Debates of May 28th, 2014

Strengthening Canadian Citizenship Act

[The Speaker, Conservative, Andrew Scheer]

Is that agreed?

[Some hon. members]

Agreed.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

Canada-U.S. Relations

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I rise in adjournment proceedings to pursue a matter that I raised in question period on March 3. It is appropriate, although the hour is late or one might say it is early morning of May 29; it is the day on which the subject matter of my question will be going through clause by clause before the finance committee. The subject of my question is a very significant and dangerous piece of legislation buried in the current omnibus bill, Bill C-31.

The question that I asked is somewhat poignant. I will share with members that when I went back and read the text of the question, I realized that this was the last time in question period that I put a question for former minister of finance Jim Flaherty, our late and dear colleague. As much as I was very fond of Jim, as I read the answer I realized that the reason I put in a slip to pursue it in adjournment proceedings was that I did not actually get an answer.

As I say, it is poignant and bittersweet to pursue in adjournment proceedings at 12:15 a.m. the matter of the constitutionality of something that many Canadians have probably never heard of: the Foreign Account Tax Compliance Act, otherwise called FATCA, which is buried in Bill C-31, the current omnibus budget bill.

What this Foreign Account Tax Compliance Act does is this. We know that sometimes we call the United States “Uncle Sam”. In this instance, Canada bent over until we said “uncle”, and that is on the matter of the U.S. doing something quite extraordinary. It has passed a domestic law and insisted that the rest of the world bow down and allow a U.S. law to apply extraterritorially all around the world.

As a former U.S. citizen myself, I find it ironic. When my family first moved to Canada, it was very clear that going to Canada and becoming Canadian citizens was something to which the U.S. government said, “Okay, forget it now; you cannot come back here and pretend you are Americans. We know you are Canadian now; no coming back here”. The laws were very clear that we were not U.S. citizens anymore. That was fine with me, because I was Canadian and that was all I wanted to be.

Now that the U.S. seems to find itself a little short of money, it is almost like people going around and trying to lift up the sofa cushions and reach for loose change under the seats where they had not looked before, in case they might find some money. Maybe a more appropriate visible image is of grabbing people who have any connection to the United States by their ankles and shaking them upside down to see if any loose coins fall out of their pockets.

The reality of this is that we have, under the Foreign Account Tax Compliance Act, acceded to the United States as if we were subject to a binding treaty with it, something called the “intergovernmental agreement”. In point of fact, the U.S. Congress has not ratified this so-called treaty, so it should not be binding on Canada at all. On top of this, we know that no less a constitutional expert than Peter Hogg has advised the Government of Canada in his letter, which I obtained through access to information, that the provisions under this act “...are discriminatory in a way that would not withstand Charter scrutiny”.

In other words, we are being forced through an omnibus procedure and into committee tomorrow at clause by clause, and unless my amendments are accepted, we will once again have passed a piece of legislation that is discriminatory, treating Canadians of different classes in different ways, which offends section 15 of the Charter. We will have done that to accede to something that is not even accepted by the United States as a treaty, because it has not ratified it.

There is a solution to this, and this solution has come from many legal experts. We should remove this from Bill C-31.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency]

Mr. Speaker, I appreciate the intervention by the member for Saanich—Gulf Islands and the fact that she stayed here this evening to pursue this, because the hour is late.

I disagree, of course, with her interpretation of the Foreign Account Tax Compliance Act. The reality is, and the hon. member would know from having American relatives and family members, that Americans have always been taxed based on citizenship. There is nothing new here. An American citizen living outside of the United States is supposed to pay taxes in the states. That is the law and it has always been the law. Enough of my own relatives are American citizens, so I know that for a fact. To say that this changes those rules is simply incorrect.

The unfortunate part of this is that there will be some citizens who, by default or by accident of birth, will be American citizens, such as Canadians, for all intents and purposes, who happen to have been born in the states. They will have to correct their citizenship. However, dual citizens have always had a tax obligation. American citizens living in Canada who have permanent resident status have always had a tax obligation. This is not new.

One key concern was that the reporting obligations with regard to accounts in Canada would force Canadian financial institutions to report information on account holders who were new residents and U.S. citizens, including U.S. citizens who were residents or citizens of Canada, directly to the IRS, thus potentially violating Canadian privacy laws. That was a key concern. Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014. As I said earlier, this would be based on the fact that they were American citizens living outside of the United States.

