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, 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.

[Tyler Blake Threadgill]

Sure, Derek, I can add to that.

I'd first say we very much appreciate that Bill C-59 highlights that there is a problem. What we would like to see from it broadly is the onus being taken off the consumer or the small shop, so that if they don't get access, they do not need to appeal. We think that the burden should not be on a small shop. If you take your car to your local mechanic and they say, “Give me a couple of weeks. I need to appeal to get this information”, you're going to go somewhere else. We want to avoid that.

We'd like to see it mandated that the car companies will allow the car owner to decide where they take the car and not have to go through that process each time they need an oil change or a brake change or when winter comes and they need to change their tires.

We're seeing instances now in which simply rotating tires requires access to data that some repair shops don't have. Specifically, we'd like amendments to include one to section 75 to make a means of diagnosis or repair available to a person within a specified period and on such terms as the tribunal considers appropriate.

Also, we'd like to have the trade secrets carve-out in subsection 75(2.1) struck down. We think that could just be used as a loophole. Obviously we have no interest in any of the car companies' trade secrets or intellectual property or access to any data other than for repair and maintenance, but we do see that as a slippery slope, in that the car companies could claim that any of that information was a trade secret.

Third, we'd like to see “maintenance and calibration” included in the proposed definition of “means of diagnosis and repair”.

[Derek Willshire]

Thank you, Mr. Ste-Marie.

For the fine details, I invite everyone to consult the brief that has been submitted. However, I can provide you with a summary, and I will let Mr. Threadgill add to my remarks afterward.

We know that it is increasingly difficult to access information relating to diagnosing, maintaining and repairing vehicles. Today's vehicles are much more technological, and that information is often transmitted to servers that are owned by the manufacturers, which further complicates repairing or doing basic maintenance on a vehicle. Consumers are increasingly required to go to the dealership, and this may involve travelling long distances for people who live in somewhat more remove areas. That means that consumers will have to pay higher prices as well as wasting their time.

Our reasoning is based on the fact that a car is the second most expensive item any Canadian family will buy. We would like to see more teeth and more specifics in the wording of Bill C‑59.

We hear a lot about the CASIS agreement, which dates from 2009 and was on a voluntary basis. I think my colleague referred to it. However, not all manufacturers are part of that agreement.

In addition, let's face it: today's cars have changed a lot. We are not opposed to technology and all of the safety-related aspects; they are very important and we are very glad of it. What is important to us, however, is to persuade you to reconsider access to that information so that repairs can be less burdensome. The choice should be up to consumers, because the vehicles belong to them.

Let's be clear: as our brief and our recommendations very clearly state, what we are interested in is the technical information related to diagnosing and repairing vehicles. We are not interested in consumers' habits or other information that might be recorded by the vehicles.

What we are asking for does not jeopardize any of the 135,000 jobs in the automotive manufacturing sector. What it does is protect consumers and give them a choice, in addition to protecting the 492,000 jobs in the secondary market. Obviously, I am referring to all the small mechanical repair shops and body shops in this great country, from coast to coast. That is becoming increasingly important.

Tyler, is there anything you would like to add?

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

Thank you, Mr. Chair.

I would like to welcome all the witnesses and thank them for being here.

Ms. Temper, I was very happy with your testimony. We will be trying to make amendments to Bill C‑59 to improve it as you would like to see.

Because my speaking time is limited, I am going to reserve my questions for the LKQ representatives, Mr. Threadgill and Mr. Willshire.

It is really important to make sure there is real competition in the automotive repair sector, and so I want to thank you for being here and for your testimony. To my knowledge, unfortunately, the committee has still not distributed your brief. I imagine it is being translated and we will be able to get it. The clerk is indicating to me that this is the case.

Mr. Willshire, I invite you to take my six minutes of speaking time to explain your proposals for amending and improving Bill C‑59 to provide for a real right to repair, real competition, and access to information in the automotive sector.

[Dr. Leah Temper]

There's a list of practices. You cannot use offsets to make claims of carbon neutrality. No generic terms or claims to carbon neutrality and net zero are permitted, and and so on.

One interesting example I would like to highlight is the case of Norway, which actually has a specific rule. As you know, Norway is the world leader in the sales of electric vehicles; I believe more than 70% of the cars sold there are electric. Since 2017, I believe, Norway has had a rule that no green or environmental terminology can be used to sell vehicles. A car cannot be described as “green” or “clean”; it doesn't even matter whether it is electric or not. What they say is that, fundamentally, cars are polluting.

This is another really interesting and useful example of what we can learn about how to market highly polluting sectors. There's no need to use environmental terms and green terms to describe them, and they're fundamentally misleading to consumers. We see in the example of Norway that this has not harmed the sale of electric vehicles.

