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.

[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?

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

Thank you, Mr. Chair.

First, I find it unfortunate that we have spent the last hour debating what the House is considering today instead of asking questions about extremely important topics relating to Bill C-59.

My question is for Mr. Soucis.

Thank you for being with us today, Mr. Soucis and Ms. Landry.

Mr. Soucis, under clause 137 of Bill C‑59, the GST would be eliminated for psychotherapy and counselling therapy services.

You said that in Quebec, because of the professional orders, there is a lack of clarity and a fear that this provision would not apply in Quebec.

The Canada Revenue Agency has published notice 335 which provides that this will apply if a person has the qualifications equivalent to those that would enable them to practise in another province. However, it makes no sense for every professional in Quebec to have to go to New Brunswick to have their qualifications recognized.

You are suggesting that the committee adopt an amendment providing that the spirit of the section should be preserved and ensuring that the GST not apply to those services in Quebec unless what the Canada Revenue Agency is proposing has been done.

Is that correct?

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

Thank you.

In your response to Mr. Morantz and in your opening, you mentioned the need for a stand-alone money-laundering offence and the reason why. Obviously, in the legislation that we're talking about today, Bill C-59, there are a number of changes made to the money-laundering offence, particularly around recklessness, as well as layering on changes that were brought in in the budget last year on structuring transactions.

I was hoping you might be able to speak to the impact this may be able to have on making it more effective in tackling money laundering.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks, Chair.

I apologize to our witnesses. This is the kind of motion that is taking us away from the important business and the wonderful witnesses we have here today. It's a shame that it's being brought forward at this time. This is the kind of thing that could be done in committee business or something like that, when we don't have witnesses sitting in front of us, and people at home watching and waiting to hear what our witnesses have to say.

I will attempt to be very concise in responding to what Mr. Hallan has proposed.

The first concern I have with this motion is that it calls on the Prime Minister to do something. This motion is, first of all, non-binding, so no matter how the committee decides to deal with this particular motion, the Prime Minister will make the decision that he believes is appropriate.

The second point I would make is, if you read the motion, one of the lines—after a series of lines that, I would argue, misrepresent what carbon pricing is about—reads, “That this meeting be publicly televised and held within five weeks of this motion being adopted.”

I want to bring to the attention of members and those watching that this committee is just starting conversations with witnesses about Bill C-59, which is the fall economic statement. Presumably, there will be a budget brought to this committee. We have a packed agenda. We have already extended the sittings of this committee to accommodate that packed agenda. This would inevitably have the effect, if passed and brought to this committee—if that's what I understand this to mean—of delaying the work of this committee.

The third thing I would say is that if the premiers of the provinces want to meet or speak with the Prime Minister, they can do that. They do that all the time. They have phone conversations. They have meetings in person. To the folks watching at home, if you wanted to, you could simply go to the Prime Minister's Instagram or Twitter feed and check it out. Those conversations happen all the time.

I'm not sure why the finance committee would get involved in micromanaging the Prime Minister's and premiers' schedules. They are capable adults who can get together to meet and talk when they need to, and they do it all the time in various forms.

The other thing I would say is what the Prime Minister has said from the very beginning, and this has been the case for years.... In fact, I was a member of the provincial parliament for Ontario when the federal government was in the process of bringing in carbon pricing. At the time, the Government of Ontario, under the Liberal government of the time, had put in place a cap-and-trade system, which the subsequent and current Ford Conservative government decided to cancel.

The way the carbon pricing works federally is it only has an effect in those provinces that don't have their own approaches to fighting climate change. What's happened here is, since the beginning of carbon pricing, when the Prime Minister brought it in, every province has had the option of doing as it sees fit to fight climate change. That would allow them to not have the carbon pricing plan that is in place today. If they object to that, they have the option of bringing in other forms of carbon pricing. They've chosen not to do that.

We heard testimony from Premier Moe at OGGO, one of our other committees. He basically said they looked at other schemes to fight climate change, and the current federal carbon pricing was actually the least costly.

I suppose the Conservatives' opposition to carbon pricing and their desire to have premiers meet with the Prime Minister is a sign that they want, number one, to take us away from the important business of this committee in reviewing the legislation that the people want and that these witnesses have come to speak to.

I would point out that this legislation has a tremendous number of important things in place for businesses and for workers. I'm sure we will hear that from our witnesses throughout the day today. These types of motions that have been put forward today are meant as delay tactics to take us away from that business.

