Will Senator Moncion take a question?

Colleague, thank you for your leadership on this file. Thank you as well for your open-mindedness when we come to you voicing our concerns and looking for reassurance.

One of the tax measures in this bill that concerns me a great deal relates to the 3% tax on digital services. Although the Minister of Finance tabled a notice of ways and means motion in December 2021, it took almost two and a half years before a bill was introduced. I think the minister wanted to negotiate a multilateral agreement with other OECD countries, but that did not work out. As a result, companies are being charged a 3% tax, retroactive over two years. To the extent that the businesses involved are large American companies, like Netflix and Disney, which boast 30% profit margins, no one is shedding any tears for them. However, for smaller businesses, like travel agencies, which have a 6% profit margin, a 3% retroactive tax could hurt.

Given that the American ambassador to Canada has warned our government that it is embarking on something contentious — he even used the words “big fight” when talking about what could happen — can you give us some reassurance, especially on the verge of a change in Washington? Do you have any guarantees that all these measures will not be challenged and that, ultimately, we will not be forced to amend this bill?

Thank you for your reply. I understand that you can’t offer any guarantees. I’m sure you will agree that the way things are being done now is definitely not great. For a bill to be introduced so long after a notice of ways and means motion is not ideal. Yes, companies were aware of this, but when I read what was published at the time, it said that, in the meantime, the government would do this and didn’t intend to introduce anything before 2024, but hoped to negotiate a treaty with the other OECD countries.

If I understand correctly, companies like Expedia and Booking were supposed to have set aside money or collected a 3% tax in case the government went ahead with the bill if talks with other OECD countries didn’t work out. That’s not an easy thing for companies to do given the delay between tabling a ways and means motion and introducing the bill. When a bill is introduced, lawmakers can debate it, hear witnesses, submit amendments and take action. With a ways and means motion, people can take notes, but things can change.

Do you agree that this way of proceeding is not ideal and is detrimental to businesses?

Honourable senators, I rise today in this chamber to speak to Bill C-59, the fall economic statement implementation act, 2023.

I will focus my remarks on clause 236, which amends the Competition Act, and on the importance of these changes.

More and more, we are seeing environmental legislation added to budget bills, and Bill C-59 is not an exception. This is because climate- and nature-related risks are associated with significant costs to Canadians. Addressing issues of environmental pollution and global warming while we transition to a low-carbon economy requires a whole-of-government approach, one that uses environmental levers as part of a horizontal approach to policy development and legislation.

Indeed, given the climate and overlapping, cascading crises, and the fact that Canada is progressing neither with greenhouse gas emissions reduction nor with reduction of pollution, the federal government must do more to protect Canadians.

Since 1990, after the implementation of more than 10 climate change mitigation plans, Canada has yet to reach its climate targets or succeed in achieving its emissions reduction targets.

The United Nations notes, and it is clear, that:

Greenwashing undermines credible efforts to reduce emissions and address the climate crisis. Through deceptive marketing and false claims of sustainability, greenwashing misleads consumers, investors —

— responsible investors —

. . . hampering the trust, ambition, and action needed to bring about global change and secure a sustainable planet.

Division 6 of Part 5 of Bill C-59 contains measures to modernize Canada’s competition framework by proposing amendments to the Competition Act. The provision as amended was adopted unanimously in the other place. I encourage you, colleagues, to vote for Bill C-59 as amended by the elected chamber and accept the report with the observations of the National Finance Committee.

The Competition Bureau has long had the ability to enforce against greenwashing, that is, false or misleading representations of the benefits of a product toward the environment that are not based on proper and adequate testing. However, the existing provisions could capture only few greenwashing claims and, most importantly, did not require firms to have evidence to back some of the environmental claims. This has limited the power of the Competition Bureau to effectively enforce against greenwashing.

In Canada, greenwashing unfortunately is a systemic issue. Just last week at the House of Commons Standing Committee on Environment and Sustainable Development, it was made clear that Canadian banks, while claiming to be on the path to net zero, are investing more in fossil fuels compared to renewables. They favour fossil fuel investments over clean energy at the ratio of almost 4 to 1, even though these investment ratios should be exactly the opposite. These investments should be effective before 2030 if we hope to achieve a 1.5 °C scenario.

