Finance Committee on May 31st, 2016

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm just trying to buy some extra goodwill with him as I talk.

We recognize that in extending the mineral exploration tax credit for one year the government has finally understood that they need to do some work with the mineral exploration community; however, that is not sufficient to create the kind of climate we need in terms of stability for development and exploration. We've seen a 90% downturn in exploration since 2007. We've seen layoffs across Canada in terms of exploration projects. The Prospectors and Developers Association has been calling for at least a three-year extension so that we can get the kind of financial climate to bring investors back into Canada for exploration.

I think part of this is based on the great uncertainty that the exploration community has about the Liberal government's commitment. We remember that in 2005, it was the Liberal government that killed the flow-through shares mining program. They didn't believe in working with the sector. We've seen zero commitment on the Ring of Fire. This is a development that will have a huge impact for generations to come.

There are really three pillars if we're going to develop exploration and develop resources in Canada. Number one will be strong relationships with indigenous communities so that they are able to fully benefit. Number two is strong environmental regulations so that these projects are credible. Number three is creating a coherent financial climate to bring investors into these developments, because many of them are very high risk. They're long-shot operations. They go through many downturns in an economic cycle. It's very hard to maintain economic interest with investors if we do not have a climate that's stable.

Having a mere one-year extension in the mineral exploration tax credit doesn't cut it, particularly when the government is telling the industry they're going to have to justify why they need these basic supports for investments. The New Democrats are saying that this program works. We have to get this industry working because northern Canada is being left behind in the economic renewal. For many of our provinces it's a major driver, particularly in northern regions. If we have a five-year extension, it will provide the kind of economic certainty for investment so that we can start to get these projects off the ground.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Angus.

Is there any further discussion on this point?

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I request a recorded vote.

[The Chair, Liberal, Wayne Easter]

We'll have a recorded vote, Madam Clerk.

(Amendment negatived: nays 5; yeas 4 [See Minutes of Proceedings])

(Clause 35 agreed to on division)

(On clause 36)

Mr. Caron, do you want to speak to clause 36?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Yes, I will be brief.

[The Chair, Liberal, Wayne Easter]

My apologies, go ahead.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

When the previous government abolished their tax credit, we fought day and night to try to overturn that decision.

The tax credit is extremely important in raising venture capital. Canada is at the back of the pack among OECD countries when it comes to venture capital. Some countries are leaders in the field, like Israel and the United States. They are doing some very interesting things and we should be learning from them.

In all the OECD administrations, Quebec is behind Israel and the United States in terms of venture capital. We must also remember that private venture capital companies supported the labour-sponsored funds tax credit, because the two can work together.

Currently, 160,000 jobs are supported by capital from labour-sponsored funds. If the tax credit had not been established or if it had been reduced and eventually eliminated, 20,000 of those jobs would have disappeared.

My only regret is that the tax credit has not been immediately put back to 15%, as the Liberal Party committed to do during the election campaign. They committed to reset it to 15% immediately. It is at 5% this year.

Thank you.

[The Chair, Liberal, Wayne Easter]

Is there any further discussion?

Shall clause 36 carry?

(Clause 36 agreed to on division)

(Clause 37 agreed to on division)

(On clause 38)

I know there is a Liberal amendment.

Mr. Sorbara, before you move it, I have some questions on this.

This relates to the Canadian Wheat Board. Is there a representative here from Finance or Agriculture who can come to the table?

Mr. McGowan, welcome. Could you state what your position is, Mr. McGowan.

[Trevor McGowan, Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance]

I am the senior legislative chief in the tax legislation division in the tax policy branch of the Department of Finance.

[The Chair, Liberal, Wayne Easter]

Okay.

I do know that the issue with regard to the Wheat Board relates to taxes, but I think you should be aware, Mr. McGowan, and the government should be aware, that this committee passed the following recommendation 48:

The federal government provide Western Canadian grains and oilseed farmers with a full and transparent accounting of the disposition of the Canadian Wheat Board’s assets since the Marketing Freedom for Grain Farmers Act received Royal Assent, and of the effects on the grain handling and marketing system since that time.

I went back, Mr. McGowan, and looked at the various annual reports of the Canadian Wheat Board. The last one I can find is for 2011-12. That's the last time there was a full disclosure on the Canadian Wheat Board's financial position. It's for the 2011-12 crop year, which ended July 31, 2012. When I look at that annual report, the Canadian Wheat Board that year was an operation with revenues of $7.213 billion. The annual report states:

On October 18, 2011 CWB received a directive through Order-in-Council P.C. 2011-1182 that all profits or gains (relating to non-pool programs) be transferred to the contingency fund unless a different disposition of those profits or gains is required under the Act.

It goes on from there to say that the surpluses were indeed transferred, and then states:

Under the terms of the Interim Act, effective August 1, 2012, the balance of the Contingency Fund was transferred to a new Contingency Fund and the upper limit for the fund was removed. Under the Interim Act, in addition to the uses of the Contingency Fund previously permitted under the Act, the Corporation may utilize the Contingency Fund for any activities set out in the annual corporate plan or on the approval of the Minister of Agriculture and Agri-Food Canada with the concurrence of the Minister of Finance.

Not to get lengthy on the matter, Mr. McGowan, or whoever can answer from Agriculture Canada eventually, what we have is pool accounts, non-pool accounts, the contingency fund being changed, an operation that was dealing with $7 billion in terms of revenue, and the public does not have an accounting of what happened to those monies since then. We don't have an accounting. We, as a finance committee and as a government, should be concerned.

