Proceedings of the Standing Senate Committee on
National Finance
Issue 40 - Evidence - May 21, 2013
OTTAWA, Tuesday, May 21, 2013
The Standing Senate Committee on National Finance met this day at 1:01 p.m. to examine the subject matter of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013, and other measures introduced in the House of Commons on April 29, 2013.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Honourable senators, before we get under way, I think we all are mourning the loss of one of our former members, Senator Douglas Finley, who served on this committee from the beginning of his time in the Senate. We all saw him evolve as a senator and learn the role of a senator very nicely. He made a major contribution to this committee, and I know our hearts and prayers go out to his wife and family at this time.
Now we will get down to business, as Senator Finley would expect us to do. We have a lot of work to do, honourable senators.
[Translation]
Honourable senators, today we are continuing our consideration of Bill C-60, an Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, tabled in the House of Commons on April 29, 2013. It is these others measures that we will be discussing today.
[English]
This is our third meeting on the subject matter of Bill C-60. We will begin today at Part 3, Division 4, which is clause 126 at page 65 of the bill.
We have already done 125 clauses on this bill, which is exciting. This afternoon we are pleased to welcome officials from the government who will continue to guide us through the bill, helping us understand each of the clauses. We have set aside three hours and hope that we will get through a lot of it this afternoon, honourable senators. Tomorrow evening we have the minister appearing first thing to give us the overview, and then we will finish up with other government officials at that time.
I would like to welcome Tim Stupich, Director, Science Partnerships Team from Industry Canada, who will be able to help us with the genome aspect of it. Raquel Fragoso-Peters, Director, Policy and Liaison, is from Industry Canada as well. Thank you very much. I have indicated that in relation to Nunavut housing, Debra Darke will be able to help us with that. Thank you for being here. We also have Diane Cofsky, Director, Program Directorate, from Aboriginal Affairs and Northern Development. Have we officially changed the name yet? We keep wondering when we will see that in legislation. It is too expensive to change the name, so we do it informally.
Thank you for being here. Who would like to start with the first clause, clause 126?
Raquel Fragoso-Peters, Director, Policy and Liaison, Industry Canada: That will be me. I am the director of small business policy at Industry Canada. I am here to speak to the Canadian Youth Business Foundation. My group is responsible for working with the Canadian Youth Business Foundation and the disbursement of those funds. The Government of Canada has invested over $57.5 million in support of the Canadian Youth Business Foundation since 2002. The economic action plan announced an additional $18 million in support over two years. The CYBF is a not- for-profit organization that provides support to young entrepreneurs looking to start their own business, and the core activities comprise financing and support services such as business planning and mentoring.
This additional $18 million over the next two years will continue to support Canadian young entrepreneurs as they pursue businesses. In the past year, the CYBF has issued 581 loans, and of these, 498 were directly supported by Industry Canada's contribution.
The Chair: Thank you. Senator Buth from Manitoba would like to intervene and have some clarification.
Senator Buth: Thank you for your opening comments. Do you have any examples that you could give in terms of the types of businesses that Canadian youth have started under this program?
Ms. Fragoso-Peters: To go as local as Ottawa, there are a number of shops. There is a sandwich shop on Bank Street that has opened as a result of CYBF funding, a cupcake shop in the Glebe, and painters. You name it, young entrepreneurs have started it. It is with this funding that young people are able to start their businesses.
Senator Buth: Are these loans then?
Ms. Fragoso-Peters: Yes, they are loans of up to $15,000.
Senator Buth: What would be the terms of repayment?
Ms. Fragoso-Peters: Over five years.
Senator Buth: Thank you very much.
The Chair: I will take questions on each of these because even though there are quite a few different payments provided for different entities, it is helpful for us to focus on the entity.
Senator Callbeck: Thank you all for coming this afternoon. Certainly, this sounds like a tremendous program. I was involved with women entrepreneurs for a number of years, so I am glad to see this program.
You said there were 498 loans last year. What would the average amount be?
Ms. Fragoso-Peters: It is a $15,000 loan.
Senator Callbeck: Up to, but would the average be $15,000?
Ms. Fragoso-Peters: I do not know if the average is $15,000. They are allowable up to $15,000 and in most cases young entrepreneurs take advantage of the full amount.
Senator Callbeck: This is $18 million over two years. I am wondering about last year. You had 498 loans. How many of those would have been in Atlantic Canada?
Ms. Fragoso-Peters: I do not have those numbers, but the CYBF supports young entrepreneurs across the country. I would be glad to get you the breakdown for the Atlantic.
The Chair: If you could make a note of that and provide it, that would be helpful. For everyone else as well, if you give us an undertaking, the sooner you can get the answer, the better. We are dealing with this bill as expeditiously as we can. You can provide the information to our clerk, and she will ensure it gets around to everyone.
Ms. Fragoso-Peters: We will do that right away.
[Translation]
Senator Bellemare: I think it is very important to take care of our young entrepreneurs. How does Canada compare with other countries such as the United States and European countries, in terms of our entrepreneurial spirit? What is the life expectancy of businesses that you help under this program specifically? You must do a follow-up when young people are granted a loan. What is the lifetime of these businesses? Do you have any data on that?
[English]
Ms. Fragoso-Peters: On the first question, since it is the Canadian Youth Business Foundation itself that distributes the loans, we do not actually have the data of how they compare internationally. However, we can certainly get that to you.
We do know that the default rate for this program is very good, because one of the conditions of the program is that each young entrepreneur is obligated to take on a mentor as part of the program, and that has been an indicator of why they are so successful.
In terms of tracking the success of the young entrepreneurs, again, we would have to go back to the CYBF to track that. I would be glad to get you those pieces of information.
[Translation]
Senator Chaput: How many applications do you receive? How many of those applications are turned down if they are not all approved?
[English]
Ms. Fragoso-Peters: That is a very good question; however, the CYBF makes the decision. Our role as the federal government is to negotiate a contribution agreement that outlines their obligations and the reporting requirements. However, the decisions are made by the CYBF itself. Again, that is data I do not have, but I would be glad to access it through the organization.
The Chair: Would it be helpful for us to have someone in from the foundation for a lot of these questions? It seems it would. We might look into that in steering.
Senator Buth: I just wanted to follow up on the request from Senator Callbeck for the distribution in Atlantic Canada. Could you give us a distribution for all provinces?
Ms. Fragoso-Peters: That was my intention.
Senator Buth: Thank you very much.
The Chair: We will talk in steering about whether it will be helpful to have the foundation in to talk to us. They probably have not had the opportunity to visit us in committee for a while.
Ms. Fragoso-Peters: No. They also have a new CEO.
The Chair: Thank you.
The next item is the Nature Conservancy of Canada. Do we have someone who can tell us about that one?
Sorry, I skipped Genome Canada. How could I do that? Mr. Stupich, my apologies.
Tim Stupich, Director, Science Partnerships Team, Industry Canada: Thank you. This is a measure to provide support of $165 million to Genome Canada, an organization that has been supported by the federal government since about the year 2000. It supports large-scale genomics research projects across the country. It has a series of regional genome centres that help to coordinate these projects, and it is primarily very leading-edge academic research; it is world-class research that they are supporting on these large-scale projects.
This is just providing some ongoing funding for Genome Canada for the genome centres. It has five science, technology and innovation centres across the country that it supports as well, all in the area of genomics research.
The Chair: Regarding this maximum of up to $20 million, what period of time will that be for?
I am sorry; I cannot get Nature Conservancy out of my mind. My apologies. It is $165 million and not $20 million.
Mr. Stupich: Yes. That is notionally to support projects over the next three years, starting next year. They are three- year projects. These are all research projects that take quite a bit of time — they are world-class projects. It is not a short duration.
Senator L. Smith: Interesting that you have ``for its use.'' What type of measurement system do you have? That amount, $165 million, is a lot of money that you hand out for someone's use. Is there some form of measurement system or expectation system that the government has to ensure that money has some form of return?
Mr. Stupich: We work very closely with Genome Canada and review the projects that get supported. It certainly has a major impact on how Canada ranks internationally in terms of its genomics research capacity. We have evaluated the program, and it has done extremely well. It is having a favourable impact, primarily in improving health impacts through genomics research, but it has also had some applications in other areas, including forestry and the environment, in aquaculture. It is a technology that actually has a range of benefits across a wide area.
Senator L. Smith: Would it be a good idea to have specific results, if it is that successful, that the government could publish and give out to the public, so the public would be better informed as to what genomics is or what Genome Canada really does? It is in the news quite often. There is a lot of lobbying that goes on. It would appear that more information going out as to actual results that benefit society would be advantageous to the government.
Mr. Stupich: There is certainly merit to that. In fact, quite a bit has been done; Minister Goodyear has been a strong advocate of this program and has talked a lot about the benefits in various forums where he has made presentations. It is being done.
When there is an evaluation done, that is made public as well, so it captures some of those benefits.
Senator Buth: Thank you very much for being here. I am very pleased to see this. In terms of agriculture, genomics has played a large role in the development of a variety of crops, especially canola. The comment you have written is ``to launch new large-scale research competitions.'' What would be the average monetary size of a project that would be funded?
Mr. Stupich: The projects would tend to be in the $5-million range from the federal government.
Senator Nancy Ruth: Can you give an example of what kind of international partnership initiatives Genome Canada has been funding?
Mr. Stupich: There is the Structural Genomics Consortium out of Toronto. It has a large number of major players on the pharmaceutical side. They are working with researchers here in Canada and developing a lot of the underlying technologies for future applications in pharmaceuticals. They have done some breakthrough research in relation to determining the genetic basis for breast cancers and other cancers. A lot is on the health side and how to deal with various conditions in autism and that sort of thing.
There is another I could mention. As an aside, I am also from Manitoba and the agriculture side — I am sorry I did not mention that earlier. Regardless, the International Barcode of Life is another project. It is headquartered out of the University of Guelph. Canada has the lead there internationally in terms of identifying what they are calling the barcode of life, which is getting right down into the DNA of organisms. They are looking at thousands and thousands of different organisms and how to identify them from just a small, very molecular-sized piece of what that organism is. You can look at various applications of identifying pests or whatever that could affect agricultural crops or forests and develop ways of looking at those and trying to solve problems before they start. In many cases, that can have a big impact on various natural resource sectors.
The Chair: That sounds very interesting.
Senator Callbeck: Could you give me the location of the five centres again?
Mr. Stupich: There are six regional genomics centres. There is Genome Atlantic, Genome Quebec, Genome Ontario, Genome Prairie, Genome Alberta and Genome British Columbia.
Senator Callbeck: The $165 million says multi-year, and then it says three years. Is it over three years or multiple years?
Mr. Stupich: It is notionally set up to cover a three-year period. They are academic research projects, and sometimes the timing is hard to predict right at the outset, so it could stretch a little further, but the overall plan is that it is about $55 million a year.
Senator Callbeck: Is this the total amount that the federal government gives to Genome Canada?
Mr. Stupich: On this current round of funding, but the federal government has supported Genome Canada since 2000, and it has been just over a billion dollars of support since that time, which leverages at least matching funding from other sources. That is the total investment. It is $165 million over three years, so it is about $55 million a year on average, which is a little less than they have had since inception.
Senator Callbeck: You say it is a billion dollars since the beginning. Could you later on provide the committee with a breakdown of that billion dollars as to the amount spent in the Atlantic, then Quebec, Ontario and so on?
Mr. Stupich: Do you mean a regional breakdown of the spending since its inception? I do not have that right now, sorry.
Senator Callbeck: Could you provide it later?
Mr. Stupich: It could be put together, so there are those centres and the projects that flow through each centre, Genome Atlantic or Genome Prairie; yes, we could do that.
Senator Callbeck: I would appreciate that.
[Translation]
Senator Chaput: You say that payment can be made at the request of the Minister of Industry. When that amount is requested, will the minister have already decided on the research topics?
[English]
Mr. Stupich: They launch competitions, so Genome Canada would announce a competition and accept proposals from a variety of sources. It would be a very competitive process with an international peer review of the research, and they would select the best proposals that come in. It is not predetermined who will be provided the funding.
[Translation]
Senator Chaput: When the choices are made after the competition, are they provided to the minister so that he can then authorize the disbursement of funds?
[English]
Mr. Stupich: The minister signs a funding agreement with Genome Canada upfront for them to deliver projects. The selection of those projects is done by Genome Canada with their international review committee, and then they provide the support to the organizations. It does not go back through the minister at that time.
