Budget Implementation Bill, 2019, No. 1

Second Reading

June 10, 2019


Hon. Peter M. Boehm
[19:37]

Moved second reading of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures.

He said: Honourable senators, it is my great pleasure to rise today to speak to Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures.

In preparing my remarks for today, I benefited from being able to use as a resource some of the previous budget implementation speeches given during this Parliament. To paraphrase our colleague Senator Pratte in his second reading speech for Bill C-86 on December 4, 2018, what is before us is a long bill, so this will be a long speech. Make yourselves comfortable.

Yes, this is an omnibus bill but, as was also explained by Senator Pratte, budget implementation acts are by their very nature omnibus bills.

Honourable senators, I will start by saying frankly that this is a good piece of legislation. Of course, I am the sponsor so my words should not come as a surprise, but I do genuinely see this as a strong budget. It is not perfect but no bill ever has been nor ever will be.

My belief is strengthened by the fact that on top of sponsoring this legislation, I am also a member of the National Finance Committee, one of nine Senate committees that participated in the pre-study.

During the National Finance pre-study of Bill C-97 alone, we heard from witnesses from across government as well as stakeholders over 12 meetings before we even received the bill last Thursday. In short, I have thought about this legislation a great deal, as I know many of you have.

Bill C-97 includes key measures that were announced in the government’s most recent budget. The government has also outlined the next phase of its plan to grow the economy by investing in the middle class, which means that it is providing more support to those who need it most.

Some measures are especially noteworthy, including the Poverty Reduction Act, improvements to seniors’ retirement security, incentives for first-time homebuyers, support for veterans in their transition to civilian life after military service, the Canada training benefit and changes to student loans, the part of the bill entitled “Climate Action Support” and issues affecting Indigenous peoples that also affect all Canadians.

These are the themes on which I will focus, but I will also discuss the provisions that have proven to be more controversial: those formalizing the creation of the Departments of Indigenous Services and Crown-Indigenous Relations and Northern Affairs after the dissolution in 2017 of the Department of Indigenous and Northern Affairs, the provisions concerning journalism, and the proposed changes to the Immigration and Refugee Protection Act.

What I intend to do, colleagues, quite simply is to explain why this bill deserves your consideration and support.

First, I would like to offer some points on a matter which always elicits much comment in election platforms and campaigns and during budget time, especially when it does not happen. I speak, of course, about balanced budgets.

The battle always seems to be between balancing the budget or engaging in deficit spending to support economic growth, as if one could not strike, well, a balance between the two. It is no secret that this budget is not a balanced one. Much has been made about that, harkening back to a promise to balance the books, made during the election campaign of 2015, by the end of the government’s first mandate. The previous federal government promised, and attempted, to achieve the same goal over its decade in power but, through a combination of external and internal factors, this became elusive.

Think, colleagues, about the worldwide sovereign debt crisis of 2008 to 2009. Since then, we have witnessed the impact of lower commodity prices and sudden changes in the global trading system. There are always stresses on our fiscal framework. Bill C-97 introduces just under $23 billion in new spending over six years. The rationale behind the plan for deficit spending is to stimulate the Canadian economy where growth may be cooling.

Honourable senators, the decision by the government to spend money in this budget and to thus not pursue fiscal balance was done out of necessity, not mismanagement or irresponsibility.

I witnessed and participated in the previous government’s very capable handling of the global financial crisis of 2008-09 from Berlin where I engaged with the European Central Bank. These matters are not easy, and they are not easy for a country like Canada. As the old saying goes, “You need to spend money to make money.” This is not about spending tax dollars on fancy, big-ticket items. This is about the economic need to make smart investments in Canada’s future and middle class over paying down the debt. We must do so, however, responsibly, to ensure that future generations benefit from world class services and education today so that they can succeed tomorrow.

Across a number of important metrics, the fact of the matter is that the Canadian economy is sound. It continues to be supported by solid fundamentals including high levels of consumer confidence and a growing labour market. More than 1 million jobs have been created since 2015 and the national unemployment rate is at its lowest levels in more than four decades.

Of course, despite the generally good news in this area, we cannot forget that there are regions of this country that have been hurting. Canada’s national unemployment rate currently stands at 5.7 per cent. The four provinces of Atlantic Canada, however, have long faced higher-than-average unemployment. This has largely been due to the predominance in that region of seasonal work and more reliable, higher-paying opportunities in other parts of Canada.

These realities have both pushed and pulled skilled workers from New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. Many Atlantic Canadians, in years past, made their way west, especially to Alberta, for high-paying jobs in that province’s energy sector. That is no longer the case at the same level.

Our friends in Alberta have been facing a severe economic downturn since it began in 2014, made worse in 2015 when the price of oil plummeted. We know the effect it has had not only provincially, but nationally. Saskatchewan has also been impacted by lower commodity prices, particularly of oil and uranium.

It also goes beyond pure economics, when we take into account the negative impact on real people, given the stress that such uncertainty in making ends meet can have on one’s mental health.

While the economic downturn ended in 2016 and things began looking up, Alberta is still facing unemployment higher than the national rate, at 6.7 per cent in April — this according to the most recent monthly labour force survey carried out by Statistics Canada. That is an improvement, albeit a slight one, over the rate for March. Hopefully this trend will continue and bring some more relief to a province that has long been a key economic engine for our country.

Despite the struggles faced, especially by Alberta and Atlantic Canada but also Saskatchewan, Canada’s overall economy is strong.

Our success is also recognized beyond our borders. The Organisation for Economic Co-operation and Development and the International Monetary Fund expect Canada to be, after the United States, the second-fastest growing economy in the G7, on average, over this year and next.

As a former ambassador to one of our closest G7 allies, Germany, and having been a deputy minister a few times, including for last year’s G7 summit in Charlevoix, I can tell you just how important this statistic is. What this means in practice is that our federal debt-to-GDP ratio, the debt relative to our economy, is not just decreasing but is on track to reach close to its lowest level in almost 40 years.

Colleagues, this does not get enough attention domestically. I can promise you, though, that this impressive fact is very much envied by many of our friends in the developed world. A low debt-to-GDP ratio is a critical indicator of fiscal health.

In the same vein, our deficit-to-GDP ratio is projected to reach a low of 0.4 per cent by 2023-24. That is in comparison to another of our G7 partners, the United States, where the federal government deficit-to-GDP ratio was 3.9 per cent in the last fiscal year and could reach almost 5 per cent in the coming years.

Another important point is that Canada is also the only G7 country that has free trade agreements with every other G7 nation. Once the new NAFTA — or CUSMA as we call it now — makes its way through Parliament, we will be in an even better position. You will get to hear from me again on that point, colleagues.

Budget 2019 demonstrates continued investment in people and a strategy to grow the economy for the long term in a fiscally responsible way. Investments the government has made over the last year to support households and to promote export development and business investment are expected to promote growth now and into the future. This has helped to make Canada one of only 10 countries that continues to receive a AAA credit rating, with a stable outlook from all three of the world’s biggest credit rating agencies: Standard & Poor’s, Fitch and Moody’s.

In order to provide support to Canada’s hard-working entrepreneurs, the government cut the small business tax from 10 per cent to 9 per cent at the start of this year. This represents the second cut made to the small business tax rate in just over a year. For small businesses, this will mean up to $7,500 in federal tax savings each year compared to 2017 — savings they can reinvest to purchase new equipment, develop new products or create new jobs.

With measures introduced to accelerate business investment in the 2018 Fall Economic Statement, the average overall tax rate on new business investment in 2018 was almost 5 percentage points lower than in the United States and the lowest among G7 members.

Colleagues, the long-term dedication to strengthening Canada’s economy and promoting investment should triumph over short-termism. I’m sure the coming election campaign will no doubt tell the tale.

In order to reduce poverty, in the fall of 2018, the government introduced the Poverty Reduction Act. This is a cause our colleague, Senator Miville-Dechêne, was the first to champion in the Senate. The Poverty Reduction Act proposes to codify ambitious and concrete poverty reduction targets. In particular, based on the 2015 levels, the act aims to reduce poverty by 20 per cent over five years and by 50 per cent over 15 years.