The same committee at the other place met with the Pathways Alliance, a coalition of six companies representing 95% of oil sands production in Canada. This group advertised their net-zero 2050 goals and lobbied the government to approve and subsidize a carbon capture and sequestration project. This, they claim, will help them achieve net-zero emissions despite several scientists raising concerns about the scientific validity of this technology.

Indeed, according to a joint report of the U.S. Senate Budget Committee and the House Committee on Oversight released just last April, oil companies’ massive public-facing campaigns portray carbon capture and storage as a viable and available solution to allow them to continue increasing their greenhouse gas emissions while they internally acknowledge that they are not planning to deploy the technology at the scale needed to solve the climate crisis.

The U.S. report also finds that “the industry’s true goal is to prolong, perhaps indefinitely, the unabated use of fossil fuels.” Based on these facts, are we surprised that one of our five big banks and the Pathways Alliance are the subject of the investigation by the Competition Bureau or that the Pathways Alliance lobbied to amend this clause of Bill C-59?

Greenwashing can give a company an unfair advantage, allowing them to continue business-as-usual polluting practices while benefiting from deceptive claims of environmental stewardship. This can make it more difficult for responsible business corporations that are not greenwashing and that are, in fact, doing the hard work required to stand out in the marketplace.

Over time, greenwashing has eroded consumer faith, which makes consumers more likely to dismiss environmental claims, even those that are, in fact, legitimate.

A 2023 report revealed that 57% of Canadian consumers do not believe most green claims brands make. Thus, companies are likely to gain an advantage by closing the perception gap and validating their sustainability and environmental claims.

Even more concerning is that companies producing greenwashed products or running greenwashed businesses and facilities also have a history of locating these polluting businesses in equity-deserving communities, including low‑income and racialized communities and, of course, Indigenous people’s lands. Greenwashing puts at risk not only the environment but also public health. Notably, this is why we needed a framework for the prevention of environmental racism.

The amendments to the Competition Act in Bill C-59 will make it easier for consumers to identify genuine green products, as well as businesses with sustainable practices.

A 2021 survey found that 49% of Canadian consumers agreed they made purchases from companies that supported environmental protection, and 46% of survey respondents agreed they purchased more biodegradable and eco-friendly products. Colleagues, there is a strong demand and a strong-growing market for green products, and we know consumers can drive the market, but up until now this ability in the context of the green market has been hindered by greenwashing.

On May 31, 2024, in a letter to the Chair of the Standing Senate Committee on Banking, Commerce and the Economy, sent on behalf of the Competition Bureau, it was stated:

As a general principle, when companies make claims to promote a product or a business interest, they should be able to back them up. Bogus claims are false or misleading and undermine competition on the merits. In the context of greenwashing, the harm of unfounded claims is even more pernicious given the existential threat posed by climate change and the need to accelerate a green transition.

The letter goes on to say that:

A substantiation requirement protects competition by ensuring that consumers can trust the statements that are made about businesses and business activities. It safeguards honest and reputable manufacturers and merchants who compete with those making claims about the environmental impacts of production. Increasingly, consumers make purchasing decisions based on the environmental impacts of production, and as such, the harm from unsubstantiated claims in relation to businesses and business activities is just as serious a harm to competition as the harm in respect of unsubstantiated claims in respect of individual products.

These amendments will strengthen our ability to police deceptive greenwashing claims. . . .

I am aware that concerns were raised by a few stakeholders and some colleagues at committee about what qualifies as an “internationally recognized methodology” in the context of adequate and proper substantiation with respect to the benefits of a business or business activities as they relate to environmental claims. However, I am confident that while this term is not defined in the bill, Canadians and Canadian businesses can place their trust in the Competition Bureau, the Commissioner of Competition and the Competition Tribunal.

As noted at committee, the Competition Bureau has a distinguished and unsullied reputation. They have a history of professionalism, demonstrated understanding of legislation and awareness of what is happening in Canada, as well as the ability to monitor what goes on in the United States and elsewhere in the world.

