Bill C-59

Fall Economic Statement Implementation Act, 2023

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023

Part 1 implements certain measures in respect of the Income Tax Act and the Income Tax Regulations by
(a) limiting the deductibility of net interest and financing expenses by certain corporations and trusts, consistent with certain Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations;
(b) implementing hybrid mismatch rules consistent with the Organisation for Economic Co-operation and Development and the Group of Twenty Base Erosion and Profit Shifting project recommendations regarding cross-border tax avoidance structures that exploit differences in the income tax laws of two or more countries to produce “deduction/non-inclusion mismatches”;
(c) allowing expenditures incurred in the exploration and development of all lithium to qualify as Canadian exploration expenses and Canadian development expenses;
(d) ensuring that only genuine intergenerational business transfers are excluded from the anti-surplus stripping rule in section 84.1 of the Income Tax Act ;
(e) denying the dividend received deduction for dividends received by Canadian financial institutions on certain shares that are held as mark-to-market property;
(f) increasing the rate of the rural supplement for Climate Action Incentive payments (CAIP) from 10% to 20% for the 2023 and subsequent taxation years as well as referencing the 2016 census data for the purposes of the CAIP rural supplement eligibility for the 2023 and 2024 taxation years;
(g) providing a refundable investment tax credit to qualifying businesses for eligible carbon capture, utilization and storage equipment;
(h) providing a refundable investment tax credit to qualifying businesses for eligible clean technology equipment;
(i) introducing, under certain circumstances, labour requirements in relation to the new refundable investment tax credits for eligible carbon capture, utilization and storage equipment as well as eligible clean technology equipment;
(j) removing the requirement that credit unions derive no more than 10% of their revenue from sources other than certain specified sources;
(k) permitting a qualifying family member to acquire rights as successor of a holder of a Registered Disability Savings Plan following the death of that plan’s last remaining holder who was also a qualifying family member;
(l) implementing consequential changes of a technical nature to facilitate the operation of the existing rules for First Home Savings Accounts;
(m) introducing a tax of 2% on the net value of equity repurchases by certain Canadian corporations, trusts and partnerships whose equity is listed on a designated stock exchange;
(n) exempting certain fees from the refundable tax applicable to contributions under retirement compensation arrangements;
(o) introducing a technical amendment to the provision that authorizes the sharing of taxpayer information for the purposes of the Canadian Dental Care Plan;
(p) implementing a number of amendments to the general anti-avoidance rule (GAAR) as well as introducing a new penalty applicable to transactions subject to the GAAR and extending the normal reassessment period for the GAAR by three years in certain circumstances;
(q) facilitating the creation of employee ownership trusts;
(r) introducing specific anti-avoidance rules in relation to corporations referred to as substantive CCPCs; and
(s) extending the phase-out by three years, and expanding the eligible activities, in relation to the reduced tax rates for certain zero-emission technology manufacturers.
It also makes related and consequential amendments to the Excise Tax Act and the Excise Act, 2001 .
Part 2 enacts the Digital Services Tax Act and its regulations. That Act provides for the implementation of an annual tax of 3% on certain types of digital services revenue earned by businesses that meet certain revenue thresholds. It sets out rules for the purposes of establishing liability for the tax and also sets out applicable reporting and filing requirements. To promote compliance with its provisions, that Act includes modern administration and enforcement provisions generally aligned with those found in other taxation statutes. Finally, this Part also makes related and consequential amendments to other texts to ensure proper implementation of the tax and cohesive and efficient administration by the Canada Revenue Agency.
Part 3 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by
(a) ensuring that an interest in a corporation that does not have its capital divided into shares is treated as a financial instrument for GST/HST purposes;
(b) ensuring that interest and dividend income from a closely related partnership is not included in the determination of whether a person is a de minimis financial institution for GST/HST purposes;
(c) ensuring that an election related to supplies made within a closely related group of persons that includes a financial institution may not be revoked on a retroactive basis without the permission of the Minister of National Revenue;
(d) making technical amendments to an election that allows electing members of a closely related group to treat certain supplies made between them as having been made for nil consideration;
(e) ensuring that certain supplies between the members of a closely related group are not inadvertently taxed under the imported taxable supply rules that apply to financial institutions;
(f) raising the income threshold for the requirement to file an information return by certain financial institutions;
(g) allowing up to seven years to assess the net tax adjustments owing by certain financial institutions in respect of the imported taxable supply rules;
(h) expanding the GST/HST exemption for services rendered to individuals by certain health care practitioners to include professional services rendered by psychotherapists and counselling therapists;
(i) providing relief in relation to the GST/HST treatment of payment card clearing services;
(j) allowing the joint venture election to be made in respect of the operation of a pipeline, rail terminal or truck terminal that is used for the transportation of oil, natural gas or related products;
(k) raising the input tax credit (ITC) documentation thresholds from $30 to $100 and from $150 to $500 and allowing billing agents to be treated as intermediaries for the purposes of the ITC information rules; and
(l) extending the 100% GST rebate in respect of new purpose-built rental housing to certain cooperative housing corporations.
It also implements an excise tax measure by creating a joint election mechanism to specify who is eligible to claim a rebate of excise tax for goods purchased by provinces for their own use.
Part 4 implements certain excise measures by
(a) allowing vaping product licensees to import packaged vaping products for stamping by the licensee and entry into the Canadian duty-paid market as of January 1, 2024;
(b) permitting all cannabis licensees to elect to remit excise duties on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2023;
(c) amending the marking requirements for vaping products to ensure that the volume of the vaping substance is marked on the package;
(d) requiring that a person importing vaping products must be at least 18 years old; and
(e) introducing administrative penalties for certain infractions related to the vaping taxation framework.
Part 5 enacts and amends several Acts in order to implement various measures.
Subdivision A of Division 1 of Part 5 amends Subdivision A of Division 16 of Part 6 of the Budget Implementation Act, 2018, No. 1 to clarify the scope of certain non-financial activities in which federal ‚financial institutions may engage and to remove certain discrepancies between the English and French versions of that Act.
