Bill C-32

Fall Economic Statement Implementation Act, 2022

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act ;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act , the Excise Tax Act , the Air Travellers Security Charge Act , the Excise Act, 2001 , Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations .
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act .
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act .
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

Fall Economic Statement Implementation Act, 2022

[Charlie Angus, NDP, Timmins—James Bay, ON]

Madam Speaker, working with Unifor, the Alberta Federation of Labour and IBEW, we have been pushing the government to get some real standards in place to create a clean energy economy. We were pleased to see that we actually have some labour standards now, some labour obligations, for tax credits for new projects. That is significant.

However, we have not yet seen the commitment for an industrial strategy to really drive a clean energy economy. At what point will we see, from the government, the money on the table required to transform us from a fossil fuel economy and make the investments needed to gather up the huge opportunities waiting in the clean energy economy?

[Arif Virani, Liberal, Parkdale—High Park, ON]

Madam Speaker, I will point the member to a few different things.

One is the approach that we have taken with labour standards vis-à-vis our conclusion of agreements internationally. CUSMA comes to mind as a fair example. Second, it is not solely about investments that the Canadian government provides. It also about the tax credits we provide to spur innovation and investment. The clean tax credit is now available to entities that are pursuing clean tech and sustainable growth industries. That was revealed in the fall economic statement. I will also point him to the fact that our environmental package of the last seven years includes more than $100 billion in investments.

He mentioned the Alberta Federation of Labour. Its response to our share buyback taxation on banks was that it is “Very positive news to hear Finance Minister Freeland confirm earlier reports that Canada will tax stock buybacks”—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Alexandra Mendes]

We have to resume debate. I will remind the hon. member that we do not mention the names of current members of the House.

Resuming debate, the hon. member for Kenora has the floor.

[Eric Melillo, Conservative, Kenora, ON]

Madam Speaker, I am honoured by the opportunity to rise again today and speak to a government bill, Bill C-32, in regard to the fall economic statement. The member for Winnipeg North believes it is a good bill. Unfortunately, I cannot really say the same, and I am going to get into that here with my remarks.

Obviously, it is an important discussion we are having today, with the cost of living crisis that is facing Canadians across the country. We are feeling that in the Kenora riding in northern Ontario, and we know we are seeing it across the country, but unfortunately, the government's economic statement is really just more of the same policies we have seen over the last number of years from the government. It is more of the same policies that have driven up inflation in the first place and have really created and exacerbated this cost of living crisis people are facing.

In the lead-up to the economic statement, Conservatives called for the same things we have been calling for for quite some time. It will probably not surprise members to know what we were calling for; we were calling for no new spending and no new taxes. We know the government's spending has driven up inflation. The PBO has told us that and independent economists have told us that, and that is the real cause and the reason we are here today and Canadians are facing the concerns they are.

Conservatives believe that every new dollar of spending should be matched by a dollar of savings. It is a very simple principle, something that most people would use in their own households and with their own pocketbooks, that if we are going to spend more money on one thing, we should find savings elsewhere. Unfortunately, that is not what we saw from the government, and it has brought forward a plan that is really just going to add more fuel to the inflationary fire.

Of course, the second thing we have called for, as I mentioned earlier, is no new taxes, because Canadians are really feeling the squeeze right now. The cost of everything is going up, and the government's additional taxes and the increases in the taxes, including the tripling of the carbon tax, are not going to make that any better. Canadians are looking for relief, and Conservatives are here fighting for that relief and calling on the government to do the same.

We know half of Canadians are $200 away from insolvency right now, and that is a very stark and striking statistic that shows the real issues and challenges people are facing. I want to share some concerns constituents have brought and sent to me. One comes from a constituent of mine in Pickle Lake, which is the northernmost municipality in Ontario and is in my riding. This constituent says, “Costs are rising at an alarming rate, and living in a remote community makes it even more so. With gas prices and the cost of heating fuel continually on the rise, it makes it hard to make ends meet.” That is just one of the many concerns in letters and emails I know I have been getting and I think all of us in the House have been getting from our own respective communities, highlighting how difficulty it is for people to get by.

