House of Commons Hansard #92 of the 43rd Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was workers.
Greg McLean Conservative Calgary Centre, AB
Mr. Speaker, my hon. colleague is exactly right. Six years plus one year means we are talking about seven years of delays in implementing actual safety regulations. That is 2,190 days for 300 pages, which is seven days per page for getting regulations—
The Acting Speaker Conservative John Nater
We will now resume debate. The hon. member for West Nova.
Chris d'Entremont Conservative West Nova, NS
Mr. Speaker, I want to thank the member for Calgary Centre for sharing his time with me today to speak to Bill S-3.
On December 31, 2020, our offshore oil and gas workers were instantly stripped of their health and safety protections. This date saw the expiry of a transitional, or what we could call temporary, safety regulations that had been in place for the previous six years. They came with the 2014 version of the Offshore Health and Safety Act.
Since then, for almost four months, there have been no codified regulations protecting offshore workers’ rights to health and safety, despite the fact that our workers, day in and day out, are still engaging in challenging and sometimes risky work. In Canada in 2021, no worker who puts their safety at risk in their workplace should ever have to do so without being protected by health and safety rights.
Bill S-3 seeks to extend these same transitional regulations for two extra years to the end of 2022 in order to provide time for the government to finally implement the long-awaited permanent regulations. During the study of this bill, many witnesses were heard from, including the minister and his senior officials, from industry, the unions, and individuals.
To indicate to everyone how important this bill is and how seriously it has been studied, I will tell of Mr. Robert Decker. He has been mentioned a few times here today, and he was the sole survivor of the helicopter crash in 2009. He does not often speak publicly about it, but he shared a brief on his experience. For him to reach out and send the committee such a note, as he did, not only speaks to the importance of safety, which we all know and we have all heard about, but it also speaks to the necessity of getting this done and getting it done quickly.
Offshore health and safety requires our attention and speaks to the fundamental role of government, which is the protection of its citizens. Unfortunately, on this side of the House, we too often need to remind the government of its responsibility, and that is a shame.
Whether it is concerning the protection of our communities or the security of women regarding domestic violence, or the protection of our women in uniform, the victims of sexual misconduct in our armed forces, we still have to remind the government of its responsibilities and fight for that. Why is it so hard for the government to take responsibility for protecting its hard-working citizens?
Offshore workers should be able to arrive for their shift every day knowing that the government have implemented the proper regulations to ensure that they will be as safe as possible and that they will be able to return home to their families. For so many in our Atlantic provinces, just like in my beautiful province of Nova Scotia, these issues are not just a matter of legislation. They are personal, affecting their lives and their loved ones' lives.
In recent decades, the province of Newfoundland and Labrador has had to face devastating offshore tragedies, some that have been mentioned a couple of times today. There was the Ocean Ranger disaster on Valentine’s Day of 1982. The Ocean Ranger was a semi-submersible drilling rig, and it was described as indestructible. I would like to share a short but important and meaningful summary of this tragedy.
On February 14, 1982, there was a storm off the coast of Newfoundland, which capsized the rig, resulting in the tragic deaths of all 84 people on board. There were no survivors. This was Canada’s worst tragedy at sea since the Second World War. A very good friend of Senator Wells, who supports this bill and has spoken passionately to it as well, Mr. Darryl Reid was one of the 84 who lost their lives. Gerald Keddy, a retired colleague from this House of Commons, also served on the Ocean Ranger. He lost a number of his friends that day.
In Newfoundland and Labrador, as in Nova Scotia, these tragedies hit directly because they are small, tight communities. Everyone is within two or three degrees of separation. I can certainly understand the feeling. Nova Scotia has had its share of tragedies during the last year, and everyone has been affected by them. Everyone knows someone who has been affected by one of them.
Later on, almost 30 years later, on March 12, 2009, Cougar helicopter flight 491 crashed into the North Atlantic after experiencing mechanical trouble. The helicopter was ferrying 18 offshore workers to oil platforms off the coast of Newfoundland. Tragically, 17 lost their lives and the only survivor was Mr. Robert Decker.
I completely understand and deeply share Senator Wells' frustration regarding the fact that the minister in charge of getting this done, and who has not done it, is also a Newfoundland and Labradorian. Once again, I find it sad that we have to speak out to ensure the protection and rights of the courageous workers who have more dangerous occupations than others.
Catastrophes, like the ones mentioned earlier, have brought so much devastation to Newfoundlanders. They are deeply rooted. Like the Portapique tragedy in Nova Scotia, no one ever forgets, even several years later. The victims of any tragedy should never be forgotten. Health and safety legislation and regulations affect so many. Bolstering offshore health and safety means decreasing the likelihood that these devastating events will happen and the likelihood that more parents, spouses and children will spend their lifetime grieving.
In Canada, prioritizing the health and safety of our workers should never be part of any debate; it should be a given. Many Canadian industries are investing time and money in implementing a safety culture and are working tirelessly to ensure that workers stay safe. Offshore workers deserve to know that we care about their safety.
Offshore petroleum boards, the one in Newfoundland and Labrador, the other in Nova Scotia, play critical roles in meeting our health and safety goals. However, these boards cannot do it alone; they require the co-operation of government to prioritize these issues and to push forward necessary legislation and regulations.
The 2014 Offshore Health and Safety Act was a promising step forward. Bill S-3 simply asks for the extension of two years. The government's legislative summary states that it is necessary because of the complexity of the regulations and the need to secure agreement from Newfoundland and Labrador, and from Nova Scotia, which I am sure are ready to go.
The 2014 Offshore Health and Safety Act outlines a path toward permanent health and safety regulations for our Atlantic offshore. However, I understand that the act of putting permanent OHS regulations into place is one that requires study and coordination, so transitional regulations were put in place when the Offshore Health and Safety Act was enacted, giving the government a five-year period of time to conduct the necessary analysis and to determine permanent regulations. These transitional regulations were necessary at the time, but critical elements were still delayed awaiting this five-year window, including the establishment of an occupational health and safety advisory council. What few people know is that an extension was already given in the second budget in 2018. That was a one-year extension tucked into the 884-page omnibus bill.
