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

[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.

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

Mr. Speaker, my hon. colleague nailed it. The reality is that this fall economic statement has virtually nothing new on climate at all.

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

Mr. Speaker, I thank my colleague for her speech.

I know that she is very concerned about climate change. I would like to know whether she shares my frustration about the battle that is not being waged and the results that are not being achieved in the House.

We know that the Conservatives to our right are not interested in the fight against climate changes. They do not have a plan. On the other side of the House, the Liberals are not interested in it either, but they pretend that they are. As members can see, they are not getting results. The government continues to invest $8.5 billion U.S. per year in fossil fuels. Greenhouse gas emissions have risen since the Liberals took office, but they give grand speeches about the fight against climate change and the importance of the green transition. We are caught between a majority of members here who are not interested in climate change.

What are the solutions? I would like to know whether my colleague has any ideas.

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

Mr. Speaker, I thank my respected colleague from the Bloc Québécois for his question.

He is absolutely right. However, I believe that many members here think, as individuals and human beings, that we are in an urgent situation and it is unacceptable to continue with the Liberals' fraudulent policies or the Conservatives' policies of denial.

We have to do more, urgently. The Intergovernmental Panel on Climate Change, or IPCC, says that we cannot wait another decade and we must act before 2025 if we want to limit warming to 1.5°C or 2°C. This situation is a threat to human civilization.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Speaker, my colleague's intervention was very interesting. I noticed that she is wearing a sustainable development goals pin. One of the things that I find most frustrating is that we have a government that claims to have a feminist international assistance policy. We have a government that speaks about being a feminist government that will perhaps, one day, provide a feminist foreign policy, yet we know the impacts on women and girls from climate change around the world are deeply disparate.

Can my colleague talk a little about those impacts and ways in which Canada and the Canadian government could do more to protect those who are most vulnerable, women and girls around the world?

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

Mr. Speaker, even though this is not a climate impact, my thoughts are ever with the women in Afghanistan who are at risk from the Taliban, including some prominent feminists we need to help.

I will also say that obviously, in any society, when things are desperate, whether through war such as in Ukraine, or through extreme drought, or through things like hurricane Fiona, it is the women who face the impacts. They are generally less economically empowered than the men in countries around the world, and it is they who take care of their parents and their children. Women are also the majority of farmers around the world.

All those impacts from climate crises particularly affect women.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I am grateful for the opportunity I have been given to take part in today's debate on Bill C‑32 on the 2022 fall economic statement.

In short, Bill C‑32 is nothing but minor legislative amendments or a hodgepodge of measures announced in the spring budget that had not been incorporated into the first budget implementation bill adopted in June.

What are the concerns that we hear people talk about daily? It is the cost of living that keeps going up and a possible recession and yet there is no measure to address this new economic reality. It is very disappointing and a missed opportunity.

It is unfortunate to end up with an economic update that mentions inflation 108 times without offering any extra help to people who are vulnerable or alternative solutions when, again, a recession is on the horizon for 2023.

Bill C‑32 is a bill that fails to address the major challenges facing our society. The government identifies the problem of the rising cost of living but does nothing beyond naming it. It talks of tough days ahead this winter without making any plans to get through it.

Families, seniors, pensioners, the unemployed and workers cannot take it anymore. They are at their wits' end. The price of gas, groceries, clothing, rent and everything else is going up. People are having to cut back everywhere, do without and make choices: Do I put food on the table or do I buy winter clothes for my kids? Do I buy medicine or do I put gas in the car? These are the kinds of tough choices that most people face.

Bill C-32 includes measures to help people buy their first home. I recognize that that is a good measure, but not everyone can afford to buy a house or wants to buy a house, and those individuals need housing, especially affordable housing.

As we know, the appalling lack of housing in Nunavik can have serious, and I would even say very grave, consequences. Because of limited space, young children are sleeping in the same beds as adults, which poses a risk of death by accidental asphyxiation. Sometimes children are even crushed and die of asphyxiation in their sleep. That is unacceptable. Overcrowded housing has been identified as a recurrent risk factor.

The coroner's office has recommended that the government inject funds into housing specifically in Nunavik. The construction of social housing in Nunavik would solve the problem of the death of infants and young children, as well as other public health problems. When will the government take action? It is urgent. We are talking about saving lives.

Last week, I was in my riding, Abitibi—Baie‑James—Nunavik—Eeyou. As members know, it is a vast riding and I represent almost half of Quebec. I met with the CAO of the Vallée‑de‑l'Or RCM, who spoke to me about the housing shortage. The wheel keeps turning. Housing problems mean labour shortages and an inability to attract people to the region. We cannot stop the wheel from turning. People are tired and demoralized. They cannot manage.

