Moved second reading of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.

He said: Honourable senators, I rise at second reading to speak to Bill C-47, the government’s proposed budget implementation act, 2023, no. 1.

It has been an honour to be asked to sponsor this bill in the Senate, and I thank Senator Gold and the Deputy Prime Minister for their confidence. It has been a pleasure working with both of their teams, and I appreciate all of the support they have provided me since April, when I first agreed to sponsor the bill.

After being the sponsor of the Fall Economic Statement Implementation Act last fall, it seemed only natural that I sponsor a budget implementation act, or BIA. I figured that a 172‑page bill was not enough for me, so I agreed to sponsor this 430‑page piece of legislation.

When I accepted to be the sponsor, I had a general idea of what the bill contained. Once I was fully briefed on its contents, I felt comfortable with the subject matter and agreed with the intended objectives of these legislative changes. Once we started our pre‑study, I soon realized that I was going to have my work cut out for me.

Here we are today, nearly seven weeks since the Senate mandated eight of our committees to undertake a pre-study of certain sections of the bill and also gave the Standing Senate Committee on National Finance the authority to review the subject matter of the entire bill.

Based on my calculations, we held 39 meetings in total, and there have been 210 unique committee witness appearances, including 3 cabinet ministers. I think we have every reason to be proud of our work. We often work with tight deadlines, but senators rose to the challenge once again.

I have read the reports from our committees, and I am happy to confirm that none of the committees are calling for amendments to the bill. However, they have made meaningful observations, which I have no doubt the government will take into consideration — many of which I will refer to in my remarks today.

As honourable senators know, Bill C-47 was first introduced in the other place on April 20, and includes measures that were first announced in Budget 2023 and other previously announced budgetary measures. The bill includes four parts: The first part makes amendments to the Income Tax Act and other legislation, and includes 17 different provisions.

The second part includes GST/HST measures.

The third part brings forward amendments to excise statutes and the Air Travellers Security Charge Act.

The fourth and final part contains 39 divisions.

In total, there are more than 60 independent measures. Some of them are quite technical in nature, and others are rather inconsequential. Others have generated quite a bit of interest in the media, amongst stakeholders and in our committees.

For your benefit, I will not address each measure individually since I only have 45 minutes, which is too bad because you all know how much I do enjoy this. Rather, I will focus my remarks on some of the more substantive measures — those that have, in my opinion, generated the most interest amongst senators and witnesses.

Before I address the measures contained in the bill, it is only fair that I say a few words on the state of the Canadian economy. Some will argue that Canada is underperforming compared to our G7 and G20 counterparts. On the contrary, I would assert that Canada is in an enviable position. At a time of global economic headwinds, Canada is operating from a position of fundamental economic strength.

When Minister Freeland appeared before our National Finance Committee last week, she reminded us that:

Some 907,000 more Canadians have jobs today than before the pandemic. And at just 5%, our unemployment rate is close to an all-time low.

That number has dropped slightly to 890,000 with the new employment numbers released last Friday.

Minister Freeland went on to say that Canada had the strongest economic growth among G7 countries in 2022. Our real GDP grew by 3.1% in the first quarter of this year — the highest in the G7 — and Canada has both the lowest deficit-to-GDP ratio and the lowest net debt-to-GDP ratio in the G7.

Honourable senators, Canada’s economy is faring quite well. In fact, I would even argue that we are leading the pack in many ways, and we should be proud of that impressive track record. Of course, we could be doing better, but the situation is not as dire as some might suggest. I think we have reasons to be hopeful that things will only become better as Canada’s economy keeps rebounding with gusto after a few difficult years.

The job is never done. We must continue to work toward greater economic prosperity; create and sustain higher-paying jobs; accelerate productivity growth; increase our overall competitiveness by attracting more domestic and foreign investments; and find innovative ways of generating more wealth.

I know that the government has the same objectives. Indeed, there are many measures in Bill C-47 that hope to achieve some tangible and long-lasting positive results.

Having said that, I now wish to shift our attention to the actual measures in the bill. I will begin with the changes being proposed to the Income Tax Act which appear in Part 1 of Bill C-47.

In Part 1 of the bill, according to paragraph (b) of the summary, the government is proposing to double the deduction for tradespeople’s tools from $500 to $1,000, effective for the 2023 and subsequent taxation years. We expect this measure to cost $11 million over six years. You may recall we adopted another measure last year for the tradespeople: the Labour Mobility Deduction. Canada’s Building Trades Unions told our National Finance Committee that they support this measure which, as they stated, puts “money directly back in the pockets of the skilled tradespeople that build our country.”

In paragraph (c), the government is expanding the residential property flipping rule, which we adopted last year, by extending it to assignment sales. Exceptions will continue to apply for certain life events, such as death, disability and divorce. This measure could affect about 1,400 Canadians per year, and increase the government’s tax revenues by about $1 million annually.

The government is making changes to the Canada workers benefit, or CWB, as explained in paragraph (g) of the summary. The CWB is a refundable tax credit that supplements the earnings of low-income and modest-income workers. As it currently stands, beneficiaries claim this benefit when completing their tax return. This measure would automatically issue quarterly advance payments of the CWB to those who qualified for the benefit in the previous year. This proposal would cost an estimated $4 billion over six years, including $68 million in administrative costs.

The government hopes to raise $635 million over five years with its new measure on hedging and short selling by Canadian financial institutions, as stated in paragraph (m) of the summary. This measure was proposed in Budget 2022 and seeks to make the tax system fair. The government is concerned that certain financial institution groups are engaging in aggressive tax planning arrangements, whereby a dividend received deduction is claimed in circumstances giving rise to an unintended tax benefit.

I thought I would also address paragraph (p) of the summary of Part 1 since we adopted Bill C-228 in April. In this section, the government will give defined benefit registered pension plans the ability to borrow additional money up to 20% of the plan’s assets. Plan administrators must continue to comply with the provisions of federal or provincial benefit standards legislation — which ensure that pension funds are administered with a duty of care, that investments are made in a reasonable and prudent manner and that the plan is funded in accordance with prescribed funding standards. However, this change will give greater flexibility for administrators in their investment and liquidity strategies.

I appreciate that I’m only scratching the surface here, but those were 5 of 17 measures in Part 1 that amend the Income Tax Act.

I’ll now move on to Part 2, which includes four GST/HST measures.

The first measure clarifies the GST/HST treatment of cryptoasset mining by providing that where a person performs mining activities — either solo or as part of a mining pool in which the miners share rewards — that person would not be required to collect tax on the provision of their mining services, and would also not be entitled to recover the GST/HST paid on inputs to those mining services.

For instance, the Digital Asset Mining Coalition appeared before our Banking Committee and National Finance Committee, and argued that this measure may have some unintended consequences and make Canadian computing companies less competitive in the international marketplace. They are calling for an exception to the GST changes being proposed to clearly state that if a Canadian company supplies its computing power to a mining pool operator who is a non-resident of Canada, the ordinary GST rules apply to them.

In our report, senators on the Banking Committee wrote:

The committee is concerned that despite the consultations held by the Department of Finance Canada in 2022 on this topic, there is still ambiguity that arises on its implementation. The committee suggests that the department consult again with stakeholders, in particular to address concerns of the Digital Asset Mining Coalition.

Minister Freeland told our National Finance Committee that:

Computing service companies and their representatives have been consistently assured by the Department of Finance that the proposed measures will not jeopardize the input tax credits to which they may be entitled per the ordinary application of the GST/HST rules where these companies are selling computer services for a fixed price — and not sharing in mining rewards received by mining pool operators.

In Part 2, the government is also proposing to clarify that payment card clearing services are subject to GST/HST. This measure is in response to a recent court decision that found that GST/HST does not apply to these types of services. It has always been understood that these services were subject to tax. The proposal being considered here is to clarify and restore the long‑standing policy that payment card clearing services are administrative in nature and, therefore, excluded from the GST/HST definition of “financial services.”

Of all the meetings I attended at our National Finance Committee and Banking Committee, I think this is the one measure that might have generated the most interest and, dare I say, the most head-scratching. Admittedly, I am also concerned about the retroactive application of the measure, but I understand the government’s rationale.

The government contends that the retroactivity of the measure is to protect GST/HST revenues, and to ensure that the court’s decision does not result in payment card issuers, such as banks who purchase these services, receiving windfall gains. The retroactivity likewise protects the providers of these services who correctly claimed input tax credits in the past and were at risk of losing them. The government expects this measure to prevent windfall gains of $195 million. I have no doubt that we will hear about this issue from other senators.

