Proceedings of the Standing Senate Committee on
National Finance
Issue No. 71 - Evidence - June 13, 2018
OTTAWA, Wednesday, June 13, 2018
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to give clause-by-clause consideration to Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures; and in camera, for the consideration of a draft report concerning Main Estimates for the fiscal year ending March 31, 2019.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I welcome you to this meeting of the Standing Senate Committee on National Finance.
My name is Percy Mockler, a senator from New Brunswick and chair of the committee. I welcome all who are with us in this room and viewers across the country who are watching on television or online. Now I would like senators to introduce themselves.
Senator Jaffer: My name is Mobina Jaffer, and I’m from British Columbia.
Senator Mitchell: Grant Mitchell, from Alberta.
Senator Campbell: Larry Campbell, from British Columbia.
Senator D. Black: Doug Black, from Alberta.
[Translation]
Senator Pratte: André Pratte from Quebec.
[English]
Senator Deacon: Marty Deacon, Ontario.
Senator Day: Joseph Day, from New Brunswick.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicky Eaton, Ontario.
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Neufeld: Richard Neufeld, British Columbia.
The Chair: Thank you.
[Translation]
I would also like to recognize the clerk of the committee, Gaëtane Lemay, and our two analysts, Sylvain Fleury and Alex Smith, who team up to support the work of this committee.
[English]
Honourable senators and members of the viewing public, we are now about to begin going through Bill C-74 clause by clause, but before we do so I would like to remind senators of a number of items of information.
If at any time a senator is not clear where we are in the process of Bill C-74, please ask for clarification. We would at all times have the same understanding of where we are in the process in both languages.
In terms of the mechanics of the process, I would like to share with you the following: I wish to remind senators that when more than one amendment is to be moved in a clause, the amendments should be proposed in the order of the lines of a clause, meaning that amendments should be proposed following the order of the text to be amended. Therefore, before we take up an amendment in a clause, I will be verifying whether any senator had intended to move an amendment earlier in that clause. If senators do intend to move an earlier amendment, they will be given the chance to do so.
Honourable senators, if a senator is opposed to an entire clause, I would like to remind you that, in committee, the proper process for that is not to move a motion to delete the entire clause but rather to vote against the clause standing as part of the bill.
Also, I would remind senators that some amendments that are moved may have consequential effects on other parts of the bill. Therefore, it is very important that the committee remain consistent in its decision and that they be consistently applied through the bill in its entirety. Because no notice is required to move amendments, there can, of course, have been no preliminary analysis of the amendments to establish which one may be of consequence to others and which may be contradictory, if it happens.
If members have questions about the process or the propriety of anything going on, they can raise a point of order. The chair will listen to the argument, decide when there has been sufficient discussion of the matter of order and make a ruling. Also, honourable senators, the committee is the ultimate master of its business within the bounds set on it by the Senate, and a ruling can be appealed to the full committee by asking whether the ruling shall be sustained.
[Translation]
As chair, I will do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation, and I ask all of you to keep your remarks to the point and as brief as possible.
[English]
Honourable senators, I wish to remind you that no seconder is required in committee. If there is ever any uncertainty as to the results of a voice vote or show of hands, the cleanest route is to request a roll call vote, which provides clear results. Senators are aware that any tied vote negatives the motion in question.
Finally, honourable senators, I wish to inform you that a full brigade of officials is available in the audience, mostly from the Department of Finance but also other departments, to answer any questions senators may have on a particular clause or section of the bill. They are monitoring our proceedings from the room next door and can be called to quickly join us if additional information is required.
Are there any questions, honourable senators, on any of the above information that I have shared with you?
Senator Neufeld: For my benefit, we have some new people around the table. For clarification, chair, who is able to vote at this table?
The Chair: Thank you. I will share that with you, honourable senators, and I will approach it in this manner. So that everyone is clear on who is a member in good standing of the committee and is, therefore, allowed to move a motion or vote on any motion, I would ask the clerk to read attentively, out loud, the membership list as it stands this evening.
Gaëtane Lemay, Clerk of the Committee: The members of the committee are the chair, Senator Mockler; and then all the other members: Senators Andreychuk, Black (Alberta), Campbell, Day, Deacon, Eaton, Jaffer, Marshall, Moncion, Neufeld and Pratte.
