Proceedings of the Standing Senate Committee on
National Finance
Issue 43 - Evidence - June 18, 2013
OTTAWA, Tuesday, June 18, 2013
The Standing Senate Committee on National Finance, to which was referred 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, met this day, at 9:36 a.m., to give clause-by-clause consideration to the bill.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: It is our intention to consider Bill C-60 at this time. Is everyone content that we should proceed with clause-by-clause consideration of the bill?
Hon. Senators: Agreed.
The Chair: In the event that amendments are proposed, I will read the instructions if necessary. If we do not have any amendments, then I would propose that we proceed with clause-by-clause consideration.
There are three parts in total: Part 1 contains proposed amendments to the Income Tax Act; Part 2 contains measures relating to the Excise Tax Act; and Part 3 contains various other measures in 18 divisions, if my recollection is correct. I would propose going through each of the divisions with respect to Part 3. If at any time you wish to comment on any item in a part or division, indicate your intention before we have a vote so that we can have that recorded for you.
If at any time any senator is not clear about the process or if there are any questions and you are not sure about what is happening, please intervene. We want to ensure that we all understand the process and what we are doing.
With those few preliminary remarks, I remind you that this is a public meeting, which is required under the Rules of the Senate when we do clause-by-clause consideration of a bill. I will proceed with the script that has been kindly prepared by Ms. Turner for us, and I thank her for that. I will do my best to follow it.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013, and other measures?
Hon. Senators: Agreed.
The Chair: Shall the title of the bill stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: We will come back to those after we have looked at the substantive portions.
Is it agreed, with leave, that the clauses be grouped according to the parts of the bill as described in the Table of Provisions of Bill C-60, as I just described the various parts?
Hon. Senators: Agreed.
The Chair: Part 1 is entitled "Amendments to the Income Tax Act, the Tax Court of Canada Act and the Income Tax Regulations,'' being clauses 2 to 41 on pages 1 to 23. Shall Part 1, which contains clauses 2 to 41, carry?
Some Hon. Senators: Agreed.
The Chair: Before we vote on that, we have comments from Senator Callbeck.
Senator Callbeck: There are some really good things in Part 1, such as the adoption tax credit. We heard from a very credible witness before the committee about the proposed changes. Many other challenges in that area were outlined, which I like to see the federal government taking initiative on. Also, I like the charitable donation tax credit, the first time. Hopefully it will encourage people to give and they will get in the habit of giving to good causes.
The accelerated cost allowance is in here, which will be extended for two more years. That has been the case, I believe, three or four different times. We heard witnesses who suggested that it should be five years so they would be able to plan better. I tend to agree with that.
There are some good things here, but I have problems with the credit union section. Credit unions certainly have done a lot of good in this country, especially in rural areas, and I come from a rural province. Under this bill, credit unions will be forced to pay another $75 million a year by the time this is implemented in 2017. Will that mean that credit unions will have to charge more for their services? Will that affect credit unions and people in rural Canada? As I say, they are a vital force there. They are in many areas where banks would never go. Not only do they lend money but they also get involved in the community. No matter what the cause is, the credit unions are there.
I fully support credit unions, and I hate to see any piece of legislation that would affect them in any way. I know for sure that this bill will affect two of the credit unions in my province.
For another thing, we heard at committee that there was no consultation by the government with the credit unions. As well, it was either the Canadian Federation of Independent Business or the Retail Council of Canada that rated the credit unions as number one for voluntary organizations services. Therefore, I have a problem with that part of the bill.
The other piece is on the non-eligible dividend tax credit. I understand that generally goes to owners of smaller businesses, and we all know the importance of small business in this country. I hate to see anything that would have a negative effect on small business. As I understand this, it means that Canadians will be paying another $2.3 billion over the next five years because of this change. To my thinking, that will affect small business. Therefore, I have a problem with that portion, too.
The Chair: I have Senator Hervieux-Payette on the list, as well. Perhaps we will call on her first and then we will discuss allow we will proceed with Part 1.
[Translation]
Senator Hervieux-Payette: Actually, the union issue is of particular concern to me. In what I would call an unusual move, both the chamber of commerce in Quebec and the unions are totally against the elimination of this funding option, which has proven very useful. The Fonds de solidarité du Québec enabled rural Quebec, in particular, to grow.
I do not know what theory this measure is based on. If there were a rational basis behind the measure, it would have been explained to us and business people would have been consulted. Hundreds of businesses got their start thanks to this funding because the banks would not lend them the money. Once the risk threshold exceeds a certain point, once you have mortgaged your home, put your car against the loan and even used your mother-in-law as a guarantor, the bank wants new guarantees. This mechanism made things easier. To begin with, there is a closeness to the places where people are running their businesses and that allows for monitoring. Know-how has been acquired.
