Government Operations Committee on Feb. 12th, 2026

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

[The Chair, Conservative, Kelly McCauley]

We're going to Mr. Gasparro, please.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you, Minister.

My line of questioning is going to focus on “25 and out” and also on regulatory sandboxes.

As the parliamentary secretary for combatting crime, obviously I get an opportunity to speak with our brave men and women in the RCMP and the CBSA relatively regularly. For them and for others, can you explain the difference between “25 and out” and early retirement, please?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

It's a very important question.

First of all, I'd like to thank our frontline workers for keeping Canadians safe and for the sacrifices they make. It's commendable.

There's a major difference between “25 and out” and early retirement incentives: “25 and out” is permanent. It will stay if we pass this budget implementation act. It is there to stay, whereas the early retirement incentive is just for the time being, for a certain period of time. It is temporary. That is a major difference.

Frontline officers—those in CBSA, firefighters and others of a similar nature—qualify if they have 25 years of operational service. They could retire early without penalty. That program will stay permanent. That is the purpose.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

That's great. Thank you.

Moving on to the regulatory sandboxes for a moment, I've spent my private sector career financing clean energy projects and infrastructure. How can regulatory sandboxes help Canada's clean energy sector innovate at the pace needed to meet, part one, our climate objectives and, part two, our energy demands in the 21st century?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

Budget 2025 expands the use of regulatory sandboxes to departments and agencies beyond Transport Canada and Health Canada, which already have sandbox authority. These sandboxes help to regularly test new ideas safely before deciding on a permanent rule change. They can only be used for a limited time.

For example, if you're going to implement or make a rule for any department, but you haven't tested whether it would work and you will be achieving objectives in delivering services to Canadians or contributing to the growth of our economy, it would be a loss of time and a loss of resources. A regulatory sandbox gives you the opportunity to test those innovative ideas to see if you can achieve the result. Then you can make rules and regulations so they can benefit Canadians in delivering services.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Do other countries or other jurisdictions use regulatory sandboxes?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

My understanding is that in the G7, we're the only country that has very limited use of them—in two departments since 2019. My understanding is that in the G7, every other country is using them because it saves time and resources, especially when we're going through this critical time.

This is a global shift. This is a time when we need to act fast. We need to focus on delivery or innovations in a timely manner so we can compete with other economies and can grow our economy. These tools, which are safeguarded by regulations and have rigorous safeguards, could be useful in achieving goal and objectives, and putting rules in place.

Mike actually has a passion toward this. His mind and soul are very genuinely into it because he understands what it is. There's a misconception.

I'm going to ask Mike if he can highlight this and give a bit of clarity to my colleagues and the Canadians who are watching at home.

[Michael DeJong, Assistant Secretary, Regulatory Affairs, Treasury Board Secretariat]

Perhaps I could give an example of a regulatory sandbox involving clean technology.

In July 2025, the Department of Transport launched a regulatory sandbox to test what the safety requirements would be for battery-powered and hydrogen-powered locomotives. Currently, the rules around train safety are specifically geared toward diesel-powered locomotives. This sandbox became particularly relevant as Canada's railways moved toward decarbonizing their fleets.

Before the sandbox was ever launched, Transport Canada commissioned a number of risk assessments to identify where the potential risks were and how to mitigate them. Then it established a series of strict safeguards, including things like ensuring that there would be proper crew training, oversight and inspections. The results of that sandbox would then be used to inform the evolution of the rail safety rules to support the introduction of low-emission clean technology.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll go now to Madame Gaudreau, please.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you very much, Mr. Chair.

I'm going to go back to the basics because the answers I'm hearing are not really clear. I have asked myself the following question: What is a regulatory sandbox? I'd like to use an analogy and refer to what I have also seen in other countries. You start with a small parcel, a sandbox where you get to build castles and have fun. In some countries, demands framed around economic prosperity and innovation have pushed for more, and as I'm saying, this has now expanded into huge beaches. What I'm hearing this morning is that more sandboxes will be added and that this new practice will be expanded and regulated over time.

Personally, there are three things that make me extremely worried that things will get out of hand, and it concerns guardrails.

First, from a legal standpoint, how do you keep things from getting skewed when it comes to the competition?

Second, for the regulatory authority, working so closely with businesses can lead to a degree of proximity that may go too far. You can see where I'm going.

Third, there is the issue of transparency. Supposedly, decisions will be made publicly, but will they be properly justified? As parliamentarians, what is going to reassure us that the guardrails are in place?

When I hear a number of officials, who have appeared before this committee in person, tell us that they're not in a position to answer questions about how this will be regulated, how can I vote for this, seriously?

I would therefore like you to explain that, Mr. President of the Treasury Board.

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

Thank you.

These are very important questions.

It's really important to understand regulatory sandboxes. There are so many speculations about them and so many misconceptions. We have had regulatory sandboxes in two departments since 2019: Transport Canada and Health Canada. They have been used only once at Health Canada, if I'm not mistaken.

Mike, is it Health Canada or Transport Canada?

[Michael DeJong]

It's Transport Canada.

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

Yes.

There has to be a justification even before you think of bringing forward and using a regulatory sandbox. You have to do it publicly, and then you have to come to a committee, and all the regulations apply to that.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

However, we need to know how and when we will be told what the regulatory authorities are doing. Your answer is clearly not sufficient, in my opinion. There must be transparency to make sure things don't get out of hand in terms of ethics, environment and conflict of interest. I'm telling you that the optics are not good. Canadians, including some public servants, have told us that.

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

As I said, there is a rigorous and transparent process, and I believe in transparency.

First, advance notice of the proposed use of the sandbox is provided through the department's forward regulatory plan, which is published annually. Then the department engages with relevant stakeholders and FTP partners during the development process. Once a sandbox is approved by the responsible minister, the department must make public a summary of new exemptions, the decision-making process that led to the decision, and information on how stakeholders can provide feedback on the decision.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

My time is up. You're telling me about the process, but on my next round, I'd like to hear about criteria and timing. That was my question.

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thank you, Madame Gaudreau.

Ms. Block, go ahead, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Chair.

I will be splitting my time with my colleague Ms. Jansen.

Welcome, Minister Ali, department officials and the deputy minister.

Hidden in the BIA were changes that would allow ministers to exempt nearly any company, person or entity from any federal law except the Criminal Code. I'm perhaps following up on some of the questions that my colleague Ms. Gaudreau had.

What is the point of having a Parliament pass laws when ministers can just give connected insiders exemptions from those laws?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

There are legal bindings on doing innovative experiments. For that reason, this was proposed in the budget implementation act. Because it's a technicality, I can ask my—

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

No.

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

It's just for your benefit and for clarity, because it's important to understand what it is and why it's there.

I'm going to ask for just 30 seconds for my deputy to give you clarity.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

You have 30 seconds.

[Bill Matthews]

There is no exemption from any law. The exemptions have to be relevant to the legislation or regulation the minister bringing forward the proposal is responsible for, so they're boxed in.

Secondly, there is no exemption from the Conflict of Interest Act. That still applies. The goal here is to allow ministers to create a sandbox for innovation and experimentation within the rule set that they are responsible for, and that drives experimentation and gives a chance to test things out. I know there's a lot of confusion about this rule set.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I would suggest that if you're watching the finance committee and some of the questioning of some of the ministers there, the only law that doesn't provide exemptions is the Criminal Code.

Here's another question for you. If there is no provision in the use of these powers that would exempt a minister from using them, then there is no provision that exempts a minister from using them while Parliament is prorogued. Why is there no restriction on the use of these powers when Parliament is prorogued?