Moving on to Part 3 of the bill, this section only contains two measures. Division 1 will temporarily cap the inflation adjustment for excise duties on beer, spirits and wine at 2%, for one year only, as of April 1, 2023. As you know, alcohol excise duties are automatically indexed to total Consumer Price Index inflation on April 1 of each year. We know industry lobbied the government for this change, and the restaurant and tourism industries certainly welcome this tax freeze. You may also recall that when the indexation mechanism tax was introduced in 2017, the budget implementation act at the time was amended in the Senate to remove it but that was ultimately rejected by the House. I wasn’t a senator at the time, but it turns out the Senate may have been right five years ago.

The government is also increasing the air travellers security charge, or ATSC, by 32.85%. This is the charge paid by passengers when purchasing airline tickets that goes towards financing the costs of Canada’s air travel security system, including the Canadian Air Transport Security Authority. The last time the ATSC increased was in 2010, when it rose by 52.4%. The government estimates that the charge on a return trip within Canada would increase from $14.96 to $19.87. The government expects this measure to raise $1.25 billion in revenue over the next five years. This measure will apply as of May 1, 2024.

I would now like to take some time to address Part 4 of Bill C-47, which includes 39 divisions, 36 of which have been sent to eight Senate committees for their review, either in whole or in part. I want to thank them for the important work they did. Your reports have been very helpful for me in my role as sponsor.

Once again, for the sake of time and my own sanity, and perhaps even yours, I will not address every single division in Part 4. I will focus on those I feel are most important and have generated the most interest among our colleagues.

In Division 1, the government is amending the Bank Act to provide for the establishment of a single, non-profit external complaints body to ensure Canadians have access to a fair and impartial process to address unresolved complaints with their banks. Right now, there are two bodies, and banks can choose which one they refer complaints to.

The government aims to select the new body later this year upon recommendation of the Commissioner of the Financial Consumer Agency of Canada following a selection process led by the FCAC. Witnesses before the Banking Committee welcomed the creation of this new entity. I also believe it’s a good idea.

In our report, our committee agrees that:

 . . . switching to a single external complaints body is beneficial for consumers, but suggests that a deadline, such as one year after Royal Assent of the bill, be considered for the designation of the external complaints body . . . .

We also call for the Financial Consumer Agency of Canada:

. . . to use its powers to ensure that it is held to the highest standard of transparency and accountability and that it is fair for all parties.

Through Division 5, the government is indefinitely withdrawing the preferential Most-Favoured-Nation Tariff treatment for Russia and Belarus. This is not a controversial measure or one that has attracted much attention, but I think it’s worth mentioning in light of the ongoing conflict in Ukraine. This measure achieves the policy objective of incentivizing importers to source away from Russian and Belarusian imports. It is worth noting that Canada was the first country in March 2022 to revoke Russian and Belarusian eligibility for Most‑Favoured‑Nation status. Many other nations have since followed suit.

In Division 6, changes are being brought to the Bank of Canada Act. As you may recall, in response to the financial market stress arising from the pandemic, the bank introduced the Government of Canada Bond Purchase Program, or GBPP, Canada’s first quantitative easing program. As a result of interest rate increases, the bank is now incurring net interest losses. According to the act, the bank must remit any surpluses or profits it generates to the government. The changes will allow the bank to retain future profits until such time as the bank’s GBPP losses are covered, which will help it exit negative equity. Australia did the same.

The next division I want to address is one I feel is quite timely. In Division 7 of Part 4, the government is establishing the Canada innovation corporation, known as the CIC. The mandate of this new Crown corporation will be to maximize Canadian business investments in research and development across all economic sectors and regions of Canada and to promote innovation-based economic growth, including working with businesses to promote the creation and retention of intangible assets in Canada. Prior to introducing the legislation, the government consulted broadly with stakeholders in the summer and fall of 2022.

The CIC will be run by private-sector experts and operate at the speed of business. The corporation will be funded through an annual statutory transfer, giving it some consistency and operational stability and the ability to establish long-lasting partnerships with the private sector. Its initial budget will be $2.6 billion over four years.

The Banking Committee reviewed this section of the bill. In my assessment of our deliberations in committee, I feel senators, including myself, want to make sure the new corporation will not repeat the mistakes of the Infrastructure Bank, which was slow to take off. As such, we suggested in our report that the government conduct an evaluation of the CIC three years after its establishment to determine whether it has been successful in meeting its mandate and to publish the results of this in-depth evaluation in its annual report.

There are four divisions in Part 4 of the bill that relate to Canada’s immigration and citizenship policies and programs.

For example, Division 17 proposes to amend the Immigration and Refugee Protection Act to enable the minister to issue instructions to cap the number of privately sponsored refugee applications submitted by Groups of Five and a Community Sponsor.

Not having these caps in place has led to a growing application inventory and longer processing times. The government feels this measure will provide refugees and their sponsors with shorter, more predictable processing times.

The Social Affairs Committee is worried that imposing a cap on privately sponsored refugee applications as a backlog management strategy:

 . . . may have the effect of excluding some of the most vulnerable people in dangerous and high-risk situations from seeking the protection of Canada.

Division 19 will make amendments to the Citizenship Act with the overall objective of improving client service. If adopted, IRCC — Immigration, Refugees and Citizenship Canada — would be able to electronically administer and enforce the citizenship program, require online applications and services and collect and use biometric information to confirm, quickly and reliably, the identity of clients and screen for criminality. The hope is that these changes will help IRCC deliver a program that is more efficient and better meets the needs of newcomers by leveraging new technologies for expedited processing. With these changes, online applications will become standard, automation and machine-assisted decision-making tools will be used to process applications faster and fingerprints and digital photos will be collected from clients.

In its report, the Social Affairs Committee voiced some concerns regarding the use of automated and machine-assisted processing. It wrote:

Bias in artificial intelligence, automation and other machine‑assistance tools has been well documented, especially against racialized people and other vulnerable populations. . . . your committee is concerned that these tools and their sorting decisions could influence the final decisions made by officials.

The committee is calling on the government to create and implement safeguards around the use of machine-assisted decision-making tools in this program in order to avoid negatively influencing application decisions with bias. I think that is a very sound and thoughtful observation, which I completely agree with.

Several changes are being proposed to the Canada Transportation Act to enhance the sharing of information between the Government of Canada and entities involved in transportation supply chains.

In addition, Division 22 proposes to increase the interswitching limit for rail from 30 kilometres to 160 kilometres in Alberta, Saskatchewan and Manitoba on a temporary basis with the goal of enhancing competitive dynamics and providing shippers with alternatives for rates and service.

This is a new pilot project, one that builds on a similar pilot that took place between 2014 and 2017 and responds directly to a recommendation of the Final Report of The National Supply Chain Task Force 2022.

Rail companies question the value of this measure and oppose it on the basis that it may have an impact on the competitiveness of our railways with American railways. It’s a valid argument and one that I appreciate, but we must also keep in mind that this pilot project is limited to the Prairie provinces and seeks to gather data to assess the value of extending interswitching. On the other hand, representatives from the Canadian Canola Growers Association, who represent 43,000 farmers, welcome this amendment, and told us in committee that “the beneficiaries of the system would also be mining, fertilizer, forestry and consumer goods.” Our Transport and Communications Committee also reported that briefs submitted by rail transport stakeholders suggest that there is not a consensus on the extended interswitching provisions.

Division 23 is one that has many people talking, and I thank our Transport and Communications Committee for the work it conducted on the proposed amendments to the Canada Transportation Act to strengthen air passenger rights, streamline the process of administering air travel complaints and shift some of the financial burden from government to industry.

The overarching goal of these changes is to enable the Canadian Transportation Agency to carry out its mandate more efficiently and allow it to offset the costs of administering the air passenger rights regime through appropriate cost recovery from the industry.

These changes are in response to the challenges we witnessed with airlines and airports last year. There are many provisions in this section, but perhaps the most important one is the overhaul of the current dispute resolution process of passenger complaints.

The government explains that air passenger rights will improve because these amendments would simplify and strengthen the system by removing the complexity and ambiguity of the regime. This will be achieved by making compensation the default for delays and cancellations unless it is due to an exception that will be prescribed by regulations. This is where some stakeholders within the air travel ecosystem have expressed some reservations.

For instance, the National Airlines Council of Canada appeared before our National Finance Committee last week and called for adherence to safety to be the primary guiding principle when defining the exemptions that airlines can claim from paying compensation over and above refund and duty of care. In a written submission, NAV CANADA also asks that:

. . . safety-driven decisions resulting in delays and/or cancellations by any player in the system — including airlines — should continue to be protected from compensation requirements.

