Proceedings of the Standing Senate Committee on
National Finance
Issue 3 - Evidence - Meeting of December 12, 2007
OTTAWA, Wednesday, December 12, 2007
The Standing Senate Committee on National Finance, to which was referred Bill S-215, An Act to protect heritage lighthouses; and Bill C-28, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007, met this day at 2:37 p.m. to give consideration to the bills.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: I call this meeting of the Standing Senate Committee on National Finance to order. We have permission to be meeting outside of our normal time.
Honourable senators, this is our eighth meeting this session. The committee's field of interest, as you are all aware, is government spending and operations, including reviewing the activities of officers of Parliament. We do this through estimates of expenditures, through funds made available to officers of Parliament to perform their functions, through budget implementation acts and other matters referred to this Senate committee.
Today, we are examining Bill S-215, to protect heritage lighthouses. We will proceed with clause-by-clause consideration of this bill in due course. We are very honoured to have the Honourable Senator Pat Carney with us. She is the sponsor of this bill.
Bill S-215 has been reintroduced in the current session of Parliament in substantially the same form that it appeared in the previous session of Parliament. In the First Session of the Thirty-ninth Parliament, it was known as Bill S-220, which was studied by the Standing Senate Committee on Fisheries and Oceans. It was previously known as Bill S-14, which was studied by the Standing Senate Committee on Social Affairs, Science and Technology.
The bill was passed at third reading on both occasions, with amendments, but never reached Royal Assent.
Senator Carney, I have given a bit of the history. Would you like to make some introductory remarks? We will also point out that there are government officials here to help answer any questions honourable senators may have.
Hon. Pat Carney, P.C., sponsor of the bill: Thank you.
We can proceed to this bill. Your many new members here are not familiar with it, but I would like to take the time to discuss the amendments. I can only say that this bill has been discussed with officials and amended many times because the mandate for this bill has been changed through various departments.
Senator Murray seconded the bill and will lead the discussion on the amendments. He and I are in agreement on all but one or two points in which the interpretation would negate the purpose of the bill. I would rather go through the amendments.
The Chair: Thank you, Senator Carney. For the benefit of all honourable senators, could you tell us if the current bill that is before us reflects the amendments or some of the amendments that were made previously in studies by Senate committees?
Senator Carney: Yes. It represents the changes that were made in several of its reincarnations. The most recent was a year ago. That was Bill C-220, which was before the Standing Committee on Fisheries and Oceans in the other place as the House prorogued.
The bill before us is the same as the bill that passed the Senate in December of last year, and it is the same as the one before the House of Commons committee.
Senator Murray and I have met with officials, and we have reviewed some new proposed amendments. We have accepted, for clarification, all but one or two suggestions that we feel would negate the purpose of the bill — or reflect a misunderstanding of a bill that has to apply to eight out of 10 provinces and therefore must be flexible.
The Chair: I understand that a number of amendments will be proposed, and I am in honourable senators' hands. I suggest that we start clause by clause, and when we get to a clause where there is an amendment, the amendment can be introduced at that time and an explanation given. If honourable senators have any questions on the amendment, we will deal with those questions.
We have government officials. Perhaps they could take a seat at the end of the table and introduce themselves so that we know who is here to help us, if we need them.
Senator Di Nino: While the officials are taking their place, I would like to refresh everyone's memory that one of the real concerns with this bill is the cost associated with implementing it. As we all know, the bill does not ask for Royal Recommendation, and it does not include the Royal Prerogative. It would then not be a bill that could be introduced here.
If this bill were passed, the funds required to restore and maintain the lighthouses and buildings would have to come from Fisheries and Oceans Canada, which obviously does not have an unlimited number of dollars available to them. That is a concern that I would like to highlight as we continue through the study of this bill because I will be making some comments related to that.
The Chair: If and when you introduce any amendments, will you give an explanation of those amendments at that time?
Senator Di Nino: Yes.
Senator Eggleton: Senator Carney has indicated there are one or two amendments she does not support. Can she identify them?
The Chair: They will be identified as we go through, because there may be quite a few of them. Once the explanation is given, Senator Carney and Senator Murray will have the opportunity to agree, or disagree, and state their reasons. Also, there may be more than one amendment for each clause, and we intend to deal with these on a clause-by-clause basis.
Senator Murray: So that we are all more or less on the same page, I will have one amendment to make to the bill. However, that amendment is a change in wording that will affect other parts of the bill. After Senator Di Nino has introduced his first amendment, I will bring my amendment in, and we can vote on it.
With regard to the substance of what Senator Di Nino said, I will not take up the time of the committee by repeating the speech I made at second reading of this bill. However, I want to emphasize again that the designation of heritage lighthouses and any associated structures is entirely within the unfettered discretion of the minister.
It is impossible for anyone to interpret this bill as necessarily involving any particular amount of money at any particular time. The minister in charge of Parks Canada will designate a lighthouse and a related structure, and will designate it, one assumes, on the basis of various considerations, including what it might cost to do it.
I will leave that there. If necessary, I can come back to it again at third reading. I believe Senator Di Nino, on behalf of the government, has an amendment to propose.
Senator Di Nino: At the appropriate time.
Senator Murray: Yes; we are not into clause by clause yet.
The Chair: No, we are into preliminary comments at the present time. Do any other honourable senators have any preliminary comments before we begin clause by clause?
Could the government officials, who are in attendance at the end of the table, please, starting on this side, identify yourselves? Thank you for being here.
Doug Tapley, Manager, Cabinet Affairs, Parks Canada: My name is Doug Tapley, and I am Manager of Cabinet Affairs for Parks Canada.
Patricia E. Kell, Director, Policy and Government Relations Branch, Parks Canada: My name is Patricia Kell, and I am Director of the Policy and Government Relations Branch with Parks Canada.
David Burden, Director, Divestiture, Fisheries and Oceans Canada: I am Dave Burden, and I am Director of Divestiture with Fisheries and Oceans Canada.
Michael Bartlett, Legal Counsel, Legal Services Unit, Fisheries and Oceans Canada: I am Michael Bartlett, and I am the counsel for justice in the legal services unit with Fisheries and Oceans Canada.
The Chair: Can we assume that each of you is to some degree familiar with this piece of legislation?
Mr. Tapley: Yes.
The Chair: Thank you. Could you tell us for the record which minister would be responsible?
Mr. Tapley: The Minister of the Environment would be the lead minister.
The Chair: Honourable senators, are you ready to proceed with clause by clause on Bill S-215?
Hon. Senators: Agreed.
The Chair: Shall the preamble to this bill stand postponed?
Hon. Senators: Agreed.
Senator Di Nino: I have an amendment.
The Chair: We will get back to it, I assure you.
The Chair: Shall the title be postponed as well?
Hon. Senators: Agreed.
The Chair: Shall clause 1 be postponed?
Hon. Senators: Agreed.
The Chair: That is the short title.
Now we are into the heading ``Interpretation.''
Shall clause 2 carry? Are there any amendments that any senator wishes to put forward? We will try to bring them in order.
Senator Di Nino: Yes. I have an amendment to clause 2. The amendment is replacing line 3 and 4 on page 2.
The Chair: Are all senators in possession of the amendments in the two official languages?
Senator Nancy Ruth: I need an amendment.
The Chair: Senator Di Nino, could you wait until we make sure everyone has a copy?
Senator De Bané, do you have the amendments?
Senator De Bané: Yes.
The Chair: Senator Biron?
Senator Biron: Yes. Thank you.
The Chair: We are on clause 2. Senator Di Nino is proposing an amendment at page 2 of clause 2, lines 3 and 4.
Senator Di Nino: I will continue. I move:
That Bill S-215, in Clause 2, be amended by
(a) replacing lines 3 and 4 on page 2 with the following:
this Act, and includes any related building that is included in the designation.
In effect, what we are talking about is, where the bill says ``related built structure,'' to change those two words, ``built structure,'' to the word ``building.''
The Chair: Let us make sure we all have that. In effect, it is ``related built structure,'' is that correct?
Senator Di Nino: That is correct. Lines 3 and 4 will then read: ``this Act, and includes any related building that is included in the designation.''
The Chair: Yes, related building.
Senator Di Nino: As well, I move:
That Bill S-215, in Clause 2, be amended by
(b) replacing lines 13 and 14 on page 2 with the following:
`` ``related structure'', in relation to a lighthouse, means''.
Does that make sense?
Hon. Senators: Yes.
The Chair: Are there other proposed amendments to this clause that come before the amendments we are looking at?
Senator Murray: I move an amendment to Senator Di Nino's amendment.
The Chair: Yes, before you do so, could I know whether there are any other amendments to this clause that appeared before these amendments in that clause?
Senator Murray: No.
The Chair: In clause 2, does anyone have other amendments? We have a proposal for an amendment.
Senator Nancy Ruth: I would like to ask Senator Di Nino about the difference in the wording.
The Chair: We should understand the proposed amendment by Senator Di Nino before we have an amendment to it.
Senator Di Nino: It is a question of a ``related built structure'' having a variety of different meanings. As stated by our colleague in the Senate, it could include an outhouse, a garage that was built sometime after or additional buildings that would not be considered heritage, which could add additional costs. These amendments attempt to clarify that we are dealing with the lighthouse building itself.
The Chair: Are there any further comments before anything is proposed on the subamendment?
Senator Carney: I would like to comment on Senator Nancy Ruth's question. The explanation, senator, is that changing the wording from ``related built structure'' to ``related building'' would eliminate 51 of the 52 lighthouses in British Columbia. That is because of the 52 light stations in British Columbia, 51 are on islands. Only one is on the mainland, at Point Atkinson. The other 51 are on islands and, therefore, the minister may choose to designate that a wharf or a helipad. Something that is required to preserve the heritage nature of the lighthouse should be included.
Senator Murray's amendment to the amendment deals with that.
The Chair: We have not heard it yet.
Senator Carney: That is the effect. To answer your question, the difference is that the total 52 lighthouses in B.C. could be excluded because they are all on islands and whoever owns them, whether the conservatory or DFO or Parks Canada, has to ensure that someone can get to the lighthouses.
Senator Murray: I do not believe it is improper for me to disclose that yesterday, Senator Carney and I had a meeting with officials and with the Honourable John Baird's staff to go through the amendments that the government was proposing. It is accurate also to say that in most cases, we found the proposed amendments acceptable.
We left the meeting with a couple of outstanding issues, and this was one of them. Senator Carney's bill, at page 2, uses as a definition ``related built structure.'' The government does not like that particular phrase in the bill, so they were suggesting ``related building.'' I do not suggest there was a commitment on the part of officials, but we informally exchanged opinions as to a compromise between Senator Carney's version in the bill and the government's version in the amendment. Senator Carney and I are suggesting a subamendment to say, ``related structure,'' which we thought would be acceptable. I do not feel it is out of line for me to tell you that the reply we have, again informally, from officials is that they had cabinet authorization for this and could not go beyond that authorization from the cabinet.
Therefore, it is up to us in committee to decide what we want to do. I will suggest a subamendment to Senator Di Nino's amendment, which will, in our view, be a compromise between Senator Carney's original version of the bill and Senator Di Nino's amendment.
I move:
That the amendment be amended by replacing the word ``building'' with the word ``structure'' and by striking out point (b) in Senator Di Nino's proposed amendment.
The Chair: I would like to be able to understand the amendment. Could you explain ``striking out point (b) ``?
Senator Murray: Point (b) proposes a definition, and if my subamendment carries, I intend to then bring forward a definition of ``related structure.'' If you carry my subamendment so that the bill reads, ``related structure'' instead of ``related building,'' I will provide a definition of ``related structure.'' I can give that to you now.
The Chair: You will propose another amendment with a new definition of ``related structure.''
Senator Di Nino: I am not sure that it is any less vague than the original term used in the bill. It does leave open for interpretation ``related'' or ``built.'' As I said before, because of that it could lead to extensive costs, which obviously are not available for this purpose.
Senator Carney, you said your speech, so let me say mine.
The concern we have is that there is a difficult definition to put on ``related buildings'' or ``built buildings'' that would be subject to interpretation, which could lead to additional costs that we do not believe are appropriate because we believe that these buildings might very likely have no direct relation to the heritage component of the bill.
Senator Murray: Senator, it is your amendment to use the term ``related buildings.'' The problem with ``related buildings,'' as Senator Carney has pointed out, is that it is too restrictive. Many of these lighthouses are on islands, and to have access to them, there are other structures. Your amendment is too restrictive. We are saying ``related structures'' to broaden it a bit.
Again, I point out to you that, first, the ``related structure'' has to contribute to the heritage character of the lighthouse. Second, the minister's discretion is, first, to designate the heritage lighthouse, and second, as a separate operation, he or she may then designate a related structure as contributing to the heritage character. The unfettered ministerial discretion covers a multitude of sins in any case. Your amendment, which would use the term ``related building,'' is altogether too restrictive and would defeat the purpose of the bill, especially in British Columbia. That is the point that Senator Carney has been making. I do not know that I can add anything.
