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.

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

Thank you, Mr. Chair.

I would like to welcome the three witnesses, whose presentations gave us much to think about.

Mr. Céré, I too wish you a happy 65th birthday. I want to congratulate you on the fullness, in every sense, of your 45 years in the struggle to protect the rights of unemployed men and women. I have the feeling that the historical perspective is too often lost when policy is made, because short-term action is what is wanted.

I certainly understood that you had expectations of the last budget. Bill C‑59 is about implementing that budget. Commitments were made and consultations were held. I recall that when you came to testify before the committee you were enthusiastic about that commitment, but there is nothing about that in the last budget. The last economic statement talks about temporary measures, which, as you said, are to end on September 7, and the pilot project, which will be ending in a few weeks.

You gave a quick listing of the requests that need to be filled if we are to have a good scheme, a scheme that functions. As you said, the economy is a cyclical thing and the crises will return.

Can you repeat what has to be done if we are to be sure this is a good reform?

[Sean Strickland, Executive Director, Canada's Building Trades Unions]

Thank you, Mr. Chairman and committee members.

My name is Sean Strickland, and I serve as the executive director of Canada's Building Trades Unions, the national voice for over 600,000 skilled tradespeople in Canada who belong to 14 international unions and work in more than 60 different trades and occupations.

I am pleased to be here today to talk about the positive impacts that the skilled trades anticipate from the investment tax credits and the substantial benefits to the broader construction industry from the measures in this bill.

I want to be clear with members of the committee that the investment tax credits are a game-changer for all construction workers, union and non-union. We urge Parliament to move forward as quickly as possible. That's because, for the first time, government incentives in the tax code that encourage investment in priority projects are being directly tied to delivering benefits for skilled trades workers. The investment tax credits are a true win-win for skilled trades workers, businesses investing in clean technology and for all Canadians.

Bill C-59 will require that companies that are claiming ITCs and investing in projects involving clean technology, clean hydrogen, clean electricity, nuclear and carbon capture that want to receive the maximum benefit must pay good wages—union wages and benefits—to the skilled trades workers who are building these projects.

The prevailing wage requirement in the investment tax credit is, without a doubt, the best definition of prevailing wage in Canadian labour history. Regardless of whether a skilled trades worker is one of our members or not, they will be paid the robust wages and benefits we've negotiated through multi-employer collective agreements.

This bill is also a monumental win for developing our Canadian skilled trades workforce. The provisions of the investment tax credit require companies to hire apprentices. This is important. Developing the skilled trades workforce for the future requires high-quality, well-paid apprenticeship opportunities. It is critical that companies receive incentives to invest in training of the next generation clean economy workforce, and the 10% apprenticeship requirement is an outstanding measure to help ensure that we're doing what we need to do to build the clean economy workforce of the future.

Moreover, because of the strong prevailing wage requirements, many more Canadian workers will be attracted to the skilled trades to the benefit of them and their families. Beyond benefits to the workforce as another critical reason to advance this bill, there is regulatory certainty. You've heard that from other delegations today. There are tens of billions of dollars in final investment decisions—and I don't say that lightly—awaiting the certainty that the passage of this bill will bring.

From new net-zero petrochemical production facilities in Alberta and carbon sequestration to small modular nuclear projects in Ontario and New Brunswick and hydrogen projects in Atlantic Canada, there are billions of dollars on hold that can start flowing into our economy, including wages into the jeans of Canadian workers.

We know that these measures do work. We've seen it in the United States under the Inflation Reduction Act and the CHIPS act. On behalf of the members of Canada's Building Trades Unions, we have one overriding message to this committee: We can't wait.

To the benefit of Canadian construction workers, our environment and the Canadian economy, we look forward to the passing of this bill. Let's get to work.

Thank you, Mr. Chairman.

[Natasha Knox, Financial Planner, Alaphia Financial Wellness Inc.]

Thank you, Mr. Chair and committee members, for allowing me to speak with you today.