Also, for the first time in Canada’s history, Bill C-97 proposes an official poverty line. This market-based measure focuses on the cost of buying basic goods and services such as clothing, shelter, food and transportation.

The act will also establish the National Advisory Council on Poverty, which will be mandated to undertake consultations with the public, including people with personal experience with poverty, and subject matter experts. The council will provide advice to the minister responsible for overseeing the Poverty Reduction Act with regard to ways in which to reduce poverty and will also be required to submit an annual progress report.

Since 2015, $22 billion has been invested in measures to support poverty reduction. These measures include the Canada Child Benefit, the Guaranteed Income Supplement, the National Housing Strategy, the Canada Workers Benefit and the Indigenous Skills and Employment Training Program.

Due in part to recent investments, the government surpassed its 2020 target three years ahead of time, with over 825,000 individuals helped out of poverty between 2015 and 2017.

This is part of why the plan to invest, thereby running modest deficits, instead of balancing the budget is so important. Helping Canadians handle the costs of living is a key component of supporting the middle class. You can see that in the way Bill C-97 seeks to support seniors.

On that subject, many seniors choose to remain active and continue to work after retirement — I’m looking all around me; there are a few of us here — for a variety of reasons. Unfortunately, some working seniors are being penalized for staying in or returning to the workforce.

They face significant reductions in their Guaranteed Income Supplement or Allowance benefits for every dollar of income they earn above the existing $3,500 annual GIS earnings exemption.

Part of the problem is that self-employment income is not eligible at all for this exemption. This means that seniors lose out on their hard-earned income.

This is something the Budget Implementation Act seeks to remedy. Beginning in July 2020, Bill C-97 proposes to help seniors keep more of their GIS or Allowance benefits and income by enhancing the GIS earnings exemption.

Doing so will accomplish three things: extend eligibility for the earnings exemption to include self-employment income; allow for an increase in the fully exempt annual amount from $3,500 to $5,000; and introduce a partial exemption of 50 per cent on up to $10,000 of annual employment and self-employment income beyond the initial $5,000.

Essentially, eligible seniors would be able to fully or at least partially exempt up to $15,000 of income. This means seniors who wish to continue working after retirement will be able to keep more of the money they earn. Bill C-97 would also ensure that all Canadian workers receive the full value of their earned benefits.

The proposal here is to proactively enroll, starting in 2020, CPP contributors who are age 70 or older but who have not yet applied to receive their retirement benefit.

While the number of people who do not apply for their pensions is relatively low — an estimated 1,600 in 2020 — it is still significant.

The effect of this measure is important. Approximately 40,000 more Canadians would begin to receive the CPP retirement pension to which they are entitled.

Of note, two thirds of these currently unenrolled seniors are women. The average monthly pension payment will be around $300, which could be of huge benefit to many senior citizens.

Whether you’re a senior or a young person fresh out of school, one thing we all must think about is where we’ll live and how we’ll pay for our home. Adequate housing is, after all, a right recognized under international law to which all human beings are entitled. Budget 2019 announced a number of new initiatives to make it more affordable for Canadians to rent or buy a home. It builds on the government’s plan to address issues surrounding housing affordability, an issue that concerns adults of all ages and many middle-class families.

Every Canadian wants, and deserves, a safe and affordable place to call home. However, that’s not easily attainable for too many people. High house prices in some of Canada’s largest cities mean that many Canadians still struggle to find, maintain and afford a good, safe place in which to live.

To help, Bill C-97 will put in place a new first-time home buyer incentive. This would allow first-time homebuyers who save their minimum 5 per cent down payment to finance a portion of their home purchase through a shared equity mortgage with the help of the Canada Mortgage and Housing Corporation.

Through the CMHC, qualified first-time homebuyers would be eligible for a 10 per cent shared equity mortgage for a newly built home or a 5 per cent shared equity mortgage for an existing home.

It is expected that about 100,000 first-time homebuyers will be able to benefit from the incentive over the next three years.

With this extra help, Canadians can lower their monthly mortgage payments, making homeownership more affordable and attainable.

Bill C-97 will also increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000, providing first-time homebuyers with greater access to their RRSP savings to buy a home.

There will also be new investments to increase the supply of homes to buy or rent. This is the best way to alleviate high prices and cool what has become a very hot housing market.

Dealing with finding affordable housing is not easy at the best of times and can make the transition to civilian life for members of the Canadian Armed Forces that much more challenging. The reality is that becoming a civilian after years and sometimes decades of loyal military service can be challenging for some members. This is especially true for those who must leave the forces due to illness or injury. To make post-military life easier, Budget 2019 proposes a number of initiatives, such as ensuring veterans receive personalized support services and enhanced training on transitioning to civilian life.

In addition, Bill C-97 proposes to expand eligibility for the education and training benefit to supplementary reservists. This benefit already provides veterans who were regular members of the forces with up to $80,000 for education. Now supplementary reservists will also have access to this support.

The value of education and training, after all, cannot be understated. It is critical to building and maintaining a strong and engaged workforce. As we know well, the world is changing rapidly in many ways. In recognition of that, Budget 2019 will help students and workers of all ages find and keep good jobs today and into the future.

This is crucial, because the jobs of the future may look nothing like the jobs of today. The evolving nature of work means that people may change jobs many times over the course of their working lives. I think, as most of us know, young people today already do this much more frequently than did previous generations.

Budget 2019 introduces a new personalized, portable tool to help all Canadians get the skills they need to find and keep good jobs, the Canada training benefit.

Bill C-97 would implement an important part of the benefit, the Canada training credit. This credit will provide working Canadians between ages 25 and 64 with up to $5,000 over the course of their careers to pay for up to 50 per cent of eligible training fees.

In addition, Budget 2019 announced the Employment Insurance training support benefit, which will provide up to four weeks of paid leave every four years for workers to pursue training.

One of the best good-news stories of this Budget Implementation Act is the amendments to the Canada Student Financial Assistance Act. The purpose of the changes is to relieve some of the substantial financial pressures faced by students who must take out loans.

The amendments will ensure that new graduates do not need to worry about interest on their student loans accumulating immediately after completing their studies, as is currently the case.

With this measure, student loans will no longer accumulate any interest during the six-month non-repayment period — the grace period, as it’s called — after a student borrower leaves school.

These changes, which would come into effect in November of this year, in combination with the commitment in Budget 2019 to lower the interest rate for student loans, will result in savings of about $2,000 on student loan costs for the average borrower.

Budget 2019 also proposed an ambitious target: Within 10 years, every young Canadian who wants a work-integrated learning opportunity would get one. To support this goal, Budget 2019 proposes to provide funding to support up to 40,000 student work-integrated learning opportunities per year by 2023-24.

In addition, Budget 2019 also proposes to provide funding to the Business/Higher Education Roundtable to match these placements by 2021.

In total, this means that the government will support up to 84,000 new job placements per year by 2023-24.

Many of these positions, and those in the broader workforce, will be ones that focus on the transition to a green economy — and ones that deal directly with the stark reality of a changing climate.

As we all know, climate action in general is, quite literally, a hot topic. Whether you believe that climate change is a real and present danger or that it is exaggerated or even a hoax, the fact is that our planet is in trouble.

Humans caused the dire environmental crisis afflicting the earth, but humans can also reverse it. Action can be taken, but it must be done quickly and effectively.

Bill C-97 seeks to protect the environment and Canadians and reverse some of the damaging effects of climate change through some important measures.

The first measure provides support to increase the number of energy efficient residential, commercial, and multi-unit buildings all while lowering energy costs. This is an investment that will support activities like home energy retrofits that can help lower Canadians’ monthly energy bills and reduce energy consumption.

Second, the Budget Implementation Act would provide a one-time municipal infrastructure top-up investment in order to build new cleaner and healthier communities. This commitment will double the funds available to municipalities and help communities fund their infrastructure priorities, including public transit, water, and green energy projects. This puts in place a plan to protect the health of Canadians today and into the future, all while growing our economy in a sustainable way. The health of our economy is largely connected to the health of our land, both of which are central to our nation-to-nation relationship with Indigenous peoples.

A critical part of advancing reconciliation and self-determination, and thus strengthening this most important relationship, is ensuring that Indigenous peoples are able to fully contribute to and share in Canada’s economic success, to which I referred at the beginning of this speech.