[Translation]
Senator Chaput: Are the research projects coordinated with Canadian universities? Are any of them part of the research taking place in Canadian universities?
[English]
Mr. Stupich: The Canadian universities are where the researchers are from who are providing the proposals to Genome Canada in the first place, so it goes back to them to deliver on those projects.
Senator Chaput: They are all done by and with the Canadian universities.
Mr. Stupich: They bring in various partners, but it is individuals and teams that put together the proposals. They will bring in partners to get funding from other sources as well, including industry partners in some cases.
[Translation]
Senator Chaput: Could you provide us with a list of the Canadian universities that are partners in these research projects?
[English]
Mr. Stupich: It would be a long list; it is a relatively comprehensive list of the universities.
[Translation]
Senator Chaput: How many?
[English]
Mr. Stupich: Do you mean that participate across Canada in Genome Canada? I would not be able to say offhand, but the leading research universities would be participating in some way. Over the last 13 years that Genome Canada has been around, there would be a majority of them.
[Translation]
Senator Chaput: Could you send us that list anyway?
[English]
The Chair: That might be part of your regional analysis of how much went to Central Canada and would include the University of Guelph, presumably, with respect to the funds that went there.
Senator Chaput: I am told there are around 72 universities in Canada, so the list cannot be more than 72.
Mr. Stupich: No, no. I think there are actually a few more than that. The list cannot be more than that, but some of those universities do not do a lot of research and are not in areas that would lend themselves to the genomics research side of things.
[Translation]
Senator Chaput: Mr. Chair, would it be possible to obtain the list?
The Chair: Yes, he will try to send it to us.
[English]
The Chair: Thank you, Mr. Stupich.
I will skip clause 128. Our witness is here but not at the table. We will get to Nature Conservancy, but not right away.
We are on clause 129, Canada Mortgage and Housing Corporation funding for Nunavut, and that should be Ms. Darke.
Debra Darke, Executive Director, Assisted Housing, Community Development, Canada Mortgage and Housing Corporation: This clause appropriates funds not exceeding $30 million to the Canada Mortgage and Housing Corporation in order to provide funds to the Government of Nunavut in 2013-14 for the construction of affordable housing units in the territory. This clause will allow funds to flow more quickly to the Government of Nunavut in the 2013-14 fiscal year. An additional $70 million for a total of $100 million will be provided, and the additional $70 million for the following fiscal year would be obtained through the supply bill process.
The Chair: The supply bill process — well, this is interesting. You are doing sort of a statutory type process for this portion, and a supply process for the other portion. Why is it $30 million one way and $70 million the other?
Ms. Darke: It is mainly so that we can provide the $30 million to the Government of Nunavut as quickly as possible to support them in their activities in the first of the two fiscal years.
The Chair: Did you feel you would get this budget implementation bill faster than Supplementary Estimates (A), which is now out and floating around as well?
Ms. Darke: As I understand it, we would more likely be going forward in the fall, so September or sometime in the fall.
The Chair: For the $70 million?
Ms. Darke: That is right, which would affect the timing of that funding's being available.
The Chair: The $30 million that is here could have been in Supplementary Estimates (A), which this committee deals with as well.
Ms. Darke: I am afraid I could not respond to that. I think it was too late for Supplementary Estimates (A), and this was the fastest way to enable us to get the funding to Nunavut to support them in this construction season.
The Chair: If it turns out it is just a matter of timing and it was too late, could you confirm that for us? If there is some other reason why, with respect to the $30 million and $70 million, one goes the way of supplementary estimates and the other goes the way of statutory request for funds, it would be helpful for us to understand that.
Ms. Darke: Okay; I am pretty sure the only reason is to get the funding to Nunavut as quickly as possible.
The Chair: I understand your point, and I think we all agree that worthwhile projects need to be funded as quickly as possible once the policy decision is made to fund them. That is not the objection; it is a process question I was posing.
Senator Callbeck: How many units do you expect to provide with the $30 million and then $70 million the next year?
Ms. Darke: The Government of Nunavut is responsible for delivering the funding. They have estimated that they will be able to deliver about 210 units, I believe. The number of units, of course, is dependent on the costs, and the costs vary for a number of reasons, for example, the size and the type of building, the communities that the units are built in and the cost of shipping the materials.
Senator Callbeck: That is $100 million for 210 units?
Ms. Darke: The Government of Nunavut has very recently announced a tentative allocation amongst communities for that funding, and that is their expectation right now, yes.
Senator Callbeck: That is pretty costly.
Ms. Darke: The average costs are very high to build in the North, as I am sure you appreciate.
Senator Callbeck: What are the average costs?
Ms. Darke: The average construction costs range quite a bit. It can be about $360,000 per unit for a five-plex, and that cost would go up for a single detached home. My understanding is it is at much as $490,000 for a single detached home.
Senator Callbeck: That is for a two-bedroom house?
Ms. Darke: I do not know the size. That would be for a single detached dwelling.
Senator Callbeck: It is pricy. Thank you.
The Chair: A supplementary question — you were thinking the same as I. Go ahead, Senator Smith.
Senator L. Smith: Do they submit a plan by locale or region? I understand the cost per unit and the expense of building in the North, but in terms of the number of units you can build and the size of your workforce, I am trying to understand, is a plan submitted or just a monetary request?
Ms. Darke: The intention is for the territories to deliver this funding through the existing agreement that we currently have in place with them, which is the agreement under the Investment in Affordable Housing program. The provinces or the territories, under those agreements, have responsibility for the design and delivery of all of the programs. That includes the determination of the allocations, which means deciding how many units they will do and in which communities.
Nunavut, as I said, has publicly announced where they intend to deliver the units. They have indicated they have chosen the communities on the basis of need, so they have looked at the amount of housing currently in the communities as well as the size of the waiting lists, and that is what has led them to determine the allocation of those units.
Senator L. Smith: They prioritized.
Ms. Darke: Correct.
The Chair: Is any analysis done as to whether this is new housing to satisfy a growing population or replacement housing to satisfy houses that are no longer habitable?
Ms. Darke: The intention is for the funding to be used to develop new affordable housing units. We understand that the territory intends to largely construct new, although they are planning to do some acquisition and renovation of unoccupied existing units. All of this money will go towards creating new affordable housing supply.
The Chair: New housing for an increased population or for people who have been living in substandard housing?
Ms. Darke: It could be both.
The Chair: It could be either?
Ms. Darke: It could be either. As you likely know, there are significant issues related to crowding in the territories.
The Chair: Yes, and maintenance?
Ms. Darke: Correct.
The Chair: I understand. This is a lot of money. Does it go out to tender on an individual house basis, or does the entire contract for the $30 million go out in one contract? How does this happen?
Ms. Darke: The territory delivers the funding. There is an agreement in place between the Canada Mortgage and Housing Corporation and the Nunavut Housing Corporation. They will deliver the funding under a variety of programs. They will choose how to tender the projects.
My understanding is that in the past they have undertaken a number of different tenders to select contractors to purchase materials, ship materials and then construct materials in the particular community.
The Chair: If you are CMHC, do you provide oversight? Do you follow up on this to ensure it is being done in a manner that we would expect when we are spending federal funds, taxpayers' money?
Ms. Darke: Yes. We have an agreement in place. We will be amending the existing agreement with the Nunavut Housing Corporation. That agreement includes an accountability framework. There is a requirement for the territory to claim to CMHC for federal funding. Supporting that claim, they provide us information on the projects for which they are using the federal funding. In addition, there is a requirement for annual audited statements of disbursements. Finally, they are required to undertake, on an annual basis, reporting on outcomes to the citizens of the territory.
[Translation]
Senator Bellemare: Is there any sort of support for mortgages? Once the houses have been built, do the individuals who are going to occupy them become the owners? Do they take out a mortgage? Will the federal government obtain a return on the $100 million that will be spent, or is that money simply a contribution for the purposes of building housing that will then be allocated by the Government of Nunavut, in some way, to the public? Do you know how that housing will be allocated amongst individuals?
[English]
Ms. Darke: Under the Investment in Affordable Housing agreement currently in place with Nunavut — the intention, as I said, is that this additional $100 million will be delivered through that existing agreement — the territory has six different programs, and each program works somewhat differently. These programs are designed and delivered by the territories themselves. They would therefore be responsible for developing rental scales and for determining the rents to be charged. In the case of home ownership programs, of course, the individuals would also be paying for their housing. There may be some additional assistance provided.
To give you a sense, there are two programs currently that create new supply; one is home ownership supply and the other is rental. There are also two repair programs. There is the Emergency Repair Program and a program that supports the renovations of individual homeowner units. There is a rent supplement program, which would help supplement incomes or provide rental assistance, so to speak, for individuals living in rental housing. Finally, there is a program targeted at victims of family violence.
There is a range of different programs. As I said, the territory administers all of them. The manner in which that assistance would flow directly to individual households would vary depending on the program.
[Translation]
Senator Chaput: How is the quality of the new housing being built monitored? Given that the federal government is providing money, are there any standards, standards that must be met when the new housing is being built?
[English]
Ms. Darke: Again, under the Investment in Affordable Housing agreement, the provinces and territories are all responsible for the design and the delivery, the day-to-day administration of the program. Provinces and territories are responsible for ensuring that any housing built as a result of this funding is in accordance with the applicable codes and standards. Provinces and territories are responsible for adopting or bringing into force building codes and standards, and they are responsible for ensuring that the quality of the units constructed or renovated meets the applicable standards and codes.
[Translation]
Senator Chaput: So it is the responsibility of the provinces and the territories?
Ms. Darke: Yes.
[English]
Senator De Bané: Ms. Darke, do you receive an audited financial statement from the province?
Ms. Darke: Yes.
Senator De Bané: However, you do not have the manpower, the people, to go and inspect whether it is really according to national building codes?
Ms. Darke: Yes, we do receive annual audited statements of disbursements as part of the accountability framework.
Senator De Bané: Yes, I know you get that. I am talking about assessing the quality of the construction.
Ms. Darke: We do not do any inspections of units under the Investment in Affordable Housing program. The provinces and territories are responsible for ensuring compliance to codes and standards.
Senator De Bané: However, surely you know that many Canadians assume that when there is financing by the Canada Mortgage and Housing Corporation, that means the builder had to follow a national code and there was effective supervision of the build quality. This is really an assumption that has no basis in reality. CMHC is not involved. It enacts building codes, but it does not have the manpower, inspectors, to check whether a house that they financed, built in Nunavut or elsewhere in Canada, meets a certain quality.
Ms. Darke: Across the country, provinces and territories have the jurisdiction and are the ones responsible for the adoption and enforcement of building codes. That is the case regardless of the context. In this particular instance, we are providing, through CMHC, federal funding that will enable the Nunavut territory to create a significant number of new, affordable housing units with the investment.
Senator De Bané: Do you not think it would be a good idea for CMHC to do random inspections in addition to getting audited financial statements? Do you not think it would be a good idea for an independent party to do random inspections across the country of buildings financed through a CMHC mortgage? Do you prefer not to be involved whatsoever?
Ms. Darke: These are not really buildings that are financed through CMHC. This is a federal investment that is helping the territory to develop some affordable housing. As is the case in all provinces and territories, under the Investment in Affordable Housing program we are making investments in affordable housing across the country. All provinces and territories have signed agreements through which we are delivering that funding. They are the ones most familiar with the housing needs and priorities in their jurisdictions.
In that context, they have responsibility and flexibility to vary the programs and the program design; they are responsible for all the administration, and they are responsible for ensuring that all units that get federal and provincial funding through those agreements are built or renovated according to code.
Senator De Bané: One idea that has become central today in public policy is accountability. You are the main financing instrument to build homes in Canada and it would be, in my opinion, quite useful if you emphasized the branding of CMHC. When I buy something from a certain vendor or company, if I buy something from a certain country, I know it is synonymous with high quality.
There was a time when the Canada Mortgage and Housing Corporation had inspectors and the purchaser knew he was buying something of quality. Accountability should be central, not just transferring money and saying other governments have to spend it.
The Chair: We will give Ms. Darke an opportunity to answer.
Ms. Darke: I can only reiterate that it is the provincial and territorial governments across the country that have the jurisdiction for adopting and enforcing building codes and standards. It is not the federal government nor CMHC that has the responsibility for the adoption or the enforcement of codes and standards: It is the provincial and the territorial governments.
