Finance Committee on May 2nd, 2023

[Some hon. members]

Oh, oh!

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I'll have to leave at question period, but between now and question period, I'm happy to talk some more, if your talking points haven't run out, gentlemen.

[The Chair, Liberal, Peter Fonseca]

Minister Freeland, that's gracious of you.

I have confirmed with the clerk that we have till 1:30, so that's almost another 20 minutes, members. If members are good with that, I will divide the time equally. We could maybe stretch it a few minutes past that.

Okay, so it will be about five minutes per party. We'll do it that way. That's how we usually do it.

We'll start with the Conservatives for five minutes.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Could we have a footnote here to credit to Mr. Blaikie for his peacemaking efforts? He's the guy who won me over.

[The Chair, Liberal, Peter Fonseca]

The analysts, I'm sure, have captured that.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Absolutely.

Thank you to Daniel. It's fitting there should be a biblical reference, with Daniel being the son of a preacher man and a regular peacemaker on this campaign.

I want to start with a “thank you”, too.

I'm going to tell tales a bit out of school. I hope you don't mind, Minister.

You met me and my kids—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

It depends on what the tales are.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

You met me and my kids in the elevator. My kids were at the end of the day and were wrangling a little, but you were incredibly kind to them, and I'm sure you've made a memory for them. Thank you for that.

It's that very issue that I want to talk to you a bit about.

I come from the riding of Northumberland—Peterborough South, right on the 401. If you're driving between Toronto and Ottawa, you'll go through our riding. We have a number of food banks in our riding. You can look at the numbers—1.5 million across Canada—but I've been to those food banks and I've seen children there. It's not a pretty picture of where Canada is.

You've pointed out a number of times that the economy is roaring and it's great. Do you not see some of the issues that are forecast in your own budget? You forecast that 300,000 Canadians will lose their job this year and that inflation will still stay relatively high, at over 4%.

We also have structural problems in our economy with respect to productivity decreasing. We also have the OECD predicting our per capita GDP growth to be 0.7%, which will be the lowest in all of the OECD.

I would love to share your optimism, but do you not also share some of concerns that we have, as we have record food bank usage, forecast unemployment increases and structural challenges, such as our productivity and innovation gap?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for that important and serious question, and please say hi to your kids. They were very charming and they cheered me up at the end of a busy day.

As you guys know, as a champion of early learning and child care and the Canada child benefit, I am a mother of three. I think we're all pro-family, but I really believe in supporting Canadian kids and families. That, by the way, includes the kids of people here. Our kids all do make sacrifices. They have interesting lives, but they make sacrifices. I was glad to say hi to your kids.

To your core question, of course I worry. It's agonizing for me. There is a food bank at the end of my street. It's actually at my local church, The Church of the Messiah, where we go. When I can, I go there on a Wednesday to help out.

There are now quite a few people who don't speak English—Ukrainians—who are there. I'm sorry, it breaks my heart. People in my congregation ask me to come when I can so I can speak Ukrainian to the people. There was one family, a grandmother and a mother. The food at the food bank is great, but it's a mixed bag. There was food that they didn't really know. There happened to be a pannetoni, which they hadn't seen before, and also lots of taco stuff. This mother and grandmother were saying, this is interesting, maybe we can find a way to give it to the kids for lunch. I talked to them. The dad is in Ukraine fighting on the front line. I said to them, I'm so sorry. I'm sorry this has happened to you. I am so sorry that it's so hard. They said to me, please don't be sorry. We're just grateful that we're here in Canada, and we're safe, and that we can get these interesting foods we've never eaten before and give them to our kids for lunch. They're mazing people.

I would love to live in a Canada where there are....

I'll finish on the food bank quickly. I don't mean to.... I'm not trying to run the clock here.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

No, no, I know you're not, Minister. I'm not completely heartless.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

No, seriously, look, we disagree about lots of stuff. I would love to live in a Canada where we didn't have any food banks.