Senator Ringuette: Correct me if I am wrong, but I believe two amendments are being proposed.
The Chair: Right now, we are discussing the subamendment by Senator Murray.
Senator Ringuette: However, in the original bill, on the top of page 2, it says the following:
`heritage lighthouse' means a lighthouse designated as a heritage lighthouse under this Act, and includes any related built structure that is included in the designation.
We have one proposed amendment by Senator Di Nino, that it would read ``any related building''; and another proposed amendment that it would read ``any related structure.''
Therefore, I do not see it as an amendment and a subamendment.
The Chair: I rule that it is.
Senator Ringuette: Okay.
The Chair: If you would just try to focus on it that way, that would be very helpful.
Senator Nancy Ruth: To clarify Senator Murray's amendment about related structures, these lighthouses are on islands, so there is a dock and if the dock is not preserved, one cannot access the lighthouse; whereas, if Senator Di Nino uses the word ``building,'' it does not include the dock. Is that what we are talking about?
Senator Di Nino: I stressed the vagueness it creates by adding the word ``structure'' to it. Senator Murray is absolutely right, that it has to be designated. We are saying that wherever there is a structure or a building — and I am not suggesting we use that — that will be part of the designation of this heritage lighthouse, the minister would obviously include that.
However, to enlarge that, to add potentially other nonessential buildings to designate these structures as heritage lighthouses, adds vagueness and could eventually add a great deal of costs to this.
The authority rests with the minister to decide what he or she would then designate — whatever building would be required to designate that building as a heritage lighthouse.
Senator Nancy Ruth: If that is correct that it is still the minister's choice, why could this possibly add greatly to the costs if the minister has to designate? I do not understand.
The minister chooses what is in this category. If outbuildings are not in that category, then they are not in that category and, therefore, there is no increased cost, is that not right?
Senator Di Nino: It is the same argument with the subamendment. If this bill has been vetted and some agreement has been reached for the senator to have her bill, we believe it is exactly the same when the authority rests with the minister.
The Chair: Could we have all of the comments directed through the chair, so we can stay under control here.
Senator Murray: I believe we will be able to clear up the question of vagueness, Senator Nancy Ruth.
We can clear up the question of the vagueness, according to Senator Di Nino, of my term, which is ``related structure.'' When the time comes, I will present a definition of what a related structure is, and I ask you to pay particular attention to this. This is part of what I hope will be a compromise that the government will find acceptable.
I intend to propose in another amendment — but it is relative to our present discussion — a definition of ``related structure,'' which is ``any building on the site on which the lighthouse is situated that contributes to the heritage character of the lighthouse''; and, this is important, ``any structure on the site on which the lighthouse is situated, the maintenance of which is necessary in order to provide access to the site.''
Therefore, this covers the problem that Senator Di Nino raises of vagueness. In any event, I will come to that definition if I get my subamendment through.
The Chair: Have you shared your potential future amendment? You have a copy of it, okay. Are there any further questions on the subamendment of Senator Murray to Senator Di Nino's proposed amendment?
All those in favour of the subamendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: On division, that subamendment is carried. We have no definition of ``related structure.'' There is no definition because we just struck it.
Senator Murray: I am about to propose one.
The Chair: I am inviting you to do so. Resuming debate on the clause as amended, are there any further amendments on clause 2?
Senator Di Nino: Is point (b) still there?
The Chair: It has been deleted.
I am sorry, I was going too fast. We are now voting on the amendment proposed by Senator Di Nino, as amended by Senator Murray. You have accepted to amend Senator Di Nino's amendment.
All those in favour of Senator Di Nino's amendment, as amended by Senator Murray's amendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: Carried on division. We now have an amendment that was amended. Senator Murray, is there anything further on clause 2, as amended?
Senator Murray: I am about to propose the definition I referred to a few moments ago. I move:
That Bill S-215 be amended in Clause 2 on page 2, by replacing lines 13 to 17 with the following:
`` ``related structure'', in relation to a lighthouse, means
(a) any building on the site on which the lighthouse is situated that contributes to the heritage character of the lighthouse; and
(b) any structure on the site on which the lighthouse is situated, the maintenance of which is necessary in order to provide access to the site''.
The Chair: In this amendment, we have reintroduced a definition in clause 2 of ``related structure,'' which is referred to earlier under ``heritage lighthouse.''
Does everyone understand what we have just done?
All those in favour of Senator Murray's amendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: Carried on division.
Are there any further amendments to clause 2, as amended? Seeing none, I would ask, shall clause 2, as amended, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: No.
The Chair: Carried on division.
Shall clause 3 carry?
Senator Di Nino: I have an amendment.
The Chair: Thank you.
Senator Di Nino: I move that it be amended by adding to line 25, on page 2, the following. That would be ``d,'' — facilitating sales or transfers. I apologize, they are not in order.
I apologize, Mr. Chair. I will start again. I move:
That Bill S-215, in Clause 3, be amended by replacing, in the English version, line 18 on page 2, with the following:
``3. The purpose of this Act is to conserve''
The Chair: Do you wish to comment on that, Senator Di Nino, and explain to us what you are doing?
Senator Di Nino: I feel it is pretty self-explanatory. It is giving us a better understanding of what this act is all about. It is to conserve the heritage nature of the heritage lighthouse.
Senator Murray: We would have to ask somebody what the difference is between Senator Carney's word ``preserve'' and your suggested substitution of ``conserve.'' Is there a linguist among us that could help?
Ms. Kell: Perhaps not a linguist, but maybe a heritage expert.
In English in Canada, the word that is generally used as the umbrella word to describe heritage preservation is actually ``conserve'' or ``conservation,'' and that is the word used in the French version here. That is why the amendment has been proposed.
The Chair: Is there any further comment on this particular proposed amendment? It has been moved by Senator Di Nino that the word ``preserve'' be changed to the word ``conserve'' on line 18 of clause 3. All in favour?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried. Now we will vote on clause 3, as amended. Are there any others amendments?
Senator Di Nino: I move:
That Bill S-215, in Clause 3, be amended by adding after line 25 on page 2 the following:
``(d) facilitating sales or transfers of heritage lighthouses in order to ensure the lighthouses' public purpose''.
I believe Senator Carney is aware of this, and I understand that she is in agreement. I may be wrong.
Senator Carney: We do not have a problem with this. I should remind senators on the committee that all of the West Coast lighthouses and most of the East Coast ones, such as Peggy's Cove, are already operating lighthouses. They are not relics. They are operating and serve a marine safety purpose for mariners. That would be included in the lighthouses' public purpose.
It would also, as we agree, mean that it could not be transferred into a McDonald's.
The Chair: Honourable senators, I will call for a vote on this.
Senator Murray: Is there any reason why they could not have said ``facilitating sales or transfers of heritage lighthouses that are surplus to operational requirements''?
Mr. Burden: Part of the reason why this was put in was that there are a number of lighthouses that we have transferred to not-for-profit groups that are operational lighthouses. In plain speak, a lighthouse can only be a lighthouse if, in fact, it is operational. It is an aid to navigation, and as such, it meets the criteria in the definition here.
Based on my understanding of the bill and of our program operations, I would not agree with the view that the lighthouses on the West Coast would not come under the purview of this bill. I respectfully put that before you.
Senator Carney: Not in this case, but the exclusion of 51 out of 52 lighthouses on the West Coast deals with the previous clause, with substituting ``building'' instead of ``related structures.'' We have no problem with this clause.
Senator Ringuette: I am trying to think of possible scenarios. The minister will be designating the lighthouses, and this amendment states ``facilitating sales or transfers of heritage lighthouses.'' Can he designate and undesignate?
The Chair: There is a designation process.
Senator Ringuette: Is that in order to sell the property?
Senator Carney: That is not an interpretation of this amendment. I am not responding to whether it can be sold or not. I am saying that this clause does not reflect that concern.
The reason we have asked for the insertion of transfers is that in many cases, these are operating lighthouses. The department does not want to sell the operating lighthouse, but is willing to transfer part of the lighthouse to a community group. There is no disagreement on that.
Ms. Kell: In the way the bill is constructed, only lighthouses that are owned by the federal government are eligible to be designated under the bill. If a department decided it wanted to sell or otherwise dispose of a lighthouse that had been designated when it left the federal portfolio, it would cease to be a heritage lighthouse. The provisions of the bill would cease to apply to it, except that one of the provisions in the bill is that in a case such as that, protections would be put on the building as it is sold to ensure the new owner had to protect the heritage character of the building.
The Chair: There is one other point I have noticed. I am sure, Senator Di Nino, you did not put it in your amendment, but we have to move the ``and'' down. You have added a new subclause, so we will move the ``and'' down. We will direct the clerk to do that, to move the ``and'' down to line 25.
We are voting on the amendment proposed by Senator Di Nino, adding a subclause (d) to clause 3. All those in favour?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried. We now have clause 3 amended in two different manners. Shall clause 3, as amended, carry?
Hon. Senators: Agreed.
The Chair: Thank you. We will now move to clause 4. Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Senator Di Nino: I have an amendment.
The Chair: Thank you. Could you explain your amendment?
Senator Di Nino: I move:
That Bill S-215, in Clause 6, be amended by replacing lines 35 and 36 on page 2 with the following:
``(2) The designation of a lighthouse may include any related building that the''.
That is basically the same amendment we made before, and deals with changing the term ``structure'' to ``building.''
The Chair: That proposed amendment that you had earlier in clause 2 was not accepted. For consistency, I suspect we may have a proposed subamendment to that.
Senator Murray: Indeed you do. I move:
That the proposed amendment be amended by replacing the word ``building'' with the word ``structure.''
The Chair: This is the same debate we have already had, honourable senators. We will be voting on the subamendment.
All those in favour of the subamendment to use the word ``structure''?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any?
Some Hon. Senators: No.
The Chair: That is carried, on division. We have the proposed amendment of Senator Di Nino amended, and we are voting on that. All those in favour of the amended amendment?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any?
Some Hon. Senators: No.
The Chair: Carried, on division. Thank you. Are there any other amendments to clause 6?
Seeing no others, shall clause 6 carry as amended?
Some Hon. Senators: Yea.
Some Hon. Senators: Nay.
The Chair: On division, thank you.
Shall clause 7 carry?
Senator Di Nino: I have an amendment. I move:
That Bill S-215, in Clause 7, be amended by replacing line 20 on page 3 with the following:
``whether any related buildings''.
This is the same thing we have just dealt with, basically.
The Chair: It is the same concept.
Senator Di Nino: Yes.
The Chair: Might there be a subamendment to that?
Senator Murray: Mr. Chair, you are prescient. I move:
That the amendment be amended by replacing the word ``buildings'' with the word ``structures.''
The Chair: It is the usual flow through: ``built structures'' to ``buildings'' to ``structures.'' All those in favour of the subamendment to Senator Di Nino's amendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: On division. Thank you. We have Senator Di Nino's amendment as amended. All those in favour of the amended amendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: On division. We will go to the clause as amended.
Senator Di Nino: On clause 7, I have a new amendment.
The Chair: Are you proposing to add 7.1?
Senator Di Nino: Yes.
The Chair: Would that not come after clause 7?
Senator Di Nino: You are right.
The Chair: Shall clause 7, as amended, carry?
Hon. Senators: Agreed.
The Chair: Carried. Do you want that on division?
Senator Di Nino: Yes.
The Chair: On division.
We have an amendment to add clause 7.1 in front of each of us.
Senator Di Nino: If you have the clause, I will read it. I move:
That Bill S-215 be amended by adding after line 22 on page 3 the following —
The Chair: Shall we dispense or would honourable senators like it read out?
Senator Ringuette: Read it out.
Senator Di Nino: Under the little heading ``surplus lighthouses,'' clause 7.1(1) will read:
``For two years beginning with the coming into force of this Act, every Minister of the Crown in right of Canada who has the administration of lighthouses must maintain and make available to the public a list of those lighthouses that he or she considers to be surplus to the operational requirements of the portion of the federal public administration for which he or she is responsible''.
Clause 7.1(2), under the little heading ``commitment'' will read:
``A surplus lighthouse may only be designated as a heritage lighthouse if a person or body submits a written commitment to buy or otherwise acquire the lighthouse and to protect its heritage character in the event that it is designated as a heritage lighthouse''.
I understand Senator Carney has also read this and that she is favourably disposed.
Senator Carney: I have only been given these amendments just shortly before the committee.
Senator Di Nino: Me too.
Senator Carney: I would say, yes. Obviously, no government department will turn over any sort of federal building without a written commitment. In the case of Parks Canada, where it has done this, there is always a licence of occupancy or a lease. I consider it not particularly useful but, for clarification, fine.
The Chair: Senator Carney is indicating her acceptance of this particular amendment. All those in favour of the amendment?
