THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, May 17, 2022
The Standing Senate Committee on National Finance met with videoconference this day at 9:30 a.m. [ET] to study Bill C-8, An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, before we begin, I would like to remind senators and witnesses to please keep your microphones muted at all times unless recognized by name by the chair.
[Translation]
Honourable senators, if you have technical challenges, particularly in relation to interpretation, please signal this to the chair or the clerk and we will work to resolve the issue. If you experience other technical challenges, please contact the ISD Service Desk with the technical assistance number provided to you.
[English]
Honourable senators, the use of online platforms does not guarantee privacy or that eavesdropping won’t be conducted. As such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate information. Participants should know to do so in a private area and to be mindful of their surroundings.
[Translation]
We will now begin with the official portion of our meeting. I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca.
[English]
My name is Percy Mockler, I am a senator from New Brunswick and Chair of the Standing Senate Committee on National Finance.
I would like to introduce the members of the Standing Senate Committee on National Finance who are participating in this meeting: Senator Boehm, Senator Dagenais, Senator Duncan, Senator Forest, Senator Galvez, Senator Gerba, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Moncion, Senator Pate and Senator Richards.
Honourable senators and witnesses, we are starting our study of Bill C-8, An Act to implement certain provisions of the economic and fiscal update, tabled in Parliament on December 14, 2021, and other measures that were referred to this committee on May 10, 2022, by the Senate of Canada.
Honourable senators, today we have the pleasure of welcoming, virtually, officials from four departments: the Department of Finance Canada, responsible for Parts 1 to 4; the Public Health Agency of Canada for part 5; Health Canada for Part 6; Employment and Social Development Canada for Part 7.
Welcome to all of you and thank you for accepting our invitation to appear in front of the National Finance Senate Committee.
I also understand that a few people will deliver a short description of their parts of the bill on behalf of their respective departments.
For your information, honourable senators, we will need to adjourn this meeting at 11:15 a.m. in order to allow your steering committee to meet and discuss the work plan for our future meetings.
On that note, I would like to introduce you to those who will offer these short comments and remarks, and then I’ll call on them individually to make their presentation.
From Finance Canada, we have: Lindsay Gwyer, Director General, Legislation, Tax Legislation Division, Part 1; Pierre Mercille, Director General, Sales Tax Division, Part 2; Ling Wang, Senior Director, Financial Programs and Strategy, Part 3; Galen Countryman, Director General, Federal-Provincial Relations Division, Part 4.
From the Public Health Agency of Canada, we have Martin Joyal, Director General, Strategic Policy, Planning and Coordination, COVID-19 Vaccine Rollout Task Force, Part 5.
From Health Canada, we have Cameron MacDonald, Assistant Deputy Minister, Strategy, Integration and Data, COVID-19 Testing Secretariat, Part 6.
From Employment and Social Development Canada, we have Mona Nandy, Acting Director General, Employment Insurance Policy, Skills and Employment Branch, Part 7.
Now we will start by hearing the comments from the officials, which will be followed by a question period.
Ms. Gwyer, from Finance Canada, please, to be followed by Mr. Mercille.
Lindsay Gwyer, Director General, Legislation, Tax Legislation Division, Department of Finance Canada: Thank you, Mr. Chair. I’ll start with an overview of Part 1 of the bill. Part 1 contains the income tax measures in that bill. There are four measures, all deductions or credits for individuals or businesses.
The first is a new credit available to businesses that make expenditures to improve the air quality in their commercial locations. It’s a 25% refundable credit that would be available for eligible expenses of up to $10,000 in a single location of the business with a cap of $50,000 per business, and that needs to be shared across affiliated groups.
It’s available to Canadian-controlled private corporations with taxable capital in Canada of less than $15 million as well as to individuals.
The types of expenses that would qualify are at a high level. They are expenses made to improve air quality, specifically expenses related to HVAC systems and HEPA filters. There are detailed rules in the legislation to set out exactly what types of expenses would qualify.
The credit would be available for expenses incurred from September 1, 2021, to the end of 2022. So it’s a temporary credit.
The next measure is a change to the existing northern residents deductions. The northern residents deductions are available to individuals that live in a northern or prescribed intermediate zone. There is a travel component and a residential component. The travel component is the one being changed and expanded to allow individuals who don’t receive employer-provided travel benefits to be able to claim a deduction for qualifying trips up to $1,200 of deduction to be spread across all qualifying trips. That’s applicable to the 2021 and subsequent taxation years.
The next measure is another existing credit, which is the school supply credit for teachers and early childhood educators. Right now, that’s a 15% credit available to teachers and early childhood educators who incur costs out of their own pocket to buy school supplies that are used in the classroom. It is 15% of up to $1,000 of eligible expenditures. The credit would be changed in three ways. The first is to increase the rate from 15% to 25%. The next change would be to remove the requirement that the school supplies have to be consumed in the classroom. That’s a reflection of the fact that some teaching would now be occurring in virtual settings. Finally, there is a list of supplies that qualify for the credit. That list would be expanded to include a number of electronic devices.
The last measure proposed in Part 1 of the bill is a new credit for farming businesses to return the federal fuel charge that is collected in backstop provinces to farming businesses in those provinces. The federal government currently collects a fuel charge in provinces that don’t have their own fuel charge that meet federal requirements, namely, Ontario, Manitoba, Saskatchewan and Alberta. That fuel charge is returned to individuals and businesses or organizations in those provinces through various mechanisms. This is a new credit that would return a portion of that fuel charge to farming businesses in those provinces. The amount that a farming business would get would be determined based on a rate that would be set each year by the Minister of Finance and it would be determined based on the actuarial amount of expenses that a particular farm has. That would start to be available in the 2021 taxation year.
Those are all the measures in Part 1. I’ll turn it over to my colleague, Mr. Mercille, who will talk about Part 2.
[Translation]
Pierre Mercille, Director General, Sales Tax Division, Department of Finance Canada: Part 2 of the bill enacts a new law, the underused housing tax act, which will impose a new tax on owners of residential property in Canada in certain circumstances starting in the 2022 calendar year. This new tax will ensure that non-resident non-Canadian owners, particularly those who use Canada as a place for passive storage of their wealth in housing, pay their fair share of Canadian taxes.
Starting in 2023, certain owners of residential properties in Canada will be required to file a return with the Canada Revenue Agency for the previous calendar year, 2022, for each residential property they own. In the return, owners will be entitled to claim a tax exemption for a residential property in certain circumstances. That will be the case, for example, if the property is leased long-term or is used by the owner as their primary place of residence.
Owners who are subject to the tax will be required to calculate, declare and pay the taxes owed, which will be equal to one per cent of the value of the residential property, prorated for their share of the property. Canadian citizens, permanent residents of Canada and certain Canadian entities will not be subject to the tax and will not be required to file annual returns. Thank you.
[English]
Ling Wang, Senior Director, Financial Programs and Strategy, Department of Finance Canada: I’m from the Financial Sector Policy Branch at the Department of Finance. Part 3 of Bill C-8 is with regard to the Canada Emergency Business Account, known as CEBA. CEBA is one of the key COVID-19 support programs for small businesses impacted by the pandemic. To date the program has provided over $49 billion in interest-free, partially forgivable loans to nearly 900,000 small businesses. The proposed legislation in Part 3 sets a six-year limitation period for any debt owed under the CEBA program. This limitation period is consistent with other government COVID support programs such as those covered by the Canada Recovery Benefits Act. Setting a limitation of six years would ensure that CEBA loan holders are treated consistently no matter where they live in the country and will help to provide maximum leniency for small businesses who may be challenged to repay their CEBA loans.