Inflation is impacting gas, groceries and home heating, perhaps the most. These are three essential things that Canadians need. In fact, when it comes to gas prices, far too often in northwestern Ontario we see some of the highest gas prices in the country. I want to share a quick excerpt from a Kenora Online news article from September of this year. The headline is “Kenora has the most expensive gas in Ontario, again”.

This is something we see over and over again, that the Kenora district has the highest gas prices in the province of Ontario. Of course, being in a remote northern area, the issues of the added cost of the carbon tax hit us so much more than they would in areas like Toronto, Ottawa and across southern Ontario. This specific article notes that Kenora had the “14th most expensive fuel in Canada, behind [only] 13 communities from British Columbia”. I think that highlights, at the time of writing, just how challenging the fuel prices are.

Gas is essential in the Kenora district. People need it, not only to go to work or get groceries, but often to travel multiple hours to medical appointments. It is really something that is perhaps taken for granted for those in southern Ontario and in the larger urban centres, who have public transit and many more options and services close to home. People need to use fuel to travel long distances in the remote north, and that is something that definitely makes everything more complicated for people in the Kenora riding and across northern Ontario.

I also want to share a couple more letters that I received from constituents about that. Wendy from Red Lake reached out to say that the prices of gas, food and electricity are all making it difficult for seniors to remain in our area as well. Tina from Dryden is a single mother of three. She says that she is forced to work two jobs to support her children, and more often than not it has become easier to eat takeout, which of course is super unhealthy, so she is very concerned about that.

This all goes back to the taxes and the inflationary spending policies of the government. It is not just gas. As I mentioned, it is groceries and home heating that are getting hit as well.

When it comes to groceries, we are seeing record food bank usage across the country. It is at an all-time high. There have been 1.5 million visits in one month to food banks in Canada. I have heard a lot about that as well from constituents.

Another individual, from Sioux Lookout, reached out to me saying that the cost of food has become so unaffordable, especially the healthy, nutritious food that is essential for her children. She is very concerned about how that is going to be impacting her. I have had a couple from Minaki reach out, saying they are both pensioners on a fixed income. They are facing a choice between eating properly or being able to stay warm this winter. That is the crisis they are facing in the Kenora riding.

I just want to share one more, from a constituent who wrote in saying that if we look at the prices in Ear Falls, a carton of milk right now costs $8.39, and a single head of lettuce is $7.99. It has become almost impossible for people to afford to put food on the table, specifically healthy food.

With the coming winter months, with the colder weather, we know home heating is something a lot of people are very concerned about. It is not a luxury in northern Ontario. It is essential. Richard from Kenora has written to me to share that his natural gas has jumped from 11¢ a cubic metre to 30¢ a cubic metre, nearly tripling in price as a result of the government's policies. He is very concerned about how he is going to be able to afford to heat his home.

What is the answer? Luckily, a constituent wrote to me to tell me what the answer is. Faith from Kenora simply says, “Eric, the carbon tax needs to go.” I could not agree more. She is obviously feeling the squeeze as well.

The concern I have, and I know all of us on this side of the House have this concern, is that when the government is faced with this crisis, its only answer is to spend more money and continue with the same inflationary policies that have really gotten us into this mess in the first place. There is no question that the Liberals like to judge their results based on how much money they can spend. If we ask a question about anything in the House, they say they have spent all this money and they are doing a great job.

On this side of the House, we are looking at the results. When we have record food bank usage across the country, when people are struggling to put food on the table and when those in remote northern communities are struggling to get by, it is clear that these policies are not working.

We are simply asking the government to rethink its approach, to stop its inflationary spending and to look at cutting taxes on struggling Canadians who are looking only for relief. That is why, as I mentioned earlier, I will not be supporting the fall economic statement. That is why I am concerned with the economic direction of the government. I look forward to any questions and comments from my colleagues on that.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Madam Speaker, the Conservatives tend to focus on correlation rather than causation, so they will say there is a Liberal government in Ottawa and there is global inflation, including bad inflation in England, and therefore it is the Liberal government's fault. However, that is not how economics works. We have to look at causation.

