Proceedings of the Standing Senate Committee on
National Finance
Issue 23 - Evidence - December 2, 2014
OTTAWA, Tuesday, December 2, 2014
The Standing Senate Committee on National Finance met this day at 2:15 p.m. to study the subject matter of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this afternoon, we are continuing our study on the subject matter of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
[English]
Honourable senators will know that there were six other committees besides National Finance Committee reviewing the subject matter of Bill C-43.
Up until this date, we have heard from three of those committees, and today we will hear from the remaining three committees. Then all we have to do after that is finish our report, and it should be in your hands this afternoon. We intend to meet tomorrow evening, Wednesday evening, to review that report.
We're very pleased to welcome, from the Standing Senate Committee on Energy, the Environment and Natural Resources, the chair and deputy chair. The chair is Senator Neufeld from Charlie Lake, British Columbia, and Senator Massicotte is the deputy chair from Montreal. They will be discussing the subject matter of those elements contained in Part 4, Division 3, page 317; Division 28; and Division 29.
We'll start with Division 3, presumably, on page 317. Senator Neufeld, you have the floor.
Hon. Richard Neufeld, Chair, Standing Senate Committee on Energy, the Environment and Natural Resources: Our committee concluded its pre-study of the subject matter of Divisions 3, 28 and 29 of Part 4 of Bill C-43, a second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, on November 18, 2014. The committee held three meetings, heard from 24 witnesses across a range of stakeholder interests and received submissions of written evidence. The committee reviewed the three parts to the bill: one that establishes the Canadian High Arctic Research Station Act; one that enacts the extractive sector transparency measures act; and a third part that provides transitional pension coverage to Canadian Nuclear Laboratories employees of Atomic Energy of Canada Limited, AECL, in the event that it becomes privately managed.
With respect to the part of the bill on the Canadian High Arctic Research Station act, it will create a new entity known as CHARS, merged with the Canadian Polar Commission to conduct a broad range of prioritized science and technology research in Canada's North. Due to open in Cambridge Bay, Nunavut, in 2017, it will be a state-of-the-art, world-class research station that will attract international researchers and enable Canada to become a world leader in Arctic science. It will also be a permanent, physical, strong presence and enhance Canada's sovereignty in the North.
Witnesses were very supportive of the act and the research station specifically. Officials from the Canadian Polar Commission said that merging the Polar Commission into CHARS will create an enhanced and more efficient polar organization that is greater than the sum of its parts. It will take advantage of and build on current partnerships, networks and infrastructure to enhance Canada's international polar profile.
The Mayor of Cambridge Bay spoke about the community's engagement in the design and integration of CHARS with Cambridge Bay and of the benefits to the region, particularly in capacity building and employment opportunities for local residents to work in science and technology programs, allowing them to stay in the region.
The Mayor of Cambridge Bay, the Northwest Territories and the Nunavut Chamber of Mines noted their mutual interest in research into healthy communities and welcomed the opportunities CHARS offers to facilitate this. The chamber also said that the mining industry can provide a further outlet for science and environmental technologies expertise acquired in the North.
Witnesses also expressed some concern about this part of the bill. The Polar Commission suggested that CHARS should adopt an integrated whole-of-government approach to reporting Arctic science and technology programs. They said this is important because, currently, there are many departments and agencies that perform a wide variety of Arctic research and technology development activities. They said these reports should be made publicly available.
The ITK, an Inuit organization — I cannot pronounce the name, but it is in the notes — spoke primarily of their interest in ensuring that Inuit involvement and knowledge in Arctic research was respected and recognized. They said it is impossible to have a discussion about what could or should be happening in the Arctic without involving the indigenous people who live there. They still have questions about the merger with the Canadian Polar Commission. They said that the Canadian Polar Commission has an Antarctic, as well as a High Arctic, mandate, and they wondered what will become of the research priorities and how Inuit will be involved once the two entities are merged. They expressed hope that CHARS will keep the Inuit at the forefront of the Arctic research and that their participation will be included and maintained.
I might add that that was enforced by the bureaucrats who came to speak to us to start with, that they intend to keep as many of the Inuit as they possibly can involved.
In the second division, Part 28, this act fulfills a commitment made by Canada in 2013 to establish mandatory reporting standards for Canadian mining and oil and gas companies in order to enhance transparency on the payments they make to governments. This legislation is broadly aligned with similar measures in the United States and the European Union as part of a global initiative to improve accountability in this sector and help deter corruption.
Qualifying payments of $100,000 or more to domestic and foreign governments, including Aboriginal entities, must be publicly reported. It is important to note that the act will not apply to Aboriginal entities for the two years following the date that the act comes into force, which is expected to be somewhere in June of 2015. This is in response to concerns expressed by Aboriginal governments, industry and some provinces about how the act will impact benefit agreements that have been made and are being made in many cases. These agreements are confidential, and so stakeholders need to work out how information will be reported. Consultation sessions have already taken place, and more are planned over the coming months.
Departmental officials reiterated that it is the government's intention that companies subject to the act will be required to publicly report payments on a project-by-project basis. For the most part, witnesses were very supportive of this act.
The Mining Association of Canada, Publish What you Pay Canada, and the Canadian Association of Petroleum Producers all commended the government on this legislation. While welcoming the legislation and expressing broad public support for it, they all raised issues concerning the proposed act. Specifically, the Mining Association of Canada and the Canadian Association of Petroleum Producers noted that since the act applies to large multinational companies, which will be subject to reporting requirements in Canada, as well as in the U.S. and the EU, it is necessary to ensure that the equivalency and harmonization provisions of the act are consistent so that the information is useful and that the administrative burden of double reporting is avoided.