Senator De Bané: With all due respect, this is an administrative view of the world: It is their responsibility and we have nothing to do with it. It all depends on where we sit.
As a taxpayer, I think it would not be outrageous for the Canadian government to do random inspections to ensure that 97 per cent of buildings are according to provincial codes, et cetera.
Senator McInnis: It really is a national code in the sense that the building codes that are put in by the provinces are synonymous pretty much across the country. It would be the same in Nunavut. I think what you are saying is a valid point, but I think what you are saying is in fact that is the case. The Nova Scotia code would be analogous to that in B.C., and they have regular meetings to ensure that that is the case.
Your point is well taken, but there is that consistency with respect to the building code.
Ms. Darke: As you have pointed out, there is a national model code. There is a committee that includes representatives from across the country, and CMHC is not actually involved in any kind of lead way in that. I believe it is the National Research Council that has responsibility for the Canadian Commission on Building and Fire Codes. Provinces and territories can adopt the national model code as is or can choose to make changes.
While you are absolutely correct that there is a fair amount of consistency across the country, it is also the case that provinces and territories can choose to adopt some differences and changes, and in fact there are some things that are different in the building codes across the country because they have chosen to make changes to respond to their particular circumstances.
Senator Buth: In relation to accountability, would you have agreements between CMHC and all the provinces in terms of putting housing in place?
Ms. Darke: Yes, currently we have agreements with all provinces and territories for the Investment in Affordable Housing program. This particular funding is an additional $100 million that is being allocated to Nunavut in recognition of the particular housing circumstances there, but also as part of the budget there was an announcement of additional funding for the Investment in Affordable Housing program.
We have agreements with all provinces and territories. The agreements outline the overall parameters or objectives for the funding. As I said, provinces and territories then have the flexibility to design and deliver programs that meet the needs and priorities in their jurisdictions.
Those agreements have an accountability framework that requires regular reporting to CMHC, annual public reporting; and of course they are required to provide us with a certain level of information when they make their claims for federal funding.
Senator Buth: How many years have you been supporting affordable housing?
Ms. Darke: The most recent Investment in Affordable Housing agreements were signed three years ago, I believe in July 2011.
Senator Buth: Have there been any issues in the last three years?
Ms. Darke: No, nothing significant.
The Chair: Thank you, Ms. Darke.
Ms. Cofsky is from Aboriginal Affairs, and she will tell us all about Indspire.
[Translation]
Diane Cofsky, Director, Program Directorate, Aboriginal Affairs and Northern Development Canada: This bill would earmark $5 million for the Indspire Foundation in 2013-14 to provide scholarships for postsecondary education to First Nation and Inuit students.
The Chair: Did the program exist before this? Was it just established? Please explain the program.
Ms. Cofsky: Very well. The Indspire Foundation has been in existence for over 20 years, and if I look at figures from last year, it offered scholarships to over 2,200 aboriginal students. Moreover, it raises funds from various corporate donors to contribute to student success.
Under Budget 2013 Indspire will receive $10 million over two years and the foundation has publicly stated it could generate or find another $10 million so as to have a new $20-million fund to provide scholarships to over 200 new students.
The Chair: Is the $5-million amount for this year?
Ms. Cofsky: Yes, $5 million this year and under Bill C-60.
Senator Bellemare: I would like to know how much is granted under these individual scholarships? And how are they awarded? Is it through a competition?
Ms. Cofsky: The Indspire Foundation has a very good Internet site that contains a great deal of information on its activities as well as audited financial statements. According to the foundation's 2011-12 report, the amounts granted for the 2,220 scholarships varied between $1,700 and $5,000 per student depending on the field of study.
Senator Bellemare: What do you know about the fields of study? Do the youth get funding for general studies or vocational training?
Ms. Cofsky: The Indspire report indicates fields of study for 2011-12; there are a 1,464 scholarships for post- secondary education in general, 650 scholarships for health care related fields, 65 in general arts and 41 in engineering and the oil and gas sector.
Senator Bellemare: Are scholarships awarded based on merit or is it on a first- come first- served basis?
Ms. Cofsky: Inspire has criteria to take into account the needs and areas of specialty. For instance, last year they received $34 million in scholarship requests and were only able to award 6 million dollars' worth of grants. So they have to choose wisely among the many applications they receive.
[English]
Senator Callbeck: The $5 million, how many scholarships or bursaries do you expect that to cover, roughly?
Ms. Cofsky: As I said, the Indspire has an endowment. If I look at their audited financial statements from last year, they have about $30 million in endowment. The revenue from this endowment fund generates the dollars for the bursaries. Last year they gave out $6.2 million in awards.
Senator Callbeck: Is $5 million what the government gave last year, or is this an increase?
Ms. Cofsky: This is a one-time thing. I am sorry; I cannot tell you the last time the government gave an endowment. It was several years ago. The department has a funding agreement with the foundation Indspire, but what we give every year for bursaries is about $600,000. This is a one-time thing that will help to increase the endowment fund for Indspire.
Senator Callbeck: Therefore, it is $5 million, and then $5 million next year?
Ms. Cofsky: Yes.
The Chair: We should clarify this. You are saying this $5 million is going to be endowed and is not to be used for scholarships or funds but only for the growth of that endowment?
Ms. Cofsky: That is my understanding, yes, because that is how the foundation works. They collect a lot of endowment funds from many different private sponsors.
The Chair: So this is going to an endowment.
Ms. Cofsky: Their audited financial statement specifies every endowment fund, one by one, and shows how the dollars come in and are redistributed. They keep the dollars separate by funds.
The Chair: Thank you. I just wanted to clarify that. I thought that was going to operations. That is helpful.
Senator Callbeck: Do you know anything about the success rate of the students who have received these bursaries or scholarships?
Ms. Cofsky: I am sorry; I do not know. I do not know whether the foundation follows them through their years of study and afterwards.
Senator Callbeck: The $10 million that the government is committing, that will not mean a cutback in the pot of money for helping Aboriginals to access post-secondary education, where there is a cap on it, I think, of 2 per cent every year?
Ms. Cofsky: It is not at all related. The department manages about $300 million per year in the Post-Secondary Student Support Program for First Nations and Inuit. That is a fund per student. It does grow by only 2 per cent per year, since the mid-1990s. It is not related, no.
The Chair: I have no other names on the list. I thank each and every one of you for being here and helping us out: Mr. Stupich, Ms. Fragoso-Peters, Ms. Cofsky and Ms. Darke.
We will now bring forward the panel to finish up Division 4. We are very pleased to welcome Mary Taylor, who will tell us about conservancy matters.
Thank you for being here. You are with Environment Canada?
Mary Taylor, Director, Habitat Conservation Management, Environment Canada: Yes. I am Director of Habitat Conservation Management with Environment Canada, the Canadian Wildlife Service.
With this bill, the government will give $20 million to the Nature Conservancy of Canada to continue its work under the Natural Areas Conservation Program to conserve ecologically sensitive lands. That is clause 128. I think you had mentioned that.
They secure land, often in partnership, and they leverage funds or in kind. They do this through purchases of land or easements and then create protection for habitat and species.
The Chair: Is the land owned by the Nature Conservancy of Canada, or is the land owned by the Government of Canada and managed by the Nature Conservancy?
Ms. Taylor: There is actually a mixture of land holdings. Typically, it is not the Government of Canada. The land is held by the Nature Conservancy of Canada. They are a not-for-profit organization that does hold land for conservation purposes, and they also have easements with other private holders or other municipalities. The title to the land is held in a variety of ways but with some kind of interest in the land for conservation purposes.
The Chair: The easements would be for trails, for example?
Ms. Taylor: The easements would be to protect it for conservation purposes, to not allow development, and to ensure that that habitat is protected.
Senator McInnis: Your earlier interest in this topic, Mr. Chair, intrigued my interest.
First, this is a not-for-profit organization, and I take it there is a national board?
Ms. Taylor: Yes, they have a national board.
Senator McInnis: Does each province participate, or are there individual sub-boards in the respective provinces?
Ms. Taylor: I am not sure that each province participates. The board membership comes from a range of people. I do not have that information directly before me.
Senator McInnis: I am trying to get clarification here. Does the Nature Conservancy receive a deed?
Ms. Taylor: In some cases they purchase the land and they have title, so they would have title to the land.
Senator McInnis: How do they operate? For example, if they get a group of islands and I want to camp on one of them, am I allowed to traverse? Can you go onto the property?
Ms. Taylor: I am not sure how they manage each and every property. I think it would depend on the property, the activity that is happening, and what they are trying to protect that property for. However, they manage those properties.
Senator McInnis: How do they square with Nature Trust? The Nature Trusts are provincial bodies that operate, I think, the same way. How do they square with the Nature Conservancy of Canada?
Ms. Taylor: How they work specifically with each Nature Trust, I am not sure I could tell you. However, I do know that the Natural Areas Conservation Program, as a whole, is meant to work with other organizations that hold lands for conservation purposes. The program was designed so that they work together. When they make a purchase, they may work with another qualified organization that holds lands for conservation purposes to have the two marry and get a larger parcel of land that is protected.
Senator McInnis: Let us say that the Nature Conservancy has a group of islands with a beach and ecosystem- sensitive lands where Parks Canada wants to put a national park. What kind of control or right does Parks Canada have to put a national park in place?
Ms. Taylor: I am not familiar with the process that Parks Canada uses to create a park, but I know they go through a very extensive consultation process whereby they determine the land and the holdings. I would assume that if there were an interest in developing a park in an area where the Nature Conservancy had land, they would hold conversations with them, part of which is a very public consultation process. They would file reports and work with them to determine the best use of that land.
Senator McInnis: Who would have supremacy? Who would have the right to say, ``We are going to have a national park there or not have one?''
Ms. Taylor: I am sorry; I do not work for Parks Canada.
Senator McInnis: I know.
Ms. Taylor: I cannot say who would have supremacy, but Nature Conservancy would have to be willing to sell or give them the interest in their lands.
Senator McInnis: That is the point. They would have to concur.
Ms. Taylor: Yes.
Senator McInnis: Currently, such a set of facts is in place whereby the Nature Conservancy is about to acquire huge tracts of land, and a huge group of organizations wants a national park. National parks create jobs. National parks normally do not destroy property or ecosystems. I am intrigued to know what authority the Nature Conservancy would have and whether they could prevent a national park's taking place; and, of course, national parks create an awful lot of jobs.
Ms. Taylor: I am not familiar with the particular case that you are referring to.
Senator McInnis: It is evolving, so you would not know.
Ms. Taylor: It would have to go through quite an extensive process to name it as an area. Parks Canada would have to do consultations, negotiations and work within the community. They work with the community so that all interests are able to voice their concerns. The Nature Conservancy, I expect, would come to the table and talk about it as well.
Senator McInnis: They would do that, but they would not have to because they could prevent it from happening. It is a national board with respect to dealing with a local group or group of organizations. I am not trying to put you on the spot or be difficult, but no one likes to take on the Nature Conservancy, given its name, all right? The Nature Conservancy is like ice cream and Santa Claus; no one wants to do anything that would be harmful. However, if they proceed, then the other opportunity may be lost.
Ms. Taylor: I cannot speak to the other opportunity. I also would note that the Nature Conservancy has this money, and they are just about finished expending the first round of money they received. They will be expending this money for the next year or two, so they will protect that land as soon as they possibly can acquire it, if it is one that they are truly acquiring; whereas Parks Canada would still have a lengthy consultation process to go through.
Senator McInnis: I know. The lands have been there forever and a day. Thank you very much.
Senator Callbeck: I am wondering about that $20 million. Do they receive that from the government every year or every second year?
Ms. Taylor: No. In 2007, they received $225 million. They have been drawing down every year. They drew down the last amount in March and expect to expend it by the end of October.
Senator Callbeck: That is $225 million. Did they match that? For the $20 million they are getting, they have to come up with double that amount. Is that right?
Ms. Taylor: Yes. The matching ratio for this $20 million is 2 to 1. For the last $225 million, we look at the history of the program and find that the match was 1.8 to 1 — almost a ratio of 2 to 1.
Senator Callbeck: They do not get the money unless they come up with the dollars.
Ms. Taylor: They get the money and have to get the dollars. The last time they committed to a ratio of 1 to 1, and they have succeeded in getting 1.8 to 1; so they expect to get 2 to 1.
