Finance Committee on May 19th, 2022

[The Chair, Liberal, Peter Fonseca]

Welcome to meeting number 48 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of May 10, 2022, the committee is meeting on 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. As 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 would like to make a few comments for the benefit of the 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, and please mute yourself when you are not speaking. Interpretation is available for those on Zoom. You have the choice, at the bottom of your screen, of either THE floor, English, or French. For those in the room, you 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 as best we can, and we appreciate your patience and understanding in this regard.

I'd now like to welcome today's witnesses. From the Council of Canadian Innovators, we have Dana O'Born, vice-president, strategy and advocacy; and Nicholas Schiavo, director, federal affairs. From JDRF Canada, we have Dave Prowten, president and chief executive officer, who is joined by Matt Stimpson. From the Native Women's Association of Canada, we have Christian Boucher, senior director, government relations; and Lynne Groulx, chief executive officer. Finally, from Samaritan's Purse Canada, we have John Clayton, director of programs and projects.

At this time, members, we have the opportunity to hear from our witnesses. Each of them will have five minutes for opening remarks.

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

Excuse me, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

I do see a point of order.

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

I'd like to make a brief point of order.

I wouldn’t want this to be seen as a political statement at all, but I’d like to acknowledge the work of one person, whom I consider a friend.

Over the past few months our colleague Mr. Fast has done an exceptional job on this committee. Consistently hard working and well prepared, he has asked thoughtful questions. I’ve been greatly inspired by Mr. Fast’s work on this committee over the past few months, and even prior to the last election. I just want to thank him for his contributions and am tipping my hat to him.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Yes, MP Fast is a well-respected and decent man. We were happy to have him on the committee.

We'll now have the opportunity to hear from our witnesses' opening remarks. We'll begin with the Council of Canadian Innovators, for five minutes, please.

[Nicholas Schiavo, Director, Federal Affairs, Council of Canadian Innovators]

Good morning to the chair, vice-chairs and members of the Standing Committee on Finance. Thank you for the opportunity to present today on Bill C-19 and the implementation of certain provisions in budget 2022.

My name is Nick Schiavo and I am appearing today as the director of federal affairs on behalf of the Council of Canadian Innovators. I am joined today by CCI vice-president of strategy and advocacy, Dana O'Born.

We are a national business council representing 150 of Canada's fastest-growing companies. Our member companies are headquartered here in Canada, employ north of 52,000 employees across Canada, and are market leaders in the sectors of health, clean, financial technologies, cybersecurity and more.

Following the release of budget 2022, CCI celebrated the strong investments in Canadian innovation. We were pleased to see a focus on supporting Canadian innovators, bolstering intellectual property generation, driving clean economic growth, and doubling down on Canada's fastest-growing sectors. These investments are a critical step to support Canada's rapidly growing innovation sector and ensure we generate true economic prosperity in the knowledge-based and data-driven economy.

However, there is more the government can do to ensure our innovators can scale up and remain competitive in the fast-paced global economy of today. First, Canada's tech sector is facing a skilled talent crisis that is threatening to suffocate innovative companies and slow new job creation. New strategies and investments to train, attract and retain top talent are desperately needed and if done right, these measures will improve Canada's innovation outputs.

The shift to remote work, especially in the tech sector, means that Canada's skilled workers are now part of a global labour market where geography is no longer as important. Our domestic innovators are finding themselves in fierce competition with highly profitable foreign tech giants that can offer significantly higher salaries for the same pool of high-skilled workers.

In April, CCI released our talent and skills strategy, with 13 key recommendations to meet the talent needs of our country's fastest-growing companies. Broadly speaking, these recommendations present ideas for the attraction, generation and retention of skilled talent in Canada.

The federal government has started to work on valuable investments in upskilling, which is an important step forward in generating more skilled talent. Deploying funding in ways that create the maximum benefit for innovators should be a key priority in the months ahead. Recently we have seen Canadian technology companies take the lead in developing their own skills training programs. The federal government should support these types of company-led initiatives and tailor funding to ensure we are generating skills to meet market needs.

Moreover, the government's funding for skills development programs should be bolstered with policies to ease immigration pathways for skilled workers. Immigration is the fastest route to boosting the supply of skilled labour in Canada, and the federal government should consider policies like a high potential tech talent visa, and a digital nomad strategy.