Offshore workers have been waiting for too long. Bill S-3 should represent the final extension of the deadline to adopt permanent health and safety regulations.
Furthermore, the Department of Natural Resources must submit an implementation progress report to the House before the end of the parliamentary session, including the implementation schedule to the expiry of the transitional regulations.
The government has failed our workers. I ask again: What is more important to the government than bringing safety to some of our most at-risk workers? In the past six years, the government could not find the time to develop permanent regulations, ones that are simple and clearly based on existing provincial and federal regulations, and the practices of the board, including the provisions of conditions of licence. Why has it taken so long and why are we scrambling for an extension mere weeks from the expiry of the transitional regulations and mere days from Parliament adjourning, back in December, until 2021?
The safety of citizens is a fundamental responsibility of government. Of course, we want to see this bill pass quickly in this House of Commons so workers can be protected. Again, the largest question that continues to go through my mind is this. Why has it taken six years for us to get here?
With those short comments, I am looking forward to a few questions before I have to get off to the health committee, which has already started.
Gord Johns NDP Courtenay—Alberni, BC
Mr. Speaker, I thank my colleague for speaking about workers and the important role we play in protecting them, especially this week, as here we are honouring those who have been injured and killed in the workplace, or who have become sick due to workplace-related hazards and occupational exposures, through the National Day of Mourning. Right now we do not have a national strategy in Canada for the reintegration of workers with physical or mental disabilities and those who are injured in the workplace. I really want to thank my colleague, because this should not be a partisan issue.
In 2014, we know this legislation was created under a federal-provincial safety advisory committee to advise on occupational health and safety composed of representatives for workers and employers in both governments. However, union representatives have not been consulted on who would represent labour at the table. Does my colleague opposite agree the government should have consulted with labour unions before choosing a representative?
Chris d'Entremont Conservative West Nova, NS
Mr. Speaker, Wednesday was of course the National Day of Mourning, and I am sure many of us know people who were lost during the exercise of their dangerous job, or even not so dangerous job, because of lack of regulation or safety requirements in their workplace.
Unions should be consulted. Unions have a really good feeling of their membership, and they speak every day for their membership for a variety of reasons. The consultation should happen with them and it should be people they suggest sitting on that advisory council.
Andréanne Larouche Bloc Shefford, QC
Mr. Speaker, I would like to hear my colleague's thoughts on a very worrisome aspect of Bill S-3.
Last year, the union condemned the fact that offshore exploratory drilling had been left out of the bill.
We know that the exploratory drilling in Newfoundland carries risks for the fisheries, the environment and workers.
What does my colleague think about the fact that these platforms are excluded from Bill S-3?
Chris d'Entremont Conservative West Nova, NS
Mr. Speaker, I thank my colleague from Shefford for her question.
Strict regulations on offshore exploration are needed to ensure that the workers are healthy and safe.
I have concerns about the exclusions. We will have to keep a close eye on this.
Marilène Gill Bloc Manicouagan, QC
Mr. Speaker, I am happy to speak in the House today about Bill S-3, which virtually everyone seems to agree on.
However, I would like to voice a few of my concerns about the bill. I will start by summarizing the bill and the position of the Bloc Québécois. Then I will illustrate my position with a parallel before wrapping up my remarks.
First, I would like to point out that this bill merely amends an act so that two regulations can be repealed no later than seven years after the clause comes into force. It would allow extra time to do things right. Essentially, it is very simple.
This bill does not affect Quebec. Although I am sharing the position of the Bloc Québécois on the bill, it concerns Newfoundland and Labrador, Nova Scotia, the federal government and the provincial governments because of the occupational health and safety initiative. We hope that the provinces themselves will speak out on the issue.
Nevertheless, as I often say, the Bloc Québécois is a party that defends workers and advocates for their health and safety. We have tabled many bills aimed at defending workers, including our federal anti-scab bills, aimed at solving a problem that Quebec addressed a long time ago.
We care about workers. I would like to remind the House that, last week, I was defending my bill that also aims to protect retirees and workers and their pension funds. This issue is one that the Bloc Québécois really cares about and that is part of our values.
I would like to draw a parallel to illustrate my concerns about Bill S-3, in that I hope that it will be adopted quickly in order to avoid leaving a gap. We know very well that leaving a gap hurts Canadians and their well-being by threatening their health and safety. As for my parallel, I remember the early days of 2020, at the beginning of the current government's term. We discussed Newfoundland and Labrador extensively for other reasons.
It was the beginning of the Ocean Decade, and the Prime Minister of Canada's way of celebrating was to authorize 40 exploratory drilling projects in a marine area recognized by the United Nations for its ecological and biological importance.
Now we are talking about Newfoundland and Labrador again, in another context, but we saw things moving very fast. The government authorized 40 exploratory drilling projects and also decided to abolish the environmental assessment process. It did not modify it, it did not reform it, it simply abolished it.
It is interesting to note that the government can green-light projects in as little as 80 days. Today in the House, we are talking about repeals within five or seven years. In my example, it was 90 days. Essentially, the government is saying that it is greener than the Green Party, that it wants to reduce greenhouse gas emissions and that it is doing a lot to achieve that very quickly, but we have absolutely no idea how it wants to go about it. The government has made a statement, but it is totally unsupported.
Even fishers in Newfoundland and Labrador expressed concerns at the time about what was happening. When we are talking about fishers, we are talking about workers and their working conditions. This is a protected area recognized for its diversity and richness. Very quickly, at the beginning of 2020, in the early days of its term, the government authorized exploratory drilling projects. The unions also weighed in on the matter because they were concerned about the health of the people and workers in Newfoundland and Labrador.
That is the parallel I want to draw. I would like to point out the government's double standard. When it comes to defending the oil industry, rather than workers, the government can move very quickly. When it came to the House in early 2020, it tried to smooth the way for oil companies, to put it mildly, or even eliminate all obstacles for them. It only works that hard for the benefit of oil companies, not for the biodiversity of this world-renowned protected area or for workers.
It should be pretty clear that the Bloc Québécois and I support the bill, but we do not want to see any further delays. The government has proven that it can move very fast when it comes to exploratory drilling, so I imagine it is capable of moving fast on Bill S-3.
