Finance Committee on April 9th, 2024

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Woo Dearden and Mr. Lemire.

Now we go to MP Davies. You will have the final questions for our witnesses.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Vichie, I think your testimony is pretty clear that you think these incentives will have a positive effect on investment in the clean-tech and hydrogen industries in Canada. I'm wondering if you can briefly help us understand the magnitude of that and the quantity of investment we might expect. Are you aware of a specific example that you could point us to that might be impacted by this measure?

[Trent Vichie]

Absolutely. The first phase, for example, of our project in Nova Scotia, which is just the start, is about $2.5 billion. The economic impact on GDP is about $2 billion, and government revenues are close $1 billion. This is a small start.

The EA was approved for the project in Newfoundland today. These are multi-billion dollar projects. This is absolutely meaningful, and it is probably one of the best clean growth economic initiatives for the Maritimes region.

I don't understate how important this is for driving growth. It's like turning the Maritimes region into the Houston or Texas or Alberta of the east. It is really substantial, so we really appreciate the consideration for the work that's being done here.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Vichie.

Thank you to all our witnesses for your testimony. We wish you the best for the rest of the day. Thank you very much for coming before our committee.

At this time, members, we are going to suspend as we transition to our last panel for today.

[The Chair, Liberal, Peter Fonseca]

Welcome back, everybody.

With us today, representing the Association des psychoéducatrices et psychoéducateurs, we have the VP, Julie Maillette, and the president, Laurie Marquis.

With us via video conference, from the Co-operative Housing Federation of Canada, we have Timothy Ross, executive director.

I understand we now have Kate McNeece with us. Welcome. We hadn't seen you earlier. Ms. McNeece is a partner with McCarthy Tétrault, and her field is competition, antitrust and foreign investment.

Ms. McNeece, if you're ready for some opening remarks, we'll start with you. Then we'll go to the association and the Co-operative Housing Federation of Canada.

You have five minutes.

[Kate McNeece, Partner, Competition, Antitrust and Foreign Investment, McCarthy Tétrault LLP, As an Individual]

Thanks very much.

Good afternoon, Mr. Chair and honourable members of the committee.

My name is Kate McNeece, and as the honourable chair just said, I am a partner at the law firm of McCarthy Tétrault, practising in competition, antitrust and foreign investment.

Thank you very much for inviting me to appear before you today.

Before I begin my statement, I want to note that I am appearing today in my capacity as an individual, and the views expressed today are my own, not those of my law firm or any client of McCarthy Tétrault. However, my submissions today are informed by my experience advising clients on the application of the Competition Act to their commercial agreements, conduct and mergers.

In my view, a comprehensive, clear and effective Competition Act is in the best interests of all stakeholders, including consumers and the business community. Bill C-59, along with the amendments enacted in 2022 and 2023, presents a comprehensive vision for the future of the act. I commend the government and this committee for their thoughtful approach to implementing meaningful competition law reform in Canada. In my remarks, I will highlight a few areas that I believe bear additional consideration.

First, I believe there is more work to be done to rightsize the merger control thresholds set out in sections 109 and 110 of the act. Over the past five years, the significant majority of transactions notified to the Competition Bureau have been designated non-complex, meaning they are identifiable by the clear absence of competition issues. Calibrating these thresholds to capture more potentially problematic mergers, while reducing the administrative burden on both merging parties and the bureau by excluding more mergers that clearly do not raise issues, should be a goal of any meaningful reform.

Bill C-59 changes the size of transaction thresholds to capture entities with significant sales in Canada. This is a step in the right direction. However, I suggest additional study to consider further calibration of these thresholds, including in particular an amendment to exclude from the “party-size” calculation assets and revenues of a vendor that is divesting its entire interest in a business. These are plainly irrelevant to the merged party's financial position.

Second, Bill C-59 introduces a disgorgement remedy for civil conduct that has been the subject of a tribunal order under section 75, 77, 79, or 90.1 of the act. I believe private actions under the act will be an important complement to bureau enforcement, and I understand these provisions are likely intended to incentivize use of these provisions.

However, the creation of a new collective redress mechanism from whole cloth risks confusion and uncertainty, when there is a simpler alternative. Section 36 of the act currently allows for collective redress for damages where there has been a violation of one of the criminal provisions of the act. I recommend that this committee consider revising Bill C-59 to remove the proposed disgorgement provisions, and instead allow private litigants to seek collective redress under section 36 of the act for conduct that has been the subject of a tribunal order concerning civil matters.

