Finance Committee on May 14th, 2014

[The Chair, Conservative, James Rajotte]

Unfortunately, we're going to have to leave it there. I apologize, Mr. Adler.

I want to thank all of our witnesses for being here.

Thank you very much for your presentations and for answering our questions.

If you have anything further, please do submit it to the clerk. We'll ensure that all members get it.

Colleagues, we will suspend for about two minutes and bring our next panel forward.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order.

We are resuming discussion, pursuant to the order of reference of Tuesday, April 8, 2014, on a consideration of Bill C-31, an Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014.

I want to thank our second panel of guests for being with us here and by video conference.

First of all we have, as an individual, retired captain Mr. Sean Bruyea.

From the Canadian Bar Association, we have Cindee Todgham Cherniak.

Welcome to the committee.

From the Canadian Consumer Specialty Products Association, we have Ms. Shannon Coombs, president.

Welcome.

From the Chemistry Industry Association of Canada, we have vice-president Mr. Gordon Lloyd.

As an individual, we want to welcome, from Vancouver, Professor Dominique Gross from Simon Fraser University's School of Public Policy.

Thanks to all of you for being with us.

You each have five minutes maximum for an opening statement, and we will then go to members' questions.

We'll begin with Captain Bruyea, please.

[Sean Bruyea, Retired Captain, Columnist, Media Personality and Academic Researcher, As an Individual]

Thank you, Mr. Chair and honourable members of the committee, for the invitation. You have much on your plate, so I will skip further formalities.

On May 29, 2012, coincidental with the announcement not to appeal the class action lawsuit involving the Canadian Forces insurance plan known as SISIP, the Government of Canada committed to cease offsetting the Pension Act pain and suffering monthly payments from four other plans: the earnings loss benefit, the Canadian Forces income support, the war veterans allowance, and civilian war-related benefits. I will speak specifically about the earnings loss benefit, or ELB.

The ELB is an income loss program and a key pillar of the controversial legislation commonly known as the new Veterans Charter. Bill C-31 provides retroactivity in returning to the veterans the Pension Act pain and suffering deduction offsets of ELB from May 29 to September 2012.

During the launch of the new Veterans Charter, including the earnings loss benefit, on April 6, 2006, Prime Minister Stephen Harper promised that:Our troops’ commitment and service to Canada entitle them to the very best treatment possible. This Charter is but a first step towards according Canadian veterans the respect and support they deserve.

If the government decided that the policy of offsetting monthly Pension Act payments for ELB is not what our troops deserved on May 29, 2012, did our troops deserve the unfair deductions on May 28, 2012? For that matter, did our troops deserve the unfair deductions for any day back to April 6, 2006, when the earnings loss benefit program was created?

ELB is clearly an income loss program. The Pension Act is indisputably a program for pain and suffering. Our courts have long stipulated that income loss is to be maintained completely separate from general damages, otherwise known as pain and suffering payments. No other provincial civilian workplace insurance program in Canada deducts pain and suffering payments from income loss programs. Why have our disabled veterans and their families been subjected to an unjustifiable lesser standard from April 2006 to May 2012?

Even if we ignore the strong legal precedent of not deducting pain and suffering payments from income loss programs, this arbitrary retroactive date of May 29, 2012, comes across as petty. The indefensible retroactive date creates an additional class of veterans once again. Those in the SISIP class action lawsuit had their problem rectified back to when SISIP began offsetting Pension Act payments. Why are ELB recipients not accorded the same dignity?

Justice, or the appearance of justice being done, is plainly not being offered in Bill C-31. Should you pass the legislation as is, you will force the most disabled veterans under the flagship Conservative veterans benefit program known as the new Veterans Charter to enter the paralytic morass of years of unnecessary and bitter legal battles. These battles will sap the health, the family stability, and the dignity of military veterans and their families.

We say that we honour our injured veterans as a nation and as a government, but Parliament's actions often speak otherwise. Before we hesitate because of cost, please remember that these disabled veterans never hesitated when Parliament ordered them into harm's way, knowing full well that many would die or become disabled for life.