Still, I am worried there might be delays. Back in 2020, the government managed to act very fast for oil companies, but it seems disinclined to do the same for workers. Here again, unions are saying they need protection, and Unifor Quebec said it has to happen fast.
Tragedies have happened to people. I have not yet talked about how there have been a lot of incidents in the oil industry. I have talked about fisheries, but these incidents are obviously going to have repercussions for people in the oil sector itself. As I just said, I would like to see the government work quickly to pass Bill S-3. Protecting employees and workers should take precedence over protecting oil companies.
I think this is going to take a lot of work. It is faster and easier to destroy than it is to build. This bill, Bill S-3, is an opportunity to build something that is absolutely doable. I think this bill will get the unanimous consent of the House. I would like to remind the government that it was capable of acting very fast in Newfoundland and Labrador on another issue for the good of someone other than workers. I hope it will side with workers this time.
Jack Harris NDP St. John's East, NL
Mr. Speaker, the hon. member talked about the government being able to act very quickly, which it did of course in the last few days, very quickly indeed, to bring action to take away the rights of workers at the Port of Montreal.
Why does the member think the government did not have the same alacrity in dealing with the question of the deadline, of the expiry of these regulations in December of last year, despite the notice it had? What commitment does that show to the health and safety of workers on our offshore?
Marilène Gill Bloc Manicouagan, QC
Mr. Speaker, I thank my hon. colleague for his question.
I would like to pick up on the parallel drawn by my colleague, namely, the Port of Montreal, in Quebec. Once again, the government's failure to act has let the workers down completely. Instead, the Liberals are siding with the money, so to speak.
With respect to Bill S-3, we have known for quite some time that something would need to be done to establish regulations and protect workers. I therefore totally agree with the comment my colleague just made in his question.
Jack Harris NDP St. John's East, NL
Mr. Speaker, I am pleased to enter into the debate today at second reading of Bill S-3, an act to amend the Offshore Health and Safety Act. This act deals with safety regulations in the Newfoundland and Labrador offshore oil and gas industry in particular. However, I am very concerned about the necessity of this legislation and what it reveals about the Government of Canada's commitment to safety in the Newfoundland and Labrador offshore oil and gas industry.
We support the speedy passage of the bill, because it will restore the offshore health and safety regulations put in place in 2014. They were established as interim regulations, with an expiry date initially of December 31, 2019, allowing five years for the relevant parties to develop permanent regulations. Five years is a long time, and they did have regulations in place.
The deadline was extended for one year, but the government has allowed the regulations to expire, leaving no enforceable regime in the offshore to protect workers who are expected to go to work every day with the expectation that a regime is in place to protect them, but it is not there.
It is very well for the minister's parliamentary secretary to say that the government will make it retroactive, but that is not good enough. The legislation before us today specifically says:
No person shall be convicted of an offence under a provision of a regulation revived under subsection (1) if the offence was committed during the period beginning on January 1, 2021 and ending on the day before the day on which this section comes into force.
That is clearly indicative that the government has no ability at this point to enforce these regulations, which supposedly will be revived. It is shameful that the government would allow that to happen, particularly given the history and the importance of marine safety in Canada and, in this case, of our offshore oil and gas industry.
Some who are looking carefully at their screens in this virtual hybrid sitting will notice that I am wearing a necktie that is peppered with images of lighthouses. These are, of course, the most ancient and iconic symbols of the need for safety at sea. Other recognized symbols of the dangers of maritime life and work are the images of the bright yellow Cormorant rescue helicopters of the Canadian Forces, the bright red hulls and the fuselages of the Canadian Coast Guard ships and helicopters with the white stripes.
These are important images for Canada, which is a significant maritime country, with three oceans and the longest coastline of any country in the world. The protection of mariners and all offshore workers, including those in the fishing industry and the offshore oil and gas industries, are of paramount importance to Canada.
We know, from the early history of offshore oil and gas development in Canada, the dangers that this industry exposed workers to from the monumental tragedy of the Ocean Ranger disaster, which has been mentioned by a couple of speakers today.
In 1982, the Ocean Ranger, a semi-submersible offshore oil drill rig, sank with the loss of 84 lives, including many Newfoundlanders and Labradorians and other Canadians who died in that great tragedy. The memory of that February 14, 1982, date is carved in the memory of those affected and all those in Newfoundland and Labrador who received this shocking news and had to relive these events over many months of a royal commission of inquiry, seeking answers and detailing important recommendations to ensure the safety of workers in this harsh environment.
Unfortunately, the legal regime that was put in place for the health and safety of offshore workers was inadequate. The labour portfolios of the various jurisdictions had responsibility for occupational health and safety, but as the jurisdictional issues were sorted out, responsibility was taken from these departments of labour in 1992 and given to CNLOPB, the Canada-Newfoundland and Labrador Offshore Petroleum Board.
CNLOPB comes easily off the tongues of Newfoundlanders and Labradorians who have an interest in the offshore and how it is managed. However, giving it the safety responsibility for occupational health and safety was not a wise decision in my view and the handling of that since then has been inadequate.
In its supposed wisdom of the day, the Newfoundland board and the Nova Scotia board, the Canada-Nova Scotia Offshore Petroleum Board, had in place draft regulations. They were not enforceable. It was not a situation in which somebody who did something contra to these regulations could actually be charged, treated as an offender, taken to court if necessary, fined or dealt with appropriately and be required to follow the regulations. It was a very different regime. The regime was there as draft regulations or really just a framework or a guideline.
That was entirely unsatisfactory to the workers involved. It was objected to by them and by the unions, by my party and both the Nova Scotia and the Newfoundland and Labrador legislators. There was very strong opposition to this approach.
I have familiarity with these regimes, as a lawyer, having had a client who was on the Ocean Ranger and having represented his family in the aftermath, seeking to get some compensation for those who had lost their lives and looking closely at the regulations that were involved.