Subdivision B of Division 1 of Part 5 amends the Trust and Loan Companies Act , the Bank Act and the Insurance Companies Act to, among other things, permit federal financial institutions governed by those Acts to hold certain meetings by virtual means without having to obtain a court order and to permit voting during those meetings by virtual means.
Division 2 of Part 5 amends the Canada Labour Code to, among other things, provide a leave of absence of three days in the event of a pregnancy loss and modify certain provisions related to bereavement leave.
Division 3 of Part 5 enacts the Canada Water Agency Act . That Act establishes the Canada Water Agency, whose role is to assist the Minister of the Environment in exercising or performing that Minister’s powers, duties and functions in relation to fresh water. The Division also makes consequential amendments to other Acts.
Division 4 of Part 5 amends the Tobacco and Vaping Products Act to, among other things,
(a) authorize the making of regulations respecting fees or charges to be paid by tobacco and vaping product manufacturers for the purpose of recovering the costs incurred by His Majesty in right of Canada in relation to the carrying out of the purpose of that Act;
(b) provide for related administration and enforcement measures; and
(c) require information relating to the fees or charges to be made available to the public.
Division 5 of Part 5 amends the Canadian Payments Act to, among other things, provide that additional persons are entitled to be members of the Canadian Payments Association and clarify the composition of that Association’s Stakeholder Advisory Council.
Division 6 of Part 5 amends the Competition Act to, among other things,
(a) modernize the merger review regime, including by modifying certain notification rules, clarifying that Act’s application to labour markets, allowing the Competition Tribunal to consider the effect of changes in market share and the likelihood of coordination between competitors following a merger, extending the limitation period for mergers that were not the subject of a notification to the Commissioner of Competition and placing a temporary restraint on the completion of certain mergers until the Tribunal has disposed of any application for an interim order;
(b) improve the effectiveness of the provisions that address anti-competitive conduct, including by allowing the Commissioner to review the effects of past agreements and arrangements, ensuring that an order related to a refusal to deal may address a refusal to supply a means of diagnosis or repair and ensuring that representations of a product’s benefits for protecting or restoring the environment must be supported by adequate and proper tests and that representations of a business or business activity for protecting or restoring the environment must be supported by adequate and proper substantiation;
(c) strengthen the enforcement framework, including by creating new remedial orders, such as administrative monetary penalties, with respect to those collaborations that harm competition, by creating a civilly enforceable procedure to address non-compliance with certain provisions of that Act and by broadening the classes of persons who may bring private cases before the Tribunal and providing for the availability of monetary payments as a remedy in those cases; and
(d) provide for new procedures, such as the certification of agreements or arrangements related to protecting the environment and a remedial process for reprisal actions.
The Division also amends the Competition Tribunal Act to prevent the Competition Tribunal from awarding costs against His Majesty in right of Canada, except in specified circumstances.
Finally, the Division makes a consequential amendment to one other Act.
Division 7 of Part 5 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to exclude from their application prescribed public post-secondary educational institutions.
Subdivision A of Division 8 of Part 5 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things,
(a) provide that, if a person or entity referred to in section 5 of that Act has reasonable grounds to suspect possible sanctions evasion, the relevant information is reported to the Financial Transactions and Reports Analysis Centre of Canada;
(b) add reporting requirements for persons and entities providing certain services in respect of private automatic banking machines;
(c) require declarations respecting money laundering, the financing of terrorist activities and sanctions evasion to be made in relation to the importation and exportation of goods; and
(d) authorize the Financial Transactions and Reports Analysis Centre of Canada to disclose designated information to the Department of the Environment and the Department of Fisheries and Oceans, subject to certain conditions.
It also amends the Budget Implementation Act, 2023, No. 1 in relation to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and makes consequential amendments to other Acts and a regulation.
Subdivision B of Division 8 of Part 5 amends the Criminal Code to, among other things,
(a) in certain circumstances, provide that a court may infer the knowledge or belief or recklessness required in relation to the offence of laundering proceeds of crime and specify that it is not necessary for the prosecutor to prove that the accused knew, believed they knew or was reckless as to the specific nature of the designated offence;
(b) remove, in the context of the special warrants and restraint order in relation to proceeds of crime, the requirement for the Attorney General to give an undertaking, as well as permit a judge to attach conditions to a special warrant for search and seizure of property that is proceeds of crime; and
(c) modify certain provisions relating to the production order for financial data to include elements specific to accounts associated with digital assets.
It also makes consequential amendments to the Seized Property Management Act and the Forfeited Property Sharing Regulations .
Division 9 of Part 5 retroactively amends section 42 of the Federal-Provincial Fiscal Arrangements Act to specify the payments about which information must be published on a Government of Canada website, as well as the information that must be published.
Division 10 of Part 5 amends the Public Sector Pension Investment Board Act to increase the number of directors in the Public Sector Pension Investment Board, as well as to provide for consultation with the portion of the National Joint Council of the Public Service of Canada that represents employees when certain candidates are included on the list for proposed appointment as directors.
Division 11 of Part 5 enacts the Department of Housing, Infrastructure and Communities Act , which establishes the Department of Housing, Infrastructure and Communities, confers on the Minister of Infrastructure and Communities various responsibilities relating to public infrastructure and confers on the Minister of Housing various responsibilities relating to housing and the reduction and prevention of homelessness. The Division also makes consequential amendments to other Acts and repeals the Canada Strategic Infrastructure Fund Act .
Division 12 of Part 5 amends the Employment Insurance Act to, among other things, create a benefit of 15 weeks for claimants who are carrying out responsibilities related to
(a) the placement with the claimant of one or more children for the purpose of adoption; or
(b) the arrival of one or more new-born children of the claimant into the claimant’s care, in the case where the person who will be giving or gave birth to the child or children is not, or is not intended to be, a parent of the child or children.
The Division also amends the Canada Labour Code to create a leave of absence of up to 16 weeks for an employee to carry out such responsibilities.