Finally, the proposed legislation covered by the debt owed under the CEBA loan may be deducted on the amount owed under the Income Tax Act. This is a standard recovery mechanism for the government to collect that and will help to ensure the efficient recovery of any debt owed under the CEBA program. Thank you.
The Chair: Thank you, Madam Wang.
Mr. Countryman to be followed by Mr. Joyal. Mr. Countryman, for Part 4, please.
Galen Countryman, Director General, Federal-Provincial Relations Division, Department of Finance Canada: Good morning, senators. Part 4 concerns a top-up to the Safe Return to Class Fund that was announced in the economic fiscal update last year. The original fund provided $2 billion to provinces and territories to help cover a variety of their investments in protecting students and staff concerning COVID-19. The $100 million top-up to the fund is intended to support projects whose primary purpose is to increase the outdoor air intake and/or increase air cleaning in order to help reduce the transmission of COVID-19. Part 4 provides authority to the Minister of Finance to issue provinces and territories payments out of the Consolidated Revenue Fund at the times and in the manner that the Minister of Finance considers appropriate. Provinces and territories will have reasonable flexibility to spend this funding on ventilation-related improvement projects such as repair or replacement of heating, ventilation, and air conditioning units; increasing maintenance of existing systems to ensure optimized operation; and other interventions that bring in more outdoor air or result in cleaner air, such as the installation of operable windows or portable air filtration units. That concludes my summary.
[Translation]
Martin Joyal, Director General, Strategic Policy, Planning and Coordination, COVID-19 Vaccine Roll Out Taskforce, Public Health Agency of Canada: Good morning, everyone. My name is Martin Joyal, from the Public Health Agency of Canada. I am here with my colleague Marie-Élise Maurice to talk about Part 5 of the bill.
[English]
In 2021, the Government of Canada, provinces and territories worked closely together toward a standardized Canadian COVID-19 proof of vaccination credentials that can be recognized across the country and internationally. Proof of vaccination credentials provides holders with a reliable and secure way to demonstrate their vaccination history. These credentials can facilitate international travel where proof of vaccination requirements are expected to remain in place for some time.
As part of the 2021 Economic and Fiscal Update, the Government of Canada proposes, through Bill C-8, to put aside up to a maximum of $300 million for provinces and territories to support their costs associated with the COVID-19 proof of vaccination credential programs.
[Translation]
It is expected that this funding will allow for repayment of the costs associated with implementing proof of vaccine programs, issuing proofs of vaccination to residents, and maintaining programs for as long as domestic and international public health measures require.
The Minister of Health will determine how the funds will be allocated among the provinces and territories. This is what the government expects from the provinces and territories in exchange for this funding. Discussions with the provinces and territories regarding the allocation of the funds are underway. The amounts allocated by province and territory will be confirmed and distributed when these deductions have been calculated, provided that Bill C-8 receives Royal Assent. Thank you.
[English]
Cameron MacDonald, Assistant Deputy Minister, Strategy, Integration and Data, COVID-19 Testing Secretariat Health Canada: Section 6 speaks to the fact that the Government of Canada is committed to supporting provinces and territories throughout the pandemic with the procurement of COVID rapid antigen tests being one of the critical activities.
When Bill C-8 was introduced, many parts of the country were dealing with the Omicron variant, including increased hospitalizations and workplace shutdowns. The Government of Canada prioritized the return of rapid antigen tests. Bill C-8 was a means to provide the minister with funding to procure, in a timely fashion, Health Canada-approved rapid antigen tests. In December, the health portfolio was risk managing this funding that had been placed in contracts — almost 322 million tests — with the bulk of the tests being shipped in January and February.
Bill C-6 has two parts to it: First, that the minister may make payments which may not exceed the total of $1.72 billion out of the Consolidated Revenue Fund; and, second that within three months of the day on which this section comes into force, and every three months thereafter, the minister must prepare a report setting out the number of payments made, the total amount paid under each section. Thank you.
The Chair: Thank you, Mr. MacDonald.
Mona Nandy, Acting Director General, Employment Insurance Policy, Employment and Social Development Canada: Hello, honourable senators.
Part 7 of the bill seeks to modify the Employment Insurance Act to increase the maximum number of weeks for which regular Employment Insurance may be paid to certain seasonal workers.
The EI program currently provides up to five additional weeks of regular EI benefits to seasonal claimants in 13 targeted EI areas, those being two in Prince Edward Island, two in Nova Scotia, one in Newfoundland and Labrador, one in the Yukon, five in Quebec, and two in New Brunswick.
The proposed amendments in Part 7 would expand the concept of seasonal claimants to include workers who are seasonal claimants in the last three years between August 2018 and September 2021, but who may no longer meet all of the current criteria. The reason why these amendments are necessary is to avoid penalizing workers who are eligible as seasonal claimants under the previous pilot project for seasonal workers which is commonly known as Pilot Project No. 21, but who have changed their claim patterns, their profiles so they are no longer eligible for these additional weeks. These amendments address the unintended consequence of the timing of the pandemic-related income benefits. That concludes my overview for Part 7.
The Chair: Thank you, Madam.
Honourable senators and to the witnesses, thank you for your statements.
We will now proceed to questions. Senators, we will have a maximum of five minutes each for the first round and a maximum of two minutes each for the second round. Therefore, please ask your questions directly to the witnesses and respond concisely. The clerk will inform me when the time is over by raising her hand.
[Translation]
I would also like to ask the other witnesses who represent their department to introduce themselves before speaking, for the record.
[English]
I would also like to begin the question period for Bill C-8 by the sponsor, Senator Gignac.
[Translation]
Senator Gignac, the floor is yours, since you are sponsoring Bill C-8.
Senator Gignac: Good morning, everyone. It is my pleasure to sponsor this bill introduced by the Minister of Finance, Bill C-8, An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures, in the Senate.
I would like to thank all the representatives of the various departments who are here today and have agreed to answer our questions.
I’m going to start with Part 6 of the bill, since it’s really talking about a large amount of money, $1.7 billion, that the Minister of Health is being authorized to pay for rapid tests. In fact, a lot of ink was spilled in the Senate about that part when Supplementary Estimates (C) were analyzed; we heard from the parliamentary budget officer, who told us that it was unusual to see a figure of $4 billion in the Supplementary Estimates (C), with Bill C-10 and Bill C-8.
I would also like to draw my colleagues’ attention to the fact that this bill has been amended from its original version. Section 46 has been amended to provide that the Minister of Health will report to the House of Commons and the Senate every three months regarding the use of the money granted for rapid tests, whether for distributing them to the provinces or for the number of tests.
I will put my question to Mr. MacDonald, who is with us. Why is it important to pass this bill to authorize payment of $1.7 billion for rapid tests, given that the Supplementary Estimates (C) providing for $4 billion have already been passed? Can you explain the situation, that is, why this point should be kept in the bill, given that the Supplementary Estimates (C) and $4 billion for rapid tests have already been approved?