Hon. Senators: Agreed.
The Chair: Contra minded? Motion carried. That is new clause 7.1 that we will add in here. I do not need to say anything on that because that is a new clause we will be adding.
We are on to clause 8. Shall clause 8 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 10 carry?
Senator Di Nino: On clause 10, Mr. Chair, I have a single amendment. I move:
That Bill S-215, in Clause 10, be amended by replacing line 44 on page 3 with the following:
``lated building should be included in the''.
That is to replace ``built structure,'' which is the original comment in the bill.
Senator Murray: I move:
That the amendment be amended by replacing the word ``building'' with the word ``structure.''
The Chair: It is the same dance, honourable senators. All those in favour of the subamendment?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Some Hon. Senators: Nay.
The Chair: On division.
All those in favour of Senator Di Nino's amendment as amended?
Some Hon. Senators: Yea.
The Chair: Contra minded, if any?
Senator Di Nino: On division.
The Chair: On division, thank you.
Shall clause 10, as amended, carry?
Senator Di Nino: On division.
The Chair: On division, thank you.
Shall clause 11 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 12 carry?
Senator Di Nino: Not too quick.
The Chair: We are looking at line 19 on page 4.
Senator Di Nino: All of us are looking at this nearly at the same time.
Senator Carney: Otherwise, I would have thought you have something against British Columbia.
The Chair: We are doing very well thus far.
Senator Di Nino: Mr. Chair, I move:
That Bill S-215, in Clause 12, be amended by replacing line 19 on page 4 with the following:
``nicipality or to a person or body that is acquiring the heritage lighthouse for a public purpose''.
Senator Murray: We agree with that, Mr. Chair.
The Chair: Senator Carney's side has indicated they are prepared to accept this amendment. All in favour of the acceptable amendment proposed by Senator Di Nino?
Hon. Senators: Agreed.
The Chair: Motion carried.
Senator Di Nino: No. I have another amendment in clause 12. We have to earn our salary here, sir. I move:
That Bill S-215, in Clause 12, be amended by replacing, in the English version, line 22 on page 4, with the following:
``must provide for the protection of the heri-''.
Senator Murray: We agree with that, Mr. Chair.
The Chair: There has been an amendment by Senator Di Nino that has been accepted by Senator Carney, the sponsor of the bill. All those in favour of this proposed amendment?
Hon. Senators: Yea.
The Chair: Contra minded, if any? Motion carried.
We now have two amendments to clause 12.
Shall clause 12 carry, as amended?
Hon. Senators: Agreed.
The Chair: Thank you. We move on to clause 13.
Senator Di Nino: I have an amendment, or two. I move:
That Bill S-215, in Clause 13, be amended by replacing line 32 on page 4, under the little heading ``public meeting,'' with the following:
``(2) A heritage lighthouse, or any part of it, may only be demolished if a public meeting is held on the matter in the area in which the lighthouse is situated''.
Under the little heading ``exception'':
``(3) Subsections (1) and (2) do not apply in re-''.
Senator Murray: That is acceptable to us.
The Chair: All those in favour of this proposed amendment?
Hon. Senators: Agreed.
The Chair: That amendment is carried.
You have another amendment for clause 13.
Senator Di Nino: I have a short one on clause 13. I move:
That Bill S-215, in Clause13, be amended by replacing, in the English version, line 34 on page 4 with the following:
``house in response to an emergency situ-''.
The Chair: That replaces ``any emergency.''
Senator Murray: That is fine.
The Chair: All those in favour of the proposed amendment?
Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried.
We now have clause 13 amended in two aspects. Are there any further changes to clause 13?
Senator Di Nino: I do not think so.
The Chair: Shall clause 13, as amended, carry?
Hon. Senators: Agreed.
The Chair: Thank you.
On to clause 14.
Senator Di Nino: This amendment is to replace the word ``shall'' with ``must.'' I will read it. I move:
That Bill S-215, in Clause 14, be amended by replacing, in the English version, line 36 on page 4 with the following, under the heading ``Duty to Maintain'':
``14. The owner of a heritage lighthouse must''.
Senator Murray: That amendment is fine.
The Chair: The change is from ``shall'' to ``must'' at line 36.
Senator Murray: Someone suggested that ``shall'' is a better version than ``must.'' My take on this is that when a bill says ``shall,'' we usually relate it to something the government is required to do, but ``must'' could include either the government or someone outside the government. Is that not so? If not, then, why are you changing it from ``shall'' to ``must?''
Mr. Bartlet: This amendment was taken on the advice of the legislative drafters. It is a distinction rather than a difference.
Senator Murray: That is good to know — a distinction without a difference.
The Chair: In the French version, it should be line 35, just so there is no confusion.
Senator Di Nino: That is why I said in the English version. I specifically said the English version.
Senator Murray: The French is not changed.
[Translation]
The Chair: Senator Biron, could you check the French in each amendment, please?
Senator Biron: Yes.
The Chair: Great.
[English]
The Chair: All those in favour of the amendment?
Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried.
Shall clause 14, as amended, carry?
Hon. Senators: Agreed.
The Chair: Motion carried.
Senator Di Nino, you have an amendment for clause 15.
Senator Di Nino: Mr. Chair, once again we are back to the same discussion on built structures. Therefore, I move:
That Bill S-215, in Clause 15, be amended by replacing lines 43 and 44 on page 4 with the following:
``house and whether any related building should be included in the designation;''.
Senator Murray: Mr. Chair, I move:
That the amendment be amended by replacing the word ``building'' with the word ``structure.''
The Chair: I believe we are getting a bit of the flavour for this now.
All those in favour of the subamendment to Senator Di Nino's amendment?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any?
Some Hon. Senators: On division.
The Chair: Motion carried, on division.
All those in favour of Senator Di Nino's amendment as amended?
Some Hon. Senators: Agreed.
The Chair: Contra minded, if any?
An Hon. Senator: On division.
The Chair: On division. Motion carried.
Is there anything further on clause 15?
Senator Di Nino: I move:
That Bill S-215, in Clause 15, be amended by deleting lines 10 to 17 on page 5.
The Chair: That would remove paragraph (d).
Senator Di Nino: Yes, remove paragraph (d). The officials are here to answer any questions. I understand that Senator Carney is also in agreement with this.
Senator Murray: I would like to hear the officials on this.
The Chair: Would anyone like to talk about removing paragraph (d)?
Ms. Kell: The effect of removing paragraph (d) will remove the requirement to have a public meeting when an alteration will be made to a heritage lighthouse. Under other clauses in the bill, any alteration to the lighthouse would have to be consistent with the building's heritage character. In other words, under the bill, it would be contrary to it to make an alteration that would change or impair the heritage character of the building. Holding a public meeting would not influence that outcome.
Senator Murray: I recall the argument that we had yesterday.
The Chair: Senator Murray now recalls why Senator Carney would be pleased to accept that amendment.
In voting for this amendment, you would also be agreeing to allow the clerk to remove the ``and'' from line 9 to line 5.
All those in favour of the amendment?
Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried.
Shall clause 15, as amended, carry?
Hon. Senators: Agreed.
The Chair: Motion carried.
Senator Di Nino: Before we get to the preamble, I have another amendment. I move:
That Bill S-215 be amended by adding after line 17 on page 5 the following:
``RELATED AMENDMENTS TO THE PARKS CANADA AGENCY ACT
15.1 Paragraph (a) of the definition `heritage protection programs' in subsection 2(1) of the Parks Canada Agency Act is replaced by the following:
(a) heritage railway stations, heritage lighthouses and federal heritage buildings;
15.2 Paragraph 4(1)(b) of the Act is replaced by the following:
(b) heritage railway stations, heritage lighthouses, federal heritage buildings, historic places in Canada, federal archaeology and Canadian heritage rivers; and''.
I believe that is a consequential amendment to that act.
For clarity, this is the Parks Canada Agency Act, which includes the heritage lighthouses.
The Chair: I suspect that someone from Parks Canada could tell us whether this was drafted by the department. Are all of you happy with that?
Ms. Kell: Yes.
Senator Murray: Yes.
The Chair: We are in agreement. Let us vote. All those in favour of the amendment proposed by Senator Di Nino?
Hon. Senators: Agreed.
The Chair: Contra minded, if any? Motion carried.
We will add the consequential related amendments.
Moving to clause 16, I do not have any amendments.
Senator Di Nino: It is the coming into force.
Senator Di Nino: That is your clause, Senator Murray.
Senator Murray: Yes, two years after the day is fine.
The Chair: Shall clause 16, without amendment?
Hon. Senators: Agreed.
The Chair: Carried.
The Chair: We will go back to the front of the bill to consider ``whereas'' clause. I believe Senator Di Nino might have an amendment.
Senator Di Nino: Yes, Mr. Chair, I have two amendments to the preamble. I move:
That Bill S-215, in the preamble, be amended by adding after line 10 on page 1 the following:
``AND WHEREAS communities in the areas in which lighthouses are situated have an important role in the conservation and protection of heritage lighthouses and in ensuring a public purpose for them;''.
The Chair: It is obviously a preamble clause. Senator Murray indicates that Senator Carney, the sponsor of the bill, is not unhappy with this additional clause.
All those in favour of the motion to add this other ``whereas'' clause?
Hon. Senators: Agreed.
The Chair: Contra minded, if any? We will fix up the ``ands'' on this one as well.
Senator Di Nino: Mr. Chair, I have another amendment. It deals with the word ``conserve.'' I move:
That Bill S-215, in the preamble, be amended by replacing, in the English version, line 13 on page 1 with the following:
``taken to conserve and protect our heritage''.
I believe the explanation has already been given.
The Chair: I believe, Senator Murray, we had agreed to change ``preserve'' to ``conserve.''
Senator Murray: We had agreed.
The Chair: With the help of the officials. All those in favour of the amendment?
Hon. Senators: Agreed.
The Chair: Contrary minded, if any? Motion carried unanimously.
Shall the preamble, as amended, carry?
Hon. Senators: Agreed.
The Chair: Shall clause 1, the short title, which we postponed, carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill, as amended in its entirety, carry?
Hon. Senators: Agreed.
An Hon. Senator: On division.
The Chair: On division in certain aspects, yes. Shall I report this bill back to the Senate, as amended, without observations?
Hon. Senators: Agreed.
The Chair: Honourable senators, I thank you very much for this exercise. Thank you, Senator Di Nino and Senator Murray, for leading us through.
We appreciate you being here, Parks Canada and Environment Canada. You can report that the bill will go back to the Senate.
The Chair: We have received authority and direction from the Senate chamber to begin our subject matter study on Bill C-28. The reason is because the bill has been held up in the House of Commons.
We have 14 parts to this bill. Mr. Menzies will give us an overview of the bill's subject matter. This is an omnibus bill, and one person would not be expected to have an understanding of all the policy issues.
Ted Menzies, M.P., Parliamentary Secretary to the Minister of Finance, Department of Finance Canada: Thank you very much.
Minister Flaherty sends his greetings. He is meeting today with the finance ministers from across the country to discuss pre-budget consultations.
I am accompanied today by a number of officials from the Department of Finance. I will not introduce them all, but we hope that we have of the facets of this piece of legislation covered with someone who is capable of answering your questions.
I am pleased to see this Senate committee agree to start a pre-study of Bill C-28. I am sure you are all familiar with the trials we are having in that other place trying to get this through. Almost everyone has taken their position already and is willing to move on with it, realizing the importance of getting this done, except for one party that seems to think they want to grandstand and slow it up.
Having said that, I may get called away for bells, so my apologies if I do.
As senators, you will know that we are in the process of concluding what has been a very exhaustive debate on this particular piece of legislation. Bill C-28 proposes to implement the tax measures announced in this fall's economic statement, along with outstanding Budget 2007 measures not yet legislated.
Before continuing, for the record, I would like to comment on the impressive state of the Canadian economy. This government is cognizant of certain sector-specific challenges that we heard very much about lately. We are very sensitive to the hardships that have resulted from that. However, our economy has performed incredibly well over the first half of 2007, bolstering revenue growth and the overall fiscal position of the government.
We have seen tremendous growth in employment. According to Statistics Canada's recently released November numbers for employment in Canada, we created 42,600 new jobs last month alone. Despite declarations to the contrary, these were chiefly good-quality, well-paying jobs. A TD Securities economist noted that ``the bulk of the employment growth came from full-time as opposed to part-time . . . and even more importantly, the private paid sector actually added a significant number of jobs.''
Furthermore, year-to-date, an outstanding 388,000 jobs have been created in Canada. Plainly speaking, our economic and fiscal positions are solid and ready to withstand the challenges that we all know are on the horizon. That strong position has allowed our government to tackle two important priorities for Canadians: lower taxes and a reduced debt. Indeed, our planned debt reduction is $10 billion for the year 2007 and 2008 and $3 billion in each year thereafter. This will bring total debt reduction since 2005-06 to over $37 billion, thus lowering the federal debt burden that we are passing on to future generations by $1,600 for every Canadian.
