Finance Committee on May 24th, 2022

[Tom L. Green]

It's difficult to explain, given that the government said that it was going to eliminate grants to fossil fuels.

It's also worth mentioning Export Development Canada, where things are also highly problematic.

[Jean-Denis Garon]

If I'm not mistaken, we're talking about $58 billion.

Thank you very much, Mr. Green.

That's it for me, Mr. Chair.

[Tom L. Green]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Garon.

For our final questions, we'll go to the NDP and MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

Mr. Ross, we've talked a little bit today about new spending on co-op housing. We've also talked about deep energy retrofits. We've talked about electric vehicle infrastructure a little bit.

I know that sometimes co-ops are forgotten in the policy-making process or they end up excluded from certain kinds of programs, whether it's intentional or whether it's as an afterthought.

Are there any envelopes or programs that the federal government is currently undertaking on the housing file that you think co-ops should have more equitable access to or where there might be opportunities to enhance investments in co-ops, either for the buildings or for the residents, which are currently missed opportunities?

[Timothy Ross]

Thanks for highlighting the importance of including all business types in eligibility for government programs, so including co-operatives. It's absolutely critical that there's no unintentional exclusion of them from eligibility. I know that has been an issue in the past, but it has certainly improved in recent budgets.

On the importance of the energy retrofits and supporting energy efficiency in housing co-operatives, we've done a lot of work in partnership with the Federation of Canadian Municipalities to provide an energy coach to the co-op housing sector. That provides the technical advisory services to access the funding and financing programs offered by government for support with retrofits. We're very proud of that work as well.

[The Chair, Liberal, Peter Fonseca]

Thank you, and thank you, MP Blaikie. That is the end of our first panel for today.

We want to thank the witnesses, and the members. We're doing this as a hybrid session. We have witnesses from right across the country and members from coast to coast to coast with us to discuss these very important issues.

We thank you very much for your time, your expertise and for answering so many questions by all of the members. On behalf of the committee, the clerk, the analysts and all those who help bring us together, we want to thank you. Have a great day.

We are now transitioning to our second panel. We'll suspend at this time.

[The Chair, Liberal, Peter Fonseca]

I'd like to welcome today's witnesses for our second panel. It will go from 11:30 to 1 p.m.

From Access Copyright, we have Roanie Levy, president and chief executive officer. Welcome. As an individual, we have Vivek Dehejia, associate professor of economics and philosophy at Carleton University. As an individual, we have Elizabeth Long, barrister and solicitor; and from the Centrale des syndicats du Québec, we have Luc Beauregard. From the Canadian Chamber of Commerce, we have Mark Agnew, senior vice-president of policy and government relations.

We will begin by hearing from Roanie Levy from Access Copyright for the opening remarks, for up to five minutes, please.

[Roanie Levy, President and Chief Executive Officer, Access Copyright]

Thank you for the opportunity to appear before you.

Before beginning, I would like to acknowledge that I am speaking from the traditional territory of many nations—including the Mississaugas of the Credit, the Anishinabe, the Chippewa, the Haudenosaunee and the Wendat peoples—which is now home to many diverse first nations, Inuit and Métis peoples.

Access Copyright is a not-for-profit copyright collective that represents over 13,000 Canadian publishers, authors and visual artists. We facilitate the reuse and sharing of content by licensing copying from books, magazines, newspapers and journals to schools, universities, colleges, governments and businesses.

I would like to start by thanking the government for including in its budget commitments the extension of the term of of copyright protection to life plus 70. However, on behalf of the writers and publishers I represent, I am here to speak more specifically to the second copyright commitment made in the budget. This is the commitment to restoring a functioning marketplace for the sale and licencing of educational materials by urgently addressing the issue of massive and systematic unpaid copying of creators' works by the education sector.

Canadian creators and publishers are an indispensable part of Canada’s culture and economy.

For over a decade, the ability to sell our stories has been under constant threat. Since 2013, when their work has been copied and shared by most of the Canadian education sector, they have not been paid for its use outside of Quebec.

The issue here is the expansion of the fair dealing exception in the 2012 Copyright Modernization Act, which included uses for educational purposes, provided those uses are fair. In response to those changes, most of the education sector outside of Quebec abandoned the collective licensing system that worked to the mutual benefit of creators and publishers, as well as educators and students, for over two decades and in its place adopted self-defined copying policies that promote the widespread and systematic free copying of approximately 600 million pages of published works annually.

