Evidence of meeting #124 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was important.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Paul Rochon  Deputy Minister, Department of Finance
Margaret Hill  Senior Director, Labour Program, Department of Employment and Social Development - Labour Program
Anna Dekker  Counsel, Judicial Affairs, Courts and Tribunal Policy, Public Law Sector, Department of Justice
Adair Crosby  Senior Counsel and Deputy Director, Judicial Affairs, Courts and Tribunal Policy, Public Law Sector, Department of Justice
Jim Valerio  Director, Small Business Branch, Innovation, Science and Economic Development Canada
Darryl Sprecher  Senior Director, Expenditure Management Sector, Treasury Board Secretariat
Stephen Fertuck  Acting Director General, External and Trade Policy Branch, Innovation, Science and Economic Development Canada
Melanie Hill  Special Advisor, Strategy and Innovation Policy Sector, Innovation, Science and Economic Development Canada
Clerk of the Committee  Ms. Suzie Cadieux

3:30 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll call the meeting to order. Pursuant to Standing Order 108(2), we're studying the subject matter of Bill C-63, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

In this first hour, we have with us the Honourable Bill Morneau, Minister of Finance, and the deputy minister, Mr. Rochon.

Welcome.

To start, the floor is yours, Minister, and then we'll go to questions.

3:30 p.m.

Toronto Centre Ontario

Liberal

Bill Morneau LiberalMinister of Finance

Thank you, Mr. Chair, vice-chairs, and honourable committee members, for the opportunity to be here with you today.

I'd also like to thank all of you for your work on budget implementation act no. 2 and for all the work that I know you've been doing on the pre-budget consultations.

As you know, our government came to office with a plan to grow the middle class and to grow the economy, and budget implementation act no. 2 is an important next step towards that goal. The bill will help to make the tax system simpler, fairer, more flexible, and efficient.

A second Act to implement certain provisions of the budget includes measures to give federally regulated workers the right to request more flexible work arrangements from their employer, largely benefiting women, who continue to do the majority of unpaid domestic work in our society.

Also proposed is the elimination of unpaid internships in federally regulated sectors that aren't part of a formal educational program and providing labour standard protections for unpaid interns who are part of an educational program.

Mr. Chair, if you look at the measures in BIA 2, I think we can all agree that this legislation is an important step in our plan to build an economy that works for the middle class and for those who are working hard to join it.

Before I speak about the next steps in our plan, I'd like to tell you about how we got to where we are today and the signs that tell us our plans to build a stronger middle class and to grow the economy are working.

Just two years ago, the world economy was still in recovery. Canadians were feeling like they were working harder than ever but just weren't getting ahead, and there were grounds for their concerns. The median real wage income of Canadians had barely risen over the previous 30 years.

Middle-class Canadians were worried. They were looking for real change and elected a government with a plan to ensure that their hard work would not go unrewarded, a plan that would enable all Canadians to enjoy the benefits of a growing economy.

Today, as I mentioned, there are clear signs that this plan is working.

In just two years, we've lifted 26 long-term boil water advisories on reserve. Over 350,000 more students get help each year to afford books and tuition and earn their degrees. We've effectively doubled the Canada summer jobs program, helping almost 65,000 students find work in the summer months.

With the Canada child benefit, we've helped about 300,000 children to be lifted—

3:30 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

I have a point of order, Mr. Chair.

I understand the minister is here to talk about the budget implementation act. He's now mentioned several measures that are not actually in that act, with which I do not have a problem as long as that approach is applied equally to all members sitting around the table throughout the hearings today.

3:30 p.m.

Liberal

The Chair Liberal Wayne Easter

The issues the minister is talking about may not necessarily be in the budget implementation act, but they are tied to the budgetary matters that the government has pursued over the last year. I'll certainly allow the remarks, and there's fairly wide flexibility in what we allow to be asked at committee as well.

3:30 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Great. Thank you.

3:30 p.m.

Liberal

The Chair Liberal Wayne Easter

As long as we can stay away from the personal stuff, and not get personal....

Mr. Minister.