With regard to “internationally recognized methodology,” I will also note that there are such methodologies for most environmental claims, including the following: the Science Based Targets Initiative, which is commonly used for net-zero targets; the International Sustainability Standards Board, which is commonly used for climate-related disclosures; and the Taskforce on Nature-related Financial Disclosures, which is commonly used for nature-related disclosures, to only name a few. I’m told that if you do the research, there will be 15 other standards, including the family of the International Organization for Standardization.

Furthermore, this type of substantiation requirement is not unique to Canada. California has a requirement that is almost identical, and the European Union and the United Kingdom are developing rules and guidance that are intended to regulate and require evidence of certain environmental claims, including those related to carbon neutrality and climate friendliness.

Finally, I would like to highlight that the amendments to the Competition Act proposed in clause 236(1) are not an attack on free speech, nor do they intend to foster green hushing or eco-silence. While these amendments may lead to organizations being more careful when making green claims, this should be viewed as a positive consequence. The bottom line is that an organization should not make any claim — green or otherwise — that it cannot substantiate with sound evidence.

While there remains opportunity to further strengthen the Competition Act and greenwashing regulations in general, I recommend that this be left for future consideration, including giving more power to the commissioner, as he has expressed.

As the intensity of environmental and social crises increases, we must take a horizontal approach to budget bills, and we must consider all aspects of the Canadian budgetary cycle through a climate lens.

I support this legislative approach, designed to horizontally fill the gaps that are making our environment, economy and society vulnerable. For the reasons I have just outlined, I support Bill C-59 and I ask you to vote for it. Thank you. Meegwetch.

Honourable senators, what a day of robust discussion about competition law reform in the Senate. That’s a great day from my standpoint, and I’ve long awaited the arrival of Bill C-59, the fall economic statement implementation act, 2023. Bill C-59 includes several specific measures that will increase competition, drive innovation, improve productivity growth and, ultimately, improve our prosperity. However, I think it is worth repeating our collective frustration in receiving not one but two complex spending bills from the House of Commons in the last couple of weeks.

The 546-page Bill C-59 was tabled in November — nearly seven months ago. Yet, it arrived just before the 686‑page Bill C-69, the current budget implementation act, 2024, No. 1, which was tabled only two months ago. I think it’s irresponsible to force the Senate to rush our study of these highly consequential bills.

That aside, I am thrilled to be speaking about three of Bill C-59’s legislative changes that I think will drive innovation into our economy. These include changes to the Canadian Payments Act and the investment tax credits for clean technology projects. I will delve into those in a moment, but first I want to review the important changes to the Competition Act and the Competition Tribunal Act.

Over the past two years, this government has introduced the most consequential changes to Canada’s competition laws since the Competition Act was first introduced in the 1980s. Why is this important? Last October, the Competition Bureau released a 20-year analysis of the steadily diminishing levels of competition and steadily increasing levels of corporate concentration right across Canada. More and more sectors now have too few competitors, much to the benefit of our largest firms and to the detriment of consumers. Consumers are finally becoming frustrated, because profits and markups have steadily risen in every industry where concentration is high. Hard-working innovators are frustrated because regulations, initially designed to protect consumers, now represent an all too costly barrier to entry. This regulatory barrier protects oligopolies from competitive threats posed by new innovators, and the lack of robust competitive threats means the incumbent oligopoly feels less pressured to innovate.

Stronger competition policy across the whole of government is now broadly seen as being crucial to stimulating market forces that will do the following: first, help increase business investment; second, improve fairness in the marketplace; and, third, reduce prices for consumers.

What are the proposed changes in Bill C-59, and why are they important? Division 6 of Part 5 includes several important changes to the Competition Act and the Competition Tribunal Act. These changes are the final elements of those considered in Innovation, Science and Economic Development Canada’s consultation on the future of competition policy in Canada, conducted between November 2022 and March 2023. It was a consultation that — as Senator Moncion mentioned — was very much encouraged by Senator Howard Wetston’s earlier work.

