Moved third reading of Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures.

She said: Honourable senators, I am pleased to take part in today’s third-reading debate on Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures (the Budget Implementation Act, 2022, No. 1).

The measures in this bill include many recent budget measures that are fundamental to the government’s plan to grow the economy and make life more affordable for Canadians as they continue to recover from the global COVID-19 pandemic.

In this is speech, I will touch briefly on important measures relating to housing, employment and tax fairness. I will also address other measures, such as the tax on vaping products and climate-related tax measures.

I will conclude with an overview of observations from reports by the committees that studied various parts of Bill C-19, specifically those in the report by the Standing Senate Committee on Aboriginal Peoples. I think it is important to read certain parts of that powerful report in this chamber.

First I will talk about housing access and availability.

Honourable senators, we know that Canadians need housing to thrive, but Canada simply doesn’t have enough. To address the situation, the government’s latest budget includes an ambitious housing construction plan. The plan would double the number of homes built in the country over the next 10 years.

Of course, a national effort will be required to make this project a reality. The government will work with its partners at all levels of government, and will provide significant payments to the provinces and territories under the proposals set out in Bill C-19. These include up to $750 million to help municipalities deal with the shortfall in public transit and housing caused by the pandemic. The funding would be conditional on provinces and territories matching the federal government’s contribution and working with their municipalities to expedite the construction of more housing for Canadians.

Honourable senators, Bill C-19 will also make the housing market fairer. We know, for example, that foreign investors are actively buying residential real estate in Canada. The bill prohibits non-Canadians from purchasing residential property for two years. This measure will help ensure that housing is used as homes for Canadian families and not as speculative financial assets.

In addition, the bill would further promote fairness in the real estate market by removing the ambiguity that may arise from the existing rules regarding the application of the GST or HST to the assignment of a contract of sale by making all assignments of contracts of sale by individuals taxable and by standardizing the tax treatment for the purchase of a new home.

Currently, when a person makes a new home assignment sale, the GST or HST may or may not apply, depending on the reason for purchasing the home.

For example, the GST or HST does not apply if the buyer initially intended to live in the home. This creates an opportunity for speculators to be deceitful about their original intentions and create uncertainty for everyone involved in an assignment sale as to whether the GST or HST applies. The current rules also result in the uneven application of the GST or HST to the full and final price of a new home. To redress this, Bill C-19 would amend the Excise Tax Act to make assignment sales in respect to newly constructed or substantially renovated residential housing taxable for GST or HST purposes.

On the housing front, Bill C-19 would also make housing more affordable for the homes people already live in. Over recent years, the home accessibility tax credit has provided support to offset some of the costs of home renovations and upgrades that make a home safer for seniors and persons with disabilities. In order to better support independent living, Bill C-19 would double the credit’s annual limit to $20,000, making additional significant alterations and renovations more affordable. These enhancements, which would apply to the 2022 and subsequent taxation years, would provide up to an additional $1,500 in tax support. Taken together, Bill C-19 offers Canadians a suite of measures that support housing availability and affordability.

Let’s talk about the importance of investing in a strong workforce. The investments in Budget 2022 extend far beyond real estate. Bill C-19 provides for investments in a stronger and rapidly growing workforce.

It will make it easier for the skilled immigrants our economy needs to settle in Canada. It will improve the government’s ability to select candidates from the Express Entry pool who meet the needs of Canadian businesses.

In addition, Bill C-19 would introduce a labour mobility deduction for tradespeople, which would allow workers to deduct up to $4,000 per year for travel and temporary location expenses. By making it more affordable for people working in the skilled trades to travel to where the jobs are, this deduction would help reduce labour shortages in some areas of our country.

Bill C-19 would also introduce 10 days of paid sick leave for workers in the federally regulated private sector, which will support 1 million workers and protect their families, their workplaces and their jobs.

Honourable senators, Bill C-19 would advance the government’s efforts to ensure Canadians benefit from a sound tax system where everyone pays their fair taxes. Bill C-19 proposes to implement the government’s tax on the sale of new luxury cars and aircraft with a retail sale price over $100,000 and on new boats over $250,000.

Bill C-19 will also help address complex financial crimes, including money laundering, corruption and tax evasion by providing authorities with access to accurate and up-to-date data on the people who own and control corporations. Anonymous Canadian shell companies can be used to conceal the true ownership of assets, including businesses and expensive properties. This change to legislation would accelerate the creation of a public registry of federally incorporated corporations before the end of 2023, two years earlier than planned, to help counter illegal activities.

This would also help to prevent shell companies from being used to avoid sanctions and the tracing and freezing of financial assets. This is particularly relevant as Canada works with its allies through the new Russian Elites, Proxies, and Oligarchs Task Force to target the global assets of Russia’s elites and those who act on their behalf.

At the Standing Senate Committee on Foreign Affairs and International Trade, officials described the process that would be followed for the forfeiture and disposal of seized assets. The minister would be responsible for identifying which asset could be seized and for applying to a court to seek a forfeiture order and to provide notice to any parties with an interest in the seized property.

On the topic of economic recovery, some of the measures in Bill C-19 are part and parcel of an economic stimulus package designed to meet the needs of the various sectors that were hard hit during the pandemic.

Many Canadian film and video productions were delayed during this time. Bill C-19 would grant more time to incur eligible expenses and extend certain deadlines related to tax credits that were available in these circumstances.

In 2019, roughly 1,540 and 550 corporations claimed the Canadian Film or Video Production Tax Credit, or CPTC, and the Film or Video Production Services Tax Credit, or PSTC, respectively. A comparable number of businesses could potentially avail themselves of these extensions. Another change found in the first part of Bill C-19 would allow the Canada Revenue Agency to accept late applications for the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Canada Recovery Hiring Program. Since their introduction, these programs have been subject to strict deadlines that are sometimes ill-suited to the reality Canadians are facing. This measure would allow the CRA to take into account exceptional circumstances, through a case-by-case analysis, when appropriate, in order to recognize a person’s eligibility despite their late application.

Programs offered by the government in response to the pandemic, including the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy, Canada Worker Lockdown Benefit, and the Canada Emergency Business Account helped the Canadian economy immensely to stay afloat. As for the International Monetary Fund’s recent Article IV report, the decisive actions and unprecedented fiscal support helped limit economic scarring and protected Canadian jobs.

In order to deliver these programs to support Canadians and the economy during the pandemic, the government had to make extraordinary borrowings. The total sum borrowed from March 23, 2021, to March 31, 2021, under section 46.1(c) of the Financial Administration Act was $6.3 billion. From April 1, 2021, to May 6, 2021, the total borrowed under that section was $2.1 billion. Amounts borrowed under section 46.1(c) do not count toward the government’s borrowing limit under the Borrowing Authority Act and are therefore not subject to the same reporting and transparency obligations as amounts that are part of the ordinary borrowing.

Given that the period of extraordinary circumstances has ended, the government proposes that the extraordinary borrowings from spring of 2021 be treated as regular borrowings to provide greater transparency on the stock of the government’s debt and accountability to Parliament for the total amount borrowed. The government followed a similar process in the fall of 2020 with respect to extraordinary borrowings that were undertaken between April 1, 2020, and September 30, 2020.

Let’s now turn to the health of Canadians. Part 2 amends the Excise Tax Act to ensure that the eligibility rules for the expanded GST/HST rebate for hospitals recognize the growing role of nurses and nurse practitioners in providing health care services in all regions of Canada, including those that aren’t remote. Hospitals, charities and non-profit organizations providing health care services with the active involvement of, or on the recommendation of, either a physician or a nurse will be eligible for this rebate.

Senators will also recall that Bill C-19 provides a one-time $2‑billion payment to reduce backlogs in the health care system through the Canada Health Transfer. A proportional payment will be made to the provinces and territories on a per capita basis.

The Government of Canada is also proposing measures that will have the effect of preventing long-term negative health behaviours among youth through economic impediments. Part 3 of Bill C-19 proposes to amend the Excise Act, 2001 and related acts and regulations to implement a new excise duty framework for vaping products.

The new framework would require manufacturers of vaping products to obtain an excise licence for vaping products from the Canada Revenue Agency and require that an excise stamp be placed on all vaping products entering the Canadian market for retail sale.

The amendment also includes administrative and enforcement rules relating to the new framework and are intended to ensure that the framework applies to imported vaping products. Many stakeholders, including the Canadian Cancer Society, are urging senators to support Bill C-19 to ensure that vaping products are taxed as soon as possible. Indeed, some statistics, particularly among our youth, are very disturbing.

Colleagues, according to the result of the national survey on tobacco, alcohol and drugs among high school students, the rate of vaping has more than tripled over a four-year period from 9% to 16% to 29%. Recent studies in the U.S. and Canada show alarming upward trends. When you consider that some of the products can contain up to 50 milligrams of nicotine, it is disturbing to see that a new generation is developing an addiction to nicotine through vaping products.

Vaping products are particularly affordable, and young people are very sensitive to product costs. We know that tobacco taxes had an impact on reducing youth smoking, and the same logic applies to vaping products. A tax should help reduce youth consumption.

However, in the interest of public health, the government must consider a comprehensive strategy to address nicotine use among Canadians in general. Ideally, this tax would be accompanied by other measures such as regulating the maximum level of nicotine that these products can contain, as is the case, for example, with cannabis; restriction on advertising and the flavours available; and more education and prevention.

