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.

Motions in Amendment

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Madam Speaker, there is no question the reckless spending of the government is burdening Canadians significantly. It is mortgaging the futures of our future generations. We need to step up. This tax-and-spend government is not sustainable.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Speaker, I am excited to speak to Bill C-32 today, the bill to implement the economic statement introduced by the Liberal government.

The bill contains 25 tax measures and about 10 other non-tax measures. This may seem like a lot, but a closer look at these measures reveals that they are twofold: minor legislative amendments, and measures that were announced in the spring 2022 budget that were not included in the first budget implementation bill passed last June. Clearly, like the November 3 economic statement, Bill C-32 contains no measures to address the new economic reality of high living costs and a possible recession.

The Bloc Québécois bemoans the fact that this economic update mentions the issue of inflation 108 times without offering any additional support to vulnerable people even though there is a fear that a recession will hit as early as 2023. Quebeckers who are worried about the rising cost of living will find little comfort in this economic update. They will have to make do with the follow-up to last spring's budget. We must denounce a missed opportunity to help Quebeckers face the difficult times they are already experiencing or that are feared for the months to come.

This bill will not exactly go down in history, and its lack of vision does not deserve much praise. However, it does not contain anything harmful enough to warrant opposing it or trying to block it. The Bloc Québécois will therefore be voting in favour of Bill C-32, albeit half-heartedly, and I would like to use the rest of my time to talk about what is missing from this economic statement.

The first big thing missing from Bill C-32 is support for seniors. Still, to this day, Ottawa continues to deprive people aged 65 to 74 of the old age pension increase they need more than ever now. Seniors live on fixed incomes, so it is harder for them to deal with a cost of living increase as drastic as the one we are currently experiencing. These folks are the most likely to face tough choices at the grocery store or the pharmacy. Last week, a study by the Association québécoise de défense des droits des personnes retraitées et préretraitées in partnership with the Observatoire québécois des inégalités revealed that nearly half of Quebec seniors do not have a livable income. Specifically, 49% of seniors aged 60 and over do not have a decent income to live in dignity. Members will agree that helping seniors is about more than just ageism, isolation and abuse. It is about ensuring that they have adequate financial support to live and age with dignity. This is not currently the case in terms of the Liberal government's priorities.

What is more, the government keeps penalizing seniors who would like to work more without losing their benefits. Inflation, unlike the federal government, does not discriminate against seniors based on their age. It is not by starving seniors 65 to 75 that we are going to encourage them to stay in their jobs. We do that by no longer penalizing them for working.

The second thing that has been largely forgotten in this economic update is employment insurance reform, a significant measure that the forgotten are counting on. Employment insurance is the ultimate economic stabilizer during a recession. While a growing number of analysts continue to be concerned about the possibility of a recession as early as next year, the Canadian government seems to be going back on the comprehensive EI reform it promised in the summer. The system has essentially been dismantled over the years and currently six in 10 workers who lose their jobs are not entitled to employment insurance. This is because they fail to qualify and, of course, they do not meet the current eligibility criteria. That is unacceptable in a developed country like ours.

The Bloc Québécois is in favour of increasing the replacement rate to at least 60%, as was the case prior to 1993.

The Bloc Québécois also believes that we need to better redistribute the EI regions to reflect the reality of workers in the seasonal industry and unemployment in the regions. In my riding in the Lower St. Lawrence area, seasonal work is a reality for many people who work hard in industries such as forestry, tourism and agriculture. These industries are important for economic vitality, but they also help build our region's unique character. They are part of our culture and heritage.

By stubbornly refusing to move forward with the necessary EI reform, Ottawa is putting our workers, our seasonal industries and our regions in a precarious situation. It is ignoring and abandoning our needs, and yet the Liberals promised EI reform in both the 2015 and 2019 elections. How many times will the federal government let Quebec's regions down?

The third thing missing here is inflation, a word we have been hearing over and over. As I said earlier, the government has identified the problem, the rising cost of living, but is not actually doing anything about it. It tells us to expect very tough times this winter, but says nothing about how to get through them. It makes dire observations about the economic situation, but dismisses any and every opposition suggestion for dealing with it. Consider supply chains, whose fragility was exposed during the pandemic. Last spring's budget named the problem 71 times, and the economic update did so another 45 times. However, neither document offers any solutions whatsoever to the problem.

In Bill C-32, the government repeats measures it took in the past and acts on announcements from last April's budget, but there is nothing to suggest it knows where it is headed. This is all déjà vu. It is a celebration of Liberal lip service, but one cannot feed one's children with fine speeches.