To directly address these and other concerns, our government signed a Canada-U.S. intergovernmental agreement, or IGA, in early February of this year. Under the intergovernmental agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens will be reported to the Canada Revenue Agency.

The hon. member talked about Canadian citizens. Canadian citizens are not caught in this loop. Dual citizens will have to pay taxes in the U.S. or, properly speaking, for the hon. member's benefit, they have to file tax returns. They may not have tax debt, they may not have to pay taxes in the states, but they do have to file returns, which they have always had to file. The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. treaty, consistent with our privacy laws.

I would also like to note that under the intergovernmental agreement, the IRS will provide the CRA with information on certain accounts of Canadian residents held at U.S. financial institutions, so we have some reciprocity.

This is an extremely complex intergovernmental agreement and treaty. It covers a lot of issues. However, the bottom line is that no one will be taxed who has not already taxed.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I must disagree with my hon. colleague. There are many tax law experts, including Professor Allison Christians, who holds the Stikeman Chair in Tax Law at McGill University. This applies to what is described as U.S. persons. It casts a very wide net. It could well include Canadian citizens who are not dual citizens. It could include the children of former U.S. citizens. It casts a wide net and it reports on the private information of Canadians without their knowledge through to the IRS, and it is not sufficiently reciprocal.

The findings of many legal experts who have testified at the finance committee make it clear that this document is neither reciprocal, nor of advantage to Canada, nor required under international law because the U.S. has not even ratified the IGA. We also know from Professor Peter Hogg, Canada's leading constitutional law expert, that it will contravene the charter if it ever goes to the Supreme Court of Canada. It must be pulled out of the bill.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, again, I respect the hon. member's passion for this subject, but passion cannot be mistaken for facts.

The facts are that any American citizen living outside the United States has a tax obligation to the IRS. They have always had that, because the United States is one of two countries in the world where tax is based on citizenship. We can argue that that is right or wrong, but that is American tax law and American policy, and it has always been American policy.

We have to find a way to accommodate that without the United States being intrusive in Canada's laws and tax regime. We have been able to do that, and so have a number of other G7 countries and another 36 countries around the world.

Whether or not we agree with this policy is immaterial. The fact is we have to find a way to comply with it without being overly intrusive to Canadian citizenship.

Housing

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, it seems that we will be ending the day together, or starting the night, I am not sure which one.

I am pleased to participate in this adjournment debate and I thank the parliamentary secretary for being with us at such a late hour, because I would finally like to have a meaningful discussion on behalf of all the pyrrhotite victims in Mauricie.

If there is one thing that I hope I have achieved in the three years of my mandate, it is to have raised parliamentarians' awareness of the tragedy of pyrrhotite in Trois-Rivières and more generally in Mauricie.

When I began working on this file, 800 families were affected by pyrrhotite. Today, more than 3,000 families are grappling with the problem of pyrrhotite in their homes—not to mention all the businesses, public buildings and infrastructure that are also affected by this scourge.

I do not want to hear the old “that is under provincial jurisdiction” response, so I will walk you through the chain of excuses to show how the federal government is responsible. Let us look at a very simple situation: a residential property owner is dealing with pyrrhotite. He decides to sue his contractor because he claims it is the contractor's fault. The contractor says that he built the house properly and according to the rules, just as he did with the foundation it was built on, but he did not make the concrete. He then tells the owner to sue the concrete maker. The concrete maker says that he poured a concrete foundation according to the rules but that he was not responsible for the aggregate or rock in the concrete. He tells the property owner that he should sue the quarry owner. The quarry owner says that the aggregate he sold complied with federal standards.

If this simple example does not illustrate how the federal government is directly responsible, I think there is a problem. Unfortunately the government has remained silent.

What is more, I think that providing support to our citizens during disasters is the responsibility of every level of government. In fact, I had the Library of Parliament do a study that looked at the largest Canadian disasters and the amount of money that was given by the federal government to the people affected by those disasters. You might be surprised to learn that pyrrhotite ranks second in terms of the magnitude of the disaster and its financial repercussions. It ranks first, however, in terms of the lack of government assistance, namely zero dollars.

As if that were not enough, we are told that this is a provincial responsibility, at a time when the Quebec National Assembly unanimously voted in favour of a motion, which I will not read for lack of time, calling on the federal government to become directly involved in this matter because it has a responsibility in terms of the Canadian standard in addition to its responsibility to help citizens.