To this end, Part 3 of the bill also amends the Federal-Provincial Fiscal Arrangements Act to allow the federal government to enter into agreements on a coordinated approach to the taxation of vaping products with provincial and territorial governments. Provinces and territories may also play a role in this national strategy within their own jurisdictions, including regulating the legal age of consumption of these products and the licensing of establishments.

Bill C-19 will continue to help Canadians fight climate change. In 2019, the government established a national price on carbon pollution to ensure that it is no longer free to pollute anywhere in Canada. In provinces where the federal fuel charge applies, all proceeds are remitted to Canadians and communities. Approximately 90% of these proceeds directly benefit the population through the climate action incentive.

The majority of families receive more money back through the climate action incentive than they pay into the federal system. Bill C-19 would change the delivery of the climate action incentive payments from a refundable claim annually on personal income tax returns for those living in Ontario, Manitoba, Saskatchewan and Alberta, to quarterly payments starting in July of this year. Payments would start with a double-up payment to return proceeds from the first two quarters of 2022-23 fuel charge year.

To support the growth of clean technology manufacturing in Canada, Bill C-19 would also help Canadians and Canadian businesses benefit from the global transition to a clean economy by cutting tax rates in half for businesses that manufacture zero‑emission technologies.

Bill C-19 also contains a measure to expand the scope of the capital cost allowance deduction to include new clean energy equipment. The measure would exclude equipment that mainly uses fossil fuels, for example, fossil-fuelled cogeneration systems and fossil-fuelled enhanced combined cycle systems. It would impose an efficiency requirement on waste-fuelled systems and limit the allowable proportion of fossil fuels that can be used by eligible equipment.

I will now talk about protection measures for Canada.

Bill C-19 would amend the Special Import Measures Act and the Canadian International Trade Tribunal Act to strengthen and improve access to Canada’s trade remedy system. The trade remedy system allows for the imposition of anti-dumping and countervailing duties on imports to protect domestic producers from injury caused by dumped or subsidized goods, thereby ensuring better conditions of competition for Canadian businesses and workers.

The trade remedy system also provides for the application of safeguard measures to protect domestic producers from injury caused by surges of fairly traded goods. At this time in our history, these important measures are essential to our economy.

Division 20 of Bill C-19 would amend the Customs Act to enable the Canada Border Services Agency to administer and enforce the Customs Act by electronic means. The proposed changes would also define the term “importer of record” and make that importer liable to pay duties on imported goods alongside the importer or person authorized to account for the goods, as the case may be, and the goods’ owner. This would provide for a fairer and more efficient system for Canada.

Under the Canada-United States-Mexico Agreement, or CUSMA, Canada agreed to amend the Copyright Act in order to change the general term of copyright protection from 50 to 70 years following the death of an author by the end of 2022. The general term of protection would apply to a wide variety of works. This will enable Canada to meet its obligations, level the playing field with its trade partners and create new export opportunities for Canada’s creative industry and Canadian content, while continuing to protect authors.

Bill C-19 would amend the Competition Act to provide better protection of consumers and promotion of fair and equitable markets. The government has chosen to proceed with its modernization in two phases.

The targeted amendments proposed in Bill C-19 in the first phase will bring Canada more in line with international best practices and provide immediate and tangible benefits to consumers and businesses. In general, the government’s proposed amendments will strengthen the Competition Bureau’s investigation powers, prohibit wage-fixing and related agreements on criminal grounds, increase maximum fines and administrative monetary penalties, clarify that posting of partial prices is false or misleading representation, expand the scope of business practices that may constitute abuse of dominance, allow private access to the Competition Tribunal to remedy abuse of dominance and improve the effectiveness of major notifications and other provisions.

In the second phase, the government will organize broad consultation and undertake a thorough review to continue reform by considering even more transformative changes.

Now, I would like to speak of — and I am very proud of — the committee work that was done by all committees toward truth and reconciliation.

In my second-reading speech, I acknowledged and thanked the members and chairs of the six committees that conducted the pre‑studies of Bill C-19, as well as the members and chair of the Finance Committee, for their work on the entirety of the bill — a lengthy and difficult undertaking. The reports from the various committees are important to provide context to the measures and sometimes a path forward to continue the work on certain issues. Not everything can be resolved through a budget bill, but the information contained in these reports is precious to continue our work.

Before I conclude this speech, I would, therefore, like to highlight one report in particular that I find very important and impactful, and I invite you all to read it. I’m referring to the report tabled by the Standing Senate Committee on Aboriginal Peoples. The committee made some observations on Division 3 of Part 5, which proposes to repeal the Safe Drinking Water for First Nations Act.

First Nations have repeatedly called for the repeal and replacement of the act, and the federal government is now required to do so under the safe drinking water class action litigation settlement agreement, jointly approved by the Federal Court and the Court of Queen’s Bench of Manitoba on December 22, 2021. The repeal of the act in Bill C-19 is therefore not contentious. However, the observations from the committee regarding the access to safe drinking water for all communities in Canada are important to emphasize. The report says:

The committee is alarmed about the unacceptable water crises that continues to plague First Nations across Canada causing serious illnesses, mental health issues and unnecessary suffering. . . .

It further reads:

The committee underscores the urgency of ensuring access to clean, safe drinking water for all First Nations.

Since November 2015, 132 long-term drinking water advisories have been lifted. We have witnessed great progress over the last few years, but we need to do so much better as a country and work in partnership and collaboration with our Indigenous counterparts to find solutions to this crisis. There remain 34 long-term drinking water advisories in 29 communities.

To improve the situation, the committee suggests the following:

The committee observes that there are innovative, First Nations-led solutions to drinking water and wastewater infrastructure. . . . The Government of Canada could contribute to these solutions, including by facilitating partnerships between the public and private sectors to deliver infrastructure to First Nations more broadly. Infrastructure builds create jobs and can drive economic and educational opportunities for local communities. Further, the Government of Canada could assess cost / benefits of infrastructure investments in terms of broader economic and social outcomes relative to their cost.

I take the opportunity to underline that June 21 was National Indigenous Peoples Day. The observation in this report reminds us of the relevance of this national day and how important it is to keep working toward the acknowledgement of the truth with respect to Canada’s treatment of Indigenous peoples in the past and the present.

In closing, Bill C-19 contains a wide variety of measures that seek to invest in Canadians and support some of their top priorities.

By investing in Canadians, the bill will contribute to our economic growth, support job creation and strengthen our economic recovery in the wake of the COVID-19 pandemic and other global challenges.

I urge you to vote in favour of the budget implementation bill and I thank you for your attention.

Thank you for that great summary and that level of detail. I really appreciate that. I do want to ask a question, if I may.

As you know from sitting at the Finance table, this last part of your speech is something that we ask every year. We get reports every year on water bans and infrastructure challenges. Absolutely, there is no question that going from 132 to 34 advisories is movement in a good, solid direction.

However, I have read the report and I still struggle with those final 34 advisories and getting this done. It is something that plagues my thinking a bit, particularly when you visit Indigenous communities and they give you such strong statistics. When we talk about the money part, we absolutely need funding and financing.

At the end, you started to talk about stakeholders and partners. Candidly, how do you see us addressing those final 32 advisories?

Thank you for the question. The answer I will give is outside of Bill C-19, but, having participated in the Finance Committee and in some of the meetings of the Standing Senate Committee on Aboriginal Peoples, the government struggles. The final 32 water advisories that are still in place are challenging beyond what was expected. These are the last 32, but they are the most difficult to deal with. Sometimes that’s just because of location or because of the industries that are around the First Nations.

The government is working very hard to bring solutions to these communities and to finally achieve zero water advisories in any communities.

Regarding the stakeholders, that’s where I see the beauty of the work that is being done. The government is working with Indigenous peoples, and they are training these people to build, maintain and understand the water balances, to be aware of the environment where they are and to identify the risks that the environment in which they live can have an effect on water.

They have been working with all First Nations to resolve these water advisories. They are working with each of these groups and with members of communities to really get this going so they can take ownership of both the clean water and waste water to manage them in the long term. These solutions are long term. They are a long time in coming and they take a long time to fix, but once it is done, it will be done, we hope, for as long as these systems can support these changes.

There is also the maintenance of these systems through the years. Just because you have built a system doesn’t mean you can leave it until you have to replace the whole thing. You must have upkeep and you have to put money into the system so that the technology, water sources and everything is kept up to date.

It is a large undertaking, but I would say the government has done a lot in the last 10 years. There is still a lot to do, but we are getting there.

Of course I will.

Thank you for the question; it is an important one.

First, the knowledge I have of this specific issue is that it was something that was asked for by the Jewish community. There are people who are saying we don’t need this, and there are people who are saying this is important and needs to be in the bill. I can’t speak for the government, but I believe that bringing the offence into the Criminal Code was a way to provide Canadians with the assurance that this is top of mind for the government.

When we are talking about freedom of the press, I think we have to look at the different views on this. This will probably be challenged on a constitutional basis. I think at some point we might bring change to this, but I really believe that when the government was looking at putting this into the Criminal Code, it was done to send a strong message to Canadians about Islamophobia. It is a problem in our country and a problem, I think, elsewhere in the world.

Thank you for the question. The budget bill is used to bring in measures that come from the budget. The budget was presented in April, and in the budget there was information on measures the government would bring forward. That’s why you find it in the budget bill.

We might agree or disagree on the fact that the budget bill or the budget implementation act is not the best place for it, but that is how the government sees bringing forward what is in the budget — to bring it through the budget implementation act. If you look at the budget and see the number of measures there, they are not all in the budget implementation act, because they don’t all need changes, but some do.

That would be my logical answer to your question.

