Finance Committee on April 27th, 2023

[Adam Chambers, Conservative, Simcoe North, ON]

I'm happy to refine that question so that it's not onerous, and I respect your time of course.

I think I have 30 seconds left, Mr. Chair. I'll yield the floor because I go overtime from time to time.

[The Chair, Liberal, Peter Fonseca]

MP Chambers, thank you. You are very punctual, I will tell you.

We're going to MP Chatel now for six minutes, please, for the Liberals.

[Sophie Chatel, Liberal, Pontiac, QC]

Good morning, everyone. Thank you all for being here and for your great work.

I know that budget time is not an easy time. We can see that you have worked extraordinarily well. I thank you and congratulate you on another fine budget and another exemplary implementation act, as one would expect from the Department of Finance.

Ms. Hunt, I am interested in the proposals, which are good measures. I thank you for that. We need to move these issues forward, as this is obviously very important.

Where exactly do you think we are on risk management and money laundering and other financial proceeds of crime? I know that the Financial Action Task Force, or FATF, has made many recommendations to Canada over the years. I would like you to tell us where we are in terms of implementing international standards in this area. Have we implemented all the recommendations, or do we still have work to do?

[Erin Hunt]

The Government of Canada takes anti-money laundering and anti-terrorist financing very seriously and looks at it from both the domestic perspective and international perspective. The Financial Action Task Force, which is the international body that creates the standards for international anti-money laundering and anti-terrorist financing regimes, evaluated Canada most recently in 2016 and then we were updated in 2021. In fact, Canada received improvements in how it's meeting its regime in that circumstance, so we are moving forward.

That said, Canada's regime isn't without some deficiencies and gaps, particularly in enforcement. The government continues to look at how the anti-money laundering and anti-terrorist financing regime can be improved. That is why it's proposing the series of measures in the budget. It would be able to continue to ensure that our anti-money laundering and anti-terrorist financing regime can adapt and evolve to meet the emerging threats both in terms of anti-money laundering and anti-terrorist financing, and also in terms of emerging threats to national security and foreign interference.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Ms. Hunt.

I would like to say that the FATF international standards are really minimum standards and that we can always do more. However, I am concerned—as are my colleagues; we have talked about this a lot—that we are not even complying with these minimum standards, which are also imposed on tax havens or countries that do not have the same capacities as us. What is preventing us from meeting these standards?

[Erin Hunt]

That's an excellent question.

The standards are established through a multilateral body and through negotiation among various jurisdictions. The standards are ones that all jurisdictions seek to achieve, but not all jurisdictions are able to meet the obligations in the same way across the board. That's understood.

Canada is among the strongest countries in the foreign Financial Action Task Force in terms of its regime. However, everyone recognizes that continual improvements need to be made. There's also a recognition that our legal system is not the same as every other legal jurisdiction; therefore, different ways of approaching issues will have to be taken into consideration in the Canadian context.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

I am really looking forward to seeing Canada become the top country in the implementation of minimum standards. You can count on this committee to assist you in that task.

I will change the subject a bit. I am very encouraged by the measures in the budget that will provide Canada with a lot of success in the green economy of tomorrow. A lot of investments have been announced to that end.

On the other hand, one of the things that I hear a lot from businesses in my riding, but also from across Canada, is that Canada may be a little bit behind in its research and development efforts. In committee, we talked about the challenges facing manufacturing and other sectors in attracting more investment in research and development.

So I'm very pleased to hear that the Canada Innovation Corporation will be established to strengthen that. Can you give us more details on how that Crown corporation will be set up? What tools will it have?

[Greg Reade, Director General, Resource Policy Analysis, Department of Finance]

Thank you very much for the question.

My name is Greg Reade. I'm a director general in the Department of Finance, and I'm joined by colleagues from Innovation, Science and Economic Development. It's a joint team that has developed the legislation that you referred to, which will enact the Canada innovation corporation.

Within the legislation the purpose of the corporation is described in subsection 238(9), and in 238(10) several functions are described that will guide the corporation as it becomes established and moves into the market to deal with Canadian businesses.

You're quite right that we're seized with the imperative to improve the productive capacity of Canadian businesses. The increase in business expenditures in research and development is a well regarded and very important way that we can assess and understand this capacity among Canadian businesses.

The corporation is an arm's-length entity. The Crown corporation's structure is designed so that on a day-to-day basis, the corporation—through its board of directors, its CEO and staff—can have the ability to allocate funding for research and development projects, and financial assistance, either as grants or in contribution-like form, depending on the nature of the project.

In addition to financial assistance, there are other important elements that can contribute to succeeding in the purpose to maximize—

[The Chair, Liberal, Peter Fonseca]

Thanks, Mr. Reade. For a follow-up, as we get into more questions, you can add more to that.

We are going to the Bloc and MP Ste-Marie, please.

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

Thank you, Mr. Chair.

Good morning to all the senior officials. Thank you for being here to answer our questions.