Major Todd, the architect of the Pension Act philosophy of pain and suffering payment, stated in 1919 that Those who give public service do so not for themselves alone but for the society of which they are a part. Therefore, each citizen should share equally in the suffering which war brings to his nation.

This is just one tangible and clear example of the debt we keep promising to pay to our veterans, but we do not

What is also troubling about Bill C-31 is what is absent: the further debts we must pay. The earnings loss benefit is not being increased to 100% of military release salary while providing lost potential career earnings, yet civilian workplace compensation schemes recognize this loss potential. Boosting ELB to 100% has been emphatically pushed by the major veterans groups and the two VAC advisory groups established to study the matter, as well as the House committee on veterans affairs.

There are also no provisions for providing child care and spousal income assistance to the most disabled veterans. The most disabled are not supported for education upgrades or to pursue any employment opportunity to better themselves or improve their esteem. The monthly supplement provided under Bill C-55 in 2011 is denied those seriously disabled veterans collecting the exceptional incapacity allowance under the Pension Act.

My first of now eight parliamentary committee appearances was in front of the Senate version of this committee, the national finance committee, on May 11, 2005. I raised then and continue to raise serious concerns about the charter. My concerns were generally ignored by government, but not by veterans and the public. Had substantive action been taken then, we would not be in year eight of the tragic mess regarding how our veterans are mistreated and often pushed aside by the new Veterans Charter and Veterans Affairs Canada.

I also warned Parliament of the harassment of those who oppose the new Veterans Charter. This was also ignored, only to explode on the national media agenda five years later, with what some call the largest privacy breach in Canadian history—my privacy. As such, provisions such as those in Bill C-31 that would allow CRA to voluntarily hand over confidential taxpayer data to the police without approval of a judge send shivers down my spine, as they should for every Canadian. Surely the magnitude of Bill C-31 is disconcerting. The consequence of ignoring Canadians' and veterans' input is indeed a perilous road.

Undoubtedly, parliamentarians and the public service work hard for democracy. However, none can claim to have sacrificed what our military has sacrificed to preserve our democratic way of life. The omnibus budget bill does not meet Canada's democratic standard. It allows many changes to Canada's laws to enter the back door of government policy without full participatory and democratic due process. Ramming through legislation without proper scrutiny is an insult to the dignity of all that the military has sacrificed in Canada's name and at Parliament's order.

The omnibus budget bill is a perversion of democracy, in my mind, a democracy for which almost 120,000 Canadians have lost their lives and for which hundreds of thousands more have lived and continue to live with lifelong disabilities as a result of serving our nation.

Surely Parliament can do better.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now hear from the Canadian Bar Association.

[Cyndee Todgham Cherniak, Chair, Commodity Tax, Customs and Trade Section, Canadian Bar Association]

Thank you, Mr. Chair and honourable members.

I am Cyndee Todgham Cherniak, and I am chair of the Canadian Bar Association's commodity tax, customs and trade law section. The CBA is pleased to appear before you to provide views with respect to part 6, division 29, of Bill C-31.

The Canadian Bar Association is a national association representing over 37,500 members of the legal profession. Our primary objectives include improvement in the law and the administration of justice. It is through that lens that we have examined the portion of the bill.

We have carefully reviewed the Administrative Tribunals Support Service of Canada Act, which intends to restructure the administration support services of 11 federal administrative tribunals. The CBA's position is that division 29 of part 6 should be withdrawn from Bill C-31 for further consultation with the affected tribunals, the users, and the stakeholders. Should this portion of the bill proceed, the CBA recommends, at a minimum, the removal of the Canadian International Trade Tribunal, the Public Servants Disclosure Protection Tribunal, and the Canada Industrial Relations Board from the legislation.

We must consider the potential risks of the proposed merger. My comments will focus on: one, the risk that the merged entity will be inconsistent with Canada's international obligations; two, the risk that the separation of the staff from the individual tribunals will cause delays in the litigation process; three, the risk that putting the tribunal staff in a merged entity will diminish expertise; and four, the risk that the effectiveness of the tribunals will be diminished if their impartiality and independence is brought into question.