There is always a cost to “free”. In this case, the cost is being paid by all Canadians.

Let me explain. First, it has led to the devastation of Canada's creator and publisher communities. This in turn has led to significantly reduced investment in Canadian content for our classrooms. This is not hypothetical. Ten years of reduced investments have deprived our students and educators of new Canadian learning resources. “Free” is shortchanging the future of our education system by stifling investment in educational resources. A poorly resourced education sector affects us all.

Over the last decade, Canadian creators and publishers have been deprived of approximately $190 million in unpaid royalties under tariffs certified by the Copyright Board. The loss of these royalties, combined with the effect of free copying on primary sales of published content, has led to a reduction of investment in Canadian works and the elimination of publishing jobs. Overall, employment in the Canadian book industry has dropped by 31% since 2012. That's a loss to Canada's economy of 4,400 jobs. Several publishers have exited the education marketplace outright.

The uncertainty over the scope of fair dealing has led to a decade of litigation before the courts. Notwithstanding the years of litigation, including a trip to the Supreme Court, the uncertainty remains. Every day, I hear our members' frustration and anger about how increasingly difficult it is for them to make ends meet. What they want is what anybody would want: to be paid for their work. Ten years is an impossibly long time for anyone to wait to be paid.

The good news is that consultations on these issues have already taken place, so the government can and must act quickly. Thanks to these consultations, we have four unanimous recommendations from the Standing Committee on Canadian Heritage in its 2019 “Shifting Paradigms” report. These recommendations continue to have the support of each of the opposition critics for Canadian heritage. The most important recommendation is recommendation 18, which would restore a functioning marketplace by clarifying that fair dealing should not apply to educational institutions when the work is commercially available.

The government needs to act at the earliest possible opportunity. Time is of the essence. After 10 years of not getting paid, we cannot wait any longer.

Thank you for your time. I look forward to answering your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Levy.

Now we'll hear from Vivek Dehejia for up to five minutes, please.

[Vivek Dehejia, Associate Professor of Economics and Philosophy, Carleton University, As an Individual]

Thank you, Mr. Chair.

When I gave testimony before this committee just two months ago, I expressed my concern about rising inflation in Canada. When I was last here, virtually, it was 5.7%. Since then, CPI inflation has jumped to 6.7% and now 6.8%, and possibly will go higher.

Inflation remains a big issue, and despite the bank's recent interest rate increase, both the central bank and the government are going to need to remain extremely vigilant that we do what we have to do to bring inflation back under control, for the reasons I went into, in my last testimony, in great detail.

Today I want to highlight the fact that there is an important relationship between the large fiscal deficit, which fuels the current high deficit and debt-to-GDP ratio, and rising inflation.

Whenever the federal government increases the deficit, that money has to come from somewhere. In the absence of new taxes, it comes from borrowing. When that happens it puts upward pressure on interest rates and creates a problem economists call “crowding out”. Public spending sucks up investment dollars and makes private investment more expensive. The net effect is that the share of public spending in total GDP goes up relative to private spending. In other words, our economy becomes more socialized.

The government projects both deficits and debt to decline, but these depend upon fairly optimistic assumptions about GDP growth. Now, with what is likely to be a protracted war in Ukraine, and pressure on energy prices and global supply chains, GDP growth may be below zero or even turn negative. We may go into recession, and that will create an even bigger problem.

We've seen this movie before in Canada, both in the 1970s and again more recently in the late 1980s and early 1990s, and it never has a happy ending. Invariably, loose fiscal and monetary policies that lead us to stagflation have to be combatted with tight fiscal and monetary policies. They invariably cause a recession to occur as a by-product of fighting high inflation and the stagflation problem. That's an avoidable scenario if the government works harder to get onto a steeper path of debt and deficit reduction and if the bank aggressively tackles inflation by raising interest rates and pushing ahead with its QT policy, meaning that it stops buying government bonds and so forth, for which it needs the moral support of the government.

