Finance Committee on May 6th, 2014

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

We're not talking here about the payment of money but rather tax exemptions which lower the tax paid in Canada. Then there's a reconciliation with the United States that doesn't automatically result in U.S. taxes.

[Scott Brison, Liberal, Kings—Hants, NS]

You got an exemption for Canadian banks on the reported side. Why didn't you get an exemption for Canadian citizens on these registered plans?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

We're talking, here, about U.S. citizens. We do have an exemption for non-American citizens.

[Scott Brison, Liberal, Kings—Hants, NS]

We're talking Canadian-American dual citizens, but we're also talking about Canadian programs—RDSPs, RESPs, and other registered programs—which Canadian taxpayer-funded grants benefit their children, or benefit their family members. Do you think it's appropriate that that money go to the U.S. treasury?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

The U.S. regulations apply to the global income of U.S. citizens. That's not our rule; that's their rule.

[Scott Brison, Liberal, Kings—Hants, NS]

In your opening remarks you said that Canada is leading the G-7 in terms of growth. I'm not sure whether you have read last week's Economist, but it said that Mr. Harper can no longer boast that Canada's leading the G-7 pack. The IMF projects growth will be 2.3% behind the U.S. and the U.K., and that Canada ranks fifth in the G-7 in job creation since 2008, ahead of only Italy and the U.S.

Our job growth in Canada has stalled since 2009 in terms of youth, unemployment, and long-term unemployment. Our numbers are significantly worse than pre-recession. Do you believe we need a real job strategy to address this, or are you going to just continue the same approach that you've been following?

[The Chair, Conservative, James Rajotte]

A brief response, Minister, please.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

We've created some 1.1 million jobs. I think you're being fairly selective in your numbers. We are among the best in the developed world. Some countries that perform more poorly have bounced back a little more quickly. That tends to happen. But more recently, our record is an excellent one, and the vast majority of the jobs are permanent jobs, and they're private sector jobs.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Brison.

We'll go to Mr. Van Kesteren, please, for seven minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair.

Thank you, Minister, for appearing here before us again today.

Sir, in my neck of the woods, Chatham-Kent—Essex, soon to be Chatham-Kent—Leamington, of course, we are deeply involved in the auto industry, and it's an important part of our industry. As long as I've been on this committee and the industry, science and technology committee, when we speak to the merits of the auto industry, one of the problems and one of the solutions they look for is harmonization. Given that we trade with our largest trading partner and that we build so many of their cars, the lack of harmonization is something that always causes problems in that industry.

I refer now to the Motor Vehicle Safety Act, which is part of this budget implementation. I'm wondering if you could maybe just elaborate on that, just tell us about that and tell us why that's important. What will that do to help the industry and Canadians in general?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Yes, thank you for the question. Canada and the U.S., as we know, have a common marketplace. The vehicles that Canadians and Americans drive are pretty much the same, except for some minor differences. Differences in regulation, therefore, can create cost increases for Canadian consumers due to our smaller market. That's why our government has been moving forward with the United States to create a more competitive North American marketplace that will help increase trade, competitiveness, and consumer pricing.

Our changes to the Motor Vehicle Safety Act follow through on our commitment made in the economic action plan 2014, and the changes in the bill will allow the importation of vehicles and equipment where it's deemed that the U.S. safety standard achieves the safety outcome that is required in this country. This change will not in any way, therefore, affect the public safety of Canadians. Where there are minor differences between countries, we can't allow these small differences to stop trade that would otherwise be beneficial.

We're also providing new powers that will increase the safety of our system, including providing the minister authority to order a company to issue a recall and increase penalties for companies that do not comply with our strict safety laws. These changes are just another example of our government's common-sense approach, removing red tape to help businesses while also increasing enforcement to ensure that Canadians are protected.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

I want to shift gears just momentarily. I'm going to give you some time to talk about this.

Your predecessor, and of course we're speaking of the late Jim Flaherty, spoke once at a meeting that a number of us were part of. He spoke of that time in 2008-2009, when the world was at a brink. You mentioned in your remarks how we expect to see this government, to see this budget, the next budget, at a surplus position. We managed to do that without quantitative easing. We managed to do that without driving ourselves further into debt, other than the debt that was incurred because of the bill in Canada, which was part of our strategy.