Impartiality and independence may be affected by the reporting structure of the merged entity, which may lead to actual bias, an apprehension of bias, and/or conflicts of interest. It is proposed that the merged entity will report to the Minister of Justice. The Minister of Justice is also the minister responsible for the Department of Justice.

For my part, as an international trade lawyer, I will focus on the impact the merger may have on the Canadian International Trade Tribunal. Canada's international trading partners may perceive the administrative staff of the CITT as protectionist and biased in favour of the Canadian government and Canadian businesses. Under the merged entity, the staff will report to the same minister as the lawyers who bring anti-dumping and customs enforcement actions against exporters and who defend the government procurement challenges filed by foreign bidders. Canada's trading partners may therefore question the independence, impartiality, and objectivity of the decisions of the Canadian International Trade Tribunal.

Turning to the risk of inconsistency with Canada's international obligations, our trading partners may question whether the merged entity is contrary to Canada's obligations under various WTO agreements and free trade agreements. I can assure you that it will not take long before a lawyer raises apprehension of bias, conflict of interest, and failure to abide by treaty obligations as reasons for challenging a CITT decision in a Canadian court, before the WTO dispute settlement body, or under an FTA dispute settlement mechanism.

Canada cannot control the outcome of a decision rendered pursuant to the WTO dispute settlement understanding or a free trade agreement. Negative decisions in the international arena are a real risk. If an international trade dispute is raised against the institutional procedures of the merged entity or the Canadian International Trade Tribunal itself, Canada may find itself having to compensate a foreign party or face retaliation under an international treaty.

If the remedy ordered by an international dispute settlement panel is a monetary amount—like NAFTA chapter 11—the cost may exceed any potential cost savings of the merger or, if retaliation is in the form of increased duties on Canadian goods by a foreign trading partner, Canadian manufacturers may be negatively affected in the international marketplace. The Department of Justice lawyers will have to defend challenges, and this will by itself result in a cost to the government.

There are also risks associated with possible delays in the litigation process. The risks of litigation increase if the timeliness of tribunals are affected by the structure of the merged entity. I can tell you that, based on personal experience, the legislative timeframes of cases before the Canadian International Trade Tribunal do not allow for delays.

The preliminary injury decision in an anti-dumping or countervailing duty case is 60 days from the date of initiation. A final injury decision must be released within 120 days of the preliminary determination of dumping. Cases before the CITT are not like litigation before the courts, which can drag on for years.

Lastly, there's a risk that the expertise of the tribunals may be diluted by the merger of the administrative support services. I can tell you from my own personal experience that the staff at the Canadian International Trade Tribunal have specialized expertise in trade matters that is unlike the expertise of the other 10 tribunals' staff.

Staff at the other tribunals cannot quickly step into the role of a CITT researcher who prepares anti-dumping injury questionnaires or compiles data for the pre-hearing staff report. Staff at the other tribunals do not have the same economic and trade analysis skills that the staff at the CITT have developed over the years. Legal support services staff would not have the same in-depth knowledge of Canada's international obligations.

Finally, the CITT staff receive confidential information from the parties who appear before the tribunal, and this confidential information is fundamental to finding the facts, applying the law, and coming up with the correct decision. The Canadian International Trade Tribunal staff are sensitive to the issues of confidentiality within the CITT act and the tribunal rules.

The credibility of the tribunal is at stake. We would like you to consider these important concerns in your deliberations.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll go to Ms. Coombs.

Very quickly, please.

[Shannon Coombs, President, Canadian Consumer Specialty Products Association]

Good afternoon, Mr. Chair and honourable members of the committee. It's a pleasure to be here today to provide support and a suggested amendment for Bill C-31.

My name is Shannon Coombs, and I'm the president of the Canadian Consumer Specialty Products Association. I have proudly represented this industry for 15 years in our many accomplishments as a proactive and responsible industry.