I have no doubt safety will always be the number one priority for the government, and officials confirmed this before our committee last week.

Another issue the National Airlines Council of Canada raised was the sharing of responsibility and accountability among all entities in the air travel ecosystem, while NAV CANADA seeks to be exempted from any assignation of financial responsibility for refunds or compensation. Clearly, a lot needs to be ironed out in the regulatory process, and I trust Transport Canada will consult adequately and seek industry feedback on these proposals.

Our National Security and Defence Committee looked at Division 24, which seeks to amend the Customs Act and enact some of the priorities of the Canada Border Services Agency, or CBSA, with respect to the Traveller Modernization initiative. The goal is to enable faster border processing and improve the border experience for travellers entering Canada by, among other things, offering more automated, self-service options and streamlining identity verification.

I note the observation made by the committee that it “supports the principle of using technology to help process travellers entering Canada,” noting that the results “could be an improved traveller experience and better prioritization of CBSA resources.” Witnesses before the committee did offer some comments on four issues of general concern, namely, privacy considerations; the differential impacts on various groups of travellers; border security in general; and consultations with the CBSA officers’ union.

The changes being proposed to the natural health products in Division 27 are in response to the Commissioner of the Environment and Sustainable Development who found gaps in the oversight of natural health products. The government’s proposed legislative amendments to the Food and Drugs Act would extend the definition of “therapeutic product” in the act to include natural health products. This will improve Health Canada’s ability to collect information and take quick and appropriate action when a serious health risk is identified.

The natural health product sector is not pleased with these changes, but as the government explains Health Canada has seen evidence of industry non-compliance with the Natural Health Products Regulations, resulting in health and safety risks. This is occurring at a time when Canadians are using these products more frequently.

For example, the Canadian Health Food Association advances that Health Canada did not properly engage with stakeholders and feel these changes are being rushed, although they remain hopeful there will be an opportunity for meaningful stakeholder engagement during the regulatory process. As they put forward, a proper consultative approach ensures that decisions regarding regulations for natural health products are well-informed, balanced and in the best interest of Canadians.

I am confident the government agrees, and that Health Canada will engage adequately and fairly.

In Division 28, the government is proposing to ban the testing of cosmetics on animals in Canada, prohibit false or misleading labelling pertaining to the testing of cosmetics on animals and prohibit the sale of cosmetics that rely on animal testing data to establish the product’s safety, with certain exceptions. These exceptions will ensure that existing cosmetic products remain on the market and that the proposed ban would not interfere with other legislative regimes in Canada where animal testing is still needed to demonstrate safety.

Health Canada’s ban is modelled on the European Union’s ban. Canada would join 41 other countries in enacting this measure. I’m sure our former colleague Senator Stewart Olsen would welcome this measure as she had been a vocal advocate for animal rights and introduced a bill to prohibit cosmetic animal testing some time ago.

Division 30 is worth mentioning because it introduces a reasonable grounds to suspect standard to the Canada Post Corporation Act to address a Supreme Court of Newfoundland and Labrador decision. It also gives me an opportunity to refer to the report from our Legal Committee. I would like to read an excerpt from the report:

The committee notes that the restrictions on the ability to open mail are stricter for Canada Post than other private carriers operating in Canada . . . these rules prevent police from searching and seizing any letter or nonletter mail that is in the care of Canada Post.

The report goes on to say that the proposed changes in the budget implementation act do not address the issue of trafficked contraband, particularly fentanyl, using letter mail through Canada Post, and senators are calling on Parliament and the Government of Canada to give urgent attention to addressing these concerns. I know one senator who might already have a solution to this issue.

Division 31 will amend the Royal Style and Titles Act and give our new king a different Canadian title than his mother had. Unlike Queen Elizabeth, King Charles’s royal title in Canada will have no reference to the United Kingdom and no reference to his role as defender of the faith.

Division 32 is one I am quite interested in, which deals with the Canada Growth Fund. Our National Finance Committee looked at the Canada Growth Fund last fall as part of the Fall Economic Statement Implementation Act, Bill C-32. Many questions that were left unanswered at the time are now being addressed. The big novelty is that the government has decided to entrust the Public Sector Pension Investment Board, or PSP, with the management of the assets of the Canada Growth Fund and to deliver on the fund’s mandate of attracting private capital in Canada’s clean economy.

Division 32 will also increase the amount that the Minister of Finance may requisition out of the Consolidated Revenue Fund to acquire shares of the Canada Growth Fund, up to $15 billion in total. It’s worth mentioning that the fund will be independent from the government.

The Canada Growth Fund will use investment instruments that absorb certain risks in order to catalyze private investments in low-carbon projects, technologies, companies and supply chains. PSP was chosen so the Canada Growth Fund will be able to move quickly and begin making investments in the near term.

In response to my question during our National Finance Committee, the Minister of Finance explained that to provide concessional financing properly for the green transition to happen at the speed and scale that is necessary, we need investment professionals. As she put it:

That is, people who have a long background doing this and who do it every day. . . . That is why PSP, which makes professional investments every day, has been charged with this responsibility.

She went on to say that with having PSP manage the fund:

. . . the people of Canada and the Government of Canada will have access to truly world-class, professional investors, putting our money to work.

When I spoke to Bill C-19, the Budget Implementation Act, 2022, in June of last year, I explained how it’s so much easier to distribute wealth than attract and create wealth. I called on the government to come up with a plan to address our lacklustre productivity and growth performance. Twelve months later, I feel the Canada Growth Fund, along with the Canada Innovation Corporation, are part of solutions to this problem.

I appreciate the government is making these targeted investments. If properly managed, these billions of dollars that will be injected into our economy have the serious potential of stimulating growth, increasing business productivity, improving our competitiveness and helping us transition to a net-zero economy. I am hopeful these two entities will work with all relevant partners in ensuring their success.

Moving on to Division 34 — which, I’m sure, Senator Ringuette was happy to see included in the budget implementation act. This division will lower the criminal rate of interest from the current 60% effective annual rate to 35% annual percentage rate. By lowering the criminal rate of interest, Canadians who use high-cost credit products will face lower interest charges.

As our Legal Committee advances in its report:

. . . having a clear and consistent criminal rate of interest that is set at a reasonable level to protect Canadians from unfair or otherwise problematic lending practices —

— is of the utmost importance, particularly because economically marginalized individuals must often resort to these lenders “. . . and are likely to remain trapped in cycles of debt.”

With Division 35, the government is supporting seasonal Employment Insurance claimants by investing approximately $147 million over three years to extend the current temporary rules that provide up to five additional weeks of EI regular benefits, for a maximum of 45 weeks. This measure, available in 13 targeted EI regions, is being extended to October 26, 2024.

This temporary policy was first introduced in 2018 and has been extended ever since. Senators on the Social Affairs Committee are looking forward “to the development of a more permanent solution.” About 60,000 workers are expected to benefit from this extension.

Division 37 amends the Canada Deposit Insurance Corporation Act to authorize the Minister of Finance to increase the deposit insurance coverage limit until April 30, 2024. A similar authority was granted to the minister during the pandemic, which was never used but is being sought again considering the recent developments in the global financial sector.

Some have argued that this measure sends the message that our banking sector is unstable. Rest assured, colleagues, our banks are healthy and stable. This is only a precautionary and temporary authority just in case something would happen.

As officials told our Banking Committee:

Canada’s banks are very well regulated, they are resilient, they are robust, but there has been some turmoil in the U.S., and the minister thought it would be prudent to have a temporary measure put in place.

The government feels this measure is necessary to provide consumer confidence in the banking system, and I would offer that the authority would likely not be used.

The last division I wish to address is Division 39, which proposes to establish a uniform national regime in relation to the use, collection, disclosure and retention of personal information of federal political parties by amending the Canada Elections Act. It’s worth noting that political parties already have privacy policies in place that include six specific elements.

When the Chief Electoral Officer appeared before the Legal Committee, he indicated that these new requirements improve transparency about the handling of personal information held by political parties, but the legislation does not impose any minimum standards, nor does it provide any oversight mechanisms to verify whether parties are complying with their policies or any sanctions for non-compliance.

In its report, the committee reminds us, “The amendment creates a framework for a potential future regime. It does not actually establish any such regime.”

I appreciate some may feel the division is not robust enough and does not go far enough, fast enough. So I would urge the government to make this a priority and not delay any further. I expect we might hear something about it from our colleagues.

In conclusion, honourable senators, these were, in a nutshell, some of the measures contained in Bill C-47. As I indicated at the outset, limited speaking time only allowed me to scratch the surface of the bill’s content — and I am content to have scratched the surface of the bill’s content. Forty-five minutes of speaking takes a toll on you, too. I am sure most of you are disappointed I was only able to address about half of the measures in the bill, but I trust you have read all 430 pages of the bill and feel adequately informed and well equipped to vote in favour of Bill C-47.

