Finance Committee on May 15th, 2017

[The Chair, Liberal, Wayne Easter]

Pursuant to the order of reference of Tuesday, May 9, we are studying Bill C-44, an act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

We are fortunate to have Minister Bill Morneau here this morning. With him as witnesses from the Department of Finance are Paul Rochon, deputy minister, and Andrew Marsland, senior assistant deputy minister, tax policy branch. Welcome, gentlemen.

Just for the committee's information, we know that there is likely going to be a call for votes. There will be a 30-minute bell, and we will stay until there are about seven minutes left on that bell. The minister has agreed to come back, following the vote, to give us a full hour of his commitment to the committee.

With that, Minister, the floor is yours.

[Bill Morneau, Liberal, Minister of Finance]

Thank you very much, Chair and honourable colleagues.

I am very pleased to talk to you today about Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

The passage of this bill paves the way for the next stage of the government's plan to strengthen and grow the middle class and all those working hard to join it. It will allow the government to continue making the smart investments that will create jobs, grow our economy, and provide more opportunities for the middle class.

The steps we have taken to date are having a real and positive impact on our economy and on Canadians. Over the past year, the economy created over a quarter of a million new jobs, the large majority of which were in full-time positions and in the private sector. Forecasters are expecting Canada's economy to grow even faster over the next two years.

We understand that, despite these positive signs, people are still anxious about the future. Canadians want to be assured that their hard work will mean a better future for their children and their grandchildren.

We must show through action that their concerns are real and that we are ready to take the necessary steps to help them succeed. That's why we are here today, to study and discuss important measures in Bill C-44 and to come to a consensus about the issues that matter most, which is what Canadians expect.

Though I know that the members of this committee are very knowledgeable on the contents of this bill, I want to begin by highlighting a few measures that I know are top of mind for the committee.

First, we have taken steps to strengthen the parliamentary budget office to make it truly independent. Bill C-44 recasts the head of the PBO as an officer of Parliament, with the authority to report directly to Parliament and supported by a team that is separate from the Library of Parliament. Our plan will ensure that the PBO will have expanded right of access to government information and a new mandate to provide costing of platform proposals during elections.

Honourable members, we need to get this right.

The parliamentary budget officer's work is essential to Parliament's capacity to discuss and study current economic and financial issues. This work helps us by requiring us to meet higher standards and to enable us to focus on the facts.

I am here today to take your questions. I know that some of you have expressed concerns. We are open to your views; in fact, we depend on them.

I want to turn now to one of the best ways we can bring confidence back to the middle class: investing in public infrastructure to build stronger communities. Our government has laid out a historic plan to invest more than $180 billion in infrastructure over the next 12 years, but no order of government can accomplish ambitious goals for infrastructure alone. Investors have told us that they want to invest in Canada.

As you are well aware, our country has enormous infrastructure needs and infinite potential for the creation of world-class facilities. For this reason, Bill C-44, enacts the Act to establish the Canada Infrastructure Bank, which establishes the new Canada Infrastructure Bank as a Crown corporation.

Through this new bank, we will work with our partners to build world-class infrastructure that will transform communities, create good jobs, build a stronger and greener economy, and ensure that more of the infrastructure needed by Canadians gets built. Canadians today will benefit from good, well-paying jobs, and Canadians tomorrow will enjoy the advantages of good roads, bridges, transit, and social infrastructure built to meet their needs and help their communities thrive.

Looking beyond bricks and mortar, we really put people at the heart of our plan. I want to address a few measures of this bill that speak directly to our highest priority—the middle class and all those working hard to join it.

The government is firmly committed to helping Canadians of all ages to get the training and the skills they need to succeed in the current and future economic conditions. That is why, throughout the pages of this bill, you will find measures designed to help Canadians receive training, no matter what stage of life they are in.

We want to help Canadians to get the training they need so that their first job is a great job, and their next job is a better job. That's why we're taking steps to help working parents who must balance the demands of raising a family while managing their own career needs in this time of transition.

Bill C-44 would allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower benefit rate of 33% of average weekly earnings. It also proposes to do more to provide greater flexibility to pregnant working women, giving them the option of claiming EI maternity benefits up to 12 weeks before their due date, expanded from the current standard of eight weeks, if they so choose.

Budget 2017 also takes action to support those who have put their lives on the line to make Canada a safe and secure place to live. After putting themselves in harm's way in service to our country, our women and men in uniform deserve a successful transition to civilian life. To help, we'll create a new education and training benefit. This benefit will provide more money for veterans to go to college, university, or a technical school after they complete their service.

