Finance Committee on May 8th, 2017

[Pierre Mercille]

I understand that there have been discussions, but I don't think the companies have expressed how they're going to do business. I was not present at any discussion.

[The Chair, Liberal, Wayne Easter]

Thank you. I assume you want on the list again, Raj.

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

I want to preface my question with a little history lesson.

I come from Alberta. I know we have a few of our friends across the aisle here who weren't in elected office at the time we had a thriving Canadian economy based on a strong oil and gas sector.

[An hon. member]

Hear, hear!

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

All of the country benefited. We had a huge trade surplus. Manufacturers in central Canada were doing record business in the oil patch. Then, of course, as we all know, the world price of oil collapsed. During that collapse, we had probably three-quarters to maybe even 80% to 90% of the rigs idle because nobody was spending any money.

Now that the price has started to climb back up and companies have started to engage drilling companies to go out and explore for conventional oil. In this particular budget, the government has slapped the oil industry by proposing to reduce the petroleum drilling incentive. What justification would that have from Finance officials, or is it purely political?

[The Chair, Liberal, Wayne Easter]

Mr. Greene.

[James Greene, Director, Business Income Tax Division, Tax Policy Branch, Department of Finance]

Thank you, Mr. Chairman.

Just so that you understand, the measure that the honourable member is referring to is not contained in this bill. I would appreciate your view on whether that should be a topic for—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I heard Mr. McGowan mention the reduced drilling incentive tax credit earlier.

[Trevor McGowan]

I did mention the one-year extension for the exploration tax credit relating to grassroots mining expenditures.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

So the decision to do away with a good chunk of the drilling incentive is not in this?

[Trevor McGowan]

The amendments relating to oil and gas and certain expenses, such as exploration expenses or development expenses announced as part of the budget, are not in this bill.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Where are they?

[Trevor McGowan]

It's common for the tax amendments announced as part of a budget process to be split into two tranches: one to be introduced in a spring bill, the first budget implementation act; and others that, for one reason or another, such as their legislative complexity, the desire to hear more stakeholder input, and the necessity of the measures being enacted by a particular date, can often be deferred. They could be included in a summer release, perhaps with revisions based on stakeholder feedback, and then be included in the second budget implementation act tabled in the fall.

The measures I believe you're referring to were not included in this. They could be tabled in the fall, the second budget implementation act for 2017.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert, that question is probably more appropriate for the minister, because it was mentioned in the budget statement. Correct? But it isn't in this particular budget implementation act.

[James Greene]

That's correct, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

As far as your question is concerned, Mr. Liepert, I think it can be directed the minister when he is before us, because relates to something he said, but that item is not in this particular bill, Bill C-44.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Could I just ask, is there any reason specific for this? You mentioned it's not atypical, and you gave some general reasons why this happens. Is there any specific reason why it's not in this particular bill? Is there going to be some kind of consultation with industry, or what?

[Trevor McGowan]

Unfortunately, I can't.... The decision on which measures are included in the first bill versus the second bill, of course, is a decision made by the Minister of Finance,, or above us at the political level. Unfortunately, I don't believe I can provide our advice as to why one thing or another ought to be put in one bill or another, nor can I speak for the minister as to why one way was decided rather than the other. I did provide the three general types of considerations, namely the necessity of something being enacted by a particular date, the relative legislative complexity, and the desire to receive feedback and engage with stakeholders on the—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Chairman, I'll leave it at that. It's no wonder Canadians can't understand how government works when the Minister says something in the budget address and then it sort of disappears.

[The Chair, Liberal, Wayne Easter]

As I understand it—because we've had this discussion on bill-based accounting as well—it's stated in the budget along the lines that Mr. McGowan suggested: to give a heads up, to give notice that this is being considered, and to provide for consultations and feedback. That's how I understand it, and things may or may not change over the summer.

Mr. Greene, you wanted to add something?

[James Greene]

Yes, Mr. Chairman. I just want to add to my colleague's remarks.

Without making any guarantees about how things will proceed this year, it has been the practice in recent years that tax measures contained in the second budget implementation act, as Mr. McGowan alluded to, are released by the government in draft form, particularly given the complexity involved in these types of measures, to give affected parties—stakeholders, industries, and so on—the opportunity to comment on the proposed legislation before it is introduced in Parliament.

Thanks.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

That's all I have for now. Thank you.

[The Chair, Liberal, Wayne Easter]

We'll come back later in any event, if needed.

Mr. Dusseault.

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

Thank you, Mr. Chair.

My thanks to the witnesses for joining us today.

I have a number of questions.

This bill is not so voluminous as the ones introduced by the Conservatives when they were in power. They introduced bills of that kind several times a year. Perhaps I will come back to that in a future round.

First I would like to talk about property underwriters serving agriculture and fisheries.

Correct me if I am wrong, but, at the moment, property underwriters working with agriculture and fisheries have a tax advantage over the others, in that their clients are almost exclusively fishing and agriculture companies. Am I wrong to make that statement?

[James Greene]

No, that's correct.

The measure in question is the tax exemption that applies to insurers who insure farming or fishing property. They have to have at least 20% of their premium income from those policy segments.