The changes in this bill build upon amendments first introduced in Bill C-19, the Budget Implementation Act, 2022, No. 1, which was on wage-fixing and no-poaching agreements, and Bill C-56, the so-called Affordable Housing and Groceries Act, which enabled the initiation of market studies by the Competition Bureau and removed the efficiencies defence.

I entirely support the government and the House of Commons Standing Committee on Finance’s amendments to the Competition Act and the Competition Tribunal Act.

Critics often observe that these legislative changes have occurred in a piecemeal manner over the last two years. In my opinion, this criticism overlooks the fact that these amendments have been intensely focused on giving our competition cops meaningful enforcement powers.

Allow me to share some data to illustrate how incredibly bad things were prior to 2022. The Competition Act amendments in section 92, section 93 and section 97 focus on changing how mergers will be reviewed, primarily by the following: First, the criteria that triggers the requirement for parties to send the Competition Bureau a pre-merger notification are being widened.

For context, Keldon Bester, a fellow and researcher at the Centre for International Governance Innovation, identified that there were 16,000 mergers in Canada between 2016 and 2022. However, he found that the bureau was notified in only 8% of those mergers, and our laws at that time enabled the bureau to challenge only 33 of those mergers in some way. In the last six years in this country, 33 mergers were challenged out of 16,000. That is only 0.2%.

Second, market concentration and dominant market position will now be explicit factors for the tribunal to consider. For context, the C.D. Howe Institute found that since the 1980s, the tribunal heard only eight merger cases. Seven involved concentration levels that created or preserved market shares above 60%, and four of these mergers would create monopolies or near-monopolies. Yet, the tribunal only ordered remedies in two of those cases.

Third, the time frame when the commissioner can challenge a non-notified merger will increase from one year to three years, giving the Competition Bureau the ability to more broadly address “killer acquisitions” and harmful mergers. An especially egregious recent example is Dye and Durham’s purchase of real estate software. The company behaved for a year until the bureau no longer had the ability to act. Over the following months, the company introduced a massive, tenfold price hike.

Fourth, it will ensure that merger reviews consider the effects on labour markets. This will force the tribunal to explicitly consider the lessening of competition in the labour market as a factor in a merger review.

Bill C-59 also introduces private rights of action. This is a highly consequential change because, under specific circumstances, it would allow for private claimants to apply to the tribunal to exercise this right.

Importantly, the tribunal holds a gate-keeping role as it relates to these new rights and could deny cases, particularly if they are considered frivolous or vexatious. This gate-keeping role is not new to the tribunal. Additionally, these rights will come into force one year after the bill receives Royal Assent.

Bill C-59 also responds to growing calls to empower a consumer’s right to repair their products by broadening the “refusal to deal” provisions in the Competition Act. These amendments complement the proposed amendments to the Copyright Act in the two right-to-repair bills currently at committee stage here in the Senate, Bill C-244 and Bill C-294. I’m sure you all recall my riveting speech on Bill C-244 as it relates to technological protection measures.

Lastly, and very importantly, Bill C-59 includes a timely response to the shocking decision rendered by the Competition Tribunal on August 28, 2023, when the tribunal awarded Rogers Communications and Shaw Communications $13 million to offset their legal fees. You may recall that beginning in April 2022, the bureau undertook to challenge the Rogers and Shaw merger under Canada’s completely outdated Competition Act. When the bureau lost this challenge, the tribunal ordered the bureau to pay the merging parties’ legal fees because of how vigorously the bureau fought this merger based on compelling evidence. I think the decision caused a “WTF” moment across the country — that stands for “what the fuddle duddle” — because of the realization that taxpayers would be paying these legal fees.

As a result of this outrageous decision, I was especially pleased to see the government amend the Competition Tribunal Act to ensure that, in the future, the robust defence of competition in case adjudication would not result in legal cost awards.

Those are, broadly speaking, the government’s proposed amendments introduced in Bill C-59.

