Debates of May 22nd, 2018

Department of Finance—Main Estimates, 2018-19

[Shannon Stubbs, Conservative, Lakeland, AB]

Mr. Chair, there is no question that the project is commercially viable. That is why Kinder Morgan has been willing to invest billions upon billions of dollars into completing the expansion that it initiated.

The finance minister said earlier tonight that indemnification was something regular in business transactions, but of course it has not been regular, standard, or required to build pipelines in Canada until these Liberals came to power. They are destroying the energy sector, now claiming that the only possible solution to get an expansion that has already been approved is through a direct equity stake, putting taxpayers on the hook, or investing pension funds or some sort of insurance plan or backstop, about which he continues to refuse to be accountable and transparent to Canadians.

Could the minister at least provide an answer on who will pay? Does he expect taxpayers to foot the bill for a direct equity stake in Trans Mountain, or will the minister gamble pension funds or will he do both of those things?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, this project is in the national interest. It is economically viable, it adds value to the shippers of product, and it will create 15,000 jobs. We see the project as one that has commercial value. That is why I am in discussions to ensure this project moves forward and is not in any way impeded by the delays and uncertainty caused by Premier Horgan. That would not be in our national interest.

[Shannon Stubbs, Conservative, Lakeland, AB]

Mr. Chair, of course it has already been severely obstructed and impeded by multiple delays and roadblocks from opponents, and the Prime Minister and the finance minister have sat on their hands for a year and a half since the approval.

Could the finance minister at least give some clarity around why there are mixed messages coming from his ministers? Last week he said that whatever their plans were, which he still will not divulge, and which is sort of like the carbon tax cover-up, they would not cost taxpayers a thing. However, a couple of days after that, the infrastructure minister indicated that it would cost taxpayer. Canadians just do not know what those costs will be after there is a deal. Of course Kinder Morgan says that there is still no deal.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, we believe this project needs to go forward. We have given federal approval. We have ensured that we have protected our oceans with a best in class $1.5 billion oceans protection approach that we know will ensure that we are environmentally appropriate as we embark on this important expansion project.

We are in discussions to ensure that the delays and uncertainties caused by Premier Horgan will not preclude the proponent or the private sector approach from moving forward. We believe that that is an appropriate way to move forward responsibly with a commercially viable approach.

[Shannon Stubbs, Conservative, Lakeland, AB]

Mr. Chair, what is also concerning is that a senior Department of Finance official commented that the finance minister's announcement of possible indemnification or taxpayer dollars being sunk into the Trans Mountain pipeline was a so-called test of Kinder Morgan's commitment to their expansion. I would say that is a pretty high-stakes game of poker to play with the livelihoods of hundreds of thousands of Canadians.

The CEO of the Surrey Board of Trade says they continue to support the Trans Mountain expansion with the 15,000 jobs it will create, mostly in the trades, but that “The Canadian government should not be using taxpayer money to compensate for project delays and to indemnify financial losses.”

Again, can the minister confirm whether or not they will be bringing forward legislation to ensure that the Trans Mountain expansion goes ahead, and if they even have a ballpark figure of what this might cost taxpayers?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, I can confirm the importance of this project. I can confirm that we believe that creating jobs for 15,000 people is the right thing to do. I can confirm that ensuring that our natural resources have access to international markets to allow us to get more appropriate prices for those resources is important. I can confirm that we are in discussions with the project proponent and that we are looking to find a way to ensure there is a private sector, commercially appropriate way to move forward with this project.

[Shannon Stubbs, Conservative, Lakeland, AB]

Mr. Chair, Kinder Morgan's response to the finance minister's announcement was that they are not yet in alignment, which means that this scheme the finance minister is cooking up with nine days left is not actually the answer for Kinder Morgan because, of course, the problem was never money. The problem is clarity, certainty, and being able to move ahead when a federal project has been approved under the highest standards and most stringent regulatory regime in the world. The federal Liberals should not have hesitated but acted to assert federal jurisdiction and ensure that the rule of law applies.

