Debates of May 22nd, 2018

Department of Finance—Main Estimates, 2018-19

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, it is vital to get the facts right in order to consider how we can work together. This is an example. The member's belief is incorrect, because now, there are two. That is the truth in the G7 at this time. We need to work together to find an approach that works for every country in the world. With international companies, there is a chance they could change their method of operation if there is no concerted approach involving every country. We are working to find an approach that works for all countries.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, could the minister tell us how much sales tax CraveTV and illico, which are Canadian digital services, have to collect from their customers, which Netflix does not have to collect in Ontario?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, I am not a subscriber of CraveTV or any such service, so I do not have the information the member is requesting.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, the answer is easy. The harmonized tax, which is Ontario's sales tax combined with the federal tax, is 13%. That is what CraveTV and illico customers get charged. Those companies offer the same services as Netflix. Netflix has a 13% competitive advantage over Canadian companies CraveTV and illico right out of the gate. Why give foreign companies that advantage?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, I will repeat my answer. We have to have a coordinated approach for international digital corporations. That is very important. The OECD released a report for the G20 and the G7, and we are reviewing that report. There is still work to be done, and we will determine our approach together in the coming months and over the next year and a half.

[The Chair, Conservative, Bruce Stanton]

There are about two minutes left.

The hon. member for Rimouski-Neigette—Témiscouata—Les Basques.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, since the minister talked about international coordination, why did EU countries, such as France, Germany, and Italy, and other countries, such as Japan and the United States, go ahead and tax foreign digital services without waiting for international coordination?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, our approach is to work with other countries to find a coordinated solution. Each country does indeed have its own solution. That is why we need to find a way to work together. That will lead us to an approach for big corporations that will work for the long term. That is what we need to do right now.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, Facebook and Google do not have to collect sales tax on ads purchased on their platforms, unlike Canadian media companies, which have to charge sales tax for advertising purchased from them.

Again, why the preferential treatment for foreign companies over our Canadian industries?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, we believe it is important to look at our tax system as a whole. It is very important. This is our approach and it is viewed as the OECD approach. This is our way of ensuring that we are well positioned for the future.

[The Chair, Conservative, Bruce Stanton]

There is enough time for one question.

The hon. member for Rimouski-Neigette—Témiscouata—Les Basques.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, the government's wait-and-see approach is costly.

Does the minister have any idea how much the failure to charge tax or have Google or Facebook charge sales tax on advertisements is costing the public treasury? How much money is not being collected that could be collected if they were being treated on equal footing with our Canadian media?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, businesses claim refunds on GST for advertising, so there may just be a misunderstanding of our tax system by the member opposite.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Mr. Chair, I am pleased to rise this evening. I will speak for about 10 minutes, after which I will ask one or two questions, at most.

My speech will focus on one of our government's main priorities, which is to strengthen and diversify trade. In doing so, we can ensure that more people benefit from trade, which helps strengthen the middle class and promote long-term economic growth.

In an increasingly global economy, Canada's economic success relies not only on the hard work of Canadians, but also on solid trade relationships.

Canada is, and has always been, a trading nation. Canadians recognize that, when done properly, trade can be a positive force for change. It can stimulate economic growth, create good, well-paying jobs for the middle class, and open up opportunities for Canadian businesses to grow and expand.

The Government of Canada is committed to adopting a progressive trade agenda that creates the greatest number of possibilities for everyone, including women and indigenous peoples, so that we can fully participate in and benefit from the global economy.

To ensure that trade benefits Canadians and that those benefits are felt by everyone, the government is actively deepening its trade relationships by entering into modern and progressive free trade agreements in North America, Europe, and new fast-growing markets in Asia.

Thanks to the Canada-European Union Comprehensive Economic and Trade Agreement, commonly known as CETA, and the recent comprehensive and progressive agreement for trans-Pacific partnership, the CPTPP, preferential market access for Canadian goods and services abroad has more than doubled in 18 months, from 31% to 63% of global gross domestic product.

The government is also making new transformative enhancements to Canada's export programs to help Canadian businesses find customers around the world.

Perhaps the most significant point is that the government is working hard to ensure that trade is done responsibly and is rules-based. No one benefits from a race to the bottom.

I will now review in greater detail Canada's main export markets to explain how the government is strengthening and diversifying trade with key partners.