Senator Moncion, would you accept another question?

With pleasure.

Thank you for all your work on this. I applaud anyone who takes on sponsoring the budget implementation act. I do share the opinion that was just offered about omnibus legislation, but I am also aware that in a minority Parliament time is always at a premium.

I want to come back to the question about clean drinking water in First Nations. I’m sure it was the way I heard this, and I was concerned when I heard you say that the government was working to help First Nations to, for example, learn about the environment and the connection with clean water — I know you agree with me that government has much to learn from First Nations on that point — but when you went on and talked about a few other things, I see that as capacity building. For some communities that is a requirement, and the resources to do that have to be there. For ongoing sustainability of the systems — maintenance upgrades, new technology et cetera — the resources have to be there.

Would you just deconstruct for me the budget provisions themselves and how they will enable these last 30-odd more difficult cases to be resolved in short order?

Thank you for the question. It’s a good question. By repealing the Safe Drinking Water for First Nations Act, it gives more powers to the First Nations to take ownership and to have more freedom to work within their communities to resolve the water problems. I think it is more in that aspect, and the government keeps working with the communities to find solutions.

Being from the North, I will give you the example of the reserve in Kashechewan, which is in northern Ontario, and which has been a difficult situation to resolve because of the yearly debacle of the river and the water system that is not viable because of the location. When you are in Ottawa, you don’t necessarily know all about what is going on in a community and when the government is working with the First Nation.

I understand when you talk about capacity building, and I think the water solution is a larger one than just putting in a system and hoping that the system is going to work. It is capacity and community building. It is working with First Nations, giving them the freedom to work and find solutions and working with government.

I want to apologize to my First Nations colleagues because I might not be answering this question in the best way, but I’m doing my best to try.

Honourable senators, I rise to speak to third reading of Bill C-19, the budget implementation act.

Honourable senators, Canada is facing many challenges. Inflation is at its highest in 40 years and is expected to increase. Interest rates are rising. Canadians are one of the most highly indebted people in the world, and increasing interest rates will make their mortgages and other debts more expensive.

Government has also increased its debt, which is now $1.6 trillion. Interest on this debt will now cost more. There is no commitment to return to a balanced budget. Our debt of $1.6 trillion will be transferred to our children, grandchildren and even great-grandchildren. Our debt will be their problem.

Canada’s GDP per capita grew by 0.8% annually from 2007 to 2020, ranking us in the third quartile among advanced economies. In other words, we were near the bottom of the rankings but not at the bottom.

As indicated in the government’s own budget document this year, the Organisation for Economic Co-operation and Development, or OECD, projects that Canada will be the worst‑performing advanced economy over the period 2020 to 2060. Our economy has waning competitiveness, weak private sector innovation and sluggish business investment. Our GDP per capita is 12% lower than the OECD’s best performers. Our productivity is 18% lower than the OECD’s best performers.

Our country needs a plan to address our economic problems and create the wealth we need to sustain our economic and social well-being.

Canadians and the Bank of Canada are coming to the realization that inflation, which remained at or below the Bank of Canada’s annual target of 2%, has now become a major economic problem. The Bank of Canada remained convinced that the inflation experienced in 2021 was transitory despite some economists sounding the alarm over the escalating inflation. In fact, in his recent press conference in early June, the Governor of the Bank of Canada warns us that inflation will probably go even higher, and it has.

Inflation has had a devastating impact on Canadians, especially low-income Canadians and those on a fixed income. Inflation in May was 7.7%, the highest since 1983. Food prices increased 8.8%. Canadians paid more in May for food compared to May 2021. Fresh fruit, vegetables, meat, bread and pasta all increased. Even a cup of coffee costs 13.7% more compared to last year. And consumers paid 48% more for gasoline in May than they did a year ago.

In April, average hourly wages for employees rose 3.3%, meaning that, on average, prices rose faster than wages and Canadians experienced a decline in purchasing power.

When this government came to power in 2015, they were focused on the middle class and those working to join it. Remember Budget 2016: Growing the Middle Class; Budget 2017: Building a Strong Middle Class; and Budget 2018: Equality and Growth for a Strong Middle Class, and so on?

We even had a minister of middle class prosperity. I don’t think anyone feels that “middle class prosperity” anymore with inflation now recorded at 7.7%.

Inflation is affecting many Canadians who have to choose between buying food, paying their bills and making their mortgage payments. There are numerous media reports of the dire circumstances of some Canadians and the increasing use of food banks.

To understand how inflation and rising prices are contributing to financial concerns or influencing the financial decisions of Canadians, Statistics Canada conducted the Portrait of Canadian Society survey from April 19 to May 1. The survey found that three in four Canadians report that increasing prices are affecting their ability to meet day-to-day expenses. Most Canadians are feeling the impact of inflation, but lower-income Canadians are more concerned about, and more affected by, rising prices. Canadians were most affected by rising food prices, which increased 9.7%.

When the finance minister was asked at our Finance Committee what initiatives were included in the budget to address the impact of inflation, she said inflation is very much a global phenomenon and referenced the recently announced items in the budget, including the dental program and the additional $500 payment for Canadians who are struggling with housing affordability.

While financial assistance provided to certain groups of Canadian society is certainly appreciated by those receiving the financial assistance, inflation affects almost all Canadians, and this is an issue which must be addressed by the government.

On June 8, the Bank of Canada released its Financial System Review focusing on inflation and rising interest rates, as well as existing and emerging vulnerabilities. In an effort to control inflation, the bank has increased interest rates and has indicated that they will continue to do so.

High household debt and high house prices are not new vulnerabilities. We have tracked household debt and house prices for years, and the Bank of Canada, the Canada Mortgage and Housing Corporation, and even the International Monetary Fund, have identified these as key vulnerabilities of the Canadian economy. However, households are now exposed to increasing interest rates, which will make their mortgages and other debts more expensive. For highly indebted Canadians, they may have difficulty servicing their debt. If the economy slows and unemployment increases, even more Canadians will have problems servicing their debt.

The Governor of the Bank of Canada has said that more Canadians have stretched their finances during the pandemic to buy a home, so they will be more sensitive to interest rate increases. In addition, Canadians who bought homes when prices were high may see the value of their homes decline. There is also the risk that the value of their homes may actually be less than their mortgage.

Last week, the Federal Reserve in the U.S. raised its benchmark interest rate by 75 basis points, its most aggressive hike in 25 years, as the U.S. central bank tries to rein in inflation in the United States.

The Bank of Canada is scheduled to make its next interest rate announcement on July 13, and some economists are predicting that the Bank of Canada will also move more aggressively to raise interest rates in Canada.

A recent debt survey by Manulife Bank of Canada found that 18% of homeowners polled are already at a stage where they can’t afford their homes. The survey also found that one in five Canadians expect rising interest rates to have a significant negative impact on their overall mortgage debt and financial situation.

But it is not just Canadians who will be facing increasing debt costs. The government is also carrying significant debt — in excess of $1.6 trillion — so the cost of servicing that debt will increase. While the government reported debt servicing costs in 2021 at $20 billion, they are projecting it to increase to $42.9 billion in 2026-27, and recent reports by the Parliamentary Budget Officer expect that increase to rise further.

Last May, Bill C-14 raised the government’s debt ceiling from $1.168 trillion to $1.831 trillion. While some parliamentarians were alarmed over this increase, the Minister of Finance told the House of Commons Finance Committee on March 11 last year:

We are saying that this is the upper limit to which the government may borrow.

We are not saying the government will undertake those borrowings. . . .

Now, just 15 months later, we are told that debt is now $1.6 trillion. We are well on our way to reaching that $1.8 trillion ceiling. In fact, it seems the government cannot reach that limit fast enough.

As the government takes on more and more debt, we have been assured by them that the cost of servicing this debt, or the “public debt charges,” remain low. However, we now know that interest rates are rising quickly and so is the cost of servicing the government’s debt. A review of the government’s financial documents over the past two and a half years shows that debt servicing costs are increasing significantly. Projections included in the last two budgets and the last two fall fiscal updates point to a rising concern over increasing interest costs.

The 2020 fall fiscal update released in December 2020 estimated that public debt charges for this year would be $22.4 billion. Four months later, this was increased to $25.7 billion in Budget 2021, and further increased to $26.9 billion in this year’s budget. Over a period of 18 months, the government’s estimate of debt servicing costs for this year increased $4.5 billion, or by 20%.

A second issue has surfaced over public debt charges. We all know that the government borrowed heavily during the pandemic, and a significant portion of this debt was acquired by the Bank of Canada. In fact, the bank’s purchases of government bonds were approaching half a trillion dollars before the bank ceased acquiring those bonds.

In 2021, the government reported debt servicing costs of $20.4 billion. However, the government also disclosed in the public accounts net losses totalling $19 billion in respect of the Bank of Canada’s purchases of Government of Canada bonds on the secondary market.

Why the $19 billion loss on the purchase of those bonds is recorded as negative revenue I do not know, but it is clearly a debt servicing cost. The debt servicing cost for 2021 is not the $20.4 billion being reported by government, but actually $39 billion.

As of June 1, 2022, the Bank of Canada continues to hold $397 billion of Government of Canada bonds. The Bank of Canada has indicated that it will not purchase any additional bonds but, rather, let the existing bonds mature, and they will essentially fall off the bank’s balance sheet. However, there are others who say that this passive shrinking of the bank’s balance sheet as the bonds mature strikes some observers as inadequate. Last month, the C.D. Howe Institute’s Monetary Policy Council urged the bank to accelerate the process by selling the bonds.

