THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, May 29, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 2:35 p.m. [ET] to examine all of the subject matter of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Good morning, honourable senators. Welcome to this meeting of the Standing Senate Committee on National Finance, and welcome to our guest today, the Honourable Chrystia Freeland, Deputy Prime Minister.
Before we begin the meeting, I would like to take a moment to pay tribute to the Honourable Joseph A. Day, who passed away recently.
As you know, Senator Day represented the province of New Brunswick in the Senate from 2001 to 2020 but more specifically, he chaired this committee with great distinction for nine years, from the 39th Parliament, 1st session to the beginning of the 42nd Parliament, 1st session, between 2006 and 2015.
(Those present observe a minute of silence)
Before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.
Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters. If possible, ensure that you are seated in a manner that increases the distance between microphones. Only use a black approved earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times.
When you are not using your earpiece, place it face down, on the sticker placed on the table for this purpose. Thank you all for your cooperation.
I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca.
My name is Claude Carignan, senator from Quebec, and chair of the Senate Committee on National Finance. I would now like to ask my colleagues to introduce themselves starting from my left, please.
Senator Forest: Éric Forest from the Gulf senatorial division in Quebec. Welcome, minister.
Senator Gignac: Welcome, minister. Clément Gignac from Quebec.
Senator Dalphond: Pierre J. Dalphond, De Lorimier senatorial division in Quebec.
[English]
Senator Duncan: Good afternoon. Pat Duncan, senator from the Yukon.
Senator Loffreda: Minister Freeland, welcome. Senator Loffreda from Montreal, Quebec, and proud sponsor of Bill C-69.
Senator Cardozo: Welcome, minister. Andrew Cardozo from Ontario.
Senator Pate: Welcome. I’m Kim Pate. I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator Kingston: Welcome. Joan Kingston from New Brunswick.
Senator MacAdam: Welcome. Jane MacAdam from Prince Edward Island.
Senator Ross: Welcome. Krista Ross from New Brunswick.
Senator Marshall: I’m Elizabeth Marshall from Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
The Chair: Thank you, colleagues. We will continue our study on the subject matter of all of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, which was referred to this committee on May 9, 2024, by the Senate of Canada.
Today, we have the pleasure of welcoming the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance. The minister will be with us for 90 minutes, with one or two brief interruptions for votes, but will try to make the time up afterwards to reach 90 minutes. Thank you, minister, you now have the floor. You are accompanied by Chris Forbes, Deputy Minister, Department of Finance.
The Honourable Chrystia Freeland, P.C., M.P., Deputy Prime Minister and Minister of Finance: Thank you very much, Mr. Chair and honourable senators, for your hard work.
I am pleased to appear before you and the committee members to discuss Bill C-59 and Bill C-69. These two bills are an integral part of our government’s economic plan to build a fair country for every generation.
[English]
I would like to start by discussing some of the crucial components of Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023. This bill will help boost the supply of homes so that we can bring down housing costs. It will temporarily remove the GST on new rental housing built for or by cooperative housing corporations — a really important measure that I’m glad to be putting forward.
Bill C-59 will help make life more affordable for Canadians. Building on changes introduced in Bill C-56, the Affordable Housing and Groceries Act, Bill C-59 will amend the Competition Act and the Competition Tribunal Act to protect Canadians with more modern and effective competition laws.
[Translation]
Combined, these amendments will bring generational changes to Canada’s competition regime, and through improved competition, Canadian consumers will have more choices, which will help drive prices down.
[English]
Bill C-59 will also eliminate the GST/HST on psychotherapy and counselling therapy services to make mental health care more accessible. For families adopting a child, it will introduce a new 15-week shareable Employment Insurance adoption benefit to help families welcome their new child. For women working across federally regulated industries, it will create paid leave in the event of a miscarriage — something that I’m really glad we’re able to do.
To build a stronger, greener economy, Bill C-59 will enshrine into law the carbon capture, utilization and storage investment tax credit and the clean technology investment tax credit. These investment tax credits are designed to boost investment and generate jobs in Canada, and they will put Canada at the forefront of attracting investment.
The labour requirements attached to these investment tax credits will ensure that Canadian workers benefit directly from prevailing union wages and apprenticeship opportunities. These labour provisions are a historic accomplishment for workers in our country.
[Translation]
Mr. Chair, I’d now like to talk to you about Bill C-69. Bill C-69 will help make home ownership more accessible, especially for millennials and Gen Z. To achieve this, the bill proposes new tax-free tools to help young Canadians save for their first down payment. For example, it improves the Home Buyers’ Plan, which allows RRSPs to be used for a down payment. The withdrawal limit will increase from $35,000 to $60,000, allowing buyers to save faster for a down payment, have a smaller mortgage, pay less interest and have lower mortgage payments.
[English]
The bill will also unlock housing supply for Canadians to live in by cracking down on short-term rentals that do not comply with provincial or municipal restrictions, and it will extend the ban on foreign buying of Canadian homes by two years, because homes should be for Canadians to live in, not a speculative asset class for foreign investors.
Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, will also strengthen Canada’s social safety net. Amongst other measures, it will establish a new national school food program and introduce automatic enrolment in the Canada Learning Bond to help more low-income families invest in and afford their child’s post-secondary education.
To make life cost less, the bill will also make switching internet and phone plans cheaper and easier.
[Translation]
To attract further investment and create more good jobs, the bill will introduce the clean technology manufacturing investment tax credit and the clean hydrogen investment tax credit. It will extend the mineral exploration tax credit by one year.
[English]
Finally, the legislation will also stand up our new $5-billion Indigenous loan guarantee program; it’s truly historic. This will unlock access to capital for Indigenous communities, create economic opportunities and advance economic reconciliation.
Mr. Chair, both Bill C-59 and Bill C-69 are critical pieces of our economic plan to build a Canada that works for every generation, particularly younger Canadians — a Canada where they can get ahead, and where they know their hard work will pay off.
Thank you. I am now happy to answer questions from the senators here on the committee.
[Translation]
The Chair: Thank you, deputy prime minister.
[English]
Senator Marshall: Welcome, minister, and also welcome, Mr. Forbes.
Looking at your budget documents, you are going to reach some milestones this year. Government expenses are going to exceed half a trillion dollars, and the public debt charges are going to exceed $50 billion, so that is $1 billion a week. When your budget passes, you are going to have the authority to spend and spend and increase our debt to over $2 trillion. I want to talk about where the money is going.
You have spent billions on housing, but the housing starts are declining.
You have spent billions on health care, but our health care system has collapsed.
You have spent billions on child care, but thousands of families can’t find child care.
You have spent more money on homelessness, yet the number of homeless people is increasing.
You have spent billions of dollars over the last nine years to grow the middle class, but our middle class is actually shrinking after nine years of spending.
Our GDP per capita is declining, indicating our living standards are declining, and millions of Canadians are lined up at food banks.