I know this will be important to the learned senators because you are very much aware and concerned, especially on this committee, about passing that debt on to our younger generations.
As a result of the additional debt payment, the total value of personal income tax relief provided under the tax-back guarantee will rise to $2.5 billion for 2012 and 2013. Canada's strong fiscal position has also allowed us to reduce Canada's overall tax burden for individuals and businesses by $190 billion over this year and the next five fiscal years. In doing so, we are bringing taxes for Canadians to their lowest level in half a century — a remarkable achievement that all Canadians should applaud.
I am here today to ask your assistance in helping us to do even more for Canadians. To that end, I would now like to outline the initiatives in the bill associated with the fall's economic statement and follow by outlining key measures in Bill C-28 related to Budget 2007.
The recent economic statement introduced broad-based tax cuts that delighted most Canadian, such as the 1 percentage point reduction in the GST — a tax cut that will save Canadian taxpayers approximately $12 billion next year. This is a significant tax reduction that directly affects Canadians whenever they purchase items subject to the GST. It is the only tax cut that will benefit low income Canadians that do not pay income tax.
Some examples of the savings Canadians can expect are, for example, that a couple purchasing a new home of $300,000 will save almost $4,000 in GST; that $10,000 in home renovations will save a family $200 on GST; and that a family spending $30,000 on a new mini van will save $600 in GST. Further, to ensure continued assistance for low- and modest-income Canadians, the GST credit will be maintained at its current level. This, we believe, is an important piece that many people probably do not recognize. There is a tremendous amount of value in that. In fact, it translates into a $1 billion benefit annually for those individuals.
The economic statement also announced additional tax relief for individuals and families, such as increasing the amount Canadians can earn before they start paying income tax up to $9,600. What is more, this measure is retroactive to January 1, 2007. Also, a further increase to $10,100 is slated for January 1, 2009. These measures alone will provide $2.5 billion in tax relief over this and the next year.
Furthermore, the economic statement proposes to reduce the lowest personal income tax rate to 15 per cent retroactive to January 1, 2007. That is this tax year. As a result of the personal income tax and GST reductions announced in the economic statement, a family earning between $15,000 and $30,000 will save $180 on average in 2008. An average savings for a family earning $80,000 to $100,000 would be $600. It is good news when money is being put back into the taxpayers' pockets where it belongs.
Additionally, the economic statement brought forward measures to help Canadian businesses prosper. Bill C-28 proposes to reduce the general business income tax rate to 15 per cent by 2012. This will start with a 1 per cent reduction, in 2008, beyond the already scheduled reductions previously introduced. In addition, the bill proposes to reduce the small business income tax rate to 11 per cent in 2008, one year earlier than previously scheduled.
With these tax reductions, we are putting business taxes on a five-year downward track to help stimulate economic growth, create more jobs and provide business predictability for future planning. These are proactive and strong measures to allow prosperity to grow in Canada. These are the right measures for Canada at the right time.
With these reductions, we will have established the lowest overall tax rate on new business investment in the G7 by the year 2011 and the lowest corporate income tax rate among the major industrialized economies by 2012. As I alluded to at the outset, Bill C-28 proposes to implement the numerous outstanding tax measures from Budget 2007 not included in the first budget bill passed by Parliament in the spring.
While time precludes me from addressing every one of these measures, I will note that Bill C-28 includes, among others, provisions to eliminate tax on elementary and secondary school scholarships; increase the lifetime capital gains exemption to $750,000 for small business owners, farmers and fishers; increase the meal expenses tax deductibility for long-haul truck drivers; extend the mineral exploration credit; reduce the paperwork burden of small business by easing tax remittance and filing requirements; encourage businesses to create new child care spaces through an investment tax credit; waive income tax payable by non-resident athletes at the upcoming Vancouver 2012 Olympic Games; and, finally, introduce the Working Income Tax Benefit and the Registered Disability Savings Plan. It is those last two items I would to further highlight. These are two progressive come passionate initiatives that illustrate how this government is assisting the most vulnerable Canadians while also prudently managing the economy. The new Working Income Tax Benefit will make an important contribution to help low-income Canadians over the so-called welfare wall.
The welfare wall refers to the fact that for too many low-income Canadians to take a job can mean being financially penalized. For example, a typical single parent who takes a low-income job can actually lose a large portion of each dollar earned to taxes and reduced income support. In addition, individuals who receive social assistance benefits could also lose in kind benefits, such as subsidized housing and prescription drugs.
The Working Income Tax Benefit will provide assistance of up to $500 for individuals and $1,000 for families. This will reward and strengthen initiatives to work for an estimated 1.2 million low-income Canadians and give them a leg- up over the welfare wall.
To continue, let us discuss the Registered Disability Savings Plan. The government recognizes that an important consideration for parents and grandparents of a child with a severe disability is how best to ensure that child's financial security when they are no longer able to provide support. Based generally on the existing Registered Education Savings Plan design, the plan will help parents and others save toward the long-term financial security of persons with severe disabilities. I would hope all honourable senators appreciate the significance of such efforts to assist disabled Canadians.
It is refreshing to be in the upper chamber, where senators are traditionally able to put aside typical partisan posturing that all too often exists in the other place. I am confident all senators will indicate their strong support for this particular measure. I would emphasize that this is not just another government program; it is much more. To those who truly understand the impact it will have, this measure is of profound importance.
Bill C-28 is large and broad piece of legislation that covers an assortment of issues and addresses numerous challenges, but its over-arching theme is the promotion of a better and more prosperous Canada, an even better Canada to live in and leave to our children and grandchildren. To do so, we cannot afford to sit back and rest on our laurels. It is time to press ahead and build on our achievements. Bill C-28 does just that.
I appreciate the need for the esteemed members of the upper chamber to always do their duty and to study Bill C-28 and, indeed, all legislation with due diligence. However, I would also ask senators to carefully consider that all the vital measures in this bill are of great and immediate importance to Canadians. As such, I would ask senators to pass this proposed legislation as quickly as possible.
I would like to throw in a personal note. Last night, I took part in the debate on the isotope issue, one of the most non-partisan debates in which I had taken part in a long time. It was just to prepare me for this non-partisan committee that I appear in front of today.
The Chair: Thank you very much for your introductory overview. I will ask honourable senators if they have any questions with respect to the overview, and then I hope to go into more detail with each part. We may well have further questions of representatives of the various departments. I have a list of questioners who would like to ask questions of Mr. Menzies.
Senator Murray: Mr. Chair, I may, as you go through the bill, have a comment or question. Do you have an educated guess, Mr. Menzies, as to when this bill will be finally decided upon by your House?
Mr. Menzies: I am not sure that education has any bearing on this one. I had hoped that debate would collapse. We know the positions of all the parties. Apparently, there are 19 NDP members that can and plan to speak. It could be some time yet.
Senator Murray: Is it at third reading in your House?
Mr. Menzies: Yes. We were hoping that we would be voting on it. We have votes at 5:30 tonight. I still hold out some hope that we might actually be voting on it tonight, but I cannot make any promises. It may very well be tomorrow. I realize you folks want to get home for Christmas almost as much as we do, if not more.
I have spoken to all of the opposition parties and thought we had some agreement. As I say, we knew everyone's position. As to the point of filibustering this at this stage, whether one agrees with all of the positions taken in this or all that we have put forward, there are many good initiatives in here. This bill contains the Working Income Tax Benefit and the disability program, which Canadians clearly support. As I commented to some of our NDP colleagues, I am glad it is them that have to go home over Christmas and explain why they did not want this bill to pass. That is a long-winded answer, but you asked a politician.
Senator Murray: You do not know, and no one knows, how it will play out. This technique we are using, the pre- study, is a useful technique. It was used much more frequently in the past than it has been more recently for reasons I need not go into. It is a very useful technique that enables us to deal expeditiously with the bill as soon as it arrives. We will have had a chance, as it were, to go through the provisions at our leisure.
Senator Ringuette: I am happy that you are here before the bill and have the opportunity to provide this committee with the information we require for our study to allow us to vote accordingly.
You mentioned that 40,000 jobs have been created. Do you have any knowledge about how many jobs have been lost in the forestry sector?
Mr. Menzies: I must apologize. I have heard that number, but I do not have it at the top of mind. I know it is large.
Senator Ringuette: Is it larger than 40,000?
Mr. Menzies: I believe it is, but do not quote me on that number. We are looking at some changes in employment profiles all across this country. We realize there was the large layoff in Northern New Brunswick. In fact, the premier was in attendance with Greg Thompson, Minister of Veterans Affairs, just last week and announced some joint provincial-federal assistance for that region. We are certainly not trying to diminish the fact that there have been job losses in certain sectors. However, we are also encouraged that there has been job creation in many sectors, and not, as some people are saying, in the low-wage jobs. These are good jobs in the service sector. Any one of us can go back to our constituencies and see ``Help Wanted'' ads up and down the streets for the service sector.
Senator Ringuette: I would not say the retail industry is the highest paying employer, and that is the service industry.
In regard to the number of jobs lost in the forestry sector, can you provide that to the clerk of this committee before we meet next?
Mr. Menzies: Absolutely, and perhaps one of the officials might even know that. We will certainly get back to you with that number.
The Chair: Does anyone here have that number? No. Thank you.
Senator Ringuette: Again, with respect to tax issues, I have an article written by Kathryn May that appeared in the Ottawa Citizen of December 7, 2007, which was last Friday. I am sure you know the article. The headline is, ``Tories spell relief. Government forgives huge tax bills for small group of former JDS employees.''
Can you provide this committee with the amount of this tax relief?
Mr. Menzies: I am sorry, I cannot. I am not sure if this is related to this bill.
Senator Ringuette: I do not pretend that you have all the answers.
Mr. Menzies: I said I have the smart people with me.
Senator Ringuette: Yes. Can you provide these numbers to this committee?
Mr. Menzies: I am not sure what relevance it has to Bill C-28.
Senator Ringuette: You are talking about tax relief, so this is part of tax relief.
Mr. Menzies: In some other context, I would be glad to provide you with that information, but I do not know if it has any relevance to the debate of this bill.
It will not be difficult to get you that answer.
Senator Ringuette: I am asking for an answer and I hope to have it.
Mr. Menzies: Absolutely, and I will get you that number.
Senator Ringuette: Thank you. You have many more employees at your disposal to provide numbers to you than we have.
Another issue that goes back to the matter of paying down the debt, seven federal government buildings were sold last July for an amount of $1.5 billion.
Can you tell me if that $1.5 billion will go to servicing debt relief?
Mr. Menzies: That is a Treasury Board decision, so I am not aware of where that will go.
Senator Ringuette: That is a huge amount of money.
Mr. Menzies: I am not disputing the amount. I am just saying that that was a Treasury Board decision.
Senator Ringuette: Maybe we can have Treasury Board give us some information on that issue.
I do not want to take all your time. I hear the bells ringing — I do not know if it is House of Commons or Senate.
In an unofficial capacity, I attend a briefing meeting, where I asked for numbers in regard to the Atlantic accord. As a member of this Senate committee, I want to have the numbers that were given to Nova Scotia, Newfoundland, New Brunswick and Prince Edward Island about the old and new formula. More particularly, with the Atlantic accord, what is the impact of the old formula versus the new formula for Nova Scotia and Newfoundland?
Mr. Menzies: I may defer to Mr. Vermaeten on that, but I believe we had decided that those numbers were for internal finance department use.
Senator Ringuette: I am sorry to interrupt you. However, as a member of Parliament, you certainly know the power that resides in committee. As a member of this National Finance Committee reviewing Bill C-28, which deals particularly with the questions and numbers in questions, I am asking for that information.
Frank Vermaeten, General Director, Assistant Deputy Minister's Office, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Budget 2007 provided projections by province for 2007 and 2008 — both the old and new formula. They are publicly available. Since that time, other than all the underlying data provided to calculate that — which is available so the province can verify all the calculations — we have not provided new numbers. The new numbers will be coming out in the next week or two for 2008-09.
Senator Ringuette: The information I am requesting is the numbers the department used with New Brunswick, Prince Edward Island, and particularly Nova Scotia and Newfoundland. In addition, comparing the old system, the new system of transfer, the accord and where it lies. I would not accept — and I do not believe this committee could accept — that there were no numbers produced in discussions with these provinces.
Mr. Menzies: I am sure there were discussions amongst officials. I do not know what was used in that discussion, so I frankly cannot answer that question.
Senator Ringuette: I accept that you do not know the numbers. However, as a member of this committee, I request that information. They are not cabinet documents or secret documents. I will not accept a ``no,'' a ``maybe,'' or any type of delay.
Mr. Vermaeten: The only numbers, to the best of my knowledge, shared with these provinces are the numbers available in Budget 2007. They cover both 2007 and 2008, both for the new and the old system. Of course, previous years as well. There were no other projections provided.