The CCSPA is a national trade association that represents 37 member companies across Canada in what is collectively a $20-billion industry employing 12,000 people in more than 100 facilities. Our companies manufacture, process, package, and distribute consumer, industrial, and institutional specialty products such as soaps and detergents, domestic pest control products, disinfectants, deodorizers, and automotive chemicals, or as I call it, everything under your kitchen sink.

I have provided to the clerk copies of our one-pager, which has a picture of our products. I'm sure many of you have used them today. Also, you would have received our goody bag a few weeks ago,that is, assuming your staff chose to share it with you.

[Voices]

Oh, oh!

[An hon. member]

I understand. Mike?

[Shannon Coombs]

You can ask for another one for later.

[An hon. member]

Well, the chair obviously got his goody bag.

[Shannon Coombs]

So why are we here today?

[The Chair, Conservative, James Rajotte]

Order.

[Shannon Coombs]

The CCSPA supports the amendments to the Hazardous Products Act in Bill C-31. These amendments will put in place a regulatory framework that will be harmonized with that of our major trading partner, the United States.

Included in Prime Minister Harper's and President Obama's 2011 joint action plan under the Regulatory Cooperation Council, the globally harmonized system, or GHS, for classification and labelling is a key initiative.

We are supportive of all the efforts to bring these new regulations to fruition, but the benefits of implementing the GHS can only be realized with a high level of alignment between the U.S. Occupational Safety and Health Administration and Health Canada. Canada cannot meaningfully implement the GHS by creating unique Canadian requirements that will result in different or costly labels that impact trade.

Our sister associations, the Consumer Specialty Products Association and the American Cleaning Institute, have also publicly supported these amendments, and the United States has already begun its implementation of GHS for workplace chemicals. Adopting GHS in Canada will allow our members to use one safety data sheet and one label for products used in the North American workplace.

At this time we are proposing one amendment to Bill C-31. In proposed paragraph 14(b), under Hazardous Products Act, we're looking for an additional provision that would clearly allow for product that is imported into Canada for the purposes of relabelling to be compliant with the act. As it currently stands, product imported must be labelled prior to entry. Depending on your country of origin, this is not always practical. Allowing Canadian suppliers to import product for relabelling will allow industry to have more quality control and flexibility with respect to ensuring compliant labels in the workplace.

Mr. Chair, we appreciate this opportunity to comment on this important piece of legislation. We support this amendment and we look forward to working with the government on the subsequent regulations and guidance that are developed and harmonized with the U.S. OSHA.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Mr. Lloyd, please.

[Gordon Lloyd, Vice-President, Technical Affairs, Chemistry Industry Association of Canada]

Thank you, Mr. Chair and committee members, for allowing us to present before you.

This discussion about the Hazardous Products Act is quite important to the Chemistry Industry Association. We're the voice of Canada's chemistry industry. Our members produce industrial chemicals across the country and we're major exporters.

I think a number of you know of our Responsible Care program. It's our industry's commitment to sustainability. It started in Canada, and it has spread to over 60 countries. It's something that I think all Canadians can be quite proud of. We won the prestigious GLOBE Award for Sustainable Leadership this year because of the Responsible Care program.

The Hazardous Products Act amendments that we are talking about here today are the first step in modernizing Canada's workplace hazardous materials information system, WHMIS, to achieve closer alignment with its counterpart in the U.S. The second step will be the regulatory changes that will take place after you've passed these amendments and the Hazardous Products Act has been modified. Shannon has already described what WHMIS is about—both of us addressed that in our briefs—with labels and material safety data sheets and training. It's been quite a unique and successful initiative.

Over the last several years, Health Canada has conducted extensive consultations with industry and others to better align the system with the system in the U.S. under the international agreement of a globally harmonized system, but Canada and the U.S. have rightly decided to focus on aligning their systems with each other.

The U.S. regulations were out in 2012. They're ahead of us. They're in a transition phase right now. They're going to have to be in full compliance by June 1, 2015. Our agreement with the Americans is that we will collaborate with them in changing our regulations, which will be in force by the same date of June 1, 2015. There's been a number of important steps taken, which are outlined in our brief, to further that objective.