However, in a recent meeting of the Standing Senate Committee on Banking, Trade and Commerce, the governor of the bank testified that if the bank sold the existing government bonds it is holding, there would be a loss of $20 billion, which will be paid by the Government of Canada in accordance with the indemnity agreement between the government and the bank. This $20 billion would increase the government’s deficit by $20 billion.

Earlier this month, the World Bank said most countries are headed for a recession and warned of a possible return to stagflation: an economy characterized by high inflation and low growth. It said global economic growth is expected to slow down before the end of the year, and most countries should begin to prepare for a recession.

Earlier this month, the media reported that the United Kingdom’s economy unexpectedly shrank in April, raising the risk that their economy will contract in the second quarter.

Canada is just emerging from the pandemic, which was a major financial shock to our economy. We should now get our spending under control and prepare for the next financial shock.

While no one can predict the future, the government supported our economy during the pandemic by borrowing and spending a substantial amount of money. It is time to get our fiscal house in order, yet the government continues to spend and borrow, seemingly unaware of the dark clouds forming.

Honourable senators, Bill C-19, similar to previous budget bills, proposes several amendments to the Income Tax Act, which is now over 3,000 pages long. The Income Tax Act is a complex and inefficient piece of legislation which has accumulated a patchwork of credits, incentives and narrow “fixes.” Governments use the tax system to help meet certain policy goals by adding credits or deductions, or to provide benefits to specific groups, making the Income Tax Act more complicated with each amendment.

The last time the government carried out a review of our tax system was 1967. Yes, that is 55 years ago. Much has changed in the past 55 years. The world has become more global, technology has changed the way we live, people are living longer and the nature of work has changed. It is time to review our tax system — actually, it is past time.

Numerous national and international organizations have recommended many times that the government update its tax system, including committees of the House of Commons and the Senate. The current system is riddled with problems and has become unnecessarily burdensome to the Canadian taxpayer, businesses and tax professionals. Even the Canada Revenue Agency, which administers the Income Tax Act, is challenged to provide correct answers to public inquiries.

We need a tax system that is simple and easy for taxpayers and businesses, encourages investment and job creation and enhances Canada’s global competitiveness. We need to be better positioned to compete for jobs, talent and investment with a fair, simple and efficient tax system.

Before I discuss certain sections of Bill C-19, I just want to make a comment on the omnibus nature of Bill C-19. First, Bill C-19 is an omnibus bill. It is 440 pages long. The proposed amendments to the Income Tax Act are highly technical and numerous. Given that these amendments will amend the very complicated Income Tax Act, which is itself 3,000 pages long, the study of Bill C-19 by any committee of the Senate is a very daunting task.

The “Select Luxury Items Tax Act” is a bill within a bill. It is 175 pages of the 440-page Bill C-19, and it should never have been included in this omnibus bill. The “Select Luxury Items Tax Act” should have been tabled in Parliament as a stand-alone bill to be properly studied and debated. It is shameful that the government has not studied the economic impacts of the proposed tax to determine how it will affect workers, businesses and the economy.

Part 5 of Bill C-19 proposes 32 measures and includes amendments to many other acts. Each of these 32 measures warrant detailed study. However, the breadth and depth of the measures contained in Part 5 of Bill C-19 alone required more time for study than the time provided.

While various parts of Bill C-19 were referred to a number of committees for study, the time provided was greatly limited. We are expected to make do with the time provided and rubber-stamp the bill.

Part 4 of the budget implementation act proposes to implement the “Select Luxury Items Tax Act,” which will impose an additional tax on some vehicles, aircraft and boats. It is complex legislation. As I said before, it is 175 pages long and contains 157 clauses. It should not have been included in the 440‑page omnibus budget implementation act. Rather, it should have been tabled as stand-alone legislation to be studied and debated separately by Parliament, as I indicated earlier.

The “Select Luxury Items Tax Act” imposes a tax on the retail, sale, lease or importation of certain luxury cars and personal aircraft priced over $100,000, as well as boats priced over $250,000. The tax will be calculated at the lesser of 10% of the full value of the item or 20% of the value above the established threshold, which is $100,000 for cars and personal aircraft and $250,000 for boats. The tax will come into effect September 1, 2022. The Parliamentary Budget Officer estimates that this tax will generate $87 million in revenue this year because there is only part of the year remaining, and $163 million next year.

Representatives of the aerospace industry do not support this “Select Luxury Items Tax Act,” and estimate the loss of 1,000 Canadian jobs and up to $1 billion in lost revenues to companies across the country. They indicated that the tax will affect not only large companies but companies of all sizes, in all regions throughout the Canadian supply chain. Some manufacturers are already experiencing order cancellations due to the pending tax.

The tax comes at a time when the aerospace industry is still recovering from the pandemic. It is asking government to undertake an economic impact assessment to determine what effect the tax will have on the aerospace industry, its employees and the economy. The International Association of Machinists and Aerospace Workers also expressed concern over this luxury tax, indicating that the tax is misdirected toward manufacturing. The tax will adversely affect jobs, and the negative impact on jobs will far outweigh any benefits that would come from this tax. The association also took issue with the fact that there has been no assessment of the impact on jobs and stressed that such an assessment must be done.

In summary, witnesses testified that the luxury tax will put Canadian aerospace companies at a disadvantage globally compared to their competitors, and will cause a loss in sales that will translate into job losses. They said that other countries have implemented similar taxes but have had to repeal or modify them.

In its testimony on this luxury tax, the National Marine Manufacturers Association Canada indicated that an economic impact study carried out by Ernst & Young and economist Dr. Jack Mintz on the proposed tax would result in a minimum $90 million decrease in revenues for boat dealers and potential job losses of at least 900 full-time equivalent employees. The study concluded that the select luxury items tax act would largely fall on middle-income workers who would no longer service or manufacture high-end boats in Canada. The tax also threatens the survival of Canada’s domestic boat manufacturing base, which has already been negatively affected by years of competition from other jurisdictions. The tax will also cause job losses at marinas and service shops.

In 1991, the U.S. Congress passed a 10% luxury tax on all new boats sold in the U.S. that cost more than $100,000. Within the first quarter of the year, sales of new boats over $100,000 plummeted 89%, resulting in massive job losses and multiple bankruptcies. The tax was eventually abandoned.

The select luxury items tax act was studied by the Standing Senate Committee on National Finance, and the committee report was tabled in the Senate yesterday. The following is an excerpt from the committee’s report:

After hearing from groups, notably the Aerospace Industries Association of Canada and the National Marine Manufacturers Association, our committee was surprised to learn that the government has not studied the economic impacts of the proposed tax, including on business activity and employment in these sectors.

Our committee therefore recommends that, prior to implementing this tax, the Department of Finance conduct such a study and that it inform our committee of the results, including its consultations with the impacted sectors.

In addition, should this tax be found to have a negative impact on business activity and/or employment in these sectors, we would urge the government to react quickly and take mitigating measures including, if necessary, doing away with the tax altogether.

Division 6 of Part 5 of Bill C-19 is proposing to amend the Federal-Provincial Fiscal Arrangements Act to authorize a $2‑billion payment to the provinces and territories through the Canada Health Transfer, allocated on an equal per capita basis to help reduce the surgical and other medical procedure backlogs caused by the pandemic. In addition to the $2 billion proposed in this bill, an additional $500 million was provided in 2019-20 and another $4 billion in 2020-21 to address the pressures that COVID-19 have put on the health care system, including backlogs of medical procedures.

The Canada Health Transfer is the largest federal transfer to the provinces and territories, and helps pay for health care. It is expected to cost $45 billion this year, increasing to $56 billion in 2026-27. Provincial and territorial premiers are asking for another $28 billion increase, which is significantly more than the $11 billion increase projected over the next four years.

Provinces and territories are not required to report to the federal government on how the monies are disbursed, although the conditions of the Canada Health Act are to be respected.

In addition, our briefing note on this portion of the bill indicated that the Prime Minister has committed to discussing with the provinces and territories the long-term strength, sustainability — which is an interesting word — and resilience of the health care system after the pandemic. The cost and sustainability of our universal health care system is often raised.

Using data from the Organisation for Economic Co-operation and Development, or OECD, the Fraser Institute recently compared the performance of 28 high-income OECD countries with universal health care systems to determine how well Canada’s system is performing relative to its peers. They used 40 indicators representing four broad categories: availability of resources, use of resources, access to resources, and quality and clinical performance.

The study concluded that Canada spends more on health care than the majority of high-income OECD countries with a universal health care system. After adjusting for age — those over age 65 — Canada ranked second highest of the 28 countries for health care expenditures as a percentage of GDP and eighth highest for health care expenditures per capita. Although Canada ranks among the most expensive universal health care systems in the OECD, its performance for two of the four categories — that is, availability and access to resources — is generally below that of the average OECD country, while its performance for the other two categories — the use of resources and quality and clinical performance — is mixed.

The study concluded that there is an imbalance between the value of health care that Canadians receive and the relatively high amount of money they spend on their health care system. This is surely an issue that will be addressed by the Prime Minister and the premiers when they meet.

Division 7 of Part 5 of Bill C-19 is proposing to amend the Borrowing Authority Act and the Financial Administration Act to include the extraordinary borrowings of 2021 in the borrowing authority maximum amount and no longer treat this amount as extraordinary borrowings for reporting requirements.

