Finance Committee on June 18th, 2019

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

If the minister had been here, perhaps we could have obtained an answer to that question.

[The Chair, Liberal, Wayne Easter]

We will go on, but feedback is coming in on that question, as he answered earlier, Pierre.

Next is Mr. McLeod, and then it's over to Mr. Poilievre.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair, and thank you to everyone who is presenting here today.

I'm looking at the program expenditures, and I find some of them relatively small in light of some of the concerns that have surfaced, especially in the indigenous policy.

I represent a riding in the Northwest Territories that is over half indigenous, and we have a real challenge in achieving a healthy economy. We need to tackle several big issues to do that. We need more transportation infrastructure to lower the costs. Industry is telling us that, and the chamber of commerce is telling us that.

We also all know that we need to sort out land tenure and self-governance issues with the indigenous governments. Some of them have been going on for a long time.

During the time the Liberal government was in place, they weren't very kind to the indigenous population. They gutted the regulatory process, and we're trying to put it back together. The indigenous government support funding was certainly cut, to a point where it was almost impossible for the band councils to function.

It didn't stop there. The departments were also cut severely, in terms of having a reduction in their negotiators, so we ended up negotiating maybe one day a month, if that. Pretty much every negotiating table for land claims and every negotiating table for self-government came to a halt. In 2015, when I was campaigning, we had zero tables working.

I see that changing now, but the need for.... Reinvestment seems to be slow. You talked about an increase in volume when we talk about the capacity for indigenous policy.

I'm just curious where this money is going. Is it going to the department, for resources within the department, or is it going to indigenous governments to help them bolster their resources and try to get resolution at some of these tables?

[The Chair, Liberal, Wayne Easter]

While they're thinking up their answer, I believe you started your statement by saying “the Liberal government”, and I'm not sure if that's exactly what you meant. You might not want to be quoted on the record on that point.

[Michael McLeod, Liberal, Northwest Territories, NT]

Oh, no. I thought I said the Conservative government, but I—

[Pierre Poilievre, Conservative, Carleton, ON]

You accidentally told the truth there.

[Michael McLeod, Liberal, Northwest Territories, NT]

I'll clarify that. I meant the 10 years that the Conservative government—

[The Chair, Liberal, Wayne Easter]

Okay.

Go ahead, Ms. Bess.

[Darlene Bess]

As you know, there are many proposals being brought forward to cabinet that relate to indigenous issues. The amount in our main estimates is for our department and for work we do with other departments on proposals related to indigenous issues. It spans many areas, including federal-provincial, tax policy and financial sector policy, etc.

Suzy can speak to you about some of the work she's doing on the federal-provincial side for indigenous policies.

[Suzy McDonald]

I just wanted to clarify that it's the funding that comes to us, and not the funding that's going out to the various groups.

As you can imagine, there are quite a number of negotiation tables at the moment across Canada, with many different groups. Those agreements are under way, and mandated.

While we are not the lead for those, a tremendous amount of data comes in to us for the work we do on that. It helps to support the work we are doing to support Indigenous Services Canada, CIRNAC and others in the work they do. My colleague and his team in tax policy do some additional work on taxation matters with indigenous groups across the country.

Darlene already made the point I was making, which is not to confuse this with funding that goes directly out or with self-governance funding.

[Michael McLeod, Liberal, Northwest Territories, NT]

Well, that explains the small number, then. I think we're now, in the NWT alone, up to 14 tables of negotiation.

I do have one more question on the carbon pollution pricing system. It's under consideration in the Northwest Territories. The Northwest Territories has its own carbon pricing plan. We're probably the only jurisdiction where members of the government are pushing back, because they don't feel the plan put forward by the cabinet of the government of the Northwest Territories is strong enough. They want to bolster it. I don't know of anybody else who's doing that.

I was curious about the $1.6 million, because throughout our discussions, I assumed everything was supposed to be cost-neutral, yet we have a cost. Maybe somebody could explain it.

[Andrew Marsland]

Perhaps I can speak to that.

It is funding for the department for the function we perform with respect to the pan-Canadian climate framework.

Effectively, there are a number of aspects to that. One aspect is that in jurisdictions where the federal backstop applies, we have to account for those funds, because as you mentioned, it's done on a cost-neutral basis for the federal government. Those funds are returned to households in the four provinces where that applies at the moment, so those amounts are paid to households through the climate action incentive. Other amounts are paid to small and medium-sized enterprises, and so on. However, at the end of the day, all amounts go back to the province, so we have a function to perform in relation to the management of that system.

That's part of it. Part of it is the overall work that the department does in respect to pollution pricing, in terms of modelling, and so on. It's to build the capacity within the department to manage that work.

[The Chair, Liberal, Wayne Easter]

It's understandable that there is some confusion in terms of the estimates, because the budget, which comes through the Department of Finance and through the Budget Implementation Act, covers all the spending in all the departments. Then when we get into the narrow focus of the estimates that apply to the Department of Finance, it's only the Department of Finance, so it's rather confusing.

Mr. Poilievre is next, and then I don't know if there's anybody on this side. I know Mr. Poilievre wouldn't want to have the last word, so maybe there's somebody more to come.

Go ahead, Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Perish the thought.

How much will yesterday's ways and means motion increase or decrease revenues in each of the next five years?

[Andrew Marsland]

We would not expect a significant impact, because the proposal is that the measure apply to options granted on a go-forward basis. Because of that, because they tend to have a certain duration, you would not expect much of an impact for several years, until the system is fully mature and is dealing with options that have been granted in an exercise subject to the new regime.

[Pierre Poilievre, Conservative, Carleton, ON]

Even then, the measure creates a new stock option deduction for the employer.

[Andrew Marsland]

Effectively, in respect of options to which it applies, the measure treats them as equivalent to regular compensation, fully included in income and deductible to the employer.

[Pierre Poilievre, Conservative, Carleton, ON]

Right.

[Andrew Marsland]

On the face of it—

[Pierre Poilievre, Conservative, Carleton, ON]

You're shifting a deduction away from the employee to the employer.

[Andrew Marsland]

Yes. We would expect an impact, because they don't perfectly match.

[Pierre Poilievre, Conservative, Carleton, ON]

Right, but I would point out that the corporate tax rate in most provinces is roughly 26%, whereas the value of the stock option deduction is about 26%. It's about half the highest marginal tax rates, so you're basically shifting a 26% deduction from the employee to the employer.

I realize that it won't necessarily neutralize as cleanly as that. As you know, nothing is clean in tax policy, but—

[Andrew Marsland]

We try.

[Pierre Poilievre, Conservative, Carleton, ON]

We try.

It's an exceptional measure, because it's full of exceptions. Private corporations are exempted; previously granted stock options are exempted; all stock options under $200,000 a year are exempted; and even for large publicly controlled corporations with employees who receive more than $200,000 in stock options, they might also be exempted if the government deems them start-ups. There are all kinds of exemptions, and you've confirmed that there won't be much of a revenue impact.

[Andrew Marsland]

Perhaps I could comment on that.