You’re spending the money, but you are not getting the results. You are saddling millennials and future generations with crippling debt, and you have lost the confidence of Canadians.
You have said this is your economic plan, but there’s nothing in the budget, minister, to address the suffering of Canadians.
Why is there no recognition in your budget as to the suffering of what people are going through in Canada?
Ms. Freeland: Senator, thank you for your question. Thank you for the careful attention that you pay to budget documents.
You packed a lot in there. Let me try to respond to a few of your points.
At a high level, what I will say is this is a budget that is about fairness for every generation. It is a budget about getting more homes built faster, because we recognize that we have to do that.
It is a budget about making life more affordable, with things like dental care, pharmacare and a national school food program.
It is a budget about economic growth, with things like the Indigenous loan guarantee program, and with things like our investment tax credits.
While I absolutely accept that we will have disagreements about ideology and maybe some values around this table, I would like to paraphrase Daniel Patrick Moynihan, who said that everyone is entitled to their opinion but facts are facts. One fact that I think is important to be very clear on is our government’s approach is fiscally responsible. That is not my opinion. That is the view of the credit rating agencies that have reaffirmed Canada’s Triple-A rating after the budget.
I know the committee had the Parliamentary Budget Officer here — I think it was last week. The Parliamentary Budget Officer, who is an independent official of Parliament, was very clear that Canada has an admirably fiscally responsible position.
That is not a matter of opinion. It is just a matter of fact.
Senator Marshall: What is fair about $2 trillion in debt? We’re not going to be around to pay it back. We’re leaving it for our children and our grandchildren. You are just spending. You have lost control of your spending. We will have debt of over $2 trillion. This is what your budget is saying.
In my home province of Newfoundland and Labrador, the seniors are saying the government has forgotten them. They can’t afford their rent. They can’t afford to heat their homes. They are going to the food banks. They can’t afford to live. Not everybody has this rosy picture of the economy. The rating agencies are just looking to make sure they get the interest on the debt.
You keep raising taxes. Yes, they are going to be happy, but Canadians are suffering; seniors are suffering. Young people can’t afford to pay their mortgage. They can’t afford to pay their rent. They are sleeping in their cars.
Then, we see a budget that’s 600 pages or 700 pages long, and seniors and young people are saying, “There is nothing in that budget for me. The government has forgotten me.”
Ms. Freeland: With due respect, senator, I strongly disagree with pretty much everything you have said. To the point of fiscal responsibility, the rating agencies make very careful judgments, and they’ve been very clear that Canada’s fiscal position is fiscally responsible. You heard the same from the Parliamentary Budget Officer, but I do want to speak to your point about the challenges that Canadians are facing.
This is absolutely a challenging time for people in Canada and around the world. That is why I would like to ask the senators here to support these measures with alacrity. A national school food program, for example, is long overdue in Canada. That is something that this budget will provide. There are an additional 400,000 children across the country who will have food in their tummies when they are in school. That is something that I hope we would all be able to support.
Senator Marshall: I think, minister, you should talk to some of the 2 million people who are lined up at the food banks.
[Translation]
Senator Forest: Thank you, minister. My first question relates to section 16 of Part 4, which provides for the legislative implementation of the core components in banking services for people. Your desire for an open exchange system is already running into a problem: Cooperatives and other institutions under provincial jurisdiction will have to obtain permission from provincial governments and agree to be governed by two consumer protection systems. According to many, instead of simplifying matters, this will complicate them. Why not adopt a more collaborative approach? For example, banks and cooperatives already participate in the Interac system, it works very well, and that doesn’t prevent the federal government from monitoring the system. Aren’t we creating an environment that would be more conducive to constitutional disagreements, when they could be avoided?
Ms. Freeland: Thank you for the question. I want to assure you that our government — and I personally — prioritize a collaborative approach with the provinces, including Quebec. We have a good collaborative relationship with Eric Girard, Quebec’s finance minister. We work closely together. As you know, our approach is optional. It’s just a first step. I assure you that we’re actively working with Quebec. We’ll continue to do so.
Quebec is a leader in innovative companies in Canada, including financial technology companies. When we talked about this open banking system approach, Quebec companies were among the most active in saying that Canada must create a system and structure. I want to assure you that this is just the first step. We understand the importance of working with the province of Quebec.
Senator Forest: The Desjardins Group is a major player in Quebec’s financial sector. The Quebec government must authorize the Desjardins Group to participate in the open banking system. Have you had any discussions on this topic? Where does Quebec currently stand on authorizing the Desjardins Group to participate in the system?
Ms. Freeland: I won’t comment on relationships with specific financial institutions. I do want to assure you that we understand the importance of working with Quebec on all issues, but particularly on this one. We’re currently consulting with the province and the province’s financial institutions.
Senator Forest: Still on the topic of consumer-driven banking, the Financial Consumer Agency of Canada Act has been amended to broaden the agency’s mandate to include oversight of the consumer-driven banking framework and to create the position of senior deputy commissioner of consumer-driven banking. This person will be responsible for overseeing the framework. Some people have wondered whether the Financial Consumer Agency of Canada should be responsible for overseeing the consumer-driven banking framework. The Bank of Canada would seem a more natural choice. It already works on setting standards and runs its own research centre. Why create a new commissioner position and entrust the agency with this responsibility?
Ms. Freeland: Good question. This structure was discussed at length in the Department of Finance with a number of experts. We took our time. We know that we need a system, we need to open up our system and we need to create opportunities for innovators and especially for Canadian consumers. We know that we need to move forward. At the same time, we know that this is a critical time and that we need to make the right choices. Our choice is to focus on consumers. Right now, when everyone’s thinking about affordability and the cost of living, we feel most strongly about making sure that we serve Canadians. That’s our main motivation for making this choice.
The Chair: Thank you, minister.
Senator Gignac: Thank you, minister. Thank you for making yourself available. We know that these are busy weeks, so we greatly appreciate it.
I’ll follow up on my colleague Senator Forest’s questions. I’m a member of the banking committee. This committee is looking at Division 16 concerning the new framework for the open banking system. Let’s talk about governance. Admittedly, people were surprised that you gave the mandate to the Financial Consumer Agency of Canada. The new deputy commissioner will be working within this consumer agency and the agency has financial penalty and oversight powers to protect consumers. In Quebec, when it comes to the conduct of financial players, Quebec also has powers. Why didn’t you opt for another governance model?
For example, for pension funds, we have the Canada Pension Plan Investment Board — there are the provinces and the federal government. Why not opt for a different concept of governance and create a board of directors that would include federal and provincial players such as the federal government, the Office of the Superintendent of Financial Institutions, the consumer protection agency and the Autorité des marchés financiers? They’re used to working together. In this case, we have one organization and the deputy commissioner simply reports to you. However, there isn’t any consultation mechanism. Are you open to the idea of considering a different governance model?
Ms. Freeland: Thank you for the question. I really appreciate the focus on this initiative. I agree with you and Senator Forest that it’s really important for Canada.
I’ll say two things.