The second thing I would say is that the—

[Félix-David Soucis, Psychoeducator, Grouping of Professional Mental Health Orders of Quebec]

Good morning, Mr. Chair and members of the committee.

Thank you for inviting us to appear before you on behalf of the Grouping of Professional Mental Health Orders of Québec.

My name is Félix-David Soucis and I am the president of the Ordre des psychoéducateurs et psychoéducatrices of Quebec. With me is Josée Landry, president of the Ordre des conseillers et conseillères d'orientation du Québec. We also represent our colleagues in the Ordre professionnel des sexologues du Québec, the Ordre professionnel des criminologues du Québec, and the Ordre des travailleurs sociaux et des thérapeutes conjugaux et familiaux du Québec.

The primary mission of Quebec's professional orders is to protect the public. They carry out that mission through a range of mechanisms that include professional inspection of their members, continuing education, and their respective syndics' handling of complaints from the public. In this way, the orders ensure the quality and rigour of their members' practice.

The orders represented by our grouping have a total membership of a little over 11,000 professionals who offer mental health services and care to the Quebec public and who are affected by this bill. Almost 2,500 of those professionals are in private practice. As is the case for other professionals in Quebec, they are currently required to charge their clients provincial and federal taxes. This interferes with access to services by people who are experiencing rising levels of need, particularly since the COVID-19 pandemic. During that period, in fact, the Quebec government formally designated professions in the field of mental health and human relations as essential because of the necessary help they provide the public in relation to psychosocial support and mental health care.

We are pleased with the measures announced in clause 137 of Bill C-59 that would eliminate the GST/HST for psychotherapy and counselling services. We believe that this measure will offer Canadians better access to mental health services and care. In Quebec, our professions have been included in the Professional Code of Quebec since 2012 as professions in the field of mental health and human relations. The legislature has thus reserved to our professions the practice of professional activities involving a high risk of harm to the public.

While some of these professionals hold permits as psychotherapists, the others hold permits issued to them by their professional order. They work in mental health and counselling in their respective field of practice, which is clearly defined in legislation, the Professional Code of Quebec. The care and services they provide, whether as psychoeducators, guidance counsellors, sexologists, criminologists or marriage and family therapists, undeniably fall within the field of mental health and apply to personal, professional and educational situations or to family- or couple-related situations.

If a person is facing difficulties relating to entry into the job market, a guidance counsellor will be able to mobilize the person's resources to enable them to achieve their career plans.

If an adolescent is having difficulties associated with going back home after time spent in a rehabilitation centre as a result of committing offences, a criminologist will be able to support them in rebuilding their social skills.

If a member of a family is in difficulty because of a mental health diagnosis, a psychoeducator will mobilize the adaptive capabilities of the entire family so the person is able to cope again.

If a person is questioning their gender identity, a sexologist will be able to support them in their personal journey.

If a couple is having relationship difficulties because of a conflict, a marriage and family therapist will offer them support to improve their methods of communication in order to foster a better relationship.

As you can see, the professionals who belong to these professions that are governed by the Professional Code of Quebec, and therefore by a professional order, are authorized to provide counselling therapy with the goal of supporting the public's mental health needs, in compliance with best practices in their field of practice.

However, the Canada Revenue Agency's notice 335 concerning the exemption for counselling therapy states that the professional services provided by a person could be exempted if the person "has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province."

Under this interpretation of the bill, it would be confusing and time-consuming, for all of the authorities that participate in such a process, for a professional to have to ask another Canadian authority to verify a qualification when it has already been attested to by the permit that authorizes the person to practise their profession. In its present form, the bill would require the members of Quebec's professional orders to verify with a regulatory agency that oversees the profession of counselling therapy in another province, as is the case in New Brunswick, Nova Scotia and Prince Edward Island, that they have qualifications equivalent to the qualifications of the professionals in the province in question.

We would point out that under the Professional Code, our professional orders have a mandate to be the regulatory and supervisory body for their profession in Quebec and that they are capable of doing that.

I would like to conclude by emphasizing that Quebec has a variety of professionals who are different from those in the other provinces. Quebeckers should not be penalized by having to pay taxes because of that difference. For this reason, we believe that this bill must take into account the unique features of Quebec's system of professions. It needs to be amended so that the services offered by members of Quebec's professional orders are exempted on the same basis as the services offered elsewhere in Canada without professionals having to prove their qualifications to authorities in another province.