I would like to understand a bit more the member's logic about food inflation. Is it demand-caused inflation? People can only consume so much food, and food demand goes up with population growth. It is not a function of how much the government spent on infrastructure last month. Therefore, is it demand driven or is it supply-cost driven? The price on carbon did not triple; it went up by 2.2¢ per litre last April. I am just wondering how that 2.2¢ per-litre increase can be contributing to so much food inflation, which is running above 10%.

[Eric Melillo, Conservative, Kenora, ON]

Madam Speaker, that is another out-of-touch comment from the Liberal government. The Liberals simply seem to believe that prices are skyrocketing and they are just victims of it and have absolutely no responsibility here. The Parliamentary Budget Officer has indicated that it is the government's inflationary spending that is the cause of inflation. Future Liberal leader Mark Carney has said so, as have other leading economists across the country. There are certainly other challenges that we are facing, but there is no denying that when the government spends more, it adds to inflation, and when it taxes more, it makes things more expensive for Canadians. Why will the Liberals not understand that?

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Madam Speaker, we have listened to our Conservative friends talk about inflation and January's tax increase, but we cannot take their “triple, triple, triple” chant any more. We would like them to find something new to say. However, they are right that costs will triple and that that will have consequences for people. That much is true.

Let us talk about climate change. The current carbon tax rate is pretty much ineffective. We are the laughingstock of COP27. Canada is ranked 58th out of 60 countries. It is the only G7 country where emissions have increased since 2015, the year the Liberals came to power. We have to take action on climate change.

At COP27, we heard that if we do nothing, the cost to African nations in particular will be atrocious. If we do not pay now, we will pay even more later.

What is the solution, according to my Conservative friends?

[Eric Melillo, Conservative, Kenora, ON]

Madam Speaker, I would agree in many respects with my colleague from the Bloc, that the Liberal government has missed every single environmental target it has set. Canada is now at the bottom of the pack when it comes to climate change. The government has brought forward all these taxation policies that cause economic pain for Canadians, but we are not seeing any environmental gain as a result. Therefore, it is clear that the Liberal plan is not working and it is time for a new government that is going to work to make life more affordable for Canadians and bring forward a real plan to protect the environment. That is what we are going to do on this side of the House.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, I want to follow up on the question from the hon. member for Lac-Saint-Louis to the member for Kenora, because a really critical point is understanding that what we are experiencing now is not typical inflation. Real costs have really gone up.

I was recently talking to a farmer in Alberta who had real drought that meant that he could get a yield of only about half the barley he would normally get, but on balance the year was good because the war in Ukraine is so caught up in the cost of barley that the prices have soared, so half as much barley yielded more profit.

This is complicated stuff, and it is not about one thing only. It is a bit about demand-driven inflation, but it is a lot about supply-driven inflation, which means that the tools are not as easily described as government spending too much money. I wonder if the member has any thoughts on that.

[Eric Melillo, Conservative, Kenora, ON]

Madam Speaker, as I said in an earlier response to a Liberal member's question, there are many aspects that are impacting a lot of the challenges we are seeing here in the country, but there is no denying the fact that, as the PBO pointed out, as Mark Carney has pointed out and as many economists across the country have pointed out, when the government spends more it makes life more unaffordable for Canadians; it drives up inflation.

The member for Saanich—Gulf Islands says that this is very complicated, but it is not complicated for people in northern Ontario who are just struggling to put food on the table and to fill their gas tanks, and who are worried about heating their homes. They know the government's spending is driving it. They know they cannot afford any more tax hikes, and that is why they are looking for relief from the Liberals.

The House resumed consideration of the motion that Bill C‑32, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022, be read the second time and referred to a committee, and of the amendment.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I am honoured to speak today and I would like to point out that I am on indigenous lands.