If the experience had not turned out well, I would understand. In this case, however, it has been nothing but positive. For that reason, I am very much against this part of the legislation, especially because I know that the business community is behind the mechanism. I cannot wrap my head around this measure. To my mind, it is a mean- spirited attack on unions for ideological reasons, not economic ones.
[English]
The Chair: Thank you. Seeing no other senators who wish to intervene, we are dealing with Part 1, clauses 2 to 41. We have heard comments from Senators Hervieux-Payette and Callbeck. Would you be content that we recognize that there are some good portions of Part 1 and also some portions that you cannot vote for, but in the end that will be reflected in the bill as well; namely, that there are portions you like and some that you do not?
Would you be content to allow a vote to go for the entire part and then it would go on division?
Senator Callbeck: Yes.
The Chair: Shall Part 1, clauses 2 to 41, carry, on division?
Hon. Senators: Agreed.
The Chair: Thank you.
We move to Part 2, which is another part that has several clauses. Clauses 42 to 61 fall under the heading "Measures Relating to Sales and Excise Taxes and Excise Duties.''
Before I call on the vote, let us hear from Senator Chaput from Manitoba.
[Translation]
Senator Chaput: I have some reservations regarding clauses 48 and 50. Clause 48 addresses a supply that is not a qualifying health care supply. It will become a taxable service. Consider the example of a service rendered by a doctor who examines a private individual to write a report for the purposes of an insurance policy. The issue is complex and difficult to figure out. It is not clear who will bear the responsibility and who will follow up. For that reason, I have trouble with clause 48.
I have somewhat the same problem with clause 50, which deals with excluded supplies. Some supplies are exempted and others are excluded because they are not used for medical or reconstructive purposes. In this case, as well, the matter is complex and has not been laid out clearly, to my mind. So I cannot support clause 50.
The Chair: Any other comments?
Senator Hervieux-Payette: This clause addresses health. And the federal versus provincial framework has not been defined. The two levels of government did not have any discussions or meetings on the care to be provided or the services to be rendered by the private and public sectors. Such an important discussion should have taken place in our country. The federal government has to consult with the provinces.
As soon as we get into taxing services that come under a specific sector involving medicine, among other things, keep in mind that the service is often for preventative purposes. If a medical certificate is used to justify someone's absence from work, that person should not be penalized for being sick. I think it is absolutely outrageous that such a service is currently being taxed. I am, therefore, against clauses 48 and 50.
The Chair: This is the same thing that happened before. Some clauses are supported by the members of the committee, whereas others, including clauses 48 and 50, are subject to opposition.
Can we proceed in the same way, meaning on division?
Some Hon. Senators: Agreed.
[English]
The Chair: Please go ahead, Senator Callbeck, before I call on the vote.
Senator Callbeck: I want to say that I also have a problem with those clauses — the GST and HST reports on non- health care purposes.
Certainly it was not clear as to where that would be charged and where it would not be, so I have problems with that portion, as my colleagues have indicated. I think the part on the tobacco is good; it is increasing the taxes there, and I agree with that.
The Chair: Therefore, there are parts of Part 2 you are content to support and there are parts that you have indicated — and it is on the record — that you are not prepared to support.
Shall Part 2 carry, on division?
Hon. Senators: Agreed.
The Chair: Part 2 is carried, on division.
We are into Part 3, "Various Measures.'' We will go through each of the 18 divisions. Division 1 is entitled "Custom Tariffs,'' clauses 62 to 103.
Shall Part 3, Division 1, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall Part 3, Division 2, carry? It is entitled "Financial Institutions,'' clauses 104 to 109.
Some Hon. Senators: Agreed.
Senator Hervieux-Payette: On division.
The Chair: On division, okay. Thank you.
We are now into Part 3, Division 3, entitled "Federal-Provincial Fiscal Arrangements Act,'' clauses 110 to 125. Shall those clauses carry?
Hon. Senators: Agreed.
The Chair: Okay. Division 3 has carried.
Division 4 is entitled "Payments to Certain Entities or for Certain Purposes,'' clauses 126 to 132. Shall Division 4 carry?
Hon. Senators: Agreed.
The Chair: Thank you.
Division 5 is entitled "Canadian Securities Regulation Regime Transition Office Act,'' clauses 133 to 135 inclusive. Shall those clauses carry?
Hon. Senators: Agreed.
The Chair: Carried.