There is also around the table this evening, an officio member, Senator Mitchell.
Senator Mitchell: Without a vote.
Senator Neufeld: Okay.
The Chair: That is satisfactory, Senator Neufeld?
Senator Neufeld: Yes.
The Chair: Honourable senators, we will now move to consideration of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures.
Is it agreed that the committee proceed to clause-by-clause consideration, honourable senators, of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures?
Hon. Senators: Agreed.
The Chair: Thank you.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Is it agreed, honourable senators, with leave, that the clauses be grouped according to the six parts of the bill and their divisions as described in the Table of Provisions of Bill C-74?
Hon. Senators: Agreed.
The Chair: Part 1 is next, honourable senators. I will ask the following:
Shall Part 1, entitled “Amendments to the Income Tax Act and to Related Legislation,” which contains clauses 2 to 46, carry?
Senator Marshall: On division.
Senator Eaton: On division.
The Chair: On division.
Honourable senators, shall Part 2, entitled “Amendments to the Excise Tax Act, 2001 (Tobacco Taxation) and to Related Legislation,” which contains clauses 47 to 67, carry?
Senator Eaton: On division.
Senator Neufeld: On division.
The Chair: Shall Part 3, entitled “Amendments to the Excise Act, 2001 (Cannabis Taxation), the Excise Tax Act and Other Related Texts,” which contains clauses 68 to 119, carry?
Senator Andreychuk: On division.
Senator Neufeld: On division.
Senator Eaton: On division.
The Chair: Honourable senators, shall Part 4, entitled “Canadian Forces Members and Veterans,” which contains clauses 120 to 185, carry?
Senator Eaton: On division.
Senator Neufeld: On division.
The Chair: Carried on division.
Next is Part 5. Shall clauses 186 to 198, which contain the Greenhouse Gas Pollution Pricing Act, carry?
Senator Neufeld: On division.
Senator Marshall: On division.
Senator Eaton: On division.
The Chair: Part 6, Honourable senators, is “Various Measures.”
Shall Part 6, Divisions 1 to 20, which contains clauses 199 to 409, carry?
Senator Eaton: On division.
Some Hon. Senators: On division.
The Chair: Do you have a question, Senator Moncion?
Senator Moncion: What time do we present observations with some of these sections? Is it at the end or as we go?
The Chair: I will have comments on observations in the later part of the meeting in respect to the seven other committees that did a prestudy on the matter itself. At that point, I will recognize you, Senator Moncion, if you have observations.
Senator Moncion: Thank you.
The Chair: Honourable senators, shall Schedules 1 to 6 carry?
Senator Eaton: On division.
The Chair: Carried on division.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
Senator Eaton: I like it.
The Chair: Shall the bill carry?
Senator Neufeld: No.
Some Hon. Senators: Agreed.
Senator Marshall: On division.
Senator Neufeld: Do you want to do it on division or vote?
Senator Eaton: Well, we would lose a vote.
Senator Neufeld: That’s fine. I want a vote. I don’t care if I lose it. It won’t be the first and it won’t be the last.
The Chair: Honourable senators, we have come to the question: Shall the bill carry?
We have asked for a roll call, so I will ask the clerk to proceed with the roll call vote.
Ms. Lemay: The Honourable Senator Mockler?
Senator Mockler: I will abstain.
Ms. Lemay: The Honourable Senator Andreychuk?
Senator Andreychuk: No.
Ms. Lemay: The Honourable Senator Black?
Senator D. Black: Yes.
Ms. Lemay: The Honourable Senator Campbell?
Senator Campbell: Yes.
Ms. Lemay: The Honourable Senator Day?
Senator Day: Yes.
Ms. Lemay: The Honourable Senator Deacon?
Senator Deacon: Yes.
Ms. Lemay: The Honourable Senator Eaton?
Senator Eaton: No.
Ms. Lemay: The Honourable Senator Jaffer?
Senator Jaffer: Yes.
Ms. Lemay: The Honourable Senator Marshall?
Senator Marshall: No.
Ms. Lemay: The Honourable Senator Mitchell?
Senator Mitchell: I can’t vote.
Ms. Lemay: The Honourable Senator Moncion?
Senator Moncion: Yes.
Ms. Lemay: The Honourable Senator Neufeld?