Before I wrap up, I wish to make two final points. First, as you may know, the bill was amended in the other place. Of note, you will recall that the two main provisions contained in Bill C-46, which we adopted last month, were also included in Bill C-47. These two measures — the $2-billion health transfer to the provinces and territories and the $2.5 billion for the one-time increase to the GST credit, also known as the Grocery Rebate — have effectively been removed from the BIA through coordinating amendments.

Second, I also wish to convey my disappointment once again in the nature and size of budget bills. I’m sure many senators will agree with me that non-budgetary measures should not appear in budget implementation acts. In fact, through their Bill C-47 pre‑study reports, committees have voiced similar frustrations.

As the Transport and Communications Committee wrote:

Having no clear connection to the government budgetary policy, the committee hopes that, in the future, such content —

— meaning changes such as those included in Divisions 22 and 23 —

— would be introduced in separate legislation.

Our Legal Committee feels the same way and emphasized that “amendments to criminal laws should be introduced in a separate bill to allow for thorough study.”

I appreciate this is a long-standing practice, and this is a recurring theme we hear year after year, but omnibus bills are not optimal. Some measures, like the new act to create the Canada innovation corporation or the changes to the air passenger complaints process or the amendments to the Citizenship Act probably deserve their own legislation. Nevertheless, I still think our committees did outstanding work and properly examined the subject matter of the bill. They heard the concerns of many affected stakeholders and received dozens of written briefs.

Thank you once again for the excellent work.

In closing, honourable senators, Bill C-47 is a good bill. As an independent senator with no ties to the governing party —

 — it has been an honour to sponsor this bill in the Senate. Is the bill perfect?

Of course not. No bill is ever perfect, perhaps with the exception of the one I’m sponsoring, Bill S-259, the bill on the Hellenic heritage month. That might be perfect — just kidding.

But I do feel the government has put forward a series of amendments and new measures that will benefit Canadians as well as many different sectors of our economy, and they send a strong signal that we are on the right path towards more growth and greater economic outcomes and positive social changes.

I would humbly urge all senators to vote in favour of sending Bill C-47 to the National Finance Committee today, so we can undertake the clause-by-clause consideration of the bill. Thank you.

I see two senators standing with questions. I’ll start with Senator Gignac and then Senator Batters. Will Senator Loffreda take a question?

Yes, with pleasure.

Senator Loffreda, thank you for agreeing to answer the question. Congratulations on the leadership that you’ve shown as the sponsor of this bill.

I learned that it is complicated to request an amendment to a bill, especially a budget implementation bill. That has happened only three times since 2009. I got the message that I wouldn’t be moving any amendments to the budget implementation act.

However, I’d like to ask you about clauses 114 to 116 of the bill. You referred to the threshold for the application of the GST and the payment card compensation services. For those senators who are listening, it is important to understand that the federal government lost its case before the Federal Court of Appeal in January 2021, because, basically, these payment cards aren’t taxable and are considered non-taxable since they are financial services. However, the government is claiming that they are actually administrative services.

Are you comfortable with including an observation at the end of our report stating that it is completely unacceptable for the federal government to have waited 26 months after losing its appeal to introduce a measure in the budget? What’s more, this measure is retroactive and could go back as far as 1991. How comfortable are you with that and would you at least agree to let the committee present an observation?

Thank you for the question, Senator Gignac. As you know, we’re both members of the committee and have debated this issue there many times. The committee heard from Department of Finance officials, who told us that this measure shouldn’t come as a surprise to the banks. They told us retroactivity is perfectly reasonable, in their opinion, and something the banks should expect because it was never acceptable as such. I have a great deal of confidence in our Department of Finance and our National Finance Committee. I agree to adding an observation because it’s an observation, as such.

Legislating 26 months after a court decision is a delay that should not be acceptable. Going retroactively is a concern. The independence of our judicial system is also a concern. I trust the finance officials who appeared before our committee and explained that it should not be a surprise to the banks and that it was discussed with the banks that this was not permissible. We are discussing a windfall of $195 million to the banks. I think a strong observation will be well accepted. Going forward, I think this will be in discussion with the government. I am looking forward to your observation.

Thank you for your question, Senator Gignac.

Senator Loffreda, in your remarks you briefly mentioned the Canada Infrastructure Bank and said how that was a lesson to be learned from as you referred to the Infrastructure Bank as being “slow to get off the ground.”

The last I heard, this particular Infrastructure Bank had spent $35 billion and did not yet have one project completed. Do you have information that is different than that?

I mentioned it as part of the budget implementation act, or BIA, to not repeat those errors that have happened with respect to the Infrastructure Bank. But the Infrastructure Bank is not part of this BIA, as you know. At times it is not easy to start a corporation. A start-up is never easy. It takes a lot of effort, resources and the right people in place. I am confident that, with the Canada innovation corporation, we’ll get the right people and resources in place. We saw with the Canada Growth Fund that the right measures have been taken and going forward it will help the economy.

With respect to the Infrastructure Bank, I don’t think it’s relevant in our discussion here, but you could ask the government that question in one of your questions during Question Period and they will have the up-to-date information. I’m certain that they do have that up-to-date information. But I want to keep it relevant to the BIA, and not everything in the budget makes it to the BIA. I’m willing to answer economic questions if there are any. But I will leave the Infrastructure Bank up to the government to respond to that issue.

I wanted to follow up, Senator Loffreda, on the ATSC, the air travellers security charge for safety and security put on passengers. It is going up by 33%. This is paid for exclusively by the flying public. You said that it would generate $1.25 billion a year. That funding is supposed to be recycled back into the system for security and upgrades, but I am told that it goes back into general government coffers for spending on a wide range of things. Do you have any further information on that? Again, it is one of these circumstances where, because it is a separate bill, we did not have time to look at it.

Senator Loffreda, your time is up. Are you asking for five more minutes?

Yes.

Is leave granted, honourable senators?

Thank you for the question, Senator Wallin. Our committees did look at that issue. I think everything pretty much goes into the general coffers, but I will get back to you with a clear answer on that issue and get back to our committee that reviewed that portion of the bill.

I noticed that you only noted in passing the fact that the Legal Committee in our report made significant observations stating how concerning we found it that major criminal law sections were included in a 430-page budget implementation act rather than in stand-alone bills. Those included a couple of the sections that you mentioned.

One part that you didn’t note was the digital asset section dealing with changes to the Criminal Code. Our Legal Committee didn’t even have time to hear any evidence about that part. Would you agree that is a concerning thing, and that these types of criminal law changes should be dealt with in stand-alone bills rather than in a 430-page budget implementation act?

Thank you. As I said, no bill is perfect. It is common practice now to have omnibus bills. I think, yes, certain measures should be dealt with in separate bills. I mentioned a few of the ones which could have been dealt with separately. That is one, maybe, that should have been dealt with separately. As I said, no bill is perfect, but this is a good bill. It will support Canadians and help our economy going forward. I thank you for your question.

Honourable senators, I also rise to speak to Bill C-47, the budget implementation act. I would like to thank Senator Loffreda for his comments and also for going through the bill because I won’t have to do that now. I can talk about the economy and government’s fiscal position and Canadians.

Canadians are facing many challenges in these difficult times. Inflation has increased, making the cost of living more expensive. While inflation had begun to decelerate after peaking at 8.1% in June of 2022 and falling to 4.3% in March of this year, it increased again in April to 4.4%. This does not mean that prices are coming down. It just means that prices aren’t going up as fast. However, food prices remain high, affecting all Canadians. In fact, inflation on food remains elevated at 8.3% as of April of this year.

To cope with the increasing cost of living, many Canadians have reduced their food consumption. They have changed their eating habits and those of their families. Some Canadians are using their credit cards to pay for food. The CEO of Canada’s largest food bank, located in Toronto, said at a recent meeting of the House of Commons Finance Committee that there were 60,000 client visits every month before the pandemic, which increased to 120,000 visits during the pandemic and to 270,000 visits during the month of March.

Second Harvest, the national service that rescues surplus edible food that businesses cannot use and distributes it through a network to people who need it, surveyed 1,300 non-profits in December of last year to understand how food charity is likely to change in 2023. Their survey indicated that 2 million people were served monthly across Canada pre-COVID. That increased to 5 million people in 2022, and it is expected that 8 million people will be using these charities in 2023, which represents 20% of the population of Canada. In other words, one in five Canadians are expected to access food banks or other food‑related programs this year. It is certainly a sobering statistic.