Let's begin with the market closest to home, the North American market. Since coming into effect in 1994, the North American Free Trade Agreement, NAFTA, has been a significant factor in growth and job creation in Canada, the United States, and Mexico. It has improved the lives of workers and families in all three partner countries.

Trade among all three countries tripled in value during that period and is now worth about $1 trillion U.S. per year.

Because of NAFTA , North America is the largest and most comprehensive trade bloc in the world. With only 7% of the global population, it represents 28% of the global GDP.

Thanks to our interconnected supply chains, Canadians, Americans, and Mexicans not only sell goods to each other, but also produce goods together and sell them to other parts of the world.

Even though NAFTA has produced strong economic gains for all three countries, it needs to be reviewed.

It should be modernized for the 21st century, to ensure the benefits of trade are shared more broadly, with more people. That is why we are working hard to renegotiate an updated and improved NAFTA that is win-win-win, one that will foster greater opportunity for the middle class and those working hard to join it in Canada, the United States, and Mexico.

Our government will always uphold and defend Canadians' interests and values, and we are committed to reaching a good deal.

Furthermore, in the face of increasing globalization, the government knows that we need to look beyond North America and establish closer trade relationships with large and emerging markets around the world.

In Europe, this has meant the delivery of CETA, the Canada-European Union Comprehensive Economic and Trade Agreement. As of September 2017, all economically significant parts of CETA had been brought into force, deepening our ties with the world's second-largest single-market economy and providing Canadian businesses with unprecedented access to a market of more than 500 million people, with a GDP of $22 trillion.

With commitments on labour rights, environmental protection, sustainable development, and cultural diversity, CETA represents a model for a modern, progressive trade agreement.

Let us go a little farther with regard to geography and trade. Our government is actively pursuing trade opportunities for Canada in the fast-growing Asia-Pacific region. Its landmark achievement in that regard is the comprehensive progressive agreement on the trans-Pacific partnership, or CPTPP, which together with the Canada-Korea Free Trade Agreement that came into force in 2015, will solidly anchor Canada's place in that part of the world.

The CPTPP, the largest regional trade deal in history, will establish a network of open markets in the dynamic Asia-Pacific region, which represents 495 million people with a combined GDP of $13.5 trillion. This agreement includes large Asian markets, such as Japan, and emerging markets, such as Malaysia and Vietnam, with significant potential for further growth over time.

The government has been focused not only on opening new markets but also on ensuring that the trans-Pacific partnership protects cultural identity and diversity and promotes corporate responsibility, gender equality, and indigenous rights. It also contains the strongest labour and environmental provisions of any trade deal in history.

Unfortunately, I have to wrap up. As we focus on strengthening and diversifying trade, Canada is building on a position of strength. Canada is open for business and open to progressive, inclusive, and rule-based international trade.

There are many good reasons to invest in and do business with Canada. I do not have time to list them all, but I would like to mention at least two. First, Canada offers businesses and investors a real openness to international trade, and second, foreign direct investment is welcome in Canada. That is not to mention the fact that we offer international companies the help they need to navigate our trade environment.

In conclusion, Canada is in a unique position in the world. The time has come for us to be more ambitious and to seize all opportunities. The time has come to enhance and diversify trade and to put to it to work for the people. This will contribute to building a solid middle class and economy in the long term.

[The Chair, Conservative, Bruce Stanton]

We will now move on to questions.

The hon. member for Bourassa.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Mr. Chair, I have a question for my colleague.

Let me start by coming back to my speech. Canada and the United States have many things in common in terms of their history, language, and identity. These commonalities grew into a wonderful friendship that has not faded with time. Both countries offer a better life to the middle class on both sides of the border. The best way to maintain a strong and prosperous middle class is to further strengthen the already close economic and social ties between Canada and the United States.

I would now like to briefly list a few facts. First, Canada is the United States' largest and most reliable customer. We buy more from the United States than China, Japan, and the United Kingdom combined. Canada is the biggest export market for 35 states and is among the top three in 13 other states. That has a huge impact. In fact, the jobs of nine million Americans depend on trade with Canada. Similarly, two and a half million good Canadian jobs rely on trade with the United States.

