Proceedings of the Standing Senate Committee on
National Finance
Issue 18 - Evidence - Meeting of December 3, 2009
OTTAWA, Thursday, December 3, 2009
The Standing Senate Committee on National Finance, to which was referred Bill C-51, An Act to implement certain provisions of the budget tabled in Parliament on January 27, 2009 and to implement other measures, met this day at 10:47 a.m. to give consideration to the bill.
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.
Honourable senators, on January 27, 2009, the Government of Canada brought forward its budget. This was immediately followed by the introduction of Bill C-10, the Budget Implementation Act, 2009, which this committee considered in March and continued to examine, following the bill's adoption. It was a post-bill study, because it was important to have that bill passed expeditiously before we had fully studied it. We tabled a substantial report with recommendations on June 11, 2009.
With the passage of Bill C-10, much of the government's program was implemented. However, some aspects required further legislative action. A second budget implementation act, Bill C-51, was introduced in the House of Commons on September 30 of this year, and was ultimately referred to this committee yesterday.
This morning, we welcome a number of government officials who will be helping us understand the provisions of the bill. We propose to deal with the different clauses and parts of the bill and we have different witnesses who will help us understand the policy behind them. When we go through clause-by-clause consideration, we will be looking at the individual clauses of the bill. We want to understand what is in the bill.
Without any further ado, I will direct you to Bill C-51 and to Part 1, entitled Amendments Related to the Income Tax Act. My recollection is that this will deal with home renovation, first-time home buyers and working income tax benefits.
[Translation]
We will start with Mr. Gérard Lalonde, Director, Tax Legislation Division, Tax Policy Branch, Department of Finance Canada; Mr. Tim Wach, also from the Tax Policy Branch; and Mr. Jovanovic, Senior Chief, Savings and Investment Section. Mr. Lalonde, the floor is yours.
[English]
Gérard Lalonde, Director, Tax Legislation Division, Tax Policy Branch, Department of Finance Canada: I have the great pleasure to be here today to speak on Bill C-51. A large part of that pleasure is because, unlike previous occasions where I was responsible to do most of the talking on the contents of the bill, today I am joined by Tim Wach, who has joined us from Gowling Lafleur Henderson, a prominent Canadian law firms. He is with the Department of Finance Canada for a 20-month period on an executive interchange.
Tim Wach's title is Director, Legislative Development, Department of Finance Canada. It goes on much longer than that, but for the purposes of this committee meeting, I think that should be enough. This will be the first bill in whose development Mr. Wach has had the opportunity to participate. I look forward to having him take some of the weight off my shoulders in the future, for this and subsequent bills.
With that, I would like to introduce Mr. Wach and also Mr. Jovanovic, Senior Chief, Savings and Investment Section, in our Personal Income Tax Division. I turn the floor over to Mr. Wach.
The Chair: Mr. Wach, congratulations on your appointment. We look forward to working with you on other bills as well. This particular committee deals with the machinery of government: legislation, estimates and budget implementation.
Tim Wach, Director, Legislative Development, Tax Policy Branch, Department of Finance Canada: Thank you very much. It is a pleasure to be here. My first couple of months with the department has been an interesting and exciting time. As I refer to it, it is my second "tour of duty," because I actually worked for Mr. Lalonde 20-plus years ago when I was a wee lad, fresh out of the bar exams.
I am not sure exactly how you would like to go through matters. As was pointed out, Part 1 of Bill C-51 deals with the Income Tax Act in terms of legislative changes as well as the related changes to the Income Tax Regulations. They deal with the three principal outstanding measures from last year's budget: The Home Renovation Tax Credit, the Working Income Tax Benefit and the First-Time Home Buyers' Credit.
There are several different clauses in the bill that deal with the implementation of the HRTC and the First-Time Home Buyers' Tax Credit, and with the changes to the Working Income Tax Benefit. Many of the changes are consequential changes. As with any change to the Income Tax Act, you make a change in one place and it ripples through the act and there are other items that have to be amended. For example, there are a number of clauses that deal with ordering of the claiming of credits and different credits by a taxpayer. Many of the clauses are consequential.
There are a number of new definitions introduced into the act. Those are found in clause 4, which is probably the clause of principal interest with the most substantive content to it. It includes the various definitions relevant for the Home Renovation Tax Credit as well as the specific provisions that provide for the claiming of that credit and the First-Time Home Buyers' Tax Credit.
That is the overview. I do not know if you would like me to take you through each particular provision or simply respond to questions.
The Chair: Why do you not try to give something half way between? We do not need you read each of the clauses, but honourable senators will be asked to look at items such as I see on in clause 4(3) on page 5, where we have "A x (B - $1,000)" and that kind of thing.
We need some reassurance from you that this is achieving the policy statement that we saw in the budget. Our role is to review the implementation in legislation of the policy statement that has been made. We need some reassurance that is achieving that, no more and no less.
Mr. Wach: I can take you through the salient, most important principles.
The Chair: As I see, Part 1 goes from clause 2 to clause 17 on page 17, and that is the part that we are dealing with at this time; is that correct?
Mr. Wach: That is correct. As I said, clause 4 is the most important one because it outlines the principal criteria, for example, for qualifying for the Home Renovation Tax Credit. It has the various definitions, including that of an "eligible dwelling."
Perhaps, before we get into the minutiae, I should start with the bigger picture, which is subclause 4(3), which is found on page 5 of the bill.
As you pointed out, that is "A x (B - $1,000)." That provides for the basic credit, which is 15 per cent of the amount that a taxpayer incurs in respect of eligible expenditures. That is what variable A is; that will be your 15 per cent for determining the amount of the credit. The "(B - $1,000)" outlines the second part of the computation of the credit, B being the amount that the taxpayer spends on eligible expenditures, up to a maximum of $10,000. That is, B is the lesser of $10,000 and the total of all qualifying expenditures. You take that and subtract $1,000, because the credit is available only for expenditures in excess of $1,000. You multiply the difference by A, which is 15 per cent to reach the amount of the credit. This would be up to $1,350, which is the maximum available to a taxpayer who has expended the maximum amount.
I will back up a bit and explain why we use 15 per cent. That reflects the tax rate applicable at the federal level on the lowest marginal tax rate — the lowest bracket — applicable to an individual. Every individual who incurs qualifying expenditures, whether in the lowest bracket or the highest bracket, gets the same benefit from having incurred that expenditure.
This has been crafted as a credit so that everyone, whether lower income or higher income, or lower marginal tax bracket or higher marginal tax bracket, all get the same benefit from having incurred the same expenditure. This is opposed to, for example, a deduction, which generally comes off the highest amount of income the individual has. With a deduction, those who are in higher tax brackets get greater benefits.
The Chair: I think we understand that. It is a 15 per cent from $1,000 to $10,000. The first $1,000 receives no credit. After that, up to $10,000, it is 15 per cent.
Mr. Wach: Correct.
The Chair: Does that achieve that?
Mr. Wach: That little bit of mathematical magic achieves that, yes.
That is really the most important part of the Home Renovation Tax Credit. The provisions earlier in clause 4 outline an "eligible dwelling" as one that is occupied by the taxpayer, the taxpayer's spouse or common-law spouse. "Eligible expenditures" are outlined and I can give you some idea of what "eligible expenditures" are, if you would like.
The Canada Revenue Agency has done a very good job of making this type of information available to taxpayers, so they can get the guidance they need. "Eligible expenditures" have to be of an enduring nature, what we in the tax world call "capital" in nature as opposed to "income" or "recurring." Some of the examples on the Revenue Canada website, with which we would concur, are things like renovating your kitchen, your bathroom or your basement; putting in new flooring; acquiring a new furnace; installing permanent home ventilation systems; re-shingling your roof; and things of that nature.
Things that would not qualify would be things like furniture, household appliances, tools, carpet cleaning and housecleaning. I will back up for a second. The purchasing of tools is interesting because the Home Renovation Tax Credit is available whether you go to a third party and have that person, a contractor, for example, come and do the work for you, or whether you are a handy person and do it yourself, go to Rona, Home Depot or Canadian Tire and acquire the necessary goods. In terms of the qualifying expenditures, buying the hammer to do the work will not qualify. Buying the linoleum to redo your kitchen floor will qualify.
The Chair: I notice at page 8, "Subsection (1) applies to the year 2009 and subsequent tax years." My understanding is that this is for one tax year?
Mr. Wach: That is correct. You would find that in the definition of clause 4.(1), in the paragraph dealing with the "eligible period." That is expenditures incurred after January 28, 2009, which relates to the budget date; and before February, 2010. That reflects the temporary nature of the Home Renovation Tax Credit.
The Chair: Do you want to finish up on the other items in Part 1 and then we will go to question and answer dialogue on that particular part?
Mr. Wach: If you would like, I can do exactly that.
Also in clause 4, on page 6 now, in what will be section 118.05 of the Income Tax Act, you will find the relevant definitions for the first-time homebuyers' credit. If you go to subclause (3) on page 7, you will find the provision that provides for the claiming of the credit by the taxpayer. Again, there are some mathematical gymnastics to get to the desired result. Again, we are using the 15 per cent tax rate. You multiply the $5,000 number given there by 15 per cent and that gives you the $750 credit that is available for a first-time homebuyer.
The most important definition in this set of changes is that of a "qualifying home." Paragraph (a), subparagraph (ii), requires that the individual claiming the credit did not own a home in the preceding four calendar years. That is the line that has been drawn in terms of determining when this is a first-time home for a qualifying individual.
The Chair: For how many years does that apply?
Mr. Wach: It is a one-time credit.
The Chair: Is it the same time frame that we just looked at?
Mr. Wach: No; this does not have a sunset on it.
The Chair: That is page 8, line 16, where I see "Subsection (1) applies to the 2009 and subsequent taxation years?"
Mr. Wach: Correct.
The other principal change is to the Working Income Tax Benefit. In case it is not obvious to everyone, that is an existing provision in the act. It is intended to ease the transition for people moving into the workforce and off social assistance. When someone makes that move, they not only face income tax on the income that they earn from their newly acquired employment, but they lose their social assistance. When you look at the combined impact of losing social assistance and the tax on income, it results in what economists refer to as the "welfare wall." In other words, you get to a point where the individual making the move says, "Why am I making this change? Why am I going out and incurring all the impact on my personal life," for example, figuring out how to deal with daycare for their children, "when I am going to be hitting a high effective tax rate by giving up my social assistance?" The Working Income Tax Credit has been there for some years. The changes from the Budget 2009 are to push out and cushion, to a greater extent, the impact of hitting that welfare wall.
In Canada's Economic Action Plan — Budget 2009, at page 113, Chart 3.1 is helpful in understanding how this affects individuals and how the changes that are proposed or were proposed in the budget are contained in Bill C-51. It shows how they affect the impact of the tax, in particular in this case, on a single individual moving into the workforce.
The changes will amend the Working Income Tax Benefit to provide a credit up to 25 per cent, it is currently 20 per cent, on each dollar of income earned in excess of $3,000, to a maximum credit of $925. That is an increase from the current level of $522 for individuals. The credit will go up to $1,044 for families. It also reduces, by 15 per cent, the outer end reduction in the credit so that, as proposed, it will apply to income in excess of $10,500, which is up from the current $9,923. Again, this will smooth the impact of the move into the workforce and the impact of tax on the individual doing so.
The Chair: We will go to questions now.
Senator Di Nino: For clarification, I think you made a comment that the maximum credit for an individual is $925. I may have misunderstood you, but I think you said that for families it goes up to $1,044. My notes indicate that for families it goes to $1,680.
Mr. Wach: Sorry, it is up $1,680 from $1,044.
Senator Di Nino: There is a disability supplement component to that as well. Can you take a moment and speak on that as well, please?
The Chair: That will be helpful. Thank you for that clarification.
Mr. Wach: The credit it is greater and more extensive for individuals who qualify for the disability tax credit. Currently, the credit is at 20 per cent, and that will be moved up to 25 per cent for income earned in excess of $1,150, down from $1,750. The maximum credit for someone so qualifying will go up to $426.50 from the current $261.
The Chair: Thank you for that clarification. Before we go to questions, I want to ask about one thing in the income tax regulations. We have several lists of various regions of different provinces. To what do those relate?
Mr. Wach: That is a good question. Those relate to something that we have not discussed this morning, namely, the provision in the act that permits farmers to claim certain deductions. In the past, these deductions have been available where they have faced drought conditions, and, as a result of those drought conditions, have been forced to sell all or part of their breeding herds. The deduction allows them to defer the tax impact of those sales into further years. The intent is that if drought conditions reverse, as everyone hopes and expects they will, the farmers will replenish their breeding herds and be able to offset the tax impact that would have arisen in the earlier year when they sold some of their breeding herd. It will offset the income inclusion from the earlier year and the deduction that would be available from replenishing their herd in the later years. Bill C-51 extends this treatment to farmers in designated regions who have suffered as a result of excessive moisture or floods. It provides the same treatment for similar impacts, but at the opposite end of the climatic spectrum.