[Keldon Bester]

Certainly, and it's a great credit to Bill C-59 for really narrowing that window.

I think it not only discourages the bureau from taking cases, but, somewhat perversely, discourages the bureau from taking cases against the biggest companies, those with the biggest legal firepower, and says that if you want to take a less risky approach, we can maybe go after more medium-sized and smaller players. I think there's a chilling effect.

Also, there's then a specific shaping that the bureau is there to go after folks that regular Canadians cannot, and I think this runs counter to that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Bester, in your written submission, the Canadian Anti-Monopoly Project said this:

...Canada's competition law treats the Bureau effectively as a private litigant, with the risk of being responsible for a portion of a defendant's legal fees should it lose in court. Most recently, this resulted in the Competition Tribunal ordering the Bureau to pay $13 million of taxpayer's money, nearly a fifth of its annual budget, to multibillion dollar telecommunications firm, Rogers.

C-59 makes progress on this front but does not remove cost awards entirely. Instead, it limits the circumstances where a judge could order the Bureau to pay these costs.

In your view, does the current potential for cost awards discourage the Competition Bureau from bringing cases?

[Julie Dzerowicz, Liberal, Davenport, ON]

I want to say thank you. You have encouraged us to implement the ITCs ASAP, which means passing Bill C-59 as soon as possible, which we've heard from industry as well.

I'll go to my second question, which is a follow-up.

The Dow group was with us on Tuesday. They've set up a net-zero facility in Fort Saskatchewan. They spoke to us about the importance of having a market-based carbon trading regime and about its revenue generation capabilities for net-zero facilities like theirs. I'm wondering if you would agree with companies like Dow about the profitability that carbon pricing will ensure for businesses well into the future.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all the witnesses for their excellent testimony. I wish I had time for each one of you, but I do not.

I'm going to start off with you, Mr. Bester, for maybe a minute or so. I want to put onto the record that we did have our competition commissioner come before our committee on Bill C-59. He's also been before the Senate, and he was actually before the Senate when he made the following statement:

Fortunately, the changes proposed in C-59, together with the recent reforms made in Bills C-19 and C-56, represent a generational upgrade in our competition law framework. I applaud the Government, Parliamentarians and citizens from across the country for their efforts in shaping this modernization process. It is the product of years of public and expert dialogue and parliamentary debate. The changes deliver on a significant number of the Competition Bureau's recommendations, and will help bring our competition regime in line with international best practice.

I wanted to put that in.

I also want to thank you. You've made some excellent recommendations, and I really appreciated your exchange with Mr. Williams. I actually think there's a lot more we could be doing, but I think we have done a significant amount and I think it's very, very critical that we acknowledge that. I personally would love to see a review right across our whole government around what's stopping competition from happening. I think if we did a whole-of-government review, that would be another excellent step forward.