The Canadian Association of Petroleum Producers said that the financial reporting standards set out in the proposed act are more stringent than other major financial disclosure legislation. They require that the information reported is "true, accurate and complete." CAPP said that reporting qualifying payments to multiple entities around the world could be very complex and that a due diligence defence that "the information is accurate to the best of my knowledge and belief" would be reasonable.
The Assembly of First Nations also suggested that the act could impose additional administrative burdens, noting that First Nations are already subject to numerous transparency and accountability provisions, including the First Nations Financial Transparency Act and the Federal Accountability Act, and questioned whether this new legislation is necessary. As more First Nations get into the resource extraction business and thus come under the act, the AFN felt the reporting requirements could be seen as a message that First Nations are not trusted or permitted to have business agreements with the corporate community.
Publish What you Pay Canada was also concerned that regulations can grant exemptions from the reporting requirements of the act, such as where payments are prohibited to be disclosed by legislation or by confidentiality agreements in contracts, saying exemptions could undermine the purpose of the transparency legislation. The EU legislation does not provide exemptions.
On the other hand, CAPP supported the exemptions. They stated that complying with the proposed act could require Canadian companies to breach confidentiality provisions and force them to choose between complying with this Canadian law or that of a foreign jurisdiction. They were also concerned that the act might oblige the disclosure of commercially sensitive information.
The committee highlights the government's stated intention that companies subject to the proposed extractive sector transparency measures act will be required to publicly report payments on a project-level basis. According to the government officials, this requirement will be outlined in future regulatory documents under the act.
Division 29: In February 2013, the federal government announced its intention to transfer the operation of the nuclear laboratories at AECL to a private sector company, which will then be responsible for the laboratory's management. This represents a move to a government-owned, contractor-operated, or so-called GoCo, model. A competitive procurement process is currently under way to select the appropriate contractor.
This part of Bill C-43 makes the amendments to the Jobs and Economic Growth Act to facilitate the restructuring of the management of the Canadian Nuclear Laboratories, CNL, and AECL. The bill provides transitional pension coverage for CNL employees who would continue in the Public Service Pension Plan for a period of three years from the date on which CNL becomes privately managed. When a new manager assumes administration and management of CNL, it will be its responsibility to establish its own pension plan. Employees hired during the three-year transition period would contribute to the new manager's pension plan. It is important to note that department officials assured the committee that employee benefits accrued up to the point where CNL ceases to be a Crown agency will be protected and guaranteed by the government.
They also said that employees could transfer their accrued benefits from the Public Service Pension Plan to that of the new employer if they wished. The professional employees' group of the Professional Institute of the Public Service of Canada was concerned that the change in management from government to private sector contractor will result in difficulties in the workplace. They said that while existing CNL employees can contribute to the Public Service Pension Plan during this three-year transition period, new employees hired during that period will not and will instead contribute to the pension plan set up by the new manager. As a result, they said employees hired during the transition may not have an equivalent or comparable pension plan to that of existing employees, and this will create a two-tiered pension system that will be divisive and will affect collective agreement negotiations.
They recommended that participation in the Public Service Pension Plan be extended to employees hired during the transition period so that all employees will be under the same pension plan going forward in negotiation with CNL's new management.
Honourable senators, that concludes my remarks. I think I've given a pretty comprehensive outline of the discussions we had, both pro and con. I want to say that the committee is comfortable with the recommendations or the changes that have been made and hopes they would be adopted.
Hon. Paul J. Massicotte, Deputy Chair, Standing Senate Committee on Energy, the Environment and Natural Resources: We were kind of rushed. We were concerned about not having adequate time to study the proposed amendments, but the conclusion is that we met some very good experts, got a wide view. As you noticed, we have concerns. But irrespective of that, overall we're comfortable with the proposed amendments and we unanimously, with the exception of one person, recommend these amendments to your committee.
The Chair: Thank you, Senator Neufeld and Senator Massicotte. We appreciate your thorough report. This is very helpful to us, because we have to do clause by clause on this without having studied it. This will provide very good background for us.
Before I go to my list, could you tell me if you had any discussion about why we have two acts within an act? Typically we would see a new piece of legislation as a separate act that we would study as legislation, and in this case we have two of them that you studied. Did you have any discussion as to the desirability of seeing acts within acts?
Senator Massicotte: We tried to focus on things we could change and that made sense to us.
The Chair: I'm not giving up. So you have no comment on that.
Senator Eaton: Thank you very much, gentlemen. Did you have anybody from the Inuit community testify?
Senator Neufeld: Yes.
Senator Eaton: And were they as dissatisfied as they sound here?
Senator Neufeld: Yes. They just wanted to make sure that CHARS carried forward using as many of the Inuit people as they possibly could in the North for their knowledge.
Senator Eaton: How can I phrase this tactfully? Is it because they're not trained scientists that they're not being used, and it's a matter of more education in some instances?
Senator Neufeld: They use a lot of Inuit now in the Polar Commission. They use their knowledge from the past to determine a lot of things. Education is an issue, and that's why the Mayor of Cambridge Bay told us they were very happy that Inuit would be included, because that would mean they would be getting the education needed to be the scientists at the end of the day and move forward. So they were very happy with what was going on.
Senator Eaton: They could use both Inuit and science knowledge.
Senator Neufeld: Science doesn't know everything about the North. They were very observant about that.
Senator Eaton: You're right.
Senator Neufeld: They live in the North, they know exactly what has taken place, and they survive it. So it is very important, even though they're not trained in a Western university that may teach them science. There's valuable information that you gather.
Senator Eaton: From both sides.
Senator Neufeld: Yes.