The regulations specify the regions that qualify for this type of treatment, whether because of drought or because of excess moisture, and the regulations provide the outline. We do not set those because they are done by another department.
Mr. Lalonde: Agriculture and Agri-Food Canada is responsible for that.
Mr. Wach: Yes, Agriculture Canada determines the regions that qualify because the program is not available generally from coast to coast.
The Chair: That is only for farmers of breeding stock who experience drought or flood conditions. Is that correct?
Mr. Wach: Yes.
The Chair: They sell their breeding stock and do not have to pay tax that year, provided they replenish their stock after the emergency is past.
Mr. Wach: That is correct.
The Chair: I do not mean to put some of these points in layman's terms but it is helpful to confirm that I understand your comments. Is that all we are to find in Part 1 of the bill?
Mr. Wach: That is the entirety, yes.
The Chair: Honourable senators, I propose that we deal with this part and then bring forward other witnesses to help us with other areas of the bill.
Senator Merchant: I have a question on the explanation you gave for replenishing the stock. Is there a time limit?
Mr. Wach: Yes, it is within a particular taxation year. The assumption is that the drought or excessive moisture will arise in one year, so farmers face the condition in a particular year. This works because farmers generally operate on a cash basis accounting system. If they sell some of their herd, they have to recognize all of the proceeds as income and pay tax on it. That means they have much less in the bank for the purpose of replenishing their herd the following year if circumstances change. The assumption is that conditions will change. If they do not, that region may be prescribed again the next year, in which case they would be able to defer tax payments an additional year. Hopefully that will not be the case but it is part of the system.
Senator Merchant: Thank you for the clarification.
Senator Ringuette: I have a few questions, beginning with the Home Renovation Tax Credit (HRTC), at page 3 and forward. Why have we specified the items that are not to be included in the program? I understand why items such as home entertainment, household appliances, recurring or routine maintenance and repair are not being included. However, who will determine what work is recurring or routine repair? One could say that painting the windows of a house is a recurring thing, but that depends on the extent of the painting that has to be done. Who will determine precisely what qualifies?
Mr. Wach: The Canada Revenue Agency will determine the answers to such questions as they typically do in assessment and audit procedures. These types of distinctions are not unusual in the income tax world. Businesses face them all the time in determining what they can deduct as an expense of earning income for that particular year and what is capital in nature and must be amortized or depreciated over a number of years. On its website, the CRA has done a good job of guiding taxpayers on what qualifies for the tax credit. Having taken a look at it, I think they have done a good job in terms of reflecting what the courts have told us traditionally are income expenses or capital expenditures. It is admittedly a little different because we are out of the income-earning milieu, if you will, but the same kinds of principles apply.
Senator Ringuette: Is it usual for the CRA to provide such details, guidelines and interpretations of legislation before it is enacted?
Mr. Wach: It is a little bit unusual but, in this case it is appropriate, in particular because the tax credit is time- limited and taxpayers desire to take advantage of it as soon as possible. To the CRA's credit, they moved early and quickly on this to give taxpayers guidance.
Senator Ringuette: It is highly unusual for a department to move ahead with guidelines to a program that technically does not exist because the bill has not passed Parliament. It is also highly unusual to spend advertising dollars for a program that does not exist. How much money has the federal government, whether Industry Canada or any other department, spent on advertising on this non-existent program?
Mr. Wach: I cannot answer that question. I do not know whether anyone at the Department of Finance Canada can answer that question because we have not been involved in that.
The Chair: Can you tell us who could answer that question?
Mr. Lalonde: We could go back to our communications and conferences people to ask whether they have the figure for the overall advertising campaign to promote the Home Renovation Tax Credit. I will clarify a couple of things, if I may.
It is unusual, although I might not say highly unusual, for the CRA to respond so quickly in providing guidance to taxpayers on various tax issues. It takes time to do these things generally but the Canada Revenue Agency has responded quickly because it is a time-limited program and taxpayers want the information.
The document released yesterday, Canada's Economic Action Plan A Fourth Report to Canadians, mentions in various places that the Canada Revenue Agency has received a large number of hits on their website by people seeking information on the HRTC. As to whether the response of the CRA has been highly unusual, it is normal for the CRA to provide information and guidance to taxpayers, not unusual. To be out of the gate so fast in this particular case is different, but it is also highly appropriate because of the time-limited nature of the program.
Senator Ringuette: All things being equal, I do not understand why the government was in such a hurry to pass Bill C-10, which authorized $52 billion in buyback to provide liquidity to our financial institutions. Yet, it has taken 10 months for the Home Renovation Tax Credit, which has a maximum value of $1,300, to pass through Parliament. There is certainly an imbalance there with regard to helping the few rather than helping the many.
I have two other questions on the Home Renovation Tax Credit. Estimates must have been done on this program. What was the estimate of how many homeowners would take advantage of this tax credit, and what is the estimated total cost for this program?
Mr. Lalonde: I would like to respond to some of the issues you raised earlier about the timing of the bill and why it took 10 months to get a tax credit of only a maximum of $1,350 per household to this stage. It is true that that is the maximum for that particular measure. If you look in Annex 5 of Canada's Economic Action Plan — Budget 2009, you will see that the Home Renovation Tax Credit, far from being a minor amendment to the Income Tax Act, produces a cost of some $3 billion in terms of federal revenues. That is a large amount, and it was important to ensure that the department and the government get this right.
For example, it is not hard to understand the renovations that a conventional household might do, but not every household is conventional. Some households are condominiums. What do you do when, for example, the roof of the condominium is repaired? How would you determine what the credit should be? Would it be for only the people in the condominium units that are directly underneath that roof, in the case of a high-rise building? They are the ones who will not get rained on, but that is not the way condominiums work. They spread the cost of such capital repairs among all the condominium owners, and special rules had to be put in for that.
There are other situations where people do not own the unit but rather own a share in a cooperative organization that gives them the right to occupy a unit. What do you do in that case? What do you do with people who occupy homes that are held in trust for them? What do you do with communal organizations such as the Hutterites in the West? They have additional circumstances that must be taken into account.
We like to pride ourselves at the Department of Finance on the legislation we produce, but we certainly are not all knowing. In the weeks and months following a budget, it is often helpful to get taxpayer input, especially when you are developing something brand new. It is not that hard to modify the Working Income Tax Benefit, for example, by changing the numbers. That is easy. When you are manufacturing a whole new tax credit, it is not always that easy, and the parameters are sometimes difficult to set out.
In that context, the first few months after the budget were very important. The House of Commons does not sit in the summer, so this bill was tabled early in the fall and has worked its way through the House of Commons and is now here at your committee on, I would suggest, a timely basis.
Senator Ringuette: I appreciate all your comments with regard to my earlier remarks, but my two questions were: How many households, or units, if you want to take into consideration condominiums, co-ops and so forth, has it been estimated will receive the renovation tax credit; and what is the estimated cost?
Mr. Lalonde: In answer to the second question, it is about $3 billion, as I mentioned.
Mr. Jovanovic can respond to the number of households.
Miodrag Jovanovic, Senior Chief, Savings and Investment Section, Department of Finance Canada: I can provide a bit more detail. Based on official Statistics Canada data, it is estimated that about 4.6 million Canadian families will benefit from the credit. That is about one half of owner-occupied households in Canada.
Senator Ringuette: You are saying that half of Canadian homeowners will participate in this program and will receive a tax credit under it?
Mr. Jovanovic: Yes. The other half, presumably, do not spend more than $1,000.
Senator Irving Gerstein (Deputy Chair) in the chair.
The Deputy Chair: I am Senator Gerstein, deputy chair of the committee. As Senator Day has excused himself for a few moments, I will occupy the chair until he returns.
Mr. Lalonde, am I correct in assuming that implementing all the measures in any budget always requires multiple pieces of legislation, particularly when you have a very complex situation like the HRTC? It was discussed and voted on as part of the main budget debate. Is the government following the usual procedure for implementing a measure such as this?
Senator Ringuette: To that you have to say "yes."
Mr. Lalonde: Yes, with one caveat. You have asked whether that is always the case. I can go back almost 28 years, but not to the beginning of the introduction of the income tax system in my personal experience. I will not state that it is always the case, but in my experience it is very common.
Senator Di Nino: That was a tough question.
You have mostly answered my first question. For clarification, I have an addition. You talked about different housing units such as condos, co-ops and communal buildings. Would those who own property on leased lands be eligible for credits of this nature?
Mr. Lalonde: If they own the housing unit, yes.
Senator Di Nino: There are quite a number of people who have 99-year leases. That would be covered as well?
Mr. Lalonde: That is correct.
Senator Di Nino: With the global downturn in the economy, the government brought these measures in to try to stimulate economic activity that would be of benefit to our country and also to help Canadians achieve objectives in varying areas. Home renovation was one measure and the Working Income Tax Benefit was another.
What has the uptake been on these? Has the $3 billion that you have estimated all been taken up?
Mr. Lalonde: The government will not know for certain until the income tax returns for 2009 have been filed and processed by the CRA. We can say that the Canada Revenue Agency has experienced a great deal of taxpayer interest in this measure. We think that interest translates into action and, we hope we will be proven right when those tax returns are filed.
Senator Di Nino: Would you have a similar opinion on the First-Time Home Buyers' Tax Credit?
Mr. Lalonde: That would be the exact same answer: We will not know the take-up until we start seeing tax returns. As Mr. Wach noted, the First-Time Home Buyers' Tax Credit is not a one-year special program; it is a continuing program that will apply indefinitely.
Senator Di Nino: I understand that.
One measure which has not been talked about a lot is the Working Income Tax Benefit. It is probably one of the best provisions in this bill, in that it does allow low-income earners a little more breathing room in being able to both work and keep a little bit more of their money.
I asked about the disability component before, which I think is also very commendable. Do we have any experience on how that has resulted in helping Canadians; do we have any data at this point?
Mr. Jovanovic: The program is still too young to be able to assess that. The answer is no, we have not clearly assessed that yet.
Mr. Lalonde: In that regard, though, I would like to make one important point. Part of a taxpayer's Working Income Tax Benefit can be estimated in advance by the taxpayer and provided in documentation to the Canada Revenue Agency. It can then be issued as a cheque, as an early refund, to the taxpayer.
The increases in those amounts will not be able to be made until this bill is passed. Indeed, any excess refunds for the 2009 taxation year that the Canada Revenue Agency has to issue that depend on these additional amounts being made, cannot be refunded until the bill is passed. One might ask, and legitimately so, how is it that they can administer the HRTC in advance but they cannot issue these cheques? There is a fundamental difference in that the HRTC is a credit that is applied against your tax payable but cannot exceed it. Therefore, the Canada Revenue Agency will be in a position of foregoing collecting tax but will never actually have to cut a cheque and pay a refund.
To cut a cheque and pay a refund, they need authority. The Working Income Tax Benefit is a refundable credit, which is to say that, even if the taxpayer has no tax payable and the credit is effectively giving rise to a negative tax, the Canada Revenue Agency can pay out a cheque to the individual claiming the HRTC. However, they cannot do it for the additional amounts that are provided for in this bill.
Senator Di Nino: Mr. Lalonde, this is a little scary. We have been across from each other too long. You anticipated my last question, which was to be that, until we pass this bill, these measures will not be effective. To be able to give Canadians this benefit, we have to pass this bill. That is what you really said, is it not?
Mr. Lalonde: That is correct.
Senator Di Nino: Thank you.
Senator Mitchell: Thank you. First, I have a couple of technical questions. I think you said that $3 billion is the actual fiscal cost of the Home Renovation Tax Credit.
Mr. Lalonde: It is the amount that is estimated in the 2009 budget documents; that is correct.
Senator Mitchell: It is the amount by which taxes to Canadians would be reduced; is that right?
Mr. Lalonde: That is correct.
Senator Mitchell: It is not the amount they are spending. If 4.6 million families are using it, the average tax savings to a family using it would be $650. That is the math of it, and they would be investing about $5,000, on average; is that correct?
Mr. Jovanovic: That is the average.
Senator Mitchell: Do you have any idea of how many jobs that created?
Mr. Jovanovic: No.
Senator Mitchell: Is anybody responsible for assessing the number of jobs that would have been created?
Mr. Lalonde: It is very difficult to calculate or determine that. From the numbers, you can know that amount of money is going into the construction sector, writ large. As Mr. Wach has indicated, you do not have to hire a contractor to do this.
Senator Mitchell: Exactly.
Mr. Lalonde: If you go out and buy the drywall yourself and put it up, no new jobs are being created directly because you are doing it yourself. However, the drywall does not appear out of thin air. Somebody is making this drywall and, hence, you have the economic stimulus of the manufacturers that produce the construction goods.
When you start getting into second-order items like that, it becomes very difficult to estimate. Based on taxpayer behaviour, we can estimate how much we think people will spend on home renovations. We cannot really estimate how many jobs will be created. The end result, though, is that jobs will be created and there will be additional circulation of funds within the economy.