I will repeat the questions for which we are awaiting a response. When will the government help the victims? When will the government change the standard to ensure that this problem does not occur in another region in Canada? Finally, when will the government appoint a credible spokesperson that the representatives of the Coalition Proprio-Béton can talk to?

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency]

Mr. Speaker, I thank the member for Trois-Rivières for bringing this subject up and staying here at this late hour.

Obviously, this is an important issue in the member's riding. I agree with him that it is a significant issue. A lot of families are affected, and it is a very serious problem. However, where we disagree is over jurisdiction, and I will explain my reasons behind that.

It is not the first time the member has brought this up, but let me indulge the House for a moment to specifically outline why this is a provincial issue.

The provinces and territories regulate the design and construction of new houses and buildings and the maintenance, operation, and fire safety systems that exist in buildings. The national model construction codes, which include the national building code, are prepared essentially under the direction of the Canadian Commission on Building and Fire Codes made up of industry stakeholders with broad technical and geographical representation. They promote technical consistency of provincial-territorial regulations and market uniformity.

The Canadian Standards Association has developed the standard for concrete materials and methods of concrete construction. The 1994 edition of the CSA standard A23-1, which is referenced in the 1995 national building code, specifically prohibited the use of expansive aggregates such as pyrrhotite in concrete. In other words, construction standards were available governing the quality of aggregate to be used in concrete prior to the emergence of the pyrrhotite problem.

The adoption and the regulatory enforcement of the codes are the responsibility of the appropriate provincial and territorial authorities that publish provincial or territorial building codes. In this case, it was Quebec's choice on whether to adopt the national construction codes as is or to adapt them to better reflect its needs. In the case of pyrrhotite, construction standards have long been available governing the quality of aggregate to be used in concrete.

The Government of Quebec has launched a program to offer financial assistance to help homeowners struggling with damage caused by pyrrhotite. This program has been in place since August 2011. It is administered by the Société d'habitation du Québec. It provides financial assistance to affected homeowners to enable them to undertake the repairs needed to ensure the integrity of their foundations.

I want to ensure the hon. member that the Government of Canada appreciates the difficulties, the very real and serious difficulties, faced by the families whose homes have been damaged by this problem. However, as I have already noted, this issue falls under provincial jurisdiction. I would encourage affected homeowners to contact the Société d'habitation du Québec if they have not already done so.

Should homeowners who are impacted by pyrrhotite have CMHC-insured mortgages and experience some financial hardship as they repair or rebuild their homes, CMHC encourages them to contact their financial institutions at the first sign of financial difficulty to discuss their specific situation. CMHC provides approved lenders with a series of default management tools that they can use to assist borrowers with CMHC-insured mortgages who are experiencing financial difficulties.

In closing, this is a serious problem. It is not a matter of passing the buck. The rules are very clear. This is a problem for the Government of Quebec. It is not a problem that is under federal jurisdiction.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, I completely disagree with the parliamentary secretary's comments.

If tomorrow morning, all of the people who own houses damaged by pyrrhotite that are insured by CMHC—another obviously federal organization—turn over their keys, the government would be stuck with quite a bill. Instead, it is pocketing taxes from people who have to pay again for work they have already paid for.

What has happened since the current Minister of Industry told the House, in relation to a nearly identical problem with pyrite in Montreal, that public works had announced that the federal government was giving $3,500 in aid per homeowner to Montreal area homes damaged by pyrite?

The government is sending cheques to homeowners in Quebec but has not really done anything for condo owners in British Columbia whose condos are leaking—

[The Speaker, Conservative, Andrew Scheer]

The hon. parliamentary secretary.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, I can only say again that the Government of Canada is sympathetic to the difficulties facing homeowners in the Trois-Rivières area whose foundations are deteriorating due to pyrrhotite. However, this is an area of provincial responsibility. The federal government has no involvement in Quebec's pyrrhotite assistance program. Construction standards concerning the quality of the aggregate to be used in concrete were in place in 1994, prior to the emergence of this problem.

I would encourage the member, in all honesty, to stop playing politics with the victims of a very serious and very real tragedy that he knows all about and to focus on helping his constituents focus their efforts on the Government of Quebec, which is responsible for dealing with this issue.

[The Speaker, Conservative, Andrew Scheer]

Pursuant to an order made on Tuesday, May 27, 2014, the motion to adjourn the House is now deemed to have been adopted.

Accordingly, this House stands adjourned until later this day at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 12:37 a.m.)