It is Algonquin and Anishinabe land, and I am honoured to be here on behalf of my constituents from Saanich—Gulf Islands.

Today we are taking up Bill C-32, the legislative interpretation of the Minister of Finance's fall economic statement, as tabled on November 4. I will start with the things I like about the bill. I want to be clear that I will be voting in favour of it, but I will be bringing forward amendments, assuming the bill gets through second reading and we see it at committee, which I think is a foregone conclusion.

In any case, the bill is primarily focused, in its substance, on a number of promises that have to do with making housing more affordable, such as reducing speculation in the residential housing market with really substantial measures, which I am pleased to see, to discourage the flipping of real estate properties. As to first-time homebuyer opportunities, the first-time homebuyers' tax credit is being substantially increased. We are also seeing cuts on interest rates on student loans.

We are seeing a number of measures that one could generally categorize as making life more affordable, and I am pleased to see those measures. Clearly, there are things in the bill that are long overdue. I am also pleased that on facing the climate crisis, although there is very little, we have one good measure: phasing out the flow-through shares for oil, gas and coal activities. In other words, we are stopping one of the many tax advantages offered to fossil fuels.

However, there is a lot to discuss that flows from the fall economic statement that is not in the legislation. With the Speaker's indulgence, I will concentrate more on what is missing than on what is here.

I would like to read from the fall economic statement. The hon. Deputy Prime Minister and Minister of Finance, in the introduction before we get into the substantial part of the statement, calls for a green transition and then says this requires “an industrial transformation comparable in scale only to the Industrial Revolution itself”. I completely agree with that. I would say that perhaps it is an industrial transformation that is quite comparable to what Canada's economy went through in the Second World War. These are not incremental steps. This is fundamental and transformational, and that is what is required.

The hon. minister put this forward in connection with a 1903 quote from Prime Minister Wilfrid Laurier, who said in this place when it was in Centre Block that we cannot wait for transformation. He was referring to building a transcontinental railway and said that this transformation would change “the conditions of our national life which it would be folly to ignore and a crime to overlook.”

I agree with all of those words, but the ambition embedded in those words is completely lacking in Bill C-32. Looking ahead to the spring budget and identifying what is missing, I want to reflect a bit on the timing, the urgency, what I hope to see and what all Canadians should put pressure on the government to deliver by spring.

In contrast, looking south of the border, it is very interesting to me that President Joe Biden managed to get through a very ambitious climate plan, but the name of his bill is the Inflation Reduction Act. The target is inflation, and it will in fact reduce inflation, but the measures are ambitious climate-related measures that Canada has not yet undertaken. The U.S., of course, must do more as well.

As we stand here today, our delegates and friends from this chamber, such as my friend from Kitchener Centre and the Minister of Environment, are at COP27 in Sharm el-Sheikh, Egypt, where they just decided to extend the meeting that was slated to adjourn today. It is extended until midnight tomorrow as progress has not been made.

We are running out of time, quite literally. The UN Secretary-General, António Guterres, opened COP27 by saying that the world was on “a highway to climate hell with our foot still on the accelerator.” We have an obligation not to allow our children and grandchildren to live in a climate hell, yet everything we have done so far as a nation has fallen dramatically short of what is required to meet our obligations under the science and meet our international obligations to attempt to hold to less than 1.5°C global warming and stay as far below 2°C as possible.

It is getting impossible, even for an optimist like me, to imagine that we can hold to 1.5°C. We are on track to nearly double that. However, let us look at what we would do if we were serious. I will start by looking at what should be in the next budget and what the government should do, because it is not too late. It is desperately close to too late, but it is not too late.

We need to stop increasing greenhouse gas emissions.

Obviously, it is impossible to reach the targets set by the Paris Agreement with increasing levels of greenhouse gas emissions. We must act quickly and also accept the idea that the era of fossil fuels is almost over.