Mr. MacDonald: Thank you, Senator Gignac. I am here with Serena Francis, Assistant Deputy Minister and Chief Financial Officer at Health Canada, to help me answer technical questions. The funds that were received under the Supplementary Estimates (C) were used to repay money under the contracts that were put in place for the 322 million tests purchased for $1.7 billion. The funds that were spent can’t be used again with Bill C-8. If you have other questions, I can answer them, but the funds have actually already been spent in the Supplementary Estimates (C).
Senator Gignac: The Minister of Health will have to appear in the House of Commons and the Senate every three months to show how the tests were used, how they were distributed to the provinces, and how many rapid tests were purchased by the government.
Mr. MacDonald: For Bill C-10, which has already been passed, we will start with an initial report; when Bill C-8 is passed, we will deliver a single report, because the money in the Supplementary Estimates (C) has already been spent. We will deliver the report to the Senate within three months when Bill C-8 is passed.
Senator Gignac: Before I turn the floor over to my colleagues, I’d like to thank you for the privilege and the honour you have done me if allowing me to speak as sponsor of the bill. My next question is for Mr. Mercille. It relates to the underused housing tax. I think I understand that the intention behind this measure had been stated in a previous budget and the current bill is where the government’s intention is put into effect.
Why are we talking about a rate of only one per cent? That seems rather low to me. Can you tell me how it combines with other initiatives that some provinces and some cities have taken to combat property speculation, and especially non-resident transactions?
Mr. Mercille: Regarding the one per cent rate, that was a tax policy decision by the government. I think it was part of their campaign platform. The justification for the one per cent rate is there. It’s the will of the government. Regarding the provincial measures, I’m not sure I’m the best person to talk to you about that. I have colleagues who may be more familiar with that and could answer you, but the aim was to try to rein in the speculation coming from non-residents of Canada a bit.
Senator Gignac: Is this $600 to $700 million in additional revenue that the government expects to collect?
Mr. Mercille: For the next five years, starting with 2022-23, we estimate that revenue might be $735 million.
Senator Gignac: That will enable us to know the people’s profiles, what region of the world they come from. Tell me something about those details . . .
Mr. Mercille: The bill creates two obligations for certain individuals, but not for Canadian residents or Canadian citizens. There is an obligation to declare the fact that they are the owner of a residence and, if no exemption applies, the obligation to pay a tax, the first deadline being April 30, 2023. The obligation to file a return will give the Canada Revenue Agency and the government of Canada in general a better idea of who owns residential properties in Canada. “Residential properties” means duplexes, triplexes, condominiums and single-family houses, but it doesn’t mean apartment buildings.
Senator Gignac: To conclude on this point, did you hold consultations? What happened between the government’s intention that was expressed in its campaign platform and what we have in front of us today?
Mr. Mercille: The government held consultations. An information document was published last summer. Following the consultations, the government decided to introduce two new exemptions from the tax. One of the exemptions is not included here, but it has been announced by the government and will be done by regulation later, once the bill receives Royal Assent.
[English]
Senator Marshall: My first question is also on the underused housing tax. Could you tell me how many underused houses there are in Canada? What is your estimate based on? Would that be the Department of Finance?
Phil King, Director General, Sales Tax Division, Department of Finance Canada: There are about 16.5 million residential units in Canada.
Senator Marshall: How many do you think will be subject to this tax?
Mr. King: About 422,000 of those, or 2.5% of the total, are owned by non-residents. Of that 422,000, we estimate that about 45,000 are vacant. A subset of that group, roughly 30,000, should be subject to this tax. That’s based on data from StatsCan and experience from the B.C. vacant housing tax.
Senator Marshall: Thank you. What are your assumptions with regard to what will happen once the tax is levied? One of the objectives is to free up housing within Canada because of the shortage of housing. How many houses are you assuming will be freed up?
Mr. King: I don’t know if I can put it into terms of units, but we assume there will be a 10% decline in the amount of revenue collected during the first year of implementation and a 5% decline in the second year. It’s difficult to say at the beginning without experience in the filings or revenues.
Senator Marshall: My second question relates to the relationship between this legislation and the budget implementation act. I noticed there are changes made in the budget implementation act to this act. I find that the government passes legislation and then they have second thoughts about something and have to go back and change something.
Could you give me some idea as to what’s going to change in Bill C-8 as a result of the budget implementation act so that we get a clear picture of exactly what’s going to happen in this area?
Mr. King: I’ll pass that back to Mr. Mercille, who is my legislative colleague.
Mr. Mercille: I cannot answer for parts other than Part 2 of Bill C-8, so maybe other officials will have to answer this. But there’s nothing in the budget implementation act that affects Part 2 of Bill C-8.
Senator Marshall: There is a section in the budget implementation act entitled the “Prohibition on the Purchase of Residential Property by Non-Canadians Act.” It says that if somebody buys property when they are not supposed to, they cannot sell it for a profit. Will that apply to any people who are affected by Bill C-8?
Mr. Mercille: It might. I’m not a specialist in this measure. I work in the Sales Tax Division of the Department of Finance, and that provision was not part of the mandate of the Sales Tax Division.
Senator Marshall: Could you get back to us on that? I’d really like to know.
I have several questions on Part 1. I want to read them into the record because I know I’m going to run out of time.
What kinds of expenses does it apply to? Why is it only 90%? Why is it only expenses greater than $25,000? The rates that are set are $1.47 for 2021 and $1.73 per thousand for 2022, but then it says zero for after 2022. I’m wondering how the rates were arrived at. Would all the fuel charges be refunded? I don’t think that is the case.
Perhaps you can just start with this question: What expenses does it apply to?
Ms. Gwyer: For the return of fuel charge, the expenses are basically a proxy to determine how large a farm is, and that determines the amount the farm would be entitled to.
One of your questions was why is there a $25,000 requirement for expenses. It’s not that the credit is only available above $25,000; it’s that the $25,000 is a threshold to being eligible to claim the credit. That’s intended to make it so that very small sort of hobby farming endeavours would not be eligible for the credit. It’s really just a threshold.
Senator Marshall: Is it a refundable tax credit?
Ms. Gwyer: Yes, it is. The expenses are determined in basically the same way that a farm would calculate its expenses under the Income Tax Act for general income tax purposes.
Senator Marshall: So it’s not just fuel?
Ms. Gwyer: It’s not just fuel, no. The expenses are intended to be a proxy for the size of the farm. One of the simple ways to get at the size of the farm is by looking at their total expenses.
Senator Marshall: Why 90%? How did you come up with 90%?
Ms. Gwyer: I’m not sure what 90% you’re referring to.
Senator Marshall: I saw that somewhere in the briefing document. It says “a portion of the expenses.”
Ms. Gwyer: I’m not sure if you’re maybe thinking about the climate action incentive payments, which return about 90% of the fuel charge to individuals. That might be what the 90% is.
Senator Marshall: This won’t return all the fuel charges, will it, to those farms? I’m trying to get a handle on how much the government is collecting and how much they will refund. What’s the difference?
Ms. Gwyer: My colleague Mr. King might be able to answer that better than I can.
Mr. King: Two things on that. One is that, by law, all the fuel charge revenues that are collected have to be returned. There’s an annual accounting of that. A government document is published, the GGPPA, or Greenhouse Gas Pollution Pricing Act report, to show that this does happen.