Senator Neufeld: No.
Ms. Lemay: The Honourable Senator Pratte?
Senator Pratte: Yes.
Ms. Lemay: The final tally: yeas, 7; nays, 4; abstentions, 1.
The Chair: Thank you. So it is carried.
The other item of information is observations, if you permit me, honourable senators.
The Finance Committee did its work on the subject matter of Bill C-74, and we reported to the chamber yesterday.
I would like to bring to your attention the committees that were asked to do a study of Bill C-74. On the subject matter of Bill C-74, the following committees were asked to do a prestudy: The Special Senate Committee on the Arctic; the Standing Senate Committee on Banking, Trade and Commerce; the Standing Senate Committee on Foreign Affairs and International Trade; the Standing Senate Committee on Legal and Constitutional Affairs; the Standing Senate Committee on National Security and Defence; the Standing Senate Committee on Energy, the Environment and Natural Resources; and last, the Standing Senate Committee on Agriculture and Forestry.
I want to remind everyone that all of those committees tabled a report in the Senate and had some observations. In light of the extensive work by these seven Senate committees on the subject matter of Bill C-74, this committee, on the subject matter of that particular bill, strongly encourages the government to consider and follow up on the observations that those committees have made on this bill.
With that, Senator Moncion asked to make a comment. I will ask her if this is sufficient; namely, that we are asking the government to follow up on the observations of each of those committees.
I will now open the discussion for your comments.
[Translation]
Senator Moncion: My observation relates to clauses 316 and 317 in Part 6 of the bill. Those two clauses would allow Canadian banks to share or sell their customers’ personal banking information to financial technology companies such as Google, Amazon or Facebook. The explicit consent of their customers would not be required since they will have already given their consent to share their personal data when they opened a chequing account, applied for a credit card or for a personal loan.
Not only do financial institutions have personal information such as name, address and date of birth, but they also have the social insurance number. Financial institutions also have information on every transaction a person makes with their credit card, debit card or chequing account. In a nutshell, banks have a lot of data about their customers.
Clauses 316 and 317 of Bill C-74 propose that federally regulated financial institutions obtain the right to share or even sell personal data based on consent from a long time ago, depending on when the account was opened or when the transactions were made.
From now on, the Minister of Finance will no longer have to pre-approve that type of information sharing, and the government, for its part, will give up its essential oversight role. Of course, the Personal Information Protection and Electronic Documents Act applies to that type of transaction. However, following the review of Bill C-50, the Privacy Commissioner concluded that his office had no authority to enforce the rule. The waiver of supervisory authority comes at the expense of protecting the privacy of Canadian taxpayers.
That is why I move that the following observation be appended to the bill:
Le règlement pris en vertu des articles 316 et 317 du projet de loi C-74 devra prévoir des mesures visant à assurer la sécurité et la protection des données personnelles de la clientèle de l’institution financière, spécialement lorsque cette dernière fait affaire avec une compagnie de technologie financière extérieure à son institution.
And in English:
[English]
Regulations regarding articles 316 and 317 of Bill C-74 will have to include measures to ensure the safety and protection of the private information of the banks’ clientele, especially if this bank is sharing or selling this information to an outside fin tech company.
The Chair: Thank you, Senator Moncion.
Senator D. Black: Thank you, Senator Moncion, for that observation.
Let me just provide to the committee context with respect to the Banking Committee’s review of clauses 316 and 317. We held our review hearings on this matter, and because we were concerned about 316 and 317, we then held three additional hearings to understand the potential issues, as Senator Moncion referred to.
We heard from the privacy officers of all of the five big banks. They indicated that, in their view, they were already subject to regulations that ensure they had to get express and explicit consent from their customers before sharing any data. That is what they said.
The Privacy Commissioner, from whom we heard as well, indicated that his office had concern as to whether the Government of Canada had gone far enough.
We have quite a detailed observation around 316 and 317. Our observation indicates that, if there is a concern here — and, frankly, the committee doesn’t know if there is a concern here because we heard the banks saying “no” and the privacy officer saying “possibly.” You will recall that I informed the Senate that we asked officials from the Department of Finance and OSFI to appear before us to help us understand this issue. They declined to appear, and that is the subject of another matter and a letter I have written to the minister, indicating our displeasure at that state of affairs.