The second item I'd like to speak about is the scientific research and experimental development tax incentive program, lovingly known as SR and ED in the innovation ecosystem. This $3 billion program is intended to incentivize research and development, but in practice the program is overly complicated, bureaucratic and restrictive. We were pleased to see in budget 2022 that the government is moving ahead with a review of SR and ED to modernize and streamline the program. We are currently undertaking the policy work to offer detailed and substantive recommendations for how to ensure that SR and ED is fit for purpose.

However, in broad terms we believe that SR and ED reform should focus on expanding the tax credit to include intellectual property as a key component of R and D. In the 21st century knowledge economy, patents and other forms of IP are the most critical sources of economic advantage for firms and economies.

In 2020, more than 91% of the value in the S&P 500 came from intangible assets. As the pandemic continues to drive a wave of digitization, we believe that algorithms, patents, data and other intangible assets will only become more important. As Canada looks towards the postpandemic economy of tomorrow, Canadian intellectual property and its acceleration by programs like SR and ED will be a driving force.

Including a patent box tax structure in SR and ED would be a big step in the right direction to ensure that IP generated in Canada continues to reside in Canada, and we were pleased to see this idea mentioned in budget 2022. We also believe costs associated with developing and prosecuting intellectual property should be eligible under SR and ED.

Lastly, but perhaps most importantly, SR and ED eligibility criteria and processes should be streamlined and clarified. Today, many tech companies rely on costly consultants to help them navigate SR and ED and we would all be much better served if that money were spent on innovation outputs, rather than a cottage industry of professionals who help navigate the thicket of confusing regulations.

To conclude, we are pleased to see budget 2022 offer a number of smart investments for Canada's innovation ecosystem. It's clear that the government is thinking about how best to position the Canadian economy for the 21st century. To ensure they have the maximum impact on our shared prosperity, we look to the government to implement these policies in the most effective and strategic way possible.

Thank you. We look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Schiavo.

Now we'll hear from JDRF Canada.

[Dave Prowten, President and Chief Executive Officer, JDRF Canada]

Thank you very much.

Good morning, everyone. My name is Dave Prowten. I'm the president and CEO of JDRF, the leading charitable funder of type 1 diabetes research. Today I'm joined by Mr. Matt Stimpson, who is a person living with type 1 diabetes and also the proud father of a wonderful young woman, Tilly, who's 14 years old and also lives with type 1 diabetes.

First of all, thank you for inviting us back to committee today. We are here again to reiterate our request to propose an amendment to the budget implementation act that would remove or reduce the 14-hour requirement under the “life-sustaining” category of the disability tax credit. This change would make life better for the 300,000 Canadians who live with this disease 24 hours a day, seven days a week.

The 14-hour requirement really is arbitrary and antiquated and has not been changed since 1988. Since then, diabetes management has come a long way and lives have drastically improved, but only with the right supports and technologies.

Type 1 diabetes continues to be a very costly disease for everyone—for individuals, families, the health care system and society overall—so we implore the committee to amend the budget implementation act and call for either a removal of the 14-hour requirement entirely or, alternatively, a reduction in the hours to seven so that more Canadians with type 1 diabetes can qualify.

We know there's a willingness to make the change, as evidenced by the budget's inclusion of additional criteria that will help more people qualify, but there's still a level of interpretation around the amount of time per week of these activities. Our proposal to remove or reduce to seven hours is really not arbitrary. It will be very clean and clear. It will really make it easier for the health care practitioners to approve and improve equity for those with type 1.

The purpose of the disability tax credit is to really ensure that Canadians with a disability are eased of financial burdens. This arbitrary and antiquated requirement for 14 hours is really preventing many with type 1 diabetes from accessing this. Therefore, the policy is not living up to its mandate. It needs to be modernized to ensure it's delivering support to some of the most vulnerable Canadians, who can use the support right now.

In our opinion, we have a very rare opportunity. This is an important change. JDRF has been working on improving the disability tax credit since 2017, so that's five years. The time to get it right is now.

I'm going to turn this over to Matt, Mr. Stimpson, who will share with you his personal experience with the disability tax credit.

[Matt Stimpson, JDRF Canada]

Thank you, Dave.

My name is Matt Stimpson. Good morning, everyone.

I'm here today because I've experienced first-hand major issues with the disability tax credit as it stands.

To give you a bit of background, I was diagnosed with type 1 diabetes in 2005. I was encouraged by the nurses at the adult diabetes education centre at the hospital and by my accountant to apply for this because, being self-employed, I have no health care benefits. My daughter was then diagnosed when she was two and a half. As Dave said, she's now 14. Basically for all of her conscious childhood she's had type 1 diabetes. My wife hasn't slept properly for over a decade because she worries about nighttime low blood sugar.

