Moved second reading of Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023.

She said: Honourable senators, I can assure you that my speech won’t be either as eloquent or as interesting as the one we just heard from my colleague, Senator Lankin.

It is my privilege to rise as the sponsor of Bill C-59, the fall economic statement implementation act, 2023.

I begin by acknowledging the foundational work carried out by our Standing Senate Committee on National Finance, which dedicated four meetings to delve into the subject matter of this legislation, while hearing from 59 witnesses.

Your efforts are crucial in guiding the legislative process and ensuring proactive oversight.

Bill C-59 would implement key measures from the 2023 Fall Economic Statement to support the government’s stated efforts to build more homes, make life more affordable and create more good jobs. The bill is divided into five parts.

The first part makes amendments to the Income Tax Act and other pieces of legislation; there are 17 measures included in this first part. The second part of Bill C-59 brings forward the new digital services tax act. The third part amends the Excise Tax Act and related legislation; there are 12 measures included in this third part. The fourth part makes amendments to the Excise Act, 2001 and related legislation; four measures are included in this fourth part. Finally, the fifth part comprises various measures, from amending the Tobacco and Vaping Products Act to enacting the new Canada water agency act; there are 12 new measures included in the fifth part of Bill C-59.

Considering that Bill C-59 includes 48 different measures, with not all of them being significant, I will focus my remarks in this second reading speech on some of Bill C-59’s more noteworthy measures — the ones that I anticipate will draw the most interest from stakeholders.

We’ll start with Part 1, which is the doubling of the Canada Carbon Rebate rural supplement. Colleagues, I’ll begin my remarks with the amendment — proposed in the Bill C-59 Summary in Part 1(f) — to the Canada Carbon Rebate, which returns most proceeds from the federal fuel charge directly to individuals and families in provinces where the fuel charge applies.

The proposed amendment would double the rural top-up to the base amount of the Canada Carbon Rebate from 10% to 20% to better support Canadians in small and rural communities who face higher energy costs and more limited access to clean transportation options. The rate increase to the rural supplement would take effect as of April 2024.

When speaking on the enhancement of these payments, it is important to highlight that currently 8 out of 10 families in provinces where the federal backstop applies receive more money back than they pay, with low-income families benefiting the most.

Next is the carbon capture, utilization and storage investment tax credit. The government is also using the bill to deliver the first two of its refundable clean economy investment tax credits. The tax credits are designed to boost investments while supporting Canada’s goal of net-zero emissions by 2050. Let me start with Part 1(g) of this bill, the investment tax credit for carbon capture, utilization and storage for taxable Canadian corporations that incur eligible expenses for projects in this field.

This measure would encourage investments in carbon capture utilization and storage technologies to reduce carbon dioxide emissions. These technologies are important tools for hard-to-abate sectors such as concrete, plastics and fuels. Projects are eligible to the extent that they permanently store captured CO2 through an eligible use, which includes dedicated geological storage and storage of CO2 in concrete. The investment tax credit would be available for expenditures incurred on or after January 1, 2022, and would no longer be available after 2040.

From 2022 through 2030, the investment tax credit rates would be set at 60% for investment in equipment to capture CO2 in direct air capture projects; 50% for investments in equipment to capture CO2 in all other carbon capture, utilization and storage, or CCUS, projects; and 37.5% for investments in equipment for transportation, storage and use.

These rates would be reduced by half for the period from 2031 through 2040.

With respect to the investments in clean tech, Part 1(h) of the bill describes a measure to introduce a 30% clean technology investment tax credit. This measure would encourage investment in clean technology assets in Canada, helping to ensure that Canadian companies remain globally competitive.

The refundable tax credit would be available to taxable Canadian corporations and real estate investment trusts for assets such as certain clean electricity generation equipment, low‑carbon heating equipment and geothermal energy systems, excluding any equipment that is part of a system that extracts fossil fuel for sale.

The clean technology investment tax credit would be available retroactively for eligible investments in property acquired and available for use on or after budget day 2023, which was March 28, 2023.