As a last word, Mr. Chair, we often hear that the current problems we face in Canada are a "global problem", but as I told the CBC a few days ago, this is a half-truth at best. High inflation in Canada is a product of a decade or more of loose monetary policies and high fiscal spending. While it's true that part of the high inflation right now is a by-product of the war in Ukraine and energy price increases, those aren't the whole story. Even if the problem is partly global, we can't outsource the solution to Washington, New York, Geneva, or, I dare say, Davos. The solution is right here at home in our fiscal and monetary policies.

Thanks, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Dehejia.

Now we'll hear from Elizabeth Long for five minutes, please.

[Elizabeth Long, Barrister and Solicitor, Long Mangalji LLP, As an Individual]

Thank you for allowing me to testify.

I am speaking to you today because I have grave concerns about the provisions in division 23 with regard to the proposed changes to the Immigration and Refugee Protection Act.

As an immigration lawyer with over 16 years of practice, I have worked with tens of thousands of individuals who have immigrated to Canada through skilled migration. The changes that are proposed in this bill are extensive and will have a significant impact on hundreds of thousands of people who are looking to immigrate to Canada. They are controversial and should be examined thoroughly by experts in the field as a bill on its own, not as part of a budget bill.

For those of you who are not well versed in immigration law, let me explain briefly what the proposed amendments mean.

The proposed amendments have to do with a system called the express entry system. This system chooses the vast majority of immigrants in our immigration system. The latest figures published by IRCC list applications at over 332,000 in 2019—in one year—and this does not include accompanying family members.

Here's how express entry works. Individuals who qualify under the three most widely used skilled migration categories are able to submit their profile into the express entry pool. The kicker is that just because they submitted their profile into the pool does not mean they can actually apply. They are issued a score based on their background, such as age, education, language proficiency, work experience, etc. In the current system, the government issues draws based on the individual's scores and the categories they qualified under to send invitations to apply. If a person receives an invitation to apply, they can apply and receive their permanent residence.

The provisions in this bill essentially seek to change how individuals will be selected to receive these invitations to apply. They would allow the government to create groupings, which are currently undefined, to select those who can apply and obtain permanent residence.

There are several reasons that this is problematic.

First, without identifying which groups the government will be using for selection, these provisions provide the minister and all ministers after him with the power to define these groupings without parliamentary oversight. For example, a minister could decide to limit immigration based on nationality, as the United States does. This could lead to severe inequity in processing times based on nationality, as is currently the case in the States.

I have also heard that a minister may wish to use these provisions to select based on occupation. This is problematic, as the minister does not have a transparent system for how they select the occupations. As such, the system is prone to lobbying and influence by large industries, leaving smaller, less powerful employers and those with lesser-known occupations without the ability to hire and retain workers. The occupations-based program has already been used several times in Canada's immigration history without success, yet the minister may be using this factor again.

Maybe I'm wrong and occupations-based selection is the bee's knees. If so, then the provisions should state occupations-based selection, not groupings that are undefined, and provide opportunities for other expert immigration witnesses to provide evidence to the parliamentary standing committee on immigration to examine this. These provisions, which give the minister the unchecked power to select based on whatever groups they wish to in the future, would not allow this process for checks and balances to happen.

Second, ambiguity leads to unpredictability. The permanent residence system requires applicants to spend thousands of dollars, and many spend years to prepare to qualify. With this ambiguity of not knowing whether or not they would qualify even if they invested their time and money, many individuals would be turned off by the system. Canada is in competition for the best and brightest of the world through our skilled migration system. The unpredictability that these provisions bring to the system would deter many of those whom we aim to attract to our country.

Our immigration system chooses who forms our labour pool, but it also chooses who our neighbours are and who will become part of our community and our country. Surely, choosing who will form the vast majority of immigrants to our country warrants more than a brief consideration in a budget bill.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Long.

Now we'll hear from the Centrale des syndicats du Québec and Mr. Luc Beauregard for five minutes of opening remarks.

[Luc Beauregard, Secretary-Treasurer, Centrale des syndicats du Québec]

Good afternoon, and thank you for this invitation.

Today, I'm basically going to talk about part 5, division 32 of Bill C‑19.

The CSQ represents approximately 200,000 members, about 125,000 of whom work in the field of education, including higher education. It is the most representative organization for this sector in Quebec. It also has 11 federations, which in turn represent some 240 affiliated unions, and the Association de retraitées et retraités de l'éducation et des autres services publics du Québec, AREQ. The CSQ also plays a role in health and social services, early childhood educational services, municipal services, recreation, and culture, as well as the community and communications sectors. In short, it is everywhere in Quebec.