If the government thinks the economy is doing so well, it should speak to some of the millions of Canadians lined up at food banks if they truly want to know how the economy is doing.

Rents have also increased significantly in most cities and towns across the country. A Canadian Press article in April of this year reported that rents in Canada increased over 10% between March of last year and March of this year, bringing the average rent to over $2,000. Renting was most expensive in Vancouver, where a one-bedroom apartment was $2,743, an increase of 17% from last year. Toronto was less expensive than Vancouver, where a one-bedroom was $2,506, an increase of 19% from last year. According to the 2021 Census, almost 5 million households in Canada are renting, so increasing rental costs are affecting a significant portion of the Canadian population.

To help with the increasing cost of groceries and rent, the government has provided some financial assistance. For example, Bill C-46 provided financial assistance to some families to help with the cost of groceries based on the GST rebate program. However, as the CEO of the Daily Bread Food Bank said at a recent House of Commons Finance Committee meeting, “. . . the benefit is helpful . . .” but it “. . . will not shorten the lineups outside of food banks . . . .”

The CEO of The Mississauga Food Bank also said that any additional money is good, “but . . . will not make a significant difference beyond the week or month when it’s received.”

The Grocery Rebate was based on the GST rebate. This assistance was provided to 11 million beneficiaries referenced by government as low and modest income. That equates to 30% of our population receiving financial assistance to buy food. This is in addition to the support provided by the food banks.

Bill C-31, which was passed last year, provided $500 to individuals who rent and meet the program criteria. Government estimated that 1.8 million renters would qualify for the financial assistance at an estimated cost of $1.2 billion. Since there are almost 5 million households renting, 36% of renters received financial assistance under this program, another sobering statistic.

When the Associate Deputy Minister of Finance appeared at our National Finance Committee, I asked him how the government knows that the GST rebate for groceries actually reaches those most in need. The same could be asked for the rental rebate program and all of the programs providing financial assistance to certain segments of the Canadian population. Given the myriad of financial assistance programs to help Canadians with living and other expenses, government needs to evaluate these programs to ensure that the money actually goes to help those who need it most.

The Bank of Canada, in its attempt to control inflation, began to raise interest rates in March 2022, which created further problems. Over the past year, the Bank of Canada has increased its benchmark interest rate from 0.25% to 4.75%, the highest it has been since 2001. That was a generation ago. Since Canadians are highly indebted, this has had a significant impact on their mortgages and other household debts. Unlike Canadians who rent, those with mortgages receive no financial help from the government. The cost of carrying a mortgage increased significantly; Statistics Canada reported that mortgage interest costs rose by 26%.

Many Canadians with mortgages are finding it increasingly difficult to pay the increasing costs of their mortgages. Many are extending the length of their mortgages, while others are adding increasing interest costs to their mortgage balances.

In its fourth-quarter financial results released on May 4 of this year, the Canada Mortgage and Housing Corporation, or CMHC, reported that a growing share of its mortgage insurance program is covering homes that are close to or “under water,” as the recent drop in home prices has eroded the borrowers’ equity. The term “under water” is used when the value of the home is less than the outstanding mortgage, so the value of their mortgage is higher than the value of their home. In the fourth quarter of last year, $2.3 billion of CMHC’s insured mortgages, or 1.2% of its portfolio, were at a loan-to-value ratio above 95%, but this year, that $2.3 billion has increased to $10 billion, or 5.8% of its portfolio.

That is significant because it demonstrates the financial stress of Canadians, but it is also concerning because this government is backing the insurance on those mortgages. The two private-sector institutions that also provide mortgage insurance show similar results. Canada Guaranty Mortgage Insurance Company reported that 5% of its outstanding insured mortgages, or almost $4 billion worth, are mortgages that exceed the value of the home. Compare that $4 billion this year to $532 million last year, which was less than 1% of its portfolio.

Sagen MI Canada Inc. reported that $14 billion, or 10%, of its outstanding insured mortgages exceed the value of the home insured. This has increased since last year, when $7 billion, or 5%, of its insured mortgages exceeded the value of the home. So it has actually doubled in a year.

Increasing interest rates are not over yet. Last week, the Bank of Canada increased its interest rate from 4.5% to 4.75% and indicated there will be further increases. Last month’s inflation report suggests that inflation may be reaccelerating, which will add further pressures on the economy and on Canadians.

The Bank of Canada’s Governor Macklem and former governor Mark Carney told the Senate Banking Committee last fall that inflation in Canada is domestically generated and reflects what is happening in Canada.

Carleton University business professor Ian Lee, in a recent interview with The Hill Times, said that the Bank of Canada is cooling the economy with rate increases, but the government is turning around, putting money into the economy. He said that even if it denies that it’s stimulus, any deficit is stimulative. Economist Don Drummond, a former Associate Deputy Minister of Finance and Chief Economist at the TD Bank, agreed that the deficit spending of the government is “absolutely” behind this increase in inflation.

Several months ago, Canadians were told that interest rates would start decreasing in the summer. Then it was said they would decrease in December, and then it was said they would decrease in the spring. Those interest rates, even higher rates, might be with us for a long time yet.

Last month, the Bank of Canada released its annual Financial System Review, indicating that higher interest rates are exposing vulnerabilities in the global financial system. While the bank reminds us that Canadian banks remain robust, it also said that they are not immune to international developments. The bank concluded that it is “. . . more concerned than it was last year about the ability of households to service their debt.” They said:

More households are expected to face financial pressure in the coming years as their mortgages are renewed. The decline in house prices has also reduced homeowner equity, and some signs of financial stress—particularly among recent homebuyers—are beginning to appear.

The bank, in its review, also said that:

The share of households affected by higher interest rates will continue to rise over the next few years as homeowners renew their mortgages.

One third of mortgages have had their payments increase so far, and this year, that will rise to nearly all mortgages over the next three years.

In addition, homebuyers have increased their reliance on credit card debt. In its Financial System Review, the bank goes on to say:

A large negative shock, such as a severe global recession with significant unemployment that further depresses house prices, could increase loan defaults among households. If defaults on uninsured mortgages with negative equity were to occur on a large scale, they could result in sizable credit losses for Canadian lenders —

— including Canadian banks.

The Bank of Canada says that the share of indebted households that are behind on payments for at least 60 days in any credit category is below the pre-pandemic average, but it has been increasing since mid-2022. The Governor of the Bank of Canada recently said that nobody should expect that interest rates will return to the very low levels that we have seen over the last decade or so. We should not count on near-zero interest rates seen in the first two years of the COVID-19 pandemic or in the years following the financial crisis. Interest rates will be higher than what people have gotten used to, and the transition creates some risk.

At 4.75%, the central bank’s benchmark rate is now the highest it has been since 2001. In fact, Canada has the highest level of household debt in the G7. CMHC recently told us that household debt in Canada has been rising significantly, owing to rising home prices. Mortgages currently make up about three quarters of household debt in Canada. Household debt in Canada made up 80% of the overall Canadian economy during the 2008 recession. It rose to 95% in 2020, and in 2021, it exceeds the size of the overall Canadian economy. In contrast to other G7 countries, household debt in the U.S. fell from 100% of GDP in 2008 to 75% in 2021. Household debt also dropped in the U.K. and Germany and was nearly unchanged in Italy, but in Canada, it keeps increasing.

If there is a recession or other negative economic shock, debtors might find it difficult or impossible to repay their debts.

The Deputy Chief Economist at CMHC also said that the Crown agency already sees early warning signs that more and more consumers are getting into financial trouble. A recent report from RBC Economics states that a looming recession and an unemployment rate projected to increase to 6.6% by early 2024 are likely to “tip more Canadians into loan delinquencies and insolvencies.” The report goes on to say that with pandemic-related government support measures now over and living costs soaring, mortgage delinquencies could rise by more than a third of current levels in the coming year.

Economists at Desjardins Capital Markets published a report last month, warning that high interest rates could inflict much more damage yet on the mortgage and housing market. They labelled Canada’s mortgage debt as “a ticking time bomb.” The report says the pain for mortgage holders has barely started. The bulk of mortgages taken out during the COVID-19 pandemic — when rates were low and house prices high — will be renewed in 2025 and 2026. If interest rates remain high, many households will be impacted by significant increases in their mortgage payments.

It is not only Canadians who are paying increasing interest costs. Our government is carrying a significant amount of debt — over $1.6 trillion. Higher interest rates, along with more borrowings, are increasing the government’s debt servicing cost.