In Canada, we currently have absolutely no guidance for companies on making green claims. The Competition Bureau had some guidance, but it has been archived since 2021. Right now there is no guidance for companies, and, as I mentioned, that has led to a huge surge in greenwashing.

Of course, we would have liked to have seen even more substantial changes to competition policy to address the greatest challenge to the economy in the coming decades, which will be the transition to a green economy. I believe Bill C-59 is a starting point. If possible, Bill C-59 should also highlight the need for complementary regulations and draw from some of the examples I put forward of what other jurisdictions are doing.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

I want to thank all of our witnesses for being here today and for their testimony already.

I want to ask questions of Dr. Leah Temper. I appreciate the joint brief you submitted with the Quebec Environmental Law Centre, particularly on the subject of greenwashing, where Bill C-59 makes some important changes.

I was hoping you might be able to share with this committee what Canada can learn from how other countries have approached this issue. We wouldn't be a first mover in this space and we may be able to take some lessons about how to implement this in Canada from what they have done in other jurisdictions.

[Tyler Blake Threadgill, Vice-President, External Affairs, LKQ Corporation]

Thank you, Derek.

Mr. Chair and members of the committee, I'm Tyler Threadgill, vice-president of external affairs for LKQ in both Canada and the United States. I'm here today to address the pressing issue of the right to repair in the automotive sector, an important matter for Canadian consumers.

While we commend the steps taken in Bill C-59, they fall short of adequately protecting consumers' rights. We firmly believe that a legislative framework for the right to repair is needed to truly safeguard consumer interests.

Voluntary agreements like the Canadian automotive service information standard agreement have proven ineffective amidst the rapid advancements in automotive technology. As technology continues to advance at an unprecedented rate, it's imperative that legislation evolve alongside it to ensure that Canadians' rights and choices remain protected.

We firmly believe that legislation is the solution for restoring competition and preserving consumer choice within the automotive repair and service industry. This legislation should guarantee access to vehicle repair data and repair tools for independent repair shops and aftermarket parts manufacturers. OEMs must be mandated to provide decrypted data and standardized access to wireless or cloud-based repair data, while also refraining from misleading consumers about their repair options.

Additionally, the establishment of a centralized entity to oversee data transmission is essential to maintaining fairness and transparency. Drawing inspiration from the American REPAIR Act, this legislation should address the evolving technological landscape and align with government commitments to innovation and consumer protection. Failure to address these issues through decisive legislative intervention puts Canadian consumers at risk of falling prey to monopolistic practices that stifle competition, increase prices and impede innovation.

In conclusion, we ask this committee to consider our amendments to improve C-59 while recognizing the urgency of this matter and the profound impact that stand-alone legislation can have on protecting consumer rights and fostering a fair and competitive automotive repair industry in Canada.

Thank you for your attention and consideration.

Let us seize this opportunity to empower consumers and ensure a level playing field for Canadians.

We will be happy to take your questions.

[Derek Willshire, Regional Vice-President, Canada and New England, LKQ Corporation]

Thank you, Mr. Chair.

I would like to thank the members of the committee for having us here today.

My name is Derek Willshire and I am the regional vice-president for Canada at LKQ. With me today is my colleague Tyler Blake Threadgill, who is the vice-president of government affairs in the United States.

We are sorry not to be testifying in person, but we are very pleased to present our views on this bill, which is crucial for LKQ. We will focus exclusively on the right to repair and the flaws in the bill. Regarding the amendments, please consult our written brief.

LKQ distributes high quality parts for automotive repairs, whether manufacturers' or other parts, and also offers complete diagnostic and calibration services in Canada and the United States. LKQ processes over 900,000 end-of-life vehicles a year in North America and is the largest vehicle recycler in the world.

In this great country, our company employs 1,175 people at 37 sites. Even so, our team represents only a small fraction of the 492,000 people working in the automotive aftermarket in Canada.

The problem is simple: vehicles are becoming increasingly interconnected and complex, and it has become more difficult for independent shops' to access diagnostic data. Manufacturers' refusal to disclose that data limits consumers' choice and increases their costs. Without concrete action, small businesses will find it hard to maintain vehicles, and this will reduce competition in Canada.

We welcome the government's renewed attention to improving the Competition Act, with Bill C‑59, but major flaws remain and require your attention.

We would like to draw your attention to the importance of improving the definition of "means of diagnosis or repair" to include maintenance and calibration of components. Unlike other legislation, Bill C‑59 does not expressly require manufacturers to provide the data needed for repairs.

As well, exceptions such as protection of trade secrets could prevent access to essential repair information. The limits on the tribunal's authority to order remedies could also exclude major players in the automobile aftermarket.