With respect to returns to farmers, there’s an estimated $100 million in terms of what they would pay in fuel charge on natural gas and propane. That is what’s being returned. It’s an estimate, but it’s as close as we can figure to what they would pay. So “yes” is the answer to your question.
Senator Marshall: They are getting it all back. Okay, that’s good.
The Chair: Mr. Mercille, you said that you would consider looking at information for a question from Senator Marshall. Do we agree that we have a deadline by Wednesday, May 25, and it would be important that you would send that answer in writing, please?
Mr. Mercille: Yes. I will refer the question to the department. I don’t know who is responsible for the measure that Senator Marshall is talking about. I will not answer directly because I don’t know the background of that, but I will relay the question to the department.
The Chair: And you will give them the information that we have a deadline of May 25?
Mr. Mercille: Yes. Parliamentary Affairs are probably on this call, and they are taking notes of all of this.
The Chair: Thank you.
[Translation]
Senator Forest: I’d like to thank the witnesses for being with us today. I’m going to continue on from there, in view of this new tax on underused housing.
The objective is laudable, but I think this sets a dangerous precedent, since the federal government is involving itself in property taxation, which accounts for approximately 70 per cent of the revenue of municipalities and cities in Quebec and Canada. While the objective is laudable, I’m concerned about this precedent, because we have a real problem when it comes to housing.
You say you held consultations before putting this tax into effect; whom did you consult? The Union des municipalités du Québec sent a letter to the minister, Ms. Freeland, stating that this tax would create an unfortunate precedent, since property tax accounts for a large portion of municipalities’ revenue. I’d like to know who was consulted before using property tax as a way of addressing underused housing.
Mr. Mercille: The consultation was public. All Canadians were consulted and the consultation was on the Department of Finance website.
I don’t know whether your question is a legal one, but the government’s position is that the federal government has the necessary powers to do this, under the Canadian constitution; Parliament may raise money by any mode or system of taxation. That is all very broad and the government had not previously decided to apply a tax on real property; in fact, that’s not entirely true, since the GST applies to new buildings and there is also a taxable capital gain, apart from the principal residence exemption, under income tax.
This isn’t my specialty, but I’m going to finish my answer there; I don’t know whether that answers your question.
However, the consultation was public; all Canadians, and essentially the entire world, were consulted and everything was published on the Department of Finance website.
Senator Forest: Our constitution may allow it, but if I understand correctly, in the spirit of tax policy in a proper cooperative federalism, the provinces and municipal unions were not specifically consulted. An annual one per cent tax has to be distinguished from a tax like the GST on the purchase of a new residence or from a one-time capital gain on a completed transaction. To my mind, these are two very different things.
Mr. Mercille: I think a public consultation is a public consultation.
Senator Forest: Of course.
Mr. Mercille: Imposing this tax is a decision of the government; the government may be the one you should be asking.
Senator Forest: My second question is for Mr. Countryman and is about the Safe Return to Class Fund, for which funding has gone from $2 billion to $100 million. That’s a very substantial increase; how was the assessment done to arrive at that figure?
[English]
Mr. Countryman: The $100-million top-up was in the government’s election platform, so it was the decision of the government to provide $100 million to support provinces and territories with ventilation improvements in schools.
[Translation]
Senator Forest: There was no specific needs assessment done?
[English]
Mr. Countryman: No, the amount that was provided comes from the platform. There was the $2 billion provided to support safe schools in 2020 during the pandemic, and the government decided to provide an additional $100 million to help with ventilation, which all provinces have readily accepted.
[Translation]
Senator Forest: I understand. Thank you.
My next question is for Ms. Nandy and deals with the amendments to employment insurance to extend the maximum number of weeks for which benefits can be paid to seasonal workers. I understand that this measure is necessary so as not to penalize workers in the seasonal industry, which is a fact of life from one end of Canada to the other.
What strikes me, however, is that things get patched up and this program has to be constantly reworked. Pieces are added, it becomes more and more complex, and each time it turns into some kind of psychodrama for seasonal workers, who don’t know whether benefits will be extended or not.
Don’t you think that a stable program that is built to deal with what are relatively foreseeable economic shocks would probably provide for more efficient handling of cases, and guarantee claimants a more secure environment, so that pilot projects don’t have to be extended every 2 months or every 12 months?
[English]
Ms. Nandy: Thank you, senator. To confirm, your question is with regard to the review of the Employment Insurance, or EI, program writ large and not the specific amendments in Bill C-8? Is that correct?
Senator Forest: Exactly, yes.
Ms. Nandy: To confirm, there was a commitment made by the government in Budget 2021 for the EI program to undergo consultations over a period of two years. Those consultations are ongoing and include topics such as supports for seasonal workers. Those consultations are expected to conclude in 2022, after which the government has committed to release its long-term plan on EI modernization.
The Chair: Thank you, Ms. Nandy.
Senator Richards: Thank you to the witnesses. Senator Gignac asked my question, but I’m going to ask it again, and then I’m going to go to Mr. Countryman for a quick question.
In Part 5 of the background, there’s the authorization of $300 million and then another $1.7 billion. Who establishes the oversight for this money? Because it was already spent in Supplementary Estimates (C). A lot of money was given, and I’m wondering why this added expense exists, how the money will be followed and how do we know where it’s going and to what benefit it is exactly?
If either Mr. Joyal or Mr. MacDonald could answer this, I would be happy. Then, I have a quick question for Mr. Countryman.
Mr. MacDonald: Perhaps I’ll go first. Senator Richards, we moved to put in place a large number of contracts to buy rapid tests when Omicron hit. Provinces and territories were asking for these tests, and there was a global glut. There were very few accessible, so we did everything we could, working across government, to make sure we could get rapid tests into the country and out to citizens of Canada.
At the time, we had introduced Bill C-8, but timing-wise, we also knew that there was a March 31 fiscal year end that was fast approaching. The monies that we were using through risk management had to be repaid, which is why we used the opportunity to put forward the same amount of funds in Supplementary Estimates (C). As I tried to explain earlier, we will freeze the funding that was used by Supplementary Estimates (C) in this fund, but the minister did commit to providing a report in the house and to table this report on how many rapid tests were purchased, at what price, and we intend to do so. That same provision was found in Bill C-10.
I hope this answers your question, but I can assure you the money will not be spent twice. The information on the procurement of rapid tests is found online on the Canada.ca website, so you can see the number of tests that have been procured, the number of tests that have been shipped out to provinces and their reporting on what has been deployed. I hope that helps. Thank you.
Senator Richards: Yes, it does, sir, and thank you. I’m concerned about this kind of double-dipping that I see when I get the supplementals, and I often wonder where this extra money goes, so I think it’s a legitimate concern of every Canadian to know.
Mr. MacDonald: Absolutely, and that concern has been expressed prior, and that’s why I wanted to make sure you were aware the funds will be frozen in these second accounts. There’s no opportunity for us to double spend the money. It was simply a fiscal management and a fiscal framework reality that we had entered into these contracts and that we needed to pay them before March 31. Bill C-8 hadn’t been in existence at that point, so we took the opportunity to use supplementary estimates to be able to pay back those funds off of the contracts that we had put in place. But there will be no double spending, and there will be a report tabled in both houses of the Senate and Parliament. Thank you.