Senator Mitchell: However, there is no specific effort to develop a methodology, nor is there anyone specifically responsible for trying to count the jobs in this case that might be created in this case? You are just saying it is too difficult to do?
Mr. Lalonde: It is very difficult.
Mr. Jovanovic: No one is doing that specifically for the Home Renovation Tax Credit.
Senator Mitchell: I am also interested in the credit to assist first-time home buyers. It is a great thing to help people do that, and it should stimulate housing construction, at least potentially. I think it was considered at a time when housing prices were still relatively high, and I think they have dropped considerably since that time.
They are coming back, so that maybe makes it more relevant again because it makes it a little less expensive for somebody to buy a house. However, is there some relationship between housing prices and how long that $750 credit would remain? Is there a defined period of time?
Mr. Wach: There is no sunset clause on the provision of this credit. There is no consideration at this point of capping it. If I understand the question correctly, there has been no discussion of removing it if housing prices are not at particular levels or something of that nature.
Senator Mitchell: I am not suggesting that should be the case. However, I am interested in it when you are facing a $56 billion deficit, and the government is now beginning to cut programs. Is there consideration this might be cut in order to deal with the deficit?
Mr. Lalonde: That is not something we can answer at our level. I think that is something that has to be asked of our minister. If I were aware of such a thing, I could not tell you. It is kind of awkward to say I am not aware of it because if you ask me enough questions and I refuse to answer, you will probably know what is going on, but there is nothing afoot.
Senator Mitchell: I am not trying to trick you, believe it or not.
I might be with this next question, just to let you know.
I notice there are a number of provisions here for the IMF and so on. They seem to be relatively perfunctory, though I am not entirely sure. Certainly the voting representation and that kind of thing is.
However, the question of policy might be more rigorous. It raises another question in my mind. I know that more and more businesses now are being expected to tell shareholders and reveal the level of risk they think they may be confronting because of climate change. I cannot imagine but that the international community and financial institutions, too, will begin to consider those issues. Undoubtedly they are.
However, in your dealings and our dealings with the IMF, is that beginning to become an issue; namely, that Canada's relationship to international monetary markets will be considered in the context of the risks that confront us and our economy because of climate change?
The Deputy Chair: Senator Mitchell, I believe our next witnesses will be dealing with the IMF specifically and perhaps they are more appropriately suited to answering your question.
Senator Mitchell: Maybe they could let us know if they want to answer.
Mr. Lalonde: My answer is that we are here on Part 1, Income Tax. That is a large enough subject for us to keep our minds wrapped around. We tend to leave questions about the IMF to people who really know what they are talking about.
The Deputy Chair: We will look forward to that question in the next segment.
Senator Mitchell: Thank you.
The Deputy ChairI have a supplementary from Senator Di Nino.
Senator Di Nino: I think Senator Mitchell asked some good questions about the provision for first-time homebuyers. However, my understanding was that one of the reasons that this was introduced was to help first-time homebuyers who would need the additional assistance in order to be able to buy their first homes. If prices were to go up, however, it would be even more difficult. In that case, I would argue that we would need it even more, and possibly a larger benefit. Could you comment on that?
Senator Mitchell: Prices were going down. I agree with you, though; it is logical.
Mr. Lalonde: Prices go up for homes, sometimes they go down. This particular measure is not really geared at the entry level in the market, whether it has gone up or down. Whatever that level is, this will assist those people who are buying their first home.
The Deputy Chair: Thank you, Senator Di Nino. Senator Dawson.
[Translation]
Senator Dawson: About program compatibility, when the provinces and Quebec decide to set up tax credits similar to the federal system for home renovation, is there any collaboration or sharing of information relating to participation criteria, among other things?
Mr. Lalonde: You will find in the Bill a provision stating that the federal tax credit will not be adjusted on the basis of provincial assistance or any type of assistance. So, any province, such as Quebec, can introduce its own tax credit without this having any impact on the federal tax credit.
Senator Dawson: In other words, theoretically, if I apply the $1,500 maximum to a renovation project and I receive $650 or $800 from the government of Quebec, this will not affect my tax credit from the Canadian government?
M. Lalonde: Correct.
Senator Dawson: But is there any cooperation? You stated a while ago, Mr. Wach, that the list of eligible items is acceptable to the Ministry of Revenue, but do you share information with them in order to have the same list? Do you adapt your list to theirs or vice versa?
Mr. Lalonde: That is a question for the province of Quebec. It could adopt the federal rules but it has its own tax system and may therefore make other decisions.
Senator Dawson: Are there similar programs in other provinces?
Mr. Lalonde: No.
Senator Dawson: Thank you, Mr. Lalonde.
[English]
The Deputy Chair: Thank you, senator. We have completed round one. We will now move to round two.
Senator Ringuette: I have one more question with regard to the Home Renovation Tax Credit. You indicated that a $3 billion tax credit take-up was anticipated. In order to generate $3 billion in credits, Canadian homeowners would have to have purchased more than $20 billion in goods and services for their home renovations. When they purchase $20 billion of goods and services, they pay the GST at 7 per cent which is roughly $1.4 billion. The actual net cost of this program, maximum, is $1.6 billion. Is my rationale correct?
The Deputy Chair: I think GST is 5 per cent.
Senator Ringuette: Is it 5 per cent?
The Deputy Chair: Yes; it was reduced.
Senator Ringuette: No, that 2 per cent was what Visa and MasterCard had in fees.
Let us say we are looking at $1 billion. The total cost is really, then, maximum $2 billion. Is that rationale better?
Mr. Jovanovic: That is a good question and one way to look at it. However, it would not be consistent with how we measured the costs of specific measures.
The tricky part here is to ask: If they do not spend the money there, what would they have done with it? It is difficult to assess the net impact regarding GST because they could have spent it anyway — maybe not now, but later.
Senator Ringuette: Or not have spent it at all.
Mr. Jovanovic: At some point, they may have generated that GST. That would require specific analysis of the substitution in your spending pattern, which is complicated.
Senator Ringuette: The rationale here is that in order to generate the $3 billion that has been cited in the government documents, there is a minimum need to purchase of over $20 billion.
Mr. Jovanovic: Yes.
Senator Ringuette: If one purchases over $20 billion at 5 per cent, then it is $1 billion in GST. You cannot say that we will give $3 billion for the tax credit and not understand that, in order to give that $3 billion, purchases must be made. If purchases must be made, then the GST is being paid. It is not a switch whatsoever. You have estimated, in government- paid documents — and a whole lot of publicity has been done on it at large expense — that it will provide $3 billion in tax credit money.
Mr. Jovanovic: It will. The marginal effect of having this measure in the system, understanding that other taxes exist, is $3 billion, and that is the general approach. This is how we measure the cost of a specific measure. We look at the differential compared to the benchmark system, that is, how the system is. We introduce that and then calculate the net marginal differential effect. In this case, it is $3 billion.
Mr. Lalonde: An example of what Mr. Jovanovic is describing would be a household that is planning to do some renovations. They might have a schedule. They are planning to do this over the next five years. They are going to spend some money this year and a bit more in each of the following five years. They would have paid GST on their expenses to do those home renovations over the course of those five years. As a result of the HRTC, they will move their expenses forward into this period where economic stimulus is desired and do all the renovations this year in order to maximize their credit. They would have paid the GST in the normal course of events. They do pay the GST in this calendar year, but this year they will get 15 per cent back of their expenditures between $1,000 and $10,000.
Senator Ringuette: Yes. However, whether they spend it over five years or one year, that does not change the fact that in order to generate $3 billion in Home Renovation Tax Credit, as a country, they need to have purchased at least $20 billion worth of goods and services to do those renovations. That $20 billion will generate at least $1 billion in GST, whether it is marginal or whatever. When you go to the store, they do not ask what marginal GST you want to pay. You have to pay 5 per cent.
Mr. Lalonde: The store does not ask it, but, in doing our fiscal forecasting, we certainly do.
Senator Ringuette: I have two more questions on two other issues. First, the transition to workforce section. There is $400 for people with disabilities. If you look at 50 weeks of work in a year, you are looking at $8 a week. That is not a lot of money. I understand that it is better than nothing, but it is not much money to receive in consideration of the special needs of a person with disabilities. Certainly, there are tax credits for some items, such as transportation and equipment, but there is an entire slate of additional expenses for the disabled when they re-enter the workforce, and $8 per week does not go far.
Mr. Lalonde: I have a couple of points to make on that. It is not as if all they get is $8 a week. That is in addition to the amount payable under their regular Working Income Tax Benefit (WITB). It is an enhancement of the WITB. In the case of persons with disabilities, in the overall picture, it is not an insubstantial tax expenditure, which Mr. Jovanovic will describe in a minute. It is also important to note that the WITB is part of the overall picture, as Mr. Wach described, in terms of trying to bring down the welfare wall. It is not the overall picture of what the tax system does for persons with disabilities. We have the disability tax credit, which is a large tax expenditure, and a number of other provisions that deal with persons with disabilities. They tend to have higher medical expenses and the medical expense tax credit applies. There are a number of provisions that apply to persons with disabilities, so you should not focus on the $8 per week as being the amount that the government gives to persons with disabilities. It is all part of an overall, much larger system of features in the income tax system to provide assistance and support to persons with disabilities.
Senator Ringuette: My last question is twofold with regard to tax deferrals for livestock breeders facing drought and flood. It is my understanding that this is retroactive to 2007. Is that right?
Mr. Lalonde: I believe it goes back to 2008. I will find that for you quickly. Yes, it is retroactive, in part to ensure that it picked up the flood conditions in Manitoba about that time.
Senator Ringuette: Let us say, for instance, that a farmer suffered from a flood in Manitoba in 2007 and sold his herd. We are in fiscal year 2009. The revenue from his or her sale in 2007 would have been reported in 2007. What will happen, because this is retroactive? Will there be efforts to contact such farmers who paid taxes on the proceeds of the sale of their herds following a flood in 2007?
Mr. Lalonde: I am sorry, when you first posed your question I thought you were talking about the introduction of the deferral for flood and excessive moisture conditions. Hearing more of your question, I think you might be speaking to some of the regulations that come in to be effective for the 2007 taxation year. It is a good question. We are in 2009, so what did they do in filing their tax returns for 2007? It is quite common for income tax regulations to come in after the fact. Indeed, for new provisions, we cannot process the regulations generally until the associated amendments to the act are passed, unless we put those amendments straight into the enacting legislation, which we have done here in the case of the drought and excessive moisture conditions.
How does the taxpayer deal with it? As Mr. Wach indicated, we prescribe the drought areas on the recommendations of the Minister of Agriculture. Those recommendations come quite early. The Minister of Agriculture publishes early in time for taxpayers to deal with the situation the lists of regions in Canada that have suffered from drought in a particular year.
Senator Ringuette: My question pertained to a farmer who had to sell part or all of his cattle and paid income tax on the revenue in fiscal year 2007.
Mr. Lalonde: In fiscal year 2007, they sold their livestock. They knew that they were selling part of their breeding herd because it was in a drought condition. They did not file that return until sometime in 2008. By the time tax return filing time arrived, the Minister of Agriculture would have released those regions for 2007 intended to be prescribed for the purposes of this measure. Based on that, the farmer would have excluded the proceeds of the sale of the livestock from their income. The CRA would have accepted that tax deferral provisionally on the basis that those regulations would be passed in the same way, the CRA is doing that for the HRTC. It will administer tax measures that have been proposed by the government until such time as it becomes apparent that those tax measures will not proceed.
In this particular case, the CRA would know that these regulations are coming down the pipe, would administer on that basis, and would not seek to collect taxes in respect of proceeds of disposition of sale of breeding livestock that fell within the drought area.
Senator Ringuette: This is very, very important.
The Deputy Chair: Could we make it brief? If it is that important, you should ask the question.
Senator Ringuette: You are saying that a government minister has told these farmers that they would not pay taxes on the proceeds from the sale of livestock in 2007 and that Parliament is only getting the relevant legislation in December 2009?
Mr. Lalonde: The regulations dealing with drought regions, as I indicated, will be provided on a list produced by the Minister of Agriculture and Agri-Food Canada. It may well have been in early 2008 rather than in 2007, as your example indicated, that these lists came out. The government has the option to proceed through the normal regulatory process for developing regulations or to append the regulations to a bill, such as they have done here. In this case, it was decided to append them to the bill because of the associated amendments in the bill dealing with the flood and excessive moisture conditions, extending the previous measures that dealt only with drought to the new measures dealing with flood.
Yes, these regulations go back to 2007. They effectively change behavior only from the beginning of 2008. I believe that I have heard this question from you before. It is quite common for measures in the tax system to be applied as of the date of their announcement pending confirmation to the CRA that the measures will not go forward. That could happen, for example, by a bill being defeated in the House of Commons. At that time, the CRA would have to seek guidance from the government as to what would happen from that measure. It is common practice and it is convention in Canada for tax measures to be implemented and to be administered from the date of their announcement.
The Deputy Chair: Thank you, Mr. Lalonde. That concludes amendments related to the Income Tax Act, Part 1. I thank the witnesses on behalf of all committee members.