The finance minister has made some vague references to other potential investors, or a company or groups of companies they would also indemnify if the colossal loss of Kinder Morgan abandoning the Trans Mountain pipeline were to happen. Could the minister name any investor, or investors, or groups of companies that are interested in taking over the Trans Mountain expansion if Kinder Morgan abandons it as a result of the failure of the Liberals' leadership?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, I can appreciate that the member opposite and her party probably feel anxious, knowing that they were unsuccessful for a decade in getting a pipeline built to take our resources to international markets. They recognize that their lack of success creates a level of anxiety, because they can see that the commitment of this government to getting this done is clear, not only in our words but also in our actions. We will ensure that we actually deliver on a promise to Canadians that a project in the national interest will get done. We are sorry that we are creating anxiety for them because of their previous failure, but our success will highlight that there is a way to do this, and it is our way.

[Joël Lightbound, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Chair, Canadians deserve to feel confident that their hard work will be rewarded with greater opportunities and a fair chance at success. A fair tax system is fundamental to instilling this confidence.

When middle-class Canadians have more money to invest, save, and grow the economy, all Canadians benefit. From day one, our government has been taking steps to strengthen and grow the middle class and offer real help to those working hard to join it.

In fact, one of our first legislative actions was to raise taxes on the wealthiest Canadians in order to cut taxes for the middle class. Nearly nine million Canadians are benefiting from this middle-class tax cut. Single individuals who benefit from the middle-class tax cut are saving an average of $330 per year, and couples an average of $540 each year.

We then moved to provide simpler, more generous, and better targeted support for those Canadian families who need it the most. That included replacing the old child benefit system with the new Canada child benefit, or CCB, in 2016. During the first benefit year, more than 3.3 million families received more $23 billion in CCB payments. As a result of the CCB, nine out of 10 Canadian families are better off. During the first benefit year, these families received on average almost $2,300 more in benefits tax free.

I am proud to be able to say that since its creation, the Canada child benefit has lifted roughly 300,000 children out of poverty. To ensure that the Canada child benefit continues to play a key role in helping Canadian families, the government is going to enhance it by indexing it to the cost of living starting in July. This measure is being implemented two years earlier than expected, due to the growing economy and the government's stronger fiscal position. This is a significant achievement not only for those working to build a better future for their families, but for all Canadians.

Following this success, the government went even further to deliver tax support to those who need it most. We know that low-income Canadians are sometimes working two or three jobs so they can give their children and grandchildren a better quality of life and better shot at success. Like all Canadians, they deserve to have their hard work rewarded with greater opportunities and a fair shot. That is why budget 2018 introduced the new Canada workers benefit, a new tax benefit that would allow low-income workers to take home more money while they work. The new Canada workers benefit builds on the former working income tax benefit, WITB, to give even more people greater financial benefits from work.

Compared to the working income tax benefit, the new Canada workers benefit will increase both the maximum benefits received and the income level at which the benefit is phased out completely.

This measure will offer real help to more than two million Canadians who are working hard to join the middle class, while raising roughly 70,000 more Canadians out of poverty. A low-income worker earning $15,000 a year will receive nearly $500 more from the Canada workers benefit in 2019 than he or she would have received in 2018 from the working income tax benefit. All of the measures our government is taking amount to nearly $1 billion in extra support, to enhance the Canada workers benefit, starting in 2019 for low-income workers from coast to coast to coast.

By cutting taxes for Canada's hard-working small businesses, we are helping to create the jobs that people need, the jobs that can provide a ladder out of poverty for so many. Small businesses are a key driver of Canada's economy, accounting for 70% of all private sector jobs.

We know that low and competitive tax rates allow Canadian businesses to invest in their success and to create more good, well-paying jobs. That is why our government is supporting hard-working small business owners by reducing the small business tax rate to 10% effective January 1, 2018, and to 9% effective January 1, 2019. For the average small business, this will mean an additional $1,600 per year for entrepreneurs and innovators to create jobs and reinvest in their businesses and communities. By 2019, the average combined federal, provincial, and territorial income tax rate for small businesses will be 12.2%, the lowest in the G7 and the third lowest among OECD member countries.

These major investments demonstrate our firm commitment to creating a fair tax system that will serve as the foundation of an economy that works for everyone. For this tax system to work, everyone has to pay their fair share. Tax evasion and tax avoidance cost the government and all taxpayers dearly. By cracking down on tax evasion, and especially on people who stash money in other countries, the government will acquire the funds it needs to deliver programs that help the middle class and those working hard to join it. That is why every one of our budgets has included measures to strengthen the Canada Revenue Agency's ability to crack down on tax evasion and combat tax avoidance.