Senator Callbeck: Thank you.
The Chair: You said that the last time they got 1.8 to 1, but their obligation was 1 to 1?
Ms. Taylor: That is correct.
Senator Buth: Can you tell me how much land in total is owned by the Nature Conservancy?
Ms. Taylor: I do not know how much land in total is owned by them, but for the Natural Areas Conservation Program, which is the monies to date, they have purchased 119,302 hectares with that money.
Senator Buth: That was the $225 million.
Ms. Taylor: That is correct, to date. There is still some money to be expended.
Senator Buth: Thank you.
Ms. Taylor: They have other hectares that are protected through other means as well.
[Translation]
Senator Chaput: How many properties throughout Canada would this amount include?
Ms. Taylor: I do not have the data on the number of properties throughout the country, but I do have numbers for each province if you like.
Senator Chaput: Could you send us that list?
Ms. Taylor: I can read it to you quickly —
The Chair: It would be preferable to send us the list.
Ms. Taylor: Not on each property, but on the number of hectares per province.
Senator Chaput: When you referred to ``matching,'' these are donations that are received?
Ms. Taylor: Yes, it can be a donation of money or property.
Senator Chaput: And the company issues tax receipts based on value?
Ms. Taylor: Yes, exactly.
Senator Chaput: Does the company work with partners that are in the same field?
Ms. Taylor: Yes, it works with other organizations.
Senator Chaput: Which organizations?
Ms. Taylor: Ducks Unlimited Canada, for example.
[English]
The Chair: Ms. McElroy and Ms. Lachance from Health Canada will tell us about the Pallium Foundation of Canada.
Helen McElroy, Acting Director, Health Human Resources Policy Directorate, Health Canada: Clause 131 proposes funding of $3 million over three years to the Pallium Foundation of Canada to support training in palliative care to front-line providers. The Pallium Foundation of Canada will develop and deliver a spectrum of continuing professional development resources and supports for health care providers. This initiative is expected to increase health care provider capacity and to develop public engagement strategies essential to meeting the needs for end-of-life care. PFC will also explore opportunities for collaboration with other organizations specializing in health professional education and palliative care in order to avoid duplication and to enhance the reach of its efforts.
Pallium Foundation of Canada works to improve the quality of palliative and end-of-life care for Canadians by creating inter-professional education resources for front-line providers, including doctors, nurses, social workers and pharmacists. Since 2001, PFC has supported innovative professional development, collaboration, and community capacity building in palliative care. The 2013 Budget commitment will complement the 2011 Budget commitment supporting the development of community integrated palliative care by addressing the need to build broader health human resource capacity.
The Chair: Could you tell us how long this foundation has been in existence?
Ms. McElroy: The foundation has been in existence since 2001. It started in Edmonton, where it largely serviced the Prairie provinces. However, since 2012, it has established itself in Ottawa, and its reach has extended nationally.
The Chair: This is the second time they have received federal money to help them in their work?
Ms. McElroy: Actually, they have received federal funding since 2003, I believe. They received funding from Health Canada, through a rural initiatives project. Then, they received more funding through the Primary Health Care Transition Fund, and then they are receiving funding through this budget. The 2011 Budget initiative that I mentioned went to another organization, and Pallium was a supporter of that.
The Chair: My final background question is about its governance structure. This is not-for-profit?
Ms. McElroy: It is a not-for-profit organization.
The Chair: Incorporated in Canada?
Ms. McElroy: Absolutely.
[Translation]
Senator Chaput: This foundation therefore supports palliative care training for front-line providers. I would like to know if needs concerning Canada's two official languages are considered in this training? Is there also support for training in French, just as there is for training in English?
[English]
Julie Lachance, Senior Policy Analyst, Palliative and Continuing Care, Health Canada: Yes, it is a national bilingual organization. Their membership is national, so they do have a presence in Quebec and in other areas of the country and meet the needs of both language population groups.
Senator Chaput: How would they do that in other areas of the country where there is a French-speaking population? How would they go about doing that in Manitoba, for example, or in Western Canada?
Ms. Lachance: They were initially established in Western Canada, so they have been involved in partnership with Manitoba. They have built partnerships from the ground up. Their model is this community model of involvement and engagement.
[Translation]
Senator Chaput: Who are these front-line health care providers? Who provides service in English and who provides service in French? Who are they?
[English]
Ms. Lachance: To whom do they provide service?
Senator Chaput: Who are they?
Ms. Lachance: Those front-line providers?
Senator Chaput: Yes.
Ms. Lachance: Doctors, nurses, social workers, pastoral care, pharmacists.
Senator Chaput: How does it work, if I may ask?
Ms. Lachance: Palliative care?
Senator Chaput: This model here.
Ms. Lachance: Their focus is on educating these front-line providers. The model to date, for palliative care, has primarily been specialist, based in hospitals and primarily for end-stage cancer care. Now there is growing demand to expand that to people who have any life-threatening condition in any setting of care. In order to be cost-effective and to expand access to palliative care, we need to take it out of that specialist model and ensure that all of the people who are encountering people at the end of life will be prepared to provide palliative care.
Whether they have just a generalist knowledge where they recognize what the issues are and are able to refer effectively to specialists or whether they can continue that care themselves, that is what this aims to do.
Senator Chaput: How does it work if people who need that care that we agree is usually at the end of their life do not speak either English or French because their first language is another language? Is there something in the training that takes care of that issue? They are at the end of their life, so they need to be understood.
Ms. Lachance: I appreciate that. I worked in a palliative care unit for 10 years. What we did was to access the community services of those language, religious or other communities that would respond to those needs best. We would bring in translators. We would bring in the people who were important to the person.
Senator Chaput: It is all part of the model, right?
Ms. Lachance: Yes. It is community engagement.
[Translation]
Senator Bellemare: Palliative care is no doubt an area in which there will be great needs very soon. An amount of $3 million is very little; the country is large. How do you distribute the funding among the provinces? How are these needs met in the different regions of Canada?
[English]
Ms. Lachance: Three million dollars is not very much when you consider that every person in this country will die. The idea is to leverage those funds to ensure that they can go as far as possible and have the greatest impact, even though, monetarily, it is pretty small when you consider the number of Canadians. It will not be divided up among the provinces, but it is a model that has worked well so far and will be replicated across the country in order to build that momentum and to build the partnership from the ground up.
[Translation]
Senator Bellemare: The funding is then distributed based on requests made by organizations in the different regions. The distribution is therefore not done per capita or based on population. Is it done at the request of service providers?
[English]
Ms. McElroy: It is a model that is being developed, and the target is front-line providers.
[Translation]
Senator Bellemare: Is it a model that could apply everywhere?
[English]
Ms. McElroy: Yes. As my colleague Ms. Lachance has mentioned, we recognize that this type of money is not going to reach everyone, but it is a start. It is a beginning that will reach a certain number of providers. Pallium has indicated that they are prepared to put their resources online to extend the reach, so we are optimistic that it will be a strong beginning.
[Translation]
Senator Bellemare: If I understand correctly, you are setting up a training program for those who provide palliative care, one that would be available on the Internet, on the Web or in all sorts of ways, and that will therefore have multiplier effects across Canada; is that correct?
[English]
Ms. McElroy: That is correct.
Senator Callbeck: You talk about this $3 million that it is going to build on the money you got in 2011 to support the way forward. You are talking about new community integrated palliative care models across the country. How would you categorize the progress that we are making? Is it good? Is it fair? Is it excellent?
Ms. Lachance: Are you referring to the 2011 funding or to palliative care in general?
Senator Callbeck: Palliative care in general.
Ms. Lachance: I think we have made remarkable progress. I had the privilege of attending the European palliative care congress at one point and was quite honoured to be a Canadian there because everyone in the audience said, ``You are from Canada; you have done remarkable things in terms of getting all of the medical schools to agree to put palliative care into your curriculum.'' Since then, we have funded initiatives for nurses and for social workers.
We have had a member of Parliament who had a special responsibility for palliative care, one of your colleagues.
Senator Callbeck: Senator Carstairs.
Ms. Lachance: Yes. We have great access to the drugs necessary to alleviate symptoms at the end of life, which is one of the markers of success internationally. I think we have done quite well. However, there is definitely room for improvement in terms of increasing access for more people throughout the country. It is a huge country, a complex country, so we all appreciate those challenges.
Senator Callbeck: When was it added in the medical schools?
Ms. Lachance: That was to be in place by 2008.
Senator Chaput: I have a very short question. Can we find that amount under health in the budget? I cannot find it in this document. Where do you find this $3 million?
Ms. Lachance: Clause 131.
Senator Chaput: Yes, in the bill, but what about in the budget?
The Chair: This is supposed to be a budget implementation bill, so we are wondering if we are implementing parts of the budget.
Senator Chaput: I am sorry; thank you. I have my answer: 223.
The Chair: Could you help us all with that, Senator Chaput?
Senator Callbeck: It is 223; that is likely the English, according to this document.
The Chair: We know it is clause 131 of the budget implementation bill.
Senator Chaput: That I have, yes.
The Chair: If you are able to help us with its origin in the budget, that would be great.
That is all I have on my list for this section. Thank you very much. Now I have Ms. Milroy-Swainson, who will tell us about the Canadian National Institute for the Blind. That is another $3 million.
Nancy Milroy-Swainson, Director General, Office for Disability Issues, Human Resources and Skills Development Canada: This section authorizes payment of up to $3 million in the current fiscal year, 2013-14, to the Canadian National Institute for the Blind, or CNIB as it is known.
CNIB is a registered charity that provides community services to support Canadians who are blind or partially sighted, supporting them to live independently in the community. These funds will be used for the support of a national digital hub, which is an approach to improving library services available to people with print disabilities.
The Chair: The Canadian National Institute for the Blind has been around for quite some time. We are familiar with that organization and the good work that it does.
Ms. Milroy-Swainson: Yes.
The Chair: Is it accustomed to receiving significant funds from the federal government?
Ms. Milroy-Swainson: It is a funding recipient on a number of levels. It has historically received a small amount from Social Development Partnerships Program for ongoing work. That funding is being phased out now. With respect to library services, though, it is not a long-term recipient. In 2005-06 it received funding to support library services. It also received additional funding available in 2011-12 for library services.
The funds this year are to support the continued evolution of a model that is intended to become self-sustaining among parties to the provision of library services, so in the long term the federal government would not be providing library services that funding.
The Chair: A digital network initiative is indicated here. Is that getting away from Braille, or is that digitizing print to Braille, or are you going to audio? What does it involve?
Ms. Milroy-Swainson: It would actually use all of that. For the moment, there is quite a discrepancy in the interests, preferences and skill sets of people with visual impairments and print disabilities. For the foreseeable future all of those models will be used. Generally there is an evolution toward a more digital manner of distributing and producing print material so that Canadians with print disabilities can then render them into their own format with their own software. It is a bit of an evolution.
The Chair: Could their own format be audio or Braille?
Ms. Milroy-Swainson: It could be. Ultimately, the goal is to make it available on whatever device an individual chooses to use, just as a person without a print disability has a choice among formats.
The Chair: Thank you very much and thank you for waiting for your turn to explain it to us. It is very helpful for us to have you come and explain what each of these requests for funds is, and you have done it well.
We will now proceed to Division 5, amendments to the Canada Securities Regulation Regime Transition Office Act, which we have seen in the past so I expect that should proceed fairly expeditiously.
We have two individuals in attendance to help us here, both from the Department of Finance Canada as I understand it: Nicolas Marion and Allan Prochazka. With respect to Division 5, dealing with the Canadian securities regulation regime, which we are somewhat familiar with having dealt with it in the past, this is an extension of that, but perhaps you can help us with this.
Nicolas Marion, Chief, Capital Markets and International Affairs, Department of Finance Canada: Thank you, Mr. Chair. In Budget 2013, the government reaffirmed its commitment to strengthen the capital market regulatory framework. It signalled that its preference for doing so is by establishing a common securities regulator in cooperation with provinces and territories. That said, the government also announced that if a timely agreement could not be reached with provinces and territories, it would be proposing legislation to ensure that it can carry out its legislative responsibilities with respect to capital markets, consistent with the Supreme Court of Canada decision.
The particular amendment before you would extend the mandate of the Canadian Securities Transition Office to ensure that the resources are available as this work continues.