As a final point, Bill C‑59 makes the right of action available only to individuals, and this limits the effectiveness of enforcement measures. It is crucial that the ability to bring an action be extended to include actions by the commissioner of competition.

Consumers deserve a competitive market that gives them the ability to have their vehicle repaired by the repairer of their choice. While Bill C‑59 recognizes this problem, specific legislation is urgently needed to address it.

I will now give the floor to my colleague, Mr. Threadgill.

Thank you again.

[Dr. Leah Temper, Director, Health and Economic Policy Program, Canadian Association of Physicians for the Environment]

Thank you.

Thank you very much to the Standing Committee on Finance for inviting me to appear today as a witness.

My name is Dr. Leah Temper. I'm the health and economic policy program director at the Canadian Association of Physicians for the Environment. I also hold a Ph.D. in ecological economics, an interdisciplinary field that considers the economic system as a subsystem of the earth's ecosystem.

Today, I'm going to be speaking about greenwashing and clause 236 of Bill C-59. My colleague from the Quebec Environmental Law Center addressed you on Tuesday and outlined four recommendations from a brief we jointly submitted. These include expanding the amendment to include all business interests and entities as well as products; broadening the scope to all environmental claims; and requiring disclosure of the evidence behind any green claims to consumers, as well as disclosure of negative environmental impacts related to products and industries to address cherry-picking.

Julien did a great job, so I would therefore like to take my time today to highlight the urgency and benefits of taking bold and effective action on greenwashing through Bill C-59.

We know that greenwashing is bad for business, that it cheats consumers and that it hinders green innovation, but I'd like to stress how it's bad for all of our health and our shared environment. One example of this is the well-known case of the Volkswagen emissions scandal, which led to the largest environmental fine in Canadian competition history, when it came to public attention that the company was marketing clean diesels that emitted over 40 times more pollution than it claimed.

The company eventually paid out about $40 billion in damages globally, but there's a study in Europe that estimated the excess air pollution emitted as a result of this deception shortened 1,200 lives in Europe by 10 to 20 years each, leading to about 13,000 years of life lost. Customers in Canada were paid out, but the public who was exposed to the toxic diesel fumes and the children who suffered increased respiratory health issues were of course never compensated.

Today, we know that the vast bulk of greenwashing revolves around claims of net zero and carbon neutrality, and these empty words are undermining and derailing the necessary transition to phasing down fossil fuel use. The IPCC clearly said that disinformation from vested interests in highly polluting sectors in Canada is undermining public support for climate change and is obstructing action.

Greenwashing about false solutions to climate change runs the risk of locking us into these false solutions that are neither environmentally clean nor economically viable without ongoing government subsidies. We should learn from a recent report that highlighted how petrochemical companies marketed plastic as recyclable for decades, in order to boost “disposability profits”, when industry insiders knew from the beginning that plastics recycling was uneconomical and was not a viable way to address the plastic waste crisis.

Similarly, oil marketed as net zero is not clean. It of course still emits tailpipe emissions and should never be marketed as environmentally friendly. We know that transport air pollution in Canada remains a major contributor to the over 850,000 children under the age of 14 in Canada who suffer from asthma.

Green claims are also different. They suffer from information asymmetry in a more significant way than other product claims because consumers do not have the tools to verify their truthfulness the same way they can verify the durability or the effectiveness of a product. This highlights the importance of the disclosure requirement we have asked for.

Of even greater concern is what Wren Montgomery, a professor at the Ivey Business School, terms “futurewashing”, which are large, unsubstantiated commitments for the future. Of course, such claims cannot be verified, and they should be considered misleading in almost all circumstances.

She and her colleagues also highlight other features of what they term “greenwashing 3.0”, including how green claims are being used by polluting industries as political strategies for maintaining corporate reputation and social licence and how such messages are being targeted at stakeholders beyond consumers and used to dispute the feasibility of stricter environmental regulations. Greenwashing 3.0 points to the urgency of broadening the testing requirements of section 236 to include all business interests and not only products, and for the need for complementary regulations to those that our trading partners have already put in place.

I will close by saying that CAPE has filed several complaints with the Competition Bureau against fossil fuel interests for deceptive advertising in the last years. However, the process in Canada is exceedingly slow, with an estimated two to three years for a complaint to be resolved. In the meantime, the deceptive ads continue to inundate our airwaves, radios, buses and computer screens. This is, of course, of concern, because the decisions we take today will define our energy systems for decades to come, and because consumer skepticism is setting in whereby soon, any green claim, no matter how genuine, will no longer be believed, seriously undermining consumer confidence. This is why I ask you to strengthen—