My next couple of questions are for the Canadian Chamber of Commerce. I'm a very big fan of the work the Canadian chamber does. You do very important work.

Mr. Detchou, you started off by saying the economic competitiveness in the last 12 quarters has significantly declined. I want to put on the record that in the last three years, from 2021 to 2023, we were coming out of a pandemic, so the whole world was dealing with the after-effects of an economic heart attack. I think, as you will see from a lot of what we've put into Bill C-59, that we are transitioning our economy from competitive, growth and productivity perspectives.

On that, I know the chamber was very supportive when we announced the investment tax credit, so thank you. There are some companies, such as Dow, that are already benefiting from the ITCs, and they are creating significant opportunities for workers. Can you maybe initially speak to how important these are in driving investment, innovation and economic competitiveness?

After that I will have a follow-up question.

[Ryan Williams, Conservative, Bay of Quinte, ON]

You can tell by my name tag that I'm not a permanent member, but I'm happy, Mr. Chair, to be here again. It's always nice to be at the finance committee.

Thank you to our witnesses for joining us today.

Mr. Bester, it's great to see you back again to talk about the changes to the Competition Act.

We've had a series of bills to amend the Competition Act in this Parliament. The first was my bill, Bill C-339, to eliminate the efficiencies defence. I had another private member's bill, but that was taken with the last government bill on open banking, which is always great. The government followed our lead with Bill C-56 and Bill C-59.

I know we've had a lot of input from your group into these bills, but I want to start with what's missing. What recommendations did not get included that are really important to this bill and to competition in Canada?

[Fernando Melo, Federal Policy Director, Canadian Renewable Energy Association]

Good afternoon, Chair.

Thanks to you and this committee for inviting me to testify on behalf of the Canadian Renewable Energy Association, also known as CanREA.

As part of this chamber study on Bill C-59, the fall economic statement implementation act, 2023, I would like to start by acknowledging that I am joining you today on the traditional and unceded territory of the Anishinabe Algonquin people.

CanREA is the voice for the wind energy, solar energy and energy storage solutions that will power Canada's energy future. Our 300-plus members are uniquely positioned to deliver clean, low-cost, reliable, flexible and scalable solutions for Canada's energy needs. With the passage of this bill, they will be able to do so at a pace and scale like never before, thanks to the proposed clean technology investment tax credit.

My members and the whole team at CanREA are very optimistic about the opportunities that the clean technology investment tax credit will create. This measure will allow companies to invest in a variety of low-carbon technologies to recoup between 20% and 30% of their project's capital costs as a refundable tax credit. When the enabling legislation for this investment tax credit is passed, it will rapidly accelerate the deployment of technologies like battery energy storage, solar systems and wind across Canada by strengthening the economics of renewable energy projects and crowding in capital to the sector.

As you well know, achieving Canada's climate goals will require a doubling or tripling of our generation capacity, but this is not the only reason to invest in new renewable electricity generation. The International Energy Agency notes that electricity consumption from data centres, artificial intelligence and the cryptocurrency sector could double by 2026. If Canada wants to stay ahead in a rapidly digitizing global economy, we will need more electricity generation, and the clean technology investment tax credit and the forthcoming clean electricity investment tax credit will enable that.

With these investment tax credits in place, Canada will be a competitive market for international developers of wind, solar and energy storage projects to invest in. Their relatively straightforward design and refundability will put the country in a competitive position relative to the U.S. and other jurisdictions that are looking to decarbonize their electricity systems. Companies looking to invest in renewable energy have also stated that the fact that the clean technology investment tax credit is available out to 2034 gives them confidence that Canada will remain competitive in the long term.

That said, CanREA members and their capital providers have made it clear that without these credits, they will invest in the U.S., the EU and other markets where a path to profitability is clearer. In a world where the demand for electricity is significantly growing, projects and capital will move to the area of highest return.

The reason I emphasize the importance of both the clean technology investment tax credit and the clean electricity investment tax credit, which has not had its enabling legislation introduced, is that the clean technology investment tax credit fails to include CanREA's indigenous members. CanREA and its members are committed to economic reconciliation, and this is why partnership with indigenous communities and companies is the industry norm.

This norm has been institutionalized, with every province and territory that has issued a call for power recently requiring that all projects bidding into these processes have some component of indigenous equity ownership. The exclusion of indigenous entities from the clean technology investment tax credit makes it incredibly difficult for bids into calls for power to be structured and renders the industry's traditional limited partnership ownership structure unworkable.

CanREA has been advocating change since the draft legislation for the clean technology investment tax credit was introduced in the summer of last year. Including indigenous entities as eligible entities to receive the clean technology investment tax credit will resolve the issues I've outlined.

For further details on this, I would encourage members of this committee to refer to CanREA's submission, which accompanies my testimony today.