The Chair: Thank you for being here, Mr. Hall, Mr. Lessard, Mr. Forbes and Mr. Wright.
We will now proceed. Honourable senators will want to locate clauses 18 to 23 of this legislation. We are moving on quite nicely. This is the beginning of Part 2 entitled Miscellaneous.
Who would like to be the spokesperson? When we go through this part, it would be interesting if you could tell us if these items are directly or indirectly related to the budget.
Chris Forbes, Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: You have a range of officials here and more coming in. I do not know if we have global remarks other than those you pointed out.
The Chair: I hope Ottawa does not come to a halt today because of this hearing.
Mr. Forbes: This group is here to talk about clauses 18 to 23, which will cover the multilateral debt relief, payments to the Province of Nova Scotia under the offshore accords, changes to the Bretton Woods and Related Agreements Act and changes to the Broadcasting Act.
These items, for the large part, are mentioned in some way in the budget. Not all of them are mentioned expressly, but there is some link to the 2009 budget. The government stated its intent in most of these areas and subsequent areas in the 2009 budget.
That is all I would say on our part. I will turn the floor over to questions. Would you like us to walk through this in more detail?
The Chair: A little bit. Honourable senators are looking at the policy but they have not had a chance to focus on the way that Justice Canada has reflected that policy.
Philippe Hall, Senior Economist, International Trade and Finance, Department of Finance Canada: Clause 18 is basically an administrative change to help us administer what we call the Multilateral Debt Relief Initiative, which is an initiative the government signed on to in 2005 at the Gleneagles G8 Summit.
The change we are requesting is to make the payment a statutory payment in the Main Estimates. It is currently a payment under the Department of Finance's vote 5. There is more than one payment in this vote, whether in the Main Estimates or in the various supplementary estimates.
We are making it statutory to enable us to fulfill this commitment in line with the agreement we signed with the various international financial institutions we are compensating for their provision of this debt relief. It is mainly a housekeeping exercise to make our commitment even stronger.
The Chair: You say to "meet our commitment." Was there a commitment to make it statutory, or was it our commitment to make payment? The payment could be made under vote 5 as well as being statutory. This is the one that goes on to 2054. Give us some comfort here.
Mr. Hall: This is why you have someone my age to talk about something that will go on until 2054.
The Chair: There will not be any senators left when this ends.
Mr. Hall: The commitment made in 2005 was to basically to say to IDA, which is part of the World Bank group, and the African Development Fund, which is part of the African Development Bank: "We understand that you will be forgoing payments on loans you have issued to certain HIPC (Debt Initiative for Heavily Indebted Countries) countries." That is, loans to countries which have been identified as being heavily indebted and poor.
In order for them to continue with their activities, they need a commitment from donor governments that we will compensate them dollar-for-dollar for payments that they will not be receiving. In 2005, the government clearly indicated its commitment to compensate these institutions dollar-for-dollar. In the past, we have been using the Department of Finance Canada's vote 5 which is for grants and contributions.
There are numerous grants and contributions in vote 5. Given the uncertainty of supplementary bills being passed — as we witnessed last year, for instance, when Supplementary Estimates (A) and Supplementary Estimates (B) were delayed for various reasons — we decided it was better for us to have it as a statutory payment. That would allow us to make our payment on January 15 every year, as committed. We would not be in a position where we would have to go to these institutions and say, "We would love to make such payments, but, unfortunately, our appropriations bill has not been passed yet and we will have to delay our payment."
The Chair: I do not want to delay the other presentations, but is the international commitment until 2054?
Mr. Hall: The international commitment is indeed until 2054. The reason is that IDA and the African Development Bank make long-term loans. In 2005, they had loans repayable over 50 years. Hence, when we talk with these institutions and tell them that we will compensate them dollar-for-dollar on payments that identified countries would have made on these loans, we have to make a commitment until the end of these loans, which lasts until 2054.
The Chair: Are there any questions following from that, before we go on to the next part of this? If not, thank you, Mr. Hall.
Will someone help us with the Canada-Nova Scotia Offshore Petroleum Resources Accord and Bretton Woods and Related Agreements Act?
Mr. Forbes: I will try the offshore petroleum resources and then Mr. Lessard will look after Bretton Woods.
This payment involves a much shorter time horizon, April 2010. It is a payment to the Province of Nova Scotia. This is part of the Crown share adjustment. This is a long-standing agreement with Nova Scotia that dates back to the 1980s. You may recall this from previous budgets. A joint Canada-Nova Scotia panel reported in 2008 on an agreement as to how to deal with this Crown share program. We made an initial payment to Nova Scotia in the last fiscal year. This payment is with respect to the 2008-09 and the 2009-10 fiscal years under the Crown share fiscal program. That describes the payment for you.
The Chair: This will continue after this, is that correct? This is for two years?
Mr. Forbes: Yes. There is a subsequent amendment later on. The changes to the program, which have been agreed to by the federal government and the Nova Scotia government, will be made in regulation. There is a change later on in clauses 47 to 50 in this bill. That change later on allows us to implement the agreed parameters through regulations.
Again, the joint Canada-Nova Scotia panel made its recommendations. This gives a payment for the 2008-09 and the 2009-10 fiscal years. Subsequent clauses amend the offshore act to allow us to make the regulatory changes necessary to implement the agreement.
The Chair: The $174 million is for two years?
Mr. Forbes: For two fiscal years, yes.
The Chair: Anything further on that?
Senator Ringuette: I was under the impression that the same accord was also with the Province of Newfoundland.
Mr. Forbes: There is an offshore accord with Newfoundland and Labrador, but the Crown share program, which allows Nova Scotia to access a portion of the federal share of an energy project in the province, was an agreement specific with Nova Scotia. That part is for Nova Scotia only.
Regarding the overall offshore accords, you are right, there is also one with the Province of Newfoundland and Labrador.
The Chair: Next, we will deal with Bretton Woods.
Trevor Lessard, International Economist, International Trade and Finance, Department of Finance Canada: These amendments are to upgrade Schedule 1 of the Bretton Woods and Related Agreements Act.
In July of this year, Canada ratified amendments to the articles of agreement which is the international treaty underlying the IMF. As a matter of good legislative housekeeping, these clauses outline the specificities of the articles of agreement that are being changed. In terms of your earlier questions, it has no budgetary consequences since Canada's position is not changing.
I am now willing to answer any questions.
The Chair: Was there any mention of Bretton Woods in the budget?
Mr. Lessard: I do not believe so.
The Chair: Thank you. Anything further on Bretton Woods?
Senator Mitchell: Sorry, are these clarifying questions?
The Chair: Yes. We can ask generally afterwards, but it is sometimes easier to ask the officials when they have just made their comments. You have a big one for later?
Senator Mitchell: It is not that big.
The Chair: Now the Broadcasting Act, the right to borrow.
Ian Wright, Chief, Financial Sector Policy Branch, Department of Finance Canada: This is clause 23. It is to amend paragraph 46 of the Broadcasting Act which contains the enabling legislation for the CBC. It is to increase their borrowing authority which currently has a maximum limit of $25 million to allow it to borrow up to $220 million. This is to ensure that the CBC has the necessary ability to deal with some current financial issues. I think you are aware that the broadcasting sector has reduced revenues. This will allow them to enter into commercial transactions to manage themselves through the current period.
The Chair: Can they pledge assets in their borrowing?
Mr. Wright: I have to go back and check on that.
The Chair: Could you do that for us? That determines how easy it is for them to borrow money. This is a significant increase, from $25 million to $220 million. We understand there has been a reduction in revenue for the CBC and that is the reason for this, but has there been any insertion of additional funds in then CBC to help them through this difficult downturn such as we have seen with other industries during the economic downturn?
Mr. Forbes: This is the primary action that we are taking for the CBC; that is, the capacity to do additional borrowing. This is part of their broader plan to deal with the downturn. Their appropriations have not changed. There will be no other changes
The Chair: You said "primary," are there any secondary stimulus funds going to them to help them through this?
Mr. Forbes: Specifically for the CBC, there is no other aspect of the action plan spending that will go directly to the CBC.
Senator Ringuette: In regard to the CBC, what is its market value?
Mr. Forbes: I would not be able to answer that question.
Senator Ringuette: This is important. Further to Senator Day's comments, in order to have good loan conditions, you need to provide, for example, your asset as guarantee. To say "Because the federal government is not adding any more money, they have to borrow" is one thing, but they will be borrowing almost $200 million more, just to get by this fiscal year.
Mr. Wright: You have to talk to the CBC about the specific details. What they are looking at in the two transactions that they have approached us on is to monetize some future revenues. They have some revenues associated with commercial properties and are looking at selling those revenues in order to get money now to enable them to develop the plans over the coming period to find further savings within the corporation
Senator Ringuette: Mr. Chair, could we invite witnesses from the CBC? I would like to understand this situation better.
The Chair: We will put them on the list of potential witnesses other than government officials.
Senator Di Nino: To follow up on your question, Mr. Chair, does the federal government have any liability associated with this borrowing authority? The more direct question might be: Does the federal government guarantee these loans?
Mr. Wright: The CBC is an agent Crown corporation, so any activities they undertake related to these kinds of actions are full faith and credit of the Crown, so, ultimately, yes. That is an important part of any structure that they would put forward to ensure that, when they go to the markets, they get as good a rate as possible.
Senator Gerstein: Am I correct in understanding that when this increased borrowing authority comes into effect, the CBC cannot simply go out and borrow at any time for any reason, that the Broadcasting Act still requires them to identify any proposed borrowings in its corporate plan, and that the corporate plan and any individual request for borrowing must be approved by the Minister of Finance?
Mr. Wright: That is correct. Under the provisions of the Broadcasting Act, there is a requirement for the CBC to present to the responsible minister a corporate plan detailing their activities. Within those plans, any borrowing or intent to borrow requires the approval of the Minister of Finance. Any subsequent individual transactions must be approved by the minister as well.
Senator Gerstein: It does not open the floodgates or their ability to simply go out and borrow at their own discretion.
Mr. Wright: No, it does not. For any transactions they enter into following the initial transaction, they have to come back for further access to borrow within that limit.
The Chair: As a follow up, you indicated that this was to cover a shortfall in broadcasting revenue, which is an operating loss. They would not have predicted that at the front end in their business plan for the year. How do you handle that kind of situation? Should we bring the CBC in here to talk about that?
Senator Ringuette: We should do that.
Mr. Wright: Probably you should deal with the CBC on that issue.
The Chair: There is a difference between operating shortfall and a desire for capital expenditure. We will ask the CBC to come in and explain that to us.
Senator Mitchell: My first question concerns the CBC. Why is it that the CBC is being driven to the markets to raise money, which will be more expensive than government funding would be. Is that always the case?
Mr. Forbes: I cannot speak to the costs of their costs of borrowing versus ours. I would say that the CBC, in consideration of the current and past economic environment, came up with a plan as to how they would deal with revenue shortfalls and other issues over the next few years. Like all broadcasters, they face a challenging time. The chosen approach was to monetize their assets, as Mr. Wright indicated. I do not know what costs of borrowing they will face on this.
Senator Mitchell: They do not have to borrow to monetize, because they will simply sell assets. Is that right?
Mr. Forbes: Yes.
Senator Mitchell: Is that the euphemism for selling the asset?
Mr. Wright: It is selling but it is the nature of what the particular transactions were, where a guarantee is involved such that CBC would ensure that the purchaser of the asset is kept whole. That creates the ongoing liability in the sense that should these payments or future payments not materialize from the counterparty, the CBC would step in and ensure that the purchaser is kept whole.
Senator Mitchell: You said, "kept whole." Is that as in remain liquid or as in retain some ability to receive the payments?
Mr. Wright: Kept whole as in receive the payment that they expect to receive.
Senator Mitchell: What would happen if they were to simply go bankrupt?
Mr. Wright: I am sorry? Who goes bankrupt?
Senator Mitchell: If the entity that purchased the asset and is supposed to pay the CBC were to go bankrupt, what would happen?
Mr. Wright: These are related to accounts receivable or receivables that the CBC has. If there were a default on the receivables that the CBC is selling, then the CBC is on the hook.
Senator Mitchell: Are the multilateral debt initiative and the Bretton Woods and Related Agreements Act two completely separate things? Could you have a multilateral debt initiative kind of debt offering that is negotiated or determined under that act?
Mr. Hall: The two clauses in this bill are definitely distinct. The one link is the Multilateral Debt Relief Initiative allows for the IMF to forgive debts that are owed to it by these selected countries.
Senator Mitchell: I put this question earlier. Perhaps you can help me with it. In the context of international debt and loans, is there greater concern, assessment and accommodation given to emerging issues with respect to climate change? We know that the face of risk is changing, but are these markets beginning to adjust to that risk?
Mr. Lessard: I do not know how well placed I am to answer that question. Current articles of agreement were the result of a two-year negotiation whose focus was on increasing the voice and representation of certain countries in terms of the IMF's role and mandate. Its role in climate change would be discussed going forward. As to whether that discussion is occurring or what is happening in those discussions, you would have to ask the minister.