In the 1990s and the 2000s, up to 2006, I was in the Newfoundland and Labrador legislature as well. I am very familiar with the arguments as to how these regimes were supposed to work. In fact, they were unsatisfactory as was also agreed to by Mr. Justice Wells in the commission of inquiry that took place after another sad tragedy, the crashing of the Cougar flight 491 in the Newfoundland offshore, with the loss of 17 lives in 2009. This was a serious problem that was caused by a fault in the helicopter involved.
After the sad loss of those 17 individuals, there was an inquiry, which also looked into these questions of how the offshore safety regime was managed. Mr. Justice Wells concurred that the situation and the regime were unsatisfactory, and called for enforceable regulations. He also called for an independent body to enforce those regulations. It was recognized that these regimes had a built-in conflict of interest and that, in accordance with their obligations and mandate to foster the industry, there was an inherent conflict of interest, which was recognized in other jurisdictions.
He did a very comprehensive report and his most important recommendation, as he called it, was recommendation 29, which was that there be an independent regulator for safety in the offshore. That followed the circumstances that existed in Australia, United Kingdom and Norway. Norway may have been the first. These regimes would require that there be an independent regulator so the issues of health and safety of workers be paramount and the only responsibility for those in charges.
This regime that is now in place in Canada failed to undertake that recommendation brought in by the Conservatives in legislation that was before the House in 2013 and passed into law in 2014. All of a sudden, as a result of these recommendations, we did have enforceable regulations. Workers had legislated the right to refuse unsafe work, which they did not have before, except in accordance with collective agreements in some of the rigs. Established by this legislation and by regulations in 2014 was a provision for an offshore safety advisory council where the representatives of both the provincial governments involved, the federal government and the workers would work to provide advice to the safety regulator for offshore safety regulations.
There is another failing of the government since the legislation was put in place. Believe it or not, since 2014, the requirement for the establishment of an offshore safety advisory council has not been put in place in Newfoundland and Labrador. The Nova Scotia board was put in place in 2019, and it has met twice a year since then. No board is in place in Newfoundland and Labrador.
That is a shocking dereliction of following up on the importance of the safety regulations. I am told that the federal part of the board has been appointed, but the provincial board has not. Indeed, one of the requirements of the legislation is that the workers' representatives and unions, if there are unions, should be consulted in the appointment of the persons representing workers.
I am advised that there has been no consultation with either the Newfoundland and Labrador Federation of Labour or the relevant union representing two of the rigs offshore. That is another failing of the government in terms of taking its commitments to the health of safety in the offshore seriously.
The fact is that the regulations were allowed to lapse. An extension passed through legislation in 2018 to extend the deadline for putting permanent regulations in place to December 31, 2020. However, the government waited until December of last year to do that. It then brought in legislation in the Senate to get the extension it required to continue on past the expiry that was coming up.
That is a shameful dereliction of duty. How did that happen? We heard the parliamentary secretary attempt to give an explanation today about how many pages were involved and how many regulations there were, etc. However, this has been going on for six years. The government has had six years to do this. It is now asking for another year. It has to be done, obviously, so we will support the legislation.
However, the most serious issue has been the failure of the government to recognize that these regulations were expiring. In fact, they were automatically repealed at the end of that period. As of December 31 of last year, they do not exist. There is no opportunity to enforce these regulations right now. No one can be charged.
The shocking part is the fact that the government showed a lack of foresight, failed to notice that the regulations would expire, or somehow or other did not take it seriously enough to ensure that the legislation was before the House of Commons prior to the end of last year.
These are some of the reasons why we are very unhappy with the level of commitment by the Government of Canada to health and safety in the offshore. Workers in the offshore are rightfully outraged that the government has failed to take this matter seriously.
We do need to have enforceable regulations. We do need to have the right to refuse unsafe work. We do need to ensure that we can ultimately have an independent regulator. Unfortunately, it is not good enough to repeat a mantra about how safety is our most important and first priority, and all those comments which give lip service to the safety, when we have these instances where the regulations are allowed to lapse and there is a failure to take these responsibilities seriously.
We will support the legislation. It needs to be fixed. It needs to be replaced and put back in place as soon as possible. It is not good enough to have the situation where we are faced with this circumstance and a failure by the government to act quickly.
Andréanne Larouche Bloc Shefford, QC
Mr. Speaker, I thank my hon. colleague for his speech.
He talked about the issue of the safety that Bill S-3 brings and the importance of speeding up its implementation. I would like to come back to a point that was raised by my colleague from Manicouagan, namely exploratory drilling in Newfoundland.
When it comes to oil drilling, the question is not if there will be incidents or accidents, but when. These have repercussions on the safety of workers, on fish stocks and on fishers. How can the Liberals claim to be a green government while continuing to promote 40 or so exploratory drilling projects in Newfoundland?
Jack Harris NDP St. John's East, NL
Mr. Speaker, I know it is an important issue. It is a bit of a diversion from the issue of safety, but one point I think the member may agree on is that our party has long been in favour of an independent environmental assessment policy, and that the regulation with respect to the environment ought to be undertaken by an independent body as well. That is both for health and safety and for environmental questions. The issue should not be determined by the C-NLOPB or the CNSOPB or the Quebec board that is also in existence, but by an independent environmental body.
I certainly agree with the member on that, and I believe that is the position of her party as well.
Matthew Green NDP Hamilton Centre, ON
Mr. Speaker, the hon. member for St. John's East laid out in very particular ways the way in which this government fixated on process but not outcomes. As a very learned legal mind himself, could the hon. member explain ways in which he feels we could have a deeper legislation that would result in better outcomes for workers in his community and Newfoundland?
Jack Harris NDP St. John's East, NL
Mr. Speaker, this is an important question. There are two things that I think would be important.
One, there ought to be an independent body to enforce the health and safety regulations. We did hear the minister talk about how one of the delays was that the stakeholders worried about too much red tape or too many blockades. It seems to me that the companies are not very happy with some of the requirements that are part of this process, which is one of the reasons we need an independent body. The petroleum operators have a very large say in the operation of the petroleum board, with the necessity for production over issues of safety and the regulation that takes place.
Two, there ought to be greater participation of worker representation, not just on an advisory body but directly on the body that oversees offshore health and safety.