I want to stress that we understand the job is not yet complete. Veterans and stakeholders have told us that the existing suite of programs is complex, and difficult and stressful to navigate, and that simply isn't good enough. Over the coming months we intend to take additional action to streamline and simplify the system of financial support programs currently offered to veterans. That will include fulfilling our commitment to re-establish lifelong pensions as an option for injured veterans so that veterans and their families can decide for themselves which form of compensation works best.

To conclude, the bill before us has concrete measures that move Canada forward as a smart and caring nation, but we can and will do more.

We continue to focus on growth, but we will not do so to the detriment of other key issues. We will ensure that all Canadians benefit from growth, not just the wealthiest, and we will help families see the futures of their children and grandchildren with more optimism.

I urge the members of this committee to support the bill and to work with us on those portions of it that can benefit from your own views and ideas so that at the end of the day we meet the high standards and expectations that Canadians have of us.

Before I conclude, I'd like to give you a preview of some of the issues we're looking to address over the coming months. Our government believes that every Canadian needs to pay their fair share of taxes, and in the coming weeks and months I'll be laying out our plan to ensure greater tax fairness. Billed-basis accounting, for example, will be brought forward as part of the next budget implementation act, which will provide the opportunity for the committee to consider in detail the legislative proposals for this measure. I know this is a topic that spurred much discussion, and I look forward to hearing your thoughts.

We're also examining tax planning strategies involving the use of private corporations. As announced in budget 2017, we will release a paper setting out the issues of this in detail, as well as proposed policy responses.

While I'm on the subject of taxation, I know members will have questions about our plans to tax the future legal sale of cannabis. Work has begun on the design of this taxation regime, and the issue will be on the agenda at the next meeting of provincial and territorial finance ministers in June. The goal will be to agree on some basic principles with the intent to move quickly on these historic legislative proposals.

Again, thank you for giving me the opportunity to speak to you today, and I'm happy to take your questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister, and also thank you for giving us an idea of what future thinking might be in some other areas for the future budget. It gives us an opportunity to think of those in advance.

We will go to five-minute rounds, beginning with Mr. Sorbara.

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

Welcome, Minister. Welcome back from your trip overseas as well.

Thank you for those opening remarks.

Minister, I've described our budget, both last year's and 2016-17's, as budgets having a three-pillar approach where we undertake investments in innovation, skills training, and lifelong learning as well as infrastructure, and with all of that, growing the economy and a stronger middle class.

One of the issues we face in Canada is our demographics. We have an aging workforce, and we have a lot of people retiring, and we need to look at avenues to increase participation rates among certain classes of workers. Fundamentally, I think one way that we increase the long-term economic growth rate of our economy is to bring in under-represented groups of workers who may not be at levels where they can be, and we can undertake certain measures.

As the father of two young daughters, I want to ensure that women in the labour force are represented at equal levels to men. Our government has undertaken a number of measures, but I want to hear from you just how important it is for us. Specifically, in the budget, in chapter 5, there is a gender statement for the first time ever that we encourage labour force participation rates to increase, and how important it is for economic growth.

[Bill Morneau, Liberal, Toronto Centre, ON]

Francesco, let me start by saying that this is a hugely important issue for our country, and the kind of advocacy you've had on this issue, both at this committee and more broadly in the House of Commons, really has brought this issue to the forefront. We know that demographic challenges specifically are going to be one of the biggest issues we face in the next generation, and we know that for your daughters and for so many other women in this country, young women, their participation is going to be critically important to ensuring we are successful.

Thinking about that specific issue, we know that we have a 9% lower workforce participation rate among working-age women than we do among working-age men, and as we think about ways to make sure that our economy is successful, we need to think about how we can enable people to be in the workforce, if they choose to be in the workforce, so all of our measures that we put in our first budget and in our second budget that have addressed this issue have been geared to making it more likely that women are going to be successful in the workforce.

This starts with the way we took a look at child benefits, which was, of course, a very important first step by giving significantly more child benefits to lower- and middle-income families, knowing that helps women in particular, especially single women. In this budget there are a number of things that are going to make an important difference. The focus on early learning and child care by putting significant funds into early learning and child care is going to make a difference for families. The biggest burden of child care often falls on the woman, in many cases, as the primary caregiver. Enabling women to have better child care options is going to help with workforce participation.