The credit rate would be reduced from 30% to 15% in 2034, and the credit would no longer be available after 2034.

With respect to labour requirements for the investment tax credits, Part 1(i) of Bill C-59 would impose labour requirements for access to the investment tax credits. To qualify for the higher tax credit rates, companies would have to pay workers prevailing wages and create apprenticeship opportunities.

The labour requirements seek to guarantee that when businesses receive financial support to invest in green energy, workers benefit as well.

I will now move to Part 2, which sets out the proposed digital services tax act. The government first announced plans for a digital services tax in the 2020 Fall Economic Statement. It was announced as an interim measure that would apply from January 1, 2022, until a multilateral approach comes into effect. In October 2021, the government agreed to temporarily pause the digital services tax until the end of 2023 to allow time for a treaty to be brought into force under Pillar One of the two-pillar plan on international tax reform. A harmonized multilateral approach to digital taxation is the preferred avenue, and the government has been actively engaged with international partners to that end since 2017 and remains committed to that objective.

However, in the absence at present of a feasible path to a multilateral approach and to safeguard Canadian interests, the digital services tax is now deemed essential. This approach aligns with international best practices with regard to tax equity and seeks to ensure that companies profiting from data and content generated by Canadian users contribute their fair share of taxes.

The digital services tax would be levied at a rate of 3% on revenue from digital businesses, whether Canadian or foreign‑owned, in which data and content from Canadian users is a key input and value driver. This includes online marketplaces, targeted online advertising, social media, as well as certain sales and licences of user data.

The digital services tax would apply to an entity or a group of companies that meets the following two thresholds: global revenue from all sources from a given fiscal year equal to or exceeding €750 million — which is C$1.1 billion — and revenue from users in a given calendar year exceeding $20 million. In introducing this measure, Canada will be joining such countries as Austria, France, India, Italy, Spain, Turkey and the United Kingdom, which have all had a digital services tax since 2021 or earlier.

The digital services tax act would come into force through an order of the Governor-in-Council. Budget 2024 reiterated that the government’s plan originally outlined in October 2021 is that the DST would begin to apply for calendar year 2024. As provided in this bill, the first year of application will cover taxable revenues since January 1, 2022, the start date originally proposed in 2020. Businesses were informed of this tax through Budget 2021, where the details were published, and the draft legislation was first released in December of the same year, providing sufficient time for preparation. The DST is expected to raise between $800 million and $900 million per year.

I will now talk about Part 3 on affordable mental health services.

Honourable colleagues, Part 3(h) of this bill will also help guarantee that Canadians receive the support they need by making mental health services more affordable and by increasing access to practitioners.

The bill amends the Excise Tax Act to add psychotherapists and counselling therapists to the list of health care practitioners whose professional services are exempt from the GST/HST.

To improve access to affordable housing, the government has taken various measures under the recently published Canada’s Housing Plan and Budget 2024, including measures to increase Canada’s housing supply in order to address the high costs people must pay for shelter.

Part 3(l) of the bill seeks to improve access to affordable housing by helping to boost the supply of housing in Canada, particularly rental housing. To do so, the government will ensure that eligible cooperative housing corporations can access the 100% GST rebate for rental housing, which was recently implemented in Bill C-56.

Bill C-56, the Affordable Housing and Groceries Act, received Royal Assent on December 15, 2023. It implemented a temporary 100% rebate of the GST and the federal portion of the HST on the cost of new purpose-built rental housing projects. This measure will apply to projects where construction begins after September 13, 2023, but before 2031 and is substantially completed before 2036.

Bill C-59 would extend eligibility for the GST rebate on new rental housing to cooperative housing corporations that provide long-term rental accommodation. This unique housing model promotes personal development and long-term stability by giving people access to affordable housing in a welcoming community.

Let’s now move on to Part 4 of the bill, which includes several measures related to the taxation of vaping and cannabis products.

While these measures are technical in nature, they implement the new excise duty framework for vaping products that is coordinated with the frameworks of participating provinces and territories in respect of product stamping.