The changes to WHMIS that we're looking for through these legislative and regulatory changes will further the government's agenda of regulatory cooperation with the U.S. They should help make Canada more competitive, improve the efficiency of our regulatory regime, and maintain worker protection. To maximize the benefits that we can achieve from that, we need to implement the changes in the same timeframe as the Americans. We're a bit behind the ball on that.

To catch up, the transition period for the GHS regulatory changes to WHMIS in Canada needs to start this year. In the second half of this year, the Americans are going to start using their new labels and safety data sheets. Our member companies want the flexibility to do the same. They want to be able to transition to the GHS-based labels and safety data sheets in both countries at the same time. American companies want to do this as well. That's illustrated by the letter from the American Chemistry Council, our sister association, which is attached to our submission.

For this to happen, several important things need to occur. First of all, the amendments to the Hazardous Products Act that are part of this bill need to pass. That needs to be done very soon, and then the regulations can be implemented. Most importantly, the amendments have to pass in a way such that the government can introduce the regulatory changes this June. If that is not done, we fear there will be significant delays.

The June deadline for the regulations is necessary and possible, for a number of reasons. The normal gazetting process will occur. There will be the Gazette, part I, regulations and draft, and then they will go to final regulations in the Gazette, part II. But because there's already been very effective and extensive consultations by Health Canada with stakeholders on these regulations, they can be issued pretty much right after the legislation to the Hazardous Products Act is changed.

We are also looking for—

[The Chair, Conservative, James Rajotte]

You have one minute.

[Gordon Lloyd]

—a very short period for comment before the Gazette, part II, goes forward. We hope that would occur some time this summer. That should be enough time to allow us to get what we're asking for, which is that we will be able to implement the changes in Canada starting this fall, in the same timeframe as the Americans will be doing.

Now, if that doesn't happen, if they aren't introduced in June, the delay will probably be longer than just a few weeks. The way we understand the government regulatory process works, the regulations will have to go through Treasury Board. It doesn't normally sit in the summer, and it could be as late as the fall until the regulations would be introduced. That will be too late for the Canadian companies to take full advantage of the opportunities that are here and to implement these changes in the same timeframe as the U.S.

In conclusion, getting the regulatory alignment that the Prime Minister and the President committed to will be important for trade and competitiveness and is readily achievable. But the potential benefits will only be fully realized if Canada passes the required legislation in the kind of timetable that I've talked about.

Other associations that have also written to you, such as the Canadian Paint and Coatings Association and the Canadian Chamber of Commerce, have made similar points in their briefs.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now go to Professor Gross, please, for her five-minute opening remarks.

[Dr. Dominique Gross, Professor, School of Public Policy, Simon Fraser University, As an Individual]

Thank you, Mr. Chair and committee members.

My presentation is about establishing monetary penalties for the temporary foreign worker program by amending the clause in the Immigration and Refugee Protection Act.

The regulations must be followed, and it is expected that penalties will be imposed if that is not the case. Introducing penalties for employers who do not meet the conditions for hiring temporary foreign workers is a positive thing.

Having to pay large fines could incite certain employers who are inclined to abuse the system to change their behaviour. However, that kind of amendment would not likely give Canadians systematic priority access to available jobs.

The goal of the temporary foreign worker program is to help businesses keep operating without interruptions when there are shortages of labour domestically, that is, when employers cannot find suitable workers for their vacancies. Moreover, such a program must allow filling jobs with foreign workers until the labour gaps are eliminated thanks to wage adjustments and training.

This implies two conditions: first, there must be certainty there are no available domestic workers for vacancies; and second, the use of temporary foreign workers is only for the short term. Then the government must penalize employers who abuse the system.

In Canada, all occupations can be filled by temporary foreign workers, and for many jobs employers must confirm through the labour market opinion there are no available domestic workers. In such a context, and especially for low-skilled occupations, businesses may be inclined to overuse the program as long as there is no complaint about abuses.

Through the temporary foreign worker program, employers have access to the world supply of low-skilled workers. They can easily find candidates who perfectly match their vacancy requirements. In addition, it is very likely that these workers will be fully reliable.