First, we’re open to all ideas and suggestions. This is really something new for Canada. We understand that it’s important to listen. That’s why the structure is currently optional. We’re just getting started. We’re currently holding consultations, including with the provinces, with financial institutions and with the honourable senators.
Second, I assure you that creating this structure and proposing it wasn’t a one-day job. We and a number of experts worked hard to come up with this proposal.
Third, I’m convinced that we definitely need to consult with the provinces. However, we must also move forward. Canadians, innovators and entrepreneurs are telling me that it’s time for Canada to create this type of system.
Senator Gignac: My second question concerns a different topic that isn’t covered by bills C-69 and C-59, but that appeared in your budget. I’m taking advantage of your presence. I think that everyone would benefit from knowing about it.
My question concerns changes in the capital gains taxation. This isn’t included in Bill C-69. However, the deadline is June 25, and a bill will probably be submitted to us.
In 1987, when Michael Wilson — the Conservative government’s finance minister — raised the inclusion rate from 50% to 66% and then to 75%, he presented a white paper that had been tabled six months earlier. People had a chance to make adjustments. As you know, selling a 6-unit or 12-unit building isn’t as easy as selling a share on the stock market in terms of cash flow. This gives people little time. Many people find it short notice.
Why choose June 25? What do you have to say about criticism from Jack Mintz and others, who say that many more than 40,000 people will be affected by this measure each year, because they will not be the same from year to year? For the real estate sector, would the government be open to pushing the effective date of June 25 to January 1, for instance?
Ms. Freeland: Thank you for the question. I will start with the statement you made at the beginning of your question. Canada has already had a 75% inclusion rate, which is higher than the inclusion rate we are proposing. Evidently, Canada already had a 67% inclusion rate; that is the inclusion rate we are proposing. It is important to note that we have already done this.
Second, I am not here to make announcements about the system — and I do appreciate the question — but I can give you a few answers. Key elements of the change we are proposing were published in the budget. As you know, the key elements are the following: First, inclusion rates will be raised to 67%. Second — and it’s different from what existed when Mr. Mulroney was prime minister — the new rate will apply after the capital gain of $250,000 per person per year. As you quite rightly noted, when taxation changes are announced, those changes usually come into effect the day of the budget. We decided not to do that this time. The effective date will be June 25 to give people time.
The Chair: Thank you.
Senator Gignac: Will the details be submitted to us soon? You have to table a notice of ways and means motion before June 25, because tax experts are calling for it.
Ms. Freeland: Yes.
[English]
Senator Smith: Welcome, minister. Last year around this time, you appeared at this committee with respect to Bill C-47. I voiced my concerns about the use of omnibus bills, and cited other Senate committees that called upon the government to introduce stand-alone legislation for several divisions in order to review them properly and effectively. The National Finance Committee’s report on Bill C-47 made it clear:
The Committee expresses its concern about the continued use of Omnibus Bills. Bill C-47 is 430 pages long and includes many sections that are unrelated to the fiscal policy of the Government, such as the amendments to the Criminal Code and the Canada Elections Act. They should have been introduced as separate Bills. This practice is unacceptable.
Today, Bill C-69 is another massive and complex piece of legislation with very consequential amendments, including Division 28 of Part 4, which amends the Impact Assessment Act.
Minister, could you please respond to the calls we’ve made from our committee about curbing the use of omnibus bills, irrespective of whether the measures were announced in the budget?
Ms. Freeland: Thank you for the question, and I do want to say something very sincere — I’m going to be sincere throughout, but this is super sincere: I do really respect the work of this committee of the Senate. I know that everyone here approaches the work seriously and with the view of making Canada better. I learn a lot in my appearances before this committee and in separate conversations that we have. I take your work seriously, and I know you take your work seriously as well.
As you implied in your question, senator, we did take care that every item in the legislation should appear in the text of the budget, either in the chapters or in the legislative annex. We recognize the importance of that, and we have done that.
I’d also point out that Bill C-69 is shorter than, for example, Bill C-9 in 2010, which was the budget implementation act when Stephen Harper was the prime minister — just for the sake of comparison.
The other thing I will say is that I think all of us, from whatever side of the political spectrum, have a sense of urgency about the things that Canada and Canadians need. I have a sense of urgency about the national school food program. We need to get it passed.
I have a sense of urgency around the investment tax credits, two of which were in the Fall Economic Statement, and two of which are in the budget implementation act. We need to get these passed into law. Pretty much every day, I talk to a business that wants to invest in Canada, either Canadian or international, and they say we need the certainty of this being passed into law.
As you know, it is quite challenging sometimes to get legislation passed, and to get bills through committees in the other place. There’s a lot of filibustering going on —
Senator Smith: Before my time expires —
Ms. Freeland: My sense of urgency is to get measures in place that Canadians need.
Senator Smith: The problem is with the process, not necessarily the policy. I think that’s an important consideration when we talk about omnibus bills, because we’re not able to get our job done properly when we have to go through large documents — things that are not related to the actual programs — and we’re trying to make sure that we do our job the best way possible. We need your help and the government’s help to recognize that by cramming things in, and by making notices in one bill and forgetting to put it into another bill, at the end of the day, we’re not being as effective as we possibly can. That’s the point. Our job is to make sure we bring these concerns up to you in a respectful way, which I think I’m trying to do, so we can move forward and make our efforts more efficient.
Ms. Freeland: Let me just say that I absolutely believe, senator, your concerns are very sincere and very thoughtfully presented; I respect them greatly, and I think they’re important. I also have a great concern in putting in place the measures that I believe Canadians urgently need — putting in place measures to make life more affordable for Canadians, like the national school food program, and putting in place measures to grow our economy, like the Indigenous loan guarantee program.
Senator Loffreda: Minister, welcome to our committee. Thank you for being here. I’m honoured to be the Senate sponsor of the budget implementation act, which contains many measures that will help Canadians, and they always say positivity plays a critical role in helping builders build better. Those who know me know that I try to be positive.
I want to address one of the questions, because there was some concern. We talk about debt levels, and we had our Parliamentary Budget Officer here during one of our last meetings, and he did say that our debt is sustainable for the next 75 years. He was concerned that he won’t be around, and his spouse was concerned too. You did mention it’s a generational budget and, jokes apart, we won’t be around; I don’t have grandchildren yet, but hopefully one day I will and they will be around.
This government’s legacy, I feel, will be dental care, child care, pharmacare and disability benefits. We must now build an economy to sustain these programs. That’s important to do so. Do you feel this budget will help our economy progress enough to sustain these programs in the future?
You were briefly discussing some of the programs that you feel will help our economy get there, but maybe you can elaborate on a few that you’d like to share with Canadians and share with us here by saying, “Yes, our economy will be able to sustain these programs — here is why, and here is what is in the budget implementation act that will help us do so.”
Ms. Freeland: Yes, thank you very much, senator, and thank you for your hard work.