Senator Ringuette: We have that in writing. If I ever, as a member of this committee or as a senator, find any evidence to the contrary of what we have just been told, I hope this committee will reconvene and take due measures.
Senator Di Nino: It is appropriate to say that the witness said, ``To the best of my knowledge.''
The Chair: I was going to ask the witness if he could confirm with inquiries. When you leave this meeting at six o'clock tonight, if you find anything out that would change your knowledge or the statement you have given here, you will let us know. We will appreciate that.
Senator Ringuette, I did hear your comment.
Senator Di Nino: Before I commence, I wondered if Mr. Menzies would tell us how much time he has. I hear the bell.
Mr. Menzies: I believe we are down to 20 minutes.
The Chair: That is Mr. Menzies, not the rest of the team.
Senator Di Nino: To try to stay within the mandate that you have given us, Mr. Chair, I am not sure whether the questions are related to the statement or just generally Bill C-28. If it is not directly related to the statement, it certainly will be to Bill C-28. You will allow me that privilege.
The Chair: I am lenient on the scope of questioning.
Senator Di Nino: One thing Bill C-28 will do is provide $5 million a year for funding for 2007-08 and 2008-09 for the new federal Public-Private Partnership, P3, office.
Can you or one of your officials give us some information on that?
Mr. Menzies: I do not know all of the details or how far along this P3 is, but I would like to speak to it in general terms, if I could.
Those of us who have gone to other countries have seen how P3s can work. There are roadways in Southern Ontario that are functioning quite well; there are bridges and the Coquihalla Highway — for those familiar with British Columbia — that work well.
I was in Chile several months ago, and I was amazed at the quality of the roads in that country, all run as P3s.
We are looking at the potential opportunities available to leverage tax dollars. That is the simplest way to describe it. This $33 billion in infrastructure money is the largest investment of its kind in Canadian history. We are hoping that through partnerships, P3s, we may be able to leverage that to $100 billion — in involving the provinces, municipalities and private sector to create the type of infrastructure that this country needs to be able to trade.
Much of this will be in our trade corridors, with our Asia-Pacific Gateway and corridor, with our Atlantic corridor, with our border crossings to the U.S. corridors. I do not believe the actual expenditures have been allocated yet, but the potential is there. I am not sure if we have anyone here who can speak to the P3 process.
Senator Di Nino: That is fine for now; we can come back to it.
Mr. Menzies: That is my view of where we are at now.
Senator Di Nino: Do I understand that the federal government has not been involved in the P3s prior to this, or is this just an extension of a program?
Mr. Menzies: I cannot say that they have not been involved, but not to the extent that we hope to become involved. We look at it as the best use of tax dollars by leveraging them rather than just the federal government tax dollars going to an investment, whether it is infrastructure or capacity building, by leveraging that money. I would not want to say there has never been, but I do not believe we have seen the focus that we are seeing by providing funding and individuals to focus on P3s.
Senator Di Nino: You are trying to multiply our investment by adding investment from the other levels of government and/or the private sector to be able to make these even larger investments — A and B — with all the spinoff benefits for the economy.
Mr. Menzies: The best use of taxpayers' dollars.
Senator Di Nino: That is what the P3s are all about.
Mr. Menzies: Yes. It is about leveraging the dollars we have to work with.
Senator Di Nino: Another area that Bill C-28 deals with is to provide the authority for AgriInvest, the tax deferral farm savings account; we have not heard a great deal about this. Can you supply some information about what that is, what it will do and how it will be of benefit to Canadians?
Mr. Menzies: I will defer to the officials on the details of it. For those of you who are familiar with former agricultural programs, we had in place the Canadian Agricultural Income Stabilization, CAIS, program, which took the place of the former Net Income Stabilization Account, NISA. The NISA program was a savings plan for farmers, for a rainy day, where the farmer contributed a portion of his net sales into this account.
Senator Di Nino: Similar to an RRSP.
Mr. Menzies: Similar to an RRSP, but specific to the proceeds from the farm. Farmers invested a percentage of their net proceeds in banking institutions across Canada, and the government matched the dollars. That was taken away in previous years and replaced by the CAIS program.
Farmers have been complaining — and I am sure that even this committee has heard — that the CAIS was not effective in a disaster situation. In AgriInvest, we are leaving a fundamental part of the CAIS program, but there is a top-up similar to the old NISA. I will ask the officials to correct me if I am wrong, but that is my understanding of this new program.
It requires an investment on behalf of farmers, but it creates the top-up. To stay within World Trade Organization, WTO, rules, we can only fund up to 70 per cent of the gross, and this helps with the top-up. However, it is farmer participation with government assistance in this AgriInvest. Do we have someone who can explain it better than I?
Martine Bérubé, Chief, Sectoral Policy Analysis, Agriculture and Fisheries, Economic Development and Corporate Finance, Department of Finance Canada: This bill is to amend the Farm Income Protection Act, which has two funds. With a NISA account, there is fund 1, which is the farmer's contribution; and fund 2, which is the government's contribution. Fund 2 used to be held in the Consolidated Revenue Fund, CRF, but this amendment will allow the financial institution to hold both fund 1 and fund 2 so that farmers can self-manage their accounts.
It will be similar to an RRSP. The government will not be managing the accounts. It will be fully held by financial institutions. That is why we need to amend the Farm Income Protection Act.
Senator Di Nino: The contributions made by the farmer is tax-deferred similar to an RRSP, is that correct?
Ms. Bérubé: Yes, until they are withdrawn from the account.
Senator Di Nino: Do I have time for one more question?
The Chair: If your next question is whether the government put anything into that account, you can have two more.
Senator Di Nino: I believe they have already said there is a top-up from the federal government. That is on the record.
Another reason we need Bill C-28 is because it provides the legislative framework for the guarantee announced on October 10 for Nova Scotia and Newfoundland and Labrador under the equalization formula and the 2005 offshore accord. What is that all about? Is this the authority that you need to act on it?
Mr. Menzies: That is my understanding. The agreement is in place, but we need to legislate it here to be able to enact it. I will defer to Mr. Vermaeten on this; he is the expert.
Mr. Vermaeten: The bill provides the legislative authority to make the additional payments, what we call the cumulative best-of insurance payments. To the extent that the 2005 equalization formula, agreed to by ministers at the time the 2005 accord was signed, is greater on a cumulative basis than the new O'Brien formula, to the extent that the provinces opt into this new program, if it is less on a cumulative basis, this legislation provides the authority for those top-up payments.
Senator Di Nino: We studied this extensively. Are you saying that without this legislation, that sort of top-up could not take place?
Mr. Vermaeten: Correct.
The Chair: The questions about farm income protection amendments under part 10 of this bill and the reply is what I hope to do with each of the 14 parts. We would like a brief understanding of what is there and why this is needed. That line of questioning helped immensely.
That is the end of the general questioning. I propose now to start at part 1 of the bill and ask who can tell us what is there briefly and we will ask questions on that.
Mr. Menzies: I apologize for having to answer these bells, but it is important I go at this time.
The Chair: If you can send us the bill, that would be wonderful.
Mr. Menzies: I have never had a committee chairman say: Send me the bill.
The Chair: Honourable senators, I have the name Pierre Mercille. Could you tell us about part 1? It is amendments with respect to the goods and services tax and the harmonization sales tax, and it deals with truck drivers. Without spending too much time, can you refresh our memories on what is there, and maybe the policy will be obvious?
Pierre Mercille, Chief, Sales Tax Division, GST Legislation, Department of Finance Canada: Part 1 is more than just the amendment for truck drivers. It is all the amendments in respect of the GST that have not been implemented in budget bill number 1. The first one is the meal expenses of long-haul truck drivers. This amendment is consequential to the amendment to the Income Tax Act referred to in the presentation. The GST mirrors the income tax in terms of how much income tax credit, ITC, truck drivers can claim for meals. The proposal changes the deductibility of those expenses from 50 per cent to 80 per cent over five years. The amendment ensures that truck drivers can increase the percentage of ITC claimed with respect to those expenses.
The Chair: How would that truck driver compare to a travelling salesperson or someone else on the road?
Mr. Mercille: Everyone else is at 50 per cent.
The Chair: The truck driver will have the advantage over everyone else.
Mr. Mercille: Yes.
Senator Stratton: At what percentage will the truck driver be?
Mr. Mercille: They will be at 80 per cent over five years.
Another amendment is that the annual filing threshold for GST will be increased for taxable sales. The threshold was at $500,000 and has been increased to $1.5 million. Sometimes only one remittance return is necessary, but instalments are required during the year, so the threshold for instalments has doubled from $1,500 to $3,000. This will help with compliance for small businesses.
Another measure is to increase the 48-hours traveller's exemption for GST and HST. It will increase from $200 to $400 for Canadian travellers who go outside the country for at least 48 hours. They can come back with $400 in goods that will not be subject to the GST.
The last amendment in this part is fairly technical. Budget 2007 announced a zero rating of export of intangible, personal property. An example of that is someone who downloads music. If an American downloads music on a website in Canada, the rule before was that it was taxable under the GST. Since one of the principles of the GST is to zero-rate export, with the increase of that type of trade, the amendment in the first budget bill ensured that this was zero-rated. This one is to ensure that there is no Canadian business that takes advantage of the rule for their Canadian activity.
The Chair: Does anyone have questions with respect to those proposed amendments? I see no questions.
Perhaps we could move to part 2 on amendments relating to excise tax on renewable fuels, ethanol and biodiesel that used to have an exemption. The government believes that the exemption should be removed. Am I correct? We will hear now from Mr. Geoff Trueman.
Geoff Trueman, Chief, Sales Tax Division, Air Travelers Security Charge, Tax Policy Branch, Department of Finance Canada: Mr. Chair, you are correct. Part 2 removes the current excise tax exemption from renewable fuels, including ethanol and biodiesel. These changes are being made in the context of the government's new strategy, which involves four separate components.
First, the government is moving forward with regulations that will mandate renewable content in fuel. We will be looking for a 5 per cent level of renewable fuel content in gasoline and a 5 per cent level in diesel fuel by 2010, once it has been proven with respect to diesel fuel that renewable fuel component is effective for Canadian driving conditions.
Second, there is a new incentive program for the production of renewable fuels in Canada, which is a $1.5 billion program over nine years announced, in Budget 2007.
The Chair: That is not in the bill.
Mr. Trueman: That is right. These factors are not in the bill, but they give the context of the strategy for renewable fuels.
The second measure announced in Budget 2007 was $500 million for Sustainable Development Technology Canada, SDTC, to invest in next-generation processes for renewable fuels, such as cellulose ethanol. These are production processes currently under development that would dramatically increase the yield and output when renewable fuels are produced from a renewable feedstock.
The Chair: Are there questions, honourable senators?
Senator Di Nino: You mentioned some specific agricultural products. How many agricultural products would be used to produce ethanol and renewable fuels?
Mr. Trueman: Currently, most ethanol is produced with corn, and biodiesel is a little more diverse in that a number of oilseeds, such as canola, wheat and various other varieties, can be used. That process is more fine-tuned to the type of agriculture input being used. Ethanol has achieved a critical mass, and that has been based on use of corn.
Senator Ringuette: How much alcohol are we importing to produce ethanol and methanol? In the material before us, the first paragraph, last sentence states: ``The exemption applies only where the alcohol, i.e., ethanol or methanol, is produced from biomass or renewable feedstock.'' How much of that are we importing?
Mr. Trueman: I could not give you an accurate number on that. However, renewable fuel producers will be looking to produce their fuel at the lowest cost and, therefore, looking for their input at the lowest cost. Given that we have a global and a North American market in crops, we could expect to see some cross-border movements, but Canadians would also sell to the U.S. market to supply American producers of renewable fuels. We have seen that the increase in demand for renewable fuels in North America has driven up the crop price for all farmers in North America, so the effects are slightly broader.
Senator Ringuette: I understand that, but what is the purpose of removing the excise tax?
Mr. Trueman: The excise tax exemption was introduced initially to encourage people to use renewable fuels and to blend renewable fuels. By moving to a system with a regulated minimum content then, in effect, the exemption becomes redundant. There is no longer any need to encourage its use because it will be mandated by a regulation. The programs that are being put in place are designed to complement that to allow for the expansion of the renewable fuels industry in Canada by providing a production incentive to producers of renewable fuels in Canada. In effect, we are creating the market with the regulation, and we are trying to give industry in Canada the tools so that they can tap into that new market.
Senator Ringuette: I understand all that. Still, we do not have a clue about the volume of alcohol that we are importing for that purpose. If we want to provide some form of incentive toward Canadian ethanol or methanol production, then I would hope that we would do everything in our power to have all the necessary ingredients made in Canada in the first place. When the excise tax is removed, the border opens up. Canadian producers of alcohol, in this case, will be somewhat disadvantaged in the marketplace.