The Chair: The important point is that Alberta and Quebec opposed the earlier legislation. The Supreme Court sided with Alberta and Quebec saying that the federal government did not have exclusive jurisdiction to deal with this but did have some jurisdiction. Does this reflect the balance that will have to be struck?
Mr. Marion: Right. Over the last 16 months, since the Supreme Court released its decision, the government has consulted with all provinces and territories through either bilateral meetings or multilateral meetings. There were a few multilateral meetings where all provinces and territories were represented. The idea here is in line with the Supreme Court of Canada decision to try to build a common securities regulator on a collaborative basis — a common securities regulator that would have offices in all of the participating provinces and territories and that would be empowered through both federal legislation and provincial legislation.
The Chair: Do we know how much per year this is costing the Canadian taxpayer to maintain this transition office?
Mr. Marion: In Budget 2009, the act that established the Canadian Securities Transition Office set aside $33 million for the duration of the transition office's mandate. Since 2009, the inception of the Canadian Securities Transition Office, they have always operated through this envelope. They are required by statute to table in Parliament, through the Minister of Finance, an annual report that talks about their financials. The last one was tabled at the beginning of October for the fiscal year ending in 2012. The next annual report will be tabled early October of this year for the fiscal year ending March 2013. Since inception, at the last annual report ending fiscal year 2012, their operating expenditures total a little over $24 million.
The Chair: There is still some money left. There was, as I recall, some sunsetting provisions in here; if a deal was not worked it would just disappear as an office. There is still some money there, so maybe that is an excuse for continuing.
Mr. Marion: There is a lot of work still ahead of us. That is the primary rationale for wanting to keep the Canadian securities transition resources available for the good work that they have been doing.
In terms of its mandate, it was set to end as of July last year, and there was a provision in the act that allowed that to be extended by a year. Through an order of the Governor-in-Council, their current dissolution date would be mid-July of this year.
The Chair: This legislation will allow that to continue?
Mr. Marion: That is correct, Mr. Chair.
The Chair: It will not disappear in mid-July of this year if we see fit to pass the legislation?
Mr. Marion: That is correct.
[Translation]
Senator Bellemare: We know that Quebec is opposed to the creation of a single national regulator. Is Quebec participating in the work of the transition organization?
Mr. Marion: Quebec has participated in meetings but continues to oppose the creation of one national securities regulation organization.
Senator Bellemare: Would Quebec agree with the approach of having regulations that, without being identical, would be consistent or comparable?
Mr. Marion: As far I as know, regarding developments, discussions and an interest in working together, Quebec has not been at the forefront of discussions that have been held to date.
Senator Bellemare: Quebec has maintained its original position?
Mr. Marion: Yes. That being said, Quebec has recognized that Parliament has some jurisdiction over regulating securities.
Senator Bellemare: Thank you very much.
[English]
Senator Callbeck: I have a brief question. You say that the office was to close July this year, 2013, but this legislation will allow it to continue. For how long?
Mr. Marion: The amendments before you would repeal the statutory dissolution date and would enable the Governor-in-Council to state a new dissolution date by order.
Senator Callbeck: Thank you.
Senator Buth: Can you tell me which provinces are at the table or are interested in cooperating?
Mr. Marion: As I mentioned, all provinces have been at various multilateral meetings. Some of them, I think, are more open than others. If I look at Ontario, for instance, in their recent budget that was tabled on May 2, they reiterated their interest as well as some of the fundamental principles that would lend to its continuing support.
I think publicly British Columbia has also expressed its support. For other provinces, a number of which remain at the table — some are more engaged than others — I think they want to ensure that a proposal being discussed meets their interests. So long as they continue being at the table, I think that is a positive sign. Again, I think their support is reflective of needing to meet their interests.
Senator Buth: Could you have a cooperative agreement without Quebec participating?
Mr. Marion: I think it is possible to have a cooperative agreement with a critical mass of provinces, with a critical mass of what I would call the capital markets activity. I think the reality is that the Government of Quebec has been fairly consistent in its views with respect to a common securities regulator. I do not think that those views will change any time soon. It would be great if they did, but those are my expectations. From a practical perspective, you could certainly have a common securities regulator so long as you have a critical mass of provinces.
Senator Buth: How large is this office? How many people would be working on this?
Mr. Marion: I believe right now the number of staff is between 15 and 20.
Senator Buth: Thank you very much.
Senator McInnis: I want some clarification. I know in the province of Nova Scotia, back a decade ago at least, they put a great deal of work into putting a securities commission in place because there were some problems there. You said that there would be some tentacles or something taking place in the provinces, yet you would have a national body. Do I understand this correctly? What would it be, for example, in the province of Nova Scotia, and what authority would diminish?
Mr. Marion: You will have to understand that a proposal or an agreement between provinces and the federal government will evolve. It is a process of discussion and what makes sense for each province that is participating in the proposal as well as what makes sense for the federal contribution to the proposal in terms of its authority.
I would not say that there is a clear proposal out there that lays out what is in each and every province. However, I think fundamentally the federal government has said that any national regulator would have to have regulatory offices — that is, offices with a sufficient amount of decision-making power, a sufficient amount of authority and the appropriate level of expertise to serve that particular market. Those would be, for instance, in Nova Scotia. Within that structure, I think you could imagine having some of these offices throughout Canada as well as some decision making throughout Canada.
I think the real benefit here is having one set of rules applicable throughout Canada and a governance model that is structured with, for instance, an independent, expert-based board that reports through a council of ministers, for instance, that would include ministers responsible for securities in each of the participating provinces, and the same with the federal Minister of Finance. Those authorities, as they relate to Nova Scotia, would stay the same. I think it would be an opportunity for Nova Scotia and for the business community in Nova Scotia to deal with regulators in Nova Scotia, but that would have a voice at the national level.
Senator McInnis: Mr. Chair, you alluded to the Supreme Court of Canada decision, which I have not read, but was the national government attempting to do something and it ended up in the Supreme Court? I see; it was a reference, yes.
The Chair: Not unlike Senate reform, the same kind of situation.
Senator McInnis: Well, yes.
If the court came down, majority rule obviously, on the side of Quebec and Alberta, and if I understand this now, the national government, if they do not get concurrence from the provincial governments, will take the route of the Supreme Court decision, correct? Did you say that, or did I misunderstand?
Mr. Marion: I do not think I have said that. By way of background, the federal government, after it established the Canadian Securities Transition Office, developed a piece of legislation — the proposed Canadian securities act — that was also discussed with an advisory committee of the participating provinces and territories. It included 10 provinces and territories. Once the act was drafted and discussed with the various partners, it was referred to the Supreme Court. The basis of the act was effectively a federal act, federal statute, and would apply throughout Canada but on a voluntary basis. In order to apply in Ontario, Ontario would have to voluntarily opt in. It is the same with British Columbia and all the other provinces and territories. The basis of the act was a comprehensive regime and that would effectively transition the provincial regulators into this national regulator. The Supreme Court, in its decision, said with respect to this act that it is not a valid exercise, from what I understand. I am not a lawyer, but it is not a valid exercise of Parliament's authority under the general trade and commerce branch of the Constitution.
Senator McInnis: It was procedural; they did not come down and say Alberta and Quebec are correct?
Mr. Marion: No, they basically said that this act itself —
Senator McInnis: I could not see why Quebec would not agree if the Supreme Court of Canada concurred with their position, but it was a procedural one. I understand.
Mr. Marion: Basically the Supreme Court said that. Now, the Supreme Court did say that Parliament has responsibilities over certain areas of securities regulation and also suggested that provinces and the federal government work together collaboratively in the exercise of those authorities.
Senator McInnis: Thank you.
[Translation]
Senator Bellemare: To continue in the same vein as earlier, is it not true that if we had the same rules throughout Canada, a province like Quebec, which has unique institutions like the Desjardins Group and others, could be at odds with national regulations? These typically Quebec financial institutions would have their legitimacy or way of doing things challenged.
Mr. Marion: We have to be specific about the nature of the regulations. If you take the case of an issuer who wants to issue securities, or shares to raise money, if this issuer wants to do so outside of a certain province — which is the case of 97 per cent of issuers — he must abide by the regulations of every province and territory where the shares will be issued. So not only Quebec's regulations would apply to an issuer based in Quebec. There are 13 regulatory authorities throughout Canada, in each province and territory, 13 sets of regulations, of which some are harmonized, but which generally are not. There are exceptions and rules which specifically apply within a province, a bit like there are in the rules of French grammar.
A regulatory body which would have offices across Canada, which could benefit from the knowledge of participants in various market sectors within the provinces, could truly contribute to a national organization with national rules. This would make Canada more competitive, as well as each province which would participate in such a national body.
[English]
Senator De Bané: There are how many securities regulators in the United States?
Mr. Marion: If I understand correctly, there would be 50 state regulators, the federal SEC, and if you want to add to that mix, the CFTC in the United States. I would also argue that the Federal Reserve also plays a certain role with respect to the regulation of securities.
Senator De Bané: Those who want to go on that national stock exchange in New York can sell their securities all across the country?
Mr. Marion: Absolutely. If you look at a company that deals with interstate activity, for instance, they would normally be regulated by the primary regulator in that case, which is the U.S. Securities and Exchange Commission.
Senator De Bané: If you want to do business there and have money from different investors and savers, by putting your shares on that stock market you can cover the United States?
Mr. Marion: Absolutely.
Senator De Bané: Second, I remember that Purdy Crawford, the great dean emeritus of Canada's corporate bar who comes from Nova Scotia and was inducted into the Canadian Business Hall of Fame, once said it is easier to do business in the European Union covering 27 countries than in Canada with 10 different provinces. Do you agree with that?
Mr. Marion: I have never tried to emit shares in the EU, so it is difficult for me.
Senator De Bané: He was on both sides. He knew the European market and compared it with Canada; he said there you do it once in Brussels and you cover the whole country.
Mr. Marion: He knew the securities market very well and continues —
Senator De Bané: You bet; he was the dean of that.
Mr. Marion: Certainly, when we looked at the proposal, we looked at some of the great work that Mr. Crawford has done. There is a real opportunity, in that vein, to improve the securities regulation in Canada.
Senator De Bané: I think it is time that we wake up.
Senator Callbeck: It says here that in Budget 2013, the government emphasized the Supreme Court opinion. It states:
If a timely agreement cannot be reached, the Government will propose legislation to ensure that it can carry out its regulatory responsibilities for capital markets consistent with the decision of the Supreme Court of Canada.
If that is the case, if they cannot get the provinces to buy in and they go ahead with legislation, what would that legislation look like?
Mr. Marion: First, I think it would have to follow very closely the decision of the Supreme Court. The Supreme Court of Canada has said that the federal government has responsibility over matters of genuine national concern, including preserving and maintaining the integrity and stability of capital markets in Canada, as well as maintaining the competition within the capital markets — efficiency — as well as capital markets in Canada.
In terms of legislation, that work has started now, so we are looking at options. We are looking at options and doing our analysis, working with the transition office in looking within the parameters of the decision for what makes sense for Canada.
Senator Callbeck: So you are just looking at it now.
Mr. Marion: We are beginning that work; that is correct.
The Chair: They are seeking authorization to continue the office to keep those 13 people employed and spend the rest of the $33 million in thinking about it.
Thank you very much for being here and for helping us understand what you are trying to achieve. We appreciate you waiting. I know there are many wishing to take your seats, so I will thank you, Mr. Marion and Mr. Prochazka, on behalf of our committee.
We will now bring forward the group to tell us about the Investment Canada Act. I wish to point out to colleagues that the House of Commons Industry Committee is also studying this particular aspect, and these witnesses have been slotted to appear there at 3:15. We will go until then and they can make their way over to the other place. If we do not finish, we will ask them to come back another time.
Mr. Halucha and Mr. Dooley, thank you for being here. You will find this a much friendlier atmosphere than where you are going next.
We are dealing with Division 6, amendments to the Investment Canada Act.
Paul Halucha, Director General, Marketplace Framework Policy Branch, Industry Canada: Thank you for having us here today. I am here with Matthew Dooley, Acting Director of the Investment, Insolvency, Competition and Corporate Policy Directorate at Industry Canada.
The genesis of the changes in the BIA regarding the Investment Canada Act go back to December of last year, when the Prime Minister made an announcement around how the government would view state-owned enterprises in the context of transactions reviewed under the Investment Canada Act in the future.