Thank you very much for your time and consideration. I look forward to your questions.

[Jessica Brandon-Jepp, Senior Director, Fiscal and Financial Services Policy, Canadian Chamber of Commerce]

Moving on to competition policy, we remain concerned by the ad hoc approach to changes to the Competition Act and we encourage the government to carefully review our submission and continue to consult with the business community, including the U.S. Chamber of Commerce, on changes to the act.

In particular, there are concerns around overwhelming the Competition Tribunal with frivolous claims, and there has been a lot of talk about structural presumptions in merger reviews pointing to misguided interpretations of U.S. merger guidelines as inspiration. These issues, among others, have the potential to make Canada’s competition regime less effective, rather than improving it.

That brings us to new corporate taxes and the digital services tax. The irony is that just as we’re contemplating ITCs and refinements to our competition regime to spur private sector investment, innovation and growth, a range of new and potential business taxes threaten to repel investment, create uncertainty and discourage new players from entering the Canadian marketplace.

Specifically, we call on the government to avoid imposing new taxes on the business sector, which Bill C-59 proposes to do with a digital services tax. A DST is particularly concerning, as it includes a retroactive tax to 2022 on online services that Canadians have come to rely on, even though over 120 countries, including our largest trading partner, the U.S., have agreed to delay imposing such taxes. The DST is the latest proposed tax that violates several critical tax principles of providing clarity, certainty and stability for businesses and help ensure Canada remains a competitive environment for investment.

First, we strongly object to the concept of tax retroactivity, which has been a concern in the latest proposals regarding both the DST and EIFEL. The effective date of proposed taxes should be during the following tax year or, at a minimum, upon proclamation. Retroactivity robs businesses of the certainty they need to make productive investments in innovation and growth, and it has a chilling effect on future investment across the economy.

Second, we oppose any measure that will increase costs for businesses and Canadians when both are facing challenging economic headwinds.

This new tax will affect far more than just large multinational corporations; if enacted, the DST will ripple across the Canadian economy, affecting many small and medium-sized businesses and hurting Canadians. In fact, this tax will disproportionately impact businesses with low profit margins, because unlike corporate income taxes, digital services taxes are levied on revenues rather than profits. As a result, there is a disproportionate tax burden being placed on companies with low profit margins, such as the online travel sector.

Third, and finally, we must sound the alarm that successive administrations in Washington have signalled that enacting a DST could provoke damaging trade retaliation, potentially against key sectors of the Canadian economy. We are hearing directly from business owners in many sectors beyond the digital services space who are concerned that their products may be impacted by retaliatory tariffs.

At a very minimum, we call for the punitive and retroactive application of the DST to be cancelled and for the introduction of a safe harbour for low-margin businesses similar to the OECD's amount “A” of pillar one, in which there is a safe harbour provision.

Bill C-59 and the forthcoming 2025 budget present an opportunity for decisive action. We urge Ottawa to adopt pro-growth policies that will invigorate Canada’s economy, instead of regressive taxes—

[Bryan Detchou, Senior Director, Natural Resources, Environment and Sustainability, Canadian Chamber of Commerce]

Thank you, Mr. Chair and honourable members.

We are pleased to appear before you on behalf of 400 chambers of commerce and more than 200,000 companies of all sizes from every sector of the economy and every region of the country.

The Canadian Chamber of Commerce's main concern today is that Canada's economic competitiveness is declining at the same time as our productivity has shrunk in 11 of the past 12 quarters. This means that Canadians have fewer opportunities to pursue their personal goals and that they have to spend more to maintain the same lifestyle.

The government should treat all businesses, whatever their size, as essential partners in our collective successful endeavours, because they can generate investment and growth, and help meet the productivity challenge.

The committee has already received our formal submission on Bill C‑59, which included seven specific recommendations and proposed amendments. Today we will focus our comments on investment tax credits, competition policy and the digital services tax.

First, on Canada's new investment tax credits, overall the Canadian Chamber of Commerce applauds new investment tax credits such as the CCUS ITC as tools to unlock private sector investment in a low-carbon economy. In order to maximize the impact of the clean technology manufacturing tax credits, we recommend that they be refined to include intangible property and mine development investments.

Further, we believe the clean technology ITC should be expanded to include pension plans, similar to the fall economic statement inclusion of real estate investment trusts. We recommend expanding the eligibility of this tax credit to encourage investment in housing and in commercial real estate that supports the decarbonization of Canada's economy.

Given the current uncertainty around the permitting environment in Canada, we also recommend extending the timeline for phasing out the clean technology manufacturing ITC and the clean electricity ITC in order to secure large investments within the Canadian mining, manufacturing and electricity sectors.

Finally, it is imperative that all the new ITCs be implemented as soon as possible, with clarity on procedure and eligibility, so that the private sector can fuel the next wave of long-term investment in our economy.

[Keldon Bester, Exective Director, Canadian Anti-Monopoly Project]

Thank you so much to the committee for inviting me to speak today on this important piece of legislation.