Senator Mitchell: I would be happy to ask.
Senator Mahovlich: Two or three years ago, the Conservative government cut back funding to CBC, which had to cancel many of my favourite programs, one being Disc Drive with Jurgen Gothe on Radio 2. You are telling us today that things have backfired and the CBC needs more money. Is that right?
Mr. Forbes: The broadcast industry as a whole, not just the CBC, has faced a sharp drop-off in advertising revenues with the economic slowdown and global recession.
Senator Mahovlich: There was a drop-off because they no longer have good programs.
The Chair: I am glad that at least Hockey Night in Canada was not cancelled.
Senator Ringuette: The music was cancelled.
Senator Dawson: The well-known television cable tax that will be coming in when it is approved by the CRTC seems to be supported by the government. The CBC will have revenues from that. How do you calculate how much money they will really need? You are telling them that they are allowed to borrow an additional $200 million but they will receive millions of dollars out of this new cable TV tax? How do you factor that revenue in calculating how much they need to borrow?
Mr. Forbes: I have two comments. Obviously, that is a subsequent decision because the situation is still evolving. I could not comment on how the CRTC will rule one way or the other. You would probably want to talk to the CBC about that eventuality and what their plans would be. I cannot really answer that question.
Senator Dawson: I thought it would be calculated as a taxable revenue since it is created by government giving permission to ask for new money. Would it not be the Department of Finance that would be calculating how much revenue is coming out of that?
Mr. Forbes: There is no tax in this case. We are not talking about a tax in the way my colleagues were talking about earlier in terms of income tax and GST, et cetera. Obviously, if the CBC's situation change, if advertising revenues recover or there is some new source of funds, obviously in the process of their corporate plans that would be part of what we would deal with.
I would treat that potential revenue source like any other revenue source and it would be dealt with through the planning.
Senator Gerstein: If I might just make one comment that I believe is in response to a comment made by Senator Ringuette. We are also looking at Supplementary Estimates (B) in the ensuing days, and I note that on page 139 reference is made to a $60-million grant to be given to the CBC. That is separate from this.
Senator Ringuette: Yes, but they are still looking at borrowing.
Senator Gerstein: They may. They have to present a business plan. They have to give specific information.
Senator Ringuette: I think we should look into this. The CBC is a Crown corporation and its assets do not belong to the CBC. They are assets that belong to all the taxpayers of Canada. If they plan to sell assets, that is a concern.
The Chair: We have all agreed, I think, we will try to bring the Canadian Broadcasting Corporation here so we can ask them some of these questions that we would not expect our colleagues on the financial side to be able to answer. We will work with the clerk of this committee in attempting to do so. Are there any other questions of this panel?
Seeing none, then I would like to thank each of you for being here and helping clarify this bill, Bill C-51.
Honourable senators, you can get your act ready for sections 24 to 57, which will be dealt with by the next panel.
I would like to welcome our next panelists, who can help us through these various sections. You have been here to hear the process we have been following. We will ask you to speak, and then if there are any clarifications we will ask for that. Then we will go to any general questions.
Who can help us by starting with the Budget Implementation Act, 2009, as amended?
Shane Williamson, Executive Director, Knowledge Infrastructure Program, Industry Canada: That would be me. This amendment relates to the $2-billion program to fund infrastructure improvements at universities and colleges across Canada, part of Budget 2009's Economic Action Plan.
The budget language clearly spelled out the intent to finance repair and maintenance and expansion of new construction projects at universities and colleges. Our funding was provided in two tranches, if you will; half through the Budget Implementation Act and half through vote 35 and the supplementary estimates. The original BIA language inadvertently referred to repair and maintenance only. This is an amendment intended to correct that. It is technical and will allow us to use the funds provided through the BIA to finance new construction and expansion as well.
The Chair: My recollection is that when we dealt with this — and I forget whether it was Bill C-10 or the first estimate — there was $1 billion that had to be used by the end of June. Are we into the same program? That had to be used very quickly.
Mr. Williamson: Was that the general vote 35?
The Chair: Yes.
Mr. Williamson: Yes, that was shared amongst all infrastructure programs.
The Chair: Was it not just this particular one?
Mr. Williamson: Not just this particular one.
The Chair: Okay. Senator Eggleton would like clarification on this.
Senator Eggleton: Are you just dealing with the colleges and universities program?
Mr. Williamson: That is correct.
Senator Eggleton: We always hear how much is committed, but how much is actually out the door on this? How much has been expended and how much is under way?
Mr. Williamson: In the Economic Action Plan we have 536 projects. We are fully committed. We have agreements in place with all provinces and territories, and some direct agreements. The $2 billion has been fully committed.
Of those 536 projects, roughly 70 per cent are under way, with either design or construction under way.
Senator Eggleton: How much money has actually been expended so far?
Mr. Williamson: We do not have a firm number. We are getting quarterly reports from provinces as we sign and as they get their systems in place. We do not have a global number on that.
Senator Eggleton: The 70 per cent under way, how do you know that is the case? Is this from the applications that come in?
Mr. Williamson: We have been supplementing that with our own on-the-ground intelligence. We have regional offices across Canada, and we have been contacting the institutions for that information.
The Chair: To your knowledge, were any of the funds used on new construction even though the wording was not quite as clear as we had all hoped it would be?
Mr. Williamson: There are projects that do involve new construction, that is true, but half of the funding we had in place could accommodate new construction. We are just trying to ensure that we make this all consistent so that both pots of money can be applied to new construction.
The Chair: With the same rules?
Mr. Williamson: That is correct.
The Chair: Is this backdating then?
Mr. Williamson: That is correct.
The Chair: This is retroactive legislation allowing for money to be spent more broadly than initially stipulated; is that correct?
Mr. Williamson: That is correct, yes.
The Chair: Are there any other questions on this particular matter for Mr. Williamson?
How are we going to get some indication about how much money is out there, how much money has actually gone out and is being used, as Senator Eggleton asked?
Mr. Williamson: As I mentioned, quarterly reports are being provided by the provinces and the institutions. We are working to collate those and pull those all together. Each province is progressing at its own pace, and some are further along in the process than others. There are set-up costs to get our systems in place and get them to be able to report because we are working through the provinces to the institutions. What is clear is that work is under way on these projects.
The Chair: How many quarterly reports have you received?
Mr. Williamson: As I said, we have quarterly reports from five or six provinces, and we are waiting for the remainder to come.
The Chair: Is it possible for us to gain access to those quarterly reports?
Mr. Williamson: We can certainly look at the ones that are available.
The Chair: The ones that are available, obviously.
Mr. Williamson: We will look into that.
The Chair: Nothing further on that? We will then go on to the Canada Pension Plan.
Mr. Forbes: I will cover that. That is paragraphs 25 to 42. The budget mentioned that the triennial review of the Canada Pension Plan which is undertaken by federal-provincial-territorial Ministers of Finance was under way and that the government would implement any joint recommendations that came out. In late May, the results of the triennial review were made public. These sections put in place the joint recommendations of the federal-provincial-territorial ministers.
I will just cover four and then there are a number of technical measures. There are probably four of the larger ones.
One is to remove the work cessation test which currently is in place. Currently, if you take your pension early, you have to stop working for two months or reduce your earnings to quite a low level in order to take the CPP. This was determined not to be necessary and to be an unnecessary barrier, so we are increasing flexibility for people at or near retirement age by removing the work cessation test.
We are also taking steps in this act to enhance the general dropout provision. This comes up in clause 34. The dropout provision allows you to eliminate years of low income in the calculation of your CPP. Right now you can drop your seven lowest years; we are moving that to around eight years in two phases. By 2014, you will be able to drop your eight lowest years. It means a greater benefit for people with a number of low-income years.
The third major change is we are extending participation in the CPP to working beneficiaries. People under the age of 65 who start to take the CPP early will now continue to contribute to the CPP to build up additional benefit if they continue to work. Those over 65 can choose, if they are still working, to continue to contribute to the CPP in order to build up additional benefit.
The Chair: How would that work? Those over 65 have an election?
Mr. Forbes: Yes, and under 65 it would be a requirement. This will start in 2012. I believe it will be phased in at that time.
The Chair: Once the agreements with all the provinces have been put in place?
Mr. Forbes: With all these changes, and I should have mentioned this, we are giving some time for people who are at or near retirement to understand what the changes are and adjust their plans accordingly. Most of the measures here would come into place in 2012 or later.
The Chair: Let us say we are into 2012 and there might be someone who is over 65 who is drawing his or her CPP pension. Why would he or she elect to keep paying? If he or she elects to keep paying into CPP, can he or she still draw a pension and pay in?
Mr. Forbes: Yes.
The Chair: How does that work?
Mr. Forbes: There are people who will be drawing the CPP at the same time as they are still working and have employment earnings. What we are doing here is giving people flexibility. It is hard to know what choices people make and what timing they want to have with their retirement benefits and their work decisions. However, if someone over the age of 65 is still working and collecting CPP, they could continue to contribute to the CPP and thus build further benefits down the road.
The Chair: So you are already drawing benefits?
Mr. Forbes: Yes.
The Chair: How do the benefits change if you are drawing but paying in?
Mr. Forbes: Once you stop working, if I am correct, and finally retire, at that point in time you would collect. I think it is the age of 70 where we insist.
Michel Montambeault, Director, Canada Pension Plan/Old Age Security, Office of the Superintendent of Financial Institutions Canada: No. I will bring some precision on that.
Let us assume you are 65 and you are receiving your benefit. You now have the option of saying, "Should I contribute because I am working?" If you do decide to contribute on a voluntary basis, on each January 1 of each subsequent year, depending on the earnings you had the previous year, we will provide a supplemental retirement benefit. Based on what you have contributed, each January 1 of the year following, it will be adjusted for the age you are at for the adjustment actual factors.
It is a monthly benefit payable for life and acts like the regular benefit.
The Chair: Thank you.
Senator Ringuette: I understand how that will work because the eight-year low income will already have been taken into consideration at the time of first application.
Mr. Montambeault: Yes.
Senator Ringuette: There is one thing in here that I do not quite understand. There is a provision here that says if the employer of a person who is collecting CPP, the employer can ask for a reimbursement of the employer portion and that the employee will receive their portion later. I did not misread that.
First, the adjustment you just mentioned would include the employer portion, would it not?
Mr. Montambeault: If you elect to opt in after age 65, the employer has no choice. You have to go to an election process, and the employer has to contribute his part, too.
I think what you are referring to is a case in which the election was not made properly and the employer was not aware and he did not pay his share. Eventually, the employee will be able to pay the share that the employer did not pay because he was not duly made aware of the fact that the employee wanted to keep contributing to the plan.
Senator Ringuette: I understand what you are saying. What would be the case where an employer would claim the portion that he has paid for that employee?
Mr. Montambeault: If he pays for it, he will not get reimbursement for it.
Senator Ringuette: Oh, yes. I read this. If you want to move on to another question, I will find it. Maybe we can come back to this later.
The Chair: We can come back to that. In the meantime, I will ask Senator Mitchell, from Alberta, if he has an intervention.
Senator Mitchell: I am really interested in the CPP stuff; I guess many people are. I am getting to be that age.
The eight years will not be retroactive, will it? That is, if someone started this 10 years ago and they dropped seven years, they will not be able to go back and drop an eighth year?
Mr. Forbes: No.
Senator Mitchell: To get the math right, at 65 an individual takes their CPP and if they made maximum contributions throughout their life, it would be $7,000 per year. What would be the premiums be after that point? Would they continue to be exactly what they have been paying up to that point?
Mr. Forbes: You would still pay the combined 9.9 per cent of your earnings which we all pay up to the annual maximum. It would be the same contribution rates as everyone else.
Senator Mitchell: Now I get the pension to help me pay it.
Mr. Forbes: As Mr. Montambeault said, at the beginning of every subsequent year, for example, your $7,000 would be boosted slightly by the fact that you made an additional year's contribution.
Senator Mitchell: By the time I am 65 and I retire outright, it still will not be as much as I would have been had I not taken anything from ages 60 to 65, but it will be closer to that than it was yesterday under the old rules, will it not?
Mr. Montambeault: Yes, it will.
Mr. Forbes: Yes.
Senator Mitchell: Depending on how much you think you need at 65, it will be interesting to see what the difference will be — somewhere between 70 per cent and 100 per cent. What do you expect the 70 per cent would rise to?
I will be taking 70 per cent at age 60 right now. Then I will be getting something more each year. What do you anticipate that "something more" would be; will it be three percentage points extra or five?
Mr. Montambeault: Let us say you took your benefit and you contributed on maximum pensionable earnings. Let us say the maximum pensionable earnings were $40,000 and you contributed to the maximum, you will get one-fortieth of the $40,000, because the accrual rate under CPP is assumed to be one-fortieth. Your full career goes to age 65. If you take out the seven years of dropout, it is about 47 minus 7, so about 40 years.