Mr. Trueman: No, because domestic and imported fuels would receive the same treatment. Currently, they are both exempt and, going forward, they will both be taxable. The level playing field will be maintained. Canadian producers will not be disadvantaged in any way. I am talking about ethanol and other renewable fuels.
Senator Ringuette: What about the alcohol?
Mr. Trueman: Currently, they are both exempt. If these changes were put in place, domestic and imported would be taxable. The level playing field would be maintained vis-à-vis domestic and imported fuels.
The Chair: That is helpful. I see no other questions on that particular matter.
We will hear from Mr. Brian Ernewein on part 3, which is huge and contains many incentives. The first one on my list is working with income tax benefits, which was referred to briefly in the introductory remarks.
Brian Ernewein, General Director, Senior Assistant Deputy Minister's Office, Tax Policy Branch, Department of Finance Canada: That is right. In fact, the parliamentary secretary has identified the majority of the income tax measures found in part 3. If you have the bill in front of you, the inside cover will list those measures, the ones the parliamentary secretary has identified, as well as the rest. I can draw those to your attention.
There will be a little stumbling involved, but I am happy to provide a précis of the measures. In the interests of time, I might ask whether people want to have a look at the list and raise questions on any of them.
The Chair: Measures such as allowing for capital gains tax donations of publicly listed securities to private foundations is pretty straightforward. Previously, it was for public foundations only, and now it can go to private foundations.
Mr. Ernewein: That is correct.
The Chair: Perhaps someone has more questions on that. We would like your help in understanding what is happening and what is trying to be achieved with the measures.
How will the Working Income Tax Benefit help the working poor?
Mr. Ernewein: In general terms, it provides a 20 per cent credit on earned income over $3,000. A single individual can receive up to $500. If married or with a dependent, a person can receive up to $1,000. If he or she qualifies for the disability tax credit, there is a possibility of another $250 on top of either those single or couple amounts.
They reduce the tax burden, in effect, on the first level of income, and that helps to address a phenomenon known widely as the welfare wall; whereby by virtue of, to some degree taxation of income, but to a much greater degree loss of federal and provincial benefits, the effective tax rate on the first level of earned income is quite high. By providing this tax credit, that effective tax rate on those first dollars of earned income can be reduced by the 20 per cent figure.
The Chair: Do we have estimates of how much this will cost the public purse?
Mr. Ernewein: The estimate provided in Budget Plan 2007, which is where this comes from, was a cost of $140 million for 2006-07. Its mature cost for 2007-08, when it is in full force and effect, is $550 million. There is another $500 million to $550 million in 2008-09.
Senator Chaput: In the previous presentation, the small business community was mentioned two or three times. Here you have reduction of income tax paid by small businesses.
What is the definition that this bill gives to ``small businesses''? Is it a matter of how much money they make per year? If so, what would that amount be? We have small and medium businesses.
Mr. Ernewein: The firms that qualify for the small business deduction are Canadian-controlled private corporations. They must be predominantly Canadian-owned and private, not publicly listed firms.
Any firms qualify in the first instance for the reduced rate of tax on small-business income, but that reduced rate is taken away as their size grows. There is a so-called clawback or reduction of the amount of income that qualifies for the small business deduction as the size of the firm capital grows above $10 million. Any entitlement to the small business deduction is eliminated once their capital is $15 million or greater.
Senator Chaput: You said Canadian-controlled businesses. What percentage must be Canadian-controlled?
Mr. Ernewein: Essentially, 50 per cent of the business must be Canadian-controlled.
Senator Chaput: Fifty per cent?
Mr. Ernewein: Yes.
Senator Chaput: That would not really qualify as small businesses; they are regular businesses.
Mr. Ernewein: The vast majority of them will be, but the cut-off point for entitlement to the small business deduction is set at that $10 million to $15 million phase-out figure.
The Chair: You referred to the budget plan as where we could go to determine the cost of each of these initiatives. Is that where we find them?
Mr. Ernewein: I did in relation to the one you asked me about, and that is because the Working Income Tax Benefit, comes out of the budget proper, Budget 2007. If you have the material in front of you, the costing for the tax measures is found on pages 374 and 375 of the budget material.
I note that when we look later on at part 14, there are also tax amendments to implement the economic update. The costing for that is not in the budget but in the update document, and I can provide a reference later or now.
The Chair: We will get to part 14 later. I appreciate you telling us where we can find it. If any senator wants to find that information, it is all available.
Senator Di Nino: I wonder if you can enlighten us as to the changes to the maximum capital gains deductions. The information just talks about a formula.
Mr. Ernewein: Just to be clear, are we talking about the capital gains exemption for small businesses and farmers and fishers?
Senator Di Nino: No, the maximum capital gains deduction as appearing on page 14.
Senator Nancy Ruth: The $750,000?
Senator Di Nino: That is what I believe it is. I am not sure that is what it is referring to.
Mr. Ernewein: The lifetime capital gains exemption was introduced in 1985, and over a period of a few years, it provided an exemption on capital gains of small business shares, including farmers and farm property, of $500,000.
That maximum capital gains exemption for small businesses, again including farmers, was maintained up until this year. It was extended to fishers as well as farmers recently. This proposal increases the maximum amount eligible for the capital gains exemption to $750,000.
I note, for the sake of completeness, the capital gains are taxable only at half rates. The $750,000 is the total amount of capital gains that qualify. Since we only tax half of capital gains, $375,000 is the taxable amount that, as a result of this proposal, would be potentially exempt from tax.
Senator Di Nino: I understand that. My question on that issue is, if people have taken advantage of that provision in the Income Tax Act, under the old provision, and have used up all of their past $500,000 capital gains exemption, are they then allowed to take advantage of another $250,000; or is it that once they have taken advantage of the original provision, they are now no longer able to benefit from the increase?
Mr. Ernewein: I believe I understand the question. Perhaps it ought to be a reward for the patient, but it is not. If they did use the $500,000, that is fine. They are not barred from obtaining access to the remaining $250,000, assuming, of course, that they own the type of property that qualifies for the exemption.
If they have already sold the property and no longer own a small business or farm, there are no more gains that they can realize that will qualify. If they had sold half the business or part of their farming operation and still had some left to sell, it is open to them to qualify for the remainder of the gain that they generate after, up to $250,000; indeed, up to $750,000, less whatever they have taken advantage of previously.
Senator Di Nino: It is a little more complex than that. Anyone who has that problem should talk to their tax accountant. I wanted to make sure that is the general philosophy of this measure.
Senator Murray: I presume the date of March 19, when some of these measures become effective, is the date they were announced; that is to say, the date of the minister's budget. Is that right?
Mr. Ernewein: Yes, it is the date of the 2007 Budget.
Senator Murray: I am sure the minister dealt with this in his speech. However, what are you trying to address with these provisions about gifts of medicine, presumably, from pharmaceutical companies?
Senator Murray: It is gifts by corporations of property held in inventory to registered Canadian charities, other qualified donees, and such. A paragraph is added to allow corporations that make donations of medicines from their inventory to claim an additional deduction for eligible medical gifts generally equal to the lesser of the cost of the donated medicine and 50 per cent of the amount, if any, of which the fair market value of the donated medicine exceeds that cost.
Senator Stratton: If you remember, the Honourable Jake Epp chairs a voluntary group that puts together medical packages of drugs and ships them to Third World countries, such as Afghanistan and Iraq. They approach pharmaceutical companies to get donations. This makes it easier to get the donations because they will get a tax write- off.
Senator Murray: Do you have anything to add?
Mr. Ernewein: That conforms to my understanding. If a corporation or any taxpayer donates property that is part of their inventory, it comes out of their inventory and reduces the value of such. It is rather neutral in terms of the tax result obtained.
The argument that some have put forward is that by virtue of that neutrality, there is no greater incentive to give the excess property away than to throw it away. The budget provides an incentive through an enhanced deduction when one donates specific medicines to qualifying charities.
Senator Murray: I thought it had something to do with the undertaking we made as a country to provide generic drugs for HIV/AIDS to other parts of the world. There was criticism that we did not send any.
Mr. Ernewein: From the sound of your description, it seems it could support that as well. However, the specific item is a tax measure that provides an enhanced incentive for these donations.
Senator Stratton: My understanding is they are shipping drugs to various countries in Africa, and then churches look after the distribution.
Senator Murray: It is not necessarily the generic drugs for HIV/AIDS.
Senator Stratton: No, they could be patented drugs also.
Senator Murray: What is a SIFT trust?
Mr. Ernewein: A SIFT trust is a specified investment flow-through, a term created as part of the introduction of the tax on income trusts and publicly listed partnerships. They are either a partnerships or trusts defined as units or other securities listed or publicly traded that engage in certain activities.
It was part of an earlier bill, so I am not sure how it fits into this one.
Senator Murray: I am looking at amendments related to income tax. When you talk about the properties in question, they include obligations of Canadian governments and quasi-governmental entities. Give me an example of those quasi-governmental entities.
Senator Di Nino: The senator is asking whether the government guarantee bonds or other commitments of Crown or other corporations, such as the Atomic Energy of Canada Ltd. or Canada Post, have the authority to borrow and so on.
Mr. Ernewein: I do not know if they currently do, but I understand government guaranteed borrowings by other public entities and by private sector bodies exist.
Senator Murray: I only wondered what those quasi-governmental entities are.
Mr. Ernewein: I believe that references what are sometimes referred to as instrumentalities. That is, government corporations or the like that perform functions of government.
Senator Murray: Is that similar to CMHC?
Mr. Ernewein: Perhaps. I now understand the reason for your question. It is consequential to the elimination of withholding tax on arm's length interest payments to non-residents, and, as part of the elimination of that tax, there is an amendment made here.
The Chair: The Children's Fitness Tax Credit and the tax credit public transit were two tax credits that were an initiative some time ago. Am I right in assuming that the tax credit is reduced in value if the personal income tax rate for the first bracket is reduced?
Mr. Ernewein: That is correct, the credits are tied to the basic personal tax rate and any change to that rate would change these accordingly. There is a proposal to reduce the basic personal tax rate from 15.5 per cent to 15 per cent.
The Chair: What is the initiative here with respect to those two credits?
Mr. Ernewein: One is more substantive than the other; or one introduces the provision and the other makes a small modification to it. You asked about the Children's Fitness Tax Credit?
The Chair: Yes. This is part 3.
Mr. Ernewein: There was the small change to this tax credit included in this bill to ensure we had proper authority for the regulations to define what qualified as an activity that could benefit from the credit.
There was a panel struck to determine what the criteria for entitlement to the fitness tax were. That is to be set up by regulation.
I believe the budget bill is only making a small tweak to the rules to ensure that the regulations can encapsulate the criteria for entitlement to the Children's Fitness Tax Credit.
The public transit tax credit is also something that comes out of the 2006 Budget, as well as the Children's Fitness Tax Credit. In this case, the purpose was to extend the public transit tax credit to electronic payment cards and to weekly passes. That is, where four or more weekly transit passes were bought, they would be treated like a monthly pass and would qualify for the tax credit available to transit passes under those 2006 Budget measures.
Senator Ringuette: Would someone working in a rural area and paying car insurance on a quarterly basis because of low income not qualify for those measures?
Mr. Ernewein: Would car insurance payments qualify for the transit pass credit? No; not that I am aware of.
Senator Di Nino: Nice try, there.
Senator Ringuette: Again, we are expanding incentives for people that have the options of public transit in comparison to people that do not have options. That should be taken into consideration.
The Chair: Senator Ringuette, are you finished?
Senator Ringuette: Are we moving on?
The Chair: We are still on part 3.
Senator Ringuette: I have two other issues.
The Chair: We will be getting to them. We have until six o'clock.
From time to time, when this legislation comes before us, we learn about something that we voted on after we voted on it. We hope that you will tell us about any of these snare traps in here that we might not recognize, for example the Anti-Tax-Haven Initiative. Could you explain to us what that might be so that we will understand what we are agreeing to, if we decide to vote for this bill?
Mr. Ernewein: Absolutely. I will make reference to the budget materials to ensure that I have captured everything.
There are a number of changes put forward in the 2007 Budget on the international tax front. One was the announcement that we had agreement in principle with the U.S. on most of the elements of an update to the Canada- United States Income Tax Treaty, including the elimination of withholding the tax on interest and related party or non-arm's-length interest. As part of that announcement, the 2007 Budget provided that we would extend the exemption for arm's-length interests — that is, to unrelated parties or non-residents — worldwide. It would not be limited to the U.S. Having done it with the U.S., we would propose — and this legislation includes measures to do this — an exemption from withholding tax on all arm's-length interest payments to non-residents. That was one change.