It's not an issue of a Canadian Wheat Board or no Canadian Wheat Board. The people of Canada transferred another $349 million, I believe, to cover various issues relating to the old Wheat Board being shut down, to cover pensions and so on and so forth, but we don't have an accounting of that either. I can go into the annual report here, and it will spell out how many hopper cars the Canadian Wheat Board had at the time.

Greg Meredith, assistant deputy minister, was before this committee. I'll not get into the quote, but he basically said that there was a loss, and that therefore there were no assets to be disbursed to western grain farmers.

Well, where's the data? The public of Canada needs to see the data. We're making a decision here in terms of tax issues related to the new Canadian Wheat Board, but we do not know the disposal of the old Canadian Wheat Board, and I think the public should darn well know. That's why I'm raising this point.

Do you have anything to say on it, or can you provide the information? We do have a recommendation from committee. Whether you're pro-Canadian Wheat Board or anti-Canadian Wheat Board is beside the point. The fact of the matter is that we should know what happened to the assets of the Canadian Wheat Board after 2011-12. I can go back and show you annual reports for 30 years where you knew what the demurrage was, where you knew what the administration cost was per bushel, where you knew what the return was to the farmer on every bushel of grain sold and whatever pool account it was. Now we don't know.

I'm asking, Mr. McGowan, if you can provide us with information on whether there were assets. If there were assets or liabilities, what happened to them? Why has the Canadian public, especially western grain farmers, not been given a full accounting on this issue?

[Trevor McGowan]

I am with the tax policy branch and as such would be happy to discuss any of the tax matters contained in the bill. The specific questions about the implementation of the privatization transaction with the Canadian Wheat Board is something that I think would be, as noted earlier, within the realm of Agriculture Canada. That's why in a previous committee hearing Mr. Meredith came in to help us out with those sorts of questions. That is something that would be much more in their capacity to provide. I can speak to the tax measures of the bill, though.

[The Chair, Liberal, Wayne Easter]

I understand that, but I guess you can understand that I'm not exactly satisfied with the answers the assistant deputy minister gave us previously on facts of the minutes. I'll not quote them. They're not answers at all. They're not giving a full accounting of what happened to the assets, or the liabilities for that matter. The Canadian Wheat Board and the public should know.

If Mr. Meredith or somebody else can provide us with written answers on that, we would appreciate it.

Mr. Champagne.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Mr. Chair, I just want to confirm, I was conferring with officials, and we take your point very seriously. This is a very serious matter for Canadians and for the committee. We'll get back to Agriculture Canada and seek to get a written response to you that could be shared with the members of the committee. This is a very serious matter for all of us.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Champagne.

Is there discussion on LIB-1? Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Chair, in Bill C-15, an act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, one of the measures proposes to amend the Income Tax Act to include rules that apply in respect of the continuance of the Canadian Wheat Board under the Canada Business Corporations Act.

The amendment ensures consistency between the English and French versions of clause 38 of the bill by correcting an editorial error in the English version. The correction adds to the English version the words “a Canadian partnership” at line 30 on page 41. The amended text appears in proposed paragraph 135.2(4)(b) of the Income Tax Act. The amendment ensures that a Canadian partnership is not deemed under the paragraph to be a designated beneficiary under an eligible trust.

[The Chair, Liberal, Wayne Easter]

You're moving the amendment.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I am moving the amendment, yes.

[The Chair, Liberal, Wayne Easter]

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Here we are again with another symptom that confirms the definition of an omnibus bill. In fact, as we have seen in the past, and specifically since 2011, omnibus bills are often so big, so huge, that corrections always have to be made. We could have avoided that if we had spent more time presenting bills in a different way.

[The Chair, Liberal, Wayne Easter]

I hate to interrupt, Mr. Caron, but I don't believe that's related to this clause.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I'm sorry?

[The Chair, Liberal, Wayne Easter]

I don't believe that's related to this clause. I don't think we're on topic.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

It is, because the government is bringing forward its own amendment to correct an oversight that's due to the length and complexity of the bill we have in front of us. I would submit that this is not the first time it has happened. It has happened in the past where mistakes were either corrected at committee at the time a bill was studied or corrected in future omnibus bills.

I think it's relevant because it's likely that the only amendments adopted by this committee will be those coming from the government side to correct mistakes made in the preparation of this bill. We'll still be voting in favour of the amendment because it's correcting an oversight and that's important.

I wanted to put that on the record.

[The Chair, Liberal, Wayne Easter]

Is there any further discussion?

(Amendment agreed to)

(Clause 38 as amended agreed to on division)

Thank you, Mr. McGowan. My apologies for neglecting to thank you.

There are no amendments from clauses 39 to 46.

(Clauses 39 to 46 inclusive agreed to on division)

(On clause 47)

We have amendment NDP-4.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

This is a clause that deals with sharing information with the Canada Revenue Agency. Since the technical information session at the beginning, we have made known our concerns about the protection of privacy that this clause raises.

In both the current Parliament and the previous one, this committee has, on a number of occasions, heard concerns raised not only by some members, but also by the Privacy Commissioner and by other authorities. The commissioner sounded the alarm when certain provisions about privacy were included in the Conservatives' legislation without appropriate oversight.

The proposal in our amendment is to require the Canada Revenue Agency to report on the frequency with which its new powers are used. This is a supervisory and monitoring measure that is essential if we want to reassure Canadians about the possible excesses that such a measure could bring with it. Our proposal is not for an in-depth amendment. It simply requires the Canada Revenue Agency to report on the frequency with which its new powers are used.