Third, Bill C-59 introduces private actions, administrative monetary penalties and financial remedies for conduct found to be contrary to section 90.1 of the act. I am particularly concerned that as drafted, these penalties could apply to agreements that would constitute mergers under section 92 of the act. It would cause significant uncertainty in transaction planning if mergers could be subject not only to bureau review and remedies under section 92 but also to AMPs, private actions and, potentially, disgorgement or damages under section 90.1. I urge the committee to explicitly exclude agreements and arrangements that constitute mergers for the purposes of section 92 from the scope of section 90.1 of the act.

Finally, I am concerned by the bureau's recent submission to this committee advocating for the inclusion of structural presumptions based on bright-line concentration and market share tests in the text of section 92. I caution the committee not to incorporate such a significant change into this bill without a careful study of the evidence supporting the magnitude of notified transactions that would be captured by the proposed thresholds and therefore be subject to a reversed burden, without consultation with a wide variety of stakeholders to understand the impact of such a change on merger activity and without consideration as to whether the proposed tests, which are taken verbatim from the new December 2023 U.S. horizontal merger guidelines, are appropriate in the context of Canada's economy.

While bright-line structural presumptions can be useful in providing direction to merging parties on the likely treatment of a prospective transaction and in potentially dissuading problematic transactions, in my view, they are most appropriately placed in enforcement guidelines, as they are in the U.S. The assessment of competitive effects is necessarily a contextual one, and the more balanced approach taken in Bill C-59, which permits but does not require the tribunal to assign greater weight to evidence of concentration and market share, is the more appropriate course.

Thank you very much for your time this afternoon. I would be happy to answer any questions.

[The Chair, Liberal, Peter Fonseca]

Thank you very much, Ms. McNeece. I'm sure there will be many questions.

Now we'll hear from the Association des psychoéducatrices et psychoéducateurs. We will go to the vice-president, Madame Maillette.

[Julie Maillette, Vice-President, Association des psychoéducatrices et psychoéducateurs]

Thank you, Mr. Chair.

Officially incorporated in February 2022, the mandate of the Association des psychoéducatrices et psychoéducateurs, or APP, is to promote psychoeducation to the public, educational institutions, workplaces and community organizations, both private and public, in the field of psychoeducation.

The APP's raison d'être is also to be present to defend the interests of its members. Right from the start, members spoke to us of their desire to see their services exempt from taxes, like other professionals.

Psychoeducation is a young Quebec profession created between the 1950s and 1970s. For example, the Université de Montréal's school of psychoeducation was founded in 1972.

To hold the title of psychoeducator, you must be a member of the Ordre des psychoéducateurs et psychoéducatrices du Québec, known as the OPPQ. In addition, you must either have a master's degree in psychoeducation, benefit from the acquired rights clause, or be admitted through the equivalence recognition process.

To fully understand how psychoeducation differs from other helping professions, we refer to the psychoeducator's field of practice as this:

Evaluate adjustment difficulties and adaptive capacities, determine an intervention plan and ensure its implementation, restore and develop the person's adaptive capacities, as well as contribute to the development of environmental conditions with the aim of promoting the optimal adaptation of the human being in interaction with their environment.

Psychoeducators work with a diverse clientele in almost all living environments, whether adults or children. Their practice covers many issues, such as adjustment difficulties, depression, developmental delays, autism spectrum disorder, behavioural disorders, emotional management difficulties, substance abuse, mental health problems, social reintegration, and much more.

[Laurie Marquis, President, Association des psychoéducatrices et psychoéducateurs]

Good afternoon.

For my part, I'm going to tell you why we want psychoeducation services to be tax-exempt, both federally and in Quebec.

As my colleague Ms. Maillette said, psychoeducators carry out psychosocial interventions with a varied clientele, particularly in mental health. In fact, you had the chance to hear about it earlier, from Ms. Woo Dearden, who is a psychotherapist.

Psychoeducation is currently helping to reduce waiting lists for mental health services, which are a primary public health need in Quebec and Canada. However, the taxation of our psychoeducational services represents a real barrier to referral. For example, some professionals, and even some clients, are reluctant to come to our services, precisely because they are perceived as being a little more expensive, compared to the services of other professionals who are not taxed. Examples include occupational therapists, psychologists, acupuncturists and naturopaths. There are plenty of other services that are tax-exempt.

I can attest to this: often, taxes can prompt the client not to sign up for psychoeducational services, even when these would be the preferred services, for example because of adjustment difficulties or the need to develop a certain skill in their development. Professionals also tend not to refer their clients to a psychoeducator. We believe that tax exemption on our services would ease the financial burden on those seeking help. The costs of psychoeducation services are high. So, if we were to remove the taxes, which represent around 15% of the price of the session, it would allow people who need help to save significant amounts.