Another change was to expand our exempt surplus network. That is, the rules that apply to the taxation of Canadian multi-nationals on income they receive from foreign affiliates. Currently, we provide what is called exempt surplus treatment. That is, we impose no further tax on income Canadian resident multi-nationals receive in the form of dividends from their foreign affiliates, if those foreign affiliates are resident in a country with which we have a tax treaty. This budget expands that to say that we will provide that exempt surplus treatment to countries or other jurisdictions with which we enter into a tax information exchange agreement. With the launch of that and the enactment of this legislation, we hope, we will be able to both expand our exempt surplus regime and enhance the competitiveness of Canadian companies, In addition, we will have a better network of information exchange to ensure that people do pay their fair share of tax.
There was also funding announced for the Canada Revenue Agency for additional audit and enforcement. That is not part of this bill, but I mention it for the sake of completeness. Finally — and this references the Anti-Tax-Haven Initiative specifically — limits were proposed and included in this legislation on the deductibility of interest used to finance investments and foreign affiliates.
Specifically, the legislation in the bill before you proposes that Canada will not allow an interest deduction on funds borrowed and interest paid by Canadian firms to finance a foreign affiliate where there is a second deduction claimed offshore in respect to that same financing structure in another country.
One of the senators mentioned the so-called double dip. Deductions will not be allowed in Canada.
Senator Murray: What is the rationale for that?
Mr. Ernewein: There is a concern that, in principle, the double deduction is not appropriate. There is also a view that we want to do as much as we can to get our general tax rates down. The problem with double dips is that it does not matter how low rate our goes, anything above zero, with the opportunity to deduct the interest both here and in another jurisdiction or one or more other jurisdictions, will still mean there will be an interest claim made here as well. We feel we can and are in the process of instituting a competitive system. With that, we believe it makes sense to limit a firm's ability to deduct interest to one place. With our corporate rate getting lower than other countries, and all other things being equal, we believe that will lead to the interest deduction more naturally and more rationally being claimed in the other country where tax rates are higher.
Senator Murray: As you know, that is an extremely controversial measure, especially among those it affects.
Senator Di Nino: I wonder why.
Senator Murray: Quite a few commentators, economic writers, some financial writers and so on, have wondered aloud: What is in this for us? Why are we doing this? What business is it of ours if the company also gets a tax incentive in another jurisdiction? Do we not want our companies to be investing abroad in that sense, with the return it provides to the country? Are there other countries that have similar regimes?
Mr. Ernewein: In our investigations, with every example we could find in taking the survey, yes, there are other countries that allow double dips in some circumstances.
Senator Murray: Are there none that forbid it?
Mr. Ernewein: There are certainly those that impose limits — perhaps not across the board, but in certain circumstances. The minister gave a presentation before the Toronto Board of Trade in mid-May of this year. Included in the materials that he used for that presentation is discussion of a number of other major industrialized countries and some of the limits that they have. That is not to say that they have all gone or that any of them have been as direct as this proposes to be in eliminating the deductibility of the double-dip interest. However, it would be over broad to say that they all allow it without qualification as well.
We believe that we can build a better system by having a broader base and lower rates. It is a rather shop-worn expression, but with lower corporate tax rates across the board, we believe we can do a better job with this and reduce the number of special incentives.
Senator Di Nino: I have a question about the introduction of a mechanism to accommodate functional currency reporting. Is that about money laundering?
Mr. Ernewein: No, it is not. This is a matter in which firms calculate and satisfy their Canadian income tax liability. Some major public companies do not, for financial statement purposes, prepare their financial accounts using the Canadian dollar. They will use a foreign currency. In the situations we observed, the American dollar is their reporting or functional currency.
They have asked that we allow them to actually take that foreign, functional currency that they use for their own financial statement purposes and calculate their income for Canadian tax purposes. In the end, they will send us a cheque for the net amount in Canadian dollars. However, rather than convert all their amounts and statements to Canadian dollars, they will do it on the baseline or bottom line, if you will.
Senator Ringuette: The item introduced an investment tax credit for child care spaces. I suppose this is geared for businesses looking for an investment tax credit by creating child care spaces.
Mr. Ernewein: Yes, that is correct.
Senator Ringuette: Are you looking at a specific type of ownership of business to give this to?
Mr. Ernewein: It is for businesses. The full description is found on a couple of pages in the budget materials from pages 426 to 427. However, in general terms, it is an investment tax credit. It is up to 25 per cent of eligible expenditures for the cost of creating a child care space, to a maximum credit of $10,000 per child care space created.
Senator Ringuette: Is that within the workplace?
Mr. Ernewein: It is not required that it be physically part of the workplace. It can be a separate location.
Senator Ringuette: In the 2006-07 Budget, I cannot remember if it was a tax credit or on outright subsidy for businesses that created child care spaces in the workplace.
Did that not work as they were told, and they are now looking at another program to see if that program will work?
Mr. Ernewein: I will ask my colleague, Kei Moray, to fill in some the history. I have described to you the 2007 Budget proposal.
Kei Moray, Senior Chief, Business Income Tax Division, Tax Policy Branch, Department of Finance Canada: In 2006, the government allocated $250 million to encourage the creation of child care spaces.
Senator Ringuette: How many spaces were created?
Ms. Moray: They allocated the funds at that point. In other words, they booked the funds. Then they said that they would go out, consult and find out the best way to do this.
They did the consultations and, based on that, they concluded there was an interest on the part of businesses to create spaces. However, the idea of businesses creating child care spaces for employees was very new.
Senator Nancy Ruth: With respect, the unions have been around for decades.
Ms. Moray: We introduced this tax credit.
Senator Ringuette: Which one?
Ms. Moray: The child care spaces tax credit.
Senator Ringuette: The one proposed here?
Ms. Moray: The one in 2007, yes. We introduced that tax credit, and $250 million is being transferred to provinces in support of child care.
Senator Ringuette: You are talking of another angle of creating child care spaces. Actually, what you have just said to us is that the $250 million that was approved by Parliament in 2006-07 was not used in that year.
The program that was identified — and that many of us said would not work — did not take up any of that $250 million. Therefore, the government decided to give that $250 million, make another announcement, and give that $250 million to see if the provinces could create additional child care spaces.
Ms. Moray: I am sorry, I cannot remember. I would have to look again to see what year the money was applied. It was an announcement that money was being allocated. There were no details on the program. The government said that it would consult, get the parameters of the program, and the program was announced the following year.
Senator Ringuette: We were specifically told that that $250 million was for companies that wanted to create child care spaces in the workplace. That is written in the budget. That is written in the 2006-07 Budget.
Therefore, there were no takers on the program, so the $250 million was — as you said a few minutes ago — allocated to the provinces to see if they could create child care spaces.
Ms. Moray: There was no program for anybody to take up at that point in time. The program was introduced in the following year, in the 2007 Budget.
Senator Ringuette: Right now, this is the supplementary budget for 2007-08.
The Chair: This is the budget implementation.
Senator Ringuette: How much money are we talking about? How many child care spaces, and in which sectors are we talking about? Are we talking about companies that want to create workplace child care spaces or to start a private child care facility? I really want to know the details about this issue.
Ms. Moray: This tax credit for child care spaces is intended for employers who are not in the business of child care. It is for an employer who wants to help their employees by creating child care spaces intended principally for the use of their own employees; they are not in that business.
Senator Ringuette: Will those spaces be in or close to the workplace?
Ms. Moray: We do not have a restriction on the location of child care spaces. Ideally, they would be in the workplace. In some cases, there could be issues around why it would not be a good idea to have the child care spaces at the workplace, so we did not have that restriction.
Senator Ringuette: In reality, we are not specifically talking about creating new or additional child care spaces. Specifically, we are saying if an employer has an employee who is looking for a child care space and identifies one, then the employer will be able to invest $5,000, you said, per space, and it can be an existing space.
Mr. Ernewein: No, I do not believe, so. This is for the creation of new spaces. This is not by child care organizations, it is by employers not in the business of running child care operations. The spot does not have to be in the workplace, because that is sometimes not sensible or suitable. It is for the creation of new child care spaces.
Senator Ringuette: Who will be mandated to attest that it is an additional, brand new space?
Mr. Ernewein: The legislation itself will require it to be. If there is some doubt about whether it is a new space, then the Canada Revenue Agency could challenge entitlement to the credit. It will operate as our other income tax rules operate, where the rules will stipulate what is required, and taxpayers will have to demonstrate that they have satisfied those requirements.
Senator Ringuette: Is there a basic program that is already written toward this tax incentive?
Mr. Ernewein: We have the explanatory notes, and we can find those and draw the material to your attention. I do not have the citation right now, but I can do that.
Senator Ringuette: I would like that, please.
Senator Nancy Ruth: I need to be clear. This is a tax credit. It is not about anyone giving money for child care. It is a tax credit for businesses. An average child care space will cost $40,000. The tax credit is up to 25 per cent of that, that is, $10,000 only. That is what the program is about. Am I missing something that I should know besides that?
Ms. Moray: No. That is it.
Senator Chaput: Just to make sure that I understand, if a person wants to create a small business, and they want to go into child care, can they do that and rent a space in a school? A private business would be renting a space and then offering the services. Is that possible?
Ms. Moray: I am not sure I understood the question. Do you mean that they want to start up a business in the business of child care?
Senator Chaput: Yes.
Ms. Moray: No, they could not.
Senator Chaput: That is impossible.
Ms. Moray: Right.
Senator Chaput: You said $250 million is being transferred to provinces for this.
Ms. Moray: No.
Senator Chaput: Is that the previous item?
Ms. Moray: That was the allocation for supporting child care spaces.
Senator Chaput: However, that is gone and is not coming again. Am I correct?
Mr. Ernewein: In trying to answer Senator Ringuette's question and trying to be helpful, we have confused the issue. We have described the investment tax credit for child care spaces, which is one of the tax measures in this package.
The question was asked about an earlier measure in the 2006 Budget about funding for child care spaces, which at one point was thought to be provided for businesses directly. That did not seem to be the most efficient way to do it, and the decision was taken by the government to provide that funding for provinces for those purposes, or so I understand. This is about a separate and additional measure for child care spaces, a tax credit for businesses.
Senator Chaput: Thank you.
Senator Ringuette: The bottom line is that, in regard to this issue, the previous attempt did not work; and this one will not either, coming from a mother.
Senator Nancy Ruth: Following up from Senator Chaput, are there any monies that are special incentives for anyone who wishes to start a child care business?
The Chair: In this bill?
Senator Nancy Ruth: Actually, anywhere. I am curious.
The Chair: Time is becoming a factor. We should try to restrict our questions to this bill.
Ms. Moray: Not that I am aware of, but I do not know.
Senator Ringuette: My next issue is in regard to another item, and bear with me, because this is my last question on section 3. It provides certain tobacco processors that do not manufacture with relief from the tobacco manufacturers' surtax. Can you explain that to me? I am a smoker. I do not hide it.
Senator Di Nino: Are you looking for a tax credit?
Senator Ringuette: I do not process it, but I would like to know why we are giving people who are not manufacturing tobacco product the same relief bracket as the people who are producing tobacco products.
Mr. Ernewein: A release was put out by the Ministry of Finance on this measure, and it was referenced in the budget. That is how it finds itself in this Budget Implementation Act.
Essentially, and in general terms — because I do not want to get the details wrong — a surtax applied to tobacco manufacturers was introduced in 1992 or 1994. One issue that has arisen is that it captures more than a tobacco manufacturer. It captures someone who is involved in a preliminary process in relation to the handling of tobacco. They are not manufacturers. This seeks to narrow the scope slightly of the existing manufacturers surtax so it applies only to manufacturers.
Senator Ringuette: Does this have anything to do with trying to stop the illegal manufacturing and sale of tobacco products that we saw in the early 1990s? It seems to be regaining strength and volume in certain regions of the country and in certain illegal border crossings. There are growing concerns about illegal tobacco manufacturing, distribution and sales, especially on our Native reserves.
Mr. Ernewein: I take the senator's question, and I do not want to put it aside, but this specific measure does not have much, if anything at all, to do with that particular issue.
The manufacturers surtax was introduced at a time when taxes applying to cigarettes and other tobacco products were reduced in an attempt to curb smuggling. Instead, this tax applying to the manufacturers themselves was put in place as part of that measure. As I say, this particular change is to better target the application of the tobacco manufacturers surtax. It does not bear upon the issue you have raised.
Senator Ringuette: Is there someone in your department working on the issues I have raised?
Mr. Ernewein: We are aware of it, certainly.
The Chair: However, it is not in this bill.
Mr. Ernewein: It is not in this bill.
The Chair: Honourable senators, time is becoming a factor. It would be helpful for us to have an appreciation for some of the other parts of this bill. That is part 3, income tax.
Mr. Ernewein, you have done a wonderful job. Unfortunately, I have your name down as the one to help us with disability savings. Is this similar to an RSP program for the disabled?
Mr. Ernewein: Yes, it does. It is a registered disability savings plan. The closest parallel would be the registered education savings plan. There are important differences between them, but it shares some attributes. There is a contribution to a plan up to $200,000 in support of someone with a disability. There is also a grant component from the government and a bond component.