Senator Richards: Thank you very much. My second question to Mr. Countryman, if I could, will there be any money or incentives for homeowners for redoing their ventilation systems in their own houses in any way, since that’s where most people live and spend most of their time?
Mr. Countryman: There is no incentive for homeowners in Part 4. Part 4 concerns strictly support for cleaner air in schools.
I don’t know whether there’s anyone from my tax policy colleagues who want to speak to measures for ventilation. I believe it’s for businesses in Part 1.
Ms. Gwyer: Yes, that’s correct. The ventilation measures in Part 1 is limited to businesses and commercial locations.
Senator Richards: Yes, that’s what I assumed. I was just wondering if there are any plans in the future to maybe go beyond that for houses, residences of families and people living in, for instance, apartment buildings and high-rises.
Mr. Countryman: Again, I can’t speculate on that. I don’t know. This measure is fixed simply for schools.
Senator Richards: Okay, thank you very much.
Mr. Countryman: Thank you.
Senator Duncan: Welcome to our witnesses. I would like to address two measures, the northern residents tax deductions and the school supplies tax credit. This is a bit of a down in the weeds question, but I would like an explanation from the department of the administration of these benefits.
Both apply to the 2021 tax year. The application of the northern residents deduction has not, to my knowledge, delayed the processing of the tax filing by northerners for the 2021 tax year, yet there have been many news reports that the application of the school supplies tax credit has caused significant delay of the tax filing and processing of the tax filing by Canadian teachers.
So I appreciate one is a deduction and one is a tax credit. I understand why the delay would be because Parliament has not yet passed, and yet there does not seem to have been that delay applied in one tax measure over the other. Could the department explain that, please?
I have a second question, as well. Perhaps I could put that on the record as opposed to having a second round, Mr. Chair.
I would like to speak to Employment and Social Development Canada. Have the issues around the additional seasonal benefits tax measure enabled the department to clear up the anomaly that exists in Prince Edward Island where we have situations between zone one and zone two that cause tremendous difficulty for islanders? We were made aware of this issue by the Mayor of Charlottetown as well as our colleague former Senator Griffin. Could I have the answer to those two questions, please?
Pierre Leblanc, Director General, Personal Income Tax Division, Department of Finance Canada: Thank you very much for your question, senator. I’ll answer the first. Really you did hit on it. What we have here, when a measure is a reduction in tax so it can be a deduction, it could be a non-refundable credit. That’s something that the Canada Revenue Agency administers on the basis of draft legislation.
The draft legislation was put out in this case as part of Bill C-8, so just as you correctly said, that’s something that northerners are able to benefit from as they have been filing their taxes for the 2021 tax year because it’s just a reduction in the amount of money that the government is taking in.
The situation with the educator school supply tax credit — and it’s also the situation with the return of fuel charge for farmers tax credit, which my colleague, Ms. Gwyer, described — is that these are refundable tax credits. They are not just a reduction in tax, they are actually effective for their spending. They are spending through the tax system, but they are government resources that the CRA is taking from the Consolidated Revenue Fund and giving and paying to taxpayers. In these cases, for those two measures the CRA is holding those returns and will process them once this legislation receives Royal Assent.
I hope that explains the difference between the two measures.
The Chair: On the second question, Ms. Nandy, please?
Ms. Nandy: Good morning, senators. Thank you for the question.
The objective of the particular measures related to seasonal workers in Bill C-8 is to introduce an additional condition of eligibility with regard to the current temporary measure for seasonal workers that is in place. That measure applies to the 13 targeted EI regions that were named in Pilot Project No. 21, the pilot project for seasonal workers.
With regard to your specific question, the regions that these particular amendments apply to have not changed. They are the same 13 regions that existed under the previous Pilot Project No. 21. That includes both P.E.I. regions, so for Charlottetown and for the rest of P.E.I. There has been no change to the EI regions affected by these amendments.
Senator Boehm: I’d like to thank the witnesses. I wanted to follow up with Mr. King in response to the question asked earlier by Senator Marshall. This, of course, is on the underused housing tax act.
The office of the Parliamentary Budget Officer has expressed some concern about the data being uneven and the quality of the data available regarding non-resident, non-Canadian residential property ownership, and has said that this could underestimate the applicable tax base. Exemptions under the UHTA include properties that are in the primary place of residence for the owner, the owner’s common-law spouse, children, et cetera, and vacation properties.
You mentioned maybe 35,000 residences might apply. As you break down the data, how accurate is this really, or are we winnowing down the actual base to a very small number? That’s the first question.
Second, you mentioned that you’ve looked at what British Columbia has done. Have you looked at other international jurisdictions as well, assuming you haven’t looked at tax havens but at others to see what other countries may have done to deal with this issue?
Mr. King: Thank you for the question. You’re absolutely right. The PBO is correct in saying that there’s a great deal of uncertainty around the numbers. We have some information from the Canadian Housing Statistics Program on the degree of foreign ownership, but that’s only for four provinces. We have a little bit of data from the B.C. government speculating on vacancy tax and the degree to which foreign-owned properties are vacant. We have to make some big assumptions there.
That’s not unusual with a new tax. Until we start to get people filing, see who they are, the numbers, where they are, et cetera, who’s going to claim the exemptions, it is a challenge to come up with a number. So that revenue estimate can change, certainly.
As to the second part of the question, foreign experience, yes, we did.
Mr. Ives, do you have any more info on what you can share on what has been done internationally and that may have been looking at as we were developing the measure?
Robert Ives, Senior Advisor, Sales Tax Division, Department of Finance Canada: In terms of a vacancy or speculation-type tax, Canada is unique in terms of being the first place worldwide to implement this type of tax. The City of Vancouver was the first to do so, followed by the Province of British Columbia.
There’s not really a lot of experience globally in terms of this type of taxation, but certainly there is domestic experience.
Senator Boehm: Thank you. I’m assuming lessons learned could also be shared in the OECD context because this is not an isolated Canadian phenomenon.
I would now like to get into Part 4 on the school ventilation improvement. I’m assuming population size was considered regarding the amounts allocated to each province and territory, but was anything allocated in terms of monies to go to specific areas and/or schools, for example? Is there funding specifically for underserved communities and/or Indigenous communities included in this?
I realize jurisdiction is always a touchy subject in this country among the various levels of government, but how deeply were the provinces and territories consulted in this program about the needs and the amounts that were allocated? Is there a deadline by which ventilation improvements must be completed and is there a way to assess and ensure the funds are used as required?
Mr. Countryman: There are quite a few questions there. Let me see if I can answer them all.
In terms of the allocation of the funding, it was allocated on a per capita basis using the population of children 4 to 18 by jurisdiction, but there was a base amount of $500,000 for each jurisdiction and the rest of the money was held equal per capita. That is how the allocation was done for each province and territory. Provinces and territories are able to choose how they allocate their funding by region, school, et cetera.
With respect to the Indigenous aspect, there is a separate fund that Indigenous Services Canada administers. It’s an estimate of $10 million to support ventilation in Indigenous schools on reserve.
In terms of the reporting and timeline, basically there’s been an exchange of letters, from the Minister of Finance federally and her counterparts in the provinces and territories, where each province and territory was asked to submit an outline of the plan for how they will spend the funds that they will receive. All provinces submitted basically along the lines I mentioned earlier in my overview, namely that they would spend things to improve ventilation, like portable filtration units, upgrades to existing systems, et cetera. This is all to take place within the 2021-22 school year. It may extend to the summer because of where we are at now, but provinces were able to do that with that time frame.
