Finance Committee on May 3rd, 2022

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 41 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2), the committee is meeting on the subject matter of Bill C-19, an act to implement certain provisions of the budget tabled in Parliament on April 7, 2022, and other measures.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I'd like to make a few comments for the benefit of witnesses and members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike. Please mute your mike when you're not speaking.

For interpretation, those on Zoom have the choice at the bottom of their screen of floor, English or French. Those in the room can use the earpiece and select the desired channel. I remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order the best we can. We appreciate your patience and understanding in this regard.

I request that members and witnesses mutually treat each other with respect and decorum.

I'd now like to welcome today's witnesses from the Department of Finance. Please note that today's witnesses are here to speak about parts 1 to 4 of the bill. On Thursday, the committee will hear from senior officials for part 5 of the Bill.

Members, this is just a quick reminder that witness lists are due tomorrow, Wednesday, by 4 p.m.

Members should have received the budget. I'm just seeing if I can have members' nod of approval for our budget for Bill C-19.

Okay, great.

With that, I understand we are going to go to officials, although I do see a hand up.

Mr. Ste‑Marie, over to you.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to rise on a quick point of order regarding our study on Bill C‑19. I just want to remind everyone that, as is often sadly the case, this bill contains an enormous amount of information. In fact, it could have been separated into many bills.

While not standard practice, it has occurred quite frequently in the past that some parts of a bill are studied by other committees. This can be through an order from the House following the second reading vote on the bill, or the decision can be made by a committee. Oftentimes, it is the government that requests it.

I am not proposing anything here, I just wanted to make information known to committee members. I would like to remind them that the bill requires careful analysis. It needs to be scrutinized, whether it be by other committees or ours.

There is an entire part on employment and employment insurance, and if this part isn't studied by the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, we will have to set aside some meetings to have a good look at the amendments contained in the bill.

The same goes for the amendments regarding the Competition Act and the Competition Bureau. Will these amendments really be conducive to a competition analysis? Will the Standing Committee on Industry and Technology study the bill? If it doesn't, our committee will have to set aside some time to do so.

The bill also deals with the Special Import Measures Act. Will the amendments made to the act have unintended consequences for our manufacturers in Quebec and in all of Canada? Will our committee or the Standing Committee on Industry and Technology undertake an analysis? If it falls upon our committee, we will need enough time to do so.

The bill also has a section on immigration, amongst other subjects. I just want us to keep this in mind. We can study these aspects after the second reading vote in the House. Otherwise, it will be up to us to make decisions. I don't necessarily have a preference, but if we, the members of the Standing Committee on Finance, are the ones who will scrutinize the whole bill, let us take the time to do an in-depth analysis of each part, because each part could be an act in itself. That way, our committee will have done its work properly.

That was my point of order.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

I know that you have a great deal of knowledge, having sat on the committee for many years. I have noted what you have said and committee members have all heard it, so they will take that into account on how we proceed. Thank you very much. I appreciate that.

I see MP Albas has his hand up.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Chair, I was busy trying to get my headpiece and everything together here.

Did you mention that we had a budget for this?

[The Chair, Liberal, Peter Fonseca]

Yes. It was distributed.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I realize it was distributed. I would like to see if we can revisit it at this time.

[The Chair, Liberal, Peter Fonseca]

Do you mean the budget?

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Yes, the issue of it, because I think we flew past it.

I believe that we, as a committee, should have a clear picture of the scope of the study. There are some amounts that are in the budget, and I do not want.... I really want to get on to the show today, which is Bill C‑19.

I would ask if we can defer the approval of the budget to a date when we have some clarity as to how encompassing and which days we will be meeting.

I've had a number of members ask me specifically about that and I've been unable to give them any kind of specificity about our schedule.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas.

I'm looking to members. Maybe we can build in some time on Thursday to be able to discuss that. Yes? Thank you.

Now we will move right into members' opportunity for questions.

For the first round, we have MP McLean. Welcome back.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you very much, Mr. Chair.

Exactly where are the officials?

[The Chair, Liberal, Peter Fonseca]

There are 56 officials. I believe they are with us virtually.

[Greg McLean, Conservative, Calgary Centre, AB]

There are 56 officials. I'm going to be asking questions of 56 officials.

[The Chair, Liberal, Peter Fonseca]

Yes. They're from 12 departments and agencies.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Are they on the screen? Are they logged into Zoom? Good. Thank you.

Mr. Chair, my first question is going to be.... I've gone through much of Bill C‑19 here. My first question is from a natural resource perspective.

There's nothing in here for the natural resources sector, and there was a significant amount in the budget concerning the natural resources sector, particularly. I'll dwell on one first of all, which is a new carbon capture, utilization and storage regime. I know that it's been a long time coming. This government has taken a lot of time and it voted down a piece of legislation I put in front of Parliament over a year ago to start getting carbon sequestered in Canada. We're a year later, emissions have continued and we have no regime.

I was expecting something in this budget implementation act on carbon capture, utilization and storage. Can any official can walk me through that? We need certainty, and the industry is trying to work with the government to get a regime that works in making a better environmental outcome for Canadians.

If we can get some certainty and someone can explain to me why there's nothing in this budget implementation act to move this process forward on a tax regime to deal with carbon capture, utilization and storage, I would be very pleased.

That's for anybody.