The government’s debt servicing cost between 2013 and 2022 were in the range of $20 billion to $25 billion annually. However, as the government borrowed more money and interest rates began to rise, public debt charges increased. For the year that just ended in March, public debt servicing charges were $34.5 billion. The government thought that debt servicing charges this year would increase from the $34.5 billion last year to $43.9 billion, and continue increasing each year after that. By 2027-28, the budget document estimated that the government would be paying about $50 billion in debt servicing costs.

However, with the increase by the Bank of Canada last week, debt servicing costs will now increase. When the Minister of Finance appeared at the Standing Senate Committee on National Finance last week, I asked her how much our debt servicing costs will increase as a result of the increase in the bank rate. She would not disclose the amount. She said that the government would regularly update Canadians as the economic situation changes — and the government, she said, will certainly do that in the fall economic update; that will be in December. I think the minister did not want to scare us with the new numbers.

The debt servicing cost is now one of the government’s most expensive programs — exceeding the costs of the Equalization program, the Department of National Defence and the new child care program, and it is closing in on the cost of the Canada Health Transfer. In fact, if the government did not have debt servicing costs, there would be a surplus of $3.8 billion this year.

How reliable are the government’s projections on debt servicing costs? In the fall fiscal update in December 2020, the government estimated debt servicing costs would be just over $25 billion for this fiscal year.

Now, 30 months later, it is at $43.9 billion and climbing, or at least 70% more than what the government estimated a mere 30 months ago.

We know now that with the increase in the Bank of Canada’s benchmark interest rate last week, debt servicing costs will exceed the $43.9 billion disclosed in the budget. Many analysts and economists expect the bank to increase its benchmark rate again in July or September, or maybe both.

In Budget 2023, the government defends its increasing debt servicing costs by explaining that debt servicing costs are projected to rise to 1.6% of the GDP until 2024-25, and then fall to 1.5% of the GDP for the remainder of the forecast horizon or, as the government says in its budget, to “a level that is low by historical standards.” But this is not true.

Public debt charges were actually 0.9% of the GDP in 2021, 1% of the GDP in 2021-22 and 1.2% of the GDP in 2022-23, and it jumped to 1.6% this year.

There are other ways to measure the government debt servicing costs. For example, David Dodge, former governor of the Bank of Canada, in a paper published in Public Policy Forum, proposed to move away from the debt servicing costs to GDP ratio, and adopt one relating to revenue — where sustainable service costs are not to exceed 10% of annual government revenues.

But debt servicing costs as a percentage of revenues are also escalating. Just two years ago, it was 5.9% of revenues. This year, it will be 9.6%. This is just below the 10% limit advocated by the former governor of the Bank of Canada. In fact, the Parliamentary Budget Officer, in his March 23 Economic and Fiscal Outlook, calculates debt servicing costs as a percentage of tax revenues and not all revenues, in which case this year’s percentage would be 11.5% — well above the 10% advocated by Mr. Dodge.

How much faith can we place in the government’s projections of debt servicing costs when past projections have been so wrong and so low?

In any event, debt servicing costs as a percentage of revenues are also on an upward trajectory. Debt servicing costs are escalating significantly regardless of how you measure it. Parliamentarians, Canadians and, yes, even the Government of Canada should be concerned.

Honourable senators, as I mentioned before, Canadians are the most indebted of the G20 nations, and have the highest household debt in the G7, but it is not only Canadians who are carrying a high debt load. Our own government has also significantly increased our debt since 2015.

In 2015, the government debt was $665 billion. This year’s budget indicates that the government will need to borrow $63 billion this year, bringing this year’s debt to $1,319 billion. Compare the $1,319 billion this year to the $665 billion in 2015. It has almost doubled — well, it’s 98.3%. Hence, the reason for our increasing debt servicing costs is a combination of more debt and higher interest rates.

The government’s current debt ceiling is $1.831 trillion, which was increased from the original debt ceiling in December 2021 by Bill C-14. Many parliamentarians and others were alarmed by the significant increase. However, the minister tried to assure us by saying that the $1.831 trillion is the upper limit — it does not mean that the government will undertake those borrowings. But the government is getting close to the ceiling.

The debt ceiling of the $1.831 trillion includes not only the government’s borrowings, but also the debt of Crown corporations. The Parliamentary Budget Officer estimates that total borrowings are expected to be $1.622 trillion by the end of this year. Since this government has never paid down any of its debt, this is our legacy to our children and our grandchildren. We are telling them that in their future, they will be paying for the government programs that we are enjoying today.

Honourable senators, I want to talk about the Budget 2023 document because it supports Bill C-47, and also the financial projections are outlined in the Budget 2023 document.

The document that supports Bill C-47 is referenced; it is 255 pages long. It identifies new initiatives which the government intends to undertake, and provides costing information on the two new initiatives, as well as details of economic and fiscal projections. It also includes the government’s debt management strategy and a summary of the legislative measures which showed up in Bill C-47.

In 2015, the government promised modest deficits for three years, followed by a balanced budget. Specifically, it promised a $10-billion deficit for 2016-17, followed by a deficit of less than $10 billion in 2018 and a plan to balance the budget in 2019. There was also a promise to reduce the federal debt-to-GDP ratio to 27%.

Since 2015, we have seen deficits every year. For the year that just ended in March, the government is estimating a deficit of $43 billion, followed by a deficit of $40 billion this year — 2023-24 — then a $35-billion deficit next year, a $27-billion deficit the following year, and then a $16-billion deficit and a $14-billion deficit. In other words, the deficit as presented in the budget document is supposed to decrease every year.

But there is no balanced budget in our future. There is no balanced budget showing up in that budget document.

When the government released its Fall Economic Statement last November, it projected a return to surplus of $4.5 billion in 2027-28. However, when Budget 2023 was released just four months later — in April — the surplus had evaporated and was replaced by a deficit of $14 billion because the government’s fiscal projections tend to deteriorate over time.

For example, in November’s Fall Economic Statement, the government estimated the deficit for the year that just ended would be $36 billion. However, just four months later — in March — the $36-billion deficit had increased to $43 billion. And then the government estimated, in November’s Fall Economic Statement, that the deficit for this year would be $30 billion. Now, just four months later, the $30-billion deficit has increased to $40 billion, and the year is not over yet. The numbers in this budget are going in one direction only: up. This trend continues into future years. Projected deficits for each year will increase as time passes.

The total deficit estimated in the budget for the six years between 2022 and 2028 is $69 billion higher than the total deficits estimated in the Fall Economic Statement just four months earlier.

The Budget 2023 document also identifies another issue, which is that three large transactions in this fiscal year are being recorded in last year’s accounts, increasing the deficit last year by $7.5 billion, so the deficit goes from $35.5 billion to $43 billion. Two of the transactions were included in Bill C-46 — Senator Loffreda already spoke about that — and the third transaction is the $2.8 billion for the Gottfriedson Band class settlement agreement, which is included in this year’s Main Estimates but has yet to receive parliamentary approval.

Why has the government decided that these transactions should be recorded in last year’s accounts? Why are their other transactions not included? For example, maybe some of the cost of the F-35 fighter jets should be recorded last year — or some of the wage settlement with the union. It appears to me — and this is me speaking as a former auditor — that the government is trying to keep each annual deficit within a certain range and not have deficits fluctuate materially from year to year. If you look at the Budget 2023 document, the deficits projected over the next several years — according to Budget 2023 — neatly decline each year.

I also want to bring up the issue of the omnibus bills. Senator Loffreda mentioned this. In fact, prior to becoming Prime Minister, Justin Trudeau said that “. . . omnibus bills . . . prevent Parliament from properly reviewing and debating . . . proposals.” He went on to say that, “We will . . . bring an end to this undemocratic practice.” So here we are with an omnibus bill, Bill C-47, which is 430 pages long and amends or introduces 51 acts of Parliament, including a number of amendments to the already-complicated Income Tax Act and two new acts — one creating the Canada innovation corporation and the other creating the Canada dental care plan.

A number of committees — and Senator Loffreda mentioned this in his remarks, but I didn’t think he did the committee reports justice — in their reports on Bill C-47 expressed concern over the omnibus bill and the lack of time provided to review the bill. I would encourage my Senate colleagues to go and read those reports from the committees because I was really struck by the tone of many of the committees’ comments. They were quite negative and almost uncomplimentary to the government. Committees expressed concern that many of the amendments were unrelated to the budget and many of the amendments should have been stand-alone bills so they could be properly studied.

The Standing Senate Committee on Legal and Constitutional Affairs expressed concern that there was not enough time or opportunity to analyze the sections of the bill assigned to them and to determine the impact. They continued on to say that this does a disservice to the legislative process. They said it is particularly concerning regarding the proposed amendments to the Criminal Code and the Canada Elections Act, which should have been introduced in separate bills.