We've moved forward on a number of other things. You heard me in my remarks talk about making parental leave more flexible, recognizing that different families have different needs and enabling people to make the right choice for their family. Looking at things as specific as how we can help women entrepreneurs to be more successful can make a difference in terms of allowing people to see their potential opportunities in the workforce. All of these things are part of a broader plan on dealing with what's critically important, enabling women to be successful and, at the same time, having a really positive economic impact.

Thank you again for your question. It's one that is central to our government's efforts.

[The Chair, Liberal, Wayne Easter]

You have time for a very quick question and a very quick answer.

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

Investing in Canada and in Canadians is of paramount importance to making sure that we have a thriving economy and that people have the right skill set for an evolving economy, which is obviously changing all the time.

I would like to follow up on a changed tangent. On the tax fairness, tax avoidance measures, for which we've put a lot of funds into CRA for the last two years, what are our expectations out of that? The way I look at it is, we need to ensure Canadians and organizations pay their fair share of taxes, but what is our overall theme in terms of the government's focus on that initiative?

[The Chair, Liberal, Wayne Easter]

Minister, you'll have to sum up fairly quickly.

[Bill Morneau, Liberal, Toronto Centre, ON]

This is central to our government. We want to make sure we have a system that's fair and also that people are paying their fair share based on that system. The kinds of resources we gave to the Canada Revenue Agency were critical to make sure that happened. At our first budget we gave over $400 million in additional funds to CRA so they could make sure people were actually paying the amounts they were due to pay. We saw that as a very successful effort to make sure that people were doing that. It actually paid dividends in terms of people paying their fair share.

In budget 2017, we moved forward again to put more money for CRA so they could enforce the rules in the fairest way across our country. It will have a positive impact on government revenues by ensuring that people are paying their fair share. That's a continuing approach that we'll take as we think about not only closing loopholes, but once we have the system, making sure that people actually do what we expect them to do, and that's to pay their taxes.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Poilievre, welcome to the finance committee.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

On the infrastructure bank, division 18, subclause 22(2) of your budget bill, it says:

The Minister of Finance, on the recommendation of the designated Minister, may make a loan or provide a loan guarantee with respect to the infrastructure project.

If you loan, say, a billion dollars of taxpayers' money to a company to build infrastructure, and that company goes bankrupt, who will repay Canadian taxpayers their billion dollars?

[Bill Morneau, Liberal, Toronto Centre, ON]

First of all, I'd like to thank you for bringing up the Canada infrastructure bank. We believe that this institution will enable us to produce more infrastructure across this country than would be the case if we didn't put it in place.

[Pierre Poilievre, Conservative, Carleton, ON]

And who will repay the billion dollars?

[Bill Morneau, Liberal, Toronto Centre, ON]

What we look toward doing is thinking about how we can attract additional money into infrastructure projects that wouldn't otherwise get done. The institution will be able to use the $15 billion of money we've put from our $180 billion over the next 10 years, as well as use the $20 billion in capital that the institution will have, to make projects work.

The specifics of each—

[Pierre Poilievre, Conservative, Carleton, ON]

Loans would be an example of the capital.

The question was, if you loaned a billion dollars for an infrastructure project and the borrower went bankrupt, as often happens, and as happened to a builder in south end Ottawa, who will repay taxpayers their billion dollars?

[Bill Morneau, Liberal, Toronto Centre, ON]

I want to thank you for the additional clarity, but I did understand the question.

[Pierre Poilievre, Conservative, Carleton, ON]

Nobody can understand your answer because you're not giving one yet.

[Bill Morneau, Liberal, Toronto Centre, ON]

I'd like to answer.

The bank will be able to have specific projects that it supports in terms of concessional capital or in terms of loans or loan guarantees—they're good examples—

[Pierre Poilievre, Conservative, Carleton, ON]

Who would repay it if the builder goes bankrupt?

[The Chair, Liberal, Wayne Easter]

Pierre—

[Bill Morneau, Liberal, Toronto Centre, ON]

I am happy to answer your question, if you'd like.

[Pierre Poilievre, Conservative, Carleton, ON]

Anytime. We're ready for it.

[Bill Morneau, Liberal, Toronto Centre, ON]

If you have more to say, go ahead, I'll wait.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay, I will.

I'll move on to the same clause in the budget bill. It gives you the power to offer loan guarantees for a company building infrastructure. That will make the taxpayer the guarantor of a loan. If a company gets a taxpayer guarantee for a billion-dollar project and fails to repay that billion-dollar loan, who will repay it?

[The Chair, Liberal, Wayne Easter]

The floor is yours, Minister.