3:30 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

As I was mentioning, with the Canada child benefit, importantly, we've helped to lift about 300,000 children out of poverty.

Consumer confidence is up, Mr. Chair, and this confidence is sustaining a rise in household spending and economic growth. The Canadian economy is now resurgent, with average growth of 3.7% over the last four quarters, making Canada the fastest-growing economy in the G7 countries.

In just two years, over 500,000 jobs have been created, and the youth unemployment rate is near its lowest on record. This growth is underpinning a significant upgrade to Canada's fiscal outlook, which has improved by over $6.5 billion compared with what we were expecting just in March. The federal debt-to-GDP ratio has been placed firmly on a downward track, and Canada continues to have the best fiscal position among G7 countries.

These achievements are more than just numbers on a balance sheet. They mean a better country for ourselves and for our children.

Thanks to Canada's strong fiscal standing, we are able to do what many countries wish they could do: invest in our country and in our future, while retaining the flexibility needed to weather global economic uncertainty.

It proves that as we invest directly in Canadians and their families, we have an immediate positive impact on the economy. The fall economic statement takes important next steps to ensure that Canadians can share in the success we achieve as a country. We're taking action on the understanding that for Canadian families, shouldering the rising costs of raising children can be a real challenge.

Our government proposes to strengthen the Canada child benefit by making annual cost-of-living increases to it starting in July 2018, two years ahead of schedule. For a single parent making $35,000 with two children, a strengthened CCB will contribute $560 in the 2019-20 benefit year towards the cost of raising his or her children. That means more support for purchases of books, skating lessons, warm clothes for winter, or whatever the family needs. By helping parents with the high cost of raising children, the CCB brings added confidence to families. It has proven to have an immediate positive impact on economic growth. Indexing the CCB for the 2018-19 benefit year will provide an additional $5.6 billion in support to Canadian families over the 2018-19 to 2022-23 period.

The help is going to where it's needed most. About 65% of families receiving the maximum Canada child benefit amounts are single parents of whom 90% are single mothers.

For those working hard to join the middle class, and many of those who are living alone, we'll offer even more help with an increase to the working income tax benefit. This increase of $500 million per year is on top of the increase of about $250 million annually, which is already set to come into effect in 2019 as part of the enhancement of the Canada pension plan. It'll give a much-needed boost to over one and a half million low-income workers as they work long hours, sometimes in more than one job, to get a foothold in the workforce and to support themselves and their families.

Our new investments in the working income tax benefit, or WITB, will mean greater support for current recipients by raising maximum benefit levels and expanding the income range of the WITB so that more workers will have access to the benefit.

For many Canadians, a stronger CCB and a more generous working income tax benefit mean more peace of mind when the bills come due. With the fall economic statement, we're also providing direct support to the small businesses that create the jobs that Canadians depend upon.

The balance we have achieved will support strong economic growth by allowing small businesses to put a larger portion of their revenues towards reinvestment and job creation, while ensuring that these benefits are available to more than just the wealthiest Canadians.

We're proposing to lower the small business tax rate to 10% effective January 1, 2018, and to 9% effective January 1, 2019. This means up to $7,500 in federal corporate tax savings per year to help entrepreneurs and innovators to do what they do best.

Our plan for middle-class tax fairness will ensure that incorporated professionals and business owners can continue to have the flexibility to save up for personal reasons, such as parental leave, or for retirement, while ensuring that the measures are focused on a small number of high-income individuals who get the biggest advantage from existing rules.

We'll work with farmers, fishers, and business owners to better accommodate the transfer of a family business to the next generation while protecting the fairness of the tax system.

In everything we do, our government knows that when Canadians are given a real and fair chance at success, they'll make the most of it. The investments we're making point to a brighter future for Canadians. As we look to budget 2018, we'll continue our work to build on the gains we've made over the last two years.

We will make sure that Canadians have access to the skills, training, and learning opportunities they need to compete and prosper in a fast-moving global economy.

We'll drive forward our innovation plan, making big bets in the most competitive sectors of our economy, making Canada a world leader in industries like agrifood, clean tech, and digital. We'll continue investments in our transit, our roads, and in clean water to keep our cities moving and our children safe. We'll continue building a better future for the middle class, those working hard to join it, and those who will follow in their footsteps.