It will not be tomorrow, but we have to accept that our dependency on fossil fuels must end, and soon. It was very disappointing to read that at COP27, within the last 24 hours, Canada rejected the language that we had accepted in Glasgow last year, that we are working towards the phase-out of coal. Most countries, many of our allies, were prepared to say, let us say “coal and oil and gas”. Canada said we could not say we were going to phase out oil and gas, on any timeline. Of course we cannot do that in two weeks. Can we do it in ten years? Probably not. However, the goal must be to phase out all fossil fuels, or we are indeed headed on the highway to climate hell.

When Sir Wilfrid Laurier talked about linking the country, east to west, with a railway, what is the modern climate equivalent of that? It is an east-west electricity grid: 100% renewably sourced electricity must be able to flow from one province to the other and north to the territories. Right now, our provincial monopolistic utilities want to sell only one way: south. They sell south for their profits, and that is fine and good, but the grid could operate like the giant battery we really need.

Let us look at where we would be if we considered the links between inflation and climate action. That is an important place to start. We need to stop thinking in silos, in other words, and start thinking holistically.

A lightbulb went off for me recently. I was talking to a friend who is an Alberta grain farmer. I asked how they had survived the very brutal drought. His answer was that it would have been really bad because they had planted barley and only got in about half the crop they would have gotten in a normal year without the extreme drought, but because of the war in Ukraine, the price of grain was so high that in the end they kind of had a good year.

What does that say? It says that when Canadian consumers are looking at increased prices for pasta and increased prices for bread products, it is a combination of things that have nothing to do with the type of demand-driven inflation that we had in the early 1970s.

Food costs are going to keep going up, because the climate crisis will continue to interrupt the growing seasons and will continue to deliver what we had for a lot of farmers and livestock producers in southern British Columbia, when atmospheric rivers killed tens of thousands of animals, mostly chickens. We have droughts that mean farmers cannot plant crops and have a good return.

That is a real cost increase. It is not about spending by the government that drives up inflation because it is demand-driven by people needing more wages. These are real cost increases.

That means we also have to be prepared for extreme weather events, and we are not. The government has postponed the delivery of the adaptation strategy until next year. Yesterday the Auditor General told us that in the case of first nations communities, 112 approved infrastructure grants that would help first nations and other indigenous communities prepare for extreme weather events were not funded by the department, just through pure delays.

There is much to be done in this country to take us from laggard, and as many people know, this week we were rated among the worst-performing industrialized countries on climate. We could still propel ourselves to leader. We could take care of our farmers, our agriculture and our economic future, at the same time as ensuring that our kids live in a livable, hospitable world. We have an obligation to do so.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, there are many things I could make reference to in regard to the fall economic statement.

However, I am very curious about what the Green Party's position is, and more specifically what the member's position is in regard to nuclear power. Does she feel there is a role for nuclear power in Canada?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I would like to parse the hon. parliamentary secretary's question a bit more by saying that there is no case for new nuclear installations in order to avoid climate hell. There is a case for maintaining existing operating reactors and phasing them out when they come to the end of their natural lifespan.

I encourage everyone in this place to examine energy alternatives by a couple of a firm criteria, such as the tons of carbon eliminated per dollar invested; the jobs created per dollar invested; and how long it is, from the moment it is given approval, before energy flows from that development.

Even excluding the unsolved problem of nuclear waste, the link to nuclear proliferation in the military and the risk of accidents, and even if we put that all to the side and say we are prepared to believe we will escape all those problems, it does not make economic sense to go nuclear.

[Greg McLean, Conservative, Calgary Centre, AB]

Mr. Speaker, I know that my colleague is very much focused on demonizing the oil and gas industry. She focused her initial comments on the reversal of flow-through funds, so-called Canadian development expenses and Canadian exploration expenses, which I think she should acknowledge in her response here were disposed of by the government several years ago. All it is doing is fast-tracking the un-deployment of those funds, so it is really a very small amount.

I wonder if my colleague can tell the House how small a portion of this fall economic statement that is? It has already been baked in by every industry across Canada.