Senator Eaton: On the extractive sector transparency measures act, I think you say in your report that raising global standards of transparency was viewed as a critical step. Are we now ahead of the curve, behind in the curve, or are we catching up?
Senator Neufeld: I would say we're probably catching up, because the U.S. and the EU already have that in place, and so that's what we're looking at to manage it, to work together well.
The Chair: Senator Massicotte, you mentioned that there was one dissenting view. Is that with respect to the entire work that you did?
Senator Massicotte: No. It was only relevant to the last part, the pension issue relative to existing employees of the AECL laboratories division. It was a highly technical issue of whether those employees should have the right to continue in superannuation after three years and whether the new ones can be separated. It's a highly technical argument that the person felt sincerely about.
The Chair: We had AECL before our committee, and they also raised that issue of the employees during the transition period and not having the same pension options available to them. You mentioned that, and it's in your report. We thank you for letting us know about it, but that was not the issue that you had the dissenting view on?
Senator Massicotte: I can comment a bit further. We had the chairman of AECL explain to us how the process will take place, and they hope to find an operator for these laboratories. The physical assets will remain the property of the government, but they will have an operator. I had a private discussion with him. He referred to how the U.S. is doing it, and there is a bid process. They would engage somebody to operate the laboratories with some sort of incentive system where the contractor will assume total responsibility of costs and results for several years.
From my experience, it is only normal then that the operator assumes the responsibility of the employees because he has to motivate them, organize them and consequently has to pay them. It's normal in that circumstance that he eventually assumes the pension obligations of those existing employees. Obviously you have to cause a transition, so therefore he has to assume responsibility with the intent of running pension services to the new employees. So there's a bit of transition. The new employees may have a slightly different plan than the old, but the bottom line is they only have three years before they're affected. The employer and the employees have to get along and find a solution because these are important people that everybody wants to keep in their employment.
Senator Neufeld: Further to that, that's assuming the pension plan for the new employees will be different than the existing one, and none of us knows that until they get to that point. At that point they'll make those decisions. As Senator Massicotte says, the new entity, the employer, is going to have to look at all that and see how they're going to be able to maintain a workforce in that industry. It is probably not easy to find those kinds of people around the world to work in nuclear laboratories.
The Chair: Presumably part of the negotiation to find the private sector operator for the public-owned assets is going to involve a discussion on the cost to the new entity of picking up whatever liabilities exist in relation to pensions.
Senator Massicotte: I'm not sure it's a liability, because these are funded pension plans, but I presume there's not much of a deficit because the federal government is behind it. You're right that the new employer must assume that obligation going forward.
The Chair: Whatever it might be.
Senator Massicotte: That's the job of the employer. He has to motivate, organize and adequately compensate the employees. It's not for us to tie their hands. You can't have employees working with a new employer, with the pension contribution being paid by the federal government. It just doesn't work. I think it's not perfect, but it's pretty much standard market practice, I would say.
The Chair: Senator Neufeld made the same point that was made by the current management of AECL, which is that during the transition period, there's going to be a period of time — and nobody knows how long that's going to be, a few years probably — until there is a private sector operator in place. And they said that if we can't offer the same pension plan, the Public Service Pension Plan, to those new hires during that interim period, then we're not going to be able to find the kinds of employees that you said there was a very limited market for.
Senator Neufeld: Yes.
The Chair: You considered that, but felt that overall you would just have to let that pass?
Senator Neufeld: I would say we're comfortable with it, other than one dissenting voice.
Senator Massicotte: The bid process will assume to be the best operator, if people do their job well. That's the bottom line. The success will be determined upon that choice and the ability of that employer. It's all encompassing. You can't predetermine or tie his hands and say, "No, you've got to do exactly this." No, you'll have the best player in the marketplace. AECL has some challenges. As you know, they haven't sold a reactor for 17 years, so maybe new blood is a good idea.
The Chair: So the point, just to clarify, before the new operator is in place, it's to keep whatever assets you have going. They're going to need some new hires, and it was that time frame that they —
Senator Massicotte: Let me clarify. The three years only commences from the date when the new operator is in place. So everything goes as is, and it's only at the point when the new one assumes all those contracts that the three years starts. It doesn't click now, but only when the new operator is in place.
The Chair: So the people they hire now will come in under the public service? Okay, I misunderstood that. The three years doesn't happen until a new operator is identified.
Senator Massicotte: Exactly.
The Chair: Thank you. That clarifies it.
Senator L. Smith: Just to follow up on Senator Eaton's question, when we're looking at the extractive sector transparency measures act, Division 28, Part 4, were the concerns that the Aboriginal groups brought up about implementation, and with some of the statements that were made about following the EU and the U.S. models, did you have government or officials explain what they were actually going to do? Because there seems to be some question. There's a two-year delay with the Aboriginal folks. Are there questions as to how to set it up, or do they have a model that they're going to use?
Senator Neufeld: First off, they're consulting with First Nations to find out exactly what will work best rather than just putting it right straight into place. So that gives them lots of time to have all kinds of discussions.
Companies also said that we have impact benefit agreements with different bands across the country, and those are confidential. How do we deal with those issues, if they're over the $100,000 mark?
There are some questions about that. They wanted to give it a little more time, to actually flesh it out a little bit more, and to figure out how they could apply that to Aboriginal governments over that two-year period.
I don't think anything is set in stone. Those negotiations will be ongoing, as we speak.
The Chair: Thank you, Senator Smith. I have one question, which is a point of clarification, so I understand your report in relation to the extractive sector transparency measures act. As I understand it, the government's desire is to try to make Canadian legislation as harmonized as possible with other jurisdictions, like the U.S. and the EU that are mentioned here. But presumably there would still have to be filings in each jurisdiction. Therefore the time that's going to be saved would be that it's basically the same kind of report. So it would be easy to file the same report in different places. Do I understand that correctly?