Budget 2019 proposes significant investments in Indigenous economic development. Investments such as these are important because they generate revenue for Indigenous communities, which tend to be reinvested into skills, health and social services.

Some of the investments proposed in Budget 2019 include supporting Indigenous entrepreneurs and economic development in First Nations and Inuit communities through the Community Opportunity Readiness Program; enhancing the funding of Metis capital corporations to support the start-up and expansion of Metis small- and medium-sized businesses; supporting the Indigenous Growth Fund to allow Aboriginal financial institutions, including Metis capital corporations and others, to support both more Indigenous entrepreneurs and more ambitious projects; and increasing targeted support to the next generation of Indigenous entrepreneurs through Futurpreneur Canada.

Further, Budget 2019 also takes action to help communities reclaim, revitalize, maintain and strengthen Indigenous languages and to sustain important cultural traditions and histories.

As I said at the outset, while this is a budget of positive measures, there are three that have elicited particular attention and some criticism: formalizing the creation of the Department of Indigenous Services and the Department of Crown-Indigenous Relations and Northern Affairs; changes to the Income Tax Act to support journalism, specifically the independent panel established by the government to make recommendations on the eligibility criteria for the tax measures proposed in Bill C-97; and amendments to the Immigration and Refugee Protection Act.

Bill C-97 will officially create the Department of Indigenous Services, which will work collaboratively with partners to improve access to high-quality services for First Nations, Inuit and Metis. One of the most important reasons for the creation of this department is to ensure we effectively work toward services and programs for Indigenous peoples being delivered by Indigenous peoples. Reaching this goal, over time, will also be a main criterion against which the success of the department will be measured.

This legislation will also formally establish the Department of Crown-Indigenous Relations and Northern Affairs. Its mandate has, and will continue to be, to renew nation-to-nation, Inuit-Crown and government-to-government relationships between Canada and First Nations, Inuit and Metis.

The relationship between Canada and Indigenous peoples is vitally important to ensuring the strength and prosperity, now and for generations to come, of our Confederation. This relationship must be properly nurtured and respected in order to work toward reconciliation from which we will all benefit.

There have been concerns expressed, including from some honourable senators, about these provisions in the budget implementation act. Of course, concerns over the departmental split have also been officially expressed by our Standing Senate Committee on Aboriginal Peoples through its report to the Senate.

In particular, clarity has been sought regarding some of the language used in the legislation. Given the importance of getting these particular measures right, the government worked with its partners, including the Assembly of First Nations, on amendments that better reflect the unique concerns of Indigenous peoples.

A number of amendments based on these discussions were introduced to the bill in the House of Commons before we received it in the Senate. As with most legislation, this provision may be revisited in the future, as circumstances may warrant.

On the path toward reconciliation and self-determination, we must acknowledge that things can evolve over time. The Standing Senate Committee on Aboriginal Peoples has recommended that Division 25 of Part 4 be removed altogether from Bill C-97 and reintroduced as its own legislation.

I must stress, colleagues, as a final point — for now — on this issue, that this provision is not coming out of the blue. The split of the Department of Indigenous and Northern Affairs into the Department of Indigenous Services and the Department of Crown-Indigenous Relations and Northern Affairs was announced almost two years ago and recommended more than 20 years ago.

In August 2017, when the creation of these two departments was announced, the government was implementing a recommendation made by the Royal Commission on Aboriginal Peoples in 1996. These two departments have been fully functional and doing good work for nearly two years. Bill C-97 simply formalizes the establishment of the two departments, especially their individual roles and responsibilities. These departments are in full flight, with a minister and deputy minister assigned to each, along with the budgets, staff and officials to match as a result of an order-in-council designating Indigenous Services as a department in November 2017.

We cannot and should not simply undo all of that.

While the names of the recommended departments have changed in 23 years, the purpose of today’s proposal is, in fact, the same as yesterday’s: to improve the delivery of vital services to Indigenous peoples so that we may work toward real reconciliation and the advancement of our most important relationship.

The second area that has received attention and some criticism surrounds changes to the Income Tax Act regarding journalism. The government has chosen associations representing Canadian journalism to serve on an independent panel of experts that has been set up to make recommendations on the eligibility criteria for the tax measures proposed in Bill C-97. Doubts have been expressed by those concerned about how “independent” this panel could be. This provision has been especially contentious in committees in both the Senate, at National Finance, and indeed the other place. The overarching criticism is that this measure will lead us down the slippery slope toward reduced press freedom.

Colleagues, like many of you, I worked in countries where press freedom is not only lacking, it is non-existent. There are many countries around the world where journalists work bravely under the very real threat of violence or even death. For too many, threats turned into action.

That is not to say that journalists in Canada do not have need to worry, but critical stories of big business and government here are not met with violent retaliation. What journalists here — and everyone who cares about a free press — do worry about is the decreasing number of daily and regional newspapers.

Since 2008, 250 of Canada’s daily news outlets have closed down due in large part to low advertising revenues and the rise of online news and social media. In just one day in November 2017, in a deal between Postmedia Network and Torstar, 36 news outlets went out of business. Three hundred people lost their jobs that day. When print media, and their digital partners, go bankrupt in big cities, that is bad enough. When it happens to small papers in rural areas, that is devastating.

A number of you here in the Senate have been journalists in your previous lives. You understand better than anyone how fundamentally important journalism, and a free press more generally, is to democracy. Journalists uncover and share information with citizens that helps to ensure governments and corporations are held to account. This makes our democracy, and our country, stronger, but journalists cannot do their jobs if they don’t have proper funding.

The fact is that the newspaper business is struggling, as I briefly outlined. That is why the government introduced provisions in Bill C-97, based on its commitments in the 2018 Fall Economic Statement and Budget 2019, to provide additional relief and support to independent news media. I’m confident the proposed measures will bolster our news outlets nation wide and enhance, rather than hinder, press freedom in Canada.

Finally, I wish to highlight the concerns raised about proposed changes in Bill C-97 to Canada’s asylum rules. Our colleague Senator Omidvar has been especially vocal in sharing the valid concerns of her and others. Our country’s system for assessing refugees and asylum-seekers is envied around the world. In Senator Omidvar’s own words, it is “the gold standard,” and I think she is right about that. It is a huge part of why Canada is seen, rightly so, as an open, welcoming and compassionate society.

In my former life in the foreign service, my first posting abroad was at our embassy in Cuba, where one of the many hats I wore was visa officer. I was responsible for issuing visas to Cubans and others wishing to visit Canada. Many of them decided to stay.

For every reason you can think of, from all corners of the world, people want to come to our country, whether to see the unparalleled beauty of our land or seek safety from violence and persecution, Canada is viewed as a beacon of hope and acceptance for the world’s most vulnerable people.

The amendments proposed in Bill C-97 will not change that. Essentially, the budget implementation act proposes that asylum and refugee claimants would be ineligible for protection in Canada if they had already made a claim in a country with which we have agreements to share intelligence and biometrics. These countries being our Five Eyes partners: Australia, New Zealand, the United Kingdom and the United States. The goal of this measure is to deter irregular migration — to reduce numbers that began to rise in 2017 — and to encourage people genuinely in need of protection to make their claim in the first country to which they arrive that has a mature asylum system rather than making claims in multiple countries. All of our Five Eyes partners have such robust systems in their own countries.

Concerns with this have centred mainly around the feeling that Canada is turning its back on its global reputation as a safe haven for asylum-seekers and on its international obligations. Neither of these is the case. Even the Canadian office of the UNHCR here in Ottawa supports the proposed changes to our asylum laws. For balance, Amnesty International and the Canadian Association of Refugee Lawyers do not.

Canada is not trying to deter migrants from coming here. It is not trying to deter refugees and asylum-seekers. Canada is trying to deter irregular migrants. It is proposing doing so in a way that still respects our domestic and international obligations.

To help allay concerns, however, the government amended Bill C-97 in the other place regarding oral hearings. Specifically, Bill C-97 has been strengthened to explicitly state in the legislation that the right to an oral hearing is guaranteed. Nobody claiming refugee status or seeking asylum will be turned away without having an opportunity to plead their case. If it is determined that a claimant would be at serious risk of harm or persecution if returned to the country from which they fled, they would remain in Canada under our protection.