Division 7 also proposes to amend the Financial Administration Act to change the reporting requirements for extraordinary borrowing amounts so that these amounts are no longer required to be tabled separately in the House of Commons within a 30-day time frame, but rather be reported in the annual Debt Management Report. Under current legislation, extraordinary borrowings must be reported within 30 sitting days of Governor-in-Council approval. There were extraordinary borrowings of $288 billion in 2020 and $8.4 billion in 2021. Both reports were tabled on a timely basis within the 30-day time frame stipulated by legislation.

The government is now proposing that extraordinary borrowings be reported in Finance Canada’s Debt Management Report. This is the same report we waited one full year to see. The government pushed back the tabling of its March 2021 Debt Management Report to March 2022. In essence, the government has concluded that the tabling of extraordinary borrowings is too timely, and that this information should be included in a report that can be delayed for up to a year, as they did this year.

The government is proposing this amendment under the pretext of improving accountability. However, if the government were truly sincere in improving accountability, they should have amended the Financial Administration Act to require the Debt Management Report to be tabled earlier rather than the one-year time limit currently stipulated.

Bill C-19 also proposes to amend the Borrowing Authority Act. This act focuses on the consolidated borrowings of government and its Crown agencies. However, reporting is only required once every three years. It is a triennial report — I think it’s the only triennial report required in government; all the other reports are annual. The consolidated borrowings of government is an amount not readily available, and I know because I went looking for it.

Since reporting is once every three years, to determine the consolidated borrowings, information is gleaned from the government’s public accounts, the financial statements and other financial information of Crown agencies themselves. You have to look through a lot of information, which I did before Christmas, and come up with the dollar amount yourself, and usually, it’s an estimate.

When we had the finance officials at the National Finance Committee, I asked them what the consolidated debt was, and they said $1.6 trillion. The $1.6 trillion I mentioned earlier in my speech, that came from finance officials. It was in a government document somewhere. I don’t know where. I checked with the Parliamentary Budget Officer and the Library of Parliament, but I don’t think that number is published anywhere.

If the government were truly interested in improving accountability, it should have amended the Borrowing Authority Act to require an annual report on consolidated debt rather than the triennial report currently required.

Division 12 of Part 5 of the budget implementation act enacts the prohibition on the purchase of residential property by non‑Canadians act. It prohibits the purchase of residential property by non-Canadians for a period of two years, and there are some exceptions defined under the proposed section 4 of the act.

The cost of homes in Canada has increased significantly over the past number of years, supported by low interest rates, a shortage of residential dwellings and high inflation. Both the federal and provincial governments have struggled to keep housing prices at an affordable rate.

The bill defines prohibition in section 4 of the act, stating that, “ . . . it is prohibited for a non-Canadian to purchase, directly or indirectly, any residential property.” The penalty for doing so is a fine of not more than $10,000 and, on application by the minister, a court order for the property to be sold. If sold, the owners are not to receive more than the price they paid for the property.

There was insufficient time to thoroughly study the proposed bill and its implications. However, of concern to me is the discretion afforded to the minister to prescribe matters by regulation. For example, the minister can exempt certain classes of individuals from the ban and can change the definition of certain key terms. As a result, regulations can change how the ban will actually work in practice.

There is also concern that the ban on the purchase of residential properties infringes on provincial jurisdiction or discriminates based on nationality. It remains to be seen whether this ban will actually increase the residential properties available for Canadian occupancy or moderate housing prices. Inflation and increasing interest rates may be the biggest factor in moderating prices in the housing sector.

Division 3 of Part 5 of the bill proposes to repeal the Safe Drinking Water for First Nations Act. This part of the bill was referred to the Standing Senate Committee on Aboriginal Peoples for examination. The committee tabled its report in the Senate on June 10. Like Senator Moncion, I was very much struck by the report.

In its report, the committee expressed alarm about the unacceptable water crisis that continues to plague First Nations across Canada, causing serious illnesses, mental health issues and unnecessary suffering. It went on to say:

Canadians would be shocked, and ashamed if they knew how the Government of Canada has treated First Nations on water issues.

The report outlines some specific examples of problems encountered by First Nations in accessing safe drinking water, including references to legal actions taken against the Government of Canada in relation to clean drinking water in First Nations communities. While the committee said it recognizes that the federal government is taking important steps to address long-term drinking water advisories, it said that it remains deeply concerned that First Nations had to resort to litigation to obtain federal funding for safe drinking water in some communities.

The committee concluded its examination of this part of the bill by saying it believes that:

. . . with respect to First Nations water, the Government of Canada has breached the honour of the Crown and its treaty and nation to nation relationships.

It was the committee’s view that the minister should report publicly on the solution to the First Nations water crisis, and further, “the implementation of any solution needs to be measured or the status quo is unlikely to change.”

Honourable senators, Division 30 of Part 5 of the bill proposes to implement the first series of changes required to meet the government’s commitment to create a publicly searchable corporate beneficial ownership registry by 2023. At the present time, anonymous Canadian shell companies can be used to conceal the true ownership of businesses. This makes them vulnerable to misuse for illegal activities such as money laundering and tax evasion. To counter this, authorities need access to timely and accurate information about the true ownership of these entities.

Specifically, the proposed amendments to the Canada Business Corporations Act will require private federal corporations to send information on their beneficial owners to Corporations Canada on an annual basis when a change in ownership occurs. This will allow Corporations Canada to provide that information to an investigative body or authorized entity.

Government has, for several years, been talking about a publicly accessible beneficial ownership registry. The information in such a registry would be invaluable in pursuing money laundering and tax evasion and would assist the government in collecting, according to some estimates, billions of dollars in tax revenues.

Last year’s budget provided $2 million for the implementation of a publicly accessible corporate beneficial ownership registry by 2025. The Banking Committee at that time expressed concern that the changes being proposed and the $2 million being provided were insufficient to implement the registry by 2025. This year, government is accelerating its targeted implementation date of a beneficial ownership registry to the end of 2023, a mere 18 months away.

Government has also indicated that the registry will now be implemented using a two-phased approach in which phase one includes these amendments and phase two will include other amendments, which will be disclosed in a future budget implementation bill in the fall of this year.

Government has further indicated this two-phased approach will allow for necessary consultations with stakeholders. Although consultations were held in 2020, there are several unresolved issues surrounding the government’s new commitment to implement the registry before the end of next year. Specifically, they have moved to what they call a two‑phased approach without providing detailed information on the plans and the objectives of each phase, and no funding has been provided for the implementation of the registry. While $2 million was included in last year’s budget, it was not enough to implement the registry and none of this money had been spent. While implementation of the registry by the end of next year is a laudable objective, this is only 18 months away. Government has many challenges to overcome before this deadline.

The Standing Senate Committee on Banking, Trade and Commerce was tasked with reviewing this part of the bill and also expressed concern over the two-phased approach. The committee also suggested that the government take complementary action to ensure the success of the registry by collaborating with provinces and territories, allocating adequate financial and human resources to ensure the success of the registry and continuing to examine the potential use of lawyers as nominee shareholders to shield the identity of beneficial owners.

Of particular interest was the release last week of the report of the Cullen Commission, which held a public inquiry into money laundering in British Columbia. The Cullen Commission said that the federal anti-money laundering regime is not effective and the Province of British Columbia needs to go its own way. Commissioner Cullen said that the agency tasked by the federal government to identify money threats, the Financial Transactions and Reports Analysis Centre, which we know as FINTRAC, is ineffective. He said that FINTRAC’s results compare poorly to other nations with comparable systems. Given the deadline established by government to implement phase one, we will be able to assess progress of the system during our study of the 2023 budget.

This year’s budget announced two spending reviews that are supposed to save the government and the taxpayer $9 billion over five years. The objective of the first review is to reduce planned spending in the context of a stronger recovery. Government estimates this review will save $750 million a year for four years, beginning next year, for a total savings of $3 billion. Government has said that the 2022 fall economic and fiscal update will inform us of the progress of this review.

The second initiative will be a strategic policy review led by the President of the Treasury Board. This initiative will assess program effectiveness in meeting government’s key priorities. It is also supposed to identify opportunities to save and reallocate resources. This second review is estimated to save $6 billion over three years beginning in 2025. Next year’s budget is supposed to provide an update on these savings. My primary concern relates to the $9 billion in potential savings since it is being used to reduce the five-year cost of new programs as disclosed in the budget. If the $9 billion in savings does not materialize in whole or in part, any shortfall will have to be funded by the government, thus increasing the projected deficit.

Given that previous expenditure reviews were unsuccessful, such as those in Budget 2017 and the 2019 fall fiscal update, government will be challenged to actually realize these savings. The initiative launched in 2017 actually resulted in increased spending while no information could be found on the 2019 initiative.

The Parliamentary Budget Officer has questioned these initiatives, indicating severe fiscal restraint will be required to achieve these savings. In addition, our review of departmental performance reports in the Finance Committee indicates that the quality of performance information provided by departments and agencies will make it much more difficult to carry out the review.

Given the invasion of Ukraine, government has signalled that there will be a significant increase in the budget for military spending. Budget 2022 allocates $6 billion over five years to reinforce our defence priorities with another $2 billion going toward supporting a culture change in the Canadian Armed Forces, enhancing cybersecurity and supporting Ukraine. The budget does not provide details on what the $6 billion over five years will provide, but the budget document frames it as funding that will strengthen Canada’s contributions to our core alliances and bolster the capabilities of the Canadian Armed Forces.

