Evidence of meeting #62 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clause.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Trevor McGowan  Acting Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Glenn Campbell  Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Senior Project Leader, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Senior Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Clerk of the Committee  Ms. Suzie Cadieux

3:50 p.m.

Liberal

The Chair Liberal Wayne Easter

That's it. Thank you.

Mr. Sorbara.

3:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Welcome, Minister.

Perhaps I can go on two different tangents.

We live in a global world. We are in the fight for competition. We are in the fight for jobs, for capital. I would argue that since our government has taken office, we have seen a number of victories on our side in terms of companies choosing to invest in Canada, whether it is Thomson Reuters, General Motors, or General Electric. Minister, I'd like you to comment on the measures we have taken to entice capital, entice organizations, to locate to Canada. That's the first tangent.

On the second tangent—it's best just to lump them together—I've always argued very vehemently that we need to ensure that we have a tax system that is fair, a tax system in which all Canadians and all organizations in Canada are paying their fair share, one in which no one is subsidizing anyone else, and in which Canadians can have confidence. We have undertaken a number of measures. When I say we, I mean the government, and you, along with the national revenue minister.

I would like you to elaborate on the measures we have taken in the government and why it is so important that we coordinate our efforts globally and why Canadians need to have confidence in our tax system.

Thank you.

3:55 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Those are two separate questions.

On the first question, I think it is fair to say that we've had some success this year. The decision by Thomson Reuters to locate their headquarters in Toronto was a positive one, and investment decisions by Microsoft, General Electric, and General Motors in Canada have been positive. That said, we know that more can be done. In our fall economic statement, there were several measures that we think will have a very positive impact on investment in Canada.

First of all, we announced that we were going to put in place an “invest in Canada” hub to focus our efforts around the country on how we can encourage more international investors to invest in Canada to create jobs here in Canada. That's critically important.

We also said that companies here in Canada that need particular talents and particular skill sets will have the opportunity to attract those people to Canada. Really, that's with the intent of hoping that they will be able to increase employment here in Canada by attracting those certain skills.

We also announced the Canada infrastructure bank, with which we hope to find projects that international investors will be able to be part of and that will enhance our infrastructure here in Canada, creating jobs now and a more productive economy in the long term.

On your second question, tax fairness is also critically important. We put in place measures in our budget to ensure that we are able to collect the taxes that are owed in this country. We're moving forward this year to look at how we can simplify the tax code to ensure Canadians can understand our tax code and believe it's fair, so that they will be able to understand and reap the benefits of a well-designed and well-understood tax code.

3:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

When it comes to the infrastructure bank and infrastructure generally, in my conversations with the pension funds and asset managers—that's coming from my prior life—there is a real desire to participate in the building up of Canada and the continuing rollout of infrastructure. I applaud the government's efforts on the infrastructure side and what we'll roll out over the next 12 years.

On the infrastructure bank, can you provide some colour on why it's so important to bring private capital into our economy and utilize that, along with public funds, to build infrastructure, and how that will help grow our economy and and provide those middle-class jobs that are so important to Canadians?

3:55 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Our decision to put in place the Canada infrastructure bank was based on our understanding of both the needs we have in Canada and the situation around global capital.

With respect to the needs we have in Canada, clearly we're going to make significant investments over the next 11 years. We've committed $180 billion, but the needs are greater than that. We can actually invest more over time in order to have an even bigger impact on our economy and to have a more productive economy in the long term.

In thinking about how we can have a greater impact, we looked at what other opportunities there are. We have the lowest interest rates in history right now. We have a huge desire from long-term investors to invest in infrastructure. Putting those two things together, we can see that we can attract capital at a very attractive cost, capital that would be interested in the kinds of investments we have here. In our estimation, it's a win-win. We have more impact for more Canadians today, with more jobs, and in the long term, a more productive economy, while creating the opportunity for investors to invest in long-term projects that can make a difference for, in many cases, pensioners and others who are seeking to have those long-term returns.

4 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Mr. Minister.

Mr. Liepert.

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Thank you, Minister, for being here. I'm pleased to see that our colleagues from the government side used their question time to get all these softie questions thrown at you, so maybe we could challenge you a bit. We'll get off script a bit and ask a couple of questions that I'm hearing from my constituents, quite frankly, and that we also heard from witnesses who testified before our committee on Bill C-29.

I'd like to ask you first about a concern that's being expressed. I'm sure that your inbox is flooded, like ours are, by those medical professionals who are concerned about the elimination of the small business deduction for group medical structures under clause 44 of Bill C-29.

Both the radiologists and the Canadian Medical Association, who were here last week, referred to it as “unintended consequences”. I actually challenged your colleagues on this committee, because several of the questions were pretty clear that this was not an unintended consequence but a direct attempt to get at small businesses.

I'd like you to clarify before this committee whether this was an unintended consequence and whether this is an attempt to fix a loophole, which seems to be the indication coming from your colleagues on the other side, or are you going to look at an amendment based on the representations we've heard?

4 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Could you just clarify what “this” is, that you're referring to?

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

Under clause 44 of Bill C-29, you are removing the ability for group medical structures to claim a small business deduction. They will be taxed at a corporate rate, which is a significant hit for the medical professionals.

I would like your comment on whether that is something you're planning to carry through on, because I have a lot of emails in my inbox to respond to.

4 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

In fact, we are clarifying what has always been the intent in the tax code, that for one business there is one ability to claim the small business deduction.