Ultimately, the government is trying to better manage the flow of migrants, making it more efficient and to bring finality to claims, all while respecting our obligations and history as an open, welcoming and compassionate country.

Honourable colleagues, I promise that I’m coming to the end of my speech.

I hope to have succeeded in my goal of outlining what are the main reasons why I believe Bill C-97 contains strong, positive measures.

I hope to have also alleviated the concerns that were raised about some of the bill’s provisions.

I’ve been a senator for only eight months, and this is the first time I’ve shepherded a piece of legislation through the Senate, whether a government bill or otherwise.

There has been a great deal to learn. It is always made that much easier when you have strong support. I thank my more experienced colleagues from all groups in this chamber who have offered their help and guidance. I also appreciate the excellent engagement at committees that participated in the pre-study. In particular, thank you to my fellow members of the Standing Senate Committee on National Finance, especially our chair, Senator Mockler. I also wish to express my appreciation to the clerk of the committee, Gaëtane Lemay, and our analysts, Alex Smith and Shaowei Pu.

We are all in this together, and of course, work on this bill is not yet complete.

Honourable senators, we all know how important budget implementation acts are. This one is no different. I hope that having concluded a thorough and thoughtful pre-study of the bill, you will join me in supporting Bill C-97 at second reading and that it may reach Royal Assent as expeditiously as possible. I thank you for your patience and attention.

The Hon. the Speaker pro tempore
[20:15]

Senator Boehm, would you take some questions?

Senator Boehm
[20:15]

Of course.

Hon. Dennis Glen Patterson
[20:15]

Thank you, and congratulations on your speech, senator.

You talked about the creation of two departments in that large chapter in Bill C-97 — Crown-Indigenous Relations and Northern Affairs Canada and Indigenous Services Canada — but the bill also allows for the creation of a ministry of Northern Affairs as an option for the Prime Minister.

You said the order-in-council that created these changes, which included the establishment of a Northern Affairs minister portfolio, which was first held by Minister LeBlanc and is now by Minister Bennett, has been working well for two years. Do you think it’s fair that the future of the ministry of Northern Affairs should be left to the discretion of the Prime Minister, or should it be mandatory?

Senator Boehm
[20:16]

Thank you for the question, Senator Patterson. Quite frankly, I’m aware of that provision, but I can’t really comment on whether it should be left to the Prime Minister.

Based on my experience — and I was still in the Public Service at that point as the split occurred and resource transfers occurred — my understanding was that there was still some consideration that there was more to do. When I said in my remarks that it is up and running, it is up and running, but there is a lot more running to do. I would submit that what you have suggested about a possible third branch or department is part of the thinking.

As I understand it from briefings I’ve received on Bill C-97, the idea was simply to formalize, de jure, this creation of the two departments two years ago.

Hon. Frances Lankin
[20:17]

Senator Boehm, thank you for your presentation. It was very thorough and informative. For those of us who weren’t engaged with the committee in the pre-study, I think it’s very helpful. You covered a lot of ground.

Of course, I’m going to ask a question on something you didn’t speak about. Trust me to do that. A lot of organizations have been calling on government for major reforms and overhaul of pension legislation, most particularly to deal with bankruptcy situations, and the order of creditors and the protection of pensioners. This budget implementation act does not do that, but it makes some small movements with respect to pensions.

I’m wondering if the committee studied that area, and if they made any comment or if you have any information you can share with us.

Senator Boehm
[20:18]

Thanks, Senator Lankin. I don’t have any details, but the answer is “yes.” There are lessons to be drawn from both the Nortel and Sears experiences of the past. There are provisions in there. It was the subject of some discussion that we had in committee.

I can’t give you the details right now; they’re not in my head.

Hon. Ratna Omidvar
[20:18]

Congratulations, Senator Boehm. It was an excellent speech, especially for those of us who do not sit on the National Finance Committee. I noted with some delight, I must say, when you talked about 40,000 work-integrated learning opportunities for students. Could you unpack that a little for us, or is that parliamentary-speak for internships, which I understand completely?

Senator Boehm
[20:19]

Thank you, Senator Omidvar. You’re putting me on the spot. This is a very comprehensive thing. There are a number of provisions in the bill related to support for student and training opportunities. I’d be happy to get more of that information to you. I just don’t have it to hand.

The Hon. the Speaker pro tempore
[20:19]

Senator Martin, are you rising to ask a question?

Hon. Yonah Martin (Deputy Leader of the Opposition)
[20:19]

Yes, I am.

Thank you, Senator Boehm, for your speech. Toward the end you talked about Division 16, the amendments to the Immigration and Refugee Protection Act. I note that the government does not address the safe third country agreement as part of this change. I had an opportunity to look at some of the numbers related to what has happened at our southern border and I was wondering if you could talk a bit about the financial cost of how we’ll deal with the backlog and what is happening. Would you detail what’s in the budget related to that issue?

Senator Boehm
[20:20]

Thank you, Senator Martin. I probably have that in one of the three binders under my chair, but I don’t have the details. I know there are measures that have been taken and I’d be happy to provide those later on.

The Hon. the Speaker pro tempore
[20:20]

Senator Patterson, you have a second question?

Senator Patterson
[20:20]

Yes, if I may, Your Honour.

Senator, you referred to the Chapter 75 reorganizing the Department of Indigenous Services, or the Department of Indian Affairs as it was formerly known. Are you aware that the Aboriginal Peoples Committee received a recommendation from Grand Chief Perry Bellegarde of the Assembly of First Nations, in a letter written to the committee, and he said there was no consultation whatsoever on these major changes to the Indian Act, which impacts First Nations on a daily basis, with the organization representing First Nations across Canada, the Assembly of First Nations?

Grand Chief Bellegarde asked that the chapter be excised from the bill altogether because the principles of the United Nations declaration that everyone is speaking about these days calls for their involvement, prior involvement and informed consent. The Aboriginal Peoples Committee simply recognized that there had been no opportunity for consultation with the Assembly of First Nations and recommended that this chapter therefore be made into a separate bill so that consultation could take place.

Now, you’ve dismissed that by saying, “Well, everything’s working fine and it has been in place for two years.”

The Hon. the Speaker pro tempore
[20:22]

Senator Patterson, Senator Boehm’s time is up.

Are you requesting five more minutes, Senator Boehm?

Senator Boehm
[20:22]

Sure.

The Hon. the Speaker pro tempore
[20:22]

Is it agreed, honourable senators?

Senator Patterson
[20:22]

I was just about to ask my question, Your Honour. Thank you very much.

Wouldn’t you say that we should not ignore an urgent letter from the Grand Chief of the Assembly of First Nations, telling us to excise the chapter due to lack of consultation? Are you saying that we should proceed with his voice, saying that his people have been left out of the development of this bill altogether? Isn’t it important that they be given a chance to give their opinion on this major reorganization of this important department before it becomes finalized?

Senator Boehm
[20:23]

Thank you, Senator Patterson, for the question. I am aware of the letter by the National Chief. In fact, I’ve read it. I’m also aware of the letter that went from Ministers Bennett and O’Regan to National Chief Bellegarde as well. My impression — and maybe you can correct me on this — is they somehow crossed and I gather there were some discussions that have taken place. This weekend, I also carefully read the report of the Aboriginal Peoples Committee.

When I mentioned that the departments were operational and rolling along, I did not want to give the impression that work wasn’t under way or that it was all fine. Obviously, when you establish new departments or change old ones — and I went through one of those exercises as a deputy minister myself — it’s not easy, but just to say you have the two entities that have been set up, they are financed, they’ve moved personnel around, they’ve divided their full-time equivalents as we say in the bureaucracy, so that work is going ahead. Should more be done? Absolutely. I agree with you. I do not know the status of those letters and how they crossed and whether there was some entente developed.

Hon. Elizabeth Marshall
[20:24]

Thank you very much for your speech, Senator Boehm. I’m the critic for Bill C-97. I’ll be giving you the other side of the story on some of the issues raised by Senator Boehm, including the one Senator Patterson just addressed.