The Deputy Speaker Conservative Bruce Stanton
There will be six and a half minutes remaining in the time for questions and comments to the hon. member for St. John's East when the House next gets back to debate on the question.
It being 1:30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.
Stéphane Bergeron Bloc Montarville, QC
moved:
That, given that the pandemic and the pressure it is putting on public finances has created the urgent need to close the loopholes being taken advantage of by some taxpayers through the use of tax havens, in the opinion of the House, the government should:
(a) amend the Income Tax Act and the Income Tax Regulations to ensure that income that Canadian corporations repatriate from their subsidiaries in tax havens ceases to be exempt from tax in Canada;
(b) review the concept of permanent establishment so that income reported by shell companies created abroad by Canadian taxpayers for tax purposes is taxed in Canada;
(c) require banks and other federally regulated financial institutions to disclose, in their annual reports, a list of their foreign subsidiaries and the amount of tax they would have been subject to had their income been reported in Canada;
(d) review the tax regime applicable to digital multinationals, whose operations do not depend on having a physical presence, to tax them based on where they conduct business rather than where they reside;
(e) work toward establishing a global registry of actual beneficiaries of shell companies to more effectively combat tax evasion; and
(f) use the global financial crisis caused by the pandemic to launch a strong offensive at the Organisation for Economic Co-operation and Development against tax havens with the aim of eradicating them.
Mr. Speaker, I cannot tell you how happy I am to speak to this motion today. I would like to thank my colleague from Joliette for supporting me in this presentation.
As we face a major public finance crisis, we must look at how we could eventually balance our public finances. Two options are always available to governments: increasing taxes or reducing services. This means taking more money out of taxpayers’ pockets or imposing austerity measures. However, while we are thinking of ways to make the people take their medicine, some people are avoiding doing their duty and not contributing according to their means.
In his speech to Congress this week, President Biden said that, according to one study, 55 of the largest businesses in the United States did not pay a penny in federal income tax last year, although they made some $40 billion in profits during the same period. How can that be?
There are two mechanisms that allow companies to shelter income from taxes. First, there are tax loopholes, which are measures provided for by law. When people have enough money, they can hire an army of accountants and tax experts to find the best ways of avoiding paying their fair share. It does not matter whether we are talking about an individual or a business. President Biden referred to the wealthiest people in the U.S., whose tax rate is lower than that of the middle class. That is unacceptable, despicable and scandalous. We need to look at tax loopholes.
There are also tax havens. What is a tax haven? It is a territory where income tax is almost non-existent. Businesses create satellite companies, and sometimes fictitious subsidiaries, in these territories to shelter their profits from the taxman. These subsidiaries exist only to enable companies to shelter their assets from taxes. They do not engage in any business activities or operations. They are empty shells that enable companies to avoid paying their fair share to society.
However transparent or opaque tax havens may be, everyone knows about them and about their impact on public finances. These schemes set up by accountants and other financiers or tax experts can go as far as tax evasion, simply hiding their clients’ income and wealth from the tax authorities. All these mechanisms are ways that some people use to avoid paying their fair share to the government, while other taxpayers continue to pay.
What makes this even more troubling is that, in many cases, these tax havens allow for tax avoidance or tax evasion and often become essential links in international criminal activity, making it possible for organized crime to launder money. Governments are powerless in the face of these tax havens, which create, or are complicit in, tax inequity among countries.
With advances in technology it is very easy to instantly transfer information and money, which makes it much more difficult to track operations.
In 2016, economist and legal expert James S. Henry calculated that a mind-boggling total of more than $36 trillion U.S. was in tax havens. We are talking about 36 trillion American dollars.
In 2017, no less than 40% of international financial transactions allegedly passed through tax havens, in one way or another, according to economist Gabriel Zucman.
The International Monetary Fund estimates that the use of tax havens cost governments a staggering $800 billion. This represents approximately $600 billion a year in corporate taxes and $200 billion a year in personal income taxes.
Tax havens are therefore a political issue that the House must absolutely address. Eliminating them is in the interest of our citizens. We must no longer give a free ride to profiteers, who have a vested interest in keeping these tax havens in place.
Canadian companies are far from being above reproach, since one-third of all Canadian foreign investments are in tax havens. According to Statistics Canada, Canadian businesses invested $381 billion in the 12 main tax havens in 2019.
That same year, the Parliamentary Budget Officer confirmed that these were not really investments, but actually accounting operations aimed at avoiding paying tax. The Canada Revenue Agency estimated that Canadian businesses' investments in tax havens deprive the government of $11.4 billion in tax annually, and that large companies are responsible for 75% of this amount. That is four times more than the CRA estimated it loses to investments in tax havens by individuals in a report published a year earlier. I think that we need to recognize that there is a certain laxity, and that we need to react.
In 2018, the Minister of National Revenue boasted in the House that the Canada Revenue Agency was going to recover $15 billion as a result of its international tax investigations. The CRA's annual report indicates a far more modest result. It mentions a paltry $25 million, 600 times less than the minister estimated.
We recently learned that, five years after the Panama papers leak, the Canada Revenue Agency had yet to lay charges and had only claimed $21 million in unpaid taxes for the entire country.
Revenu Québec, however, recovered $21 million in addition to the $12 million it claimed and that remains unpaid, for a total of $33 million, for Quebec alone. It did so without the benefit of the international tax information the Canada Revenue Agency has access to.
It therefore appears that the Canada Revenue Agency and the federal government are among the most lax when it comes to prosecuting tax fraud. Moreover, the federal government is complicit in the increased use of tax havens because it literally legalized their use.
In 1994, Jean Chrétien's Liberal government allowed companies to repatriate the income earned in Barbados without paying a penny in tax. Paul Martin, who was finance minister at the time, took advantage of the regulatory change to register his company Canada Steamship Lines there.
Stephen Harper's Conservative government went even further, making a regulatory change that legalized 18 new tax havens. Five more have been added since then, 3 under the current Liberal government's previous mandate, which makes it 23 tax havens legalized through regulation.
The House of Commons never had a word to say about it. This major change was made by simple regulatory amendment, which the government tried to hid in a mishmash of documents.