I have four main points I'd like to address that concern planning for people with disabilities that I have encountered in my private practices. I think if these issues were addressed, it would be greatly helpful to people with disabilities and their families. It would be a ray of hope for a more inclusive and supportive future.

The first thing I'd like to talk about is with respect to the inclusion of siblings as successor holders of RDSPs, which is part of Bill C-59. This change, which I am very heartened by, addresses a very real need and concern for parents of children with disabilities. It makes their planning process more streamlined, more flexible, and it gives certainty and comfort around knowing their children's savings will be seamlessly managed when they're gone. This is a major worry for people who have children with disabilities.

However, this measure is still temporary, and it expires at the end of 2026. I believe this excellent measure should actually be made permanent. I would hope that whatever negotiations or mechanisms need to be implemented to make this change permanent can be done.

The second point that I would like to talk about today concerns specified disability savings plans. These are for beneficiaries who have shortened lifespans. Regular RDSPs can be designated as specified disability savings plans when a doctor or a nurse practitioner provides a written opinion that the beneficiary is unlikely to live more than five years. At a really high level, the current provisions allow for a withdrawal of up to $10,000 of the taxable disability assistance payments or the LDAP formula, whichever is greater, without having to repay the grants and bonds.

The issue here is that with older plans that were funded early on, the taxable portion of those plans could be well in excess of $50,000—so $10,000 times five years. With a beneficiary with a significantly decreased life expectancy, this current structure ends up creating estate value, which is not the purpose of these plans. These plans are intended to help the lives of people with disabilities while they're living. What would be more helpful instead would be perhaps a percentage withdrawal, rather than a specific dollar value limit that would allow those people with disabilities, who also have a shortened life expectancy, to properly access their savings, to make their lives easier and more comfortable in their final years.

My third point today concerns inter vivos Henson trusts. It would be helpful if those could regain access to the principal residence tax exemption. The loss of the principal residence exemption for these types of trusts happened in 2016. It has had unintended consequences for people with disabilities, who have a property that they live in in this type of trust that was set up for them prior to 2016. The particular issue here is that the 21-year rule causes a deemed disposition and causes capital gains to be paid on all trust assets. Without the principal residence exemption, these trusts have to pay capital gains based on the increase in the value of the property since 2017. This is unjust since these properties are in fact the principal residence of the person with disabilities living in them. Further, it's problematic, because it imposes hardship on the beneficiary if the trust assets don't have sufficient money to pay the capital gains.

The final piece I will mention today is around expanding access to the disability tax credit itself for people who have a diagnosis of a degenerative illness or an episodic disability. The disability tax credit is the key that unlocks access to lots of programs, including the ability to establish a RDSP, which is the aspect that I personally encounter in my work. When we're talking about RDSPs, the time value of money is significant. The earlier on that a person can start saving, the more meaningful those savings become.

It's a real shame that someone who has a diagnosis of something degenerative in nature like MS, for example, that progresses over time, is unable to start saving. They could get the grants and bonds and all of the sheltered growth on those savings when they first get the diagnosis versus the situation now, which is that they have to wait a number of years for their condition to get bad enough to qualify for the DTC in order to even open up an RDSP.

Recently there were some provisions made, which was a really great step in the right direction for people with type 1 diabetes to automatically qualify for the DTC. What I would love to see is if we could make even more strides in that direction and continue expanding access.

Thank you very much for giving me the opportunity to speak with you today.

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

Thank you, Mr. Chair.

First, I have some more questions I would like to ask Mr. Soucis and Ms. Landry. Bill C‑59 presents a major problem for all the professions they represent. I hope to have time to question them on this subject.

Second, I would not support the idea of a House of Commons committee inviting the provincial premiers to appear, which is an unusual process. However, I would support that idea in the event that the provincial premiers wrote to the committee to ask to appear at a meeting, as in the really unusual case we have seen. In that case, it is the least we could do is to give them a respectful hearing. Four premiers have already made that request: Mr. Moe, Mr. Houston, Ms. Smith and Mr. Higgs. If there are motions proposing to invite them to testify, I will support those motions.