Honourable senators, before I speak to the specifics of Budget 2019 and Bill C-97, I would like to reflect on the four budgets of this government. As you know, one of the primary objectives of this government was to grow the middle class. In fact, Budget 2016 was titled: Growing the Middle Class. This was followed by Budget 2017: Building a Strong Middle Class, then Budget 2018: Equality and Growth for a Strong Middle Class, and now Budget 2019: Investing in the Middle Class.

Over the past four years, Minister Morneau was asked on many occasions to define the “middle class.” After all, how can the government determine if the middle class has grown if it doesn’t know who is in it? Minister Morneau never did define the middle class.

Earlier this year, the OECD, Organisation for Economic Co‑operation and Development, of which Canada is a member and Senator Boehm has referred to earlier, issued a report on the middle class. According to the OECD, the middle class in its 36‑member countries is actually shrinking. Middle class shrinkage was sharper in Canada than the OECD average. After four budgets focused on the middle class, it’s disappointing that a government committed to measuring results has never reported on whether they were able to actually grow the middle class.

Honourable senators, the last comprehensive review of Canada’s tax system was carved out in the 1960s, more than 50 years ago, and I can actually remember that time. Since then, our tax system has accumulated a patchwork of credits, incentives and other changes, many of them major. It has created a complex and inefficient system.

Many organizations have called for a comprehensive review of our tax system, including the OECD, the International Monetary Fund, the Business Council of Canada, the Chartered Professional Accountants of Canada, the Canadian Chamber of Commerce and so on. Even the government’s own Advisory Council on Economic Growth, headed by Dominic Barton, in 2017, recommended a targeted review of our tax system, noting it has been decades since the last significant review.

Canada is falling behind other jurisdictions, including the U.S., the U.K., New Zealand and Japan, in keeping our tax system competitive. The tax system is fundamental to creating a competitive environment, encouraging business to invest and expand. It creates quality jobs, encourages innovation and produces revenue to fund government programs and services.

Honourable senators, the Standing Senate Committee on National Finance met with representatives of CPA Canada and the Canadian Chamber of Commerce to discuss several aspects of Budget 2019. The Chartered Professional Accountants of Canada indicated that it supports the measures to accelerate business investment, but more needs to be done to bolster competitiveness in the long term and a comprehensive review of the tax system is needed. Such a review would help make the tax system simpler, fairer and more competitive. In the absence of such an announcement in the budget, CPA Canada noted that this was a squandered opportunity. There is a groundswell of support for a full-scale tax review in Canada and a much-needed assessment would pave the way for an improved system that best positions the country for economic and social growth.

The Chartered Professional Accountants of Canada is one of the largest national accounting organizations in the world, representing more than 210,000 members. In February of this year, it commissioned a public opinion survey on Canada’s tax system, which was conducted by Nanos Research. The survey reported several interesting findings. It found that almost half of Canadians — 47 per cent — say the tax system has become more complex than it was 10 years ago, while 37 per cent say it has stayed the same. Only 5 per cent feel that the tax system is less complex.

The public opinion survey also found that 81 per cent of Canadians see a comprehensive tax review as a priority for the federal government. Of those, more than one in three, or 35 per cent, say it should be a high priority — an impressive number for a topic such as tax reform.

Honourable senators, many of our country’s leading tax experts are members of CPA Canada. Based on their knowledge and that of other CPA members, CPA Canada has issued two reports supporting a review of our tax system.

The first report looked at how other countries have approached tax reforms and reviews. The second report addresses why Canada’s tax system needs an urgent overhaul. The final report will explore how an independent tax system can be designed to maximize the benefits.

Honourable senators, when Minister Morneau appeared before our Finance Committee last Wednesday, several senators asked him why he has not undertaken a comprehensive review of our tax system. While Minister Morneau indicated it is always important to listen to people, he said, “A complete overhaul of the tax code is not currently something on our agenda,” to which one senator responded, “Who are you listening to? If not the 80 per cent who is looking for a tax review, it must be the 20 per cent that says we don’t need it.”

Honourable senators, Budget 2019 includes the government’s debt management strategy for 2019-20 and sets out the government’s objectives, strategy and borrowing plans for next year. Borrowing activities include the ongoing refinancing of government debt coming to maturity, the implementation of the budget plan and the financial operations of the government.

As honourable senators may recall, the Liberal government, as part of its 2015 election platform, promised modest deficits of $10 billion a year, with a return to a balanced budget by this year, 2019-20. However, in its first budget, the government abandoned its promise to run smaller deficits, along with its promise to balance the budget by this year.

Since its election, the federal government has incurred deficits of $17 billion in 2016-17, $19 billion in 2017-18, $15 billion in 2018-19, along with a projected deficit of $19 billion for this year. There is no plan ever to return to a balanced budget, as promised. I think I did see something about the 2040s, but that’s so far off.

While there has been much emphasis on Canada’s market debt, which is projected to reach $754 billion at the end of this year, the debt of its Crown corporations is often ignored. The total liabilities of these Crown corporations do not appear in the market debt of the Government of Canada, nor in the consolidated financial statements of the Government of Canada. However, as agents of the Crown, the government is ultimately legally liable for their actions and for their liabilities.

It is estimated that the debt of these Crown corporations will reach $316 billion by the end of this fiscal year. In recognition of this reality, government, in enacting the Borrowing Authority Act in 2017, included the debt of these Crown corporations as a component of the new legislation.

If we look at Canada’s debt over the years, we can see that government debt, including that of Crown corporations, was $918 billion at the end of the 2014-15 fiscal year, just before the current government was elected. In its 2019 budget, the government indicates that its debt, including Crown corporations debt, will reach $1.07 trillion. In other words, the current government, since its election in 2015, will have increased Canada’s debt by $152 billion.

Honourable senators, there is a cost to carrying debt. This year, public debt charges are expected to be $26 billion, up from $23 billion last year and $21 billion the previous year.

Projections for public debt charges for the next four years also indicate an increase: $28 billion in 2020-21, $30 billion in 2021-22, $31 billion in 2022-23, and $33 billion in 2023-24.

Past debt charges and projected debt charges clearly indicate that debt charges have already increased significantly over the past four years and will continue to increase in the future. As our debt increases, and if interest rates increase, so will the cost of servicing our debt. As public debt charges increase, there will be less funding for other government programs.

Honourable senators, I would be remiss if I did not provide further comments on debt and interest rates.

CMHC recently indicated that Canadian household debt reached a record high at the end of 2018, even as mortgage activity slowed, as Canadians continued to take on more non‑mortgage debt.

The Bank of Canada, in its Financial System Review last month, identified the main vulnerabilities and risk to financial stability in Canada, indicating that:

The vulnerabilities associated with high household debt and imbalances in the housing market have declined modestly but remain significant.

The Bank of Canada continued on to say that:

Despite this progress, we need to remain vigilant as the overall level of indebtedness continues to be high, with a large portion of that debt held by indebted households.

Also included in the Bank of Canada’s Financial System Review is a reference that fragile corporate debt funding is emerging as a vulnerability.

Honourable senators, we should not think that the Government of Canada, which has assumed a significant amount of debt over the past four years, is immune to risk.

The Bank of Canada, in its financial review, continued on to say that:

The overall risk to the Canadian financial system has increased slightly since our last assessment in June 2018 . . . caused in part by global trade policy uncertainty, last year’s oil price decline, ongoing difficulties in the energy sector and expanded risk taking in global financial markets.

The International Monetary Fund has also provided commentary on Canada’s economy. Every year, the International Monetary Fund sends a team of economists to most of its 189 member countries to assess the state of their economies.

Last month, the International Monetary Fund released its preliminary findings of its most recent consultation with Canada. The report indicated that risks are evolving as the federal election approaches.

As stated in the preliminary report:

The global economy is slowing, low oil prices, aggravated by domestic pipeline constraints, have dampened exports and business investment, while private consumption and residential investment — important contributors of Canada’s recent rapid growth have decelerated in line with the slowdown in the housing market, rising interest rates, and slower real income growth. While the deal to overhaul NAFTA was signed, the new USMCA awaits legislative approval, and trade tensions between the U.S. and its major trading partners continue to cast a shadow over [Canada’s] economic outlook.