As you said, my name is Keldon Bester. I'm the executive director at CAMP, a think tank dedicated to addressing the harms caused by monopoly and building a more democratic economy in Canada.

We appreciate the opportunity to return to this committee and discuss improvements to Canada's competition law contained in Bill C-59.

Of the changes to the Competition Act in Bill C-59, I'm going to focus my time in two areas—the opening up of private access to the Competition Act as well as improvements to the merger enforcement framework.

Today, in contrast to places like the United States, where individual companies can bring cases against corporations harming competition, in Canada nearly every competition law case originates from the Competition Bureau. Despite the bureau's best efforts, it's an organization with finite resources and it can't have eyes on every aspect of Canada's $2-trillion economy. A more decentralized competition law enforcement framework is more likely to address harms to competition, especially those affecting small and medium-sized businesses.

Accordingly, a robust private access framework is an important complement to the expert work of the Competition Bureau, and Bill C-59 creates the foundation for this by expanding the scope of private access as well as allowing for damages to be claimed for harms caused by anti-competitive conduct.

I will shift to enforcement against harmful mergers. Today the Competition Act downplays the role that market structure and the number and relative size of players in a market play in determining competition. By removing language that rejects market structure as a potential indicator of the likelihood of competitive harm and by adding increases in concentration as a factor in evaluating a merger, Bill C-59 gives our competition law a better defence against mergers in markets where Canadians already face limited choices.

Bill C-59 also addresses a gap in Canada's law that excludes a core component of our economy from the analysis of mergers. We often talk about competition and the benefits to consumers, but Canadians benefit from competitive markets not just as consumers but as entrepreneurs and workers as well. Competition law has long focused on the effects of consolidation on consumers and businesses, but has largely ignored the potential effects on workers.

Thankfully, this is changing. It's changing at home with the addition of wage-fixing and no-poach agreements to our laws, and it's changing abroad with the inclusion of the effects on workers in a recent U.S. Federal Trade Commission challenge against a major merger in the grocery sector.

Bill C-59 is another positive step in this direction. By including effects on workers as a potential factor for review, Bill C-59 gives our competition law a more complete view of the costs of consolidation to Canadians.

In addition to these changes, the committee should consider the ways in which Bill C-59 could go further to protect Canadians in markets where they already face limited choices. When a market is highly concentrated and is characterized by a few large players, further mergers and consolidation are more likely to harm competition at a cost to Canadian consumers, workers and entrepreneurs.

To recognize this, a bias against mergers and markets with few players, often referred to as a “structural presumption”, should be incorporated into Canada's competition law. With a structural presumption, merging parties must work harder to prove that a merger truly is to the benefit of Canadians, and these presumptions can intensify as markets become more concentrated, banning them outright where a single firm dominates a market, for example.

As others have pointed out, Canada's current competition law has repeatedly allowed mergers that create a near or literal monopoly, killing competition and choice for Canadians. This is a consequence of a competition law that does not take market structure seriously, a trend that Bill C-59 has an opportunity to break with.

Bill C-59 is an important component of comprehensive reform to the law that Canadians depend on to protect competition and affordability in all sectors of the economy, and this committee has a chance to strengthen these reforms to truly protect Canadians.

Thank you for your time. I look forward to your questions.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Can you repeat the changes you are proposing for Bill C‑59 with a view to further enhancing and supporting the industry?

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you. I think it's very much a link to preventive health care.

This is a historic announcement. How important within your sector is it for this bill, Bill C-59, to be passed and that we ensure that the dental care program goes across the country?

[Marie-Josée Houle, Federal Housing Advocate, Office of the Federal Housing Advocate]

Thank you.

Good morning. My name is Marie-Josée Houle. As the first federal housing advocate, my mandate is to take systemic action to ensure that legislation, policies and programs respect people's right to adequate housing. My presence here also falls within a human rights accountability mechanism.

Thank you for inviting me to comment on Bill C‑59. On the subject of the housing-related measures announced in Budget 2023 and the fall economic statement, I will address three elements: first, the government must do more to meet its human rights responsibilities; second, public funds must be for the public good; and third, the government must prioritize non-market housing.

First, the government must do more to meet its human rights responsibilities. Canada recognized the human right to housing in the 2019 National Housing Strategy Act, but housing as a human right was missing from budget 2023, along with a serious lack of tangible resources to uphold it.

Housing as a human right is not recognized in Bill C-59 either. It's absent in part 5 of the bill, related to the department of housing, infrastructure and communities act and the duties of the Minister of Housing. The minister must be responsible for upholding the human right to housing as it is set out in the National Housing Strategy Act. Recognizing housing as a human right means prioritizing outcomes for disadvantaged groups, such as people who are low-income, racialized, veterans, indigenous, or experiencing homelessness, for example.