As I said earlier, all of these changes were made by way of regulation. The House of Commons was never asked to consider the matter. Canada therefore plays a major role in international tax havens, but we wonder whether it is doing so for the right reasons.
There is a close connection between the federal government and certain West Indian tax havens, since Canada speaks not only on its own behalf, but on behalf of some of these tax havens. I am talking about countries like Barbados, Bahamas, Antigua and Barbuda, Belize, the Dominican Republic, Grenada, Jamaica, Saint Kitts and Nevis, and Saint Lucia, for which Canada speaks at the annual meetings of the International Monetary Fund. That is unbelievable.
It appears, then, that tax havens have decided that Canada should defend their interests before international financial institutions, but who is defending the interests of Quebeckers and Canadians?
In addition to this highly questionable situation, we see that the digital multinationals have VIP passes that allow them to do business in Canada without paying a cent in taxes. The budget contained some indications that this will change, but why did the government wait so long, when businesses in Quebec and Canada pay their taxes?
The federal government, with its careless and cavalier attitude, has been complicit in allowing this loss of revenue for our public purse. Quebec has no fiscal leeway because it needs to know an income exists to be able to tax it. However, it is the federal government that signs the tax agreements and information-sharing agreements so it is the only one authorized to request tax information, pursuant to the Income Tax Act.
Quebec, in particular, is losing out on revenue because of Ottawa's complacency, and, as I was saying, Quebec does not have much leeway. All of this lost revenue could be put towards much-needed investments in health care, education and infrastructure.
It is also unfortunate that the single tax return bill was not passed, because it would have given Revenu Québec direct access to foreign tax information. That would have been a good thing, because Revenu Québec has proven much more effective than the Canada Revenue Agency in recovering money hidden in tax havens. If Revenu Québec was able to do better than the CRA using only the information it obtained from media leaks, imagine what it could do if it had direct access to foreign tax information.
Motion No. 69 proposes several solutions. It proposes to:
(a) amend the Income Tax Act and the Income Tax Regulations to ensure that income that Canadian corporations repatriate from their subsidiaries in tax havens ceases to be exempt from tax in Canada;
We would also need to repeal subsection 5907(1) of the Income Tax Regulations, which I talked about earlier. The motion also proposes to:
(b) review the concept of permanent establishment so that income reported by shell companies created abroad by Canadian taxpayers for tax purposes is taxed in Canada;
We are talking about “shell companies” that do not engage in any real business activity but should be paying taxes in Canada. The motion also proposes to:
(c) require banks and other federally regulated financial institutions to disclose, in their annual reports, a list of their foreign subsidiaries and the amount of tax they would have been subject to had their income been reported in Canada;
In 2019, Canada's big six banks generated record profits of $46 billion, 50% more than five years before. In 2020, despite the pandemic, they made $41 billion. Their profits are going up, but they are paying less tax. We can only assume this is because they are investing in tax havens.
(d) review the tax regime applicable to digital multinationals, whose operations do not depend on having a physical presence, to tax them based on where they conduct business rather than where they reside;
(e) work toward establishing a global registry of actual beneficiaries of shell companies to more effectively combat tax evasion; and
(f) use the global financial crisis caused by the pandemic to launch a strong offensive at the Organisation for Economic Co-operation and Development against tax havens with the aim of eradicating them.
Christine Normandin Bloc Saint-Jean, QC
Mr. Speaker, I thank my hon. colleague from Montarville for that very inspiring speech.
I wonder if he could comment on this. The revenue minister boasts about investing $1 billion in the fight against tax avoidance and tax evasion. As we know that has had only so-so results.
From my colleague's perspective, I would like to know what message that sends about the government's true intentions. Maybe it does not really want to crack down on companies that engage in tax evasion and tax avoidance. It could use regulations to do so at no added cost, after all.
Stéphane Bergeron Bloc Montarville, QC
Mr. Speaker, my colleague from Saint-Jean just raised a very good point.
The government does like to brag about wanting to fight tax evasion and tax avoidance. It invests huge amounts of money, with mixed results, as I have talked about in the past. All it needs to do is simply outlaw what was legalized through regulation. The first step would be simply to amend the regulations that made Canada an accomplice to 23 tax havens simply via regulation, meaning that parliamentarians in the House of Commons could not even vote on the matter.
All it took was a quick cabinet meeting, and then they tried to hide it in a mishmash of documents to get it through. That would be a step in the right direction towards combatting tax avoidance and tax evasion.
Pat Kelly Conservative Calgary Rocky Ridge, AB
Mr. Speaker, the government has a tendency to measure its success in any matter of public policy by how much money it spends on it. Of course it is not a matter of what is spent; it is a matter of what results are achieved. In the last Parliament, the Auditor General remarked that the government's expenditures in the area of combatting tax evasion really did not bring in anywhere near the amount of money that it had promised or claimed it would.
Would the member comment on the rhetoric that we hear about money spent on fixing a problem versus actually addressing a problem?
Stéphane Bergeron Bloc Montarville, QC
Mr. Speaker, that question seems to complement the one from my colleague from Saint-Jean.
As I was just saying, the first tangible move would be to amend the regulations that helped make it legal for Canadian companies to use 23 tax havens. Rather than combatting them, we are literally being complicit in these tax havens. The government can brag about investing $1 billion, but as we have seen, the results do not justify the investment.
There is another thing we could do. The Biden administration is proposing a global minimum tax. Unfortunately, it would take unanimous agreement from member countries of the Organisation for Economic Co-operation and Development, the OECD, to proceed. Will Canada speak up for countries, like the United States, that want to get rid of tax havens, or will it continue to speak for tax havens at the OECD?
That is a good question that we should be asking the government.
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Mr. Speaker, I thank my colleague, the member for Montarville, for his initiative.
We sometimes have differences of opinion on certain issues, but I believe that we will fully agree on this one. The NDP has also been fighting against tax havens for years.
My thoughts are similar to those of the member for Saint-Jean. As the title of Alain Deneault's book Legalizing Theft implies, a good part of the problem is that what we are condemning is not illegal. We are being robbed of money for our social programs and public funds. This has all been organized by Canadian governments, both Conservative and Liberal, and the big banks in large part. The Minister of Revenue can boast all she wants about having more inspectors, but when it is legal to rob a bank, putting more police in front of the bank will not make much of a difference.