In 2017, the government released its defence policy and earmarked $164 billion over the 20-year period from 2017 to 2037 for capital expenditures for the Department of National Defence. However, financial information indicates that, for its capital spending, there was a shortfall or underspending of $10 billion on capital projects between 2017 and 2021 between what the defence policy had projected and what was actually spent. Revised departmental plans show that this $10 billion shortfall will now be shifted to future years, notably 2023 to 2028. That’s the background. This is my point.

Earlier this week, the government announced it would spend $4.9 billion over the next six years to modernize NORAD and upgrade our continental defence system, and there is a commitment by government to invest $40 billion over the next two decades on NORAD. Government must clarify whether the 2017 to 2021 spending shortfall of $10 billion, which is now shifted to future years, will be the source of funding for the NORAD initiative, or whether the NORAD initiative requires new funding. These issues are important because we need to know how post-budget initiatives will affect government-projected deficits as disclosed in Budget 2022.

It is not only NORAD which requires significant funding. The Canadian Armed Forces has old planes, old ships, second-hand submarines that are often not operational and a shortage of recruits. In addition, in order for Canada to reach NATO’s 2% of GDP defence spending benchmark, government will need to spend between $13 billion and $18 billion more per year over the next five years. Suffice to say the Canadian Armed Forces and the Government of Canada have their challenges in protecting our country.

Each year, government launches new billion-dollar programs or significantly increases existing programs. These include multi-billion-dollar infrastructure programs, such as the $187 billion Investing in Canada Infrastructure Program and the $30 billion Federal Secretariat on Early Learning and Child Care launched last year, promising reduced child care fees, 250,000 new child care spaces and about 55,000 new early childhood educator positions by 2026.

Last year, $1.5 billion was allocated in the budget for the Rapid Housing Initiative, promising 4,500 new affordable units that would be constructed within 12 months. The program is extended this year to create at least 6,000 new affordable housing units at an estimated cost of $1.5 billion. This year government is also committing $10 billion for the making housing more affordable initiative, targeting the creation of 100,000 new housing units over the next five years. However, all these numbers are projections. They are estimates. And we never see the report cards which tell us what has actually happened. Did the infrastructure projects actually get built? And where are those projects actually located? In what communities? Were the housing units actually constructed? In what communities? Are those units occupied? How many child care spaces have been created so far?

Honourable senators, these are the questions we should be asking, and this is the information we should be looking for. This is accountability. The easiest part is saying that we plan to do something. The difficult part is delivering results.

Each year, government departments and organizations release their departmental results reports. However, the information provided in many of these reports do not provide sufficient information to indicate what results they actually achieved with the funding provided. Quite simply, the departmental results reports are not providing the information they are supposed to provide. Government, its departments and agencies should provide report cards on its programs and demonstrate that the money provided has actually achieved its purpose. The departmental results reports no longer demonstrate accountability.

Honourable senators, in closing, I would like to thank Senator Moncion for two speeches on the budget bill. I would also like to thank all of my colleagues on the National Finance Committee, the chair, the deputy chair and all the staff who supported us in our many meetings while we studied the budget. Thank you, honourable senators.

Senator Boehm, if you have a question, Senator Marshall will have to ask for additional time.

I do have a question, Your Honour.

Senator Marshall, are you asking for five minutes to answer questions?

Yes.

Leave is not granted.

I want to congratulate Senators Moncion and Marshall, the sponsor and critic of Bill C-19. I want to speak briefly at third reading of this bill.

I have three points that I want to address.

Many of you have already spoken about the democratic deficits of omnibus budget implementation bills, but I’d like to say it in my own words.

The practice of introducing omnibus bills undermines the democratic process because, as you know, it limits debate and limits potentially worthwhile amendments that could be made to bills.

It is much more complicated for the Senate to amend the budget than to amend a specific bill, and we have much less time set aside to study a bill.

The Senate generally adopts the government’s budget without amendment, but omnibus bills force us to vote in favour of the budget even if it contains provisions that are not directly connected to the government’s budgetary and fiscal policy and to which we might be opposed, as Senator Simons previously pointed out.

A quick review of budget implementation bills introduced since the beginning of the 21st century shows that these mammoth bills are a relatively new phenomenon in Canada’s parliamentary history.

As proof on this subject, let me quote from journalist Bill Curry’s article in The Globe and Mail today entitled, “Senate reports express concern with large budget bills ahead of final vote on C-19” where he states:

According to research compiled by the Library of Parliament, the first reference to a “budget implementation bill” occurred in 1991. Throughout the nineties, they were small bills of about a dozen pages each.

Budget bills started to grow in size in the next decade, but their page count jumped dramatically to hundreds of pages in 2009 and 2010 as the government dealt with a global economic crisis.

It was during the Harper government that omnibus bills first made an appearance. At that time, as you may recall, the Department of Finance didn’t announce the contents of budget implementation bills ahead of time. Parliamentarians were often surprised to see what was in them and the last-minute additions that were made. Let me give you a few examples. In the 2014 budget implementation bill, there were amendments to the Labour Code regarding health and safety that were developed without consulting the stakeholders.

The 2015 economic action plan bill included provisions that amended the Immigration and Refugee Act. It also included amendments to the Ending The Long-Gun Registry Act, which put an end to the debate with certain provinces, including Quebec, that wanted to keep the existing data in the registry.

Those are examples of legislation that shouldn’t be part of budget implementation bills but rather should make their own way through the legislative process.

I believe it was in 2017 that the Liberal government adopted a very similar practice, essentially the same one as the previous Conservative government, the only difference being that parliamentarians are now informed ahead of time of the legislative provisions to be included in budget implementation bills. The budget speech includes a schedule listing all the legislative measures to be presented, which means we can prepare.

The process is now more transparent, but that doesn’t make it more acceptable, as these bills contain a number of elements that don’t really have anything to do with the budget. Examples I gave earlier are amendments to the Criminal Code with respect to the Holocaust, the amendment to the Judges Act and the amendment to the Parliament of Canada Act. Those are all well and good, but those kinds of amendments should not be in this bill.

Furthermore, these bills are often too big. In fact, many witnesses, including some who appeared before the Standing Senate Committee on Banking, Trade and Commerce, said that some divisions of Part 5 of the bill, such as the division on competition, should be in a bill of their own.

In short, just because a bill has financial implications doesn’t mean it deserves to be incorporated into the budget, and it is poor practice to include so many issues in the budget that aren’t directly related to the budget statement, even if that practice is more transparent than it was before.

One has to wonder how and why governments got to this point.

We know that the reason this practice exists is to make it easier to pass legislation that would otherwise be more difficult to pass.

Is another reason that we have a minority government? Is it because of the COVID-19 pandemic or the scope of the legislative agenda? I don’t think those are valid excuses for broadening the scope of budget implementation bills.

In my opinion, one way to reduce the size of mammoth budget implementation bills is to spread out the introduction of government bills more evenly throughout the year.

I therefore invite academics and political science experts to tell us what they think about this and propose solutions.

One thing is certain, and that is why I rose to speak today: If this practice continues to grow, Canadians are going to become increasingly cynical about our institution.

That being said, I will obviously be voting in favour of Bill C-19, but I want to take this opportunity to ask the government not to include employment insurance reform in the next budget implementation bill. Which brings me to my next point.

In the budget speech, the government said it will release its long-term plan for the future of EI after the consultations conclude.

Let us be clear: It would be inappropriate to include this plan in a budget implementation bill. The reasons are obvious. It would be difficult for us to realize an in-depth study of this reform, which is central to the health of the labour market. We would not be able to look at regional consequences and make a value-added contribution.

However, I want to take this opportunity to insist on the necessity for an iterative consultation process with the labour market partners who finance entirely this social program. The proposition I made in Bill S-244, which I introduced recently, would make an important addition to the EI Commission that could make a difference in favour of better EI reform. It proposes to strengthen the social dialogue within the EI Commission. This constitutes the kind of iterative approach in the consultation process that can be extremely useful and innovative in this case. I will continue this file upon our return in September. As you might recall, this bill has been supported by the main labour market partners in Canada, such as the Canadian Labour Congress and the Canadian Chamber of Commerce.

I think the Senate can play an important role in the EI file because we have a cognizant group of senators who could invest themselves in this reform. We could have the time to do an in‑depth analysis, especially if the government asks us to pre‑study the bill.

As my third and final point, I want to emphasize that the Senate can make a difference in the quality of legislation. It has done so in the past. The Senate exerted its influence when examining Bill C-19, although it did not make any amendments.

Indeed, Bill C-19, when tabled in the House, contained 32 divisions in Part 5. It now contains 31 divisions.

We are grateful for the leadership of our colleague Senator Yussuff in persuading the government and Minister Qualtrough to remove Division 32 on the creation of a new EI board of appeal that would have replaced the EI appeal process under the Social Security Tribunal of Canada. The withdrawal of this division is consequential to the unanimous objection of labour and employers’ associations.

The government was surely acting in good faith in proposing reform. It wanted the reform to respond to the grievances of workers and employers, but it missed the mark.

If the proposals to strengthen social dialogue at the Employment Insurance Commission included in Bill S-244 had been in effect, the government would not have missed the mark. Stakeholders could have pointed out the problematic situations from the outset and proposed reforms to the tribunal that would have really addressed the needs.

In closing, I want to acknowledge the tremendous amount of work done by all honourable senators on Bill C-19. I especially want to commend the sponsor of the bill, Senator Lucie Moncion, and its critic, Senator Elizabeth Marshall. Thank you. Meegwetch.

Honourable senators, I appreciated Senator Bellemare’s discussion of omnibus bills, yet here is another interesting section of this bill.