Division 6 is entitled "Investment Canada Act,'' clauses 136 to 154. Shall those clauses carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Division 7: "Canada Pension Plan,'' clause 155. Shall that clause carry?
Hon. Senators: Agreed.
The Chair: Carried.
Division 8 of Part 3 is entitled "Improving Veterans' Benefits,'' clauses 156 to 160 inclusive. Shall those clauses carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Division 9 of Part 3 is entitled "Immigration and Refugee Protection,'' clauses 161 to 169 inclusive. Shall those clauses carry?
Some Hon. Senators: Agreed.
Senator Hervieux-Payette: We have a problem with clauses 162 and 163. Clause 161, without 162 and 163, we approve.
The Chair: Do you wish to make any comment with respect to 162 or 163?
Senator Hervieux-Payette: We oppose them.
The Chair: On division?
Senator Hervieux-Payette: Yes, on these two.
The Chair: Thank you. We have noted that clauses 162 and 163 are the ones that you have concerns about. Those clauses carry, on division, however.
We turn now to Part 3, Division 10, entitled "Citizenship Act,'' clauses 170 to 172 inclusive.
Some Hon. Senators: Agreed.
Senator Hervieux-Payette: We oppose them.
Senator Callbeck: We have concerns about this because it exempts all fees under the Citizenship Act from the requirements of the User Fees Act. Certainly, we do not agree with that. We think it should be kept under the User Fees Act.
The Chair: Shall these clauses pass, on division?
Hon. Senators: Agreed.
The Chair: We can have a hand count at any time you would like, but if it is clear to certain individuals that there are some good parts and some bad parts, then "on division'' basically means that you are objecting to portions, and that is of record.
Senator Buth: There could be just good parts.
The Chair: That is right. For those who do not object to any of it, they would not be on division.
I am now on Division 11, entitled "Nuclear Safety and Control Act,'' clause 173. Shall that clause carry?
Hon. Senators: Agreed.
The Chair: Agreed.
Division 12 is entitled "Department of Foreign Affairs, Trade and Development Act''; this was the one bringing in CIDA.
[Translation]
Senator Hervieux-Payette: As far as the basic principle behind this measure is concerned, no study was even done to prove the merits of bringing CIDA under the Department of Foreign Affairs. Within the department, it is clear that our embassy officials around the world are absolutely disgusted at the fact that they are not treated as well as the employees in Ottawa. From the outset, there is a problem in terms of our embassy administration.
International trade and international aid are two completely different things that do not necessarily go together. People have to work together, and I believe a philosophy underlies international aid, so we will miss the boat when it comes to meeting even our international obligations. We are against Division 12, clauses 174 to 179. We are against amalgamating CIDA with the Department of Foreign Affairs.
[English]
Senator Callbeck: I agree with what the senator has said. Certainly, there are real concerns about how putting CIDA into DFAIT will affect the aid that CIDA gives out for poverty reduction programs.
I remember when we had the officials before us, they seemed to be pretty vague in their answers. When we asked about the structure, how these two were going to be integrated, they did not have answers. I would think that if you are to join two departments together once Bill C-60 takes effect, that you would have known or had on paper how the structure would look. We asked for that and we did not get anything. I have real concerns about how these two will be joined together, how they will merge and work, and what will happen to these poverty reduction programs under CIDA.
[Translation]
Senator Chaput: I agree with my colleagues. I also have serious concerns about how the amalgamation will impact CIDA's efforts to reduce poverty. I do not see, nor can I see, how this can work. No one has been able to explain it to me. To me, this measure is akin to flying blind. This is an important decision, and I do not support it.
[English]
The Chair: We are dealing with Division 12. Division 12 is the clause that I have referred to and we have had comments in relation to clause 174, but there are also clauses 175 to 199, which are consequential amendments. Clause 174 is the creation of the new act. It is an act within this act; and then clauses 175 to 199 are consequential amendments. We are, in effect, in Division 12 dealing with two different aspects, but they are all related to the same issue.
Can we agree that clauses 174 to 199 inclusive would pass, on division?
Hon. Senators: Agreed.
The Chair: Agreed. Thank you.
Division 13 is entitled "Ridley Terminals Inc.,'' clauses 200 to 212. Shall Division 13 pass?
Hon. Senators: Agreed.
The Chair: Thank you.
Division 14 is entitled "Transfer of Powers, Duties and Functions to the Minister of Canadian Heritage.'' That relates to clauses 213 to 224, transferring of powers. Shall those clauses carry?
[Translation]
Senator Hervieux-Payette: I cannot see how the minister will do a better job of choosing the colours of the capital's lights. Nevertheless, that is the most simplistic part of this decision, as I see it. The decision as a whole and this division should not have been included in a budget. They have nothing to do with budget items.