Senator Neufeld: That's what industry is hoping for, and I think that's what they're actually trying to work to and will work to, in regulation. Whether that becomes the way that you just explained, senator, I don't know, because there are a whole bunch of other issues around this. At the end of the day, it may be different for each jurisdiction or it may not. But they're going to try to harmonize it, as much as possible.
The Chair: From an industry point of view, the closer the better because that will cut down on the work that has to be done in different jurisdictions.
Senator Neufeld: Yes.
The Chair: Colleagues, do you have any questions that come from any of the discussion we've had? If not, then on behalf of the Standing Senate Committee on National Finance, we thank you very much.
Senator Neufeld: Thank you. We appreciate it.
The Chair: We'll try to vote in a manner that won't disappoint you.
Senator Neufeld: I'm sure you won't, sir.
The Chair: We are now pleased to welcome, from the Standing Senate Committee on Social Affairs, Science and Technology, the Honourable Senator Ogilvie, who is the chair, and the Honourable Senator Eggleton, who is the deputy chair. They will be discussing the subject matter of those elements contained in Part 4, Division 5, 329, and several other divisions, 7, 17, 20 and 24. They had quite a heavy load of sections and divisions in this particular bill.
Senator Ogilvie, as soon as you have your papers organized, we would be pleased to hear from you and your deputy chair.
Hon. Kelvin Kenneth Ogilvie, Chair, Standing Senate Committee on Social Affairs, Science and Technology: Thank you, chair. As you know, our committee heard testimony on Divisions 5, 7, 17, 20 and 24, Part 4, of Bill C-43. I think what I could do is, Mr. Chair, at your wish, is give you an initial quick comment on each of the divisions. Then if you would like us to flesh it out in more detail, and in any event, I'm sure that Senator Eggleton will want to do that, then we would proceed in that manner.
The Chair: Okay.
Senator Ogilvie: With regard to Division 5, this division had the overall support of the committee, with the opposition that was voiced, voiced strongly.
This is one that changes the act. Currently, if a province imposes a time restraint in this category then the federal government is obliged to impose a financial penalty, if a provincial government imposes a residency requirement, in terms of time, for this category of individual.
This division removes that and transfers the responsibility for determining any time requirements that are needed to be met in order to obtain assistance. It transfers that authority to the province, and therefore if a province were to implement a time restriction, there would be no penalty in terms of transfer of funds from the federal government.
Currently, money is transferred to the provinces to deal with assistance in this area, and so this removes any possibility that the federal government can restrict transfer of funds or impose a financial penalty on transfer of funds to provinces for funds in this category.
As to the Revolving Funds Act, your committee supported the change in Division 7. You have that before you. We supported it. There was no discussion, no debate, no contrary indication.
As to the DNA Identification Act, your committee supported the changes in this division, and it attached some observations. This change, just briefly, Mr. Chair, is to set up DNA data banks with regard to, for example, missing persons. It's been long demanded and requested by families who have had a member go missing that their DNA be used in the identification or the investigation of the missing person. As a quick and easy observation, it would immediately be used in the case of remains being found to rule out or rule in the possibility of identity. It sets up a new category of DNA data bank to assist in the cases of identifying missing persons.
As to the Public Health Agency of Canada Act, the majority of our committee supported the changes proposed in the divisions. There was no strong opposition to this. What it does is change the management structure of that agency. It's straightforward. It's in your documents.
As to amendments to the Immigration and Refugee Protection Act, overall, your committee supported this proposal, but I think it's fair to say that, in this case, the observation dealt with regulations that are already in existence. The concern that certain committee members had could not be raised with regard to this change in the act because the issue that concerned them is not contained in this change to the act but, rather, is contained in the regulations that support the existing act.
What they were concerned about was hardship cases, the issue of having to pay a second time to get permission to advertise for a temporary foreign worker in the event that the first search was unsuccessful or that the person identified subsequently turned down the position offered. The act requires now that before an employer — I'm probably not making much sense to you.
Looking at your perplexity, Mr. Chair, let me start over. I just take it for granted that you guys have read all of this in great detail and know all of these things. My apologies, chair.
The situation is that, when an employer applies for permission to recruit temporary foreign workers, whether that's one or 30, for each position, they have to go through a full review. The cost of that review has gone from around $250 to, in the new act, $1,000 for the cost of that review.
So let us suppose that you are an individual looking for a caregiver. You would be looking for a single person. It still costs you $1,000 to get your request reviewed, and all the terms that are applied to your search for a temporary foreign worker cost you $1,000.
Now let's suppose that your search is unsuccessful. You make an offer; the person doesn't accept it or whatever. That completes that file. That ends that authority that you were given.
If you wish, subsequently, to re-advertise what is now, effectively, a new position, a new search, you are required to get a new approval for that search and pay another $1,000.
So you can imagine that, for large employers in situations of that type, this might be a very logical thing to do because there's an enormous amount involved. A search for a temporary foreign worker may take six months. A great deal changes in that time in most employers' situations, so the act requires certainty that the employer be authorized again to renew the search.
Some committee members felt that that was a hardship with regard to, perhaps, a senior citizen looking for a helper or something of that nature, but the actual regulation that covers this particular access is already in the existing regulations. What the new act does is require the second review.
So what members of your committee suggested is that there be some recognition of the possible hardship here, and perhaps it could be passed on, with regard to regulations, that, when regulations are set, perhaps that could be looked at.
I want to go back and make it clear that the observation does not have to do with the actual item in this legislation but is inferred because of the nature of the regulations on the book. Have I made any sense with what I just said?