Hopefully, that answers most aspects of your question.
Senator Boehm: Except for the very last one: How do you ensure the monies are being used for that purpose?
Mr. Countryman: Again, there was an exchange of letters between the ministers. We have a pledge from each province and territory that this is how they will spend the money. They’ve outlined, to varying degrees of detail, how they intend to spend the funding on those categories. We did ask if they can provide assurances they spent the original $2 billion and all provinces and territories came back and said, yes, the original $2 billion in the fund had been allocated and spent.
Senator Boehm: Thank you very much.
Senator Loffreda: Thank you to all our panellists for being here this morning.
My question is on the underused housing tax act. We discussed the other jurisdictions, municipalities or provinces who also implemented a similar tax on foreign-owned or underused or vacant homes.
Is there any data on how successful this tax has been domestically in slowing down foreign purchases and changing behaviours? We discussed internationally, but domestically do we have any statistics? Was it a success? Has it improved housing affordability in those provinces or municipalities?
Mr. King: I can say one thing about that. We have information from the B.C. speculation and vacancy tax where, in 2018 — the first year it was implemented — and in 2019, the number of people filing for the taxes, or foreign owners, declined by 50%. That went from approximately 3,200 to about 1,500 people filing and paying the tax. Presumably those houses were sold to Canadians or rented out on a longer-term basis, but that was just for B.C. and for one year.
I’m not aware of any other data beyond that.
Senator Loffreda: Thank you.
My next question is on Real Estate Investment Trusts, what we call REITs. Those are companies that operate and finance income-generating real estate and are similar to mutual funds. I’m asking because they pool numerous investors and there may be some foreign investors. To what extent do the proposed measures address vacant properties owned by REITs? Were REITs considered when developing this measure? Does the government have a reason to believe that REITs own a great portion of underused Canadian property leading to unproductive use of housing?
Were REITs considered at all, because there are many investors when it comes to REITs and, as I mentioned, some may be foreign investors.
Mr. Ives: Thank you, senator, for the question. REITs were considered in the development of this legislation. REITs are, in fact, excluded from the tax. This tax applies to residential housing consisting of no more than three units. So an apartment building, a fourplex and up, is completely outside the scope of this tax.
As I indicated, REITs are outside the scope. The assumption is that REITs are likely in the business of making money from renting out properties. To the extent that there are foreign investors in a REIT, it wasn’t something we were overly concerned about, given that a REIT is unlikely to be sitting on vacant or underused property, more specifically consisting of three or fewer units. Hopefully, that answers your question.
Senator Loffreda: Yes; it does. Thank you.
With respect to the collection of the tax, does the government anticipate any difficulty in collecting tax from foreigners?
Mr. Ives: The tax is a self-assessment regime. Anyone that’s potentially subject to the tax is required to file a return every year in respect of each residential property that they own. If they don’t file that return, there are significant penalties for failing to file the return by April 30 of the subsequent calendar year.
A proposal was released as part of the consultation paper last summer, whereby there would be a compliance mechanism that would be used if an individual, a non-resident, proposed to sell a residential property. There already is an existing mechanism that applies mainly for the purposes of ensuring that non-residents pay their capital gains prior to the disposition of certain taxable Canadian property, which would include residential property. The proposal in the consultation paper was to utilize that mechanism to ensure compliance with this.
For example, if a non-resident were to propose to dispose of a residential property, they are required for income tax purposes to request a certificate of compliance and pay an amount of tax equal to 25% of the expected capital gain. Failing to do so triggers a liability on the purchaser of the property for 25% or 50% of the total sales price.
Basically, the proposal was to utilize that mechanism. CRA would then verify whether the non-resident had complied with their obligations under the underused housing tax.
Currently, that’s not part of Bill C-8, but there would need to be an amendment made to the Income Tax Act to implement that particular policy that was announced last summer.
The Chair: Thank you, Mr. Ives.
[Translation]
Senator Gerba: I’d like to thank our witnesses. My question is for the representatives of Finance Canada. I don’t know who could answer it, but I will address it to Finance Canada. The Canada Emergency Business Account (CEBA) was put in place at the height of the pandemic and provided invaluable assistance for many businesses, in a total amount of 50 billion dollars. Most of that assistance took the form of repayable loans.
My question is twofold. At this point, can you tell us what proportion of the loans has been repaid by the businesses? The second part is this: in spite of the assistance provided, some businesses went bankrupt. How many businesses have gone bankrupt to date after benefiting from the CEBA? Do you have an estimate of the amounts that will probably not be repaid?
[English]
Ms. Wang: Just to clarify, your first question is how much of the Canada Emergency Business Account, or CEBA, loans have been provided to businesses?
[Translation]
Senator Gerba: The amounts that have already been repaid.
[English]
Ms. Wang: I will have to find it. It’s a very small amount that has been repaid. As you know, the CEBA loan is designed in such a way that it is an interest-free loan until the first repayment deadline, which has been extended to December 31, 2023. If a loan holder repays the loan by that date, they can keep a portion of it — up to $20,000 in forgiveness — and just repay the principal partially.
The majority of businesses are keeping the loan until closer to the repayment deadline.
We have received a very small amount of repayments. Based on the data I’ve seen, it’s roughly a little bit under $4 billion, but the majority of the loans are outstanding, currently.
[Translation]
Can you please remind me of what the second question was?
Senator Gerba: How many businesses have gone bankrupt to date after receiving these loans? Do you have an estimate?
[English]
Ms. Wang: We don’t currently have the debt statistics. Again, I understand it’s very small, but we don’t currently have an estimate of businesses that have already claimed bankruptcy. CEBA loans are between the loan holder and the financial institution. A lot of them will have to work through the system, and we won’t see them until closer to when they are actually in front of a court or a bankruptcy proposal had been made. We don’t currently have a number, but I understand the number is very, very small.
[Translation]
Senator Gerba: Do you have an estimate of the businesses that are already having trouble paying?
[English]
Ms. Wang: No, because the design of the CEBA program is that it is interest free. So there are no payments until 2023. Because of that, we don’t have insight into businesses that currently have problems servicing the loans and who are facing difficulties.
[Translation]
Senator Dagenais: My questions are for the representatives of the Department of Finance. I’d like to come back to the question of the Underused Housing Tax Act coming into force. When I look at the list of exemptions, I see that charitable organizations are not subject to this tax. However, the WE charity scandal brought to light the existence of certain highly questionable property investments. Why exempt these organizations rather than adopt a method of easily checking their financial statements to make sure that these organizations’ money is genuinely used for their charitable activities? I don’t know who wants to answer the question.
[English]
Mr. Ives: I can take that question.
When we were developing the tax, as you noted, there is a list of what are defined as “excluded owners.” These are generally Canadian entities and individuals that are Canadian citizens and/or permanent residents of Canada. The idea is that this tax is meant to apply to non-resident, non-Canadian owners of residential property in Canada.
To the extent that there are issues with non-residents registering charities and owning property through those registered charities, that’s obviously something that the government would be concerned about. In terms of this particular tax, the decision was to scope out those registered charities entirely from the individuals and entities that could be subject to it.