Colleagues, I rise today to speak to Division 13 of Bill C-19, the budget implementation act, which advances the Senate modernization agenda initiated by this government in 2016 of moving toward a more independent Senate. It includes amendments to the Parliament of Canada Act and other changes.

Division 13 recognizes the steps that have been taken toward independence in our upper chamber and reinforces this direction by making key changes: changing the annual additional allowances for Senate leadership positions, and requiring that leaders of all recognized groups in the Senate are to be consulted on the appointment of certain officers and agents of Parliament.

Colleagues, as we know, these amendments are not new. They were initially introduced as Bill S-4 in the Senate last year; again as Bill S-2 after the 2021 election; then in the other place as Bill C-7; and then were incorporated by the government into this bill, the budget implementation act. They follow from significant rule changes within the Senate since 2016 to recognize groups other than the government and official opposition.

Many of our colleagues have worked hard to achieve these changes. I want to thank all Senate leaders — in particular, our leaders Senator Woo and Senator Saint-Germain — for the hard work they have done over the years, as well as Senator Harder and Senator Gold for taking us to this point.

My goal today is to speak briefly about the evolving Senate and about how Canadians view our upper chamber.

During my 30-year career in the public opinion business, I have had the opportunity to study, analyze and consult Canadians on the many proposals advanced over the years to achieve Senate reform.

In 1987, the Meech Lake Accord included in a short list of provisions a clause giving the provinces the ability to submit names to the Prime Minister to fill Senate spots. That accord died in 1990.

In 1992, the Charlottetown Accord included in its much longer list of provisions clauses to implement a “Triple-E” Senate — a Senate that would be elected, equal and effective. That accord died on the heels of a national referendum that failed that year.

In 2011, Prime Minister Harper introduced legislation with term limits for senators and proposals to allow the provinces to hold Senate elections. That reform also died when the Supreme Court ruled in the 2014 reference that such changes would require constitutional amendments.

Mr. Harper knew then, as we still know now, how difficult it is to change the Constitution. In fact, a recent Environics poll shows that only 35% of Canadians would be willing to reopen the Constitution for the purpose of making changes to the Senate. Much more public support than that would be needed before we would go down that road again.

Colleagues, in my lifetime, the only major Senate reform that has truly succeeded has been Prime Minister Trudeau’s initiative toward creating an independent Senate.

I want to make a few observations about public opinion and speak a bit about what Canadians think of the Senate.

First, we still have challenges with the way the public views the Senate overall. In reviewing national public opinion research conducted by Nanos Research last year, I tried to dig into the weeds to understand what the remaining sources of public dissatisfaction with our chamber were.

Among the number of Canadians who hold a negative view of the Senate, here are the reasons they give for why they view us negatively. Some are critical because we are not elected, and they would prefer to have an elected Senate. Others are critical because they say the Senate is still too partisan, yet others still point to the scandals of many years past. But the single most important critique is that they do not see that we provide value for money. They don’t know exactly what we do, they think maybe we cost too much. They are not quite sure, and that really emerges as the most important of all the critiques.

Colleagues, we have not told the story of our hard work, purpose and sober second thought very well, and we must continue to do a better job of that. When it comes to the independent Senate, however, we see a lot of positive feedback from Canadians.

In the Nanos survey from last year, there was widespread approval of the new Senate appointment process that has been in place since 2016. According to the data, 80% of Canadians think it’s a good change and a good development that new senators sit as independent members and are not active in a political party. Furthermore, 67% think that the open application process to become a senator is a good change, and 79% say it’s a good change that an independent board reviews applications for the Senate.

Most importantly, colleagues, Canadians want future governments to keep building an independent Senate. Three quarters of Canadians — 76% — want future governments to keep the changes to the appointment process that have been implemented, and only 3% of Canadians want to return to the previous ways of appointing senators.

Colleagues, we still have work to do. We must keep building awareness of the Senate’s unique role in governance and of the move toward independence and non-partisanship. When awareness of the independent Senate increases, so do positive attitudes.

I will conclude by saying the reforms promoting independence are a very bright light for our institution. Division 13 of Bill C-19 is an important and vital step toward recognizing our independent Senate and recognizing it into the future. I will be voting yes. Thank you.

Honourable senators, I rise today at third reading to speak to Bill C-19, the government’s budget implementation act, 2022, no. 1. I thank all the senators who have spoken thus far for their insightful speeches.

As a member of the National Finance Committee and the Banking Committee, I had the pleasure of immersing myself in a top-to-bottom review of this almost 500-page bill. Combined, we held eight meetings and heard from more than 75 witnesses. We received several written briefs, and I also reviewed the reports from the six committees who conducted pre-studies of specific parts of the bill. And I will attempt to be as complementary as possible to the other speeches we have heard.

Studying a budget implementation act is always an exciting and daunting task that usually includes a review of a long list of policy initiatives, income tax amendments and various other measures. Bill C-19 is no different.

As we all know, sometimes you need to look around you to feel better about yourself. Indeed, the Canadian economy is doing well compared to our G7 allies. For example, the International Monetary Fund revised its growth projections in April downward slightly. Globally, growth is projected to hit 3.6%, while in Canada, the increase is 3.9%, which moves us ahead of the United States, Great Britain and the European Union. These projections are encouraging.

Although the Canadian economy is moving full steam ahead, many Canadians remain in tough, precarious situations. Inflation is mainly to blame for the many problems facing Canadians who are worried about making ends meet. Fortunately, there are some measures in Bill C-19 that will ease the financial burden for some of these Canadians.

There are a few measures in C-19 that I welcome and feel will help alleviate some of the financial pressure and economic hardships Canadians are dealing with these days due, in part, to the inflationary pressures we are experiencing. I’m optimistic that some of these measures will help create wealth and increase productivity in our country.

For instance, I think of the labour mobility deduction for tradespeople, which was well covered, to allow workers to deduct eligible expenses of up to $4,000 per year. I’ve spoken to many entrepreneurs who continue to struggle to find workers. This measure should help and, hopefully, will solve some of the delays. Labour shortages are not the only challenge, as supply chain delays also continue to have a negative impact, as we have all witnessed and experienced.

I also support the government’s commitment to providing greater support to the disability community, namely through the home accessibility tax credit. This measure is expected to benefit 10,000 Canadian families and allow seniors and people with disabilities to live and age at home. I also support the expansion of the eligibility criteria for the disability tax credit, and I would welcome further expansion in the future to a refundable tax credit.

We all know housing supply and affordability in Canada are big issues. Let’s not mince words: It’s a crisis that needs our immediate attention. Thankfully, there are a few measures in Bill C-19 that focus on housing, namely Divisions 4 and 12 of Part 5. Division 4 authorizes the Minister of Finance to make payments to provinces and territories of up to $750 million out of the Consolidated Revenue Fund for the purpose of addressing municipal and other transit shortfalls and needs, and improving housing supply and affordability, which is so important.

Division 12 enacts the prohibition on the purchase of residential property by non-Canadians, a new statute that implements a ban on foreign investment in Canadian housing for two years. The prohibition would also apply to certain foreign corporations and entities and prevent non-eligible foreign persons from avoiding the ban by using corporate structures.

I also want to briefly acknowledge the government’s commitment to fast-track by two years the implementation of a public and searchable beneficial ownership registry by bringing amendments to the Canada Business Corporations Act. Division 30 of Part 5 of the bill will require private federal corporations to proactively send information on their beneficial owners to Corporations Canada. The registry is being implemented in a two-phase approach, and we expect further amendments this fall in the government’s second budget implementation act of 2022. In committee, officials from Innovation, Science and Economic Development Canada, or ISED, explained that the government will further consult with stakeholders, which is so important.

I think it will be important for our Banking Committee, when the time comes, to take a good look at the proposed changes in phase two to make sure that there are no loopholes that could, among other things, allow foreigners to create shell companies and bypass the measures in Division 12, which bans foreign investment in housing. I know our colleague Senator Downe shares this concern and has written to Minister Freeland about it.

Of course, these three measures are in addition to another housing-related measure we adopted in Bill C-8 last week: the Underused Housing Tax Act, which the government estimates will generate $735 million in revenue in the next five years. Officials who appeared before the National Finance Committee argued that Division 12 is one measure that is packaged within a number of measures put in place in Budget 2022 by the government to contribute to better affordable housing outcomes for Canadians and curb foreign demand.

I was reassured that these measures are only part of a larger package of initiatives because a lot of work still needs to be done on this file. Taxing foreign owners won’t solve the housing shortage, and it is unlikely to address affordability challenges. With the recent and anticipated interest rate hikes, housing may become increasingly more inaccessible for Canadians. Approximately one in four Canadians are worried that increasing interest rates will force them to sell their homes.

It is my hope that our Banking Committee will take the time this fall to explore what opportunities, challenges and risks lie ahead in the sector and make recommendations to the government on how to make housing more affordable, available and accessible.

I appreciate that the federal government may be limited in what it can actually do to address the housing crisis since many of the responsibilities fall within provincial and municipal levels of government. Zoning issues and permitting come to mind. I respect jurisdictional authority, but I also believe that the Canadian federation works best and can achieve great things when all levels of government work together. The housing file is one such issue where collaboration is crucial. When funding transit provincially, a solution would be that this funding be linked to an increase in housing supply. This housing supply is currently being rationed by provinces and municipalities. This is too complicated to get into in a short period of time, but we will study this further, and I will comment on it at a later time.