The Chair: You have. I hope I'm looking a little bit more understanding this time.
Senator Ogilvie: Almost euphoric, sir.
[Translation]
Senator Bellemare: Please correct me if I am wrong, but I was under the impression that those who pay the fees are the companies in charge of bringing the caregivers. Individuals do not usually go abroad to bring people from the Philippines; agencies do. Whenever someone comes to Canada, the host family pays the fees, not the agency taking care of the service.
Senator Ogilvie: Yes, in most cases, but individuals can be the employers.
Senator Bellemare: Thank you.
The Chair: Thank you for the clarification.
[English]
I didn't call on Senator Eggleton, but I would like him now to comment on any of the points he would like to make as the deputy chair of the committee.
Hon. Art Eggleton, P.C., Deputy Chair, Standing Senate Committee on Social Affairs, Science and Technology: Thank you very much. I would like to comment on two of the divisions, the ones that indicate strong opposition. I am here to represent the strong opposition.
Let's start with Division 5. This is where a modification is proposed to the national standard for the Canada Social Transfer as it applies to certain groups of people. Most notably, what we're talking about here are refugee claimants, and what it says is that, up until now, the provinces have had no choice but to provide social assistance to refugee claimants when they come to the country. It's now going to give provinces the option to put in a residency requirement, which may mean that the province could decide that you have to be in that province for three months or six months before you would get anything in the way of social assistance.
The big problem here is that when people come to this country as refugee claimants, they don't come, by and large, with any money. They don't come with many people they know. They may not even speak either French or English. They've got 15 days to get their case prepared, with legal assistance, for their claim as refugees. How are they, meanwhile, supposed to survive? How are they going to eat? Where are they going to live? Are they going to live on the street? This social assistance is absolutely vital right from the beginning of the period of time that these people are claimants.
Once the claim is decided and if they're going to be allowed to stay, they become refugees who are covered. If they are not accepted as refugees, they can be removed from the country, but meanwhile there's this in-between period. They can't work, either, because you have to be here several months before you can get a work permit.
Right from day one they have to put food on the table and clothes on their backs and have to have a roof over their head.
What does this do? It says that the provinces can put in this residency requirement, which creates an enormous problem for these people. Do the provinces want this? It turns out, we found out at the committee, that no province asked for this. When I questioned officials, they said they had talked to some officials somewhere in the province of Ontario. That's all, just the province of Ontario. What did Ontario have to say about it? They came out right after that and said:
The government of Ontario has not requested the ability to impose residency restrictions, and we were not consulted on this legislation . . .
. . . In fact, the Ministry of Community and Social Services has concerns about the potential human rights implications of imposing a waiting period for a specific group. We believe that a waiting period could impact people with legitimate refugee claims who are truly in need. We have communicated our concerns to the federal government.
Nobody has asked for this, so why would the federal government want to give this permissive kind of legislation? They're saying if the provinces don't want to do this, they don't have to do it and they won't be penalized. Yes, but why do it, then? It does raise the concern that somewhere down the line when you change this national standard, it might become something that could be imposed.
The additional thing I want to say in terms of what the Ontario government has said on its concern about human rights implications is that this could be — and I think it is — in violation of at least two UN covenants. One is the International Covenant on Economic, Social and Cultural Rights to recognize the right of everyone to social security, including social insurance. It doesn't say just citizens or approved refugees. It would also include refugee claimants. It is the same thing in terms of the Convention on the Rights of the Child, which says:
States Parties shall recognize for every child the right to benefit from social security, including social insurance, and shall take the necessary measures to achieve the full realization of this right in accordance with their national law.
There are agreements Canada has signed which this flies in the face of. And a number of my colleagues on the committee and I — a minority, granted — feel strongly that this kind of impact is just wrong.
The Chair: As a rebuttal?
Senator Ogilvie: I think I should put forward the view of the majority with regard to this issue. First of all, the provinces are entirely responsible for social assistance. Essentially, this removes a paternal role of the federal government with regard to punishing provinces for any action that they might take. Furthermore, no province has indicated that it has any intention of setting a waiting period for this access, and in that case, if a province did take that, it would be the province acting in violation of the covenant. So what it really does is remove the federal government from a paternal role with regard to a transfer of funds for social assistance.
The Chair: It's interesting that all of the provinces seem content to continue to do this. Immigration and refugees is a federal responsibility, yet the provinces are being asked to pay the social assistance.
Senator Ogilvie: They are responsible for dealing with the social assistance under the Canada acts.
Senator Eggleton: I will say something about this paternal role. Remember, it was the Government of Canada, the Parliament of Canada that signed these two UN conventions. We have a responsibility as the Government of Canada, in our own Constitution as well, to uphold this. So I don't see it quite the same way.
The Chair: Who deems whether refugees are refugees and can stay or not stay in Canada? That's federal government, is it not?
Senator Eggleton: Federal government, of course.
The Chair: Yet the social assistance is expected to be paid by the provinces.
Senator Eggleton: But there is a transfer payment.
The Chair: Is it 100 per cent coverage?
Senator Eggleton: I don't think so; I don't know.
Senator Ogilvie: The federal government earmarks a certain social transfer each year in this category.
The Chair: Yes, so whatever it is, it is.
Senator Ogilvie: Yes, and you don't know how many refugees will come. By the way, there are several categories in the so-called refugee area.
The Chair: It's interesting. We know that the majority in your committee would support this point of view, and a strong voice in opposition was expressed.
Senator Eggleton: I hope it's been strong. I have one more.
The Chair: I know. I'm looking forward to your strong opposition to the next one. It helps us understand.