We have observed quite definitely that this is a matter the Government of Canada must get to the bottom of. If there is an issue to be addressed, it needs to be addressed in privacy legislation, not the budget bill. We are satisfied as to that.
In terms of this observation, it goes a little further than the Banking Committee would be comfortable with because we don’t understand fully whether or not that is the state of play today. This is what we heard: “You didn’t help us get to a full understanding of it, so this is what we feel needs to be done.”
That is the background to that. Consequently, this observation is not particularly helpful to the issue. That’s the background.
Senator Marshall: When you were talking, before you got to the part where you said that this one goes too far, I was going to ask if you think it goes far enough.
Senator D. Black: The problem is, Senator Marshall, we don’t know. We had an extraordinarily impressive panel of privacy officers of the banks. I think you were there, Senator Eaton.
Senator Eaton: They’re very good at giving talking points and smoothing the PR thing. I guess I would ask both of you, when you say, senator, to ensure the safety and protection of the private information of the bank’s clientele, once they have sold the information to the fintech company — and maybe I’m misunderstanding it — how can the banks assure that the fintech company will not leak it out here and there? How can the banks make sure that the fintech company is as entirely reliable as they are?
The Chair: Senator Eaton, any additional comments?
Senator Eaton: No, but I was listening to Senator Moncion, who says that they cannot be sure of what the fintech company will do with our privacy information. I was going to ask you, additionally, senator, we all get things on our phones, from Rogers or Google, saying,“ Do you agree to do this?” And people say yes because they want to get to the next thing.
When you sit down and open a bank account, is the first thing the bank manager says to you, “Now, Mrs. Eaton, do you mind if we share or sell your information?” Or is it somewhere way down in the contract in a dark little space under your signature, where I would go, “Who wants to read that?” Do you know what I’m saying?
The Chair: For the information and benefit of all senators, I will be asking the officials waiting to be called to give further details and explanations.
Senator Neufeld: I had the same question that Senator Eaton had — so I’m not going to repeat it — about Senator Moncion’s observation.
Second, Banking did the study. We have an observation from them that will be included with the bill, as I understand. We didn’t do the study as the Finance Committee. So why wouldn’t we just accept those observations from the committee that actually did the study and not try to pile another new one on it at this committee? We didn’t do the study. I think that the observations we have now from the committees that did all the work are sufficient observations that should go with the bill, and we shouldn’t be writing up more observations now to add to what committees have already done. That’s my point of view.
The Chair: That’s a comment. Senator Andreychuk, did you have a comment on the subject matter of the observation put forward by Senator Moncion?
Senator Andreychuk: I hope so. You’ll rule me out of order if not.
The observation itself technically almost reads like an amendment. If that’s the case, I think that would be something for the chamber.
We did a pre-study. We had an opportunity to do the report together. This was not raised in this forum at that time as an observation. I feel uncomfortable doing it now because, if we put this one in, I have a few others I’d like. We’re reopening our own report and the committee, so I have difficulty with that. As I say, I’m not sure it belongs as a privacy issue and a Privacy Act change or elsewhere.
You’ve asked for the officials. I’m not sure why you’ve asked the officials. This is an issue that we’re struggling with. I’m not sure that we’re going to reopen by asking the officials to give us their interpretation of this, when the Banking Committee has called everyone they thought and we accepted it. We didn’t call them during our study.
Our report and the bill is what it is. I want the opportunity to speak to the bill and my critique of difficulties. We’re doing it, in a way, piecemeal, and I think we should talk about the budget bill as a whole.
The Chair: Any comments from other senators?
[Translation]
Senator Moncion: I was reading the report of the Standing Senate Committee on Banking, Trade and Commerce to see what was said about that.
In the case of Equifax, information from the banks was sent to Equifax and lost. When a Canadian association was asked questions, people were unable to say who owned the relationship between the bank and Equifax. As a result, the data that belonged to specific customers, which belonged to the banks, were now in a company with which the bank had a business relationship. There’s always a grey area where people’s privileged information —
[English]
Senator D. Black: I want to respond to Senator Eaton’s very good question. At the Banking Committee, we were after the banks’ representatives, saying, “Look, how do you control the information once it leaves your world?” The answer is, of course, they don’t, but they control the relationship. And they led us to believe, and certainly their testimony was very clear, that they have very disciplined contractual relationships with all parties they deal with, and, if there is a violation, they’re cut off.