The Canadian Chamber of Commerce, in its testimony at the Finance Committee, indicated that the federal debt and deficit, with increasing debt and continuing deficits, presents challenges. Canada’s fiscal flexibility is extremely limited, and there is no clear plan for returning to balance. They said this is a terrible long-term policy, and failure to get our fiscal house in order increases Canada’s vulnerability whenever the next economic downturn occurs.

CPA Canada also stated that while the government has continued its commitment to reduce Canada’s debt-to-GDP ratio, the government has provided no target for elimination of the deficit.

CPA Canada further stated that Canada needs a plan for fiscal stability, one that establishes a target date for a return to a balanced budget over the medium term. The government must demonstrate that it has a plan to rein in spending and address the persistent deficits. This would greatly assist in creating business confidence and minimize the burden on future generations.

Even Kevin Page, our former Parliamentary Budget Officer, commented in a recent article that:

The increase in federal debt and associated interest on the public debt will raise legitimate concerns about the government’s capacity as a fiscal manager.

He goes on to say:

If the economy slides into a recession between now and the election, the government will look seriously unprepared.

Honourable senators, Budget 2019 expands the Rental Construction Financing Initiative, which was first introduced in Budget 2017. It provides low-cost loans to encourage the construction of rental housing across Canada. Projects must meet certain criteria to qualify. The program was enhanced in Budget 2018 to build 14,000 new rental units over the life of the program.

Budget 2019 proposes to further expand the program, with an additional $10 billion over nine years. With this increase, it is estimated that the program would support 42,500 new rental units across Canada.

Budget 2019 indicates that five projects, representing 500 rental units, have been announced.

Senators questioned why there were only five projects representing 500 units for a program announced two years ago. CMHC officials indicated that they still expect to meet the targets and that it takes time to build a rental building. Their explanation was:

. . . so there is a bit of a lag between when we start the program and take applications and fund it.

I must say, to take two years and to only have 500 units announced was very disappointing with regard to that program.

Budget 2019 also proposes to introduce the first-time home buyer incentive program, and Senator Boehm has commented on that. This program was referred to the Senate Social Affairs Committee. However, the CEO and President of CMHC testified at our Senate Finance Committee and discussed this budget initiative.

Under this program, an incentive of 5 per cent or 10 per cent of the home purchase price would be provided by CMHC; 5 per cent would be provided for an existing home and 10 per cent would be provided for a newly constructed home. The 10 per cent shared equity mortgage for newly constructed homes is intended to help encourage new home construction in areas that have housing supply shortages.

To qualify, the participant must be a first-time homeowner, household income must be less than $120,000 a year and the insured mortgage plus the incentive cannot exceed four times the household income. The incentive would allow eligible first-time home buyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with CMHC. It is expected that approximately 100,000 first-time home buyers would be able to benefit from the incentive over the next three years.

The government has committed a significant amount of funding to this program. In fact, $1.25 billion over three years: $250 million this year, half a billion dollars next year and half a billion dollars the following year. The government has indicated that the program will be implemented September of this year.

The first-time home buyer incentive will be a shared equity mortgage that is to be repaid when the participant sells their home. Further details on the program will be needed to understand how the program will actually work. For example, if a home is sold for less than the outstanding mortgage, how will CMHC recoup its investment? The formula under which CMHC will recoup its investment has yet to be disclosed.

However, as much as the plan has been promoted, it is not without its critics. Critics say the plan will increase demand for houses. It will also increase supply, but while the new homes are being built, house prices most likely will increase. In markets where prices have stabilized or declined, it could reverse improved affordability. However, CMHC officials indicated that they were confident the program will essentially have no impact on housing prices.

The biggest and most visible threat to Canada’s economic stability is record-high household debt tilted heavily toward mortgages. In fact, Canadians have the highest debt load in the Group of Seven economies, so this program will encourage more people on the margins to take on more debt, while contributing to higher housing costs that got Canadians into their current debt problems.

In fact, our own Bank of Canada says that Canada’s high household debt is the central bank’s top domestic financial vulnerability. In addition, the International Monetary Fund has warned Canada about its high debt levels and the pressure on Canadian households to pay down their debt.

CPA Canada, in its testimony, commented on the proposed first-time home buyer incentive, citing several concerns. First, they said that the proposed program implies that CMHC is taking on direct exposure to the mortgage market at a time of record household indebtedness and rising interest rates.

Second, CMHC taking on part of a buyer’s mortgage simply allows the borrower to leverage further. CPA Canada went on to say that in a supply-constrained housing market that already has sufficient demand, pushing more buyers into a higher level of debt is unlikely to impact supply in isolation.

Mortgage Professionals Canada also expressed concerns regarding the first-time home buyers incentive program. The difficulty they have with the program is that it doesn’t assist anyone to qualify to purchase a home that wouldn’t already have qualified.

They also indicated that the program limits the mortgage size to four times the actual household income, whereas a family with reasonable credit would generally qualify for a traditional insured mortgage of around 4.7 or 4.8 times their household income.

Mortgage Professionals Canada also indicated that, to their knowledge, the program was conceived and announced without significant industry consultation.

The House of Commons Finance Committee also met on the first-time home buyer incentive program. I’m summarizing some of their discussions that provide insight into the program.

MPs indicated that at recent Public Accounts Committee meetings, nobody seemed to know the details of the program. The head of CMHC said the board of CMHC only found out about the program on the night of the budget. MPs at the House of Commons Finance Committee indicated that the program is intended to help 100,000 first-time home buyers, but they could not determine where that number came from.

Other information on the program was not available from CMHC, including the application process, the terms and conditions of the program, what happens in the event of a mortgage default, the repayment terms and amounts and the undertaking by CMHC of a risk assessment.

In summary, discussions at the House of Commons Finance Committee were similar to those at the Senate Social Affairs Committee. That section of the budget bill was sent to the Social Affairs Committee. I’ll have some other comments on that later on when I get into the reports of the committees.

Given that this budget initiative is estimated to cost $1.25 billion over the next three years, I would have expected the program to be more fully developed.

Honourable senators, I want to talk a bit about Phoenix because there’s a significant amount of money provided in the budget to fix Phoenix.

As you know, the Phoenix pay system for federal public servants is the result of the Transformation of Pay Administration Initiative. This led to the Phoenix pay system, whereby more than half of the federal government’s public servants have experienced pay problems, causing hardships to thousands.

The Auditor General of Canada issued two reports on Phoenix. The Phoenix pay system is still currently used to administer the pay of approximately 300,000 federal public servants.

In 2016, after Phoenix was launched, problems arose. The causes of the failure were multiple, such as failing to manage the pay system in an integrated way with human resources processes, not conducting a pilot project, removing essential processing functions to stay on budget, laying off experienced compensation advisers and implementing a pay system that was not ready.

The total amount of investments to respond to pay issues of the Phoenix system now stands at $1.2 billion. I’ll just give you a rundown as to where that money has gone.

During 2017, there was $142 million invested to build capacity, enhance technology and support employees; in other words, to help fix the problems that were being identified. Budget 2018 last year set aside $431 million over five years so that Public Services and Procurement Canada and Treasury Board Secretariat could hire staff, build capacity, enhance technology and support employees, again to fix the problems of the Phoenix pay system. It also set aside $5 million over two years towards the Canada Revenue Agency to process income tax reassessments on pay issues.

In Budget 2018, the Government of Canada also set aside $16 million over two years for Treasury Board, beginning in 2018-19, to work with experts, federal public sector unions and technology providers in order to establish a way forward for a new pay system and establish a temporary next generation human resources and pay team as a pay solution for the Government of Canada. It is expected that this initiative will result in recommended options during this month. We’re anxiously waiting to see what those options are going to be.

Minister Qualtrough, in her appearance before the National Finance Committee, said that work has already begun to move away from Phoenix and begin development of the next generation of the federal government’s pay system. Budget 2019 provides an additional $22 million in 2018-19 to address urgent pay administration pressures to continue progress on stabilizing the current pay system.

Budget 2019 also proposes to invest an additional $523 million over five years, starting in 2019-20, towards Public Services and Procurement Canada and Treasury Board Secretariat to ensure that adequate resources are dedicated to addressing pay issues. It also establishes $9 million towards the Canada Revenue Agency to process income tax reassessments.