One reason that I am glad that we separated the grocery rebate from everything else is that it means we can get that money to people by July 5. The people who get that rebate really need it.

Is that money going to support every single person in Canada as much as I would like, as much as you would like? Look, I know we disagree about a lot of stuff. I think we here are all people of good will. I think all of us don't want there to be a single child in Canada who goes to bed hungry tonight, but there will be some.

Would I like to be able to give cheques to everybody so that no one goes hungry tonight? I would love it, but I actually—and I know Conservatives don't really believe this, but you should—believe in fiscal responsibility, too. What I have tried to do in this budget and what I tried to do last year is find that balance between compassion and fiscal responsibility.

[The Chair, Liberal, Peter Fonseca]

Thank you. We're at time.

MP Lawrence, do you want to make a quick comment?

Okay, go ahead.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Yes, it will be 15 seconds.

Thank you for appearing. Like I said, I think you have acquitted yourself very well today. I would invite you to come back.

I'll just make one quick comment. The difference between Liberals and Conservatives—and I believe this—is that Liberals want to give cheques to everyone who needs them. I don't want anyone to need a cheque.

[The Chair, Liberal, Peter Fonseca]

Thank you.

We are now going to the Liberals. I have MP Chatel, please.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

I am a Liberal, and I agree that we should not be handing out cheques to everyone. That shouldn't be something people need. That's why we believe in the economy. I don't think the honourable member's comment was quite true.

Minister, as you mentioned, I spent 20 years working in taxation, mostly international. I saw a tremendous amount of tax avoidance. I worked in both the private and public sectors. During my two decades in the field, I can tell you that Canada lost hundreds of billions of dollars in tax revenue to schemes.

Treaty shopping comes to mind. Alta Resources, a foreign company that develops our natural resources, made $380 million in revenue without paying tax on it in Canada. AMECO is another such company. Foreign companies developing our natural resources made $8 billion in revenue that the government couldn't collect tax on. That takes away revenue we could use to build hospitals, housing and other important infrastructure. You were talking about food banks. We could give them more funding if we had the money from that untaxed revenue.

Two measures in the budget are going to be especially helpful. I commend you on your courage, because you need it to strengthen the system. You took the bull by the horns in dealing with big international corporations that avoid paying Canadian tax. Thank you.

I want to discuss two things. The first is the OECD's pillar two. We spoke about your trips to the G7 and G20 summits. Thanks to your leadership, international companies will have to pay a minimum 15% tax rate, regardless of where in the world they are based. That is the work you are doing through the OECD on pillar two.

I would like you to talk specifically about how you plan to change the general anti-avoidance rule. The changes appear in the supplementary information document, which I consult directly because it's a great reference, in my view. The important changes you're proposing to the general anti-avoidance rule are under way. Tell us about the process, if you don't mind. Will we see it in the next budget implementation bill? Where are you in the consultation process? I read the amendments you're proposing, and I quite like them.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

If I may, Mrs. Chatel, I'd like to finish answering Mr. Lawrence's important question first.

[Sophie Chatel, Liberal, Pontiac, QC]

Of course.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you, Mrs. Chatel.

Mr. Lawrence, I'm going to follow up on your comment.

Actually, I agree. I want a Canada where everyone has a great job or a great pension because they worked hard all their life. In fact, that is why I believe so strongly in some investments that we're making in this budget and that we made in previous budgets. That's why I believe in our investment in early learning and child care. It is not only great for kids who have great child care; it's great for parents who can go out and get a job—especially mothers—and support their families.

That's why I really believe in what we're doing in this BIA on the Canada workers benefit. I hate this reality about the Canadian economy, and I hope working together we can change this, but there are a lot of people in Canada today who work really hard every day, and who do some of the hardest jobs—less glamorous and fun than our jobs—like the people who are going to clean up this building when we leave today. A lot of those essential workers can work really hard and they can have a job, and they still don't make enough to make ends meet. That's why I'm a big believer in the Canada worker benefit. We've increased it, and we're paying it in advance.