Senator Eaton: Are there penalties if there is a violation and my banking transaction history and personal information falls into hands I don’t want it to fall into? Does the bank impose a penalty? Or is it just we’re not going to sell you anything more for a while, you’re in our bad books?
Senator D. Black: The banks would have you believe that is a real penalty because they’re so significant in terms of these businesses’ business, so they cut them off and they believe that’s penalty enough. I’m not arguing one side or the other. I’m simply reporting to the committee what people have said to us.
But as Senator Moncion has pointed out, there is going to be slippage. Equifax is a perfect example. There is no one more concerned about that, again as represented to us, than the banks. Is that adequate? That’s what we’re observing to government, saying, “Figure this one out. We’re not sure it’s adequate.” But we went as far as we possibly can, and I just don’t think this observation, with respect to Senator Moncion, adds anything to the debate. That’s what I feel.
The Chair: Senator Black, you had requested witnesses from the Department of Finance?
Senator D. Black: And from OSFI. I understand people’s schedules are busy, but they were busy on three occasions. I believe it was three occasions we offered for them to visit with us. We found that extraordinarily unhelpful, and I’ve written to the minister expressing that point of view.
The Chair: I want to remind senators and the public of what I said earlier. After I had named the seven committees that did the study on the subject matter of Bill C-74, I had included that in light of the extensive work by the seven Senate committees and this committee on the subject matter of Bill C-74, we strongly encourage the government to consider and follow up on the observations we have made on the bill.
Senator D. Black: Will those observations be appended as well in Appendix A? They won’t be.
Ms. Lemay: The report is before the chamber.
The Chair: By the nature of due diligence, the report has been tabled in the house, so it is public, plus the fact that we, the Finance Committee, will be asking that they strongly follow up on the observations that we have made on the bill.
This evening, in all fairness to the process, we do have officials from the Department of Finance, the Financial Sector Legislative Renewal.
Honourable senators, as chair of the committee, I don’t see a consensus to accept the observation that was to be considered by the committee that was put forward by Senator Moncion.
Senator Eaton: Can we have a vote?
The Chair: One minute, please. If this is the case, after hearing from the chair of the Banking Committee and the observation that is written and your report that was tabled, since I don’t see consensus around the table at this point, at this point I would not consider the observation put forward by Senator Moncion. Very diligently, we said that we’re asking the government to follow up on the observations of the seven reports that were tabled in the Senate of Canada.
Senator Neufeld: I’m good with that.
The Chair: Therefore, the chair recognizes that since there is no consensus, I will not accept the motion that is put forward by Senator Moncion under observations.
Do we agree, senators, that in light of the extensive work by the seven Senate committees and this committee on the subject matter of Bill C-74, we strongly encourage the government to consider and follow up on the observations we have made on this bill?
Senator Neufeld: Agreed.
Senator Eaton: No. As a committee, and I remember on Finance, we used to have all the committees come before us and report to us and tell us their observations. I have no idea what those seven committees have put in as observations, so we are absolutely blind.
The Chair: I have been informed by the clerk about the logistics of what we did. All reports were tabled in the Senate and circulated. It was a decision of the steering committee not to have the chairs come to the Finance Committee but they would table their own report.
Senator Eaton: I disagree with accepting them because I don’t know what they are.
The Chair: So we do not vote, honourable senators, on observations. The comments made by Senator Eaton are public.
If I hear no other comments, we will then suspend to consider the next item, the second part of our agenda.
Before suspending, I will recognize Senator Moncion.
[Translation]
Senator Moncion: I want to make sure I understand correctly. If someone does not agree with the observations because they have not seen them, they will not go into the report? Is that what you are telling us?
The Chair: No. We are asking the government to take note of all the observations from the seven committees.
Senator Moncion: Okay.
The Chair: And follow up on the observations from the National Finance Committee.
Senator Moncion: Okay. I thought you said that because there was dissent —
The Chair: No.
Senator Moncion: Okay.
The Chair: If, as chair, I do not accept one of the observations, senators have the right to express their opinion publicly or privately.
[English]
Now, honourable senators, we will suspend to move on to the second item of business.
(The committee continued in camera.)