The government has established a new service delivery model to process pay transactions, which is a pay centre employee initiative known as Pay Pods. It is expected that the use of resources would be more efficient and that pay transactions are processed more rapidly during the Pay Pod system.

We were told, when we met with the minister in April, that by May — last month — all 46 departments served by the pay centre would use the Pay Pod model.

Honourable senators, Bill C-97 deals with overpayments. The Phoenix pay system has been underpaying some public servants, and it has also been overpaying other public servants. Under the current legislation, an employee who has been overpaid is required to pay back the gross amount of the overpayment to the employer and the employee is to recover from the Canada Revenue Agency the excess income tax, Canada Pension Plan contributions and the Employment Insurance premiums that were deducted by their employer when the overpayment was made.

Clauses 33, 45 and 50 of Bill C-97 establishes that under certain conditions, an employee who was overpaid due to a system, administrative or clerical error would be able to repay to their employer only the net amount of the overpayment received in a previous year rather than the gross amount.

Under the new rules, the Canada Revenue Agency would be able to refund directly to the employer the income tax, CPP contributions and EI premiums withheld on an overpayment remitted to the Canada Revenue Agency on behalf of the affected employee. As a result, affected employees would no longer be responsible for recovering these amounts from the Canada Revenue Agency and repaying the gross amount to their employer.

For these new rules to apply, the employee must have repaid their employer or made arrangements to repay within three years following the end of the year in which the overpayment took place. Where these conditions are not met, the current rules would continue to apply. Public or private sector employers may elect to apply these new rules for any overpayment after 2015 as long as they have not previously issued a T4 correcting this overpayment.

Witnesses appearing before the National Finance Committee stated that since neither retirees nor employees were responsible for overpayments, they should not bear the burden of gross repayments, years of income tax confusion and challenges or financial hardship and uncertainty.

Honourable senators, I want to say a few words now about money laundering. This issue was referred to the Standing Senate Committee on Legal and Constitutional Affairs, but I was interested in this topic. I was doing a bit of research before that section of the bill was referred to another committee. I want to talk about it and then, later on, I can refer to what the Legal and Constitutional Affairs Committee had to say about the issue.

Honourable senators, in Budget 2019, the government lays out its concerns regarding money laundering. For the past few years, the issue of money laundering has played out in the media in British Columbia. Last year, the B.C. government retained retired RCMP Deputy Commissioner Peter German to conduct an independent review of money laundering in Lower Mainland casinos. His report was released in March 2018.

More recently, two other reports have been released on money laundering in real estate, luxury cars and horse racing. These reports were commissioned in September 2018, following a widespread concern about the province’s reputation as a haven for money laundering.

The first report was from an expert panel on money laundering, which was appointed by the B.C. government to review money laundering in the real estate sector. The second report was from Peter German’s second review into money laundering, focusing on the construction industry, real estate, luxury cars and horse racing.

The C.D. Howe Institute also released a report entitled, Why We Fail to Catch Money Launderers 99.9 percent of the Time. In this report, author Kevin Comeau says that Canada’s anti-money laundering protections, especially as they pertain to real estate, are among the weakest of those of Western liberal democracies and billions are being laundered in Canada annually.

In addition, the House of Commons Finance Committee issued a report in November of last year on their review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Standing Senate Committee on Banking, Trade and Commerce also issued a report in 2013 titled as follows: Follow the Money: Is Canada Making Progress In Combatting Money Laundering and Terrorist Financing? Not Really.

The federal government has been criticized for not taking enough action to counter money laundering.

Budget 2019 commits $11 million this year and $141 million over five years to the RCMP, Public Safety Canada, Canada Border Services Agency and FINTRAC to strengthen Canada’s anti-money laundering and anti-terrorist financing regime.

In addition to the funding, Bill C-97 proposes amendments to the Criminal Code and Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

As I mentioned earlier, this section of the budget implementation act on money laundering was referred to the Standing Senate Committee on Legal and Constitutional Affairs, and I will comment further on this item later in my speech.

Honourable senators, the budget bill adds three new measures to the Income Tax Act to provide support to Canadian journalism. Senator Boehm has referenced this and described it in his speech. I’ll just mention the three new measures and provide some comment.

First of all, it establishes a digital news subscription tax credit for subscribers. It would also amend the definition of qualified donee, which presently includes registered charities, to include registered journalism organizations registered by the Minister of National Revenue. This would enable journalism organizations to issue official receipts for donations.

A third new measure in Bill C-97 introduces a 25 per cent refundable tax credit on wages paid to eligible newsroom employees.

To implement this program, the government has identified eight organizations which have been invited to name a member to the independent panel of experts to assist in implementing these measures, including recommending eligibility criteria. The government also proposes to establish an independent administrative body, which will be responsible for recognizing journalism organizations as being eligible for the three measures. The government argues that a strong and independent news media is crucial to a well-functioning democracy.

However, the program has been heavily criticized since the people who lobbied for assistance are now the people responsible for defining the criteria for eligibility, and they are the same people who will be the beneficiaries of the program.

As Mr. John Miller, a professor at Ryerson University, stated:

Bill C-97 runs to more than 106,000 words, and 4 of those words concern me . . . “qualified” or “registered” journalism organizations, which will be the only ones receiving federal support.

. . . Who qualifies journalists? Where are they registered? Who benefits?

He also expressed concern that the danger here is that the government has power over news organizations.

The cost of the program is significant. Budget 2019 discloses that the cost of this program over the next five years will be $594 million.

A number of issues were discussed during our committee meeting. The program infringes on the independence of the press, as media organizations will now be subsidized by the government. While the government has established an independent panel of experts to recommend eligibility criteria, if you look at the Budget 2019 document, the budget has already established the eligibility criteria. Of particular concern is the inclusion of Unifor on the independent panel of experts.

In addition, the Canadian Association of Journalists, which is a member of the panel, has raised a number of concerns about the transparency of the process. It has called for the panel’s terms of reference, meeting minutes and agenda to be public. It has also called for the full list of applicants applying for funding to be posted online.

No information on the independent administrative body has been released, so we do not know how this body is to function.

Honourable senators, here is the main concern I have with regard to this program. When this government was elected in 2015, it focused on how to achieve results on promised actions. Departments were required to establish performance indicators for the program, and a Results and Delivery Unit was created in the Privy Council Office. A deputy minister was appointed to head it up.

Despite the fact that $594 million will be spent to support journalism, no one has told us what this $594 million is supposed to achieve. I know Senator Boehm used the words “bolster” and “enhance,” but for $594 million, I think that the government should be more precise as to what it expects the $594 million to achieve.

Senator Marshall
[20:59]

What results can we expect? What happens after year five when the funding ceases? Those are questions that haven’t been answered.

Honourable senators, I want to move now to zero-emission vehicles. We had a meeting at the finance committee on zero-emission vehicles, which was very interesting and educational.

Budget 2019 proposes several measures that will encourage more people and businesses to purchase zero-emission vehicles to reduce greenhouse gas emissions.

Bill C-97 proposes that zero-emission vehicles be eligible for a first year enhanced capital cost allowance rate of 100 per cent in the year that the vehicle is put in use, up to a maximum of $55,000.

To be eligible for this enhanced capital cost allowance, a vehicle must be fully electric, a plug-in hybrid with a battery capacity of at least 15 kilowatt hours or fully powered by hydrogen.

Bill C-97 also extends the accelerated capital cost allowance to vehicle charging stations. This initiative is estimated to cost $130 million over five years.

The measure to support business investment in zero-emission vehicles is estimated to cost $265 million over five years. There’s lots of money being devoted to this initiative.

In addition to the accelerated capital cost allowance for businesses, Budget 2019 proposes to introduce a new federal purchases incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a manufacturers’ retail price of less than $45,000. This initiative is expected to cost $300 million over three years.

Witnesses told us that more than 40 electric vehicle models are available for sale. The number is expected to grow significantly over the next few years. This compares to seven models that were available in 2011.

They also told us there has been a direct correlation between increased consumer adoption rates of electric vehicles and those jurisdictions that have provided consumer purchase incentives. There is a correlation.

The proposed $130 million investment over five years to deploy new recharging and refuelling stations is welcome, but, as one witness said, there is still a good way to go in that respect.