The first thing I’ll say is I think investments in Canadians, in making life more affordable for Canadians and in supporting them are also investments in the economy. A great example of that is our national program for early learning and child care, which is certainly social policy, and which is certainly affordability policy. Across the country already, fees are down by 50%, and we’re going to hit $10 a day, as we promised to do. It’s also economic policy, because we now have a historic rate of women’s participation in the labour force, which is driving the economy. And by the way, those women who are now able to work are already in Canada; they already have a home.
I agree with you about the historic investments we’re making in Canadians. Very many of those investments also deliver economic growth.
Having said that, in addition to investing in Canadians and making life more affordable, there are two other pillars in the budget: One is housing, and the other is economic growth. I’m going to start with housing, because I believe housing, in addition to being an urgent social need, is absolutely critical for our economy to grow. When I talk to major employers in Toronto and in Vancouver, they say to me, “We need to get more homes built faster because we want more people to work at our company, but they need to be able to afford to buy a house.” Our plan to get 4 million homes built by 2031 is absolutely an investment in the Canadian economy.
Then, the budget also includes really significant investments in the economic capacity of Canada. I’ve spoken already about the investment tax credits; I think those are really important. The industrial transformation that we are in the midst of is comparable only to the Industrial Revolution, and those investment tax credits are what we need to be sure that Canada is a real manufacturing superpower in the 21st century.
Senator Loffreda: Thank you for sharing that, and the Parliamentary Budget Officer did mention we’re in the first two rows of the class when it comes to sustainability and our balance sheet, but the economy is important and I think housing is key. The Canadian dream is alive and well. Every Canadian wants to have his home.
There are multiple levels of government. Regarding the federal government, the intentions and the programs are there. When it comes to the municipal level, we see the housing is not being built. How confident are you that you’ll be able to work with the provincial and municipal governments to really unblock the building of homes and have every Canadian live his Canadian dream?
Ms. Freeland: I think it’s a really good question, senator, and I think we all recognize that when it comes to housing, there is no silver bullet and there is no one person in government at any level who has all of the levers under their control. Getting more homes built faster is something that is going to — and does — require all levels of government to work together. It requires the public and private sector — all of us — to work on it.
A couple of measures in this legislation, which we are discussing today, that I think are really important are lifting the GST/HST on co-ops; I think that’s really important. Affordable housing broadly and co-ops particularly are important parts of the housing mix, and I’m glad we’re able to create some incentives there. More broadly, though, I am actually very optimistic on the housing front, because we’re in the midst of a sea change in Canada when it comes to housing. There are a lot of different things we need to do, but the heart of everything is supply, supply, supply.
Senator MacAdam: The tax system is fundamental to a competitive environment, inclusive growth and a fair society. The Chartered Professional Accountants of Canada, or CPA Canada, has been calling for a comprehensive tax review. Canada’s last thorough review of the tax system was concluded in 1967. As indicated by CPA Canada, it has since become more complex and ineffective with a patchwork of fixes, credits and incentives. While many tax measures are subject to review within the budget — and all budgets — I’d like to get your comments on an overall comprehensive tax review and whether you would support such a review.
Ms. Freeland: Nice to meet you, senator, and thank you for the question.
I think that all of us would seek to make all aspects of government, including the tax system, as simple and user-friendly as possible. One of the things that I’m glad we’re doing in the legislation that we’re here to discuss is making enrolment in the Canada Learning Bond automatic; I think that’s really helpful. Something that is not before us today, but which I think moves in the direction of simplicity for Canadians that you’re headed toward, is automatic tax filing — that’s something we’ve been taking real steps toward. The budget does include support to take a further step in that direction. I think that is really helpful.
Also, at its heart, this budget makes our tax system fairer. This budget really recognizes something that resonates with a lot of Canadians: It’s just not fair for a nurse or an electrician to be paying tax at a lower rate than someone who is very well off. With the change we’re proposing in the capital gains inclusion rate, we’re making the system fairer.
I think that when Canadians think about their tax system, they want it to be simple and easy to use. They want it to be fair, and they want it to provide the revenue that we need to support some of the social programs that we’ve been discussing — such as early learning and child care and the national school food program — and to get more homes built faster.
Senator MacAdam: According to the Parliamentary Budget Officer, from 2018 to 2022, corporate income before taxes increased by 47%, growing from $439.9 billion in 2018 to $646.5 billion in 2022.
How does Canadian corporation taxation compare internationally to ensure that we’re offering a competitive marketplace from a tax perspective to the global community in order to attract new investment and to drive economic and productivity growth domestically?
Ms. Freeland: Thank you for the question. That is something that we look at carefully in the Department of Finance. The Department of Finance actually has a measure that — as I have found in my discussions at places like the International Monetary Fund, or IMF, and the Organisation for Economic Co-operation and Development, or OECD — is widely recognized internationally. It is referred to as the marginal effective tax rate, or METR. We look very carefully at where Canada fits in on the METR. I think we published a table of the METR in the budget.
What that table shows is that Canada continues to have a very competitive METR when it comes to the G7 countries, when it comes to the OECD and when it comes to a comparison with our nearest neighbour, the United States. I think that’s a really important question and something that we’ve paid a lot of attention to.
Senator Kingston: Thank you for being here. It’s very nice to meet you. You have mentioned pharmacare, and so have a couple of other people along the way. Thank you, by the way; I’m a nurse, and I’ve been involved with both the Canadian Nurses Association and the Canadian Federation of Nurses Unions for many years, so this is something that is great for us. The universal, single-payer quality of it, as we see in Bill C-64, is the right thing to do, in my opinion and in the opinion of lots of nurses.
I see there’s $1.5 billion in the budget, and it spreads over five years. You’ve started with Phase 1. It’s not everything, but it’s substantial for women, for instance. What are your plans for the next couple of years? What is your next most important thing to do to move this along so that, in five years’ time, we’ll see a more fulsome type of pharmacare available?
Ms. Freeland: Thank you very much, senator. Thank you for your work as a senator, and thank you for your work as a nurse. I spoke yesterday to a health care professional about the budget, and this person talked to me a lot about the lingering trauma of COVID among health care workers. It was a gentleman, as it happened. He was proud of the work he did, but he said it was really hard for all of us.
In speaking to you, I’d like to speak through you to all the nurses and all the health care professionals, and just say thank you very much.
I agree with you; I’m really glad that the budget is able to take an important step forward in terms of pharmacare. I’m really glad that prescription contraceptives will be free. Something that shook me in the conversations we had in making that choice was speaking to an obstetrician-gynecologist. She said to me that in her practice, every month there is a teenage girl or a young woman who is pregnant and doesn’t want to be. She is pregnant because she can’t afford contraceptives. She doesn’t have her own money and she, for whatever reason, doesn’t feel able to ask her parents. To me, that’s a tragedy. It’s a tragedy for that young woman and a tragedy for our country, and I’m so glad that we’re able to take a step past that.