Thank you for your attention and we are available to anything further having to do with this bill.

My colleague and I are now prepared to answer your questions.

[Jeffrey Simser, Barrister and Solicitor, As an Individual]

Good morning. Thank you so much for inviting me to come and share my expertise with the committee.

For those of you who don't know me, I'm now retired from the Ministry of the Attorney General after over 30 years, and I was Canada's first director of civil asset forfeiture.

I'm here to talk about subdivision A of Bill C-59, which is proposed section 278 and onward, and specifically changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Criminal Code. However, before I do, I want to give you a bit of brief context and history.

A company, Silver International, operated out of unit 303 in a nondescript building in Richmond, B.C., called the Pacific Business Centre. When a search warrant was executed on that unit, police found two safes with over $2 million in bundled cash, mostly $20 bills, as well as ledgers chronicling the daily in and out transactions of the enterprise. Silver's video security system was also seized, along with an archive of the previous two weeks, and that surveillance provided investigators with a very clear picture of what was going on at Silver International.

Legitimate customers went in to access the money service business, or MSB, of Silver, but at that time, it was not properly registered as an MSB. It registered later with FINTRAC, after the warrants were executed, something that, thankfully, wouldn't happen now in 2024. The legitimate clients went in and did the standard paperwork, say, to exchange currency. They showed ID, confirmed the exchange rate, counted the money carefully and got a receipt. It's a process that might take 15 minutes.

The video archive, however, showed a second group of customers who stayed less than two minutes each, simply dropping a suitcase off in a secure area and leaving immediately, with no receipts and no counting. After those clients left, Silver staff then opened and emptied the suitcase onto the floor, arraying $10,000 bricks of $20 bills for counting and sorting.

The prosecution against Silver and others collapsed on November 22, 2018, when the Crown entered a stay of proceedings. As with most criminal prosecutions that fail, no public reason was provided. The Crown simply told the court there was no reasonable prospect of conviction, but there was clearly a structural problem with this case. In Canada, prosecutors have a constitutionally mandated duty of disclosure to the defence, and the quantum of that disclosure in a case like this is massive. It's almost hard to conceive of how much there is. There were upward of 300 law enforcement personnel working on that project at any given time.

The disclosure needs to be managed very carefully, both by the police and particularly by the Crown. For example, if there's information that might identify a confidential informant, or CI, it must be carefully redacted. Some of that information will be easy to redact, such as the notebook of the CI's handler, but sometimes it's very difficult. For example, there might be a passing reference in a police officer's notebook.

The need to protect confidential informants was affirmed on September 18, 2020, when shots rang out in the parking lot of an elegant but unassuming Japanese restaurant in Garden City, a neighbourhood in Richmond. The principal of Silver was murdered at that scene. Dead men tell no tales.

The Cullen commission determined that Silver was laundering at least $220 million a year, and it was a small part of a larger money-laundering ecosystem in British Columbia. There is one redemptive glimmer in this case. A civil forfeiture case is still ongoing, so even though all the criminal charges have gone, there's still some justice being had in B.C.

I'll move on to my two comments.

Bill C-59 once again tinkers with the money-laundering offence provisions of section 462.31. I take no issue with this, but the amendments, to me, elide a more fundamental problem. There is no stand-alone money-laundering offence. The code still requires prosecutors to link the laundering activity to a specific predicate crime.

As far as we know, Silver International was a pure third party money-laundering service. It was a professional money launderer. Had the prosecution not failed, I'm absolutely certain that defence lawyers would have built a defence around the operators' lack of direct connection to the drug trade. I'm sure they would have argued that they were simply helping business people evade currency controls from the People's Republic of China, which is not a crime in Canada.

My second point is that civil forfeiture law is critical to the fight against money laundering. We have nine jurisdictions—provinces and territories—in Canada with a civil forfeiture law, and any plan, either legislative or operational, to address money laundering must include civil forfeiture. Provinces and territories need to be encouraged to build and strengthen their capacity in this regard.

I will observe to the committee that Canada's financial intelligence unit, FINTRAC, will not provide disclosures directly to a civil forfeiture unit. If a disclosure comes to the unit through the police, FINTRAC is perfectly fine with it being used, but it will not engage directly. The reason for this has never been clear to me, but I might urge this committee to consider an amendment to the Proceeds of Crime and Terrorist Financing Act to mandate and enable such information sharing.