The Standing Senate Committee on Energy, the Environment and Natural Resources expressed its discontent with responses given by officials representing Environment and Climate Change Canada regarding the proposed amendments to the Canadian Environmental Protection Act.

The Standing Senate Committee on Banking, Commerce and the Economy stated in their report that it continues to be concerned that the government continues to include substantive changes to Canadian law in a budget implementation bill, which means there is insufficient time to properly examine the bill and hear stakeholders’ concerns.

And the Standing Senate Committee on Transport and Communications said that the subject matter in Divisions 22 and 23 of Part 4 of the bill is very complex in nature. They went on to say that, having no connection to the government’s budgetary policy, the committee hopes that, in the future, such amendments would be introduced as separate legislation.

I think it would be really beneficial if everybody went back and read those reports.

I’m looking at the time, and I’m thinking I might run out of time.

If you look at the budget details, the $5.3 billion that is assigned to the cost of the new budget initiative is really the net cost. The gross cost is actually $10.9 billion. There are a lot of numbers that show up in the budget that don’t have any reference. You can’t really tell what they’re for. They reduced the cost of the budget measure by applying a number of adjustments. There was one for $3.4 billion that was called “Realigning Previously Announced Spending.” Then there was one for $665 million, referenced as “Previously Provisioned in the Fiscal Framework.” Then there was $500 million for savings on consultants and travel.

For the $665 million, $561 million of it related to the Department of National Defence. I asked them where that money was in the fiscal framework. I couldn’t find it, and they couldn’t tell me. I had the impression they did not know. They committed to providing the Finance Committee with the information, but we never received it, and it has been quite a while since we asked for that information.

When I asked the Parliamentary Budget Officer about all these adjustments in the budget, he said that anybody with even the best intentions and best knowledge could not find them in the budget documents. He said these provisions were made in the fiscal framework, they’re not easy to follow and they’re not always transparent. That’s something from a government that keeps telling us how transparent they are.

There’s also $500 million in savings this fiscal year for consultants and travel. The Parliamentary Budget Officer did say that it should be relatively easy to achieve those savings, but he went on to say that there’s capacity for some of the work of the consultants to be done within the public service. So while the $500 million in savings is estimated for this fiscal year, $15 billion has been identified in savings over the next four years. The $15 billion in savings includes further reductions in consulting, another $7 billion in reductions throughout government departments and agencies and $1.2 billion in savings from Crown corporations. But there’s nothing there to indicate how government will save all that money. It adds up to $15 billion in savings to be realized beginning next year.

This information is relevant because these savings are incorporated into the government’s fiscal plan and deficit projections for the next four years, and $15 billion in savings over the next four years is a big commitment.

I want to move on to the Canada Growth Fund because I spoke about this last year, and I know Senator Loffreda mentioned it. I want to go back to last year and tell you what transpired. I still have concerns. Actually, I have more concerns this year than I did last year about the Canada Growth Fund.

Last year’s budget announced the government’s intention to create the Canada Growth Fund. It was to be an arm’s-length public investment vehicle intended to attract private capital — like the Canada Infrastructure Bank — to help meet the government’s economic policy objectives and help close the underinvestment gap in Canada’s economy.

It was established last year by Bill C-32. I spoke to the bill at that time. There’s no information on the fund except to say that it would be a wholly owned subsidiary of the Canada Development Investment Corporation, which would be responsible for administering the funds. There’s nothing to say how they are going to administer the funds.

Unlike the Canada Infrastructure Bank and the newly created Canada innovation corporation, the Canada Growth Fund wasn’t enacted under its own legislation. Bill C-32 was very short: It created the fund, and there was no requirement that the fund would report to Parliament. There’s very little information on it.

The Fall Economic Statement said at the time that the fund would operate at arm’s length from the federal government and would invest using a broad suite of financial instruments using all forms of debt equity guarantees and specialized contracts. It would invest on a concessionary basis with the goal that every dollar invested with government funding would aim to attract at least $3 of private capital. The objective of attracting private capital is identical to that of the Canada Infrastructure Bank, which, as we all know, has experienced underwhelming success. The objective is to attract $45 billion of private investment along with $15 billion provided by the federal government for a total investment of $60 billion.

In addition to my concerns over the absence of legislation defining the mandate and governance structure of the fund, Bill C-32, if you will remember, provided $2 billion to the minister to buy shares in the subsidiary corporation. The problem was that the subsidiary corporation didn’t exist. The minister, in response, explained that by saying that the Canada Growth Fund needs to act swiftly and partner with fast-paced private sector entities. Delays, she said, are likely to lead to many lost opportunities. The fund was eventually incorporated as a subsidiary of the Canada Development Investment Corporation later in December.

The Financial Administration Act comes in here. It establishes a very important piece of legislation. It establishes the financial management framework of the government, and it provides direction to government departments, agencies and Crown corporations on financial matters. It’s one of the foundation pieces of legislation within the Government of Canada. That section of the Financial Administration Act requires that certain transactions by a parent Crown corporation or a wholly-owned subsidiary of a Crown corporation must receive Governor-in-Council approval if they have certain types of transactions. That means they have to go to cabinet to get approval. These types of transactions would include acquiring shares of a corporation, acquiring assets or substantially all of the assets of another corporation or selling or disposing of shares.

On December 21 of last year, regulations amending the Crown Corporation General Regulations were published in the Canada Gazette exempting the Canada Growth Fund and its wholly‑owned subsidiaries on that section of the Financial Administration Act. Given that the Canada Growth Fund does not have to comply with section 91 of the Financial Administration Act, that there is no requirement for the fund to report to Parliament and that there is no enacting legislation, the Canada Growth Fund is going to operate beyond an opaque wall. Access to information about the Canada Growth Fund will not be available.

The Regulatory Impact Analysis Statement indicated that this exemption to section 91 of the Financial Administration Act is necessary because approval requirements by cabinet would slow down the fund’s ability to enter into transactions. The intent was to enable the fund to make investments in the first quarter of 2023.

Division 32 of Part 4 of Bill C-47 proposes to amend the Public Sector Pension Investment Board Act to enable the Public Sector Pension Investment Board to manage the assets of the fund. It will allow the board to incorporate a subsidiary for the purpose of providing investment management services to the fund. But it’s also going to amend Bill C-32 to increase the $2 billion that was approved in December by the Fall Economic Statement Implementation Act, so the payout in December is going to increase the amount to $15 billion. That $15 billion will go out right away. We think that’s going to be the end of it, but the funding is not capped at $15 billion because Bill C-47 also provides for additional funding through an appropriation bill.

The Canada Growth Fund has no enacting legislation and no governance structure. Although Bill C-47 provides the fund with $15 billion, there’s no requirement to provide annual reports to Parliament and the fund has been exempted from the accountability requirements of section 91 of the Financial Administration Act.

There’s also confusion over the eventual structure of the fund. The regulatory impact analysis said that the fund was intended to be a subsidiary of the Canada Development Investment Corporation only on an interim basis, yet officials testifying at our Finance Committee last week indicated that the fund will remain as a subsidiary of the Canada Development Investment Corporation.

While it was the objective of the government to enable the fund to make investments in the first quarter of this year — as the minister said, the fund had to act quickly — the fund is yet to begin operating. So much for the fund acting swiftly with the fast-paced private sector. The government hasn’t even been able to get the fund set up properly. In any event, I’ve seen enough of the Canada Growth Fund that I do not think it’s going to end well.

I want to talk about the Canada innovation corporation act. Division 7 of Part 4 of the bill proposes to enact the Canada innovation corporation act. That one does have its own legislation. The act says:

. . . to maximize business investment in research and development across all sectors of the economy and in all regions of Canada to promote innovation-driven economic growth.

What does maximize business investment mean, what does innovation-driven economic growth mean and how will the government measure it if they’re going to put money into this organization?

The legislation does not indicate any specifics as to what the government expects the corporation to deliver, achieve or how the government will measure the corporation’s success or lack thereof. This is especially concerning because numerous funds already exist within the government with the objective of driving economic growth.

For example, there’s the Strategic Innovation Fund, the Greening Government Fund, the Innovative Communities Fund and the funding to support clusters and superclusters, all of which are funds disbursing billions of dollars. Yet the Deputy Minister of Innovation, Science and Economic Development Canada and the Deputy Minister of Finance told the Senate Banking Committee that none of these funds have ever been evaluated to determine what their impact has been on the economy. This means that the government does not know whether these existing funds disbursing billions of dollars have actually achieved any economic benefit.