Senator Eggleton: That comes under Division 20, which is the Public Health Agency of Canada. To quote one of our witnesses before the committee, this provision will significantly weaken the agency in the position of influence to the Chief Public Health Officer and his or her independence. The Public Health Agency, led by the Chief Public Health Officer with a deputy-level position, should be maintained.
That's what the minority of the committee feels strongly about.
The Chair: Could you give us a little bit of background on this?
Senator Eggleton: Yes. This proposes to put a president of the Public Health Agency, which would be a deputy minister type of person operating in that normal kind of function, as the head of the agency, and the chief medical officer of health would then work under that person. That person would be relied upon to provide medical advice. They are a doctor; the person above them is a bureaucrat. However, the concept of this agency, when it was originally developed, was to have control of the funds and the work program in the hands of the Chief Public Health Officer. This diminishes that position.
Apparently, the current incumbent has said he doesn't mind this. Well, we're not here just to follow what the current incumbent thinks is the right thing to do. This says something about him perhaps, and that's too bad. But this is a position we feel should be left in the hands of the Chief Public Health Officer as the head of that agency and not bring somebody in over and above that person.
Senator Ogilvie: Mr. Chair, I have a quick observation. First of all, the opposition to this change has come largely from those who had a role in recommending the current situation to government some number of years ago. And it could be said they have a vested interest in not seeing the recommendations changed. This is after a considerable period of experience in the role of the Chief Public Health Officer in Canada. Senator Eggleton correctly said the current incumbent says he finds he is completely comfortable with the position. He likes not having to deal with the deputy minister aspects of the role and can get on entirely with his role as the chief medical officer.
So it seemed that there were persons from the past who opposed the new change. The current incumbent and others support this change, but Senator Eggleton has correctly pointed out the opposition.
The Chair: Do you get the sense that this is being proposed because the Chief Public Health Officer wanted the change?
Senator Ogilvie: It is not because of the person appointed as the Chief Public Health Officer. This was in the works prior to his appointment, so it's not because of the new, recently appointed Chief Public Health Officer. There was no evidence that he had any role in recommending, and he was hired under the understanding that this was the way government would be proceeding. That was my understanding, senator.
Senator Eggleton: Yes. I don't differ from that. Again, in terms of the position, this Public Health Agency was born out of the SARS crisis of a number of years ago, and it was determined that we needed to have this kind of a figure who could help lead us through these very difficult times. If you have that kind of a person, they should be in a position where they can move around the resources within their department, set the goals and the objectives, and they can move quickly when you've got a major pandemic or epidemic problem that arises. Instead, the person will now become secondary to a bureaucrat, and I just don't think it will function as well that way. It's riskier.
The Chair: We understand your difference of view. I think honourable senators might be interested in knowing what prompted the change. That's what I was trying to get to by asking you if this was as a result of something —
Senator Eggleton: You'll have to ask the government representative.
The Chair: Is there any indication the system wasn't working the way it was set up, that it had some failings we're trying to correct here?
Senator Ogilvie: My understanding is that over roughly a decade of the Chief Public Health Officer position, it was largely occupied by a single individual over that period of time. He was supposed to be replaced. The search was incomplete and he stayed on for a bit longer. They finally appointed a new Chief Public Health Officer.
My understanding is it has been the experience in the position that people here would be fully aware that a deputy minister deals more with the politics of the various aspects of these areas. The Chief Public Health Officer previously had both aspects of responsibility. The Chief Public Health Officer is charged with leading Canada's response in any major issue. My understanding is that that role of public health officer is unimpeded, and, in fact, it's the responsibility of the deputy minister in this role to facilitate the issues that ensure that resources are available and that things move quickly at the political level. Provinces are involved and all those kinds of issues. My understanding is that it's an evolutionary understanding of ways to make our response as fast as possible in difficult situations, but that's the best I can give you, Mr. Chair.
Senator L. Smith: Just an observation: It would appear that the Chief Public Health Officer, being a technician or doctor of some superior level, would have outstanding technical skills and the ability to mobilize people within the network. The deputy minister's job is probably, as you mentioned, more of a political job or an administrative job. If you deal with doctors and lawyers or accountants, usually the big knock against a doctor or lawyer or accountant is they may not be the greatest administrators, but they may be excellent at doing the job that they do best.
One of the things that maybe have come out of this is that there's been an organizational assessment as to what role the public officer should play in terms of the management side versus the technical side of the actual execution. I'm not making a judgment either way, but, usually, you'll see in businesses or corporations that sometimes there will be a shift from one type of approach to another. Maybe, because of efficiencies, the deputy minister may have more administrative capability, which is a key element of overseeing, but the public health officer has to do all of the interconnection. So there may be a role that needs to be divided to get more efficiency because maybe the issue was whether the Chief Public Health Officer was as efficient in the past. Just a thought.
Senator Eggleton: It is already divided. That's recognized. Except that the administration person comes underneath the Chief Public Health Officer. So the Chief Public Health Officer is, in fact, the leader and is able to lead the department, able to set the priorities, but there is administrative help, at a very senior level, right beneath him. It's a question now of the fact that that position is going to leap over the public health chief, which is what I object to.