The Chair: If I had a disabled child, could I create a fund for the child and take the deduction by putting money into that program?
Mr. Ernewein: It is not a deductible contribution. As I say, it is similar to a registered education savings plan where money is put in, but it can grow tax-free.
The Chair: Other people could put money into the program in addition to the disabled person, who may not have any income to put in there.
Mr. Ernewein: Indeed, it is often thought to be the case that perhaps the parents would use this as a savings plan to look after the disabled child's needs later on in the parents' life, and possibly the grandparents.
The Chair: Is there anything further on part 4, colleagues?
Senator Murray: There is the Canada Disability Savings Grant, which is an authorization for the minister to pay a grant into yours or my disability savings plan. The grant is to be paid on any terms and conditions that the minister may specify by agreement between the minister and the issuer of the plan. That would be a financial institution, one assumes. I am glad to see that, I guess.
The Chair: Is that similar to the 20 per cent top-up?
Senator Murray: I do not know what it is.
Mr. Ernewein: We have a colleague from Human Resources and Social Development Canada.
Caroline Weber, Director General, Office for Disability Issues, Human Resources and Social Development Canada: This is a little tricky because it is a tax-assisted savings vehicle, so it requires amendments to the Income Tax Act. Also, because the government wants to make contributions to these plans, it requires a statutory base. These will be long- term savings vehicles, so we want to ensure the money is there for the government to make contributions.
Senator Murray: Are these contributions to the individual plan?
Ms. Weber: Yes. The Canada Disability Savings Act is the statutory vehicle so that the government can make contributions to encourage people to put money into these plans. Similar to the RESPs, there is a bond component. If people are in the low-income bracket, we will put money into the account for them. They do not have to put any money into it. Again, similar to the RESPs, the grant component is a matching contribution with limits, of course. If you want me to read out what those rates are, I can do that for you.
Senator Murray: Has money been set aside in the estimates somewhere for this?
Ms. Weber: Yes.
Senator Murray: How much has been set aside?
Ms. Weber: The amount is $150 million per year; that is my recollection.
The Chair: Thank you. That is helpful. Are there any other questions on that, honourable senators?
Senator Di Nino: It is a great program.
The Chair: We will move on to part 5, financial incentive relating to provincial capital tax. Some provinces tax capital, and this is an incentive to wean them off that. Is that correct?
Mr. Ernewein: That is right, Mr. Chair. The federal government has eliminated its own general capital tax as of 2006. We believe the capital taxes can pose a costly burden on corporations, and it is sensible for provinces to try to eliminate their capital taxes as well.
We have sought to put our money, or our taxpayers' money, where our mouth is and provide a short-term incentive to help provinces eliminate their capital taxes as well; essentially give the tax savings we get back from the deduction of capital taxes to the provinces for a period of time.
This proposal would authorize the measure in the budget legislation, the transfer or payment to provinces to eliminate their capital taxes. Thus far, Ontario and Quebec have responded favourably to this by eliminating their capital tax. Manitoba has announced that it will, subject to budget constraints. We are hopeful that at least three provinces will get a 17 per cent credit. That is assessed to be the value of the tax savings to us until 2011.
The Chair: Those provinces that are not taxing capital will quickly begin doing so in order for them to sign on.
Mr. Ernewein: No, we have tried to guard it so that there is not an incentive to put one in place to repeal it. It is only for those who have it in place and do away with it.
The Chair: In part 6, can you tell us what the Bank for International Settlements is?
Sandra Dunn, Chief, Financial Sector Stability, Financial Sector Division, Financial Sector Policy Branch, Department of Finance Canada: The Bank for International Settlements itself is an international financial organization that was formed in 1930 by treaty. It is basically a bank for central banks. Canada is a member by signature to the treaty.
The Chair: Is this similar to the World Bank or an international development bank?
Ms. Dunn: It does not do development assistance. It essentially fosters discussion about financial stability, a type of policy forum. It also performs transactions for states and central banks. It deposits foreign exchange reserves on behalf of other central banks, et cetera.
The Bank for International Settlements can also act as a trustee or agent for certain financial transactions, and that seems to be the basis for certain legal risks lately. The bank is finding that it is the subject of certain nuisance lawsuits. For example, in a case where bondholders want to get at Argentina's money, they will sue the Bank for International Settlements.
The Chair: Are there any other questions on this provision that creates immunity for the Bank for International Settlements? No.
Part 7 is the Pension Benefits Standards Act, phased retirements. Does someone want to give us a brief understanding of this? Mr. Grace, are you here?
John Grace, Specialist, Pension Policy, Private Pension Plans Division, Regulation Sector, Office of the Superintendent of Financial Institutions Canada: Yes. This part contains proposed changes to federal pension legislation to permit sponsors of federal pension plans to offer the types of phased retirement arrangements that will be permitted by changes to tax rules that are contained in other parts of this bill.
Specifically, the tax rule changes would permit an employer to offer an arrangement that involved the payment of a pension to an individual, while at the same time they would continue to work and accrue pension benefits on the same pension.
The Chair: Is that on the same pension plan?
Mr. Grace: Yes, on the same pension plan, a different plan of the same employer or a plan of a related employer; this is currently not permitted by tax rules. The changes in this part are due to the pension legislation to allow that to happen.
The Chair: Do senators have any questions on that? It sounds like a good incentive to keep people working.
With respect to part 8, advanced market commitment, this is a provision to have commitment toward future vaccines to create a market or an incentive for research and development, I believe. There is no one on my list who can tell us anything about that. I will go to trusty Mr. Ernewein to help me out with this.
Mr. Ernewein: Your faith is misplaced. Ask if there are any questions, and if there are, we will get answers to them.
The Chair: Are there any questions, honourable senators? The incentive they are trying to create is fairly straightforward.
We will move on to part 9, Canada Oil and Gas Operations Act amendment and National Energy Board authority in relation to pipelines. Does someone want to give us a quick overview of this?
Richard Graw, Legal Counsel, Department of Justice Canada: The Canada Oil and Gas Operations Act regulates the exploration, development, production and transportation of facilities in the Northern territories and the offshore not covered by the accord acts.
We have discovered that it was not necessary until recently with the Mackenzie Gas Project starting to come on stream. We have noticed that, unlike the National Energy Board Act where the National Energy Board can regulate — not only approve the facilities but regulate the tolls and tariffs and access to those interprovincial pipelines — there was an absence of regulatory power under the Canada Oil and Gas Operations Act. The board could approve those facilities but did not have the regulatory authority to regulate the operational aspects of them.
Extending this authority to the National Energy Board means shippers on those new pipeline facilities will have fair access to the pipeline and regulated tolls and tariffs.
The Chair: Does anyone have any questions? I do not have any background on this at all.
Senator Ringuette: I have one question. Is the Canadian taxpayer the owner of this, in order for us to regulate fees, access and operation?
Mr. Graw: Right now, in order to have a pipeline, one has to be approved by the National Energy Board. Because they are granting the company that owns that, such as Transcanada Pipelines, a near monopoly power with so much capital involved, there is great potential for misuse of that position in the industry.
The Government of Canada has the National Energy Board regulate those facilities. Under the Canada Oil and Gas Operations Act, there was no corresponding regulatory power for the National Energy Board to ensure that everyone who uses those facilities will not be subject to unjust or discriminating tolls by the owners of the pipelines. This fills the gap that, under the Canada Oil and Gas Operations Act, does not exist under the National Energy Board Act. Now, they would be paired up together and have a similar authority.
Senator Ringuette: In reality, this should not be in this bill. It has nothing to do with taxation.
The Chair: There is much that has nothing to do with taxation in here. This is everything that can be imagined. It is thrown in as these omnibus bills. That is how we can make mistakes if we do not have these sessions to find out at least what they are related to.
Is there anything further on the Canada Oil and Gas Operations Act? Seeing nothing further, I believe we have done part 10. Unless there is something further, we can thank Ms. Bérubé for being here.
We will be dealing with part 11 tomorrow. We have had some discussion. Our first session tomorrow is on equalization.
Senator Murray: At what time?
The Chair: From 9 until 10:30.
Senator Murray: I will not engage with the officials. We had a briefing already. We do not need any more information; at least, I do not. It is the construction that one puts on the information that does not belong here but rather in debate.
I will ask a question, however, about the agreement that was announced by Prime Minister Harper and Premier Macdonald. That was in September, was it?
Mr. Vermaeten: It was the October 10 agreement.
Senator Murray: I am sorry, yes. Part of that agreement was that there would be a panel of three people appointed by each party, and a third to be agreed upon by the two parties as chair, to look into defining the amount of the Crown's share. Am I using the right terminology here?
Mr. Vermaeten: Basically, yes.
Senator Murray: Where is the panel? I have not heard much. Have they been appointed? Who are they?
Mr. Vermaeten: Progress is being made on the panel. There has not been an official announcement made. The panel will be looking at how to interpret the legislation that has been in place for some time.
Senator Murray: Nova Scotia expects that the panel will put a value on the Crown's share.
Mr. Vermaeten: Yes, they will be looking at the value; but given that the legislation would apply not only to existing projects but also future projects, the primary purpose is to figure out how to go about calculating projects.
Senator Murray: There is a deadline for this panel to bring in its report. Do you remember what that is?
Mr. Vermaeten: I believe the guidelines were that they would report by March 31, 2008.
Senator Murray: They are taking their time.
Mr. Vermaeten: As well as the panel members looking at it, work is ongoing among the officials — both the federal and Nova Scotia officials.
Senator Murray: I would like to see the panel in place. Thank you, Mr. Chair.
The Chair: Part 11, federal-provincial fiscal transfer equalization, we will be dealing with tomorrow morning. Unless there is something further, I propose we move on to part 12, Canada Education Savings Act. I understand that allows for the collection of social insurance numbers, privacy-type legislation, but maybe you could explain it to us.
James Bandola, Policy Analyst, Operational Policy and Legislation, Human Resources and Social Development Canada: It is explained in annex 5 of the budget. It is just three sentences; it is a housekeeping item. The Canada Education Savings Grant, CESG, and Canada Learning Bond, CLB, programs are administered by Human Resources and Social Development Canada, HRSDC, while the Canada Revenue Agency, CRA, administers registration auditing and compliance of RESPs. Both organizations have authority to share information necessary to ensure the integrity of the tax system and the CESG and CLB programs. This piece of legislation clarifies HRSDC's authority to collect on behalf of the CRA any information that the CRA requires for purposes of administering RESP tax provisions.
The Chair: Are there any questions on that?
In part 13, we have talked about public-private partnerships, P3s; that is the $5 million a year to set up the office and create the incentives for two years. Is there anything further that senators would like to discuss on that initiative?
Senator Murray: I could find this out by an access to information request, I suppose, but I do not feel like paying the $5, so I will ask now.
Will the P3's come under the Department of Finance?
Francis Bilodeau, Officer, Sectoral Policy Analysis, Economic Development and Corporate Finance, Department of Finance Canada: The budget says it will be a joint effort by Transport and Finance. The final decision has not yet been made on where the P3 office will lie.
Senator Murray: Has the Department of Finance or any other department or agency that you are aware of done an analysis of the success or otherwise of this P3 business in the provinces where they have been attempted?
Mr. Bilodeau: The provincial P3 offices are fairly new, so there has not been an in-depth analysis on Canadian P3s. The U.K. treasury did a more in-depth study of the success of their own P3s and found them to be successful.
Senator Murray: The projects were successful?
Mr. Bilodeau: They provided better on time, on budget results.
Senator Murray: I have had the impression, perhaps wrongly, that they have had mixed success in the Canadian provinces where they have been tried and that, in at least one case, they have backed away. If there is an analysis, I would like to see it. The government could provide us with this, if they have such an analysis.
Mr. Bilodeau: To the best of my knowledge, there is not an in-depth analysis of that per se.
Senator Murray: Is there a superficial analysis?
Mr. Bilodeau: At the official level, some cases have been looked at, but there is no paper produced per se as an official analysis of P3 projects.
The Chair: Are there any further questions on P3? Part 14 brings us back to the income tax and GST. We have touched on the various issues — small business and the reduction of GST from 6 per cent to 5 per cent. That has all been commented on earlier.
The only outstanding issue that we have not dealt with extensively will be dealt with tomorrow morning.
Before all of the members of the various government departments leave, is there any area, honourable senators, which you feel that we have not delved into in the depth you would have liked? Do you want to invite anyone back tomorrow, or are we content to thank them?
Senator Ringuette: Just a friendly reminder that tomorrow morning when we reconvene, I hope to have the information that I have requested this morning, so I can look at Bill C-28.
The Chair: Thank you. Mr. Menzies went away with that information.
On behalf of the Standing Senate Committee on National Finance, thank all of you very much for being here. It has been a long afternoon but it has been very helpful for us. Thank you for the good work you are all doing.
The committee adjourned.