Foreign low-skilled workers usually see themselves as privileged to have a job in Canada. It is a guaranteed improvement for their family life in their home country, thanks to having a steady job with a high wage for themselves. So businesses have access to very reliable and productive workers for several years, but at a relatively low legal wage compared to what would have to be paid to Canadian workers. As time passes, this makes employers increasingly dependent on such workers.

Two highly undesirable consequences arise from such a situation. Employers lose incentives to raise the wage to attract domestic workers from other regions, and they lose incentives to train local unemployed workers. These are additional costs that do not have to be incurred with access to temporary foreign workers. Thus, the labour shortage, if it exists, is not solved over time. If there is no shortage of labour, unemployment rises.

Detailed information about labour shortages for occupations in local areas is a necessary condition for a temporary foreign worker program to fill its goal effectively. Relying on employers to confirm a labour shortage with no possibility to check on whether their statement at the time of the LMO application is correct is not adequate. The government should be able to control employers' LMO statements and ensure priority is given to domestic workers at the time of hiring. With detailed information on labour shortages, application conditions in LMOs can be easily and quickly verified. Then employers will definitely be less inclined to use the program extensively.

In addition, detailed information about labour shortages would allow the creation of an accurate list of eligible occupations with deep shortages of labour and allow employers to have easier access to foreign workers. The list could also be revised regularly. Such a policy choice would not only reduce abuses, but when shortages are not deep, it would induce businesses to train unemployed workers if necessary, or to raise wages and make occupations more attractive to domestic workers.

In conclusion, an effective temporary foreign worker program should stimulate incentives to hire and train domestic workers and should not be used to fill long-term jobs. This is particularly important when there is high unemployment for various groups of people like low-skilled workers, youth, or aboriginals. Policy changes that prevent negative impacts on domestic workers at the time of hiring ensure the effectiveness of the program. Adding penalties for abuses is useful, but it is unlikely to correct the present negative consequences of the temporary foreign worker program.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll begin members' questions with Mr. Cullen.

You have five minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair.

Madam Gross, thank you very much. I listened to your presentation and read your paper. I see how the basic supply and demand system that we have all accepted and welcomed in the Canadian labour market has been contorted and distorted by a temporary foreign worker program, in which, as you say, training workers or raising their wages in regard to short supply is in fact discouraged behaviour for employers.

I offer apologies both to you and to the other panellists, but I need to ask Sean some questions that I think are incredibly important.

First things first, I hope that all our witnesses and those watching aren't under any illusion that what we're doing here is a proper study of this omnibus legislation. In two short meetings, we're going to be dealing with almost 300 pages in part 6 alone, affecting all the things we have talked about today and many more. That's the process that's happening. They say that you don't want to watch bills and sausages being made, but this is taking it to another level.

Specifically on veterans and specifically on this arbitrary decision, we asked Veterans Affairs officials at our briefing what the policy basis was for not extending compensation when this payment was first clawed back. We were told that it was a political decision, that there had been no assessment and no analysis of costs.

The Conservative government used $35 million of taxpayers' money to fight veterans in the courts for six years. They spent $28 million celebrating the War of 1812.

Is there an estimate of costs for properly compensating veterans who have been injured while serving their country and for taking this payment back to 2006 rather than to this arbitrary, politically chosen date of 2012?

[Sean Bruyea]

No. In fact, repeated questions to the department have come up empty. But we could probably extrapolate some number. We're talking about $9.2 million for the earnings loss benefit over a five-month period. If we extrapolate for the years prior to that—there were declining numbers of applicants going back to the beginning of the new Veterans Charter, which we could probably extrapolate—we are talking probably about less than $70 million to compensate totally.

But I take your point. The arbitrary date does not give the dignity or the full due process to understand why that date was chosen and for people to voice their opinion.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

The government, in its decision to compensate back at least to 2012, has admitted that this was an illegal clawback, but in this omnibus bill has chosen this arbitrary date.

First of all—or second, now—I want to thank you for your service to this country and also thank you for your service to veterans.

[Sean Bruyea]

Thank you.