Budget 2023 did not improve the $82-billion national housing strategy, despite the Auditor General’s finding that it did not decrease chronic homelessness, and the federal government must redesign the strategy so that it results in measurable, evidence-based and human rights-compliant progress.

Second, public funds—precious funds—spent on housing must be for the public good. The 2023 fall economic statement included a GST rebate for purpose-built rental construction. Also in Bill C-59, there is a preamble in part 5, division 11, that says the government will use innovative financial tools to attract investment from the private sector and institutional investors in public infrastructure projects. I want to caution that these measures alone will not create affordable housing. Our research estimates that Canada is short 4.4 million affordable homes, and using public funds to create homebuilding incentives for the private market with no strings attached does not work.

The companies do not use those incentives for the benefit of the public and the housing units are not affordable beyond the first tenant or buyer.

That does not mean that there is no role for the private market. However, all investments of public funds must be for the public good. New housing built using public funds must be affordable, accessible and adequate, permanently.

Investing in non-market housing is the way forward. That is why the federal government must attach safeguards to public money spent on the private sector and attach conditions to federal infrastructure funding to require non-market housing in new housing projects.

Finally, the government must prioritize non-market housing. The 2023 fall economic statement made welcome announcements on non-market housing. It included $309.3 million in new funding for the co-operative development program; $1 billion, with $370 million in new spending, for the affordable housing fund for non-market and public housing providers to build new homes; and it extended the removal of the GST to the development of new co-op rentals, which is a measure that would be implemented by this bill.

However, there's still more to do. Non-market housing is the best investment of taxpayers' dollars. It creates permanently affordable, accessible housing for a wide range of people. Disadvantaged groups will have more money to spend on food and medicine. It has economic value. It benefits everyone because it is non-inflationary, and if you think about it, when people are paying less for their housing, they will have more money to spend on other things, which does bolster economic stability.

Canada needs a short-term plan to double our non-market housing stock, from the current 3.5%, to 8% of our supply, and we need a long-term plan to bring that number up to 20%.

Here's how else the government can prioritize non-market housing that is permanently affordable and accessible. We need to revise the national housing strategy to prioritize non-market housing; to commit long-term funding for the non-market sector, including the rental assistance program for federal co-ops, non-profits and indigenous housing providers, as currently, this program will be expiring in 2028; and to invest in growing the non-market sector’s capacity, including leveraging their assets into capital for development.

The federal government must make funding available to address the housing and homelessness crisis. All levels of government have a role to play. The federal government must pave the way.

Thank you. It will be my pleasure to answer your questions.

[Aaron Wudrick, Director, Domestic Policy Program, Macdonald-Laurier Institute]

Thank you very much, Mr. Chair.

Thank you very much to the committee for the invitation to appear today on behalf of the Macdonald-Laurier Institute.

We are a public policy think tank located right here in the nation's capital, and we're here to offer some comments on Bill C-59. I understand one of my colleagues, Philip Cross, has preceded me, but, fortuitously, I don't think we're going to be covering the same territory in the bill.

I'd like to focus my remarks to relate to the competition provisions in Bill C-59.

First of all, I should applaud the government for being seized with the problem of competition. It is obviously a very serious, pressing, bread-and-butter issue for Canadians in this country. I fear, however, that the provisions of this bill, much like Bill C-56 before it, have the wrong focus and risk imposing some well-meaning solutions that will only end up creating other unintended consequences.

In particular, I refer to the changes in the bill that refer to the review of proposed mergers and the right of private action before the Competition Tribunal.

With respect to the merger review, in Canadian competition law, the purpose of the law is to maintain and promote competitive markets.

Why do we care about that? We care about it because we want consumers to benefit. The important thing is that Canadians are benefiting from more choice, more innovation and, most importantly these days, lower prices. That is the purpose of competition law.

The existing merger review process is designed to prevent anti-competitive behaviour, so the focus of the existing law is on bad behaviour. When companies break the law, they should be investigated and punished.

If passed, Bill C-59 would instead repeal sections of the Competition Act that prohibit the tribunal from concluding that a prospective merger is anti-competitive based solely on the size of the parties proposing the merger. This sounds appealing, because in a lot of cases, the size of the market share has an impact on whether or not they have the ability to act in anti-competitive ways. The problem is in treating this as definitive, since it is not the only factor in whether or not a company is acting anti-competitively. Taking this prohibition out and allowing the tribunal to make a finding solely based on market share would have the effect of empowering courts to develop a framework that includes what are known as structural presumptions. In other words, if you are of a certain size, automatically we will not allow a merger. It puts an onus on companies, then, to prove that a merger would not have anti-competitive effects.

In effect, this would shift the focus from behaviour to size. Rather than punishing you if we see you as a company doing something wrong, we're going to presume that you are guilty simply because you are large. I would suggest that this is a problem, for a couple of reasons.