[Trevor McGowan, Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance]

That is correct. The 2022 federal budget announced a measure relating to carbon capture and storage. It is also entirely correct that it's not contained in the first budget implementation bill.

I can say that, for a lot of more complicated measures, as the CCUS credit would be, it is normal for the government to delay their implementation or inclusion in a bill until, for example, the second budget implementation bill that is often tabled in the fall, in order to receive stakeholder feedback and consult with affected stakeholders. It's not in this bill, but there's often a second budget bill to come.

[Greg McLean, Conservative, Calgary Centre, AB]

I appreciate the response. This government has been receiving stakeholder feedback on this mechanism for a year and a half. How much longer does it have to take?

I appreciate that it's not as good a measure as I put on the table for abating carbon emissions over a year ago. However, we still need to start from somewhere and get this moving along.

It's not something that industry wants to do in the rear-view mirror. It wants a regime it can look at and say, “This is how we abate carbon, and this is where the tax credit and the cost of abating carbon will be shared through society”. You're telling me that it's going to wait another six months before industry gets that look at how that tax expense will be shared. Is that what I'm hearing?

[Trevor McGowan]

As I noted, the measure's not contained in Bill C-19. It will ultimately be a decision for the government as to what legislative vehicle the measure would be included in. As I said, it's fairly normal course for some of the more complicated measures to be announced in a budget. Quite often draft legislative proposals are released in the summer for further consultation, and then the measures can be included in a fall budget bill. Again, it's up to the government to decide what legislative vehicle any measure would be included in, but that is a fairly standard path that they can take.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you for that.

You're saying it's the government's choice not to put it in this implementation bill. The government's had a year and a half to look at it, consult and waffle on an actual effective tax regime that would make us competitive with the United States and Norway, yet it's going to delay that another six months because it wants to do it in a separate mechanism.

Is this the Privy Council? When you say “the government”, are you talking about the political ministers, or are you talking about the centre of the Privy Council Office? Could you inform me, please?

[Trevor McGowan]

I believe it would be up to the government ministers to table bills.

[Greg McLean, Conservative, Calgary Centre, AB]

It's the government's choice to delay that another six months before we actually start dealing with carbon sequestration and environmental amelioration in Canada. Thank you very much.

I'll ask a similar question. I do rest in the theme of natural resources here. You also have a new regime where you're giving another tax credit for Canadian exploration expenses. You're doubling down on that for the critical minerals industry. That's not in this implementation act either, yet this is something where the government says it's urgent to proceed as quickly as possible. Can you explain why that's not in this implementation act, please?

[Trevor McGowan]

As I noted earlier, I think my response would be the same to this question. It is a decision for the government as to what measures get included in the bill. It's fairly normal procedure for some of the more complex measures, or measures that might benefit from more stakeholder engagement, to have that additional stakeholder engagement done after the tabling of the first budget bill through the summer. Quite often those amendments can be included in a subsequent budget bill.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. McLean. That's the time.

Now we'll hear from the Liberals for six minutes.

MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all the officials who are joining us today. Thank you for being here. Thanks for your tremendous work.

The first question I want to ask you about is the home accessibility tax credit. There are lots of seniors in my wonderful riding of Davenport. They've worked extraordinarily hard their whole lives. Many of them are blessed to own their homes and they want to continue to live in them as long as possible. Our federal budget 2022 doubles the qualifying expense limit of the home accessibility tax credit to $20,000. It's to help seniors and persons with disabilities to live and age at home.

I have two questions for officials. First, how many people are expected to benefit from this change? Second, what types of expenses will be eligible?

[Lesley Taylor, Senior Director, Social Tax Policy, Department of Finance]

I'm Lesley Taylor. I'm here from the tax policy branch.

As you noted, the annual expense limit is increasing to $20,000.

To your first question of how many people may stand to benefit, it's a little tricky to estimate these things given that this would be potentially a new population accessing the measure. We think it's around 10,000 families that may be able to take advantage of the increased limit. As a bit of additional context, about 27,000 families claimed the credit in the 2019 tax year. That gives you a sense of the proportion there.

In terms of what types of expenses might be eligible, the intent of the government here is to increase that limit for perhaps more substantial renovations, such as adding a powder room or a full bathroom to a ground floor for someone who's lost the ability to access the second floor of their home or perhaps renewing the flooring within the home to prevent slips and falls. These kinds of more substantial things can often cost more than $10,000 a year for a family.

In general, the expenses have to be enduring in nature, so they do have to be integral to the home. They have to promote the safe movement of the individual in the home, safe access into the building and just generally promote accessibility and safety. There are restrictions in the Income Tax Act that help to direct those expenditures to those types of safety- and security-improving expenses.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

I know that many people in my riding of Davenport will be very happy with this doubling of the home accessibility tax credit, as well as many Canadians across the country.

My second question is on climate change and the climate action payments. We are determined as a government to move towards net zero by 2050. We know that pollution has a cost and that putting a price on pollution is recognized as one of the most efficient ways to drive down emissions.

Under the federal pollution pricing system, the federal government applies a price on pollution in jurisdictions like Ontario that do not have a system of their own that meets the federal requirement. Ninety per cent of those proceeds from the price on pollution are returned to residents of the province, and in my case to the Province of Ontario, via the climate action incentive.

Budget 2022 has moved the climate action incentive to be delivered from annually to quarterly. Why is the government proposing this change now?