[Translation]
Senator Dagenais: My second question is also for the Department of Finance and is about improving ventilation in schools. I see that $100 million will be paid to the provinces and territories; for Quebec, we’re talking about $21 million. Has the money already been paid or will it be paid in a single cheque? Or will the federal government impose conditions and monitor the use of the funds in the education sector, which, I would remind you, is ordinarily under provincial jurisdiction?
[English]
Mr. Countryman: Thank you for the question, senator. The funding has not been provided to provinces and territories yet. We are waiting for Royal Assent of Bill C-8 before we can do so.
There has been an exchange of letters between the federal government and the province of Quebec concerning the allocation of the funds. The province of Quebec has agreed to provide the funding to support ventilation in their schools.
[Translation]
Senator Dagenais: My next question is for the representatives of Employment and Social Development Canada. The budget provides for the extension of an employment insurance pilot project until November in regions where jobs are connected with highly seasonal activities.
The Minister of Finance has said that she wanted workers in these regions who receive pandemic-related benefits to be included in the process. How are you going to do that, in administrative terms, or is it still a policy process that is being developed that we don’t yet know the details of?
[English]
Ms. Nandy: Thank you, senator, for the question. Should these amendments receive Royal Assent, as soon as they receive Royal Assent, those who would be eligible and would meet the additional criteria that are proposed in these amendments would receive access to the additional up to five weeks of benefits. This would be processed automatically by Service Canada and would not require eligible applicants to apply.
Senator Pate: Thank you to the witnesses.
Picking up on Senator Dagenais’ last question, I would like to ask the folks at ESDC this: Regarding the pilot project that was developed, I’d like to know the status of that. If there are findings so far, what are those findings in terms of what has emerged thus far? How were the 13 regions of the pilot determined? How many seasonal EI claims are received each year from outside of those regions? Are you making a comparison to other potential approaches such as basic income and some of the other initiatives that have been proposed by other bodies?
I’ll ask my next question at the same time so that if we run out of time, we could get written responses. That would be fantastic. Thank you.
My question is for the Department of Justice. Coming back to what a number of colleagues have asked around the vacant and underused homes project, what was the justification for the 1% tax? Has the Department of Finance considered the benefits of a higher tax rate, the 3% or 5%, such as was looked at and is being undertaken in British Columbia? It is my understanding that Vancouver has increased it to 5% next year.
Will you be recommending an increase in years to come? How much revenue has been generated that the federal government can now use? How is it being applied to address homelessness? In B.C. we’ve seen a direct impact on lifting people out of poverty by employing these resources to poverty-alleviation exercises and housing initiatives. Thank you.
Mr. Ives: I will answer the question of the underused housing tax. The 1% rate, as my colleague previously indicated, is a commitment announced by the Liberal Party in their 2019 federal campaign. That was the rate they chose to use.
In terms of alternative rates, this is a revenue-raising measure. To the extent that you were to introduce a rate that would render certain behaviours as being prohibitively difficult to engage in, that might change the purpose of the measure from being a tax to being something else. A 1% rate maintains a level of balance with the primary purpose, being revenue generation.
Ms. Nandy: I can speak to the original questions on the EI amendments. I’ll start with the status of Pilot Project No. 21. That project was in place from August 2018 to September 2021. However, there was a one-year extension of the pilot that will end in September of this year. I would indicate that in the budget implementation act for 2022, there is a proposed extension of that legislated measure for a further year until October 2023. That’s the status of the pilot.
There have been other pilot projects relating to seasonal workers, but for this particular pilot, the evaluation is being done by the department and the results will be published once the evaluation is complete. The timing for that publication is still to be determined but is expected later this year.
I think there was a third question in terms of how the EI regions that were affected by Pilot Project No. 21 were determined. They were determined in 2018 based on the unemployment rate in those regions, which was above 4%, and the proportion of seasonal workers in those regions.
Finally, I think the last question was the number of claimants inside and outside of those EI regions. Inside of those EI regions, the 13 regions that I mentioned, in 2019-20 there were approximately 140,000 claimants who were eligible for additional weeks under the pilot measure. Outside of those 13 regions, so in the remaining 49 EI regions in Canada, it’s about 260,000 eligible EI claimants.
Senator Marshall: Back to the housing tax, you’ve told us that the objective is to raise revenue. We’re expecting that some properties will be sold and other properties that are now vacant will be occupied.
Was there an assessment of any other impact? One example is companies that invest in Canada and have people living in Canada who aren’t Canadian citizens or Canadian residents. They’re working as part of their company. Was there any assessment of the impact that might have on foreign investment or any other impact beside the houses becoming available for occupancy or the tax revenue? What are the other implications?
Mr. Ives: If you had a foreign corporation that owned residential property, they would have a filing requirement under the tax. Some of the exemptions could certainly be available if they had, for example, an employee who was living in the residence. We didn’t conduct any specific measurement of the impact of that sort of thing.
Senator Marshall: A message is being sent to businesses who have people employed in Canada. But that’s fine if there is no assessment. I just wanted to know that. Thank you very much.
[Translation]
Senator Forest: My question is for Mr. Countryman and relates to the $100 billion Safe Return to Class Fund. In the legislative summary, it says that the provinces will have reasonable flexibility to spend the funds, including for ventilation improvement projects.
How is what is reasonable defined?
[English]
Mr. Countryman: Thank you for the question, senator.
As I mentioned in my summary, I gave some examples of the types of expenditures that provinces could make depending on their needs, such as the repair or replacement heating, ventilation or air conditioning units, or the installation of operable windows or portable air filtration units. These are all items that many jurisdictions mentioned in their letters to the Minister of Finance regarding their proposed plans for the funding. All jurisdictions provided projects or indicated how they would spend the money along the lines that I mentioned.
Senator Boehm: My question is about Part 6, so perhaps Mr. MacDonald could answer this one.
We know there are a lot of issues with the duplication of funding requests when it comes to rapid testing. I don’t know whether you have the answer or not, but how much money has actually been spent on rapid tests since the start of the pandemic? How much has been spent on tests for use in Canada versus how much has been spent to help countries around the world, particularly developing countries, to acquire these much-required tests? Thanks.
Mr. MacDonald: Thanks, Senator Boehm. I don’t have the total funding amount that we have spent since the beginning of the pandemic on rapid tests. I would also make the distinction that in some of your questions, there are multiple types of testing involved. There’s rapid antigen testing, there’s molecular testing and there’s obviously PCR testing, which provinces have cut back on. In order to answer your question, we can certainly try to provide something in writing, but it would be good to be precise.
When it comes to rapid antigen testing, we did spend the money in Supplementary Estimates (C), as I mentioned, and so it would never be loaded into the system this fiscal year from Bill C-8. We did also gain approval for Bill C-10, for which we haven’t spent a lot of that money yet. We are just actually in the midst of loading up to be able to get more rapid tests out to the provinces from now through the fall.
In terms of your question for sending tests to developing countries, I’m not aware from a Health Canada perspective that we are sending rapid antigen tests. Up until recently, there’s been a global lack of rapid antigen tests, and there’s been a dire need for them inside this country. I know there are several countries that have been seeking these tests, and that’s what made it difficult for us in the later parts of December, January and February to get them. I don’t believe we have any mechanisms in place today to send rapid tests to developing countries.