In addition, vaping product licensees would be allowed to import unstamped finished products for stamping in Canada and specify the net volume in a given unit of measurement, which is used to determine the excise duty.

The amendment related to licensed cannabis product producers would give them the option to remit excise duties quarterly to accommodate certain cash flow problems.

Moving on, Part 5 of the bill contains a host of measures, including support in the event of a pregnancy loss. Division 2 of Part 5 of the bill would amend the Canada Labour Code and An Act to amend the Criminal Code and the Canada Labour Code to give federally regulated private sector employees a three-day leave of absence in the event of a pregnancy loss, or eight weeks in the event of a stillbirth.

A pregnancy loss can be a harrowing experience, and people dealing with this type of situation often need time off work to recover.

The new leave will offer employees greater job and income security during their recovery.

Division 3 of Part 5 enacts the proposed Canada water agency act. This measure establishes the Canada water agency, which would have the mandate to improve freshwater management in Canada by collaborating with the provinces, territories, Indigenous communities, local authorities, scientists and other stakeholders.

The Canada water agency would deliver on key elements of the strengthened Freshwater Action Plan to improve freshwater outcomes, restore, protect and manage water bodies of national significance, and improve freshwater quality. The Freshwater Action Plan would deliver regionally responsive initiatives in the Great Lakes, Lake Winnipeg, Lake of the Woods, the St. Lawrence River, the Fraser River, the Wolastoq/Saint John River, the Mackenzie River and Lake Simcoe.

One of the main roles of the Canada water agency would be to strengthen coordination among the more than 20 federal departments and agencies that have water responsibilities.

Water is Canada’s most precious natural resource. With 20% of the world’s freshwater reserves, it is essential to our well‑being and our economy.

To guide the development of this legislation, public consultations were launched in 2020. More than 2,700 Canadians shared their views, as did over 750 Indigenous communities, including First Nations, Inuit and Métis settlements and locals. There was also bilateral engagement with the provinces and territories.

It is also important to note that the preamble to the bill reaffirms the Government of Canada’s commitment to implementing the United Nations Declaration on the Rights of Indigenous Peoples.

Division 4 of Part 5 of the bill would establish a tobacco cost recovery framework. This would be a key step in increasing industry accountability by ensuring that tobacco manufacturers contribute to the government’s costs of responding to the tobacco epidemic.

The total public health costs of tobacco use in Canada, including direct and indirect costs, are estimated at over $11 billion per year. In 2021, the tobacco industry’s reported revenue was approximately $4.6 billion.

Taxpayers currently bear the full cost — $66 million a year — of federal activities to address the national public health problem of tobacco use and to prevent vaping.

The bill would amend the Tobacco and Vaping Products Act to enable the establishment of fees or charges and related administration and enforcement measures to implement a tobacco cost recovery framework. If adopted, the amendments would help reduce the financial burden on taxpayers.

Division 6 of Part 5 has been crafted to provide more relief on Canada’s strained household budgets.

For several years, stakeholders and the public have voiced serious concern over growing corporate concentration, rising prices and the power of corporate giants.

Complementing the changes introduced in Bill C-56, which I discussed with you a few minutes ago, Bill C-59’s package of amendments would provide Canadians with a more modern and effective competition law. Together, these amendments represent generational changes to Canada’s competition regime. More competition means lower prices, more innovative products and services and more choices for Canadians in where they take their business.

The bill’s amendments are designed to improve many aspects of the country’s competition regime, empowering the Competition Bureau to better serve the public in its role as a watchdog and advocate of dynamic markets and allowing the country to reap their well-documented benefits.

The proposed package comprises carefully selected areas that can directly contribute to addressing long-standing issues, delivering on the government’s commitment to significantly update competition legislation. The bill would further modernize merger reviews and position the Competition Bureau to better detect and address “killer acquisitions” and other anti‑competitive mergers. The changes would also enhance protections for consumers, workers and the environment, including improving the focus on worker impacts in competition analysis.