The accrual rate of your pension is assumed to be one-fortieth. If you contributed on $40,000 the year before, on January 1, you will get one-fortieth of the $40,000. You will get $1,000, adjusted for the age at which you took it.
Let us say you are age 61 now. Right now, it is 70 per cent but, at age 61, it is 76 per cent adjustment. Therefore, your $1,000 will be adjusted for that. The maximum is 25 per cent of the average pensionable earnings, and you will get one-fortieth of 25 per cent of the $40,000. Therefore, you will get $250 adjusted for the age of benefit. That is on a yearly basis.
Senator Mitchell: Therefore, over 5 years, it will be $1,250. Therefore, it goes up to $8,250 a year at age 65, rather than the maximum, which might have been $10,000 a year; is that correct?
Mr. Montambeault: Yes.
Senator Mitchell: These are rough numbers. If you did present value, you would want to start it at 60. However, many people have not because of this eligibility thing of two months off. Do you see a huge hit on the CPP now because, all of a sudden, people who would have waited five years are saying they will start it?
Mr. Montambeault: Under the proposed new provisions, there could be an incentive to take it earlier at age 60 because you are removing the work cessation test. However, at the same time, we are also increasing the reduction for those who take it before age 65. You were talking about 70 per cent. This is the current penalty at age 60. However, the new proposal is to restore neutrality to the system. It will be a reduction of 36 per cent versus 30 per cent.
Therefore, there will be an incentive to take it early because we are removing the work cessation test, but then you have a higher penalty.
Senator Mitchell: What is the point of doing it if you are trying to maintain balance? Does not it kind of "nil" out?
Mr. Forbes: Part of it is to ensure the system overall is fair and flexible. Maybe the individual changes offset each other. We need to ensure these changes remain sound over the long run, so the costs of the various measures do not put into question the long run soundness of the system. As well, you want to give people the flexibility to make the retirement decisions they want without being unduly affected or being unfairly treated by the CPP.
While they may seem somewhat offsetting from the outside, the fact is that, depending on your circumstances, you may look at these changes and be better able to make a decision. It just means that no one will be forced to try to figure out a two-month work cessation or artificial measure to get early CPP. The idea is to simplify it and try to make it more neutral and fair, overall.
Senator Mitchell: Was this something people were clamouring for, or was this a determination by the CPP administration of how to make it fairer and more flexible?
Mr. Forbes: If you go back, it is a process of the federal and provincial-territorial finance ministers. They do it every three years. They look at priorities, which can come from outside or internally. You look at this package and this is a lot about flexibility and ensuring that people who retire early are treated fairly vis-à-vis those who retire late. There are a whole series of changes that way.
It came from the work of the ministers and their officials.
The Chair: We have in our briefing note here adjustment factors that apply to early or late take-up of retirement pensions, fixed in 2010, in the regulations. Presumably, that is in one of these clauses of the bill that is in front of us. Maybe could you direct me to the right clause.
Mr. Montambeault: It is clause 46.
The Chair: You are living and breathing this, are you, Mr. Montambeault?
The adjustment factors are the percentage reduction in the benefit if you take it early, and the percentage increase if you take it late. However, are the adjustment factors also the age at which you take up early or late?
Mr. Montambeault: The current adjustment factors are applied. If you take your benefit before age 65, there is a reduction in benefit, and it is a 0.5 per cent per month reduction. If you take it between age 60 and 65, you have 60 months. Therefore, your penalty is 60 months times 0.005, which gives the current 30 per cent reduction.
It is proposed to increase that 0.5 per cent per month before age 65 to 0.6 per cent per month. That means that, at age 60, instead of a 30 per cent reduction, it will be a 36 per cent reduction. For those who opt to delay after age 65, the current increase factor is 0.5 per cent per month.
Therefore, someone who waits till age 70 gets a pension that is 30 per cent higher right now. Under the proposed changes, if you wait till age 70, the factor will be 0.7 per cent per month, giving you a 40 per cent increase in your benefit by age 70.
It is gradual. If you take it at age 66, it is 12 months times the 0.07. You apply the number of months to that 0.7 per cent, if you wait after 65. It is a reduction before age 60. For those who take it at age 60, even though there might be a greater reduction under the proposed plan, we have increased the dropout from 7 to 8 years and we have introduced the working beneficiaries provision. Someone who takes it at 60 will take a greater reduction in benefit but he will have a chance to make up that penalty by working, contributing and having that additional benefit every January 1. That is the bottom line. Yes, those factors go by age.
The Chair: I understand it does.
When you say that the adjustment factors will be negotiated by federal and provincial and territorial ministers, are the 60 year and 70 year provisions up for adjustment as well? Could it be that you will be able to take your Canada Pension Plan only at 63? Is that up for debate and does that clause cover that, as well?
Mr. Montambeault: There is no discussion about changing which age you can take your CPP. The flexible retirement provision that allows you to take it as early as 60 or as late as 70 is the same as it has always been since 1987.
The Chair: Some other jurisdictions around the world have moved up the age at which you can first start drawing a pension to try to encourage people to stay in the workforce. We are doing it a little differently here by increasing the penalty before 65, and increasing the benefit after 65 in order to encourage that.
Mr. Forbes: It is important to note the existing formula had been in place since 1987, as my colleague pointed out. These were, in some senses, actuarially unfair, given life expectancies, et cetera. The existing reduction and increased post-65 were not in line with life expectancies and other changes.
This change make the CPP a bit more neutral and fair in the sense that those retiring early, given current life expectancies, incomes, et cetera, are being treated fairly, and the incentive to retire early is removed vis-à-vis those who retire at 65 or, indeed, at 70.
Senator Ringuette: I find that more women are retiring early to take care of elderly parents. Will that increase in penalty not discriminate against them more?
Mr. Montambeault: For people retiring below age 65, the reduction will be increased from 0.5 per cent to 0.6 per cent per month. One important element of the proposed changes is the fact that we are increasing the dropout period from seven to eight years and this helps more women than men because of their lower average career earnings and greater disconnection with the labour force.
Therefore the impact of the proposed changes will be less for females than for men. This is reported in our twenty- fourth CPP report that was tabled to accompany Bill C-51. If you look at the results in that report, there are a few tables that show the impact, and it shows that women will be less affected.
Senator Ringuette: Could we have a copy of that?
Mr. Montambeault: These could be provided to you. They are on our website also.
Senator Ringuette: I have two questions. First, you must have made an actual analysis. I would like you to table it with the clerk so we can see the analysis that was done.
Second, I was under the impression that the provincial premiers looking into the pension situation will report in January of 2010. Am I right on that?
Mr. Forbes: It is a different process, but, yes.
Senator Ringuette: Are we to conclude that, in regard to provincial premiers looking at pensions, that these are the only changes they wish to see in regard to the CPP?
Mr. Forbes: To your first question, we can definitely table the actuarial report with you. As Mr. Montambeault said, it has been tabled in the House of Commons. We can make sure you have it.
There are two processes; admittedly it is confusing. The triennial review of the CPP by the federal Minister of Finance with his provincial and territorial counterparts happens every three years and was completed last May.
There has been ongoing discussion by finance ministers and premiers about the retirement income system more broadly. This would include private pensions, registered pension plans and RRSPs. There are perhaps a number of processes. Specifically, the provincial premiers have a process under way where they are looking for a summit on retirement income issues.
There is also a finance minister's process under way to do research on retirement income adequacy. That is, beyond the CPP, looking at the retirement income adequacy of seniors and future seniors. There is a report that will be presented to the ministers at their meeting in Whitehorse later this month.
Senator Ringuette: Last but not least, Quebec has its own pension plan. Will the Quebec provincial pension plan be modified to reflect what has been done federally?
Mr. Forbes: You would have to ask the Quebec government. They have these proposals. I do not know if they have stated their intent to follow them completely. It is their decision as to which of these they follow or whether they have their own measures. That is really up to them.
Senator Ringuette: If these changes come from the input of provincial premiers, which would include Quebec's Premier Charest, then you must have an indication of whether there will be a similar process done for Canadians living in Quebec. If this is a beneficial measure, they should be able to benefit also.
Mr. Forbes: The Quebec government is well aware of the analysis that went into the review of the CPP and the outcomes. Again, it is the Quebec government that decides what changes to follow with the QPP and which ones they do not. In the end, that will be their decision. No one else is involved in that, at least not from over here.
[Translation]
Senator Rivard: In the past, I believe, any time a change was introduced to the federal pension fund, Quebec adjusted its plan in the following months. It always made sure that both systems matched, did it not?
Mr. Montambeault: In general, I would say that in the past there has always been some similarity in the proposed changes.
As far as these proposed changes are concerned, relating to retirees or beneficiaries who will have the opportunity to continue to pay premiums in order to receive a supplement, that provision has been in existence since 1998.
Among all the changes implemented in 1998, one of those that were adopted by Quebec is the one relating to working beneficiaries. We are introducing this measure today and, most of the time, the measures match but that is not necessarily always the case. This time, Quebec agrees with the changes proposed to the Canada Pension Plan but they have their own process to consult the public and they will have to make some choices at that time.
Senator Rivard: Thank you very much.
The Chair: Does the Quebec Ministry of Finance take part in the meetings of the provincial ministers?
Mr. Montambeault: You mean the triennial review of the Canada Pension Plan? Yes.
The Chair: All right. Senator Di Nino?
[English]
Senator Di Nino: I want to refocus on what I understand to be one of the purposes of the changes, and that is to encourage workers to stay and/or return to the labour force, we talked about it a little bit before, while receiving the CPP benefits. That obviously would be of value certainly to the employees but also to the economy.
What have we seen so far? What have the results been? Has this resulted in the intended benefits that we were looking for?
Mr. Forbes: Are you talking about the proposed changes?
Senator Di Nino: Yes.
Mr. Montambeault: The first changes, the factor after age 65, will come into effect in 2011. We will not see until 2012 how people will behave.
Senator Di Nino: Thank you.
Senator Ringuette: Clause 43 talks about coming into force. Although you say the changes will be in effect in 2012, it is my understanding that these changes will only come into force by order-in-council and, most importantly, with the consent of two thirds of the provinces with two thirds of the population of Canada. What is the process to get two thirds of the provinces that represent two thirds of the population?
Mr. Forbes: Mr. Montambeault will correct me if I am wrong. The process is under way. The provinces have approved these already and they have their own legislative processes to go through once this legislation is passed. The provinces, the two thirds and two thirds, were all part of the unanimous agreement to propose these changes. Our expectation would be that they would all follow suit.
Senator Ringuette: Is there an agreement that within the next year, the proper legislation would be enacted provincially?
Mr. Forbes: Mr. Montambeault may be able to correct me, but the provinces need to have their legislation done by the middle of next year.
Mr. Montambeault: By the end of summer.
Mr. Forbes: By September next year; and so before the summer recess in the provincial legislatures in order to make sure we can enact changes in 2011.
Senator Ringuette: Whatever we do today or do not do today with this bill, there is still this provision that this legislation cannot be enacted until two thirds of the provinces have agreed to it.
Mr. Forbes: Yes, certainly, until they have taken the necessary steps.
Mr. Montambeault: And the Royal Assent.
The Chair: You indicated 2011, Mr. Forbes. Did Mr. Montambeault not mention earlier 2012?
Mr. Forbes: There are different dates for different aspects. I believe the earliest start date of any of the changes would be 2011. Some of them start in 2012 and then they are phased in over a number of years.
The Chair: We have Mr. Wright here to tell us about the Canada Pension Plan Investment Board Act. I notice that clause 44 repeals a section of that. I hope you will tell us what is being repealed and why the amendments are here.
Mr. Wright: These are a couple of housekeeping items related to the legislation. Section 37 of the Canada Pension Plan Investment Board Act refers to some provisions within the Income Tax Act that were repealed in 2005, so they relate to foreign property investment rules. This was just a tidying up to reflect the fact that those provisions are not required any more.
The Chair: Was that mentioned in the budget?
Mr. Forbes: Probably not explicitly.
Mr. Wright: Clause 45 of this act deals with section 53 of the CPPIP Act. This is a clarification to codify our current practice. The current wording of the act could be interpreted to imply that provincial approval, the two thirds and two thirds we were just talking about, would be required after the regulations had been printed in the Canada Gazette. Our current practice has been to get approval of the provinces in advance. What you are looking at here are just some amendments to clarify that you can have the approval in advance of the regulation being published.
Clause 45(2) deals with ensuring some enhanced transparency in the process so, if there is in the future some instance where approval is provided after the fact, the date upon which the two thirds and two thirds was met has to be published in the Canada Gazette by our minister.
Clause 46 is the coming into force and that is just to backdate these changes to ensure it captures any regulations that have been put in place since this piece came into force on April 1 of 1998.
The Chair: Do you anticipate there are some regulations that might not, under the old rules, be valid because of this? Is that why we are backdating this 11 years?
Mr. Wright: There have been some regulations brought in. I am not familiar with the details. I do not think there is a question that they are not in force, but this is just to ensure clarification.
The Chair: To ensure clarification?
