Finance Committee on April 29th, 2019

[Tom Kmiec, Conservative, Calgary Shepard, AB]

There are about 300,000 first-time homebuyers per year. A lot of people confuse this group with young people, but that's not always the case. There are a lot of people who purchase their first home later in life. Are you saying that half of that 20,000 would be under 40 in the department's modelling?

[Pierre Leblanc]

Those statistics are similar to the Canadian Revenue Agency's. That's how it breaks down by age.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay.

Is there any administrative reason the government couldn't have indexed that HBP to inflation? Is there any system or mechanism that makes it unreasonable to do, or is it just a policy choice?

[Pierre Leblanc]

I think it's more of a policy choice. It's a good question. It's the sort of thing that you typically use once, or in one year. You have other things you can use year after year. If you index them, you might use them, but then you'll have a little bit more, and then you'll have a little, little bit more. I guess that's the policy decision the government has taken.

[The Chair, Liberal, Wayne Easter]

That section, and section 1.1.13, extension of liability for tax owing from carrying on a business in a tax-free savings account...that was explained earlier. Are there any questions?

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Is the financial institution obliged to disclose certain activities in connection with tax-free savings accounts, or TFSAs?

In other words, is the financial institution obliged to disclose the fact that the TFSA is connected to the operation of a business? That seems to be the topic here.

Why would we exempt financial institutions from that obligation? At the very least, are they obliged to disclose what is going on with the TFSAs they offer their clients?

[Trevor McGowan]

To be clear, this measure vis-à-vis the financial institution doesn't remove joint and several liability for the financial institution where business is being carried on in the tax-free savings account. Rather, it limits the joint and several liability of the financial institution for tax arising as a consequence of carrying on a business in a tax-free savings account to the amount of property in the tax-free savings account. In addition, there would be the amount associated with distributions of property from the tax-free savings account after the financial institution received the notice of assessment or the act against trustee and became aware of the tax liability. They couldn't avoid this joint and several liability just by distributing all the money out of the TFSA. It doesn't eliminate the liability with respect to the trustee of the TFSA. Rather, it provides a cap on the liability, and that cap is equal to the assets in the tax-free savings account. That's where one would expect the collections to be from the TFSA itself.

The second component is that it extends it to the TFSA holder, who is in the best position to know if they are carrying on business or not. It's not the elimination of joint and several liability. Rather, it's putting a cap on it, based on the value of the assets they have as trustee.

[The Chair, Liberal, Wayne Easter]

We'll turn next to section 1.1.14, tax measures for employees reimbursing a salary overpayment. This wouldn't have any relation to Phoenix, would it, Mr. Dusseault?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

No, I don't think there is a link.

My question is: why place the decision in the hands of the employer rather than in the hands of the employee who was overpaid? Why is the employer made responsible for the decision to agree, and tell the employee to reimburse the net, after-tax amount?

Why was the decision put in the hands of the employer, and not in the hands of the employee who could benefit from this measure?

[The Chair, Liberal, Wayne Easter]

Mr. Maxson, welcome to the table again.

[Mark Maxson]

Thank you.

The issue there is that certainly this requires a lot of changes to employers' payroll systems and employers' processes.

There was a desire to put in place a solution that could be acted on quickly. We knew that the federal government intended to act on this quickly in the case of Phoenix, and we wanted to extend it to private sector employers as well. However, we did not want to put an undue burden on private sector employers with regard to updating their payroll systems and their processes.

We certainly hope and expect, based on our discussions with stakeholders, that it will also be rolled out and put into place in the private sector, as it simplifies life for employees. I think it simplifies life for employers as well, who aren't interested in collecting more than they have to from their employees.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Fine.

Should the employer decide to take advantage of this new system, would he take back from the employee only the net amount equal to his salary, and then the employee would reimburse the employer? Would the employer in fact reimburse the total amount? Should this not be up to the government instead? I'm just trying to put things in the proper order.

Will the government then reimburse tax deductions to the employer, and the overpayment of benefits like the pension plan, and taxes withheld?

[Mark Maxson]

This is really just dealing with the question of taxes and Canada pension plan contributions and employment insurance premiums that are withheld by the employer. Presently, if an employee is repaying their employer, let's say, a year or two after the overpayment, they're repaying the full amount of the salary that they received plus the tax and other contributions that were withheld from that salary. Effectively, the employee would then receive that difference, those taxes, the employment insurance and CPP contributions, back from the Canada Revenue Agency when filing their return.

What we're proposing in this bill is that the employer would only have to collect the salary portion and the CRA would return the difference to the employer, so the employer is no longer acting as a go-between.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much, Mr. Maxson.

With respect to these provisions in the law, there is no doubt that many public sector employees were affected by them in the case of the Phoenix pay system.

I imagine you held consultations with the public sector unions. Did you consult them? What was the outcome of the discussions that led to these provisions?

[Pierre Leblanc]

Thank you very much for the question.