In our first two budgets, we invested close to $1 billion to support the efforts of the CRA in this area. These investments are expected to deliver more than $5 billion in additional federal revenues over six years, which is a great return on this investment for Canadians. Budget 2018 announced additional funding of $90.6 million over five years to support the CRA in its continued efforts to ensure taxpayer compliance.

In budget 2018, the government proposed measures to strengthen international tax rules, including those that prevent taxpayers from avoiding Canadian income tax by shifting property income into foreign residence corporations.

We will continue to work with our international partners to combat aggressive international tax avoidance, including through the enhanced sharing of information between tax authorities.

Canada's finance ministers made a similar commitment in December 2017. They committed to working together to ensure appropriate authorities know who owns which corporations in Canada, and to better harmonize corporate ownership record requirements between their jurisdictions.

That information will help Canadian authorities take appropriate legal action against those who are using corporations to conceal criminal activity, such as international tax evasion, money laundering, and other criminal activities.

These are all tremendous achievements for Canadians. Ensuring a fair tax system in which we all pay our proper share is the foundation of a stronger middle class and a growing economy. It instills confidence in Canadians and helps to create opportunities for everyone. However, it is also a complex process, requiring ongoing engagement with a wide range of partners, both at home and abroad.

Our government has made a strong commitment to this process. We will continue to do what is necessary to assure Canadians that their hard work will be rewarded with more possibilities and equal opportunities to succeed.

I know that a lot has been accomplished by this government to support a fair tax system for Canadians. I think I have covered a lot of ground, and I could have gone well beyond my time.

I would like to talk a little more about aggressive international tax avoidance. This is typically perpetrated by transnational corporations that can move money internationally and take advantage of the sorts of shadows that exists in the space between government borders. The strategies that may be used to shift profits to low- or no-tax jurisdictions are generally referred to as base erosion and profit shifting, or BEPS, strategies. These strategies are often undertaken by transnational corporations to avoid paying their full and fair share of taxes owed.

As members know, Canada, along with its international partners, is part of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, also known as Multilateral Instrument or MLI. The multilateral convention is a global initiative developed as part of the joint Organisation for Economic Co-operation and Development, or OECD, and G20 project to counter base erosion and profit shifting.

Could the minister to tell us more about how this process will help end base erosion and profit shifting and about Canada's role in this process?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, I thank the member for his excellent question. I want to tell him that this is obviously a very important question.

This question has to do with the important sector in which the government is taking action to protect Canadians. In its efforts to deal with base erosion and profit shifting, the OECD identified a number of specific situations in which the terms of existing tax treaties could potentially be abused.

The OECD then developed effective measures to counter base erosion and profit shifting, measures that the countries can choose to include in their tax treaties to effectively close these loopholes. However, given the large number of existing tax treaties and the long period of time that would be required to bilaterally renegotiate such an agreement, a new approach was created so that these changes can be implemented more quickly and effectively. This new approach is the multilateral tool that was mentioned.

The MLI would allow signatory nations such as Canada to quickly modify their bilateral tax treaties to work more effectively together in the fight against aggressive international tax avoidance. At the same time, the MLI would improve the functioning of the international tax system and provide greater certainty for Canadian taxpayers by improving dispute resolution under Canada's tax treaties. It was developed and negotiated by more than 100 countries and jurisdictions, including Canada. Budget 2018 confirmed that, this year, Canada would take the steps necessary to enact the MLI into Canadian law and to ratify the MLI as needed to bring it into force.

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, we see that Canada's international efforts are consistent with what we have observed in the country since coming to power in 2015 after the last federal election. We arrived with measures to raise taxes on the wealthiest 1% and lower them for the middle class, for nine million Canadians. We transformed the child benefit system to make the benefit much more progressive, by no longer sending cheques to families who did not need them and instead sending more generous cheques to those who need them the most.

I see the impact that has had in my riding. I see the impact this would have had on my younger self. I see it in the Saint-Vincent de Paul stores and at the food banks that tell me that this has had a real impact on families. Our government's desire for improving tax fairness is inherent not only in the measures the minister takes with his OECD partners to come up with a system that is generally more equitable, but also through the actions we observe here at home.

I would like the minister to say a few words about the impact that this greater equity has had on the Canadian economy and on Canadian families as he sees it in his riding, but also from coast to coast.