The amendments would strengthen the Competition Act’s enforcement framework, including empowering the Commissioner of Competition to review a wider selection of anti-competitive collaborations and seek meaningful remedies to ensure that harmful conduct is not repeated. It would also deter greenwashing by prohibiting environmental benefit claims that are not based on proper testing.

The bill is drafted to go further with support for Canadians’ right to repair by preventing manufacturers from refusing to provide the means of repair of devices and products in an anti‑competitive manner. Right to repair is clearly an area of focus.

In the recently released Budget 2024, the government announced it would launch consultations this June to develop a right-to-repair framework, which will focus on durability, repairability and interoperability. The competition-related measures are informed by the comprehensive review of the Competition Act undertaken by the government over the past two years.

With regard to establishing the department of housing, infrastructure and communities, Canadian communities require affordable homes as well as key infrastructure like public transit, modern water systems and community centres. In recognition of this link, Division 11 of Part 5 would establish the department of housing, infrastructure and communities and clarify its powers, duties and functions as the federal lead for improving housing outcomes and enhancing public infrastructure.

The change would establish two statutory ministers, a minister of infrastructure and communities and a minister of housing, both supported by one department. The implementation of the department of housing, infrastructure and communities act would be effective immediately upon Bill C-59’s Royal Assent.

Regarding support for parents of children through adoptions and surrogacy, I will briefly speak on an equity measure aimed at Canadian families.

In Division 12 of Part 5, the bill proposes to amend the Employment Insurance Act to introduce a new, shareable, 15‑week benefit for parents who qualify for Employment Insurance and become parents of a child or children through adoption or surrogacy. Qualifying parents could combine benefits, making their total number of weeks of income support the same as that of birth parents, who can combine maternity and parental benefits. The change would support approximately 1,700 Canadian families each year.

With respect to amendments adopted at committee, before I conclude, I would like to touch on the 10 amendments that were adopted at the Standing Committee on Finance at the other place. All of these amendments are part of the bill we received on Tuesday, and no additional amendments were adopted during third reading.

First, an amendment was adopted regarding the provisions that relate to the dividend received deduction, as in paragraph (e) of the summary’s outline of Part 1. The amendment modifies clause 28 to clarify that Canadians with certain types of life insurance policies that offer variable returns who were not the target of this change will not be affected by it.

The other amendments are aimed to improve the measures relating to the Competition Act by clarifying the language and closing potential loopholes. Most were proposed by the NDP.

An amendment to clause 234 was adopted to close a potential loophole regarding “drip pricing” and prevent the unintended proliferation of junk fees. This amendment specifies that charges can be listed separately only if they are imposed directly on the purchaser of the product by an act of Parliament or the legislature of a province. Consequential amendments were adopted to ensure consistency of this approach in the whole regime.

Another amendment was adopted with respect to the broadening of the Competition Act’s “refusal to deal” provision to include refusal to provide means of diagnosis or repair other than trade secrets. The amendment modifies clause 244 to clarify that the tribunal can require the manufacturer to give access to any person. This was supported by stakeholders, such as the Automotive Industries Association, or AIA, of Canada.

Also supported by AIA Canada was an amendment proposed by the Bloc Québécois to strengthen the definition of “. . . means of diagnosis and repair . . .” at clause 244, by including “. . . maintenance . . .” and “. . . calibration . . .” given that these services and activities are central to proper repair in the aftermarket.

Finally, clause 249 was amended, as proposed by the Commissioner of Competition, to enable the tribunal to order remedies that fully restore competition as it would be but for the merger. Currently, only mergers that are likely to substantially lessen or prevent competition can be challenged by the commissioner in front of the Competition Tribunal.

Honourable senators, Bill C-59 advances key components of the government’s economic plan by delivering on the main elements of the 2023 Fall Economic Statement. You may have noticed that in this speech at second reading, I only touched on half of the measures in Bill C-59. In my speech at third reading, I will address other interesting measures in this bill that advance the work of some of our colleagues in this chamber. In the meantime, I invite my colleagues on the Standing Senate Committee on National Finance to continue diligently studying this bill.

Thank you for listening.