Yes, we held discussions with union representatives, especially during ongoing meetings between government and union representatives to discuss Phoenix-related issues, in our case.

The unions' response has been positive, to date. They are satisfied with this measure and the government's flexibility around this proposal.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Mr. Kmiec, do you have comments on this point?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

On your next point, I was going to do what I told you I would do.

[The Chair, Liberal, Wayne Easter]

Okay, expansion of tax measures for electrical vehicle charging stations and electrical energy storage equipment.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Chair, I had told you at the beginning of the meeting I would move a motion at this time to allow the department officials to—

[The Chair, Liberal, Wayne Easter]

Oh, I thought it was when this was all done.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Oh no, I would never do that, it would be right now. It has been given notice; I put the motion on November 15, 2018. I know you will have to find a copy of it, which I understand is conforming with the rules, and the motion was passed by the committee. It reads:

That, pursuant to Standing Order 108(2), the Committee undertake a study of Canada's 2017 decision to join the Asian Infrastructure lnvestment Bank (AIIB) and report to the House on: (a) how joining the AIIB has impacted Canada's representation at the Breton-Woods international financial institutions, particularly the International Monetary Fund and the World Bank; (b) how joining the AIIB aligns with Canada's domestic and foreign economic and development goals; and that, pursuant to Standing Order 109, the Committee request that the Government table a comprehensive response to the report within 120 days.

If you want me to pause so the motion can be distributed, I'm happy to do that, or I can go straight into it.

[The Chair, Liberal, Wayne Easter]

I think we're okay just to explain to witnesses that a member can move a motion at any point as long as it's on the order paper. It is proper to move the motion, so it is open for debate.

Go ahead, Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Chair, I'm doing this as I have a lot of motions before the committee, but this one, I think, is pertinent at the moment because of China's trade actions against Canada that specifically affect canola farmers. Now there's talk that it's expanding to soybeans and our pork products, and it seems to be that there are widening trade actions being implemented against us.

As you heard the leader of Canada's Conservatives mention, one of the actions that we should be taking, not so much in retaliation, but in response to China's trade actions, is to pull out of the Asian Infrastructure Investment Bank. Members will know this: We looked at this two years ago, and it went through Parliament. It was forced through. We tried several motions at committee and then in the House of Commons to remove this funding.

There are several reasons to do it; it's not just the trade actions. There's a worsening human rights situation in western China, specifically affecting Uighur Muslims. Also, there was a public consultation held by the finance department. I have now lodged a complaint with the Information Commissioner because I was lied to by the department, and I'm going to explain it. I have letters and confirmation here. I just want to show that I did my homework before bringing this before the committee.

First, maybe just on the AIIB, we can recap. The federal government decided to purchase a 0.9% share in the Asian Infrastructure Investment Bank, a bank that is specifically meant to further the foreign policy interests of the People's Republic of China. It's a bank that is financing three pipeline projects overseas. We all heard the responses from the minister about how there's this great project in the suburbs of Beijing that would take suburban Beijing dwellers off coal and allow them to use cheap natural gas. What he failed to mention was this: I don't see how the Canadian taxpayers should be subsidizing any of these things when we have perfectly good pipelines that we're trying to build in Canada and when we're trying to get these products to overseas markets. These are our products.

One of the projects that the AIIB is funding is the Trans-Anatolian line, which will compete with Canadian products on the international markets.

There's another pipeline project in Bangladesh that's also being financed.

The case against participation in this is made stronger because of China's trade actions against us. I think that it would be a measured response to take against the government just to show that we also have bargaining chips in this. It isn't just a one-sided relationship where we can't do anything on behalf of canola farmers in Canada.

There's been too little action so far, and it's been too slow, especially on the technical side, to respond to these actions by Chinese officials to block perfectly good, high-quality, internationally well-regarded canola products, and now pork and soybean products. It has a huge impact on the western Canadian economy.

I mentioned before that the Asian Infrastructure Investment Bank is furthering the foreign policy interests of the People's Republic of China. I have an official I want to quote here who said, “...political, political, political (sic): never forget that. It's the extension of a new policy under President Xi to dominate the South China Sea and to dominate Asia.”

It will “promote a version of China's state capitalism, not transparent markets,” said a 2015 article in The Wall Street Journal, “China Trounces U.S. Smart Power”. I got these two quotes from “The Asian Infrastructure Investment Bank: Multilateralism on the Silk Road” by Mike Callaghan from the Lowy Institute for International Policy.

There's ample evidence from speeches made by President Xi that the AIIB is simply another tool in their tool box to further their foreign policy interests, which is why I want to look at it. If that is what this bank is for, then we should not be participating in it.

Now is the perfect time to apply some Canadian pressure to resolve this canola dispute with the Chinese government. It's a measured response. We're not going overboard. The government said that we'd participate back in 2017. We haven't spent all of the money. We have spent under $100 million, but about $256 million is still committed to be spent for the first tranche of purchases for these shares. What I'd like to see us do is back away from it and actually get rid of the shares as our initial response to this.