People come to work in our area to make good money and then they return home. They do not buy locally, and so there is no local economy. It is an ongoing problem in Abitibi—Baie‑James—Nunavik—Eeyou. What can we do to keep our foreign workers? We must also improve the immigration process, which is very slow. It is outrageous. I feel as though the government is abandoning our regions.

The Bloc Québécois asked the government to focus on its fundamental responsibilities toward vulnerable people by increasing health transfers, providing adequate support to those aged 65 and over and urgently reforming employment insurance, which we know is the best stabilizer in times of economic difficulty.

Sadly, the government dismissed all of those good suggestions. We can therefore only denounce this as a missed opportunity to help Quebeckers deal with the tough times that they are already going through or may face in the months to come.

The government itself is making some grim economic predictions without ever considering any of the opposition's proposals as to how to prepare ourselves. Where is the logic in that?

Quebec and the other provinces are unanimously asking the government to immediately, permanently and unconditionally increase health transfers. Emergency rooms everywhere are overflowing. What is the government waiting for to transfer funds?

In addition, people between the ages of 65 and 74 continue to be denied the increase to old age security, which they need more than ever before. This is unthinkable. I have trouble understanding why the government has created two classes of seniors. It is unfair. Seniors live on fixed incomes, so they cannot deal with such a sharp rise in the cost of living in real time. They are the people most likely to have to make tough choices at the grocery store or the pharmacy.

To add to this, the government continues to penalize those who are less well-off and who would like to work more without losing their benefits. Unlike the federal government, inflation does not discriminate against seniors based on their age. Contrary to what the government says, starving seniors aged 65 to 75 will not encourage them to remain employed. That is done by no longer penalizing them when they work.

What about people who lose their jobs and have to rely on EI? For all intents and purposes, the EI system has been dismantled over the years. Currently, six out of 10 workers who lose their jobs do not qualify for EI. This is a serious problem in these tough times. The government promised reform seven years ago, and time is running out. We need EI reform. It is crucially important that we not be forced to cobble together a new CERB to offset the system's shortcomings if recession hits. As we saw during the pandemic, improvised programs are expensive and ineffective. With the looming threat of recession, there is an urgent need to rebuild the system to avoid a repeat of what we went through in 2020.

As the Bloc Québécois critic for families, children and social development, I would be remiss if I did not talk about the plight of some of our children in these tough times given the possibility of a recession. Yesterday morning, I had a chance to meet with people from the Breakfast Club, an organization that was founded in Quebec in 1994. Thanks to them, many children have access to the healthy food that is essential to their success. Thanks to them, children do not start their day on an empty stomach.

Some businesses have shut down because of the pandemic, and this has led to an increase in unemployment and poverty. Food insecurity is affecting a growing number of people. Experts believe that food insecurity could double in Canada by the end of the year. The government is making efforts and investing money, but it is still not enough. In 2020, nearly one in seven people in Canada lived in a household that had experienced food insecurity in the previous 30 days. Nearly 2.1 million households experienced food insecurity. That is a 39% increase from 2017-18 data.

One thing is clear: Things are not getting any better under this government. Our children need to have full bellies in order to reach their full potential. It is also important to note the shortage of children's medicine in our pharmacies. It is impossible to provide adequate care to our young people because the shelves are empty.

It is the same story for all of our constituents. Where will it all end?

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

Mr. Speaker, in listening to the member opposite's comments, I would like to encourage her to recognize that yes, inflation is very significant and is having an impact, but when we do a comparison around the world, Canada is doing exceptionally well in the inflation fight.

That does not mean we should not put in efforts, and we have been putting in efforts, focusing on the hardships that Canadians are having to go through on a daily basis. That is why, for example, we have a dental program. We have a rental program. We have a student program. We have the enhanced GST rebates.

All of these are there to put more money in the pockets of Canadians in all regions of the country, yet the member seemed to completely overlook that the government has been there.

Is she aware of how many of the provincial governments are contributing to putting money in the pockets of Canadians? Is there a provincial example she can cite that we can take a look at?

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I thank my colleague for his question.

I must say that Quebec is doing more than Canada. In fact, Canada often follows the example of Quebec when it comes to dental insurance. The problem is that the federal government is not supporting people aged 65 to 74. It has forgotten about them. It has also overlooked the regions when it comes to tax credits. It has overlooked Quebec when it comes to the needs of self-employed workers and immigration.

What can people do? People need government supports. It is time for the government to take concrete action.