Regarding the premiers who have not asked to appear at the committee, I will not support such motions. Obviously, if the other provincial premiers wrote to the committee, then I would be in favour of having the great pleasure of hearing them. I am sure we can arrange our schedule to have them appear quickly, while continuing our study of Bill C‑59. I think that is possible.

Regarding the present motion, if I am not mistaken, only Mr. Houston of Nova Scotia is named. For that reason, I will not support the present motion. I will only support motions that propose to invite the premiers who have asked to appear at the committee.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I just want to say that I'm very, very disappointed that this motion has been moved, for the following reasons. At the very end of this motion, it basically says that we should be entertaining this motion at the expense of moving forward with Bill C-59 business, which is the fall economic statement. We have listened to six excellent witnesses so far. They have been very clear that they're asking for fast passage of Bill C-59. We heard from industry today, who indicated that it's very important for them to have clear timelines and predictability or else we will be at risk from a competition perspective, from an economic perspective and from a competitive perspective. I'm very disappointed that the Conservatives are moving this forward.

Also, Mr. Chair, just from a technical perspective, the premiers listed in this motion have not written to this committee. Other premiers wrote to this committee, but not the premiers who are listed here. I wanted to point that out.

I'm really glad that Mr. Hallan mentioned OGGO. I happened to be watching some of the commentary on national news about that testimony from the premiers at OGGO. I'll be quoting a couple of them, because I think their summary of what took at place at OGGO after the testimony around the carbon pricing was very accurate.

Andrew Coyne, referring to the testimony of the premiers at OGGO committee, now a couple of weeks ago, said, “What you saw on display...with each of them was [actually a] parade of nonsense. You saw how completely dishonest they were about the costs of the carbon tax and...basically...ignoring the [Canada carbon] rebates that are available, that for 80% of households, as the Parliamentary Budget Officer has found, makes [most Canadians] more than whole. But also, when they were asked for their alternatives, it was just fantasy. It was...maybe we could amend the Paris Accord, or maybe we [can] get China to reduce [their] consumption of coal, or maybe we could get other countries to give [Canada] the credit for the carbon reduction” that our companies are making or the provinces are making “by using our liquefied natural gas rather than claiming the credit themselves.”

In terms of what the provinces would do alternatively, they have no suggestions. Mr. Coyne mentioned his favourite, which has been mentioned a couple of times today in other debates. When Premier Scott Moe was asked what he would do, he said he looked at the alternatives, but all of them “cost more than the carbon price”.

Chantal Hébert said that the Premier of Alberta had mentioned that the carbon tax is immoral and inhumane, but then in her budget that was unveiled just a few days before her testimony, she raised the tax on gas in her own province, so it seems like the price on pollution or carbon tax is immoral and inhumane because it's federal, but when the Province of Alberta raises the price on gas, it is not inhumane and immoral.

It is ridiculous. This is a colossal waste of time. This is bad strategy. It is stopping us from continuing to move expeditiously on Bill C-59, which is what we need to do right now.

I will not be voting in favour of this motion.

Thank you, Mr. Chair.

[Don Davies, NDP, Vancouver Kingsway, BC]

My second confession is that I do remember 1971, but it's very hazy, very hazy.

Mr. Beaulieu, clause 236 of Bill C‑59 adds a new provision, as you've pointed out, to the deceptive marketing provisions of the Competition Act to help address certain types of false or misleading environmental claims. It specifies that claims about a product's benefit for protecting the environment or mitigating the environmental and ecological effects of climate change must be based on an adequate and proper test, and that the burden of proof would fall on the person making the representation, thereby making it a type of reverse-onus provision. However, Canada's commissioner of competition, Matthew Boswell, in a letter to this committee in March, said this:

The reality is that a significant portion of the greenwashing complaints the Bureau receives do not involve claims about products, but rather more general or forward-looking environmental claims about a business or brand [such as] being “net-zero”...by 2030.... These claims are not reverse onus, and it can be challenging for the Bureau to prove that they are false or misleading in a material respect.