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

In other words, I take that as a “no”, that you're not planning to make any changes to Bill C-29.

4 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

You should take it as a clarification. The intent is that a small business has a small business deduction. We are clarifying that, yes, in fact, a small business has a small business deduction.

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

And you're clarifying—

4 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

There is one deduction per small business.

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

And partnerships don't fall into small businesses. Is that what you're saying?

4 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

I'm saying there is one deduction per small business.

4 p.m.

Conservative

Ron Liepert Conservative Calgary Signal Hill, AB

I don't think medical professionals across the country will be too happy with that answer.

I want to ask you a question about what I am consistently asked when I'm home in my constituency in Alberta. We have, as you are probably well aware, a crisis in Alberta, relative to jobs. We have a 10% unemployment rate in Calgary, and it's rising every month. People are saying to me that they hear you consistently talk about the middle-class tax cut, but that doesn't do any good for someone who's not working. If they don't have children, the child tax credit is of no value.

I know that you gave a $250-million equalization payment to the Alberta government, but that doesn't help the individuals in Alberta. What am I supposed to be telling my constituents who are out of work and who have little likelihood of finding work that the federal government is going to be doing for them as an individual person, not as a faceless, middle-class, child-rearing couple that we continue to hear about?

4:05 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Minister, this is the final question.

4:05 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

We recognize that the challenges in Alberta are significant. This is of enormous concern. I'm sure you're hearing what I'm hearing, which is that families are struggling in Alberta. That's not limited to Alberta; it's in other parts of the country as well.

We've taken significant measures to be of assistance. We started out, most importantly, with changes to the employment insurance system, recognizing that for regions of the country that were experiencing significant changes in unemployment, they would be in a better position in terms of getting longer unemployment insurance amounts so they could deal with the transition.

I won't in any way say that that's going to fully deal with the challenge. We are doing other things, as you mentioned. I think what we've done with the Canada child benefit is really important, because that is having a big impact on families with children who are finding themselves in that situation.

For all Albertans, and for that matter, for all Canadians, investing for the long term in our country is important. Finding our ability to invest in infrastructure—and we've announced a number of infrastructure investments in Alberta—will help to get people to work and will help the economy to be more productive over the long term.

We are making multiple efforts to make a difference, and we will continue to be focused on this challenge, recognizing that it's important. In the long run, we will be talking about skills and skills development as well, so that we can enable people to keep their skills up to date and consider ways in which they can have an impact in whatever field they choose to be in, whether in Alberta or in other parts of the country.

4:05 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you both.

Ms. O'Connell.

November 28th, 2016 / 4:05 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you, Minister, for being here.

I want to start off by clarifying something that my colleague mentioned with regard to the Canada child benefit, and keeping it cost neutral having been a campaign commitment.

I have gone through the platform, and it's my understanding there was never a cost neutral promise. The promise we made, which was delivered on, was that we were going to stop sending cheques to millionaires, and we were going to redistribute it to those who needed it most, and it would be tax-free, unlike with the previous governments under which people who received this got taxed at the end of the year.

Do you want to perhaps clarify the commitment that was made?

4:05 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

Well, I never like to challenge people without having absolute certainty of the answer. What I can tell you is that all of the things you just said are accurate.

Our main goal with the Canada child benefit was to significantly improve the outcomes for Canadian families, in particular for families in a lower-income or middle-class situation, and that we've done, raising 300,000 children out of poverty. It was also, as you said, to focus our efforts on families that really need it.

My family, previous to our decision, was getting the universal Canada child benefit, and we're not now. I think that is wholly appropriate, because we were able to take the money being used in sending out those cheques and give it to families that were in a greater position of need.

We also, in taking the approach we took, made sure that those payments were not taxable so that when people see the cheque, can really understand what they're getting and put it to use for their families.

I think it's made an enormous difference. We're hearing the differences. You're probably hearing them in your constituency office like I am. Across the country, we're hearing that the rolls are down in drop-in centres and places where struggling families would go to get support, which is an extremely positive thing for those families and for our country.

4:05 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Moving on to another topic, if the changes in Bill C-29 are incorporated, I'm wondering about the Bank Act changes and the consumer protections. Can you elaborate on how this will situate us in comparison with other G20 or OECD countries in respect of the bank protections for consumers, and what this actually means for the average Canadian?

4:05 p.m.

Liberal

Bill Morneau Liberal Toronto Centre, ON

The main issue here is that, of course, we want to protect Canadian consumers. We want to make sure that they understand their situation when working with their financial institutions.

The main issue for us was that we wanted to make sure there was one approach across the country so that there was clarity and we didn't fall into a situation where perhaps there were different levels of consumer protection across the country over time.

We think that we have a strong system, that it compares well internationally, and that it is something we are required to be clear about for the future. We've done that, and we think it'll be positive for consumers.

4:10 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you.

My last area is on economic development and the growth of the economy. I have raised this before, but you've touched upon it as well, and so I'm going to bring it up again.

As to the growth of climate change adaptation and the greening of our economy—and I'm sure you've spoken a lot about this with other leaders—how is Canada positioning itself to be a leader in green technology and climate change adaptation?

As we've spoken about before, it's not only good for our bottom line as we try to prepare so that we're not responding to disasters and just dealing with them, but it also helps us to be leaders on climate change adaptation and to grow the economy.

You mentioned this in your comments. I'm just wondering if you could elaborate on how we're doing as leaders, and how much you see this fitting into the overall growth of our economy as we move forward in the long term.