You didn’t ask about dental care, but I do want to mention it. I guess it was just a week ago when I was at a dental hygienist clinic in Toronto talking about the next stage in the Canadian Dental Care Plan. There, I spoke to a dental hygienist, and she said that, currently, people who can’t afford dental care only come into her clinic when the pain is so great that they just can’t stand it. She said most of the time they have to extract the tooth in that case, causing more pain and hurting the person. It’s terrible that is happening in Canada today.
There are 2 million people who have now signed up for the Canadian Dental Care Plan. That’s 2 million people who won’t have that suffering, and, to Senator Loffreda’s point very quickly, it’s also going to save us money.
[Translation]
The Chair: Thank you, minister. I apologize, but I must act as the Government Whip and tell you that we have to allow you to go vote. We will have two minutes with you, Senator Kingston.
[English]
Senator Kingston: Dental care, by the way, is good for heart health, but I’d like to get back to pharmacare and the next steps when you look at five years of funding for that and maybe more, I’m hoping. Is there a next step contemplated at this point in terms of the first thing you would need to do to make this a fulsome program?
Ms. Freeland: Senator, let me just say this: I think it’s an important step. I think it’s something all Canadians should be proud of. I really believe — and I think this way about the national program of early learning and child care — these programs, like medicare, will immediately become something that all of us, as Canadians, see as part of our national patrimony and as part of what it means to be Canadian. I’m really glad we’re able to do this.
I do take fiscal responsibility seriously, so I think we need to move step by step.
Senator Kingston: Thank you.
Senator Ross: Thank you, minister, for being with us today. I’m a new senator, and I’ve been really shocked to see the schedule and the overlap of the timing of the bills that we’ve been receiving at this committee. Bill C-69 is massive and has a lot of non-budgetary measures.
Do you think we have an appropriate amount of time to analyze this bill? Keep in mind our time frame is only due to the fact that we agreed to pre-study the bill. After today, it seems that we’ve had more time studying the bill than the House of Commons. We have agreed to have additional meetings next week to try to get through it.
I do understand in your comments to Senator Smith that you respect the work that we do, but this type of a process is very difficult. We’re studying two budget implementation acts at the same time. This process doesn’t signal that there’s an understanding of what we’re dealing with.
Ms. Freeland: First of all, welcome. It is probably not for me to welcome you here, but maybe I could say welcome to the legislative process.
I really do respect the work of all legislators. I respect the work of the Senate. I learn a lot during every one of these conversations. My team, the Department of Finance officials and I learn a lot from the conversations we have with your offices. Please know that makes a difference. You do bring things up that we pay attention to and learn from.
I take seriously your concern about having the time to get the work done. I need to balance that against what I believe to be a moment of particular urgency for Canada and Canadians. This is a key moment in the life of our country that is really challenging. When you think about what we have been through with COVID, as well as what is happening with climate, the industrial transformation in the world, and the Russian invasion of Ukraine and its impact, this is a time of great challenges. We need to rise to those challenges and put in place measures to support Canada and Canadians.
The final thing I will say is that there is a tremendous amount of filibustering happening right now in committees and in the House of Commons. That does not help us to get the measures in place that Canadians urgently need. It doesn’t help anyone here have the time you would like to judiciously and carefully consider legislation. Our government would certainly be delighted if that were to stop.
Senator Ross: To add to that, would you support having a fixed budget date that might help align these documents coming to us in a more orderly fashion?
Ms. Freeland: We are a parliamentary system. Many of our time-honoured parliamentary processes are in place for a reason. I am very respectful of those reasons.
A parliamentary system works differently from, say, a presidential system.
However, I do take seriously the point about the Senate specifically doing its work seriously and needing time to do that work. I probably should have said this in my opening remarks, but I’m grateful to all of the committee members for agreeing to do a pre-study. It helps you have the time to work on this. I am glad that you do.
Senator Ross: I will add one comment to that. In doing the pre-study, there were changes made prior to us receiving it yesterday. We were pre-studying a bill that was then amended. That is a challenge as well.
Ms. Freeland: I want to say this to you, and maybe especially to your staff, some of whom are here, as well as to the many people who I know talk to your offices: Our government really takes the Senate seriously. It is not for me to speak for the Prime Minister, but he has been clear on this: He really believes in the particular and important role that the Senate has to play in the Canadian political system.
The Chair: Thank you, minister.
Senator Pate: Welcome, minister.
I lived through the horrors of criminal law and sentencing reform through omnibus budget bills of the past administration. Seeing this practice being adopted now by this government is particularly challenging for many of us.
When former Minister of Justice Allan Rock appeared before the Standing Senate Committee on National Security, Defence and Veterans Affairs the other day, he said the following:
I do recall that the party with which I’m associated in politics was critical of the former government for using omnibus bills to include matters unrelated to the budget just for the sake of getting them through expeditiously. Generally, it’s not regarded as a sound practice of governing. . . .
Not only that, but it makes it very difficult to challenge the approaches that are being taken. I’m speaking particularly with respect to immigration detention in federal prisons and the inclusion of harsher penalties for auto theft, which is a model that has been shown by the Supreme Court of Canada, your own government and the Department of Justice to not be the most effective way — in fact, it is a fairly ineffective way — to address this. At the same time, it is clear that there is evidence that car companies could be held accountable and made responsible for addressing the security issues that give rise to the concerns regarding the increase in auto thefts that exist in the country.
I am curious about the rationale for that. What do you plan to do to remedy this? It is also clear — not just to me, but also to many who have worked in this area for a long time — that we are likely to see more racialized people, particularly young people, end up in custody as a result of this. It is not going to be the multi-million dollar crime bosses who will be picked up by these provisions.
At the same time, we’ve seen the kinds of recommendations made by the National Inquiry into Missing and Murdered Indigenous Women and Girls and the Truth and Reconciliation Commission for things like a better benefit than that which has been put forward in the budget for the disability benefit.
All of that together flies in the face of the very laudable intentions that things like pharmacare, dental care and child care all help push in the opposite direction.
I’m curious as to whether we’ll see a different approach sooner and what the rationale for this is. What other policy approaches will be taken to address these issues? How can we ensure that the very predictable results of those particular provisions don’t yield more inequality for people with disabilities, racialized people and those who are refugees and immigrants?
Ms. Freeland: I thought other senators had packed a lot into their question, but you might get the prize today for touching upon the most things. Let me try to respond within the time allotted to me.
First, no budget will accomplish every single thing that every single person in the country might desire.
Having said that, I believe this is a budget that is consequential when it comes to delivering fairness for every generation of Canadians. It is consequential when it comes to answering the housing crisis, which is such a central challenge in the lives of so many Canadians, including supporting people who rent, supporting affordable housing and making it easier for young Canadians to achieve the Canadian dream to buy a home.
It is absolutely a consequential budget when it comes to making life more affordable for Canadians. You have spoken already, senator, about some of those elements, whether it is pharmacare, dental care, a national school food program or moving further on the national system of early learning and child care — those are really big things, and we are moving forward with them.