Do you agree that more general or forward-looking environmental claims about a business or brand should also be subject to the reverse-onus test?

[Don Davies, NDP, Vancouver Kingsway, BC]

Bill C-59 also eliminates the requirement that credit unions derive no more than 10% of their revenue from sources other than certain specified sources, such as interest income from lending activities.

Mr. Hatch, how does the removal of the revenue test benefit credit unions and their members?

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Hatch, I will declare my bias from the outset. I have been a proud member of the credit union movement for over 30 years. I will situate myself there.

Bill C-59 amends the Canadian Payments Act to, among other things, expand membership in the Canadian payments association to credit union locals that are members of a credit union central.

Could you outline how this measure will impact credit unions and their members?

[Julien Beaulieu]

Perfect.

The officials also talked about the fact that certain types of claims were not covered by the present version of clause 236.

Clause 236 requires that when a business makes certain environmental claims it do tests. For example, if a business wants to say that an apple is carbon neutral, it has to do tests. People at the grocery store will then be able to rely on the fact that the business did a test to prove that the apple was carbon neutral.

However, the officials told us that if the business says the apple is green, that is, that it is environmentally friendly, regardless of what colour it is, or if it says that the apple is sustainable, there are no standards in the industry that regulate that claim. There is no standard that regulates the use of words like "green" or "sustainable". In fact, the commissioner of competition said, in the letter that was sent to committee members, that generic representations, like ones that use words like "green", "responsible", "sustainable", and other catch-all words, are not precise enough for people to know what they mean. Clause 236 in its present version would not apply to representations of that nature.

We believe this is a huge problem and that is why we are proposing to compel the disclosure of the tests on which environmental claims, including generic claims, are based. In practice, this means that if it says at the grocery store that an apple is responsible or sustainable, the business will have to explain how it arrived at that conclusion, by way of a label, a QR code or a link to a website. It must therefore explain how it defines the word "green" or the word "sustainable". If it cites an industry standard, it will have to name it.

That approach would therefore give consumers access to information and they would be able to understand what someone is trying to tell them when they say something is "green" or "sustainable" at the grocery store, for example. Requiring disclosure of tests or of the proof to support environmental claims would very significantly improve Bill C-59.

Essentially, what I would like you to take from my presentation is that clause 236 is a step in the right direction, but we want to make it genuinely possible for consumers to recognize greenwashing and have a good understanding of what they are being told. Businesses have to be given a clear regulatory framework. The amendments I proposed in my presentation would be essential to achieving that objective.

I think everyone here is in favour of environmental transparency, regardless of how extensive the environmental policies someone wants to propose might be. No one opposes transparency and truth, and that is essentially what we are asking for by proposing these amendments.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all the witnesses for being with us today.

I particularly want to thank you for asking our committee to move with haste to implement Bill C-59. I think it's a very important message. I think we are trying to move as quickly as we can.

Following that theme, my first question is for Mr. Cameron.

The U.S. Inflation Reduction Act was passed into law within two months of the introduction of the bill. Our bill has been in our House for twice as long.

How important is the quick passage of this bill in your decarbonization efforts as well as investments, and how important is it for Canada to remain competitive in the global market?

[Mark Cameron, Vice President, Government Relations and Public Policy, Pathways Alliance]

Thank you, Mr. Chairman and honourable members.

I am pleased to be speaking to you today on behalf of Pathways Alliance.