What would my colleague say to the Liberal government about its hypocrisy on this issue?
Stéphane Bergeron Bloc Montarville, QC
Mr. Speaker, I will just say that I completely agree with the member.
The government cannot claim to be combatting tax evasion and avoidance while at the same time creating all of the measures and mechanisms that allow this to happen.
That is what the federal government did, however, first under Jean Chrétien's Liberal government, then under Stephen Harper's Conservative government, and now, under the current Prime Minister.
The only way to stop tax evasion and avoidance is to get serious and take the bull by its horns, instead of grandstanding and claiming to be investing however many millions or billions of dollars to combat these practices.
As my colleague from Saint-Jean pointed out, a simple change to the regulations could address much of the problem with one stroke of the pen.
Mark Gerretsen Liberal Kingston and the Islands, ON
Mr. Speaker, I appreciate the opportunity to take part in today's debate on Motion No. 69.
Shutting down tax evasion and avoidance is a major priority for the government, and it is a priority we have made and been able to take great strides in advancing. It is only in its execution that Motion No. 69 would raise concerns. Canadians expect and deserve a tax system that is fair and effective in supporting their highest priorities. Canadian businesses should pay their fair share of taxes, but they should also be able to compete on a fair and equal footing with their international counterparts so they can grow, create jobs and pay taxes here in Canada.
It is in this regard that the deficiencies of this motion are most apparent. It includes elements that are poorly targeted at achieving their desired results and that could carry negative consequences for businesses and taxpayers. Moreover, the objectives it seeks to achieve would be better addressed through the government initiatives to address tax evasion and avoidance that are already under way.
I would like to discuss some of the consequences of Motion No. 69.
The motion proposes, for example, that income that Canadian corporations repatriate from their subsidiaries in tax havens ceases to be exempt from tax in Canada. In short, it would change what is known as the “exempt surplus treatment” within the income tax. These provisions allow foreign active business income earned by foreign subsidiaries of Canadian corporations to be repatriated to the Canadian corporation as dividends free from Canadian tax, provided the subsidiary is resident and earns the income in a jurisdiction with which Canada has a tax treaty or a tax information exchange agreement.
By changing these income tax rules, this proposal would represent a major change in Canada's international tax policy. At the same time, it would be well targeted toward achieving its apparent objectives and it could potentially have several other negative consequences.
First, the proposal would put Canadian tax rules out of step with international norms. Canada's exempt surplus treatment is long-standing and is consistent with the tax treatment that most other developed countries apply to active business income earned by foreign corporations owned by their residents.
Second, the proposal could adversely impact the competitiveness of Canadian businesses. Exempt surplus treatment is applicable only to foreign active business income. It ensures that foreign subsidiaries of Canadian companies carrying on business in tax treaty countries or countries with which we have a tax information exchange agreement face similar tax rates and compete on an equal footing with other businesses active in those countries. Restricting exempt surplus treatment could therefore undermine the international competitiveness of Canadian companies operating abroad.
Third, the proposal may not generate significant revenues, if any, and may at the same time reduce the amount of profits repatriated and invested in Canadian businesses. It would do so by encouraging Canadian companies that do not require access to their foreign profits in the short term to keep those profits offshore in order to avoid paying Canadian taxes on repatriation. This would result in less foreign profit being repatriated and invested in Canadian businesses, which would reduce taxable Canadian income generated from such investments or from distributions to Canadian shareholders.
It could also result in some Canadian companies paying more tax on their foreign profits to foreign governments and not to Canada. This would occur because the proposal would require setting a threshold foreign tax rate below which exempt surplus treatment would no longer be available. This would incentivize companies that need to repatriate their foreign profits in the short term and wish to benefit from exempt surplus treatment to earn those profits in subsidiaries located in foreign jurisdictions whose tax rates are higher than this threshold rate, but still lower than the Canadian rate.
This would leave less after-tax profits to be repatriated and reinvested in Canadian businesses, which would in turn reduce the taxable Canadian income that is generated when these profits are reinvested or paid out to shareholders. Moreover, the Canadian tax system already has a set of rules that are better targeted at shutting down the kind of tax avoidance at which this proposal appears to be aimed. These rules, known as the foreign accrual property income, or FAPI, rules, are designed to prevent taxpayers from avoiding Canadian taxes by earning investment income or certain types of highly mobile active business income, offshore in low-tax jurisdictions.
The FAPI rules subject these types of income to Canadian tax when it is earned by foreign corporations that are owned by Canadian resident individuals or corporations, thus ensuring that the tax treatment is the same as if the income had been earned in Canada. By targeting more mobile income, rather than active business income in general, the FAPI rules largely avoid the sort of adverse competitiveness effects that Motion No. 69 would entail, so what the motion is offering is a bad solution where a better one already exists.
Our government already recognizes the ongoing risks arising from tax planning arrangements used by multinational enterprises to minimize their taxes. The solutions we continue to implement are achieving their goals without hobbling Canadian businesses. Our government is currently working with the 138 nations of the OECD/G20 inclusive framework on base erosion and profit shifting, to develop a multilateral approach to modernizing the international tax rules. Part of this work involves the development of a global minimum tax regime, commonly referred to as “pillar two”. This new tax regime would ensure that large multinational enterprises pay tax at an agreed minimum rate by allowing countries like Canada to tax their foreign profits when they are earned, as opposed to when they are ultimately repatriated to Canada, if the profits have been taxed at a low rate in the foreign jurisdiction in which they are located.
Our goal is to discourage base erosion and profit shifting by reducing the benefits of earning income in low-tax jurisdictions, but do so through the multilateral consensus-based approach that is more effective than a unilateral action. That would mitigate many, if not all, of the concerns identified within this motion.
In conclusion, I have expended my allotted time addressing the serious problems related to just one element of this motion. This should be enough to give hon. members pause about supporting this motion. Should this debate continue, I would be pleased to present many more.