Thank you.

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 134 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference on Monday, March 18, 2024, and the motion adopted on Monday, December 11, 2023, the committee is meeting to discuss Bill C-59, 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.

Today's meeting is taking place in a hybrid format. Pursuant to Standing Order 15.1, members are attending in person in the room and remotely using the Zoom application.

I would like to make a few comments for the benefit of the members. Although this room is equipped with a powerful audio system, feedback events can occur. These can be extremely harmful to the interpreters and cause serious injuries. The most common cause of sound feedback is an earpiece worn too close to a microphone. We therefore ask all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on.

In order to prevent incidents and safeguard the hearing health of our interpreters, I invite the participants to ensure they speak into the microphone into which their headset is plugged in and to avoid manipulating the earbuds by placing them on the table away from the microphone when they are not in use.

All comments should be addressed through the chair.

For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

I believe, Clerk, that all virtual witnesses have been tested and everything is fine. They're ready to go.

With us today, we have, as an individual, Mr. Jeffrey Simser, who is a barrister and solicitor.

Welcome, Mr. Simser.

From the Forum for Leadership on Water, we have Ralph Pentland, a member of that forum.

From the Regroupement d'ordres professionnels en santé mentale du Québec, we have Monsieur Félix-David Soucis, who is a psychoeducator, and Madam Josée Landry, who is a guidance counsellor.

Each of you now will have up to five minutes to make some opening remarks before we get into the members' questions.

We'll start with Mr. Simser, please.

Carbon Pricing

[Iqra Khalid, Liberal, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I have to say that we can use all the buzzwords that we want in the world, “spike the hike” or “axe the tax” or whatever fancy words that we can come up with, but that does not lead to common sense. In fact, I am really thinking about former prime minister Brian Mulroney today. He actually was a common-sense Conservative who wanted to fight climate change. He did what was necessary and that is what we need to do today: what is necessary.

I realize that no amount of legislative action or policy is going to eliminate the hot air coming from those Conservative benches, but we do need to take action on what climate change means to Canadians. We know that we need to fight climate change. We need to better protect our communities.

You, yourself, Mr. Speaker, in your community, would have felt and understood the realities of what climate change really is and know the importance of acting now.

I am proud to be a part of a government that is working to fight climate change. We are going to do that with our pollution pricing system. That plan is working. The reality is that we are putting a price on pollution. It is the lowest-cost way to reduce pollution causing climate change. As the member opposite is aware, our system is revenue-neutral. It is well established that the cost to Canadians and the Canadian economy to achieve our emissions reduction goals by other means would be far greater.

As I alluded to earlier, while this system allows us to effectively reduce our emissions, it also makes life more affordable for Canadians by ensuring that they are receiving more money back into their pockets than they paid. Every three months we are delivering hundreds of dollars back to families through the Canada carbon rebate, which gives eight out of 10 families more back than they paid, while ensuring that big polluters are paying their fair share.

In provinces where the federal fuel charge applies, a family of four will receive up to $1,800 in Canada carbon rebate amounts for the 2024-25 fiscal year. Residents of these provinces will receive their first of four quarterly Canada carbon rebate payments starting next month in April.

Our government also understands that Canadians who live in rural areas face unique challenges by having to travel longer distances for school, work, groceries, etc. That is why we are proposing, in Bill C-59, to double the rural top-up to 20% of the base rebate amount in recognition of their higher energy needs and more limited access to cleaner transportation options.

In addition, our government is continuing to implement various financial support initiatives for Canadian households. This includes support for home retrofits, energy-efficient heat pumps and electric vehicles.

Doing nothing to fight climate change is simply not an option anymore. The price to pay for inaction would be way too high and that is why we are acting. Young people in our communities tell us how they want us to continue to invest, to continue to make sure that we are fighting climate change and to make sure that all of us have an opportunity to live in a safe society and a clean society in the future.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morrice.

We want to thank Minister Freeland and Deputy Minister Forbes for coming before our committee for Bill C-59 and for the main estimates. We appreciate your time and your answers to the many questions that were posed here today.

We'll allow the minister to depart. Thank you very much.

I see that MP Blaikie's hand is up, and then we'll go to MP Lawrence and MP Ste-Marie.