Another major file that Ottawa continues to ignore is health transfers. The meeting of health ministers from Quebec, the provinces and the federal government from November 7 to 9, 2022, went nowhere. The federal government showed up empty-handed and did not offer any increase in health transfers. Even worse, it lectured and insulted the provinces, accusing them of mismanaging health care. That came from a government that is incapable of managing its own responsibilities such as passports, employment insurance and immigration. That is really rich coming from the federal Liberals.

The Bloc Québécois is defending the provinces and Quebec, which are united in asking for an increase in federal health transfers from 22% to 35%, or an increase from $42 billion to $60 billion. That is a $28 billion increase per year, as unanimously requested by Quebec and all the provinces. This permanent and unconditional increase would make it possible for Quebec to rebuild its health system, which was undermined by years of austerity caused by the reduction in transfers in the 1990s. It would also help address issues related to the aging population and the additional pressure this will put on the health care network.

Those three Bloc Québécois priorities are not included in the economic update. I would like to take the time to remind my fellow members, and all Quebeckers, of what the Bloc Québécois had asked the government to do in conjunction with this economic statement. Our request was both simple and meaningful in an uncertain and difficult economic context: We asked the government to refocus on its fundamental responsibilities towards vulnerable people.

The measure of a society is how much care and support it provides to those who are most vulnerable and most in need. To do this, three key measures are more crucial than ever: increasing health transfers; providing adequate support to people aged 65 and over, since they are on a fixed income with low indexation that fails to offset our rampant inflation; and, of course, undertaking a comprehensive reform of employment insurance. Unfortunately, the Liberals did not think any of these measures were worth considering.

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

Madam Speaker, the Bloc is somewhat predictable in the issue of health care, as is, to a certain degree, the official opposition. They tend to think the Government of Canada's only role in health care is to be like an ATM and hand out money. They tend to not want to recognize that there is the Canada Health Act and that there is a huge expectation from Canadians in general that the federal government be there on issues such as long-term care, mental health and pharmaceuticals, let alone many other aspects of health care.

I am wondering if my friend would not, at the very least, agree there are variations in different provinces, yet Canadians want to have a health care system they know will be there in the future and be supported relatively closely in services provided, no matter where they happen to live, whether it is Montreal, Winnipeg, Vancouver or Halifax.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Speaker, the comments from the member for Winnipeg North are giving me a feeling of déjà vu.

Giving Quebeckers the health care system they expect requires adequate financial support, but this government is not offering that. The Prime Minister made a commitment in 2020 to address the situation after the pandemic and to sit down with Quebec and the provinces to negotiate health transfers. This commitment is not new; it is nearly two years old. However, the Prime Minister did not even bother to show up when the federal Minister of Health called a meeting with all the first ministers of Canada and Quebec.

It is just not a priority for the federal government right now. The only thing Ottawa wants to do is continue trampling on provincial jurisdictions. I would like my colleague from Winnipeg North to tell me what real expertise the federal government has in health care when—

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

Questions and comments.

The hon. member for Salaberry—Suroît.

[Claude DeBellefeuille, Bloc, Salaberry—Suroît, QC]

Madam Speaker, in his excellent speech, my colleague talked about federal services to the public, such as passports and immigration. He also talked about the delays and unreasonable wait times EI claimants are being subjected to. Our staff hear from so many of these people.

Can the member give some specific examples of problems he is experiencing because of the government's failure to deliver these three services to people efficiently?

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Speaker, the few seconds I have will not be enough to list the many problems my constituents are having with federal services.

Take immigration. It is unbelievable how much time my team and I spend dealing with immigration issues every week. People are having to take days off so they can attempt to reach Immigration, Refugees and Citizenship Canada staff for updates on their applications. That is why they turn to their MPs for help.

Then there is the passport crisis. People have had to camp out in front of passport offices to get their documents. The government realized how bad this looked, so it sent EI officers to work at passport offices. Now people are waiting even longer for their EI benefits. The government fixed one problem by causing another. What we need is for the government to focus on its own responsibilities, which it is currently failing to carry out.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the member is wrong in what he says about funding for health care. Never in the history of Canada have we had a national government provide as much cash in transfers over to provinces for health care. It has not happened before. In fact, if the member was to take a look at history, and I was first elected back in 1988 in the Manitoba legislature, he would see that Ottawa has always been the place to go to try to get more money, even though during the seventies there was an agreement among the provinces that they would rather have tax point transfers as opposed to cash. The only government that has been consistent in supporting national health care and ensuring Canadians would have the health care they want is the national government.