I believe the Minister of Canadian Heritage is overburdened as it is. The National Capital Commission does an excellent job of fulfilling its duties. We have one of the most beautiful capital cities in the world. I always take great pride in bringing guests to Ottawa. The National Capital Commission has done a stellar job.
In my view, this is a political decision that simply reflects decisions that will have a political effect. The National Capital Commission should, however, be managed without political interference. The capital must meet the objectives of the Canadian people. I do not think transferring part of the National Capital Commission's responsibilities to the Department of Canadian Heritage will serve Canadians' interests well.
The Chair: Would anyone else care to comment?
[English]
Senator Callbeck: I agree with those comments. I do not see any reason why that should take place. I think it is working well now. Why should the minister be given extra powers? It seems to me that with Winterlude, it would be easier for the National Capital Commission to work with the city than with the department. I am opposed to this.
[Translation]
Senator Chaput: I would like to throw my support behind the comments made by my colleagues. This measure has no place in a budget, no place in the bill before us. I cannot see the rationale behind this decision, if there is any. I am against it.
[English]
The Chair: Thank you for your comments. Of course, at third reading you can make any other comments in relation to this that you wish, but your comments have been made of record.
Shall Division 14, clauses 213 to 224 pass, on division?
Hon. Senators: Agreed.
The Chair: On division, thank you; carried.
Division 15 is entitled "Parliamentary Secretaries and Ministers,'' clauses 225 and 226. Shall those clauses carry?
[Translation]
Senator Hervieux-Payette: Mr. Chair, I do not see any way we can support this. Some 300 people have been laid off at the Canada Revenue Agency, money-laundering is a problem, tax evasion is a monumental concern and every department is being called upon to cut staff. And yet, here is the Prime Minister, asking us to increase the size of his team; that dichotomy is absolutely unbelievable.
I would have supported reducing the number of ministers and parliamentary secretaries, but certainly not increasing expenditures and the number of people. I do not think this will benefit services to Canadians, not to mention the terrible example the government is setting by not practising what it preaches to other departments. Therefore, I am opposed to this clause.
The Chair: Would anyone else care to comment?
[English]
Senator Callbeck: I also am opposed to it. As I understand it, right now we have 27 ministers and 31 parliamentary secretaries. If Bill C-60 is adopted, we would be adding 3 new ministers and 10 new parliamentary secretaries. That is millions and millions of dollars. That is 13: 3 ministers, 10 parliamentary secretaries, plus they would require staff and offices.
I cannot accept that at all because we are laying people off. The government has been talking about cutting back, yet here we are increasing the number of ministers and parliamentary secretaries. I am very much opposed to this.
[Translation]
Senator Chaput: I agree with Senator Callbeck. This makes no sense. On one hand, the government is setting out a plan for economic development and asking every department to reduce its budget and staff levels, and on the other hand, the government is asking for more parliamentary secretaries and ministers. Where is the logic in that?
The Chair: Would anyone else like to comment?
[English]
The Chair: Shall clauses 225 and 226 pass, on division?
Hon. Senators: Agreed.
The Chair: Carried, on division.
Division 16 of Part 3 is entitled "Department of Public Works and Government Services Act.'' Shall clause 227 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Part 3, Division 17, contains clauses 228 to 232 and is entitled "Financial Administration Act.'' Shall those clauses carry?
Some Hon. Senators: Agreed.
The Chair: On division?
[Translation]
Senator Hervieux-Payette: I think we are setting a precedent here. The government has always allocated the funding for Crown corporations. The Canada Revenue Agency was even created specifically to bypass a condition preventing it from recruiting highly skilled people to fill tax specialist positions because they could not fit into the public service structure. Not only is the government asking Crown corporations not to go over their budgets — an aspect it already controls — but it is also asking them to do a good job at the bargaining table. Does the government lack confidence in the very chairs and boards of directors it appointed, whether we are talking about Canada Post, the CBC or another organization?
Sending in public servants to interfere in the bargaining process is completely ridiculous and adds no value. We would do better to control our public expenditures. There is a $3-billion shortfall in our budget, so perhaps we should be doing our duty in Ottawa instead of interfering in the business of others. I have never even heard auditors at CBC, Canada Post or the other agencies criticize the organizations for mismanagement or non-compliance with collective agreements. This is an ideological provision that has no place in this bill, and I strenuously oppose it.
[English]
The Chair: Are there any other comments? If not, shall clauses 228 to 232 carry, on division?
Hon. Senators: Agreed.