First of all, if you're going to propose this guilty-until-proven-innocent onus, you're going to have to allow a mechanism for companies to prove that they are innocent. This is very difficult to do, because unlike the Competition Bureau, private companies do not have the power to compel information and they cannot compel witnesses. It's a very difficult hill for them to climb. I would suggest that the provisions in Bill C-59 create a structurally unfair asymmetry with respect to mergers.

The news is no better regarding right of private action. This is similar to the concept of a class action lawsuit, which allows private parties who suffer to hold businesses accountable. Again, there is a positive element to this. It allows individual citizens or a group of citizens who are negatively affected to utilize competition law to punish bad actors. That's good. The problem is that they don't have the same guardrails as they do around private class action lawsuits. Right now, if you want to launch a class action lawsuit against a company for bad behaviour, there are certain thresholds you have to meet. Those thresholds are not in place for these measures in Bill C-59. This could open it up to an abuse of process.

I should say, as a former litigation lawyer, that if I were still practising, I would be very happy about these changes because it would be payday for me. There would be a lot of lawsuits and a lot of work. From a consumer's standpoint, though, I suggest that it may end up diverting resources at the tribunal that could be better placed elsewhere. I would suggest that if you're going to keep the provisions around private right of action, there have to be guardrails that are similar to the ones for private class action lawsuits.

That's the thrust of my remarks. I'll leave it there, and I'm happy to take questions.

[Daniel Breton, President and Chief Executive Officer, Electric Mobility Canada]

Thank you, Mr. Chair.

I would like to pay my respects to the members here today.

My name is Daniel Breton and I am the President and CEO of Electric Mobility Canada.

Founded in 2006, EMC is the national membership-based industry association dedicated exclusively to promoting electric mobility as a means of supporting the Canadian economy while fighting climate change and air pollution.

EMC's wide range of member organizations include manufacturers of light, medium, heavy-duty and off-road vehicles; electricity suppliers; infrastructure providers; research centres; tech companies; mining companies; cities; universities; fleet managers; unions; etc.

Among its 160 members are companies that manufacture off-road electric vehicles here in Canada, such as snowmobiles, personal watercraft, ATVs, pleasure boats, airport vehicles and more.

In October 2022, the economic statement delivered by the Minister of Finance announced a refundable 30% clean technology investment tax credit for zero-emission non-road vehicles. However, Bill C‑32, Fall Economic Statement Implementation Act, 2022, did not contain any provision for the tax credit that had been announced.

In November 2023, the economic statement delivered by the Minister of Finance referred to the 2022 economic statement and the legislation concerning the refundable 30% clean technology investment tax credit for zero-emission non-road vehicles, saying that the credit applied to eligible property acquired and available for use on or after March 28, 2023, and before 2035.

Let us now analyze the terminology used in the 2022 statement. It says:

The following types of equipment would be eligible for the credit: ... non-road zero-emission vehicles described in Class 56 (e.g. hydrogen or electric heavy duty equipment used in mining or construction) and charging or refuelling equipment described under subparagraph (d)(xxi) of Class 43.1 or subparagraph (b)(ii) of Class 43.2 that is used primarily for such vehicles.

Regardless of how we may interpret the content of the statement, it is important to understand that this kind of document, just like the announcement of a policy or plan of action or directive, does not have force of law.

Bill C‑59 provides for the addition of section 127.45 to the Income Tax Act. That proposed section contains a new definition of "clean technology property," which refers, under proposed subparagraph (d)(iv), to "a non-road zero-emission vehicle described in Class 56."

It’s important to note that off-road vehicles are a disproportionate source of air pollution. According to ECCC, their combined emissions make up 38%, 15% and 10% of the total emissions of CO, NOx and VOCs respectively. Carbon monoxide and NOx are volatile organic compounds. Emissions come mostly from the household use of gasoline-powered or diesel-powered recreational equipment and lawn and garden equipment and from the operation of agricultural, construction and mining equipment.

Since 2022, however, we have tried without success to get a clear, exhaustive definition of what a non-road zero-emission vehicle is, to the government's mind. After numerous communications with government officials by email, telephone and ordinary mail, we have still not been able to obtain a satisfactory answer.

Since Canada has a growing number of companies that are developing and building these zero-emission off-road vehicles, creating jobs and selling in Canada and abroad a growing variety of them—snowmobiles, watercraft, recreational boats, ATVs, airport vehicles, unregistered vehicles and mining vehicles, all electric and off-road—it’s important to ensure that the definition we propose does include such vehicles so that these Canadian technologies are encouraged that these vehicles and their workers can benefit from the proposed new measures.

What's more, it's vital that the companies purchasing these off-road vehicles be able to obtain this 30% tax credit and that this tax credit be retroactive to March 28, 2023.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Dr. Temper, and thank you, MP Davies.

I want to thank all the witnesses for coming before our committee today and for your opening remarks and testimony. This will help us inform Bill C-59. Thank you so much. We really appreciate it and wish you the best with the rest of your day.

At this time, members, we are going to transition to our second panel. I am going to suspend.