Senator Boehm: Thanks, Mr. MacDonald. It is the rapid antigen test that I’m the most interested in, because that’s the one Canadians would get over the counter at pharmacies and grocery stores, et cetera, so if something could be sent to us in writing, I would be grateful.
The Chair: Mr. MacDonald, do we agree that you will send the answer in writing, please, before the May 25?
Mr. MacDonald: I’ll just note, Mr. Chair, that there are other departments, like Indigenous Services Canada, that have bought rapid antigen tests, so it’s hard for me sometimes to respond on behalf of the entire Government of Canada, but I will do my best. I understand and will respect the dates to get as clear of an answer as I can for Senator Boehm.
The Chair: Thank you, Mr. MacDonald.
Senator Loffreda: My question is on proof of vaccination in Part 5. Section 45 authorizes the Minister of Health to make payments of up to $300 million to the provinces and territories for the purpose of supporting proof of vaccination initiatives. What is the status of these initiatives? We’re over two years into the pandemic, so I feel like most provinces probably already have a good handle on the situation. Are these funds still necessary for this specific initiative?
Mr. Joyal: Thank you for the question. I’m here from the Public Health Agency.
The intent behind the $300 million is to recognize efforts already undertaken by provinces. In 2021, we worked closely with provinces and territories as they set up their IT infrastructure program and architecture for the proof of vaccination, or PVC, initiative and for them be able to issue the documents. By November 2021, I think, all provinces and territories were issuing to the Canadian standard across the country. That funding is, in part, to help support provinces that have already incurred costs, as well as to continue to support provinces so they can continue to issue PVCs as Canadians continue to need to be equipped with authoritative proof of vaccination to enter a number of countries or to deal with border measures in a number of countries.
It’s to continue to equip Canadians with that proof of vaccination. It is as much backward-looking in 2021 as it is for going forward in 2022.
Senator Loffreda: Thank you.
[Translation]
Senator Dagenais: My question is for the representatives of Health Canada. The budget seeks to authorize payment to the provinces and territories of as much as $1.7 billion to cover expenses associated with COVID-19 tests. Given that this figure seems to be limited in time, it would be worthwhile to have an overall picture of the funds dedicated to these tests.
Can you tell us how much these tests have cost the federal government since the beginning of the pandemic? If it’s possible, can you provide us with a breakdown of the payments by province?
Mr. MacDonald: Thank you for the question. As I was just saying to Senator Boehm, the amount spent before the $1.7 billion was about $900 million. I don’t have the exact figures with me, but we’re going to try to answer your question in writing.
If you consult the website, at Canada.ca, you can see the provinces and territories where the tests were distributed. There are also a few federal programs for companies.
As I was saying, the Department of Indigenous Services also bought tests for some sectors. I don’t know whether I’ll be able to get all the figures, but it’s about the same amount as I said.
Senator Dagenais: Thank you.
[English]
Senator Duncan: I would like to follow up on my questions regarding the deductions and the tax credits. I can appreciate this and, as a legislator, understand that the paramountcy of Parliament and both houses approving these benefits, but to the average Canadian teacher who’s awaiting their supply credit, it may not be as apparent.
I wonder if the department could give an indication of just how quickly, pending Royal Assent, that the school supplies tax credit might be processed? As I understand it, there are, in some situations, tens of thousands of dollars at stake for individuals. Could the officials give an indication of how nimble the department will be in responding to these outstanding issues?
Mr. Leblanc: Thank you for the question, senator. The Canada Revenue Agency will move to process those returns very quickly. Basically, they are in abeyance now, but they will be ready to assess those returns where those people are receiving refunds to pay those amounts quickly.
Senator Duncan: Could I have more of a reassurance as to what “quickly” means? Are we talking months? Are we talking within the month for Royal Assent or within days or weeks?
Mr. Leblanc: I think it’s more the latter of what you are saying. I would say weeks, but the Canada Revenue Agency would be in the best position to provide the exact confirmation.
Senator Pate: In 2017, the Canada Revenue Agency did a study of Indigenous participation in the Canadian tax system and found that many low-income earners did not benefit from the tax credits and tax-returning process, funding returns that they were entitled to, particularly because they didn’t participate often because of the cost of filing a tax return, from their perspective, and because of limited financial literacy, limited computer or internet access, lack of access to services and no knowledge about the tax credits available.
How is the Department of Finance addressing these challenges and ensuring that the lack of awareness and lack of access to the means to file taxes is not interfering with the ability of individuals to take advantage of the benefits and tax credits to which people are entitled, particularly Indigenous and First Nations people?
Mr. Leblanc: Thank you for your question, senator. While there is no measure in Bill C-8, I’ll just mention two initiatives, because it’s such an important issue that you raise.
The first initiative, because it’s really a government-wide approach to this important issue, is that Service Canada has been visiting Indigenous communities across the country and really playing an important role in underscoring the importance of filing in order to access these benefits and credits. Secondly, the work of Canada Revenue Agency in preparing — and for those living on reserve, there’s a very simplified tax return that they can access, which makes it easier to file the return to be able to access these benefits and credits.
It’s a short answer, given the time, but it’s a very important issue that you raise. Thank you for raising it.
[Translation]
Senator Gerba: I just wanted to go back to my previous question to ask whether answers can be sent to me in writing. I’d be very grateful.
My second question is for the representatives of Health Canada. Subsection 45(1) in Bill C-8 authorizes the Minister of Health to transfer up to $300 million to the provinces and territories for the purpose of supporting administrative initiatives relating to proof of COVID-19 vaccination.
I’d like to know whether the easing of public health measures will result in a reduction in these transfers of funds.
Mr. MacDonald: I think that’s a question for the Public Health Agency of Canada. I don’t know whether Martin Joyal is still online. Health Canada, we’re talking about Part 6 of the bill, which deals with rapid tests.
Mr. Joyal: I heard that the question was for Health Canada, so I may have missed some details. Could you repeat your question?
The Chair: You can read the testimony and answer the question in writing. You can send the answer directly to the clerk of our committee. Are we agreed on that, Mr. Joyal?
Mr. Joyal: Thank you. We’ll read the testimony and I’ll talk to the clerk.
The Chair: Thank you, Mr. Joyal.
[English]
To the witnesses, thank you. We have completed the agenda items on Bill C-8. We will conclude this meeting, but I would like to thank the witnesses for taking the time to appear before us this morning. It is appreciated on behalf of the senators of the National Finance Committee.
In written responses, as I have mentioned at the outset, we have a deadline of May 25, 2022, to receive the responses in writing. Please let us agree that we will wait for you to do the due diligence respecting the date to provide answers in writing.
I would also like to inform honourable senators that our next meeting will be on Tuesday, May 31, 2022, at 4 p.m. Eastern time, and we will welcome the Honourable Chrystia Freeland, Deputy Prime Minister of Canada and Minister of Finance. Minister Freeland will be with us for 90 minutes to discuss Bill C-8 and Bill C-9. It has not yet been decided, however, if we will have a meeting that morning in our normal time slot. We will discuss this at the steering committee shortly, and we will advise members of the National Finance Committee.
I would like to kindly remind members of the steering committee to please stay on the line, so we can resume our meeting for the steering committee to look at agenda items.
(The committee adjourned.)