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, I would like to tell the member for Louis-Hébert that that is a really good question. It is always a pleasure to field a question from him because he always makes some very important observations about our economy, Canadians, and how we can improve their lives.

On the subject of what we have done for Canadians, the tax changes are definitely very important. It is obvious that it is much easier for a family to be in a good position thanks to the tax cuts for the middle class. With the addition of the Canada child benefit, families with children are much better off from a tax perspective. Our approach of growing our economy, considering the concerns of the middle class, and determining how we can work together to improve economic growth sets the example for other countries. That is our approach and we are talking with our counterparts around the world to see how we can improve Canada's situation and also how we can improve the situation of families in every country and facilitate international exchanges with the assurance that economic growth will benefit families and individuals in all countries.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, trouble is to man what rust is to iron. The longer I have listened to the debate so far, the more I have noticed that the minister has gotten rusty with his answers.

I want to start with the New Brunswick gas tax. The premier has proposed to simply rename the gas tax as the carbon tax, which means it would apply only to gasoline and diesel. Will this meet the federal requirements set out in the budget bill, yes or no?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, as we gladly mentioned this evening, we decided to establish a price on carbon, which is already in place for 85% of Canadians in many communities across the country. We believe that this is an effective way to reduce greenhouse gas emissions. We believe that co-operative federalism is the best way to approach this issue and, therefore, the provinces have the opportunity to choose the model they wish to adopt.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, I noticed that the Minister of Finance did not bother to get up to answer my question.

We are told that an assessment has to be done by September, and that by January 1, 2019 a federal carbon tax will be imposed on all the provinces that do not comply with it. Could the minister tell me whether New Brunswick will be in compliance on January 1, yes or no?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, we expect to analyze the provinces' proposals by September, once we have received them all.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, I noticed again that the Minister of Finance did not get up to answer my question.

The New Brunswick premier, Brian Gallant, has said that the carbon tax in his province will respect the economy. Does the proposal, then, in the budget bill not respect the economy?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, we believe that the proposal put forward in Bill C-74, the budget implementation bill, is very good for the economy because it will stimulate innovation by putting a price on carbon pollution. At the same time, it will enable us to improve the fate of our environment by reducing greenhouse gas emissions. It is just one of the many measures a government can take to manage the economy and the environment at the same time.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, I noticed again that the Minister of Finance did not get up to answer my question.

The New Brunswick gas tax the premier is proposing to impose on the people in his province is simply a rebranding exercise to now call it the carbon tax. On January 1, will it be in compliance with federal rules, yes or no?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, my opposition colleague is not happy to see me or to hear my answers, but I am pleased to be here with him tonight debating carbon pollution pricing.

I would like to know what the opposition's plan is. That is something that has not yet been mentioned, and I think Canadiens would also like to know.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, I noticed again that the Minister of Finance chose not to get up. This is the one time when constituents in my riding have an opportunity to hear directly from the Minister of Finance, and he is choosing not to stand. Earlier today he spoke about indemnification for Kinder Morgan, which is pursuing the construction of the Trans Mountain pipeline. Members on this side of the House have repeatedly tried to ask the basic question of how much that indemnification will be. How many dollars are they willing to spend? Is it half a billion dollars, yes or no?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, we already said that we do not negotiate in public. We will not negotiate in public the principles guiding the Minister of Finance in his discussions with Kinder Morgan. It is in Canadians' best interests to ensure that this major project, which will create 15,000 jobs in this country, moves ahead.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, perhaps the parliamentary secretary or the Minister of Finance could answer this question. Is it between half a billion dollars and a billion dollars of taxpayer money they are willing to give away for their own screw-ups on the construction of the Trans Mountain pipeline?

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Chair, I would argue that the biggest screw-up is that for 10 years they were not able to build one single pipeline to export markets. They should look no further if they want to look for a screw-up. That is the mismanagement we have witnessed over 10 years while they were in government.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Madam Chair, again, the Minister of Finance chose not to stand and answer the question.

I will remind the parliamentary secretary, though, that under the current government, 7,000 kilometres of pipeline have been cancelled, whereas the previous government approved and saw built over 5,000 kilometres of pipeline.

Moving on to the main estimates directly, the Asian Infrastructure Investment Bank is being given another $52.3 million, money going to an infrastructure bank in Asia that will build three pipelines overseas. Why is the Government of Canada financing pipelines overseas instead of ensuring that pipelines are built in Canada?