A few days ago, we told Ms. Qualtrough, the Minister of Employment, Workforce Development and Disability Inclusion of our concerns about division 32 of part 5, in Bill C-19, which is about the Employment Insurance Board of Appeal and the Social Security Tribunal, commonly referred to as the SST. We asked her to remove division 32 of part 5 from the bill so that it could be analyzed separately.

The SST was established in 2013 to serve as a one-stop shop to replace four administrative tribunals, including the arbitration boards. Before that, tripartite boards made decisions at the first appeal level for employment insurance clients. This provided better access to justice and the participation of community representatives familiar with the labour market in their region. The appeal structure went from a three-member tribunal, which was viewed as a trial by one's peers, to a single decision-maker who was often remote from the appellant and that person's living and working environment.

In 2019, the government announced in a news release that, further to a recommendation made by KPMG in its report on the review of the SST, reforms would be undertaken. These included a return to the tripartite system to begin in April 2021. The government assured us that people would be at the centre of the appeal process, which would become faster, simpler and better suited to the needs of Canadians. The announcement also said that community stakeholders would be consulted. This did not happen, however, despite our many efforts to remind the departments of our full cooperation.

Bill C‑19 provides that the SST would report solely to the Commission's commissioner. And yet, it is essential that the structure be tripartite to ensure proper monitoring of how the union representatives and employers are deployed and trained to perform their duties within the Board of Appeal, which would not really be tripartite unless the social partners take part directly in the selection and appointment of member workers and employers.

In addition, the right to regional representation and an in‑person hearing is not found in Bill C‑19. The necessary reforms were to be flexible and client-centred. Genuine access to an in‑person hearing was recognized as an essential feature of any reform of the employment insurance appeal process. The presence of members of the tribunal with expertise and knowledge of local markets is essential.

The composition of the Board of Appeal also provides two types of status: full-time members of the tribunal appointed by the Governor in Council, and part-time members from the employers or insured persons, appointed by the commission. This different status is of concern to us because it necessarily leads to inequity between members, in addition to a different hiring status. The full-time members will have status as employees of the public service, strengthened by the fact that they will be the only ones eligible to hold the position of chair, vice chair and coordinating member. The inequity is obvious.

In short, we would have liked to have been consulted beforehand and to have had the opportunity to contribute to the development of the appeal process. The provisions included in Bill C‑19 do not reflect what was suggested and proposed by the government at the beginning of the process. Of course we understand the delays caused by the health crisis, but that should not have prevented consulting the social partners on such an important matter. If no changes are made to the provisions in the bill, we believe that they should be withdrawn and studied separately.

Thank you very much for hearing me out.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Beauregard.

Now we'll hear from the Canadian Chamber of Commerce and Mr. Mark Agnew.

You have up to five minutes, please, for opening remarks.

[Mark Agnew, Senior Vice-President, Policy and Government Relations, Canadian Chamber of Commerce]

Chair and honourable members, it's a pleasure to be here today.

The honourable members would have seen the submission that the chamber made via the clerk, so I'm going to focus my remarks mostly on the competition policy provisions of the budget implementation act as well as the luxury goods tax.

Let me start on competition policy. Given the evolving nature of the economy, our competition policies certainly need to keep pace; however, getting it right is critical. This means robust consultation with stakeholders, including the business community and others in legal, civil society and consumer groups as well.

The chamber is particularly concerned with three elements. It is urging this committee and the government to remove them from Bill C-19 and place them into the mandate of the full Competition Act review that the minister of industry has committed to undertaking later this year.

First is the abuse of dominance provisions and codifying a number of definitions. An overly broad approach to defining what is anti-competitive is particularly problematic because every act of competition may, at least in the eyes of the competitor, impede their progress or expansion. Indeed, an action seeking to outdo a competitor is at the very heart of healthy and necessary competition. Clarity is also needed on areas like privacy, given that we have a separate federal privacy regulator in this country.

While some have argued that these proposals codify existing practice, we should not be haphazard about amending legislation, given that it cannot be then changed back on a whim later on.