I'd also like to describe the expertise of psychoeducation. It lies above all in understanding the human being, developing abilities, managing emotions and developing skills. Moreover, our clinical process corresponds to the definition of the work of therapeutic counsellors, which we would like to see added to Bill C‑59, as we have seen. So, we believe that psychoeducation services could fall into the category of therapeutic counsellors.

To proceed in this way, you would first need to amend the Excise Tax Act by including the term “therapeutic counsellor” in the definition of “practitioner”. It should be made clear that psychoeducation is included, so that there is no ambiguity. That way, Revenu Québec, to which we also report, will be able to rely on federal documents to grant us tax-exempt status.

So there's still a long way to go before we can benefit from this exemption.

Thank you for listening.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Marquis and Ms. Maillette.

Now we will hear from the Co-operative Housing Federation of Canada.

Mr. Timothy Ross, please go ahead.

[Tim Ross, Executive Director, Co-operative Housing Federation of Canada]

Good evening, Mr. Chair.

Thank you to the members of the committee for the invitation to appear tonight. I would love to be there in person; however, I am in Fredericton for work, so I am appearing from Fredericton today. I represent the Co-operative Housing Federation of Canada, the national voice of the co-operative housing movement.

As a bit of co-op history for starters, co-op housing is a very well-documented success story in Canada. For over 50 years, co-ops have been providing good-quality, affordable homes owned and governed by the community members who live there. There are more than 2,200 housing co-operatives located in every province and territory, and co-ops are home to more than one-quarter of a million Canadians.

Co-ops offer at-cost housing, meaning housing charges are increased every year simply to cover the costs of maintaining buildings in a good state of repair and investing in the future. That's why co-op homes cost $400 to $500 less per month on average in Canada when compared to similarly aged apartments in the private rental market. Co-ops also offer greater security of tenure: There's no outside landlord who might sell, renovict or unreasonably increase rents.

Co-ops are inclusive by design, as almost all operate on a mixed-income model, administering available rental assistance programs for a portion of households with low incomes. They build strong communities because co-op housing brings people together, and they allow people the chance to have a say in how their housing is run.

Now I have some remarks to offer related to the fall economic statement and implementation.

The first is related to the rental rebate. Bill C-59 proposes to extend the GST rebate to certain co-operative housing. We really appreciate this policy change, as we know it will be directly passed on to households in need that occupy new co-op housing. This is a big part of the power of co-op housing. The non-profit, community ownership model ensures co-op homes are affordable and remain affordable for generations to come.

The co-op housing sector is also ready to build. We're ready to play a larger role in the housing crisis. The fall economic statement also included some resources for the forthcoming co-op housing development program. A budget commitment for this program was first made in 2022 for the launch of a new co-operative housing supply program, and we are very much looking forward to the launch of this program. We heard recently from the minister, at a conference a couple weeks ago, that the program is expected to launch in early 2024. We really hope that is the case, because any further delay in the launch of the program is costly—there is a lost opportunity cost to that.

I'll also to speak to the importance of acquisition in the national housing strategy's set of programs. Between 2016 and 2021, Canada lost 370,000 homes rented at or below $1,000 per month. This happens through demolition, conversion to condo or increasing rents at turnover, which leaves fewer affordable housing options. Unfortunately, we're actually losing more affordable housing supply than we're seeing built under current federal programs.

We recognize and welcome the recently announced Canada rental protection fund, which is meant to stem the loss of affordable housing by enabling co-ops and non-profits to buy rental housing to keep it affordable. We look forward to working with the federal government and our partners to expedite that fund's launch, because so many renters are in precarious situations today and housing co-operatives are ready to help.

Last but not least, it also must be said unequivocally that we need a fully funded “for indigenous, by indigenous” approach to the urban, rural and northern indigenous housing strategy. It's much needed right away. There's a $4-billion commitment on the table. We know that's not enough. Indigenous people in communities across the country disproportionately experience housing need, and we need to see a robust and dedicated response. This will help to both address the housing crisis and advance reconciliation.

In conclusion, the co-op housing sector is ready to work closely with the public, private and non-profit sectors to build more of the housing we need. The co-operative housing movement in Canada is well established and has proven to be very resourceful, passionate and committed to a vision of co-op housing for all. We believe that a housing system that works for all must include more co-operative homes.

Thank you, Mr. Chair. I look forward to the members' questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ross, for your opening remarks.

Thank you as well to our other witnesses for your opening remarks.

This is our fifth panel of witnesses today. I may be a little biased, but I think this is the hardest-working committee on the Hill. I think the members would agree with that. As a result of that, we have many special guest MPs joining us, because they want to break a record. I understand this will be the most meetings that we've ever had for the fall economic statement.