As I said in response to Senator Loffreda’s question, there are really significant investments in economic growth, the jobs of today, the jobs of tomorrow, the Indigenous loan guarantee program and the investment tax credits, as well as huge investments in research — our universities, students and post‑docs — and huge investments in artificial intelligence, or AI. All of that is underpinned with real tax fairness.
All of that taken together is a big deal, and I suspect, senator, that you and I agree with most of that stuff in there. Where we may have a slightly different perspective is specifically on the auto theft point. I believe it is important for us, as a government and as a country, to take what is happening with auto theft seriously. I was in Brampton a week ago, or 10 days ago, and I spoke with the law enforcement officials and city councillors there. People are really feeling unsafe in their communities and unsafe driving their cars, and that is not okay. Being safe is also part of supporting Canadians.
[Translation]
The Chair: You must vote again, so we will let you go vote.
[English]
Senator Duncan: Thank you, minister, for being here. I would like to focus on tax credits in Bill C-69, or specific measures, I should say.
I want to express my thanks for increasing the much-needed volunteer firefighter tax credit in clause 26. It is very important to volunteers in the Yukon and in all rural and remote areas in the country.
I also appreciate clause 34 because the Mineral Exploration Tax Credit is being renewed. However, minister, I have been talking about this tax credit for more than 30 years as a politician, and every year it is a one-year renewal. Why is it not permanent?
That leads to another question about the tax system. This week, many of us were lobbied by the golf industry because the entertainment tax credit will allow for tickets to a hockey game — don’t get me wrong, I’m a committed hockey fan — but it doesn’t allow for a round of golf. It is an anomaly in the system. It is an outlier. That builds on Senator MacAdam’s questions and point: We keep repeating the need for an overhaul, a modernization, of the tax system. We hear it from the people who came before the Standing Senate Committee on National Finance when I was a member. It is a repeated call. Senator MacAdam asked if you would entertain a review of the Income Tax Act.
Colleagues, I will ask for your forgiveness rather than your permission. Will you task the Senate with this? We don’t have to deal with voters every single year. It is long overdue. It needs to be done. Will you task us with it? In addition to answering the other three questions, I thank you.
Ms. Freeland: Like many of your colleagues, you have put a lot of substantive things in there. I will take them in turn.
I want to say thank you, Senator Duncan, for mentioning the volunteer firefighters. As part of this measure, I spent some time with some volunteer firefighters in rural Ontario, and I was so impressed. These are people who have jobs and families, and who are dedicating so much time to training and being available to take care of their neighbours. There were many families there. There was a father and a son who have a dairy farm that they work on together. It is one of the measures that perhaps does not get all of the headlines, but that, to me, supports one of the things that is best in Canada — people making a commitment to support one another and their communities. Thank you for singling them out, and also for giving me a chance to salute them.
Thank you for also mentioning the Mineral Exploration Tax Credit. Now is a historic moment for the mining sector in Canada. Critical minerals and metals are so important for the industrial transformation of Canada and the world. What we are hearing clearly from our allies is that they want secure supply chains, and they want a supply of these critical minerals and metals in democracies like Canada. You mentioned the investment tax credits — that is because I know that you know that those investment tax credits are a massive $93-billion set of tools to support that entire transformation in Canada, which starts with the critical minerals and metals.
I was glad to see the Honda investment, which is premised in part on the fact that Canada is probably the country in the world that has the greatest capacity to have a full supply chain going from the mine to the finished, manufactured good. That is so important. It is a huge opportunity for the Yukon, but it is also an opportunity for our entire country.
When it comes to that full supply chain, and when it comes to Canada really taking advantage of our natural endowment of critical minerals and metals, I think we now have the tools in place that we need to really shine. As I have mentioned, I have been hearing from businesses who want to see those investment tax credits passed into law. Thank you, senators, for helping us do that. It will make a real difference.
[Translation]
The Chair: Thank you very much, minister.
Senator Dalphond: Welcome, minister. On February 6, the Senate asked this committee to study the practice of including non-financial matters in budget implementation bills and economic statements.
[English]
The budget implementation act before us today is another striking example of this concerning practice. On review — which I always do, because I’m not an economist like my colleague Senator Gignac, or a former banker — I always look at the section called “Various Measures,” which is Part 4 of this bill.
You were asked many questions by previous colleagues about that. I will be more specific so that you will not be able to answer this one only generally. I will pinpoint one division: It is Division 39 on immigrant stations which, if adopted, will allow holding an immigration detainee in a federal penitentiary.
Before the Senate National Security, Defence and Veterans Affairs Committee earlier this week, the Canadian Bar Association, scholars, the Canadian Association of Refugee Lawyers, Human Rights Watch, the Canadian Council for Refugees, and the Honourable Allan Rock, who is a former Liberal minister and a member of the World Refugee & Migration Council, all urged senators to insist for a separate bill on this issue.
Are you, minister, willing to consider removing this division from the bill, as Bill Morneau did when he was the finance minister when removing a chapter that was dealing with consumer protections regarding banks?
[Translation]
Ms. Freeland: Thank you for the question, senator. If I may, I will answer in French, because I think it is more appropriate. It is very important for me that the Minister of Finance answer Quebecers in French, if I may.
You and Senator Pate quoted Mr. Allan Rock. I want to start by saying that I have a great deal of respect for Mr. Rock. With Mr. Axworthy, he played a key role in our work with Russian Central Bank assets. I work very closely with him and I am sad that we don’t agree on these measures, but his opinion and yours are important to me. Regarding those specific measures, I must say that it’s a measure of last resort. It’s not something we do often, but in consultation with responsible ministers. Today, in Canada and around the world, we are in a situation with an issue requiring tools for us to act in order to ensure the safety of Canadians and that of the asylum seekers who are here.
For our government, due to the global reality, we need these tools, but I really want to highlight that it’s a measure of last resort. This is not a situation that happens often and we understand the concerns raised. I want to assure Canadians that we take this situation very seriously.
Senator Dalphond: Is this special legislation that will only focus on that and allow for an enlightened debate on such an important issue? It touches on fundamental rights issues, which the Liberal Party has always prided itself on defending, including respect for the Charter.
Ms. Freeland: That’s a very important question and I agree with you to say that, today more than ever, it’s important to highlight the importance of the Charter for Canadians and Quebecers. Furthermore, I already assured you that it’s really a measure of last resort. I must also admit that while talking and working with the ministers who are directly responsible, we realized that we needed these tools. Otherwise, the situation would be more dangerous for the other people who present no other risk. We have to separate the people who present another risk and not put them in the same situation as people who don’t present another risk.
The Chair: Minister, you have a third vote; we will therefore give you the time to vote.