At that time, the Minister of Industry had completed his review of the Nexen transaction with CNOOC and another transaction of Progress Energy by Petronas, a Malaysian state-owned enterprise. In that context, the government made a series of announcements, including a policy clarification, stating that in the oil sands, from that point on, transactions would only be approved on exceptional bases. They also noted that the government would be reviewing future transactions and monitoring the level of state-owned enterprise investments in other sectors of the economy.
Second, the state-owned enterprise guideline, which Minister Prentice put out in 2009, was updated and released. Specifically in that, a new definition of ``state-owned enterprise'' was put in place. It indicated before that it was in direct or indirect control, and we added the concept of influence.
Two other changes were made at that time.
Third, there has been a commitment since the Wilson panel to liberalize the SOE threshold up to $1 billion over five years. It was announced at that point. The Prime Minister announced in December that the liberalization would go forward for private sector companies; it would not happen for state-owned enterprises.
Finally, national security review provisions were added to the act in 2009. In the fall, the Prime Minister indicated that an extension of the timelines would be brought forward.
To segue to the act before you, I wanted to provide the policy context to indicate that there is a clear policy communication on all the aspects that are contained in the BIA, except for one area, where I will expand.
First — I will go in reverse order — the national security timelines. As I indicated, the government's intention is to provide additional time to the GIC — to the Minister of Industry — in order to ensure that the national security review process is conducted fully.
In the BIA is a set of clauses that will give the minister the authority to prescribe those periods. If you are looking in here to understand what those times will be, they are not here; they will be prescribed in regulations later. We are simply giving the minister the authority to prescribe in regulations those additional timelines.
Second, we have included a definition of ``state-owned enterprise.'' As I indicated, it is the same definition that was included last December when the Prime Minister spoke and when the SOE guideline was updated.
Third, the threshold power is here. You will notice that we are repealing the previous liberalization. We indicated the schedule remains the same: It will go from the current levels up to $600 million, stay there for two years, then be another two years at $800 million, and up to $1 billion at the beginning of the fifth year. What is changed is that state- owned enterprises no longer benefit from that liberalization, so that is the principle change in terms of the threshold.
As the threshold increases, that is the common parlance: We are liberalizing the threshold, because the number of companies that otherwise would be subjected to reviews is reduced, so it is a liberalizing measure.
The Chair: You are proposing that the threshold for transactions that would be reviewed is going higher; is that right?
Mr. Halucha: Exactly.
The Chair: Everything below that line would not be reviewed and would not fall under this; is that correct?
Mr. Halucha: That is correct, other than in one small instance, which is the last power that is in the act, which was not included in the December announcement. This is the power relating to de facto control.
Currently the act has a legal definition of what control is. It says that control happens in the case of a private company when the greater proportion of the assets are sold; so 50.1 per cent of the assets change hands to a foreign government. Legally, the control has moved. In the case of a publicly traded company, it is 33.1 per cent of the shares, because it is recognized in corporate law that at 33.3 per cent, you have the ability to veto many of the significant corporate decisions within a private company.
If the minister has concerns that a deal has been structured in such a way that, while legal control has not been given to the foreign investor — and it only pertains to state-owned enterprises — a foreign investor acquires control, new authority allows the minister to conduct what they call a ``de facto control review.'' That is to look at all the various factors relating to the exercise of control within a corporation.
If the minister determines that they do not have legal control but have de facto control, and the company is over the threshold — so the transaction still has to be above the threshold for that year — he is permitted to bring the transaction forward and review it under the act.
That is the extent of the changes.
The Chair: Could that be retroactive? Could that apply to some transaction that has already taken place?
Mr. Halucha: The government has established a 60-day reach-back period. From the period when the BIA was introduced in the house, I believe at the end of April, until it receives Royal Assent — any transactions completed during that period — the minister will have 60 days on the other side of that period to reach back and make a determination. He can conduct a de facto control test and send an order to the company indicating he will proceed with a review.
The Chair: Thank you. I have received a letter from the Canadian Bar Association, and that letter will be translated and circulated to all members although it has not been yet. We just received it this afternoon. Are you familiar with that letter?
Mr. Halucha: We have had an opportunity to look at it. We also received it just before the committee appearance.
The Chair: I will not put you on the spot with respect to the letter other than that they let honourable senators know that they are concerned about certain provisions being proposed, and they make some suggestions.
Once you have had a chance to review it, could you provide us with your response to the points they raised, so we will have an understanding?
Mr. Halucha: Absolutely, or we can speak to it now.
The Chair: If you have time, but honourable senators have not seen it and that is part of the problem. If you have some general comments rather than going into the specifics, go ahead.
Mr. Halucha: The Canadian Bar Association raised questions around certainty. The legal practitioners who support foreign investors in making acquisitions in Canada have traditionally sought a high level of certainty in the act. It is important to note that the act is a discretionary power. Ultimately, the minister on a case-by-case basis is legally required to assess each transaction and make his judgment based on the famous net benefit factors that are contained in the act. He has a set of factors in the act, and then he has a discretionary authority and a legal obligation to review each of them.
On its own, that means that there is a level of uncertainty, as they never are able to predict exactly how the minister will respond.
What typically happens is that the maximum uncertainty with regard to any policy change is at the point when it has been articulated and not been used, which is the case we are in right now. Regarding previous instances where the government made significant changes to the ICA, I would note in particular then Minister Prentice announced the state-owned enterprise guidelines, and there was the addition of the national security provisions in the act. Canada was different from most countries in that we only had an economic review test up until 2009, I believe.
In both those instances, the same types of questions about uncertainty were raised. In both cases, the government, over time and over a series of decisions, established a body of practice. If you talk with many of the same lawyers, they will now indicate that they do not have concerns about, for example, national security provisions because they understand how they are reviewed. We would contend that with practice and decisions there will be clarity established around these as well.
Uncertainty in this case was a conscious decision of the government. The view was that with regard to state-owned enterprises, it was important to provide the minister with maximum flexibility to assess those transactions when they took place. In both cases, the addition of influence provided the minister with another way of looking at it in that when a corporate structure is established, he can look not just at the number of shares that a state held but also at other decisions, for example, the extent to which they control other members of the board, the extent to which individuals move between the foreign state and those corporations, and the past practice of the state. All of these factors are ones that he is now permitted to look at.
The Chair: When you say ``influence,'' is that the same as the de facto control issue?
Mr. Halucha: They are at different stages, but, effectively, yes, we are talking about the same set of factors.
The Chair: Can you tell senators about the net benefit test, and the economic test is the broadest test? Is security included?
Mr. Halucha: National security is not one of the factors under the net benefit test. Those are all economic factors. There is a division within the act between the economic review process and the national security process. The Minister of Industry is ultimately accountable for both, but the Minister of Public Safety provides strong advice and recommendations around the national security component. They are distinct within the act, and there is an administrative separation as well.
The Chair: This is not unlike legislation in other countries in the world, especially with all the international trade that is going on. How do we compare? If you put us on a scale, would we be more protective of Canadian industry or less than most of the nations that we deal with internationally?
Mr. Halucha: The regimes are always very difficult to evaluate partly because many countries are not very open about how they conduct foreign investment review tests, especially countries like the United States where they only have a national security test. It is very difficult to understand. You typically have reporting around what the results are, but transactions will leave the table; foreign investors will be given indications that they probably should not pursue. A lot of that is not captured.
Generally, Canada does very well in terms of attracting foreign investment. In the policy announcement in the fall, again, the Prime Minister was quite clear that the country remains open to investment and recognized that foreign investment is extremely valuable for the development of the Canadian economy; it is essential, the life blood. However, in the context of state-owned enterprises, a degree of prudence would be applied, so the new powers the minister is getting here will effectively empower him to use that prudence and that discretion.
The Chair: The amount for state-owned enterprises will not be liberalized, as you termed it. How do we come up with the figure of $344 million?
Mr. Halucha: At this point, it is basically indexed for the growth in GDP. For the origin of it, I would have to get back to the committee. It increases by increments of $10 million to $15 million to $20 million, depending on the increase in nominal GDP on an annual basis. This is to prevent a situation where, if you look back seven or eight years ago, you had a limit of $200 million.
Another factor is that if you do not actually have some sort of an inflation index with the threshold, then, effectively, the regime becomes progressively less liberal because the threshold does not take into account inflation.
The Chair: There is no inflationary factor built in?
Mr. Halucha: It would continue for state-owned enterprises. The proposal with state-owned enterprises is to use the existing definition of ``asset value'' in the act. There is no new proposal to bring forward a different way to calculate what their value is or to change how they would escalate. They would go up progressively, year after year, as nominal GDP increases. Last year, we went from $330 million to $344 million, to give the committee an idea of what the increase is like on an annual basis.
The Chair: The ``enterprise value'' is what we are moving to for all corporations other than state-owned enterprises. Could you explain that to us?
Mr. Halucha: Asset value is the book value of the company. It is the assets minus the liabilities. The reason for moving to EV value is that you have a lot of companies now, in particular those that are in the information economy, that have trademarks, patents and intellectual property. It is very difficult to value that using asset value. EV value — market price — gives you a better sense of the value.
The Chair: How do you determine market price when they do not have publicly traded shares?
Mr. Halucha: You are talking about private companies. We are asking them to do EV. The decision there is that after a transaction is done, they would agree on a purchase price, obviously. The view is that that is the market value and that the board has to effectively attest to that as the value of the company. For cases of companies that are publicly traded, we have a formula in regulations that we published last year.
The Chair: Mr. Halucha and Mr. Dooley, we do not want you to be late for your next meeting. We thank you for being here and explaining this to us.
We will now go on to the next division. Division 7, as I understand it, amends the Canada Pension Plan.
Mr. Tousignant and Mr. Cuthbert, thank you for being here. Mr. Cuthbert is from the Canada Revenue Agency, and Mr. Tousignant is from the Department of Finance Canada. We are dealing with Division 7, the Canada Pension Plan and changes proposed thereto. Please go ahead.
Ray Cuthbert, Director, Director's Office, Canada Revenue Agency: This amendment is necessary because of the recent change to the Quebec Pension Plan contribution rates that now makes them higher than the Canada Pension Plan contribution rates. The proposed amendment will affect only individuals who work in Quebec but live outside Quebec.
During the year, employees in Quebec will have QPP contributions deducted from their pay. However, at the end of the year when they file their tax return, the Canada Revenue Agency will calculate the required contributions using the CPP contribution rate because the individuals live outside Quebec.
This creates a situation where, because the QPP contribution rate is higher than the CPP contribution rate, there will be an overpayment calculated, even though the amount of the contributions were correctly paid during the year. In other words, the individual would be entitled to a refund that, in essence, they should not be getting.
The proposed amendment will ensure that the appropriate contribution rate will be used, and the calculation will determine the amount of required contributions during the year. This will result in no overpayment being calculated, assuming everything is being done properly, and the individual will get the proper credit of, in this case, the QPP deductions that should have been made during the year.
I would be pleased to answer any questions.
The Chair: Is there a corporate equivalent to this? Is the employer paying more into the Quebec Pension Plan than the Canada Pension Plan and then we have to make changes in that regard as well?
Mr. Cuthbert: This measure does not deal with the employers. At this time, there is no equivalent employer calculation.
The Chair: Does the change in the Quebec plan require the employer to pay more towards the individuals who are employed there for their pension plan?
Mr. Cuthbert: That is correct. The employer will be deducting the QPP rate and matching that portion during the year.
The Chair: Matching it?
Mr. Cuthbert: Yes. The individual will pay the QPP during the year and the employer will match that.
[Translation]
Senator Bellemare: What is the gap between the Canadian rate and the Quebec rate?
[English]
Mr. Cuthbert: Currently, the QPP contribution rate for 2013 is 5.1 per cent of pensionable earnings, and the CPP contribution rate is 4.95 per cent. The net dollar effect, if that would be more helpful, if people are earning the maximum pensionable earnings, the difference of dollars between the two regimes would be about $71.
[Translation]
Senator Bellemare: Is there a difference between both systems? Usually both systems evolve in a similar way; is this the first time that the rates differ, or has this already happened in the past? Is this the first time that the assessment rate under Quebec's pension plan is different from the federal plan?
[English]
Mr. Cuthbert: This is the first time since 1966 that there has been a difference in the rates.
[Translation]
Senator Bellemare: I know that this is connected to demographics. Thank you.