Additionally, the Competition Bureau submitted several recommendations to further strengthen Bill C-59, and most of these were accepted at committee stage in the House of Commons. These amendments included, firstly, removing legislative loopholes to further prevent companies from hiding additional fees through drip pricing and to encourage price transparency. We’ve all seen drip pricing cause prices to creep up as much as 30% through the addition of a convenience fee, a processing fee, a cleaning fee, a resort fee — you name it. The bureau’s objective is simple: Businesses should advertise and compete based on their fully costed price.

The second amendment recommended that businesses who promote their interests using environmental claims be required to substantiate those claims if and when challenged by the bureau. I think we heard our colleague speak strongly about this.

The third involved adopting a reverse onus approach where businesses must prove their discounts are legitimate if challenged by the bureau.

The fourth dealt with implementing new remedies for anti‑competitive mergers specifically intended to restore or preserve the level of competition that existed prior to an anti‑competitive merger.

I want to pause for a second on this one. Historically, increased concentration was guaranteed in the Canadian economy. Why? Because until now, if a merger was expected to cause a substantial reduction in competition, the remedy could only remove the word “substantial,” not the word “reduction.” We were guaranteed that every merger in this country would make an industry less competitive and more concentrated. With the implementation of this amendment, the pre-merger levels of competition must be restored. That’s a very good thing and a big change.

Finally, the House Finance Committee went beyond the original request from the Competition Bureau and made an amendment in clause 236 that broadened deceptive marketing practices to include environmental misrepresentations that would be assessed using, and we heard this before, “. . . internationally recognized methodology . . . .” This was intended to capture greenwashing claims, but instead the definition introduces uncertainty because no specific methodology exists. Uncertainty is anything but helpful for anyone, including the Competition Bureau.

At the Senate’s National Finance Committee, Senator Ross introduced an amendment to remove these three words but it was defeated. I completely support the concerns that were compellingly argued by Senator Ross and Senator Tannas and that were cited in the committee’s observations. However, I believe that we will be seeing clarifying guidance well before this provision comes into force, which the bureau committed to in a letter to the committee.

The fact that we were only able to discover and address this problematic issue at the last minute is yet another illustration of the challenges created when the Senate is not provided with sufficient time to fulfill our legislative responsibilities.

Colleagues, over the past two years, tremendous progress has been made in competition law reform. I commend the government for their efforts. However, we are far from done. We still require a robust, whole-of-government approach to removing anti-competitive policies, programs, regulations and legislation across each department and agency. Why? Because Canada has Organisation for Economic Co-operation and Development, or OECD-leading levels of regulatory burden. We have too many command-and-control regulations that describe the process that must be followed rather than the desired outcome to be achieved. This eliminates the ability to innovate.

We need to act with national urgency across our government and economy. A leading researcher in this field, Professor Thomas Ross, provided compelling testimony at the House Industry Committee on June 10 when he observed that:

. . . the Competition Act, the bureau and the tribunal really just take care of one big slice of competition in Canada but not the whole pie.

Outdated and anti-competitive programs, policies and regulations exist across the whole of government, and Canada’s global competitiveness will never improve until we begin to streamline this burden.

I’ve long said that you can never regulate a company into becoming customer-centric; only competition can achieve that all-important goal. I want to give you an example that I was just reminded of today. Australia’s National Competition Policy encompasses all levels of government and has reviewed and updated over 1,800 laws and regulations. Federal transfer payments enable states and territories to be important partners, and the effort has been conservatively estimated to result in a permanent 2.5% increase in Australia’s GDP worth roughly $5,000 per household per year.

The return on investment from streamlining our regulations and our legislation is significant. Australia has proven it, and Canada can do it.

Continuing on the theme of increased competition driving innovation, Part 5, Division 5 of Bill C-59 includes changes to the Canadian Payments Act. These changes will allow new members to join Payments Canada, specifically those who are payment service providers supervised by the Bank of Canada under the Retail Payment Activities Act, which was an important part of Budget 2022.

The Bank of Canada’s accreditation process for payment service providers has been developed in a robust and inclusive manner. Many of these new regulated participants are innovative, Canadian-based financial technology companies that will introduce responsible regulated innovation into Canada’s payment systems, which manage roughly 20 billion transactions worth about $10 trillion a year in this country.