Type 1 diabetes has been a part of our lives for as long as I can remember. We've had to worry about paying for insulin supplies, advanced glucose monitoring devices and insulin pumps. Those costs exist regardless of how much time is spent per week on management. It really doesn't matter if I spend 14 hours a week or 100 hours a week on management, I am constantly worrying about this condition and my child's condition. It's 24-7 and 365.

We spend around $1,500 a month for our diabetes supplies that aren't covered publicly. As I said earlier, as a small business owner, I don't have private coverage. The pump supplies are $300 each per month. Insulin is $120 per month. We use flash glucose monitors because they're more affordable than the advanced glucose monitors, but they're still $190 a month. There are test strips at $60 a month. Glucagon is at $300 a year. Ketone strips are $25 per box. Then there are dextrose tablets to deal with the daily lows.

In the past, my family doctor refused to sign forms simply because he didn't agree that spending 14 hours a week managing my diabetes was realistic. However, he had no trouble signing Tilly's forms, and we have exactly the same disease. It's inequitable. Some people are approved and some people aren't, even if they have the same condition.

Unfortunately, if you're not aware of how to fight and advocate for yourself, you end up with the shorter end of the stick. The current eligibility process is a bit of an administrative nightmare. I strongly believe that time spent on type 1 diabetes is irrelevant, because it doesn't affect the thousands of dollars per year that it costs me and my family to survive.

Lastly, I'd love to thank JDRF for all their continued advocacy.

I appreciate the opportunity to appear before this committee. I truly hope you'll support the proposed amendment and remove or reduce the 14-hour threshold to make the disability tax credit more equitable and accessible for all Canadians living with type 1 diabetes.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Matt, for sharing your story.

We'll now hear from the Native Women's Association of Canada.

Members, just to let you know, the Native Women's Association of Canada will only be able to be with us until noon, so, if you do have questions for them, you may want to focus those in the first part of our meeting.

Go ahead for five minutes, please.

[Lynne Groulx, Chief Executive Officer, Native Women's Association of Canada]

Thank you, meegwetch, Mr. Chair and members of the committee, for inviting me to speak to you today.

I’d like to point out that we are gathered on the traditional unceded territory of the Algonquin Anishinabe people, who have lived on this land since time immemorial.

My name is Lynne Groulx and I'm chief executive officer of the Native Women's Association of Canada, or NWAC. With me today is Christian Boucher, director of government relations.

NWAC is the national indigenous organization and political voice for indigenous women, girls and people of diverse gender identities in Canada, including first nations on and off reserve, status and non-status, as well as the disenfranchised, Métis and Inuit. NWAC is the largest indigenous women's group in Canada.

For over 48 years, NWAC has brought together indigenous women across the country from all provinces and territories with a collective goal to enhance, promote and advocate for human rights of indigenous women—that is, for the social, political, economic, cultural and well-being of indigenous women, their families and communities.

Through advocacy, legislative analysis, policy, programs and direct service delivery, NWAC works each and every day to preserve indigenous culture, advance the well-being of indigenous women and speak out about racism, discrimination and violence in all of its forms.

While budget 2022 contains some meaningful and long-overdue investments, it is clear to NWAC that more needs to be done to end the systemic violence and gross human rights violations faced by indigenous women, girls and 2SLGBTQIA people.

Today I would like to focus on five main issues: one, MMIWG; two, housing; three, health care infrastructure; four, food security; and, five, over-incarceration. You will notice that these all deal with basic human rights.

First, on missing and murdered indigenous women, girls and two-spirit people, budget 2022 mysteriously contains no new funding for action. While the budget cites some funding committed in budget 2021, to see such a glaring lack of recognition and lack of investment in budget 2022 to answer the 231 calls for justice is alarming. We don't even know if or where the funding from 2021 was disbursed.

The national inquiry handed down 231 legal imperatives, not 231 recommendations and not 231 suggestions; they are legal obligation. The issue of missing and murdered indigenous women and girls we know amounts to a genocide. This is the conclusion of a $92-million inquiry with thousands of hours of testimony and a 1,000-plus-page report. We expected to see the federal government take action in a concrete way in this budget. That means committing additional and necessary funding to end this genocide of indigenous women and girls.

Also mysteriously, there was no mention of MMIWG or indigenous women in Minister Miller's statement of accomplishments following his 100 days as minister of Crown-Indigenous Relations issued on February 7. We at NWAC just want women to be safe, and we need dedicated resources to ensure that this happens.