[English]
The Chair: Will the result of this be that when someone who has paid into the Quebec Pension Plan retires, they will have a higher pension than people in other parts of Canada?
Mr. Cuthbert: Unfortunately, being a representative of the Canada Revenue Agency, I cannot really speak about what the benefits would be. That would be a matter for HRSDC or the Canada Pension Plan people.
The Chair: We know more is being paid in by both the employer and the employee, but we do not know if more will be taken out.
Senator Callbeck: My first question has just been asked; it was on the rates.
How many people do you think this will affect in a year?
Mr. Cuthbert: The number of people affected should be quite minimal. We looked at 2010 data to figure out how many individuals would be affected, and we came up with a number between 24,000 and 25,000. The exact number is 24,326. It is quite a small number of the taxpayers in Canada.
Senator Buth: You made the comment that the difference would be approximately $71. In the briefing notes, it says it would be an overpayment of $34.95. Could you explain that?
Mr. Cuthbert: Yes. The figures I used are for 2013. The figures in the briefing material are from 2012, so it has actually gone from approximately $35 last year to $71 this year, and the Quebec contribution rates will continue to escalate over time, so that spread will grow. If no measure is put into place, there will be a bigger and bigger difference between the contributions.
Senator Buth: For the Quebec plan, then, have they laid out the increases over a certain period of time? Do we know what that is?
Mr. Cuthbert: I do not happen to have that information, but my understanding is they have laid out the increases up until the year 2017.
The Chair: That is interesting. We will be following this one. Thank you very much for being here and explaining it; senators now understand what they are being asked to vote on.
The next group will deal with the Pension Act, the War Veterans Allowance Act and another Supreme Court of Canada decision to be dealt with through legislation. That would be Division 8.
From Veterans Affairs Canada, we have Mr. Butler. You are here all by yourself.
Bernard Butler, Director General, Policy and Research, Veterans Affairs Canada: I am indeed, Mr. Chair.
The Chair: You will handle this decision of the Supreme Court that has made a number of veterans happy, I would say.
Mr. Butler: Indeed, it has. I thank you for that.
By way of context, these proposed amendments in Division 8 of Part 3 are basically designed to give effect to ceasing the deduction of disability pension benefits paid under Veterans Affairs Canada's Pension Act when it comes to determining eligibility and calculating benefits payable under Veterans Affairs Canada's War Veterans Allowance legislation.
By way of context — and, Mr. Chair, you have already alluded to it — in the spring of 2012, the Government of Canada made an announcement to the effect that it would no longer include disability pension benefits paid under the Pension Act in the offsetting of Veterans Affairs Canada's three principal programs that take this into account.
As of October 1, 2012, the government ceased offsetting disability pension benefits for its Earnings Loss program under the New Veterans Charter and also for its Canadian Forces Income Support Benefit under the New Veterans Charter. Those were regulatory amendments, and it was possible for us to implement those more readily than the legislative changes.
What you see before you now in Division 8, Part 3, is the legislative change required now to give effect to the offsetting of the disability pension for purposes of the War Veterans Allowance Act.
The War Veterans Allowance program, to refresh you, is an income support program designed to provide assistance to low-income veterans of both the Second World War and the Korean War, as well as their survivors. As a function of that program, once a veteran becomes eligible for War Veterans Allowance, they also become eligible for a number of collateral programs that Veterans Affairs provides, including its long-term care program, the Veterans Independence Program and its treatment benefits program.
Effectively, to cease the deduction of VAC's disability pension from the War Veterans Allowance, or WVA, these proposed amendments are required. Essentially, the changes to the War Veterans Allowance Act itself will simply exclude disability pension benefits from the definition of ``income,'' and changes to the Pension Act will essentially stop the withholding of disability pension payments to WVA recipients in order to avoid circumstances creating overpayments on those accounts.
Once the legislative authority is obtained, if and when, through the budget implementation act, it will have a positive effect on a number of veterans in this program. Essentially, about 200 recipients in the program will receive an increase in their allowance payments. There will be about 3,000 or so more veterans and survivors who will qualify for the allowance. There will be about 700 more veterans who will qualify for Veterans Affairs health care benefits, and there are about 2,000 veterans in long-term care who will receive greater levels of support for their care as a function of these changes.
All told, over the next five years the expenditure for these changes will be in the order of about $95.4 million.
Mr. Chair, with that brief overview, I will turn it back to you for questions.
The Chair: Thank you, Mr. Butler. The $95.4 million.
Mr. Butler: Over five years.
The Chair: Will it continue after that?
Mr. Butler: It will, indeed, but the calculation we have done is on a five-year horizon, and that is the estimate of cost.
The Chair: That is cumulative for five years?
Mr. Butler: Those are cash costs, that is right, cumulative for five years.
The Chair: It is something less than $20 million a year.
Mr. Butler: Yes, that would be the benefit paid each year.
The Chair: My understanding is that under the New Veterans Charter, Veterans Affairs Canada has been trying to get away from a pension and dealing with lump sums for loss of limbs, et cetera. How does one qualify for a pension under the Pension Act with the New Veterans Charter?
Mr. Butler: The Pension Act is not legacy legislation, but it has been in effect for many years, going back to 1919. Veterans of the Second World War could still make applications under the Pension Act. The New Veterans Charter, which was implemented on April 1, 2006, applies to all so-called modern-day veterans: those who have served since the Korean War. All of those individuals, when they come to the department seeking benefits and support, would make applications for program benefits through that suite of programs under the New Veterans Charter.
However, veterans of the Second World War and the Korean War could still potentially come to us. We still see applications for disability benefits and so on being made under the old Pension Act. These changes must be made to ensure that those veterans will achieve the benefit of the cessation of offsetting.
Bear in mind that the War Veterans Allowance Program, as I indicated, applies to Second World War and Korean War veterans. It is not a program that is open to the so-called modern-day veterans. It is one of the older, traditional veteran-oriented programs, and as the traditional veterans age and pass on, ultimately the numbers of veterans and survivors in that program continue to decrease.
Senator De Bané: Which is more generous, the one for the older generation or the newer generation?
Mr. Butler: Thank you for the question. It is not really a question of which is more generous, I do not believe. It is really a question of which programming served and serves the unique benefits of two very different classes of veterans. If you go back to post-First World War, the Government of Canada, over a period of time, introduced various programs, benefits and services targeted to meet very specific needs of large cohorts of veterans coming back from the First World War, and after the Second World War the very large cohort of men and women who came home. They had very specific needs. They were not career soldiers. They had signed on to fight a war on behalf of Canada. They had very specific needs, and the Government of Canada responded over many years with different programs and services.
What the Government of Canada decided, as of April 1, 2006, was that the modern-day veterans, men and women who have been in service since the Korean War — career soldiers for the most part — have different needs and requirements. As a function of that, the New Veterans Charter was implemented in 2006 with a view to targeting what were largely the evolving transition and re-establishment needs of this younger group.
They are very different programs with different provisions in each. We believe that where we are currently is very well situated to meet the needs of the modern veteran.
Senator De Bané: Per capita, how much does each cost you per beneficiary?
Mr. Butler: You cannot really make that determination because each veteran who comes to the department has different needs. As an example, if we look at the current environment, an individual who may have served for five years and may have very little disability but simply wants a little bit of support in terms of career transition assistance, that may be the only benefit or service they look for. Another veteran may come to us after suffering a catastrophic injury in Afghanistan, for instance, might have lost both of his or her legs or might have suffered a traumatic mental health issue. Their needs are entirely different, and the programming will provide different levels of service and therefore different costs associated with them for each of those veteran types.
Senator Buth: Thank you very much for being here today. When was the War Veterans Allowance created? Can you elaborate on the purpose of the allowance in the larger context of the services and benefits that we offer to veterans?
Mr. Butler: The War Veterans Allowance Program is a long and very old program; it was developed in 1930. Its primary thrust and focus has been, over these many years, targeted to veterans who served in military conflict, in war. That was basically the sense over time. It was targeted really to try to address what we would call the intangible effects of being in a conflict, in a war.
By that I mean that what the Government of Canada found over the years was that there were many veterans who would return from, I will say the Second World War, without any apparent physical disability necessarily, but they had significant challenges in terms of finding employment, reintegrating and re-establishing.
There was a feeling at the time that the social context was such that they needed some type of financial or economic support to help them manage. The War Veterans Allowance — and of interest is that a lot of older veterans used to refer to it as the ``burned-out pension'' — was a benefit paid to individuals who were having a real struggle trying to adapt and trying to get settled. It is an income-tested program, so it was designed to basically ensure that veterans and their families who were eligible would have a very minimum level of income. What the program did was essentially top up other sources of income that they might have up to a given ceiling, and then beyond that they would no longer be eligible. That is essentially the history of the program.
Senator Buth: How many veterans are we talking about in total?
Mr. Butler: It is a declining number. As of December 31, 2012, we had roughly about 3,600 veterans and survivors in the program.
Senator Buth: What happens in terms of survivors in this program?
Mr. Butler: The survivors become eligible as the veteran passes away, as long as their income levels meet the thresholds and requirements. It is a very good point, because right now we actually have considerably more survivors in the program than we have veterans themselves. This is again reflective of the demographic change in this aging veteran population.
Senator Buth: This is one piece of a suite of programs that is offered to veterans. How would you rank this in terms of importance?
Mr. Butler: Again, bearing in mind that this program is targeted to veterans of the Second World War and Korean War and is one element, as you point out, of programming that is available through Veterans Affairs Canada for that population, obviously for those individuals who qualify for it because of their income I would say it is an important program and, as I noted earlier, not only for the benefits that it provides directly, but also because of the fact that it does provide access to other program elements of Veterans Affairs programming, which would include, again, subsidies for long-term care, access to treatment benefits and access to the Veterans Independence Program.
Senator Callbeck: You mentioned the Veterans Independence Program. Will this change affect the number of veterans and survivors or spouses who will be eligible for it?
Mr. Butler: It will, senator. I will see if I can find the number here. It will provide access for an additional number of veterans for the VIP. I do not have that number in front of me, but it will have an impact as well on those, yes.
Senator Callbeck: Because that is an income-tested program, is it not?
Mr. Butler: VIP is basically a program to provide support for independence in an individual's own home, based on a number of eligibility criteria, including service-related disability and so on. If you qualify for War Veterans Allowance, it is one of the provisions you can then access through that program; you are right.
The Chair: Mr. Butler, you talked about two different types of veterans. There is the modern-day veteran and then the War Veterans Allowance, Korean War, Second World War. You drew a parallel. The legislative changes are necessary with respect to the war veterans because of the changes resulting from the court case. I misspoke earlier; I said it was the Supreme Court, but it is a Federal Court case.
Mr. Butler: Correct.
The Chair: My apologies for that. It is the Manuge case. You were drawing the parallel. The changes being made to the older veterans programs are the result of the changes that had to be made to the modern-day veterans as a result of that court case?
Mr. Butler: Yes, and perhaps I can be a little clearer.
With the decision of the Federal Court in Manuge, essentially the court was dealing with a question around the Canadian Forces SISIP, Service Income Security Insurance Plan. The issue turned on the policy. It was a policy document for that plan. The court had concluded at the time that there was a substantive question around the appropriateness of offsetting disability pension benefits for purposes of calculating eligibility for income support under that plan.
At the same time, the court commented on Veterans Affairs Canada's programming. It basically said that its interpretation of its legislative framework was actually quite appropriate. With regard to the legislation we operate under, the Pension Act, the court said Veterans Affairs is doing it right, consistent with the legislation. It had concerns about how SISIP was doing it compared against a policy document, an insurance contract.
Based on the court's ruling in Manuge, as I alluded to earlier, the Government of Canada decided, in an announcement following that decision, that it would not appeal the ruling and, furthermore, when it came to Veterans Affairs Canada programming, that it too would direct that all offsetting of disability pension benefits be terminated.
For Veterans Affairs Canada, that meant our looking at three programs. The Earnings Loss program and the Canadian Forces Income Support Benefit program are targeted to the so-called modern-day veteran. We have already addressed those now through regulatory changes implemented in October of 2012. The one remaining program that was impacted by this change was the War Veterans Allowance Act. That required legislative amendments to both the War Veterans Allowance Act and the Pension Act, and that is what you have before you today for consideration.