Pathways Alliance represents Canada's six largest oil sands producers: Canadian Natural, Cenovus, ConocoPhillips Canada, Imperial, MEG Energy and Suncor. Together, our six companies operate 95% of Canada's oil sands production. The oil sands sector accounts for about 3% of Canada's total GDP and supports 255,000 direct and indirect jobs. Last year, the sector contributed over $20 billion in taxes and royalties to all levels of government in Canada.

We are proud of our contribution to the Canadian economy, but we also acknowledge that we are significant greenhouse gas emitters. That's why, in 2021, our six companies came together to make a joint commitment to achieve net zero in our operations by 2050. Our industry has made significant progress in reducing emissions already. We reduced our emissions intensity, or emissions per barrel, by 23% between 2009 and 2022.

To go further in reducing emissions in order to achieve the kinds of ambitious reduction goals Canada has set for 2030 and the ultimate goal of net zero by 2050, we will need not simply incremental improvements but also step changes in new technology. That's why our six companies are not only committed to long-term emissions reduction but also collaborating on what would be one of the world's largest carbon capture and storage networks in northern Alberta. The Pathways project would involve installing carbon capture units on 14 different oil sands projects, building a 400-kilometre-long pipeline from Fort McMurray to south of Cold Lake, and storing the carbon dioxide from those 14 sites deep underground in saline aquifers.

Carbon capture is the only currently available technology to reduce emissions from oil sands operations in absolute terms between now and 2030. Other technologies, whether small modular reactors, increased use of solvents in oil sands extraction or use of hydrogen for steam generation, may be possible in the longer term, but they are not commercially available today.

Unfortunately, carbon capture is extremely expensive and is, frankly, not economical without partnerships between industry and the federal and provincial governments. That is why we are strong supporters of the concept of the investment tax credits for CCS and other clean technologies. We were pleased when the government first announced their intent to move forward with the ITCs in budget 2021 and have followed this proposal closely, until it was ultimately tabled as part of Bill C-59.

We would strongly urge the committee and the House to pass this legislation this spring and allow CCS projects to start not only in our sector but also in other sectors across Canada. However, we need to be clear that the proposed legislation still presents significant challenges.

We have proposed a number of important changes, which we have submitted both to Finance Canada and to this committee. I can't go into all of the issues now, but let me mention a few of the matters that we see as being most critical.

First, in our view, the rate reduction after 2030, effectively reducing the ITCs in half, is too steep and too fast. There are significant schedule risks in being able to get a 400-kilometre-long pipeline and 14 capture projects costing over $16 billion from the drawing board to in-service within six years. If there are delays for any reason—regulatory or legal challenges, labour shortages, supply chain challenges—companies may miss the 2030 deadline and therefore lose half of the available ITC. At a minimum, we think the projects that are under construction before 2030 should be able to receive the full ITC rate until the project is complete.

Second, Bill C-59 states that the ITCs would only become available when equipment is acquired, not when expenses are incurred. Again, given supply chain and other challenges, we think this is a difficult requirement. Companies cannot make hundreds of millions of dollars in expenditure decisions without knowing when those expenditures will be eligible for the ITC and whether they will get the full rate at that time.

Third, we are concerned about the provisions that allow ITCs to be clawed back if the ownership of carbon capture infrastructure changes hands, even if the infrastructure is still being used for its intended purposes. This could pose challenges if oil sands facilities change ownership, or even if we were to bring in indigenous partners as equity owners of CCS infrastructure. We think it should be clear that ITCs will not be clawed back as long as CCS infrastructure is still used for carbon capture.

There are a number of other important issues that we have raised, which are outlined more fully in our brief, such as the definition of “refurbishment expenses” versus “development expenses” and the role of the Minister of Natural Resources versus the Minister of National Revenue in looking at future clawbacks and several other important issues.

I want to make clear that we believe this legislation should still move forward, even if we can't address these issues right now. We believe that, for the ITCs to achieve their intended effect, we will have to deal with these questions, either now or in the future, before projects are able to achieve final investment decisions.

With that, I thank you for your time and look forward to hearing your questions.