It’s my turn to ask you a few questions, minister. I will act as the spokesperson for Rock, 65 years old and Rose, 63 years old. Rock is retired and earns $20,000 per year. Rose is an administrative assistant and earns $40,000 per year. They bought an income property in the neighbourhood of Ahuntsic, which is located in your colleague Minister Joly’s riding. What happened, minister, for you to classify Rock, 65 years old, who earns $20,000 a year, and Rose, 63 years old, who earns $40,000 per year, as “ultrarich” because they own a triplex, which is their pension fund? Is this a marketing mistake, or did your officials make a mistake in calculating the people directly affected by this capital gains measure?
Ms. Freeland: Thank you for the question. I’ll start by pointing out what Senator Forest also noted, which is that the inclusion rate for capital gains was 75% when Mr. Mulroney was prime minister. Therefore, we are proposing a lower rate than the one we had when the great Conservative Brian Mulroney was prime minister; it is very important to say that.
In addition, I think it’s a matter of fairness when it comes to taxes — that is, fairness between the tax rate in relation to work and the tax rate on capital gains. You know this very well, but many Canadians don’t: We’re not talking about the level of taxation, but about a tax rate that’s fair, and to that end we’re proposing a rate of 67%. I’d like to point out two other things that middle-class Canadians, average people, need to know because they’re important. The first thing is that the primary residence continues to be—
The Chair: I think you communicated your thoughts well when you referred to these people as “ultra-rich;” that’s the problem.
Ms. Freeland: I am pointing this out because I know that, for many Canadians, the primary residence, the home, is really the most important thing in their lives and it is not completely excluded from taxation. Moreover, for each individual, every year, the first $250,000 will be included at just 50%. For a couple, that means you can have a $500,000 capital gain annually, and the level remains the same as it is now.
The Chair: My other question is about debt interest costs, which you estimated in the budget at $54 billion for 2024-25 — $54 billion. Mr. Trudeau was saying, “We’re going to borrow, interest rates are low.” Now we realize that interest rates are going up, and so the cost of the debt is going up — it’s $54 billion for 2024-25. This week, we received the first Supplementary Estimates (A). They show that the cost of the debt has risen by $1.9 billion, in addition to $1.1 billion; so we’re talking about an extra $3 billion in the Supplementary Estimates (A). I cite the main reason: The expected rise in interest rates and growing borrowing requirements.
Minister, we just got the budget a month ago and there is already an error, or a projected number of $3 billion that is explained by rising interest rates. So what happened? Did you expect interest rates to drop, but in the end the Governor of the Bank of Canada didn’t lower them? How can you make a mistake or a wrong prediction to the tune of $3 billion in such a short space of time? Isn’t this an admission of a loss of control over the situation?
Ms. Freeland: Not at all, senator. I love questions about fiscal responsibility. We disagree on a number of issues. For example, I think a national child care program is a good thing. The Conservatives don’t agree with me. A national dental care program is a good idea. The Conservatives disagree. On fiscal responsibility, I know it’s hard for Conservatives to accept reality. The reality — as Mr. Giroux, an independent, told you — is that Canada is in a very fiscally responsible position. The credit agencies agree with us. Finally, for four months, the inflation rate has been within the Bank of Canada’s target range.
The Chair: Thank you, Minister. I don’t want to interrupt you. I wouldn’t want to give myself more time.
Ms. Freeland: I apologize; this is my favourite question, as it is the strong point of our government. So you can keep asking those questions.
The Chair: I am glad to have pleased you.
[English]
Senator Cardozo: I have an observation and two questions.
As senators, part of our role is to look at the long term. When I look at the long term of your government, there has been — it would seem to me — a determined agenda from the start, which you don’t talk about, and I would call that an “affordability agenda.” You started with the Canada child benefit in 2016; you increased the Canada Pension Plan; and there’s national child care. You talked about the national school food program, as well as the two things the NDP forced you to do, as they would put it, which are dental care and pharmacare.
There is a pattern here of dealing with affordability — the housing measures that you have mentioned here. The way it is put forward by the government is, “Here are a bunch of things.” I see a real pattern. Do you not want to use a solid term like “affordability agenda” for a reason?
On the disability benefit, would you consider a suggestion from us in terms of a higher rate and an earlier start date?
With regard to the detention, I would further the points that my colleague Senator Dalphond made. This is one of the benefits of the advanced study that we are doing. If you made the change, and pull out that chapter at the House while it is still under consideration at committee, it makes it easier than us doing it here and sending it back, which I do not think that we like to do, especially with budgets.
I put it to you that the advanced study is, in fact, a good opportunity to make a change like that.
Ms. Freeland: I think, senator, that is the most gentle and polite way that I have been threatened in quite a long time. I admire the skill. I say it in jest.
Going back to the beginning of your question, I completely agree with you. When I summarize what our government is seeking to accomplish, and what this budget is seeking to accomplish, I say that this is a budget about fairness for every generation. It focuses on the following: First is housing — an absolutely urgent need; second is affordability, and under affordability falls all of those elements you have spoken about; and third is investing in economic growth and jobs, and doing it all, notwithstanding the protestations of our chair, in a fiscally responsible way so that inflation can come down and interest rates in turn can come down.
How, therefore, do we afford to do all of these great things in a fiscally responsible way? Through tax fairness. For me, of our three pillars — the three legs of the stool — affordability is absolutely one of them.
[Translation]
The Chair: I don’t think it’s necessary to suspend, but we’ll take a moment while Minister Freeland votes.
We are being told that you still have a few minutes to spend with us. There are still a few questions. If you don’t mind, we’re going to do a quick round of questions.
[English]
Senator Marshall: Minister, I have a couple of comments on what you said during the meeting.
On the 3.5 million houses to be built by 2031, I do not think it is going to happen. I know it is your Plan A, but I respectfully suggest you have a Plan B.
The $30-billion child care program is in trouble. Some people are enjoying the $10-a-day daycare, but the waiting lists are very long. As for the 250,000 spaces that are supposed to be created by March of 2026, so far your own document says there are only 50,000. I think for both of those programs, it’s very optimistic.
Ms. Freeland: Senator, I do respect your seriousness and your focus, but I have to say your powers of prediction are not perfect. I remember that when I was here last year, you had some urgent questions about the Canada Growth Fund. You were worried about it. You thought it wasn’t going to work. I took that seriously, so I am glad to inform the senators — I was here on June 7, 2023, and senators said it was never going to work — the Canada Growth Fund has already made three major investments. It is up and running and admired around the world.
[Translation]
Senator Forest: Minister, Division 23 of Part 4 extends employment insurance for seasonal workers until October 24, 2026. Since this is a seasonal situation that exists across Canada, why not make it permanent? The reality of workers in the fisheries, forestry and agriculture sectors recurs annually.
Ms. Freeland: Thank you for the question and thank you for highlighting a very important element of the budget. We understand the importance of supporting seasonal workers; that’s why we did it in the budget.
I also want to highlight something important and positive for our country. Even with a very high interest rate, we have a very strong labour market in Canada. We have created 1.3 million more jobs than before the pandemic.
Senator Gignac: Thank you, Minister, and thank you for what you are doing and for the open banking system. We must move forward.