We have MP Darrell Samson joining us.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

It's a pleasure for me to be here. Thank you.

[The Chair, Liberal, Peter Fonseca]

MP Morrice has joined us at the table along with MP Sébastien Lemire. We also have MP Fast, who was a member of this committee and has joined us to break the record—

[Ed Fast, Conservative, Abbotsford, BC]

It's a pleasure to be back.

[The Chair, Liberal, Peter Fonseca]

—as we go through 20 hours of witness testimony here for the fall economic statement.

[An hon. member]

Mr. Bittle is here.

[The Chair, Liberal, Peter Fonseca]

That's right. Mr. Bittle is here.

You can join us at the table.

With that, we are going to get to members' questions. In this first round, each party will have up to six minutes to ask questions.

We are starting with MP Morantz in this record-breaking effort.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

I want to clarify if Mr. Leet is here from World Energy.

[The Chair, Liberal, Peter Fonseca]

No.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay. I was just checking.

I want to thank the witnesses for being here.

I'll start with Ms. McNeece.

Thank you for your testimony. I want to back it up to about 30,000 feet, though, in terms of general policy.

A few minutes ago, Professor Vivek Dehejia from Carleton University was talking about serious problems Canada is having with falling productivity, and he partly laid the issue at the feet of foreign investment. Deputy Governor Rogers from the Bank of Canada recently said Canada is in the middle of a productivity emergency and that “it's time to break the glass.”

From your perspective and the perspective of the clients you talk to, what are you seeing in terms of foreign investment? What steps, from a legislative perspective, do you think the government could take to make foreign investment in Canada more palatable to investors from outside the country?

[Kate McNeece]

That's a very 30,000-foot question, and I'm afraid it's a bit above my pay grade. My comments were restricted to the Competition Act, which is covered in Bill C-59. However, I also deal with the Investment Canada Act, which governs the review of foreign investment going into Canada. We've seen a number of changes under the Investment Canada Act as well. Bill C-34 recently received royal assent. It is not yet enforced, but I think it soon will be.

The issue with foreign investment is multifold. First, there's a great deal of regulatory uncertainty for foreign investors who are subject to the Investment Canada Act in terms of what will be required of them. The national security provisions of the act are quite broad and are being applied more broadly. I think there is a lack of transparency in what investors can expect, especially in areas that aren't traditionally thought of as related to national security. You can think of defence and the military, but increasingly we're looking at investments in critical minerals and critical infrastructure as being very important to Canada's national security. Those categories are getting very broad.

The pending amendments that will come into force shortly will implement a mandatory reporting regime for certain investments in critical areas for prescribed businesses that involve prescribed rights. However, those will all be defined by regulations, of which the business community and the bar have not seen any drafts. There's a great deal of uncertainty right now as to where the foreign investment regime is heading.

Separately, I know the Canadian government and a number of people working in the civil service at ISED and other investment-related arms are doing good work in reaching out to foreign entities that may have an interest in investing in Canada. I've worked with a number of clients who have been the subjects of that type of outreach and who have come to Canada. We've worked with them in that context, so I know that work is being done. However, I think the more clarity we can get around the new amendments to the Investment Canada Act, the better, from a foreign investment perspective.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

You mentioned regulatory uncertainty. What would be an example of a company looking to invest in Canada that would have to be approved under the foreign investment review laws? What would be an example of something that would be a hindrance to them or something that is uncertain in the regulations that would cause them to maybe pause or reconsider their investment?

[Kate McNeece]

There are two types of processes under the Invest in Canada Act that foreign investors may have to go through.

One is what we call a net benefit test, which is for certain investments that exceed financial thresholds. They need to go through a preclosing review and approval process. That typically involves providing undertakings to the relevant minister. There are two categories here. The reviews of non-cultural investments are done by the Minister of Industry. The reviews of cultural investments are done by the Minister of Canadian Heritage.

There can be some uncertainty in what undertakings will be required to demonstrate that an investment is of net benefit to Canada. It tends to be an iterative process. It involves consultations with a number of stakeholders.

The way the process is set up is that you deal with the civil service agency that then speaks to the decision-maker, rather than discussing directly with the decision-maker. There can be a bit of friction in that process, just naturally.

The other is the one I referred to previously, which is the national security process. I think the greatest uncertainty there is that while we have guidelines as to how those provisions will be applied, there is a new mandatory regime that will be coming into force. However, the scope of that application and the timing of those rules is right now completely uncertain. That is also causing uncertainty for some of our clients.