Can my colleague explain to the committee how NAFTA modernization will contribute to enhancing the relationship between Canada and its closest neighbours?

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

Mr. Chair, I want to thank my colleague from Bourassa for his passionate and very interesting speech, and also for his question.

As members know, the economies of Canada and the U.S. are highly interconnected. Our supply chains are so connected that a product sold by a Canadian or American company could have crossed the border five or six times. Take, for example, a Ford transmission.

First, pieces of Canadian scrap metal are sent to Metaldyne, in St. Cloud, Minnesota, where they are forged by American workers. These materials are then returned to Linamar, a Canadian auto parts manufacturer in Guelph, whose factory employs about 560 people, to be manufactured and assembled. These pieces then cross the border a third time to the Ford plant in Sterling Heights, Michigan, where they become parts of a fully assembled transmission. The transmission is then sent to the Ford assembly plant in Oakville, Ontario, where it is installed in the vehicle. Then, when it crosses the border for the fifth time, the product is sent to an American dealership.

Some products take a long journey before entering Canadian and American markets. Because our countries are so interconnected, we have one of the largest and most mutually beneficial relationships in the world. It is very important for our government to strengthen this relationship. It is important for all North Americans that we sign a NAFTA agreement that is beneficial to all parties, so that we can continue to grow trade between our two countries.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Mr. Chair, I would like to ask my colleague a supplementary question.

We are talking about these agreements, whether NAFTA or others, but we know that in other budgets, the government brought forward some measures to help the middle class and those who want to join it. This also applies to these agreements. I know that my colleague can speak about measures to help families, whether it is the Canada child benefit or summer jobs, but these agreements also lead to more growth.

Would my colleague speak more about all this economic growth in Canada generated by these events?

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

Mr. Chair, it goes without saying that trade with the United States and Mexico is very important for Canada's prosperity.

My colleague from Bourassa referred to our government's vision, namely that prosperity is important and must be inclusive. When all Canadians have the opportunity to reach their full potential, thanks to the Canada child benefit that reduced child poverty by 40% compared to 2013 levels, for example, we are ensuring that not only do we have the conditions to attain prosperity across the country, but this prosperity trickles down and is inclusive. Thus, we are ensuring that we have a strong and prosperous economy for all Canadians.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Chair, my question is for the finance minister. The minister's office reportedly called the Canadian Association of Mutual Insurance Companies and told the group, which the office regulates, not to testify at the finance committee on the budget. Does the finance minister think it appropriate for his office to tell witnesses not to speak up on his budget?

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

Mr. Chair, just to be clear, no stakeholders have been told by the minister's office not to engage with parliamentarians or appear before a committee. We are always open to engaging with stakeholders directly at the department, but no such thing has ever been said to any stakeholder. In fact, it is the prerogative of the member for Carleton to invite whomever he wants to committee. He invited Jason Kenney, and we were happy to welcome Jason Kenney to the finance committee. The department and the minister's office would not discourage stakeholders from engaging with parliamentarians, and it has not been done.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Chair, on the issue of the Trans Mountain pipeline, the minister announced that his government is prepared to “indemnify the project against any financial loss that derives from Premier Horgan's attempts to delay or obstruct the project”. If the premier causes losses to the project, who will pay for those losses?

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

Mr. Chair, I think the minister was clear. We will not negotiate a possible indemnity for the Trans Mountain expansion in the public arena. Our goal in the negotiations is to mitigate the risks arising from a unique situation created by the premier of British Columbia and his actions so that we can have a commercially viable project that is useful for the Canadian economy and that will create 15,000 jobs. That is our position.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Chair, it really is sad that the minister has gone into hiding. I have now placed three questions to him. He will not stand up and answer those questions. This is an occasion when the minister is supposed to come here and answer for his spending, but he has apparently snuck out the back door and is refusing to answer those questions.

I appreciate that the parliamentary secretary is very articulate and knows his files, but if the minister really believed in what he was doing and had the competence to implement his agenda, he would be here to answer the questions. Therefore, the question—

[The Chair, Conservative, Bruce Stanton]

Order. I would just remind hon. members that the same rules apply to references to members being in their place, references to either their absence or their presence, in debate as in committee, in this case.

The hon. member for Carleton can go ahead and finish up his question, and then we will go to the minister or the parliamentary secretary.