They also include credit unions that are part of a credit union central. A credit union central is a service provider that manages the financial infrastructure for multiple member institutions. Credit unions can often be the only financial institution in our rural and remote communities, and they’ll finally have a direct voice at Payments Canada. They’ll also be able to access the Bank of Canada’s liquidity support.

Additionally, proposed changes to the Canadian Payments Act will make sure that the Payments Canada Stakeholder Advisory Council cannot include any Payments Canada members. This change will help the advisory council to better represent the views of all users in the payment system, like merchants, when giving advice to the Payments Canada board. It’s a small step towards good governance in the Payments Canada world, and good governance is crucial to establishing trustworthy payment systems.

My consistent concerns with Payments Canada’s governance are primarily due to repeated delays in implementing Canada’s Real-Time Rail payment system. Canada is now dead last in the G7 in introducing real-time payments, something that is crucial to providing Canadian businesses and citizens with instant financial transaction processing, improved cash flow and better and quicker fraud detection.

While it was first initiated in 2015, Payments Canada says it now expects Canada’s Real-Time Rail to begin to be implemented in 2026. I’m compelled to note that 56 other countries never had these lengthy delays that put their citizens and businesses at a competitive and costly disadvantage, so I’m glad that we’re seeing progress, but I continue to worry that tomorrow may never come.

Lastly, I’m incredibly happy to see Part 1 of Bill C-59 includes clean technology investment tax credits that were first introduced in the 2022 Fall Economic Statement and then again in Budget 2023. This is a refundable tax credit for businesses that invest in eligible clean technology equipment, including things like carbon capture, low-carbon heating equipment, zero-emission equipment and other energy systems that do not consume fossil fuels, systems like wind power.

How does this work? Businesses investing in these technologies can get a refundable tax credit of up to 30% on their investment costs, making it easier to support clean technology projects that might otherwise be too expensive. With the federal government’s goal of reaching net-zero emissions by 2050, including attaining net-zero electricity by 2035, it’s imperative that we continue to align incentives to catalyze innovation.

The Nova Scotia government expects these tax credits to generate, in our province, more than $450 million in construction activity and create about 1,700 direct and indirect jobs over their lifetime, mostly in rural Nova Scotia. Additionally, they’re expected to deliver tangible savings to Nova Scotians by lowering the average cost of electricity, saving taxpayers an estimated $100 million annually over the next 25 years — that’s $100 million annually in reduced electricity costs. The projects will be operational by the end of 2025 and will reduce Nova Scotia’s greenhouse gas emissions by more than one megatonne annually, continuing to accelerate Canada’s net-zero transition.

Colleagues, each of these initiatives in Bill C-59 harnesses innovation to improve the lives of Canadians. For this reason, I’m very happy to support this bill — thrilled, in fact.

One other thing came to mind when Senator Moncion was speaking. You may recall in 2021, three years ago, we were debating Bill C-208, a private member’s bill from the House of Commons. It was working to make fair the intergenerational transfers between farming, fishing and small business operations that were not being given access to the lifetime capital gains tax exemption that everybody else in Canada had access to. There was significant pushback on this bill from the government in June 2021, but we held firm in the Senate and supported that bill supported by the House of Commons. A lot of us felt a lot of pressure at that time, and Minister Freeland was very concerned that this would unlock a whole series of inappropriate transactions, inappropriate intergenerational transfers. In fact, she fought back even on the coming-into-force date.

In the end, two and a half years later, there wasn’t evidence of a whole lot of fraud, but she did come through and put in place restrictions in this bill to make sure those would not occur in the future. We held firm. We did our job and were independent from pushback against that bill, and in my mind, we did the right thing. It’s wonderful to see the loop being closed now, eventually by the government, and we can be very proud of the work that we did.

I want to congratulate Senator Moncion for her speech, for her work and also for her work around bankruptcy and insolvency in post-secondary institutions. It’s great to see that in the bill as well, Senator Moncion. Congratulations.

Thank you, colleagues.