Senator Ogilvie: Senator, your summary of many normal situations would be my experience as well, but this is a unique position. The individual chosen to hold the role of the Chief Public Health Officer is selected on a wide range of abilities. If I thought for a moment that they would choose an individual who wasn't capable of organizing and thinking through a national plan and the mobilization of all of the medical forces and so on required to meet that at a national level, I think I would be objecting strenuously too. Indeed, it is the requirement of the Chief Public Health Officer to lay out that overall strategy, to have those abilities and to be able to represent Canadians at the highest level of organizational ability in meeting this. As you would recognize in the professions you mentioned, at the top of all of those professions are people capable of leading the issues at a national level. So I would not want to leave here with any thought that the capability of the Chief Public Health Officer is expected to be diminished in any administrative way at all. Rather, there are different types of administration, some of which are entirely bureaucratic, that somebody has to put a bulldozer up against to move. If the person who is attempting to get their handle on an outbreak of an Ebola-like virus in Canada has to, at the same time, move civil servants faster than they normally move, then that individual has two very serious lines of command that have to go ahead simultaneously. So it is my understanding that this is not, in any way, intended to diminish the expectations of the calibre of the Chief Public Health Officer but rather to facilitate and expedite the plans that are needed to protect Canadians during any major health outbreak.
Senator Eggleton: We agree to disagree.
The Chair: Senator Smith, do you have any final comments?
Senator L. Smith: I wasn't trying to denigrate or demean the public health officers. When we had, in Finance, as you remember, the various groups that came in and the interconnection between the Public Health Agency of Canada and Health Canada, this is a huge maze, and there are thousands of practitioners as part of this whole global process. Maybe I didn't explain it as well as I should have enunciated it, but I was sort of on this bent of Senator Ogilvie's, where there may be situations whereby, when you're trying to get into that bureaucratic side, that deputy minister may just have a better handle on it than the other person. That's not to demean the other person because doctors and lawyers are outstanding in what they do, and they build up their range of expertise. But, in this case, there's a huge maze outside of the Public Health Agency, as we found out when we were interviewing these various groups. It's a very complex situation.
The Chair: I think we'll just speculate on why this action is being taken, but we understand what action is being taken. That's the important thing for us in assessing the legislation.
If you could explain, one or both of you, the background to Division 7, the Revolving Funds Act. You indicated that the committee supports it, so you all support it and didn't have any observations. Can you tell us what it's all about?
Senator Ogilvie: No. Well, we could, but I don't have it in front of me. We spent very little time on it. We discussed this at the steering committee meeting. We were in total agreement that this is a logical thing to do. If you'll refresh my memory, perhaps I can tell you why we had no opposition whatsoever.
The Chair: Maybe we can do a little bit of refreshing here. That would be helpful to us.
Senator Ogilvie: I want to make it clear that, on this one, there was zero controversy of any kind.
The Chair: I understand, but —
Senator Ogilvie: It's a straightforward change.
The Chair: As a committee, we're going to be asked to vote on it. I don't like my committee members to vote on something they have zero knowledge about.
Senator Ogilvie: This is the transfer of responsibility of Passport Canada from the Minister of Foreign Affairs to the Minister of Citizenship and Immigration. This requires a number of changes to a number of bills, and this is the last piece of legislation that needs to be changed in order to bring about that complete transfer.
The Chair: For passports?
Senator Ogilvie: That's right. There is no issue of substance here whatsoever. This is cleaning up the number of pieces of legislation around a transfer process that has been approved and is now being implemented.
The Chair: That's interesting that it should have been sent to your committee.
Senator Ogilvie: We find that we do receive a lot of interesting things.
The Chair: Senator Ogilvie and Senator Eggleton, thank you very much for being here, and thank you for that last explanation. We appreciate that. It's very helpful for us in the work that we have to do. You've done a fine job.
Senator Ogilvie: Thank you, chair and members of the committee, for your patience.
The Chair: I understand that we can move right on to Banking, if Banking doesn't mind. I'm told, Mr. Chair, that the deputy chair will not be able to be in attendance, so we would ask you to present both sides of each argument.
For Banking, we will be discussing the subject matter of those elements contained in Part 4 again, Divisions 9, 12, 18, 22, 26 and 27. Banking had quite a bit of work to do. They have a good, fulsome report here that will help us understand the work that you did do.
Hon. Irving Gerstein, Chair, Standing Senate Committee on Banking, Trade and Commerce: Thank you very much, Mr. Chair. You have mentioned the divisions that we reviewed. The committee held two hearings, one being an extended four-hour meeting. We heard from the Minister of Finance, government officials and a number of outside witnesses. I propose to give an overview of the intended legislative changes, as well as some of the views expressed by witnesses and committee members.
As you may be aware, as is the case we've had before, certain sections generated more discussion than others. I propose to focus first on those divisions that did not generate much discussion, being Divisions 12, 18, 26 and 27, before turning to the two divisions that did, Division 9, which contains amendments to the Investment Canada Act, and Division 22, which deals with credit unions.
Division 12 contains proposed amendments to the Business Development Bank of Canada Act. This legislation proposes to improve and modernize the Business Development Bank of Canada Act — an act, I might say, that the Banking Committee reviewed in great detail several years ago. The proposed legislative amendments would allow the BDC to help small and medium-sized enterprises beyond the domestic market invest in venture capital funds legally established outside of Canada that deliver benefits to Canadian entrepreneurs; update the scope of management services and ensure that they are complementary to those offered by the private sector; include enabling legislation to allow the Governor-in-Council to make regulations with respect to additional financial tools and management services that BDC could provide; and provide indirect financing through third-party organizations. In addition, it would align the act's governance provisions with industry practices. Officials from the BDC stated that the proposed amendments, which it characterized as minor, which the committee unanimously agreed with, would provide BDC with the tools it needs to fulfill its mandate of helping entrepreneurs.
Moving to Division 18, the proposed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, you may recall that the Banking Committee undertook a very major review of Canada's anti-money laundering and anti-terrorist financing regime, tabling its report in the Senate in March of 2013, so clearly an area of great interest to us.
Division 18 would amend Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to broaden the definition of the term "foreign entity." The new definition would include foreign entities that are engaged in or carry out services similar to money services businesses. The result of the change would be that these businesses could now be subject to countermeasures by the minister.