That is also why—and Daniel has spoken about this—our focus during the COVID recession was, and afterward has been.... If you said to me, “What's the one indicator or what's the one data point you want to optimize?”, I would say jobs, jobs, jobs.

On that measure, Canada has done remarkably well. We have recovered 129% of the jobs compared with prepandemic levels, compared with the the depths of COVID and compared with 115% in the U.S. That's 900,000 more jobs. I repeat that for the reasons you raised.

I want all Canadians to have a great life, and I believe that a great life starts with a great, well-paying job, doing work you care about and that is respected, knowing that when you get older...knowing that when you get sick, you have a health care system that can take care of you, knowing that your kids are in a great early learning and child care centre, and knowing that when you retire after a life working hard building our country, you're going to have a great pension.

That is my focus. I hope it's a focus for all of us.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister.

Thank you, MP Chatel.

Now we are going to the Bloc and to MP Ste-Marie.

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

Thank you, Mr. Chair.

I want to start by commending Mrs. Chatel for her comment on tax evasion and tax avoidance.

What you said about food banks was very moving, Ms. Freeland. Thank you. I think we are all united in the fight against poverty.

During the pandemic, you were there to support the economy and help everyone out. There's something this bill doesn't address, however—the employment insurance, or EI, fund. The deficit in the EI fund was not shifted to the consolidated revenue fund, so it wasn't absorbed. The Employment Insurance Act requires that the fund be balanced over seven years. Short of amending the Employment Insurance Act to transfer the pandemic-related deficit to the consolidated revenue fund, the government intends to take $17 billion from the pockets of EI contributors. This means it will be impossible to reform the system to make it more accessible. There is nothing in Bill C‑47 to prevent this tragedy. Why?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for your question.

I agree with you. Mrs. Chatel raised a very important issue. I want to thank you for the work you are doing to address tax evasion, in fact. I think we've made a lot of progress together. We've made Canada's system better, but I think we still have work to do. I would be very glad to work with all members. Food banks are just one facet of the issue. We need a fair tax system where everyone pays their fair share. That's how we will be able to help those who are less fortunate.

As for EI, Mr. Blaikie asked almost the same question. I'll answer it in three parts.

First, we have to work together to improve and modernize the EI system.

Second, you may not agree with me, but I think the cornerstone of my work as finance minister is finding the right balance between compassion and fiscal responsibility because both are necessary.

Third, we haven't lowered the contributions to the EI system, contrary to what the Conservatives are calling for. I think that shows how responsible we are. Being fiscally responsible is important in order to make significant investments in modernizing the EI system, enhancing the Canada workers benefit and improving health care.

[The Chair, Liberal, Peter Fonseca]

MP Ste-Marie, you still have time.

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

Thank you for your answer, Minister. For years, the EI fund had a surplus, which was shifted to the consolidated revenue fund. Now, however, workers and unemployed people are being penalized. We are anxiously awaiting EI reform, so we can have a system that is truly accessible.

Two years ago, Parliament passed Bill C‑208 in order to stop penalizing owners for passing on their business to a family member, especially a farm. However, people still can't take advantage of those measures, so we are still waiting. Tax experts and accountants in Quebec say they have yet to receive direction from the Canada Revenue Agency, which says that it is waiting for clarification from you. We hear from business owners, families and accountants about it all the time. Is there anything you'd like to say?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Yes. Thank you for your question. You've raised a very important issue.

I hope you'll agree that, through the budget, we have improved this important measure so that family farm owners in Quebec, say, can take advantage of it. That was our goal, and we worked very hard to achieve it. Mr. Jovanovic assured me that the system would be in place by January 1, 2024. That's good news for everyone, but we need to pass the budget first so that farm owners and families in Quebec and Canada can use the important measure.

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

Thank you.