Second is housing. Housing was hugely underfunded based on the Canada Mortgage and Housing Corporation and the national housing advisory's own recommendations for over $4 billion per year for 10 years to effectively address the housing crisis. This budget, however, only commits $4 billion spread out over seven years. While this funding will have some impact, it will not end the housing crisis faced by indigenous people, especially in remote and isolated communities where the cost to build and maintain housing is higher.

The impact of decent housing on the safety, security and health of indigenous women and their families cannot be understated. The housing crisis in many indigenous communities has gone on for far too long. We have to see an end to the situation of houses that need major repairs, including houses with mould, overcrowding, and extremely long wait-lists.

There is also an issue with couch surfing and homelessness. We still have children being removed from houses because they do not have their own bedrooms.

Third, there is health care infrastructure. In budget 2022, increased investments to improve health outcomes in rural and northern first nations communities are not long-term commitments, because funding is only guaranteed for a single year.

NWAC would like to see more long-term investments in health care infrastructure in all indigenous communities. This was a glaring omission in the wake of the shocking treatment and subsequent death of Joyce Echaquan. Indigenous people seeking health care must be able to do so, without fear, in a safe and culturally appropriate environment. First of all, of course, it needs to be available.

The COVID-19 pandemic exposed significant socio-economic and health inequities faced by indigenous people in Canada. Inequities can no longer be denied or ignored. This budget and subsequent BIA does little to address the needs of indigenous people and their communities in this situation.

[The Chair, Liberal, Peter Fonseca]

Ms. Groulx, I apologize for interrupting, but you need to wrap-up shortly. You have a few seconds left.

[Lynne Groulx]

I did mention the five areas, and I'm going to repeat them with an emphasis on the final point. It deals with the situation of over-incarceration. We would like to see an investment in the system to end the overrepresentation of indigenous women in federal prisons, who now make up 50% of the prison population when they represent only 4% of the national population.

Thank you very much for your time.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Groulx, and you will have an opportunity to expand on that during members' questions.

We're now going to hear from Samaritan's Purse Canada, for five minutes please.

[John Clayton, Director of Programs and Projects, Samaritan's Purse Canada]

Mr. Chair and members of the finance committee, thank you for the opportunity to appear before you today concerning Bill C-19, the budget implementation act, and specifics related to charities.

I've spent 30 years working in the charitable sector. Back in August 2019, Samaritan's Purse studied the Senate report on the charitable sector, specifically the pages concerning CRA direction and control. We decided to pursue changes to ITA legislation to correct problems we and many other charities in Canada have been experiencing. Samaritan's Purse then joined Cooperation Canada, where I am co-chair of the direction and control working group.

I don't know the precise history, but about 70 years ago the Government of Canada enacted legislation in the ITA that enabled charities to function but required that they only pursue their “own activities”. Subsequent to this, the CRA policy was developed around this idea.

I need to mention that the idea of “own activities” is unique to Canada. No other country uses this concept and every other country has found ways to hold non-profits accountable without using the idea of “own activities”. It is the cause of the problems we are dealing with today and the issues within the budget implementation act.

Cooperation Canada, Imagine Canada and Philanthropic Foundations Canada, together with a group of Canada's leading charity lawyers and Senator Omidvar, worked together for the last two years bringing forward Bill S-216. Bill S-216 would have eliminated “own activities” requirements, but in the last days, and after two years of advocating for changes to the Income Tax Act, this year's budget announcement indicated that the charitable sector's concerns had been heard. We were grateful for this and considered it a great success.

However, our initial euphoria turned to concern when the details of the BIA emerged. The BIA proposes changes to the Income Tax Act that would add new rules allowing charities to make “qualifying disbursements” or grants to non-qualified donees. The qualifying disbursement mechanism is a workaround to the problem of “own activities”. The BIA claims this would provide the needed funding mechanism for charities to work with non-charities and that this was in the spirit of Bill S-216, but what the BIA proposes is not in the spirit of Bill S-216. Instead, it would add 800 words of tightly defined, inflexible and prescriptive terms and conditions to the ITA.

The BIA's proposed qualifying disbursement mechanism will not work and will not be used by charities. Charities need to work with non-charities. This happens in Canada and around the world. The ways these partnerships and arrangements take shape are complicated and are determined by contextual realities, current events, cultures and a myriad of other factors.