Division 26 is proposed amendments to the Canadian Payments Act. Amendments to the Canadian Payments Act alter the governance structure and administrative obligations of the Canadian Payments Association. The proposed amendments improve the accountability of the Canadian Payments Association, allow the association's board of directors to act more independently and expand the minister's authority. The Canadian Payments Association said the proposed amendments would enhance its governance functioning and accountability and that the smaller and more independent board of directors would be more representative of the stakeholders in the payments system.
Moving to Division 27, these are proposed amendments to the Payment Clearing and Settlement Act. The purpose of the amendments in Division 27 is to expand and enhance the oversight powers of the Bank of Canada with respect to designated clearing and settlement systems. Changes would allow the Bank of Canada to oversee payment system risk. Payment system risk is currently solely governed by the Canadian Payments Association, and the association sought clarification that this possible duplication of oversight would not have a negative effect on the association's role in governing the Automated Clearing Settlement System.
Focusing on the two items which stimulated more than a little debate at committee, the first is Division 9, which contains amendments to the Investment Canada Act. The proposed amendments require foreign investors to file a notification whenever they acquire a Canadian business through the realization of security granted for a loan or other financial assistance. Secondly, the amendments authorize the Minister of Industry to publicly disclose certain information related to national security reviews.
Our colleague Senator Black raised an issue with officials on this division, and I quote the senator: "Since the last involvement in gathering information in respect of investment, investment from outside of Canada in the oil sands has stopped." That was a quote from Senator Black.
In response, Paul Halucha, Director General, Strategic Policy Branch, Industry Canada, stated that the amendment:
. . . is not making any changes to the oil sands policy at all. The burden that's going to be placed on businesses who are realizing on debt here is going to be extremely minimal. . . . There are not any changes to the oil sands policy. There are no impacts here on the flows of capital going in and out of the oil sands.
Following discussion among the committee on this subject, however, an observation is included at the end of our report, which states:
First, the Committee notes that Division 9 could have an effect on foreign investment in Canada. In particular, unintended consequences could prevent a lender from realizing security on a loan.
The Canadian Bar Association also echoed concerns that the national security review process could limit foreign investment in Canada, and Omar Wakil suggested that ". . . the government should provide more disclosure about the frequency of national security reviews and the outcome of those reviews."
The second division which generated debate was Division 22, which amends the Bank of Canada Act, the Canada Deposit Insurance Corporation Act, the Bank Act and the Cooperative Credit Associations Act.
First, the amendments would end the supervision of provincial central cooperative societies by the Office of the Superintendent of Financial Institutions, OSFI. Second, amendments would clarify the access that provincial credit unions and caisses populaires have to federal aid. And, third, amendments would streamline the process for credit unions that wish to transition from provincial to federal regulation. At present, I might point out, no credit union is federally regulated and no credit union has applied to do so. However, some are considering this transition.
Mr. Michael Leonard, President and CEO of Atlantic Central, expressed concern that ". . . C-43 may divide the credit union system by creating barriers between federally and provincially regulated entities . . ."
Martha Durdin, President and CEO of Credit Union Central of Canada, also raised this issue:
Specifically, it will take time to understand the impact of these changes on provincial central operations and the relations between central organizations across provincial boundaries.
Therefore, they are requesting clarity with respect to the starting point of the two-year period for the transition to the end of OSFI's supervision. I quote Ms. Durdin again:
. . . it is not clear when the clock starts on the transition. Does it start when C-43 is passed or when the stakeholders have a clear sense of what must be done to facilitate the transition? In our view, the timetable should be dictated by the need to ensure a smooth transition to exclusive provincial authority. The timetable should be set in consultation with the system.
This was also a concern for several senators, and hence one of the observations at the end of our report reads:
Secondly, the Committee suggests that the federal government should ensure that credit union stakeholders and the provinces have sufficient time to prepare for the transitions that would be required in relation to Division 22.
In conclusion, honourable colleagues, I would draw your attention to the end of our report, where it states that the committee unanimously supported the divisions we studied:
The Committee supports Divisions 9, 12, 18, 22, 26 and 27 of Part 4 of Bill C-43 and proposes that they be adopted as written . . .
Perhaps this total unanimity and not much opposition to any of our discussions explains the absence of the deputy chair from our committee today. Thank you.
The Chair: Thank you very much for that brief but thorough review of several sections that you looked into. No honourable senators have expressed an interest in intervening or asking questions, so that has to mean that your report is clear, and your verbal explanation of the report made it even clearer.
Senator Gerstein: Thank you, Mr. Chair. It is a pleasure.
The Chair: Could you tell me, do you intend to have a debate on this report in the chamber? I know that it's been filed and tabled.
Senator Gerstein: I do not expect so.
The Chair: So, colleagues, then, I think we keep that in mind in terms of all of these reports that we've looked at now, and this is the final one. Our role now is to look at our report and then we'll file that. Then if you can speak on the report, that's great, or you can wait and speak on the bill when it comes, either one, because the report and all of these reports give you some background to help prepare your remarks.
Senator Gerstein, thank you very much.
Senator Gerstein: Thank you, Mr. Chair.
The Chair: You can take your chair hat off.
In fact, I think we can all take our hats off. I think we've done a fine job on getting through Bill C-43, colleagues. Thank you all very much for your cooperation. Once we get the report later this afternoon, please take some time to review it today and up until tomorrow evening.
[Translation]
The Chair: Senator Rivard, we will proceed to the consideration of our report tomorrow evening.
[English]
That is all for now. Thank you very much. The meeting is concluded.
(The committee adjourned.)