Since this corporation has been created to maximize business investment and promote innovation-driven economic growth, the government needs to define the structure and criteria against which the corporation will be evaluated.

Section 20 of the proposed Canada innovation corporation provides the money for the government to operate. Because the money is coming from the Consolidated Revenue Fund to the corporation and is provided for in the act, the payments are statutory. That means that the money will be paid out each year automatically and the money doesn’t need to be requested in an appropriation bill, so there will be no more parliamentary debate about this money.

According to Bill C-47, the corporation will receive $198 million this year. Next year, they’re going to receive $775 million, $800 million the following year and another $800 million the next year. That adds up to more than $3 billion to be paid to the corporation in its first four years.

The money for the corporation doesn’t end there. The act requires that the minister will pay the corporation $525 million each and every year after March 2027, and there’s no end date. The legislation specifically says for each subsequent financial year, $525 million, and that’s it. As I said, this amount is also statutory.

Once Bill C-47 is approved, the government has the authority to pay out this money and there will be no further parliamentary debate. But the money for the Canada innovation corporation doesn’t end there. While Bill C-47 specifically provides $3 billion for the first four years and $525 million for each year starting in 2027-28 and never ending, Bill C-47 also provides for additional funding above and beyond these amounts through an appropriation act. Billions of dollars for a corporation whose mandate has not been well-defined, nor do we know specifically what the corporation is supposed to achieve with all those billions of dollars.

The act also states the corporation is not an agency of the Crown, with the exception of more specific activities, but officials could not clearly explain what benefit this provides to the corporation or what benefits or disadvantages this has for the government. Even though Bill C-47 states that the corporation is not an agency of the Crown, the corporation is actually being created by an act of Parliament and is being funded by the public purse, and it carves out numerous roles and responsibilities for both the Minister of Finance and the Minister of Innovation, Science and Industry. In fact, the word “minister” appears 46 times in the Canada innovation corporation act.

While Bill C-47 includes some elements of a governance structure, noticeably absent is any reference to the appointment of auditors or the requirement of the corporation to table its annual reports in Parliament. The bill does reference the Financial Administration Act, which requires certain information to be included in the quarterly and annual reports of the corporation, but it stops short of requiring that the reports be tabled in Parliament.

As Senator Loffreda mentioned in his speech, the Standing Senate Committee on Banking, Commerce and the Economy in its report on Bill C-47 suggests that the government evaluate the corporation three years after its creation to determine whether it has been successful in meeting its mandate and publish the results of this in-depth evaluation in its annual report that should be tabled in Parliament.

I came across a survey that I found very interesting, and it relates to these two organizations that receive a lot of money from the government. The government is looking to the private sector to increase investment in Canada. I found the results of this survey very interesting and informative. It was a survey of 30 CEOs that was carried out by Nanos Research between March 15 and April 12 of this year for The Globe and Mail. The 30 CEOs oversee public and private companies from all sectors of the Canadian economy. The results of the survey won’t be surprising to members of the Banking Committee because they reflect the testimony that we heard at our Banking Committee, which is studying business investment in Canada.

More than 6 in 10 CEOs believe Canada is on the wrong track when it comes to being a place for business to invest. Only one third of the CEOs held a positive view that Canada is a good place to invest right now, which is a decline from five years ago. Issues raised include a lack of clarity on overall industrial and business policy, government’s hostility to business in general and the lack of consultation or collaboration with large businesses.

The results of the survey were consistent with the Business Council of Canada, whose members include the largest companies in Canada. The CEO of the Business Council of Canada also said that the federal government’s support for low-carbon energy, critical minerals strategy and clean-technology manufacturing needs projects that can move ahead, and if the government’s policy cannot provide assurance that projects can be approved and executed, then companies will be reluctant to invest. We’ve heard a lot about the government’s regulatory regime and how difficult it is for projects to be approved.

Taxation was another area of concern, where they said that Canada has the fourth-highest marginal income tax rate among its peers, and corporate tax rates that put Canadian companies at a disadvantage compared to the U.S. New taxes, including the bank tax, a tax on dividends from financial services companies and a share buyback tax aren’t helping businesses stay competitive. About 8 in 10 CEOs think that Canada will be in recession in the second half of the year — this was also included in the survey.

Unlike our federal government, which continues to spend, CEOs surveyed have been proactively preparing for a downturn in the economy by managing their costs and fortifying their balance sheets.

I think I still have a few more minutes.

Senator Marshall, you don’t. If you want a few more minutes, you can ask. Senator Marshall, are you asking for five more minutes?

Can I have five minutes to speak about Canada’s health care system?

Do we have consent?

Thank you to all my colleagues.

I wanted to talk about the Canada Health Transfer, because there’s an extra $2 billion provided for under Division 8 of Part 4 of the bill. It’s being disbursed to all the provinces and territories on a per capita basis. We talked earlier about the economy, and I was talking about the food banks and about people finding it difficult to pay for their rent and mortgages. I know on one side we have a group saying the economy is doing fine, but there’s another group that is really struggling.

For the Canada Health Transfer, the introduction to Chapter 2 of the budget starts with this sentence:

Canadians are proud of our universal publicly funded health care system. No matter how much money you make, or where you were born, or what your parents do, you will receive the care you need.

But we now know that’s not true. Our universal health care system is not accessible to many Canadians. In fact, many Canadians are saying that our health care system has collapsed and is in crisis. Healthy Debate, which publishes journalism about health care in Canada, conducted a survey between September and October of last year, which included more than 9,000 responses across the country. Results from the survey estimated that more than one in five Canadians — this is a big number: 6.5 million people — do not have a family physician or nurse practitioner they can see regularly for care. That’s true, because I’m one of those people in Newfoundland and Labrador.

The survey found that the situation is particularly bleak in some parts of the country — in British Columbia, Quebec and the Atlantic provinces, where approximately 30% of adults, or one in three, report not having a family doctor or nurse practitioner. But the percentage is better in Ontario, because they say only about 13% don’t have a family doctor or nurse practitioner.

But 21% of those without a family doctor had to pay a fee, and the survey indicated that some people may be paying for primary care services. I assure you that some people are actually paying for primary care services that should be covered under the Canada Health Act, adding to the debate of a two-tiered health care system in Canada.

Emergency rooms are full as Canadians queue up to obtain medical care, waiting for long hours. In some communities, emergency rooms have closed and ambulance services are sporadic. A trip to the emergency department or health clinic requires you to bring a pillow, a blanket and a lunch.

Over the past 30 years, the Fraser Institute has regularly assessed the state of health care in Canada. I spoke about their report last year, but they’ve completed a more recent one.

In December of last year, specialist physicians surveyed reported a median wait time of 27.4 weeks from the time of referral from a general practitioner and receipt of treatment, which exceeded the wait time of 25.6 weeks reported in 2021 and the 20.9 weeks reported in 2019. So this year’s wait time is the longest wait time recorded in the survey’s 30-year history, and is 195% longer than in 1993 when it was just 9.3 weeks.

Canadians also had to wait for various diagnostic technologies. This year, Canadians can expect to wait 5.4 weeks for a CT scan, 10.6 weeks for an MRI and 4.9 weeks for an ultrasound.

Division 8 of Part 4 of Bill C-47 authorizes the Minister of Health to provide an additional $2 billion to the 10 provinces and 3 territories allocated, as I said earlier, on a per capita basis to address urgent pressures in emergency rooms, operating rooms and pediatric hospitals. New funding of $46.2 billion will also be provided over the next 10 years in addition to the $195.8 billion in health transfers.

I have to say that Chapter 3 of the budget book outlines the funding. There’s a graph there, and I’ve been trying for quite a while to get the numbers associated with that graph because the lines aren’t legible. So I can’t give you an idea as to what is increasing in what year, but I did add it up and there is new funding of $46.2 billion indicated. However, health care professionals are saying that the extra money isn’t enough to fix health care and is not enough to bring fundamental change to the health care system.

Last year, the Fraser Institute released a report that compared the performance of Canada’s health care system relative to its international peers. The report studied the cost of health care systems along with the provision of health care services. The provision of health care services focused on the availability, use and access to resources, along with clinical performance and quality.

All of the indicators used by the institute for the report are either publicly available or derived from publicly available data from the OECD, the Commonwealth Fund and the World Health Organization. To be considered a participant in the study, each country has to be a member of the OECD, must have universal or near-universal coverage for core medical services and must be classified as a high-income country by the World Bank. Of the 37 OECD countries —

Senator Marshall, I hate to disturb you, but do you have a quick conclusion?

Our health care system is expensive, and our results are modest to poor.