Fleet turnover is about 8 per cent per year, so the introduction will take some time.

Witnesses also told us that weather impacts and patterns of use have an impact on batteries. Witnesses indicated that on average a 340-kilometre distance is at the high-end range, depending on the vehicle, the type of battery and the load that’s placed on the battery. Even driving behaviour of the individual can drastically change battery performance and distance travelled.

Witnesses also indicated that there is clearly a need to expand the recharging network.

A representative of the charging industry indicated that a complete charge for a normal electric vehicle takes about 15 to 25 minutes and that more charging stations will instill confidence in electric vehicle owners.

This was all very interesting and informative.

Budget 2019 sets a target — the government has set a target for this program — to sell 100 per cent of zero-emission vehicles by 2040, so that’s a ways off, with near-term targets of 10 per cent by 2025 and 30 per cent by 2030.

While 2030 and 2040 are a way into the future, witnesses seem to be a bit reluctant to comment on those dates, but they were willing to comment on the 10 per cent target by 2025. They said right now, we are below 4 per cent, so we may reach 10 per cent, depending on the rebates, accessibility of charging stations and types of available vehicles.

Another witness felt that the established targets, while ambitious, are achievable with the right mix of policies.

We had three main witnesses, and there was a fourth witness who came to the table to answer questions on the recharging network. At the end of that hearing, all of our witnesses were very supportive of these vehicles.

Interestingly, at the end of our meeting, Senator Mockler asked the three witnesses — well, the three witnesses were supportive of the Budget 2019 initiatives, none of the three own an electric vehicle.

It was an interesting session. It sparked my interest in having an electric vehicle.

Honourable senators, I want to talk about the Canada training benefit. Budget 2019 proposes to establish a new Canada training benefit, with the objective of helping Canadians get the skills they need in a changing world.

The benefit is going to be administered by the Canada Revenue Agency. Under this program, eligible workers would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000, which could be used for training fees. I think Senator Boehm has talked about this program.

To be eligible for this benefit, individuals must be between the ages of 25 and 64, have earnings between $10,000 and $150,000 a year, and workers would be able to apply their accumulated Canada training credit balance against up to half of the cost of training fees.

Workers would claim this refund when they file their tax return. Since the Canada Revenue Agency will be administering this program, an updated balance of their Canada training credit will be included in the information the agency sends to Canadians each year.

The committee heard from five external witnesses when we studied this section of Bill C-97. They raised several issues with regard to this new benefit.

I’m going to list them because they had quite a few comments. There are eight.

First of all, Dan Kelly from the Canadian Federation of Independent Business said there is no role for the employer, who would be required to provide leave regardless of whether there is a business-related benefit.

The second comment is that the $250 annual credit may not be sufficient to buy meaningful training.

The third comment was a worker will have to wait until tax time to receive their refund.

Another complaint, I guess, is that only half of the cost of training, not the full amount, will be covered.

Witnesses also said the program itself and the administration by the Canada Revenue Agency increases the complexity of our tax system. I’ve talked about that before.

There should be a definition of what to expect in terms of long-term labour impacts, again, talking about the results of a program.

The benefit is restricted to workers between the ages of 25 and 64 years. As Senator Boehm has mentioned, many people work now past the age of 64. Perhaps 64 years is cutting it off too quickly.

Individuals have to have earnings of $10,000 a year.

It was most disappointing to hear that none of our five witnesses had been consulted on the bill, and especially so since a representative of the Canadian Federation of Independent Business was one of our five witnesses.

Honourable senators, one of the benefits of sitting on the National Finance Committee is that you learn about all the government departments and agencies.

When the budget implementation bill was tabled over in the House of Commons, and we were looking at the various sections, some of the sections I thought would come to the finance committee didn’t come to the finance committee; they went to other committees. The reports that were issued by the different committees on their sections of the budget implementation bill goes to the Senate finance committee. I took the reports and was reading some of them to see what concerns they had with certain parts of the bill. Some of the parts of the bill I found interesting, such as the issue Senator Patterson raised with regard to the two new departments. The section on money laundering was very interesting.

I was going to go through all of them. I don’t know if I have the time. I’m going to sort of start at the end and talk about the Standing Senate Committee on Aboriginal Peoples. They were to look at Division 25 of Part 4 of the bill, and that has to do with the two new departments.

In the finance committee, when those two new departments were created, every time someone came from those two departments we would ask what the status was of the new legislation governing the departments. When we questioned the witnesses, we found it sometimes confusing as to who was responsible for what programs. I’ll give you an example.

Could I have five more minutes, please?

The Hon. the Speaker pro tempore
[21:09]

Is it agreed, honourable senators, five more minutes?

Senator Marshall
[21:09]

When witnesses came from those two departments, we would always ask them to clarify what they were responsible for. As an example, it seems like there were several departments involved in housing for Indigenous peoples. Between the two new Aboriginal departments and CMHC, it got confusing at times, so we were waiting for the new legislation.

As Senator Boehm said, it was back in August 2017 that the Prime Minister announced the dissolution of Indigenous and Northern Affairs Canada, so we were waiting for the new legislation.

I was kind of surprised when somebody told me, “Oh, the legislation for those two new departments is part of the Budget Implementation Bill, so it’s right at the end.” So ever before I knew it was going to go to the Aboriginal Peoples Committee, I thought the Finance Committee would get it, because we were interested in it.

I did read it. Now, I don’t know what I expected before I read the bill, but after I read the two bills, I really thought that the legislation was superficial. I don’t know why and I don’t know what I was expecting, but whatever I was expecting, it doesn’t meet my expectations.

When I went to the Aboriginal Peoples Committee, I was very interested in what they had to say. Senator Patterson did reference some of it. He referenced a letter written by the Assembly of First Nations and I have it here. These are excerpts from the report of the Standing Senate Committee on Aboriginal Peoples.

. . . the Assembly of First Nations informed the Committee that there was a lack of meaningful consultation on the creation of the two departments and a potential third ministry.

The committee also said:

Further, the Assembly of First Nations felt that “there has been insufficient time for First Nations governments and representative organizations to thoroughly review and analyze the Bill, obtain legal opinions on the matters raised, and prepare submissions.” The lack of consultation led some witnesses to state that their treaty rights were violated and some recommended that Division 25 of Part 4 be deleted from Bill C-97.

So the Standing Senate Committee on Aboriginal Peoples made two recommendations in its report, and here’s what they said in their first recommendation:

That the Standing Senate Committee on National Finance amend Bill C-97 by deleting Division 25 of Part 4 and reintroducing it in the Senate as a stand-alone bill to allow better participation of Indigenous rights holders in the legislative process.

In its second recommendation, the committee said:

That Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada:

•undertake additional consultations with Indigenous peoples, communities, and organizations on the replacement of the Department of Indian Affairs and Northern Development with two new departments and potentially a third Ministry of Northern Affairs;

• report back to the Committee within one year on the consultation process and progress made to address issues raised, such as the concerns of First Nations with pre-1975 treaties and whether the Minister of Northern Affairs should be a discretionary or mandatory appointment.

Those were the two recommendations of the Standing Senate Committee on Aboriginal Peoples.

Now, there are several other committee reports that interface with what we did at the Finance Committee. I wanted to talk about the Legal and Constitutional Affairs Committee because they looked at money laundering. They were authorized to look at that section of the budget implementation act. Here’s what they said in their observation:

The committee acknowledges that Bill C-97 contains amendments aimed at enhancing the capacity of law enforcement, prosecution services and FINTRAC to deter, prevent, investigate and prosecute money laundering activities. However, the committee is of the opinion that the government is not demonstrating the leadership that is necessary to effectively combat money laundering and to make up for the losses caused to public funds. According to recent expert reports and information released by the British Columbia government, losses range from $40 to $100 billion per year. The federal government appears to rely on international bodies, and even the provinces, before taking action.

The Hon. the Speaker pro tempore
[21:14]

Senator Marshall, your time is up.

The Hon. the Speaker pro tempore
[21:15]

Are senators ready for the question?

The Hon. the Speaker pro tempore
[21:15]

Is it your pleasure, honourable senators, to adopt the motion?

Some Hon. Senators: Agreed.

An Hon. Senator: On division.

(Motion agreed to and bill read second time, on division.)