[Julien Beaulieu]

Right. I'm sorry.

As I was saying, paragraph 236(1)(b.1) of Bill C‑59 proposes to tackle greenwashing by requiring that businesses that make representations regarding "a product's benefits for protecting the environment or mitigating the environmental and ecological effects of climate change" do adequate tests prior to making their representation. In the English version of the bill, the word "épreuve" is translated as "test". In other words, businesses that voluntarily decide to advertise their good environmental performance are to be required to have proof of what they are asserting.

While this provision is a very important step forward, it has four major limitations and it will miss its target if it is not improved.

First, paragraph 236(1)(b.1) would apply only to representations regarding products, so it excludes representations regarding a brand, an activity or an organization. However, as the Commissioner of Competition acknowledged in a letter sent to all members of the committee, many greenwashing cases, such as those regarding the carbon neutrality targets adopted by businesses, do not relate to specific products. We are therefore recommending that the scope of paragraph 236(1)(b.1) be extended to cover all environmental representations by businesses, regardless of their subject.

Second, paragraph 236(1)(b.1) does not require that businesses disclose the tests on which their representations are based unless there is a prosecution in the courts. However, without disclosure, it will be difficult for consumers to quickly ascertain, for example by reading a grocery product's packaging, whether a business really has proof of what it is asserting or what it means when it says a product is "green" or "sustainable". Other countries or states, like France and California, already impose disclosure obligations on businesses that make environmental representations. We suggest that Canada adopt the same type of obligation.

Third, paragraph 236(1)(b.1) relates only to representations regarding "protecting the environment or mitigating the environmental and ecological effects of climate change". That wording, which we believe to be too restrictive, could exempt some environmental representations from paragraph 236(1)(b.1), like representations relating to "restoring", as opposed to "protecting", the environment, or to mitigating the "causes", as opposed to "effects", of climate change. To correct the situation, we propose that the scope of paragraph 236(1)(b.1) be extended so that it is more inclusive in order to cover all representations about environmental performance.

Fourth, paragraph 236(1)(b.1) does not specifically prohibit cherry picking, which is when a business tries to boast about the positive aspects of its environmental performance without also disclosing its less glowing aspects. For example, a business might advertise its reductions of greenhouse gas emissions but fail to point out that they were achieved by destroying ecosystems. Something good is being done on the one hand, but on the other hand, nothing is said about what is less positive.

It should be noted that businesses are not obliged to advertise their environmental performance. However, the decision to do so comes with a duty to provide a complete picture of the situation and not choose the facts that put us in a good light while concealing those that make us look bad. We are therefore proposing that paragraph 236(1)(b.1) be amended to expressly prohibit cherry picking.

In conclusion, I will say that we believe these four proposals would definitely make Bill C-59 more enforceable and better able to achieve its objectives in relation to combatting greenwashing, a business practice that we are seeing or that could arise in all sectors of the Canadian economy. Sometimes it is difficult to detect this practice. However, we believe that Parliament's jurisdiction in this regard is clear and settled.

Thank you for your attention.

[Julien Beaulieu, Competition Law Researcher, Québec Environmental Law Centre]

Hello everyone.

Thank you for having me here at the committee. I am very grateful.

My remarks today will address the topic of greenwashing, and more specifically clause 236 of Bill C-59.

Those who are not familiar with greenwashing should know that it happens when an organization makes false or misleading representations about the environmental characteristics of a product, a brand, an activity, or the organization itself. Greenwashing can involve several environmental characteristics, such as recyclability, greenhouse gas emissions, and impacts on biodiversity.

We see several forms of greenwashing in the market across Canada. They include flatly false representations, vague or generic representations such as the use of fuzzy words like "green" and "sustainable" that no one really knows the meaning of, cherry picking by making selective representations that highlight positive environmental characteristics without mentioning their negative aspects, representations that are not supported by sufficient evidence, and prospective representations that are not based on a concrete action plan.