I'll give some examples. In the last month, Samaritan's Purse, my organization, and many other organizations have responded to the Ukraine crisis. We are currently working with 17 local partners across Europe that are providing assistance to Ukrainian refugees. Another aspect of international work is that many charities are affiliated parts of larger networks. When they come together to respond to events like Ukraine, they need to be able to easily combine or pool their resources in a common response. This increases effectiveness and efficiency. Other charities are engaged in long-term development projects involving multiple partners, complex programs, funders and local governments. Lastly, within our own country, the government provides funding to charities, expecting them to work with community groups, marginalized, racialized and indigenous groups, and other non-charities.

I need to make it clear that the BIA's proposed inflexible terms and conditions don't work in any of these contexts. The qualifying disbursement mechanism would provide a one-size-fits-all regulatory straitjacket. The qualifying disbursement mechanism doesn't fit the real world. With this approach, we appear to be taking the problems of “own activities” and making them worse. Charities will avoid using this mechanism and its codified rules in the ITA because any failure to perfectly comply would result in a loss of charitable status.

If the BIA proceeds as is, we would see a combination of ITA regulations, CRA policy and a regulatory hierarchy that would be complicated and confusing. This should not be allowed to happen.

If we're going to work around the problem of “own activities”, we need to make amendments to the BIA to connect a qualifying disbursement mechanism to the practical realities and operations of charities. We all acknowledge the need for accountability. The CRA needs to monitor and enforce policy when tax-protected dollars are involved. The charities themselves are concerned about integrity and the public trust that they must preserve with their donors.

Nobody is asking for relaxed or reduced accountability. We need appropriate accountability for practical, workable mechanisms for engagement with non-qualified donees. The BIA as is will not provide this. The committee already heard earlier this week from Bruce MacDonald of Imagine Canada and has received a detailed briefing note from the three organizations, Imagine Canada, Cooperation Canada and Philanthropic Foundations Canada, which was signed by 66 significant Canadian charities.

If I have time, I'd like to restate the three specific amendments we are seeking: to refine—

[The Chair, Liberal, Peter Fonseca]

Mr. Clayton, I'm sure you're going to have an opportunity during question time to do that, but we are well over already the time—

[John Clayton]

Okay.

[The Chair, Liberal, Peter Fonseca]

—for the opening remarks.

We thank you, Mr. Clayton, and all the witnesses for your opening remarks. We're going to move quickly into members' questions, so they have all the time they need.

In the first round, each party will have up to six minutes to ask witnesses questions. We'll begin with the Conservatives, and I have MP Stewart up for six minutes.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

I'd like to thank all the witnesses for being here today, and I give a special shout-out to JDRF. I'm very encouraged that you're here again today, and my questions will be for you today.

My first question is for Matt Stimpson. When we talk about type 1 diabetes, we often look at it from the view of children who have diabetes. However, these children become adults.

Could you explain the difficulty adults with type 1 diabetes have in accessing the disability tax credit. Is there equal access?

[Matt Stimpson]

Personally, I don't feel so because I've had to really justify my position to just get the forms signed versus for my daughter, for whom there was no question. They just signed them and it was fine.

Type 1 diabetes can hit you at any age. I was diagnosed with type 1 diabetes when I was 32, so we should try to get away from the fact that it's juvenile diabetes. It's type 1 diabetes. Yes, there is a huge disparity, even between doctors. I've heard all sorts of stories. I've had to pay an endocrinologist $100 to sign a form because that's what they charged.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you for that. Clearly there seems to be an arbitrary battle between doctors and bureaucracy.

Is the government proposing now to allow the counting of exercise restrictions or regimes as part of the calculation of the 14 hours of life-sustaining therapy? Does JDRF know what this means? Does this create confusion where some with type 1 diabetes who walk to work may not be eligible, but someone who trains for a marathon is? How are patients and doctors supposed to interpret this? Is there potential for the Canada Revenue Agency to apply this in an inconsistent way and on an arbitrary basis?

[Dave Prowten]

I'll take a crack at that one. I would say that there are encouraging revisions that are being proposed, but I do think there is a degree of arbitrariness to them, because these would be open to interpretation from a health care practitioner. That is really why we are proposing the reduction in hours or the elimination of the hours, because at the end of the day, you do need life-sustaining therapy. Insulin is, by definition, a life-sustaining therapy. We are trying to remove the arbitrary nature of these terms right now.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you. I appreciate your answer, and you'll be happy to know that I'm proposing an amendment that will be used during the clause-by-clause consideration of the bill. I'll get to that in my second round with you today.

As my final question for this round, I would ask you, Mr. Stimpson, do you currently qualify for the DTC?

[Matt Stimpson]

Yes, I do.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

You do?