The Chair: Carried, on division.
I am now at Division 18 of Part 3 entitled "Keeping Canada's Economy and Jobs Growing Act.'' Are there any comments in relation to Division 18? Shall clause 233 carry?
Hon. Senators: Agreed.
The Chair: Carried.
The schedule relates to a listing of most favoured nations. Shall that schedule carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry? That was the one we skipped earlier, and we have come back to it.
Some Hon. Senators: Agreed.
Senator Hervieux-Payette: No. On division.
Senator Callbeck: On division.
The Chair: Carried, on division.
Shall the title carry?
Some Hon. Senators: Agreed.
Senator Callbeck: No, on division.
Senator Hervieux-Payette: On division.
The Chair: Carried, on division.
Shall the bill carry?
Some Hon. Senators: Agreed.
Senator Hervieux-Payette: On division.
Senator Callbeck: On division.
The Chair: Carried, on division.
Other than the comments that have already been made, are there any comments that honourable senators would like to make?
Senator Callbeck: On the questions that we asked various witnesses, how are we doing with getting answers? Have Correctional Services Canada come out with a —
Jodi Turner, Clerk of the Committee: Correctional Services was questions on the Main Estimates.
Senator Callbeck: On Main Estimates. Sorry.
Ms. Turner: That was not in the context.
The Chair: This is the preamble of one of the titles of this; it is not the short title. Under Bill C-60, it reads:
An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, and agreed on Tuesday, May 28, 2013 . . .
I might have misspoken in terms of the year; I just wanted to correct the record. Thank you.
Is it agreed, honourable senators, that I report the bill back to the Senate at the earliest opportunity, without amendment and without comment?
Hon. Senators: Agreed.
Senator L. Smith: One thing that would be good for the committee is when people ask for answers, we usually get them. If you had a log, and at a certain point during the year you could have a review because there may be cases where not all of the senators have a chance to look at the feedback. If there are questions like Senator Callbeck has had in terms of getting the proper feedback so we are better informed, it may be a way of better managing the situation. That is just a suggestion.
The Chair: I think it is a good suggestion to follow up on those undertakings. In our most recent report on the Main Estimates, you will note that we had a list of outstanding questions at the back. We have asked the Library of Parliament to work with Ms. Turner in that regard to keep on top of those.
Senator L. Smith: Especially in a timely manner so that we get these things back.
The Chair: The first step is to know we have logged them, and we are keeping a schedule. I appreciate you doing that.
Senator Black: When we ask for material and they undertake to give it, is it appropriate for us to request a timeline? In what period of time could they get that back to us?
The Chair: You may ask that question, and they may say that they can do it quickly. That would be helpful for us.
Senator Black: I would create a table and a timeline, because then we have a stick. The clerk could follow up and say the senators are wondering where your report due on June 16 is.
We need to keep the heat on. Senator Callbeck's comments of a couple days ago were very good. These requests go out and we are told material is coming back, and we lose sight of it. We should not lose sight of it.
That was a good point, Senator Callbeck.
Ms. Turner: I do keep a log. We keep an ongoing log, and I follow up as much as I can with individual departments to see where each response is. I note it in the log when they are received. If they are not received, we continue to go back to the department. The departments do work hard to put the information together. It is sometimes sent up for approval, and there may be a delay at that stage. In their defence, they are working hard to prepare the information.
Senator Black: I do not doubt it at all; they have a lot of fish to fry.
Ms. Turner: Yes.
Certainly if anyone is wondering as to the status of a certain response, please contact me and I can look. Senator Callbeck's office is good at doing this, and we just cross reference to ensure they have caught all the responses because you get all sorts of emails.
Senator Black: Could you circulate that log on a monthly basis, just so we know this is in, this is not in?
Ms. Turner: Yes, sure.
The Chair: Good comments. We have been conscious of this gap for a while, have been talking about it, and it is good to tighten that up.
Senator Black: Thank you, Mr. Chair.
The Chair: If this were an examination for discovery, it would be followed up much more closely in the legal profession. I understand that point.
That concludes Bill C-60. I anticipate that we will report it back to the chamber this afternoon.
Before we break for the summer recess and get reacquainted with all of our folks back home in our communities, we have on our agenda Bill C-217, the Financial Administration Act and the borrowing. The steering committee's recommendation is that we deal with it tomorrow evening in our normal time slot. We will consider either going to clause by clause or reporting it back in some manner, whatever your pleasure is. We have an obligation, under the rules, to report it back in some manner, so we should think about comments we might like to make. I expect we will deal with that fairly expeditiously tomorrow evening.
(The committee adjourned.)