Second is the changes made to the administrative monetary penalties. The proposed changes to the AMPs represent a significant overcorrection. Such significant penalties of up to 3% of worldwide revenues are problematic when the provisions are being expanded and companies are left without the benefit of existing jurisprudence to understand what they mean in practical terms. The penalties additionally scope in activities that are not linked to violations occurring in Canada, by virtue of taking a worldwide revenue approach instead of a Canadian revenue approach.

Third, and finally, is the other provisions relating to no-poach. Others have pointed out in separate forums that this poses challenges in the franchise context where companies often have provisions written into contracts as a means to ensure that investments in training their employees are not being undermined. Interactions with provincial labour laws also need to be considered.

I don't have specific amendments to offer today, which reflects the time needed by the chamber to consult our members that sit across different sectors. A few hours of meetings on legislation at committees unfortunately does not suffice for the consultations we hope the government will make as part of the phase two review, rather than putting these three provisions into the budget implementation act.

Despite the assertions made by some that we should make the changes now and figure it out later through administrative guidance or by reopening it in the phase two review, I think that would be a mistake. We don't know what will happen from that review, given that it has not yet actually begun.

Additionally, there may be a tendency to view these Competition Act changes in the context of the current inflationary environment. Unfortunately, these changes will not address current inflationary pressures, so we should not have a knee-jerk reaction with that goal in mind.

I want to briefly end by talking about the luxury goods tax.

Members will be aware from other witnesses who have appeared about what the luxury goods tax means for Canadian aircraft manufacturers. The industry is still in recovery mode from the pandemic and concerns persist, from our standpoint, as to what this tax means for industry. We hope to see amendments made to specific areas of the bill, should the government continue to go ahead with the proposal. This includes exemptions for exports and also the treatment of liabilities when it comes to usage by the buyer after a sale has occurred.

We also need to understand how the tax will impact our competitiveness relative to other jurisdictions. The U.S. experience, of course, was to introduce such a tax, only to then repeal it a short time thereafter.

Thank you for taking the time to consider the chamber's perspective. I'd be happy to answer your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Agnew.

Now we'll start with our first round of questions by members. In this first round, each party will have up to six minutes to ask questions.

We will commence with the Conservatives and have MP Albas up for six minutes.

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

Thank you, Mr. Chair

Thank you to all of our witnesses for being here today.

I'd just like to give the chair notice that about halfway through I'm going to share my time with MP McCauley.

I would like to start with Ms. Long.

Thank you for your testimony here today. We appreciate your views on this.

I've had some experience with the B.C. nominee program. it seems to have very much the same kind of lines as what you've set out here, where it gives so much discretion that a minister could be subject to lobbying. They could simply make a grouping based on abstract criteria or have been lobbied for a specific group.

That's exactly what seems to happen in the B.C. nominee program. In fact, one case came across my desk where one engineer was being brought in and his wife, children and, I believe, an uncle and a parent were all included under the same file for one position. I worry about how these things come together.

When you say occupation-based selection, would this require a definition to the act or does the occupation-based selection amendment that you're suggesting already exist? How would you best construct this so there is criteria where the government has to show some transparency?

[Elizabeth Long]

The occupations-based selection is just something that I have heard from other lawyers from their meetings with IRCC, namely, that they were considering with regard to selection. In the current provisions, there is no definition of what these groupings could be. In the future, the minister, if these provisions passed, could choose to use occupations-based selection. What this will mean, how they will select occupations, is not known. Normally in the past when they've used occupations-based selection, it's just been a list. Nobody knows where these occupations come from. That's why I say it could be subject to lobbying. Who knows where this research comes from as to which occupations are in need?

My main concern with these provisions is that they're not defined and as such, in the future, the minister is not subject to parliamentary oversight.

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

What sorts of amendments would create more transparency around this to make sure that when someone's invited through the express entry program, it is for the stated purpose of needed necessary skills for our labour shortages?

[Elizabeth Long]

Right now the express entry system is pretty clear as to what individual selection criteria are being used. As to whether or not we need further selection criteria, I would be happy to take a look once I actually know what the minister wants to do.

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

So you're of the opinion that this addition is not necessarily helpful to the public interest—albeit it might be helpful to someone who is lobbying the government.

[Elizabeth Long]

Absolutely. It only gives more power to the minister and it only adds more unpredictability to the system.

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

Thank you. I'll pass on the rest of my time, Mr. Chair.