Mr. Wright: To ensure the interpretation that they are in force, yes.
The Chair: But not to cover anything that you are aware of?
Mr. Wright: There have been some regulations brought in, but I am not familiar with exactly what those ones are, no.
The Chair: Anything further on that, honourable senators?
Then that is fine. We dealt with this aspect of offshore earlier but I have Andrew Staples, Chief, Canadian Health and Social Transfer and Policy Development, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada, who can talk about the offshore in Nova Scotia again. Is that necessary? Have we dealt with that?
Mr. Forbes: Only to the extent you have questions.
The Chair: I think honourable senators had a fairly good understanding of the changes when we dealt with that earlier. In fact, this section was referenced at the time we dealt with this in the earlier panel.
Mr. Forbes: Yes.
The Chair: On the custom tariffs, we have Mr. Patrick Halley, Chief, Tariffs and Market Access, International Trade Policy Division, International Trade and Finance Branch, Department of Finance Canada. Sorry to keep you waiting so long on this. Please tell us about the custom tariff amendments and why this is desirable.
[Translation]
Patrick Halley, Chief, Tariffs and Market Access, International Trade Policy Divisions, International Trade and Finance, Department of Finance Canada: The changes to the Customs Tariff are at clauses 51 and 57. In the 2009 Budget, the Government made the commitment to consult Canadians on further liberalizing the rules relating to using containers imported in Canada on a temporary basis.
[English]
Shortly after the budget the government consulted on those proposals through a notice in the Canada Gazette. They were widely supported by stakeholders, including the Canadian Chamber of Commerce, the Shipping Federation of Canada, the Canadian Trucking Alliance and the Retail Council of Canada and a number of companies. The governments of Manitoba, Saskatchewan and Alberta have also written to express their support.
The amendments in Bill C-51 result from these consultations. They are also consistent with recommendations that were made by the Standing Senate Committee on Transport and Communications back in June 2008.
The amendments are meant to relax some of the conditions for the tax and duty free treatment of temporarily imported containers and trailers and semi-trailers. Specifically clause 53(a) increases from 30 days to 365 days the amount of time that a temporarily imported container can stay in Canada free of the duties and sales tax that would otherwise be applicable at the time of importation.
In clause 53(b) our proposal is to remove the restriction that during that period of time, which has now increased to 365 days, those temporary imported containers can only be used in the transportation of goods between two points in Canada if that transportation is incidental to the international traffic of goods.
Finally, clause 55 provides a link to the schedule to the act.
The proposal is to remove the condition of foreign control and ownership of temporarily imported trailers and semi- trailers.
The other clauses are consequential and mainly technical. There is a coordinating amendment with the bill that is currently before the House of Commons to implement the Canada-Colombia free trade agreement.
[Translation]
Taken together, these changes will increase the capacity of the Canadian transportation network, will ensure a more efficient use of containers in Canada, will harmonize our rules relating to utilization of containers with those in the United States, will improve the effectiveness of the logistics networks and will facilitate trade in general.
Senator Rivard: I was a member of the Government of Québec in 1994 and I sat on the Transportation committee. We were already requesting such measures at that time. Better late than never! I am sure that transborder shippers and transporters will be very happy.
Is there more or less the same accommodation in the US? This change will apply to American transporters coming to Canada who will not have to pay any duties. Will that also apply in the other direction?
Mr. Halley: The US already had similar rules. To my knowledge, a few changes were made to those rules but they generally already exist in the US. As a matter of fact, this was one of the recommendations of the Standing Committee on Transportation and Communications, to harmonize our rules with those in the United States.
Senator Rivard: Do you know what the fiscal cost of this new provision will be?
Mr. Halley: There will not be any fiscal cost since it relates to the Customs Tariff. It is only an exemption of duties. However, in this case, sales taxes might apply.
As I said, the intent is to liberalize some conditions which, according to stakeholders, were too constraining and made the effectiveness of our transportation and trade networks less than optimal.
Senator Ringuette: Who collects those taxes?
Mr. Halley: The Canada Border Services Agency administers the Customs Tariff as well as legislation from the Minister of Finance.
Senator Ringuette: What tools are they provided with in order to collect those duties? If the period is raised from 30 days to 365 days, and considering that you referred to the effectiveness of the transportation networks, I suppose there will be increased movement of containers and trailers from region to region.
[English]
How are we going to police this? From my perspective, it was already hard to police when we were looking at a 30- day framework. If you look at 365 days and containers going from one Canadian port to another to another to another, coming back and so forth, who is policing that?
[Translation]
Mr. Halley: As I said, the Canada Border Services Agency is responsible for administering the Tariff in general, including these provisions. As I understand the systems the Agency uses to administer such provisions, there is a tracking system. One should also understand that the Canada Border Services Agency generally deals with all matters relating to the Customs Tariff in the context of verification after importation. Therefore, the collection of duties does not necessarily apply or sales taxes do not necessarily apply at the border. The agency deals with shippers and transporters through computerized connections.
Senator Ringuette: How many inspectors are there across the country to do this work?
Mr. Halley: I will check if this information is available.
Senator Ringuette: Thank you.
[English]
The Chair: Honourable senators, I have no one else on my list.
Thank you very much, each of you, for being here and helping us understand this Bill C-51, or your aspect of it. If there are any items that you have undertaken to produce for us, certainly the sooner you can make them available the better because we are trying to deal with this as quickly and expeditiously as we normally do in the Senate. You are very helpful in helping us do our job. Thank you, once again.
We are almost finished our work this morning. We could break, but I think we could be finished in half an hour. My inclination would be to finish and then we can go on about our other business.
We are now dealing with the final portions of Part 2, under the heading "Miscellaneous" of the Budget Implementation Act No. 2. We have representatives from Treasury Board Secretariat and from Industry Canada with us. Thank you very much for being here. I have seen the process we have been following. If we could continue that, if that is acceptable to you, we will deal with clauses 58 through to the end of the bill.
The first area is under the Financial Administration Act. These are the quarterly reports, I understand. We have, from the Treasury Board of Canada Secretariat: Mr. Bill Matthews, Assistant Comptroller General, Office of the Comptroller General, and Mr. Marcel Lalande, Director, Office of the Comptroller General. Please proceed.
Bill Matthews, Assistant Comptroller General, Office of the Comptroller General, Treasury Board of Canada Secretariat: I will deal with the next four clauses of the act which deal with the amendments to the Financial Administration Act for quarterly reporting. They are fairly straightforward, but I will run through them quickly.
The notion is that departments, Crown corporations and the Bank of Canada, would make public a quarterly financial report for the first three quarters of each fiscal year commencing in 2011. The reason we have said "the first three quarters" is that there is already substantial reporting done at year end by departments and Crowns, but there is nothing at present to deal with interim financial reporting at the organizational level at present. This will address a gap in terms of reporting in that we have estimates done early in the year, and then we typically do not report back to Parliament until the public accounts are tabled six months after year end. This proposed change will allow for increased scrutiny and transparency by having departments and Crowns publish a quarterly financial report for the first three quarters of each fiscal year, commencing in April 2011.
If you are curious about the 2011 date, the reason that was picked was twofold: We have departments getting ready to implement a new policy on internal controls that is quite intensive for them. That is under way already. As well, our colleagues from Crown corporations are busy gearing up to implement international financial reporting standards or other changes in accounting standards that go effective 2011, and we did not want to overburden them in terms of financial reporting in that period.
That is all I will say on the subject for now and I will take questions of clarification.
The Chair: Do these international accounting standards for the Crown corporations include quarterly reporting?
Mr. Matthews: They do not. They are to govern year-end reporting only. It is to coincide with a move made by the private sector in Canada where private sector organizations will move to international reporting standards, like many other countries in the rest of the world, effective in 2011. That will affect Crown corporations like Canada Post and EDC who are self-sufficient. Crown corporations that are more appropriation dependent will have a choice. They could move to international financial reporting standards or to public sector accounting standards. Either way, they have a change to make.
The Chair: You are aware that this committee was asked to review a Senate private member's bill dealing with this very subject of quarterly reporting.
Mr. Matthews: Yes, I appeared on that very bill two times I believe.
The Chair: We supported that concept after the information that you brought to us and your intervention. That bill did not include the provision proposed in clause 58 of this bill pertaining to section 65.1 of the Financial Administration Act that "The Treasury Board may, by regulation, exempt a department from the requirement." We did not have that.
Mr. Matthews: No, you did not.
The Chair: Why is that there and what are the parameters to be followed to determine whether you should exempt some department?
Mr. Matthews: I will speak to it generally. The Treasury Board often has the authority to make policy or regulations regarding financial reporting. Typically government does financial reporting through policy, not legislation. Therefore, this is somewhat strange.
There is a specific reason we want to do this. For example, think about some of our intelligence organizations. There may be organizations where it is simply not in national security interests to publish quarterly financial results, depending on the nature of what they are doing.
This is not a regulation we intend to use greatly. It is for those rare cases where you have an organization where it does not make sense, or possibly for a new organization that came into being three weeks into a quarter. In such a case, do you want to impose quarterly reporting on them in their first quarter? I am not sure. That is the sort of exemption we had in mind when we included this.
The Chair: Will there be defined parameters that the Treasury Board Secretariat will use to implement this exemption?
Mr. Matthews: To get a Treasury Board Secretariat exemption accepted, you have to go through the approval process of Treasury Board ministers.
We do not have defined parameters at this stage for an exemption. The intent of putting this requirement in law is that this will apply to the vast majority of organizations. We built this additional provision in for the rare exceptions. If the intent was not to have reporting widely done, it would not be showing up in legislation.
The Chair: I have been sitting through the consideration of Bill C-6. There are a lot of "give us the power and trust us." A number of honourable senators would like to see something in writing on how and when this will be implemented.
Mr. Matthews: The when is 2011.
The Chair: I am talking about the exemptions.
Mr. Matthews: They will be done on a one-off basis. There is no plan to put exemptions in place in the early stages. I mentioned the intelligence type of organizations where I think it is logical to pursue exemptions on that front.
The Chair: That is a good example, but it is not restricted to intelligence.
Mr. Matthews: It is not.
The other piece to keep in mind on the financial reporting front is that the Government of Canada is a world leader. We are the only country in the G8 to get a clean audit opinion on our financial statements for 11 years in a row. If you compare our public accounts to any other country, the disclosure we provide is far fuller. Some countries say it is too much. We have an excellent track record. We publish departmental financial statements for all organizations, except a handful, on an annual basis without any requirement to do so in law. As I mentioned, we normally do that through policy.
This one is in law, which is a little different but the intent is not to make broad use of this.
Senator Di Nino: Let me clarify. Would there still be requirements to publish annual reports?
Mr. Matthews: This does not impact the disclosure required under public accounts or departmental performance reports.
Senator Di Nino: You said that Treasury Board and all the ministers associated with Treasury Board would be required to approve this exemption in effect?
Mr. Matthews: The exemption would be done through regulation. That would involve Treasury Board ministers as well as the regular regulation process that goes through.
Senator Di Nino: Will this be known at the time this exemption would be given? Would some publication tell us that, in effect, these exemptions have been granted?
Mr. Matthews: When regulations are processed, they are typically public.
Senator Di Nino: It will be in the regulations.
Mr. Matthews: We can take on an ability to report on any organizations that do not publish these reports. We are happy, if and when that occurs, to make it known which organizations are not reporting. You will know because the reports and the regulations are made public. It will be very transparent.
Senator Di Nino: This committee will be dealing with that in our future anyway. I want to ensure I understood that, in fact, this is not one minister; it is the Treasury Board plus all of the other people involved in the process.
Mr. Matthews: The regulation process.
Senator Di Nino: It does not impact on any requirement to publish annual reports. It will be made public with publication of the regulations.
Mr. Matthews: That is correct.
Senator Di Nino: Thank you.
The Chair: Thank you for that clarification, Senator Di Nino, and Mr. Matthews. For further clarification, when the regulation is published exempting a particular department, will the reason for the exemption appear in the regulation?
Mr. Matthews: I would say it would not be typically.
The Chair: I would say typically not as well.
Therefore, we still will not know what parameters are being applied.
Mr. Matthews: It will be on an application.
The Chair: Yes. You make a good point with respect to security — CSIS and possibly the RCMP. What about the Department of National Defence?
Mr. Matthews: In my view, the Department of National Defence would be producing these reports. We have had no discussion with National Defence about not producing them. Their public accounts reporting — their DPR — it is quite full. I do not see them as an organization that would be pursuing an exemption.
The Chair: That is helpful.
Is there anything further on that?
Next is the Public Service Superannuation Act.
Joan Arnold, Senior Director, Legislation, Authorities and Litigation Management, Treasury Board of Canada Secretariat: Yes, this is clause 62 of the bill. It is a technical amendment that adds PPP Canada Inc. to the schedule of the Public Service Superannuation Act to provide public service pension plan coverage for employees of that organization. It is a Crown corporation that was put in place to facilitate the establishment of large projects involving public private partnerships. It is merely to give pension coverage to those employees.