I would ask the member if he would not at least acknowledge that never before has the Province of Quebec or any province received as much cash for health.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Speaker, we understand the member for Winnipeg North's point. Health transfers are not a gift that we are asking Ottawa for. We want our fair share of our money. This money comes from Quebeckers and the provinces. The federal government does not invent this money—

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

Resuming debate, the hon. member for Renfrew—Nipissing—Pembroke.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Madam Speaker, I am proud to rise on behalf of the fiscally responsible citizens of Renfrew—Nipissing—Pembroke.

This costly coalition is out of control. The fall economic statement spells out in black and white just how bad the government's addiction to spending has gotten. None of this is a surprise. It is déjà vu all over again.

In 1972, after just one term under Pierre Trudeau, Canadians clipped his wings and handed him a minority government. Pierre Trudeau struck a deal with the NDP to stay in power. Does that sound familiar? The NDP made expensive demands and the Liberals spent and spent. They timed their spending for maximum pain as the rest of the decade was dominated by stagflation, which is high inflation and low growth fuelled by government spending. Does it sound familiar?

By the end of Pierre Trudeau's reign of error, the deficit was the largest in prepandemic Canadian history. The situation was so bad that Canadians had to elect a Progressive Conservative government to raise taxes and a Liberal government to cut spending. It took 15 years to clean up Pierre Trudeau's overspending addiction. How long will Canadians have to wait this time?

This fall economic statement is either the height of delusion or the peak of cynicism. Canadians face a stark choice: Either the government is delusional and believes spending even more than what it had budgeted for six months ago is fiscally responsible, or Canadians have a government that is so cynical of democracy it thinks it can just repeat the claim of fiscal responsibility enough that people believe it. The government knows it is addicted to spending without a plan. The Parliamentary Budget Officer says there is $14 billion unaccounted for, just another little slush fund to pay off whichever interest group is most in favour tomorrow.

Recently, headlines said the Bank of Canada lost money for the first time in history. That is because it had to pay interest to the banks for the bonds they swapped to keep the current government afloat. That is great for Bay Street, but it is bad for the taxpayers. We can add that to the interest we are all paying on the debt. It is now more than what we spend on national defence and soon it will be more than we spend on health. It did not have to be this way.

Once upon a time, we had a national consensus that deficits outside of economic downturns were to be avoided. The economy roared back after the government lockdowns nearly cratered it. Had the government demonstrated even a modicum of self-restraint, we could be arguing about how to spend a surplus.

Many Canadians believe that our country is becoming more polarized. We should ask ourselves if deficits contribute to the increasing polarization. Running deficits is a bit like musical chairs. Everyone knows that eventually the song will end and there will not be enough chairs for every person, so people get their elbows up and eventually the bonds stop selling and the money runs out. Rather than people scrambling for chairs, it will be social factions fighting for funding. When the money runs out, do they close the school or the hospital?

If the government truly wished to reduce polarization in society, it would be running surpluses. When they can run surpluses, everything becomes easier. It is like a game of musical chairs, except when the music stops they add extra seats. With surpluses, they could pay down debt, lower taxes and make sound investments in core areas of federal responsibility. All it requires is an element of patience. It requires the ability to say “not yet” to favourite interest groups. However, the government lacks discipline.

The government lives in denial. Every budget and every update, the Liberals make the same empty promise. They say that this time it will be different. It is as if Canadians are Charlie Brown and the Liberals are Lucy with a football of fiscal responsibility.

In 2019, the budget said the Liberals would be spending $421 billion by 2024. In the 2020 economic update, the minister claimed that spending in 2024 would be $429 billion. One year later, the Liberals needed to revise the numbers again. That time, they said the spending in 2024 would be $465 billion. That was just 12 months ago. Now, the gang who cannot spend responsibly claims that spending in 2024 will $505 billion. That is not sustainable.

There is no better illustration of the government's addiction to spending than its latest plans for the Canada growth fund. Here is what the fall economic statement says about the new Canada growth fund. The fund will make investments “that contribute to economic growth through direct investments, loans, loan guarantees and equity investments.” I apologize, that was the 2016 budget referring to the Canada Infrastructure Bank.