I'm wondering if you could just tell this committee how that is going to affect future generations and specifically this country in terms of perhaps investment from other countries' looking at us as a solid economy and our banks as places where there seems to be stability in a world where that's increasingly becoming less and less the case.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Our Conservative government believes in keeping Canadian families strong, and that's why our budget introduces several key measures to help Canadian families. They include enhancing flexibility and access to employment insurance sickness benefits for those who receive the parents of critically ill children and the compassionate care EI benefits.

The objective is to ensure that they get the support when they need it most. We're also increasing the adoption expense tax credit to further recognize the unique cost that the family incurs when adopting a child. We're removing the GST and HST on more health care products and services, to include acupuncture and naturopathic services, eyewear specially designed to electronically enhance the vision of individuals with vision impairment, and special training to help individuals cope with the effects of a disorder or a disability. And we're expanding tax relief under the medical expense tax credit to include costs associated with service animals that are trained to help people with diabetes and with specialized therapy plans to help individuals cope with the effects of a disorder or a disability.

These measures build on our Conservative government's strong record of support for Canadian families. For example, since 2005, we've reduced the GST from 7% to 5%, putting more than $1,000 back in the pockets of an average family. We've introduced the universal child care benefit, offering families more choice in child care by providing $1,200 every year for each child under age six; and we've introduced the family caregiver tax credit, a credit of up to $2,000 for caregivers of all types of infirm, dependent relatives, including spouses, common law partners, and minor children. Overall, our strong record of tax relief means savings of nearly $3,400 for a typical Canadian family of four this year.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

We'll go to Mr. Rankin. You have five minutes, Mr. Rankin.

[Murray Rankin, NDP, Victoria, BC]

Thank you.

Welcome, Minister. Thank you for being here.

I'd like to turn to the intergovernmental agreement that your government negotiated with the United States to deal with the so-called FATCA. Canadians who may also be so-called U.S. persons are very, very concerned about their personal data being shared. As you know, last week Canadians found out their personal information had been accessed 1.2 million times without their knowledge.

My first question is, under this agreement, will people be notified when their information is collected by the CRA and shared with the United States?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Well, the point is that this bill will not impact Canadian citizens, and the bill had raised a number of concerns here in Canada, but what we're doing is relying on existing framework under the Canada-U.S. tax treaty.

[Murray Rankin, NDP, Victoria, BC]

But, Minister, there's a million people, your officials say, are affected by this bill. You say it doesn't affect Canadian citizens. With respect, people who are born in Canada to Americans are defined as American citizens, but they're born in this country. So certainly it affects Canadian citizens.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Well, it affects dual citizens.

[Murray Rankin, NDP, Victoria, BC]

Of which there are a million, your officials estimated in our meetings a couple of days ago.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Well, the point is, it affects Americans, some of whom are also Canadians.

[Murray Rankin, NDP, Victoria, BC]

A million. It's a million according to your officials.

Sir, estimates say that there's a million people affected; we've had privacy experts say that this is unconstitutional. Peter Hogg has said it's unconstitutional. You gave 30 days for Canadians to be involved in the review and comment process on the intergovernmental agreement. Your officials don't know how much it costs our banks and credit unions, they've said, to comply with this law, although one bank said it cost $100 million—one Canadian bank, that is. Given the complexities of this bill and its constitutional ambiguity, at the very least, would you agree, sir, to remove this agreement from the budget implementation act so we can properly study it?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

The Justice department has provided us with their opinion that this agreement would not be viewed as unconstitutional, not by the courts. And so we have relied on that. And that doesn't require additional time to focus on.

There are very clear benefits to this agreement, one of which is to avoid a 30% withholding tax on all American citizens who happen to be living in this country.

[Murray Rankin, NDP, Victoria, BC]

Sir, I would like to ask you the following. Professor Cockfield and Professor Christians of the Law faculties of Queen's and McGill, respectively, said, “for the first time in Canadian history, our federal government is preparing to provide a foreign government with sensitive personal financial information about hundreds of thousands of Canadians. It is doing so to stave off threatened economic sanctions, and is getting nothing in return.” I wonder if you could comment on that.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

I think it's important to remember that without this agreement, Canadian financial institutions would still have to comply with FATCA. Obligations for Canadian financial institutions would have been unilaterally and automatically imposed by the United States. This would have required banks to report information directly to the IRS and potentially deny basic banking services to clients. Furthermore, the banks and their clients would have been subjected to a 30% withholding tax. So, without the agreement in place—