Thank you, Mr. Chair.

3:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Mr. Minister.

We'll go to seven-minute rounds for the first four, starting with you, Mr. Fergus.

3:40 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Thank you, Mr. Chair.

Minister and Deputy Minister, thank you very much for your presentation on Budget Implementation Act, 2017, No. 2.

Further to the information sessions we held, the remarks heard by the committees, and the stories my constituents have told me, one thing is clear when it comes to this bill: we now have an excise tax collection system and GST and HST measures that are much more efficient than they were in the past.

Would you describe the measures that improved the efficiency of our goods and services and harmonized sales tax system?

3:40 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Thank you for the question.

As you know, two years ago, we decided to create a national tax regime that was effective and, at the same time, more efficient and fair. A year and a half ago, an expert panel helped us pinpoint the tax measures that were not working as intended. We included in the budget some of the measures stemming from our commitment.

We feel we identified key elements, and we will continue to implement measures that will result not only in a fairer tax system, but also create promising investment opportunities for the future.

The measures we put in place after consulting Canadians, a few weeks ago, are the most important when it comes to improving our system and making it more fair, and putting more money in the hands of small and medium-sized businesses so they can invest in the future.

3:40 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Indeed.

We heard from a brewing company. Molson Coors representatives told the committee why the industry welcomed the excise tax on beer made from beer concentrate. The measure will be effective and significantly level the playing field. I imagine that isn't the only company applauding the measures.

Was the measure well-received by the brewing stakeholders you consulted?

3:40 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

We believe the measure was well-received. The initiative you described is essential. The importance of not taxing these products twice is very clear. That's something the brewing industry feels very strongly about.

All types of beer will be taxed fairly going forward thanks to these measures, which are more beneficial for the industry. From the consumer standpoint, it's important to always have access to an array of beers that are taxed at the same rate.

3:40 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Thank you. I have two more questions for you. I hope I have enough time.

The first has to do with division 1 of part 5 of Bill C-63, which deals with the Bretton Woods and Related Agreements Act. These provisions give you the authority to do certain things. Can you explain to Canadians why the Bretton Woods and Related Agreements Act is being amended to give you that authority?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

We wanted to make sure the authority and responsibilities of the global affairs minister were well-established. That's the purpose of the measure, and I would say that, from a good governance standpoint, it was the right thing to do.

3:45 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

The legalization of cannabis is a government-led initiative. I noticed that the budget implementation bill set out some flexibility around establishing the structure to implement this change. To my mind, laying the groundwork for when legalization comes into effect is a good thing.

Could you talk a little bit about the flexibility you would like to have in your negotiations with the provinces and territories?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

With the legalization of cannabis, having an effective tax regime is important, in our view. We want—and our goal is clear—the taxation level to reflect our objective. It has to be clear that it will be difficult for certain people to purchase cannabis because of their age. That's a key objective. It will also be necessary to establish cannabis pricing and an appropriate level of taxation.

We will have to negotiate with the provinces to find a solution in terms of the method and level of taxation. That is why we need to have the power to do so. That's important for us. Over the next few months, we will be talking with the provinces to establish agreements.

3:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, both.

Mr. Poilievre.

3:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

In what year will the budget be balanced?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Each year we've shown the ongoing trajectory to be fiscally responsible by reducing the amount of debt to our GDP over time.

3:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

In what year will the budget be balanced?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

As I've said, we think it's important to be fiscally responsible and to have a balanced approach to managing our economy. That is exactly the approach we've taken. Happily, it's working with a high level of growth, and it's showing that we can make investments in our long-term future and do it in a fiscally responsible way.

3:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

In what year will the budget be balanced?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

As I've said, the approach that we've taken is one that has demonstrably worked. The economy is growing much faster than it was, of course, when we came into office after the previous government left us with a very low rate of growth.

3:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

In what year will the budget be balanced?

3:45 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

I would be pleased to continue to have the same response to the same question, which is that we believe that having a balanced approach to having—