Senator Ringuette: I have some difficulty with that. In this committee, I questioned the hiring processes used at Public Private Partnership Canada. It was not that of the Public Service Commission. It was highly questionable.
This clause requests that their staff receive the same pensions as those people that have to go through the Public Service Commission hiring process. I have great difficulties with that.
Ms. Arnold: The Public Service Superannuation Act covers a number of corporations that are not subject to the Public Service Commission's hiring processes. A number of outside organizations are under the federal umbrella but do not follow the employment processes of the Public Service Commission. This would not be the first example.
Senator Ringuette: Is this also retroactive to the beginning of their employment?
Ms. Arnold: I believe this will only come into force when this legislation is passed. Remember that I am only the pension person. I am not the person that set up this organization. It is my understanding that the many of people in place currently are public servants on assignment from the rest of government. They will simply be continuing their public service coverage.
Senator Ringuette: That is not the information we received in this committee from the Public Service Commission about a special law for that particular body in regard to hiring practices. I have major reservations. I understand it is not your responsibility.
Maybe we could hear from PPP Canada.
The Chair: They could explain that to us a little more fully. We have been studying the importance of pensions while recognizing the benefit of public pensions versus private pensions. We understand why this group of employees might want to get in on a public pension. Thank you, Ms. Arnold. We appreciate your help in that regard.
We will hear from Industry Canada now about the Bankruptcy and Insolvency Act. We hear quite a bit about that from former employees of companies that are no longer in existence in the Ottawa region.
Roger Charland, Executive Director, Corporate and Insolvency Law Policy and Internal Trade, Industry Canada: The amendments to the BIA that are proposed in the bill are housekeeping amendments. As the committee might be aware, some insolvency reforms came into force quite recently. Certain provisions that dealt with eligible financial contracts related to derivatives were treated also under the Budget Implementation Act, 2007, known then as Bill C-52. A renumbering of the bill was done as it went through Parliament, which caused the cross-references to be flawed in a number of places. These amendments are to ensure that what was intended by the passing of these bills is what we have today. That is what we were trying to address.
Clause 63 simply removes the reference to section 55.1(8) because the definition is no longer there. Clauses 64 and 65 propose to write the sections of the BIA as they were meant to be, which did not occur because the references between the Budget Implementation Act, 2007, Bill C-52, and the bill that amended the provisions were not correct.
Clause 66 clarifies that the coming into force of these changes would occur after Royal Assent for filings that are later. That means there are no retroactive implications. Clause 67 repeals section 25 because that is redundant. Those are the proposed changes to the BIA.
The Chair: We understand that there is need from time to time, as you described, for housekeeping amendments to deal with administrative items. It would not make sense to have a stand-alone bill for those items. Periodically, there should be a bill that would include all of these housekeeping items. Does somebody go round and ask if there are any housekeeping items? Could you tell us about the process for cleaning up the housekeeping details?
Mr. Charland: From what I understand, the Department of Justice does that on a regular basis. When we identify such a technical issue, we discuss it with the Department of Justice to find the appropriate vehicle to bring them forward. When the Department of Justice feels that there are enough of these items, they move forward on a technical bill. I would not be able to speak more in terms of what their policies are.
The Chair: Why do they happen to put them in a budget implementation bill?
Mr. Charland: In this case, it was a reference. The issues we are pointing out resulted in the amendments to Bill C- 52, which was the Budget Implementation Act, 2007. The connection was doing the housekeeping as a result of amendments that were made to that bill.
The Chair: Are you saying that when there is a problem with one budget implementation bill, we should straighten it up with another budget implementation bill?
Mr. Charland: Well, that becomes a possibility.
Senator Di Nino: In this instance it is a little selective.
The Chair: Exactly. Are there other questions?
[Translation]
Senator Ringuette: Mr. Lalande, you are here as a director in the Office of the Comptroller General at Treasury Board . Treasury Board is the government body that approves all the expenditures of departments.
Marcel Lalande, Director, Office of the Comptroller General, Treasury Board of Canada, Secretariat: I am here to support Mr. Bill Matthews on the amendment to the Financial Administration Act relating to quarterly reports. That is why I am here this morning.
Senator Ringuette: You work in the Office of the Comptroller General at Treasury Board?
Mr. Lalande: Yes, it is part of the Treasury Board Secretariat.
Senator Ringuette: And Treasury Board approves the expenditures of the various departments. It also exerts some measure of control to ensure that expenditures do not exceed budget allocations. It also makes horizontal or vertical transfers within departments.
For some time now, this committee has tried to obtain information relating to the cost and the amounts spent in the current year for the Home Renovation Program. Obviously, since Treasury Board is the organization approving those expenditures, it would have all that information.
Therefore, I would like you to provide that information to the clerk of the committee as soon as possible. How much has the government spent in the current year on advertising for the Home Renovation Program?
Mr. Lalande: I understand your question but I must repeat that I am here this morning to support Mr. Bill Matthews, my boss, relating to the Economic Recovery Act and the amendment to the Financial Administration Act.
I am director of financial and departmental reports and my job at the Office of the Comptroller General is to work on policy development, which relates to the amendment proposed this morning about quarterly reports. Therefore, I am not in a position to answer more fully.
Senator Ringuette: Could we ask the Comptroller General, your ultimate boss in that unit, to provide us with this information?
Mr. Matthews: I would like to answer this question.
[English]
Within the Treasury Board Secretariat there is the Comptroller General. The responsibilities of the Office of the Comptroller General are accounting policies and then tabling and preparing the financial statements of the Government of Canada.
In the in-year financial reporting, we monitor for trends, but we do not receive detailed spending reports from departments on an in-year basis. If I recall the discussion earlier, I believe that one of my colleagues from the Department of Finance Canada committed to trying to determine the amount spent in relation to advertising on the Home Renovation Tax Credit, although I might have misheard him. That was my recollection.
The Chair: That was my understanding as well. We are asking you to help him.
Mr. Matthews: Certainly, I can touch base with him. We receive information from each department on an on-going basis. Each department has its own financial system, tracks its own spending and provides a monthly summarized report to the centre.
It does not get into the details that you are asking about. We would not see that information. Public accounts reporting would not highlight spending of that detailed nature. You will see for each department what they have spent in the realm of advertising, but you will not see anything that specific. The question has to go back, for the most part, to departments because they are responsible for their own budgets.
Senator Ringuette: You are receiving monthly expense reports from these departments and you know these people that are mandated in the different departments to provide such information. Can I ask you to contact them and ask them for that specific information so that you could report to us?
Mr. Matthews: I will follow up with my colleague who has committed to do that to see if I can be of assistance. The information we receive will not help me out on this front, but I will follow up with him.
Senator Ringuette: Every little bit helps because we have been run around in circles on this request. Everyone is pitching the ball to someone else.
The Chair: Mr. Charland, when you talked about the need for amendments with respect to the Bankruptcy and Insolvency Act, is that a result of seeing some errors in the earlier Budget 2007 implementation, or were there actually problems in bankruptcy proceedings that prompted this?
Mr. Charland: These amendments solely relate to numbering problems from the Budget Implementation Act, not errors. For example, let us say a particular clause was 109, I do not have the exact example here, and Bill C-12, which was the insolvency piece of legislation that moved in parallel, made cross references to section 109. However, as the Budget Implementation Act went through Parliament two clauses were deleted, which affected the numbering of all that followed. Therefore, when the insolvency legislation referred to section 109, it was no longer the right section. Those are the housekeeping and technical amendments that we are talking about.
The Chair: That is very helpful. Thank you. Are there any other questions?
Senator Mitchell: Speaking of insolvency, is this related to fallout from Nortel's pension issues, for example, and its bankruptcy?
Mr. Matthews: No.
Senator Mitchell: Speaking of that, the problem for the pensioners is that the Bankruptcy and Insolvency Act says that they are ranked quite low behind many other creditors. An explanation we had from a witness here as to why that priority ranking would be that way — to the disadvantage of pension subscribers for a company and that company in particular — was that if they were further up, the risks inherent in anyone loaning that company money would be greater because they would have to carry the potential costs, rather than the pensioners.
The flip side of that is the pensioners are actually subsidizing the cost of borrowing for that company, many of whom do not even belong to that company anymore. Therefore, it is an interesting issue. Are you aware of any other reason why pension subscribers and actual pensioners would be so diminished in the priority amongst creditors under the Bankruptcy and Insolvency Act?
Mr. Charland: The scheme that is provided in the Bankruptcy and Insolvency Act speaks to certain special super priorities in terms of deemed trust; then it goes to secured creditors and unsecured creditors. That was a certain logic that was established, which is consist and common with what we see in all the OECD countries. There are some little changes in here.
The implication of changing the order of precedence, as you pointed out, is always one of what is the impact on the overall treatment of credit, whether it is the cost of it or the availability of it. If you put one ahead, then you have someone who falls back, so those are the trade-offs.
As was pointed out this morning, there are a number of initiatives that are ongoing in terms of looking at pensions more globally. I cannot really speak to that today; but notionally, when we come down to the distribution scheme, it is always a matter of trade-offs in terms of the costs and availability, and the impact to the overall economic implications and the flow of credit that results from it. That is what we look at and those are the considerations we have to keep in mind as we look at these issues.
The Chair: If there is nothing else, honourable senators, thank you very much to each of our witnesses for being here. It has been a long day for you, but you now know as much as we know about this entire piece of legislation, and not just your few sections at the end. It has been helpful to us in understanding and doing our job.
Honourable senators, this concludes our first look, through government officials, at Bill C-51. We will continue tomorrow morning at 9:30, and it looks like we should be able to finish by 11:30. We will be finished by 12 for sure, I think, so you can do your planning in that regard.
We have two or possibly three panels — but two primarily to deal with. Then I would like to hear from you tomorrow, or now if you know, if there are any other witnesses you would like to hear from next week. If not, we would be ready to proceed with clause-by-clause consideration.
Senator Ringuette: Which day?
The Chair: Our normal day is Tuesday, but it depends on whether we have any other hearings. If we do not, I would assume we would be ready to go with clause-by-clause consideration on Bill C-51 on Tuesday.
We also have a report which will be sent out to you this afternoon on Supplementary Estimates (B). It is pretty straightforward, as it usually is; there are no recommendations or anything. If we can all read that and then adopt that on Tuesday, I could file both of those in the afternoon on Tuesday.
That leaves us with one other piece of business, Bill C-56, on which we have approval to do a pre-study. If you are interested in doing a pre-study, we could start that Monday morning or afternoon. That way, we have got started on our final bill, all of which have to be done before we go home.
Senator Ringuette: Why do we not sit Monday with the Supplementary Estimates (B) report and the pre-study on Bill C-56? Then we could resume Tuesday and go to clause-by-clause consideration or vice versa.
The Chair: Or if you have any other witnesses. CBC is one we talked about. We could, if you agree. I do not normally like to go to clause-by-clause consideration after having witnesses; but with respect to CBC, we could have them as a single witness and then go to clause-by-clause consideration after that on Tuesday.
We could do it Monday afternoon or morning. That is what I want to know.
Senator Mitchell: I may have a conflict with another committee.
The Chair: I do too, but nothing is more important right now than this.
Senator Di Nino: Since we have the authority, why do we not meet early on Tuesday morning?
The Chair: We do anyway.
Senator Di Nino: Meet at 8:30 Tuesday morning and carry on. We all have conflicts. In other words, the three or four hours we have on Monday, let us do them on Tuesday. We have authority, like we have today.
The Chair: My concern with that is that I want to have enough time to have our clerk and the team get the documents ready to file in the Senate on Tuesday afternoon, because the time starts running and we cannot rely on unanimous consent. I would like to make sure we do that. I am not sure with witnesses and everything if we would be able to.
If you cannot make it Monday afternoon, maybe you could get a substitute, just to let us get started on Bill C-56. We will have government officials only. Afternoon or morning?
Senator Di Nino: I have a big problem. I have four meetings scheduled already. Anyway, that is my problem, not yours.
The Chair: Afternoon or morning?
Senator Ringuette: Afternoon.
The Chair: Start at one o'clock, so we will not conflict with Standing Senate Committee on National Security and Defence.
Senator Mitchell: That is not mine; my committee is the Standing Senate Committee on Human Rights, which would be at 2 p.m.
The Chair: Let us get started at 1 p.m.
Senator Ringuette: Why do we not do a compromise? His is 2 to 4 p.m.; are you okay for 4 to 6 p.m.?
The Chair: I am not — I have the Standing Senate Committee on Security and Defence, which lasts until 7:30. We have to meet earlier on Monday to deal with this. Do you want to start at 7:30?
Senator Di Nino: It does not make sense. I still think we should meet at 8:30 on Tuesday morning.
The Chair: It will back things up and it gets dangerous. We have Monday.
Senator Ringuette: Let us say 1 to 3 p.m. or 12 to 2 p.m.?
The Chair: 1 to 3 p.m.
Senator Di Nino: Can we cut the broadcast off?
The Chair: This meeting is now concluded.
(The committee adjourned.)