This greenwashing has harmful consequences for the public and the Canadian economy. For example, it prevents consumers from making informed choices, it gives the offending businesses an unfair competitive advantage, and it denies the real environmental leaders recognition. Greenwashing also erodes consumer confidence and reduces incentives for businesses to innovate so they can offer products that are less harmful for the environment.

Paragraph 236(1)(b.1) of Bill C-59 proposes to tackle greenwashing by requiring that businesses that make representations regarding "a product's benefits for...

[Michael Hatch, Vice-President, Government Relations, Canadian Credit Union Association]

Thank you so much, Mr. Chair and honourable members, for inviting me to speak at this committee today.

My name is Michael Hatch. I am the vice president of government relations with the Canadian Credit Union Association.

Our members manage assets worth almost $600 billion, and we serve nearly 11 million Canadians. There are over 2,000 credit union locations. We are, as many of you will know, the only financial institution with a physical presence in nearly 400 communities across Canada, many of which are represented here today.

Credit unions and regional centrals employ over 30,000 Canadians and provide full-service financial services while being fully Canadian owned.

We are pleased to appear today to comment on Bill C-59, which contains many measures of importance to our sector and to Canadians.

First of all, we were extremely pleased to see in last year's budget an update to the definition of “credit union” in the Income Tax Act. The current definition—too often enforced by CRA—dates from the early 1970s, so that makes it older than a lot of people in this room. It's no longer remotely relevant for today's world and has had negative tax consequences for co-operatively owned financial institutions in recent years. Last year's budget proposed language that will solve this problem, and we urge Parliament to pass this as soon as possible.

We were also pleased to see in last year's budget bill expanded membership options for credit unions in Payments Canada.

Furthermore, this bill also contains significant reforms to competition law in Canada, and I gather we'll hear more from my colleagues on that. These are largely necessary, should enhance competition and consumer protection and are part of a broader global shift towards enhanced competition law. However, in our sector, there is an important nuance that must be pointed out.

Credit unions, as many of you will know, provide some of the only real competition that exists in financial services in this country. Bill C-59 contains, among other things, significant reforms to the merger review process. Normally, mergers and consolidation are associated with decreased competition. In our sector, the opposite is true, and I can't underline this enough. Credit unions have been consolidating for decades, and this trend will continue.

Far from reducing competition, consolidation has allowed the sector to continue to provide the only competition that exists for the large banks. The recent acquisition of HSBC by RBC will negatively impact the competitive landscape for financial services in Canada, as these are two massive entities. The partnership of two or more small co-operatively owned financial institutions that come together to share costs and increase scale allows them to continue competing with the RBCs and HSBCs of this world. It is our hope, therefore, that a more robust merger review process will not hinder the further consolidation that will be required in the years to come in the credit union sector.

We urge members of this committee and all parliamentarians to pursue a legislative regime that allows credit union consolidation to continue, as this is consistent with enhanced competition in Canadian financial services. As federal policy-makers, the members on this committee have a key role to play in ensuring a regulatory and legislative environment that fosters the competition the Canadian financial services sector so desperately needs.

Far too often, policy coming out of Ottawa towards our sector takes into account the needs, scale and structure of the large banks. This has had very negative impacts on the credit union sector over the years. By working towards a federal legislative regime that allows credit unions to grow and thrive, we can be part of the solution to the ongoing cost of living pressures faced by millions of Canadians. Passing this bill at the earliest opportunity will help a great deal in this.

Thank you so much again for your attention.

I look forward to the testimony of my fellow panellists and to your questions, Mr. Chair.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Pentland, the Department of the Environment Act presently identifies Environment and Climate Change Canada as the lead federal department on all matters relating to water. It is not assigned to any other department. Bill C-59 enacts the Canada water agency act which would establish the Canada water agency as a stand-alone entity on this matter.

In what ways would the Canada water agency be more effective as the lead on fresh water in comparison to the current situation?