The Chair: The disability pension that was being deducted from the SISIP pension that we were talking about, was that disability pension under the Pension Act?
Mr. Butler: Yes, they were disability pension benefits paid under the Pension Act.
The Chair: Therefore, modern-day veterans can still apply for a pension under the Pension Act in addition to, and separate from, any pension they might have earned through contributions during the time they worked in the Armed Forces?
Mr. Butler: No. That SISIP provision is a Canadian Forces-administered program, a long-term disability program. Again, it was addressing issues where veterans were receiving benefits paid under the Pension Act. To try to put a finer point on it, if you were a so-called modern-day veteran prior to April 1, 2006, if you came to Veterans Affairs seeking a disability benefit, your application was made under the old Pension Act. It is only since April 1, 2006, that if you are a post-Korea-service veteran, you would now make your application under the New Veterans Charter.
The fact of the matter is there were many veterans, both on our books and that the Canadian Forces had under their SISIP program, who were receiving these benefits under the old pension legislation.
The Chair: Going forward, from 2006 onward, this court case will not impact on all those individuals?
Mr. Butler: It has impacted on some of those individuals. The individuals it has impacted on, in terms of modern- day veterans, are those individuals who came to Veterans Affairs after April 1, 2006. They were receiving a disability pension paid prior to that. They came to us after April 1, 2006, and they were seeking access to our rehabilitation program. Our Earnings Loss benefit is paid under the New Veterans Charter rehabilitation program.
By virtue of the way the legislation and the regulations were structured, if you were a modern-day veteran, you were already in receipt of a pension paid under the old act. If you came to us looking for support under our rehabilitation program, when you get into our rehabilitation program we provide you with income support, in other words, our Earnings Loss program. We were factoring in that earlier disability pension benefit that you received for the purposes of calculating income.
There is a crossover, and it has to do with the time and space that we are in. There are some crossovers, and we had to come to terms with that through regulatory change, as well as legislative change, in order to give effect to it.
The Chair: After 2006, there can be no applications under the Pension Act for veterans who are retiring then?
Mr. Butler: Modern-day veterans, correct.
Senator Callbeck: The Veterans Independence Program basically has two programs in it, right? If the veteran is getting those two programs and passes away, then the spouse can continue to get the two. If the veteran is not getting the two programs, then the spouse can apply; if she is within the income bracket, she can get them. However, if the veteran is receiving one program, after he passes away she can only get the one; she cannot apply for the second even though she is in a low-income bracket. I see you are the director general of policy and research, so can you explain to me why that is the case?
Mr. Butler: Thank you for the question, senator. I know that this has been a long-standing concern of yours. The Veterans Independence Program, in terms of its original roots and its original intent, was targeted at veterans. It was targeted at veterans to keep those veterans independent for as long as possible, in their own homes, or to basically avoid their having to go on long-term care. That was the focus. Survivors have benefited through various changes over time. As you know, the most recent change was to try to focus on those survivors who found themselves in very difficult financial circumstances. However, the idea was to try to keep the program focused on veterans and to not expand the program too broadly beyond the current intent. I fully understand the concern you have raised over time. You have been consistent in your expression of concern around that. At the moment, our thinking is to try to contain it and keep it as close to its original intent as possible.
Senator Callbeck: I understand what you are saying. However, it seems very unfair. On Prince Edward Island, a woman lives across the street from another woman whose husband was a veteran who did not get the two programs, so she cannot apply for the other one, even though she has a very low income.
Mr. Butler: Yes. Yet, because she does not meet that income threshold that the other widow meets, the flip side would be to say that because of the fact that the changes that were brought in more recently to allow that other individual to access both programs, the program was being broadened beyond that which it was originally intended to do. It depends on which side of the equation you find yourself as to whether you may feel it is equitable or otherwise; but I understand the concern. We are very conscious of it, for sure. I know you have raised it through various parliamentary questions and written questions. Certainly, we continue to be sensitive to it and will continue to keep that in mind as we try to move forward with this type of programming.
Senator Callbeck: Thank you.
The Chair: Mr. Butler, thank you very much. We appreciate your explanation. Keep up the good work with veterans.
Mr. Butler: It is a pleasure. Thank you.
The Chair: We are on Division 9, dealing with the Immigration and Refugee Protection Act.
Frank Vermaeten, Senior Assistant Deputy Minister, Skills and Employment Branch, Human Resources and Skills Development Canada: My colleagues Mr. Conrad, Mr. Massé, Ms. Paré and Mr. Baril and I are here to answer your questions. Clauses 161 to 166 deal with proposed changes to the Temporary Foreign Worker Program and the temporary resident permit fees; and clauses 167 to 168 deal with refugee protection.
In clause 161, the government is seeking to amend the Immigration and Refugee Protection Act, IRPA, to provide authority to revoke work permits issued by Citizenship and Immigration Canada and to suspend or revoke labour market opinions, LMOs, provided by Human Resources and Skills Development Canada if an employer is found to be misusing the TFWP.
In addition, under Economic Action Plan 2013, the government announced that it would introduce user fees for employers applying to hire temporary foreign workers through the LMO process. Therefore, clause 162 seeks a User Fees Act exemption in respect of work permit LMO fees to provide the government with the flexibility to quickly enact these fees through the amendments to the Immigration and Refugee Protection Regulations.
The government is also seeking a User Fees Act exemption that would give the minister of Citizenship and Immigration Canada the flexibility to quickly change temporary resident fees to ensure that taxpayers no longer heavily subsidize the processing of these applications. Clause 162 will amend IRPA to provide the authority to establish regulations for a privilege fee in respect of work permits. As well, it specifies that regulations may waive these fees for certain work permits or certain classes of work permits.
Clause 164 will expand the existing provision that clarifies that ministerial instructions issued under IRPA may incorporate documents by reference to include the Minister of Human Resources and Skills Development Canada.
Clause 165 specifies that any instructions given by the minister of HRSDC under IRPA will not be statutory instruments for the purposes of the Statutory Instruments Act.
Clause 166 specifies that, similar to the current legislative requirement for a description of ministerial instructions given and the date of their publication to be included in the annual report to Parliament on immigration, the instructions given by the Minister of HRSDC for the suspension and revocation of labour market opinions and the instructions given by the Minister of CIC for the revocation of work permits will be described in the annual report to Parliament.
Clauses 167 and 168 will amend the Immigration and Refugee Protection Act to provide that claimants referred to the IRB prior to December 15, 2012, who have yet to receive a determination with respect to their claim, may not appeal to the Refugee Appeal Division, RAD, due to a drafting error in Bill C-31. Access to the Refugee Appeal Division of the Immigration and Refugee Board was extended in error to claims referred to the Refugee Protection Division on or after August 15, 2012. This allowed a four-month period whereby applicants under the previous system would have access to the Refugee Appeal Division upon its implementation on December 15, 2012.
This concludes our opening remarks. We would be happy to answer your questions.
Senator Buth: Can you tell me how this would affect the primary agricultural streams of temporary foreign workers?
Mr. Vermaeten: Certainly. With regard to legislative provisions, the ability to be able to revoke or suspend work permits and the LMO process will apply to all streams in the program. The government intends to exempt the agricultural stream from most of the measures that were announced, including the user fee. The government does not intend to implement any additional user fees or any new user fees for that stream.
Senator Buth: Where will those exemptions occur, in the regulations?
Mr. Vermaeten: Yes, they will occur in the regulations and in policy.
Senator Buth: Thank you.
[Translation]
Senator Chaput: Companies will have to pay fees to Human Resources Canada to get an opinion before they are allowed to hire foreign temporary workers. Will small businesses have to pay the same fees as big businesses to get an opinion?
[English]
Mr. Vermaeten: No decision has been made on the exact amount of the user fee or how it will be structured. As part of our regular policy analysis, we look at the issue of who pays and the burden relative to small businesses and large businesses. The final decision has not been made on that.
[Translation]
Senator Chaput: Is it a percentage or is it a specific amount?
[English]
Mr. Vermaeten: The user fee is designed to cover the full cost of implementing the labour market opinion process, so it is full recovery for the program. However, that does not mean that each individual pays exactly the expenses it takes to process a fee because they will differ from company to company depending on how complicated it is. As I had already indicated, there is a decision on exempting the agricultural sector from this. We will be looking at all of these factors, but no decision has been made on how and if it will be differentiated between small and large businesses.
The Chair: I am wondering about the interplay between Immigration and Human Resources in relation to this revoking of work permits and providing instructions to the immigration officer in that regard. Can you tell us who the ultimate authority is and how that will work? It sounds like it will be a bit of a confusing time.
Philippe Massé, Director, Temporary Resident Policy and Program, Citizenship and Immigration Canada: Currently, the CIC minister has the authority to issue instructions to officers, and that authority has been existence in IRPA since 2008. It has mainly addressed the processing of applications, so this is a new authority that would address the revocation of work permits. Similarly, CIC is now obtaining new authorities either to not process, to stop processing or to revoke labour market opinions, which are within the purview of the minister of HRSDC to render decisions on.
Both departments will be working together to draft those instructions for officers and to ensure that they are coherent. The implications of a negative or a revoked LMO and what happens in terms of the work permit would then be specified in those instructions. We will be working with HRSDC to draft those instructions to ensure that they are coherent in terms of their application in the field.
The Chair: In practical terms, could a farmer do his planning, get a preliminary approval from Immigration and then have HRSDC say, ``Forget it,'' after all that work has gone into planning? How do they react to a situation where they need someone to help harvest their product? Human Resources is saying, ``There is a bunch of temporary workers out of work in your area; hire them.''
Mr. Massé: The intent of the instructions is to provide the authority to the minister in situations where new information has come to light or where there are errors in the initial information that was provided that led to that original decision. We want to be able to adjust in those situations. Currently, if the individual is not here in Canada, we do not have any power to stop them coming here if there is a negative decision or new information that comes to light. We will be able to react to evolving situations if it is found that the employment of temporary workers has been displacing Canadians, which is the issue that the government wants to address. Those decisions will be looked at on a case-by-case basis. We are not anticipating that this will be done very often. It would be something that would arise very infrequently, and we would do the due diligence and procedural justice processes around those types of decisions.
[Translation]
Senator Bellemare: If I understood correctly, seasonal farm workers will not be covered by these provisions. Will fish processing plant workers be covered? Will domestic workers also be covered by these provisions?
You must have an idea with regard to how much the government will have to pay to manage these permits. You said that the fees will be proportional to costs. Will they be high? Will they be significant?
[English]
The Chair: Why do we not get Senator Callbeck's question on the record as well? Then, you can react to both of their points.
Senator Callbeck: It is regarding all the discussion that has taken place about companies being able to pay temporary foreign workers less than Canadians. I thought the government had said it was going to address this and fix it, but I do not see it in this budget.
The Chair: We have arrived at the time when we said we would adjourn. If you can answer these questions quickly that would be great. Otherwise, you could provide us with written answers or come back to our meeting tomorrow evening, whichever you prefer.
Mr. Vermaeten: I think we can answer them quickly. The government has not expressed an intent to exempt any sector other than the agricultural sector at this point. We do have rough numbers on the fees. I think the government will be announcing the amount of the fees shortly, so I do not think it will take very long for that to come out.
As for the TFW being paid less in wages, there was an announcement made on April 29 with respect to what is called the prevailing wage. Some flexibility was provided that would allow companies to pay someone less than the prevailing wage if other individuals in that company were paid less, so there was a bit of flexibility there. That flexibility was eliminated on April 29, 2013. That was a policy decision. The way it was implemented is through policy, and, therefore, that took effect immediately. That flexibility to pay below the prevailing wage in those situations is now gone.
Senator Callbeck: It does not require legislation?
Mr. Vermaeten: No, it does not.
The Chair: I have a policy issue that I would like to talk about, and that is your request to be exempted from the User Fees Act, which is an act that was initiated before our committee, some time ago, to help parliamentarians and to protect the public. I will not get into the policy discussion now because we have run out of time. I see it is becoming a habit of government to ask to be exempted from this legislation, and I would like some explanation other than that you find it inconvenient to deal with a piece of legislation that was introduced by parliamentarians to protect the public.
If you want to give us something in writing on that, that would be fine. I will be bringing it up tomorrow evening when we deal with Division 10 because the same thing is in there.
Thank you very much, honourable senators, and thank you all for being here. We will meet again tomorrow evening at our usual time.
(The committee adjourned.)