Here is the quote from this year: “It will invest using a broad suite of financial instruments including all forms of debt, equity, guarantees, and specialized contracts.” How will this growth fund operate? Here is what the government said: “The Canada Infrastructure Bank will be accountable to, and partner with, government, but will operate at greater arm’s length than a department”. I am sorry, that is the 2016 budget again.

This is what budget 2022 said, “The Canada Growth Fund will be a new public investment vehicle that will operate at arms-length from the federal government.” Now the growth fund is all about leveraging private capital. It states, “It will invest on a concessionary basis, with the goal that for every dollar invested by the fund, it will aim to attract at least three dollars of private capital.”

I will say that the government has gotten slightly more modest since 2016, when it said, “great opportunity for the government to leverage its investments in infrastructure, by bringing in private capital to the table to multiply the level of investment...there is a potential to multiply this level of investment 10 to 14 times”. While the Canada Infrastructure Bank was supposed to be at arm's length and focus on infrastructure, it quickly fell victim to the government's radical net-zero ideology. This so-called growth fund is just another example. The growth fund will be stuffed with well-connected executives friendly to the Liberal ideology. They will be paid bonuses whether they accomplish anything or not.

There will be billions and billions for green dreams, yet Canada does not have a national four-lane highway. Ontario's Ring of Fire is full of critical minerals and metals, yet it is nearly inaccessible by road. The government has mandated that 20% of cars sold in three years will be zero emission, yet it has not even studied the costs of electric vehicles. There is nowhere near the electrical capacity in our grid to switch one in five cars. No amount of government spending can change the physics of energy density. No amount of growth funds or infrastructure banks can change the economic realities of scarcity and opportunity costs.

With every dollar the government spends chasing its net-zero ideology, it is a dollar we do not spend on mitigation. Every dollar the government borrows to purchase prohibited firearms is a dollar plus interest it cannot spend stopping gang violence. Every bonus paid to executives at the Canada Infrastructure Bank or the growth fund comes at the expense of seniors, veterans and the disabled.

We know the Minister of Justice has some disgusting suggestions on how we can cut spending on vulnerable Canadians. The Liberal addiction to spending is terrible. Sadly, bad spending is not the only terrible thing in Bill C-32. Reminding Canadians this bunch of Liberals is more like a parody of government, this bill attacks the solicitor-client privilege by requiring lawyers to report the names of their clients to the Canada Revenue Agency. The same government invoking solicitor-client privilege to keep its legal opinion hidden is removing that same privilege from Canadians.

Canadians should know, without any doubts, that the government wants to go down in history for bringing the biggest tax hike on alcohol in Canadian history. It could have introduced a freeze on the excise tax hikes, which it tied to inflation with its automatic escalator tax, but Bill C-32 contains a number of changes to the excise tax. Of course, as with everything the government does, the changes are for the benefit of the government. It has no problem making it easier for the tax man to search our records, but making it easier for Canadians to enjoy beer on the weekend? We can forget it. All the government cares about are the wealthy and well connected, who get rich off the special deals cooked up by these so-called arm's-length funds.

Canadians need relief from inflation and all the government does is increase spending, which fuels inflation. Like an addict, the government will deny it has a problem. It will deny and deflect until the money runs out.

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Madam Speaker, I heard the member say there is nowhere near enough charging capacity for electric vehicles. I realize we are both from Ontario, so I would encourage her to travel a little east into Quebec. She will see there is more than enough. Quebec has done an incredible job of building up its infrastructure. Ontario had that opportunity but suddenly abandoned it five years ago when Doug Ford was elected.

The reality of the situation is that this is about political will, and the Conservatives, at least provincially in Ontario, do not have the political will. What we have seen in Quebec is the exact opposite, and I am wondering if the member would like to comment on that.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Madam Speaker, that is pretty rich coming from a member of the Liberal government who is able to charge up at work every day and charge it to the taxpayers of Canada.

The House resumed consideration of 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, as reported (without amendment) from the committee.

Fall Economic Statement Implementation Act, 2022

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

Mr. Speaker, it is always fascinating hearing my colleague and friend across the way present herself in the form of a speech to the chamber.

One of the biggest issues I have with the Conservative Party is that there are many members within it that will say, on the one hand, that we need to spend some money. We heard a lot today about spending on different areas from some of her colleagues. Then on the other hand, we hear from other colleagues who say that we need to stop spending money.

There seems to be an inconsistency at times. The overall theme of the Conservative Party seems to be to chop and cut programs and to cut back on government expenditures. I wonder if my colleague could provide her thoughts on what areas, and which departments in particular, she believes we should be looking at cutting programs or funding dollars.