Luc Berthold Conservative Mégantic—L'Érable, QC
Mr. Speaker, I thank my colleague from Montarville for moving this motion, even though I find it a bit odd that he is asking for the support of members of the House while criticizing the work that the Conservatives have done to fight tax evasion.
Today, we have another opportunity to show Canadians that the Conservatives are firmly resolved to combatting tax evasion. We believe it is important to maintain a sense of tax fairness at all levels. Simply put, those who avoid paying taxes, which is illegal, should not be allowed to get rich at the expense of honest, hard-working Canadians.
The world is still fighting the COVID-19 pandemic. As we know, economies have been hard hit and that has created a lot of financial uncertainty. It is therefore more important than ever that measures be taken to guarantee the security of our tax systems and the collection of taxes by governments.
The disproportionate deficit that the Liberal government is currently running only reinforces the urgent need to put an end to tax evasion. The money that is flooding into tax havens will be needed to help our children's great-grandchildren pay off the no-limit credit card the Liberal government has in its hands.
Various estimates suggest that Canada loses between $5 billion and $10 billion annually to tax havens. For instance, a November 2020 report by the Tax Justice Network suggests that Canada loses $7.9 billion annually to tax havens. That is equivalent to the annual salaries of about 100,000 nurses. That is a lot of money.
A report published by the Quebec National Assembly in March 2017 estimated that tax havens have prevented the Province of Quebec from collecting between $0.8 billion and $1 billion in taxes. According to the Institut de recherche en économie contemporaine, Quebec is actually losing between $1 billion and $2 billion. According to some estimates, the number could be even higher.
The Tax Justice Network report estimates that Canada is responsible for $10 billion in losses in other countries. Although Canadians have a lot to lose because of tax evasion, it is important to realize that other countries are also significantly affected by these illegal and fraudulent practices. We should note that the poorest countries tend to suffer more from problems related to tax evasion.
Between April 2014 and March 2020, Canadian courts found 263 people guilty of tax evasion. Is that a lot of people or not many? We do not know. According to the sentencing, these 263 people hid $118 million in federal taxes. Collectively, they were fined $32 million and sentenced to 230 years in prison. That may seem like a lot, but if we compare this to the real figures on tax evasion in Canada, we realize that it is very little. This is no small matter, especially since we have not yet managed to reach the objective of having everyone pay their taxes.
We must continue to take measures to ensure that taxes are paid and that people who unfairly try to avoid their obligations are held accountable. Fraudulent companies established in tax havens have not only avoided paying taxes but have also stolen money from Canadian workers' personal funds. In a recent case, more than $500 million was siphoned from Canada to the Isle of Man, in order to hide that money from creditors. This case involved massive amounts of money, including entire retirement funds, which were lost as a result of fraudulent activities.
Although the executives of the companies involved were found guilty of fraud, the majority of the money they had earned from their illegal activities was never found. The contributors to these pension funds were swindled. Unfortunately, these Canadians and many others were robbed of their savings, and they will never see that money again. We need to implement measures to ensure that fraudsters are never able to exploit Canadians like that again.
The Conservative Party believes that individuals and businesses must pay their fair share of taxes. Corporate tax evasion entails significant economic and social costs. It is unacceptable for the largest companies in the world and the wealthiest individuals to thumb their noses at Canada's tax system or any other system.
Billions of dollars in revenue are being stolen from governments, and inequality is growing. In the end, the biggest victims are consumers, small businesses and the economy in general.
Throughout its history, the Conservative Party of Canada has maintained a strong record when it comes to combatting tax evasion and cracking down on tax havens. In fact, the former Conservative government introduced more than 85 measures to close tax loopholes and improve the fairness and integrity of our system.
For example, budget 2013 introduced changes to the Canada Revenue Agency's compliance programs, which enhanced the effectiveness and integrity of the tax system by targeting tax evaders who were considered high risk. These changes generated over $1.5 billion in additional annual revenue.
To go back a little further, as minister of finance, the late Jim Flaherty announced an initiative to crack down on tax havens in budget 2007. At the time, he said, and I quote:
When multinational corporations use this tax loophole, Canadian taxpayers are indirectly subsidizing their international operations. Our goal is to improve the fairness of our tax system and further reduce taxes for hard-working Canadians while preserving Canada's overall tax advantage...
This anti-tax-haven initiative was launched to prevent multinational corporations from using tax avoidance structures to generate two expense deductions for only one investment. This initiative also sought to appoint an advisory panel of experts to look for ways to generally improve and leverage the fairness and competitiveness of Canada's international tax system.
I also want to remind members that the Conservatives supported a 2016 report from the Standing Committee on Finance on tax evasion and tax loopholes. That report specifically recommended that the Income Tax Act be reviewed and that steps be taken to improve coordination between the Canada Revenue Agency and the Department of Justice in the investigation and prosecution of cases of tax evasion.
The Conservative Party has always stood strong in the fight against tax evasion in order to ensure fairness and prosperity for all Canadians. We will always continue to do so.
We still have a long way to go, though. A 2019 CRA report revealed that 20% of respondents believed the benefits of tax cheating outweighed the risks, 13% felt that tax evasion was no big deal, and 26% did not think they would be caught trying to evade taxes. In other words, it is going to take a lot of work to fight tax evasion. The government needs to send the public a clear message.
Getting back to Motion No. 69, I want to tell my hon. colleague that passing laws on these issues must be done with care and attention. Some parts of his motion call for more thorough consideration. That is for another day, however. Today, the Conservative Party also believes that, during a crisis, the government must ensure that all taxes legally owed by Canadians are duly paid. To do any less would be inappropriate.
I hope my colleagues will soon be able to thoroughly examine these issues during a Standing Committee on Finance study on tax evasion. Our party has an impressive record when it comes to fighting tax evasion. We will always stand up for the best interests of Canadians from coast to coast to coast.
In conclusion, our party will support the motion so that it may be studied in committee. Fighting tax fraud and tax evasion is a tough task because the perpetrators have almost unlimited means to avoid paying the Canadian government what they owe. Parliamentarians have a clear role to play. They have to send a clear message that these practices are illegal, unjust and unfair and will never be tolerated.