Now, there was a public consultation held by the department. It started November 9, 2018, and closed on December 21, 2018. It was a public consultation that all Canadians could participate in, so on November 28, I created a web page so that Canadians who care about it—many of them have contacted me from across the country—could participate in it. What I then also did was blind-copy myself on every single email sent from that web page so that I could have a copy of what people were sending and could then follow up with them. Over 1,200 Canadians participated in this public consultation. Then I did an access to information request for which I got an answer on March 15, 2019. In it, it said, “” This is on official letterhead. My file number is 1199283, and our file is A-2018-01679-CL.

It tells me that no such thing existed.

When my staff followed up with the officers, saying that they could forward them every single one of the blind carbon copy emails, within five minutes they apologized, and on April 11, they corrected themselves and said that a search of their departmental records identified 1,243 pages in connection with our request. They're actually right here; I printed every single email so I could have a record of it.

Initially telling me that no such documents existed is an absolute failure of the access to information system. I'm not accusing the minister of hiding anything. I really do believe this is a departmental problem. It shouldn't require me to blind carbon copy myself on emails I'm receiving to ensure that the public consultation is being held in a fair and open way and that parliamentarians can have access to information.

I filed a complaint with the Office of the Information Commissioner. I've yet to hear back whether they will take up this matter.

There are only two things that could have happened. One is that they were incompetent in collecting the emails. I would have thought there would just be some Outlook account and they would have just copied and pasted everything while hiding people's personal information so I wouldn't see it and they would have just provided it to me.

I just wanted to see whether anybody had said yes to participate in it and what types of arguments they were making. In fact, I don't have any of those emails because not one person from the email stack that I received said that Canada should continue to participate in the AIIB, which reinforces the need for this committee to look at it. I think there's time in June to do so. I know that's not ideal because we have to look at the budget bill. At the earliest moment we can, we should review the AIIB. In my motion, I don't have a fixed number of meetings that we should have to do so.

We should be mindful of the impact that the People's Republic of China trade actions against Canada have had on canola farmers. They are going to be deciding very quickly in the next few weeks what they are seeding. There's going to be an impact on soybean farmers and pork farmers all across Canada. We should be seriously considering pulling out. I would say we need to pull out in order to show that we have the ability to respond. Make it a measured response; there's no need to go over the top. It's something that they will pay attention to. You heard our leaders. There were three easy points. I think the third point about pulling out of the Asian Infrastructure Investment Bank is a timely thing to do. This is a half a billion dollars of taxpayer money that's eventually going to be funding these different pipeline projects. There's a list of these projects online and some of them might be worthy; some of them might be really reasonable, but I really don't think that the minister's response during question period today holds up to scrutiny at all. China is the second-largest economy in the world. They literally do not need a half a billion dollars of Canadian taxpayer money to finance a pipeline project in and around the suburbs of Beijing to get them off coal power, so they can use clean-burning natural gas. They really do not need that.

It's a measured thing that we could do. We could take a look at it over one meeting and then recommend to the government that they pull out. It would be a simple thing for us to do to take stock of the current situation. Perhaps in 2017, the government.... I remember officials before this committee making a case for it and defending the logic of that decision. I disagreed with it, but two years later we can review it. I think it's incumbent upon committee members to provide the best advice that we can to the minister. Perhaps the minister is hearing advice from other people. I am worried, based on the fact that this access to information request that I filed initially received the response that no such documents exist. I had to then inform them that they had made a mistake for which I have a paper trail that I have provided now to the Information Commissioner.

To me, everything around this AIIB participation decision stinks. Therefore, I think it's time for a study—a review. I don't say how many meetings we should take. I don't even know how much time we should put aside for it, but I think it's worth our time to then recommend—and hopefully other committee members will agree with me—that Canada should pull out of the AIIB.

We already participate in the Asian Development Bank led by Japan. We should definitely participate in that one, but this one, which is led by Beijing and run out of Beijing....

This is a measured response to their trade actions against canola farmers in Canada. Farmers here need to know that we're on their side and this is something that we could do that would not harm Canada's economy directly. We're not proposing to shut out Chinese products. We're simply saying we should not participate in their bank.

The one other thing I will mention is that I submitted an order paper question with my colleague Ron Liepert, who was a member of the finance committee before, asking whether any Canadian companies or Canadian jobs have been created through this bank and our participation in it. I got back an answer of zero.

There was an answer in the media—there was an article written in the media just a few months ago—that potentially one Canadian company may have received a subcontract for one of these projects. A half a billion dollars for one subcontract, maybe, is simply not enough. My order paper question was government documentation saying it was not aware of any private sector jobs being created or any Canadian companies obtaining work.

It's timely. Farmers need to know we're behind them, that we're going to back up our rhetoric with real action. A quick study with a recommendation to the government is the right thing to do at the moment. I'm hoping that all my colleagues on the opposite side and this side will support me.