All the stakeholders I spoke to and the witnesses who appeared before the banking committee said they were surprised that this mandate was given to the Financial Consumer Agency of Canada. They were consulted, but never on governance. Yet this is an important element. Like my colleague, I am talking about Division 39, but as for Division 16, why not hold consultations this summer and come back to us in the fall with a more comprehensive document that would incorporate a vision on governance, since the stakeholders were not consulted on that? They were surprised.
Ms. Freeland: Senator, as you know, I take your expertise on financial institutions and pension funds very seriously. I take your comment seriously.
The only other comment I will make is that when I speak with consumers, innovators and entrepreneurs, they tell me that they want us to act fairly quickly.
[English]
Senator Smith: Minister, one of your stated objectives in 2024 is to decrease the size of the federal public service by reducing full-time equivalents, or FTEs, by 5,000 over the next few years. There are also lots of areas of growth that have been outlined in the budget in terms of spending and projects. How are you going to achieve or manage these two competing objectives of growth and reduction?
The other point I would like to ask is this: Does the federal government have a long-term human resources plan for the federal public service, and will you commit to developing one? Apparently, we have not seen one.
Mr. Forbes, maybe you could help out by sending a written answer to that question.
Ms. Freeland: I do not have a lot of time, so I’m just going to say thank you for pointing out that element. That was something very important for me to have in the budget. We believe in a strong public service, and we know the important role it plays.
We think it is also important to demonstrate to Canadians that we take seriously the effectiveness of the government and the effectiveness of how the government spends money on delivering services and serving Canadians. That is why we have made that commitment. We are absolutely confident it can be done.
Senator MacAdam: Budget 2024 is providing funding of $2.4 billion to support access to computing power and investment in Canada’s computing infrastructure to ensure Canadian researchers, as well as AI start-ups and scale-ups, have the resources they need to grow in Canada. However, the Standing Senate Committee on Banking, Commerce and the Economy learned that part of the problem that Canada faces is scaling start-ups to compete on the global stage, as we do not have sufficient policies in place to support and protect innovative intellectual property from foreign takeovers.
Is the government considering a strategy to help start-ups scale their businesses to compete internationally and to protect Canadian intellectual property?
Ms. Freeland: That is an important question. We have many elements in place to support Canadian start-ups. It is important to keep on working at it.
One of the really important things happening right now is a review of the Scientific Research and Experimental Development, or SR&ED, Program, which is an important, excellent program. This budget commits to putting more money into SR&ED. I do think the review of SR&ED is going to be an opportunity for us to support Canadian innovators and the development of Canadian intellectual property.
Senator Kingston: I would like to ask you about the national school food program. How will what is being discussed in the budget be used this year? What things will happen this year as a result of the start of the national school food program? I love the program, by the way.
Ms. Freeland: Thank you very much. I love it too. As we have been talking about this program, going to breakfast clubs and to organizations who are providing food for children has been one of the things that has confirmed so forcefully to me that it is something we need.
Our commitment is that with the funding in the budget, an additional 400,000 Canadian children will get a meal. As you know very well, this is delivered through a beautiful mosaic across Canada of schools, provinces, municipalities and not-for-profits. Our commitment is to build on that and to support the people who are already doing this work with more money.
Senator Ross: Thank you, minister. Yesterday, we met with the Financial Consumer Agency of Canada. One of the things I asked about was the choice of Prosper Canada for the $60‑million strategy for the consumer protection program. We were told the decision was not from an RFP or through their agency, but through the minister’s office. Could you give me a sense of what criteria or due diligence was used in making that selection, given some past challenges with the selection of charities for implementing programs?
Ms. Freeland: Thank you very much for the question.
It is really important for us to find ways to support low-income Canadians, and to be sure they have the financial tools they need to prosper. It is important for us to do that as quickly and effectively as we can. The federal government recognizes that one of the strengths of Canada is that there are many not-for-profits out there who are doing really good work already and who have good networks.
Senator Pate: You may be able to answer my questions in writing.
First, I want a clear answer as to why the failure of automobile companies to remedy a situation that they could remedy is not being followed up.
Second — as has already been mentioned, and as I have mentioned — I’ve been to the detention centres and jails that are being examined as a possibility for the 20 to 50 people whom the Canada Border Services Agency, or CBSA, identifies as high risk, but recognizes that only 1% of them pose a risk to the public and 83% of them are essentially a flight risk. That is the primary issue. Over 200 beds are free in the new retrofitted facilities that have been set up. Why is $31 million being allocated for 20 to 50 people? This is a massive outlay for a short term, because it is seen as an interim measure. What other options were being looked at, and which retrofits are being looked at? What are the long-term interests?
Thank you.
Ms. Freeland: I do not have time to answer this question. I’ll just answer about the auto theft. We recognize that there is a role for car companies to play, and we are working with them as part of the solution to this problem.
Senator Duncan: Thank you again, minister, for being here.
It was asked by both Senator MacAdam and me about a review of the Income Tax Act. You said you take this committee seriously. At the risk of sounding like an opposition politician, could I ask for a “yes,” “no” or “I will take it under consideration” response to the suggestion that the Senate be tasked with overhauling and reviewing the Income Tax Act?
Ms. Freeland: I do take you very seriously, Senator Duncan. I take the work of the Senate very seriously.
In some ways, the question of tax policy is at the heart of everything we do as a government. In my budget speech, I intentionally said tax policy is not just for experts. It is actually a statement of values. I am not here to make a fresh announcement about our government’s direction on tax policy.
Senator Duncan: It is the act itself I was asking about.
Senator Loffreda: Minister, open banking seems to be a concern. In June 2019, the Standing Senate Committee on Banking, Commerce and the Economy issued a thorough report on open banking, which was well received by all. As you have seen by the report and by this committee, some of the best work of the Senate gets done through our committees.
We are the last country of the G7 to adopt the open banking concept. Why is it only a framework? Does that give you the opportunity to adjust or correct our concerns going forward?
Ms. Freeland: Thank you for the question, senator.
The questions from Senator Gignac and Senator Forest and your own question, taken together, underscore the challenge. On the one hand, we do need to act and act quickly. On the other hand, Canada is a very specific country with some complexities of our political structure, including how our financial system is governed. What we are trying to do is achieve a balance. In moving forward with a framework, that is an important step.
We need to get open banking more fully up and running in Canada. I also recognize that there is a reason that people have been posing questions about it. I welcome those questions and the ideas behind them. I am glad to have an opportunity to hear those ideas about how we move ahead.
[Translation]
The Chair: Thank you very much, Minister. I’m going to cut into my speaking time, as we’re out of time. Thank you very much for your generosity. We’ve stretched out this meeting for longer than we expected. It’s always a pleasure to have you with us. This concludes our meeting today. We’ll see you again on June 4 for the continuation of the study of Bill C-69.
Ms. Freeland: I thank all the senators and the chair for their patience with the votes.
(Meeting adjourned)