There are some very interesting exchanges this morning. I thank Mrs. Chatel for asking you about the fight against tax evasion and tax avoidance. We need to do more, and I also hope that Canada will do everything possible to fight this effectively by following international standards.

On Tuesday, I asked your colleagues to follow up with you on a question about division 31 of Bill C‑47, which enacts the Royal Styles and Titles Act, 2023. I thought it was quite odd that they would hide a reference to “Charles the Third, by the Grace of God” in a bill hundreds of pages long, near the end, in division 31.

Since I was not in Parliament the last time this happened, I asked your colleagues to pass on my question to you: How was this done last time? Was it hidden at the end of a budget implementation bill?

[Galen Countryman]

Thank you for the question. We cannot answer it, and it should rather be put to our colleagues in the Privy Council Office. I'll take note of it, though.

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

Okay. We would appreciate a written answer.

Last Wednesday, the House fast-tracked Bill C‑46 after the report stage. Part of that bill includes an additional $2 billion in health funding for the provinces, with no strings attached. Now, this additional funding is also in Bill C‑47. If Bill C-47 is not amended to remove that portion, it would mean that the $2 billion in Bill C‑46 would be in addition to the $2 billion in Bill C‑47. Is that right?

[Galen Countryman]

Yes. The $2-billion provision is in both bills. Bill C‑46 is before the Senate now.

The intent clearly isn't to allocate this $2 billion twice. I believe the government will indicate how it intends to coordinate the two bills, under these circumstances.

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

The text of Bill C‑47 was presented to us last Thursday, after Bill C‑46 was passed in the House of Commons. My understanding is that, if the current bill is not amended and is passed as is, the funding in question will be $4 billion.

[Galen Countryman]

I believe a decision will be made soon on how to coordinate the two bills.

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

Thank you very much.

In the latest budget plan, the government is announcing large sums of money—$80 billion over 10 years—to support the energy transition and the green shift. Bill C‑47 gives us a worrisome idea of how the government intends to manage some of this money. Through legislative changes, the government wants to create two institutions that will be responsible for administering the money that the government plans to invest. This means that the money will no longer be controlled by Parliament and that unelected officials will be able to choose the projects they want to support without being accountable to anyone. We are also very concerned about the lack of clear criteria.

Do you have an answer that may reassure us?

[Greg Reade]

Just to clarify the question, is this with regard to the Canada growth fund or the Canada innovation corporation?

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

Both. What we are concerned about, essentially, is that money from the budget will be given to these two institutions outside the budget framework. Unelected officials will make decisions and will no longer be accountable to Parliament.

Why would that be done? Do you know if there is a technical reason why the government chose to use that method?

[Greg Reade]

I'll speak on behalf of the Canada innovation corporation, and my colleague can speak with regard to the growth fund.

The approach was taken for a couple of reasons, and there are a number of measures to counterbalance this approach.

In the first instance, laying out, in legislation approved Parliament, the amount of funds that will be available was deemed to provide businesses with whom the corporation will interact a measure of stability and security so that they understand that the government is here to provide this support and funding in the long term, which is deemed important for businesses that might take on multi-year research and development projects.

There are some counterbalancing measures in the legislation that are designed to limit the amount of funding that can go year to year in order to prevent an accumulation of funds. We think that there's a lot of demand, so we don't see that, but there is a limit to measure that. There's also an ability for the minister to withhold funds if ever there was deemed a reason to need to do that.

We believe that there are some counterbalances and that the signal to business is an important feature.

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

Mrs. David, do you want to add anything?

[Anne David, Senior Director, Crown Investment and Asset Management, Department of Finance]

Thank you very much for the question.

The government established the Canada growth fund following budget 2022, which announced its creation and its $15 billion in funding.

A number of details about the Canada growth fund were released in the 2022 Fall Economic Statement. In particular, a technical document outlined the investments that will be made and described how they will be made at arm's length from government.

In Bill C‑47, the government proposes that PSP Investments, the Public Sector Pension Investment Board, manage the fund. This existing Crown corporation has an experienced investment team that will be able to invest quickly. It will be accountable to Parliament through annual reports, as other Crown corporations are.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now we'll move to MP Blaikie for six minutes.

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

Thank you very much.

I'll just carry on talking about the growth fund a little bit.

One of the budget 2023 commitments was to have two labour seats at the table for the governance of the growth fund. That's obviously not here in this legislation. However, I am wondering, following the passage of this legislation, what the process will be for standing up the growth fund governance, and when we might expect to see subsequent legislation delineating the governance of that special committee—or however exactly we want to define that—of the Public Sector Pension Investment Board.

[Anne David]

Thank you for your question. I think what you're referring to is the text of budget 2022, so I'll add a bit of clarification here.

The text of budget 2022 mentions the two board seats for representatives nominated by bargaining agents. This is with respect to PSP Investments, the Crown corporation that manages public sector pension plans. That is where the board seats will be. That measure is expected to be consulted upon by the government this spring. The government is intending to consult bargaining agents on this particular measure, with the measure to come out in a later bill, such as in a fall budget implementation act.