One issue that has received a lot of media coverage and that I have some reservations about is the select luxury items tax act, Part 4 of the bill. On the surface, this seems like a good policy. As the government argued when it introduced the tax in Budget 2021, those who can afford to buy luxury goods can afford to pay a bit more. It is estimated that this measure would increase federal revenues by $749 million over five years.

At the National Finance Committee, we heard from the aerospace and marine industries, and both advanced that the measure would be harmful to the economy and would have a negative impact for thousands of Canadian families. It was suggested that this measure could result in lost jobs and lost revenues to companies across the country. I won’t get into the numbers, but many supply chains will obviously be affected. We were reminded that the United States enacted a similar tax on boats in the early 1990s, only to repeal it a couple of years later. We can always learn from global jurisdictions and especially our largest trading partner.

Finance officials suggested that, within the context of the economy of the whole, it wouldn’t really impede growth globally but recognized that specific sectors, like automotive, boating and planes, will experience a bigger impact. I think the government may have failed to look at the consequence of this measure on workers within these sectors, lost revenue from sales and the impact on our reputation globally.

I am not suggesting that this tax be repealed from Bill C-19 — and we’ve made a few observations in our National Finance Committee’s report, to which you can refer — but I can’t help but question what economic impact assessment the government conducted to justify it. I think it will be very important for senators on the National Finance Committee to monitor the implementation and impact of this tax and for the government to also track the impact of this tax and the impact it will have on employment, and to act very quickly if the impact is negative.

We’ve discussed the excise taxes and the “sin” taxes, but, rapidly, what can I add? I’ll add this: as reported in the Public Accounts of Canada, revenues from tobacco between 2016 and 2021 amounted to nearly $16 billion, and just over $9 billion for alcohol. These are considerable sums of revenue for the treasury. With respect to vaping products now being taxed, the revenues from their taxation in the next five years will generate approximately $654 million. I just want to outline the importance of those taxes.

In relation to competition and growth, when Minister Freeland tabled her budget in the other place on April 7 she acknowledged that the Achilles heel of the Canadian economy is productivity and innovation. I completely agree with her, and I feel Bill C-19 could have done more to properly address this issue. The business community feels the same way. Sure there are some measures, like the changes to the Competition Act in Division 15 of Part 5, that could set the stage for a more competitive marketplace. According to the government, these changes could result in lower prices for goods and services, greater choices for consumers and better, good-paying jobs — we never have enough good-paying jobs — and an environment that fuels business, innovation and productivity.

This is good news, because we all know that competition will benefit the consumer, and the consumer, I often say, is the driver of every economic recovery and the motor of every economy. If we look south to the largest economy in the world, and our largest trading partner, the consumer is two thirds of that economy, and close to 60% of the economy in Canada. Seeing the importance of the consumer, any measure and/or amendment that benefits the consumer is always very welcome.

It is also important that the government increase engagement with stakeholders, the business community and others to see what else must be done to ensure that Canada keeps pace with our global competitors. We need to be an attractive destination, a place where we encourage businesses to innovate and give Canadian workers a chance to prosper. We must also establish very favourable conditions to promote domestic and foreign investment.

In conclusion, honourable senators, as we look to the future and consider how Canada can, should and must manage the recovery, we need to turn our attention to Canada’s overall competitiveness. I’ve said it before and I’ll say it again: It’s much easier to distribute wealth than to attract and create wealth. It was the same in business. When you tell executives to cut expenses, they quickly go and do so. When you tell them to grow sales, it’s a little tougher.

Canada needs a plan to address our lacklustre productivity and growth performance. Simultaneously, we must also find ways to raise revenues and start dealing with our debts and deficits. I won’t get into the numbers. They’ve been mentioned enough by Senator Marshall, who is looking at me while smiling and nodding. I also want to thank Senator Moncion for doing a great job as the sponsor of the bill, and Senator Marshall as critic.

While I’m at it, I want to thank all my colleagues on the Finance and Banking Committees. It’s always a learning experience, and I am really privileged. But the best way to raise revenues is to grow our economy.

Colleagues, I will vote in favour of Bill C-19. I feel most of these measures will have a positive impact on our economy, although I was hoping to see more measures to address Canada’s productivity growth and competitiveness. Bill C-19 is, nonetheless, a good step forward and a reminder that much work lies ahead — and not just talk. It’s easy to talk, but let’s see action. Let’s make action happen. I’m glad to contribute, and to join my colleagues on the Finance and Banking Committees in doing some great work. Thank you for all your work.

Honourable senators, I want to thank Senator Moncion and Senator Marshall for their exceptional work during the study of this bill.

Honourable colleagues, as you know, I have called out the Government of Canada a few times on its priorities when it comes to the financial needs and rights of persons with disabilities, either by deploring how long it took to bring in assistance programs during the pandemic, or emphasizing the urgent need to kick-start a new Canada benefit for persons with disabilities. Our role as sentinel requires us to point out these shortcomings or any other broken promise. However, when appropriate, we also have a responsibility to commend any measure that eases the burden on Canadians with disabilities.

Bill C-19 gives us the opportunity to do so by proposing to expand the eligibility criteria for the disability tax credit, DTC, which is a gateway to being entitled to other supports, including the Registered Disability Savings Plan and the child disability benefit.

I want to take a few minutes today to talk about these changes and to share the relief of the Canadians who have long been pushing for this tax measure to be improved. The Library of Parliament reports that around 45,000 families and individuals will benefit from the DTC and will have better access to other associated benefits.

You may recall that the Standing Senate Committee on Social Affairs, Science and Technology examined this tax credit in 2018, in response to the work done by Senator Munson. The tax credit was known to be difficult to access, especially for applicants with intellectual disabilities. At the time, we learned that it was common for a medical certificate stating that an individual met all of the eligibility criteria to be rejected without explanation. We therefore based our recommendations on the need to eliminate barriers, make the eligibility criteria fairer and more consistent, and inject some compassion into the administration of the program.

Our requests have been partially met by the changes proposed in this budget implementation bill, which will not only facilitate assessment and reduce delays, but, above all, will improve access to this tax measure. In general, an individual is eligible for the DTC if he or she has one or more severe and prolonged impairments in their physical or mental function that seriously limits their ability to perform basic activities of daily living.

The first set of amendments in Bill C-19 actually updates the list of what are considered to be mental functions essential for daily living. This list was strongly criticized for its lack of clarity and consistency with respect to several regular life situations.

The other major change to be commended concerns what can be included when calculating the time spent weekly on essential therapy. At present, certain activities are not included. For example, consumption of food and activities related to the physical exercise required to administer medication and ensure the safe dosage of medical food or medical formula are not eligible.

This will no longer be the case once Bill C-19 is passed. Even better, the new category of activities will also include the time spent on appointments to receive treatment because of the impairment. It will also be possible to calculate the time spent by another person to assist the individual receiving therapy if that individual is unable to perform the activities themselves because of the effects of their disability. At present, any recipient must be receiving essential therapy at least three times a week, for a total of at least 14 hours a week. The frequency required for the administration of this will be reduced from three times a week to two.

Another bit of good news in this bill is that, thanks to an amendment passed unanimously by the other place’s finance committee, people with type 1 diabetes will now automatically be eligible for the DTC.

Dr. Michèle Hébert, Chair of Buds in Bloom and family advocate at Children’s Healthcare Canada, welcomes this progress in these terms:

This amendment recognizes the extensive time spent to coordinate care, in large part due to issues related to application processes and administration such as missing forms, heavy paperwork, re-application requirements, rejections, securing a prescriber’s approval or bureaucratic interpretations in meeting eligibility to secure this important tax credit.

Dr. Marc-André Dugas, Chief of Pediatrics at Centre mère‑enfant Soleil du CHU and board member at Children’s Healthcare Canada, states that:

 . . . this is a welcome change to reduce the associated administrative burden on families and providers alike, this reduces the challenges facing young families at a time when they are attempting to courageously manage this illness.

There are still barriers. The eligibility criteria will be less stringent. However, some Canadians who hire consultants to fill out the form so they can collect the benefit may turn over up to 30% of their tax refund once their application is approved. This is in spite of the Disability Tax Credit Promoters Restrictions Act that was passed in 2014 — yes, 2014 — and the publication of the regulations in 2021, which was nine years later. The regulations, which were supposed to cap fees that DTC promoters could accept or charge for these services at $100, were suspended indefinitely by a British Columbia judge pending the outcome of a constitutional challenge.

There are still obstacles and barriers. From equipment costs to treatment and services, the harsh reality is that it always costs more to be a person with a disability.

That said, I’m pleased to see that people with disabilities are now participating in the conversation more than ever before. Three years ago yesterday, the ambitious and historic Accessible Canada Act received royal assent. The act is based on the principle of “nothing without us,” which set the tone and showed that a barrier-free Canada is possible by 2040. It’s realistic to hope the provinces will follow suit in sectors under their jurisdiction.

The 2020 Speech from the Throne announced a plan to include people with disabilities, and the new Canada disability benefit is a key component of that plan.

In conclusion, while I applaud the proposals in Bill C-19, it remains frustrating and disappointing to see that Bill C-22 has not even begun second reading in the other place. I therefore urge the government to make it a high priority when we get back in September because as we are about to recess, we must never forget that for the 22% of Canadians living with a disability — and as many have said before me — poverty will not take a summer break. Thank you.

I would like to congratulate and thank the sponsor of the bill, Senator Moncion; the official critic, Senator Marshall; as well as the committee chair and its members.

I just want to come back for a moment to the luxury items tax that would apply to the aeronautical, nautical and automotive sectors, among others.

As you know, the current government made this a key election promise; unfortunately, it seems to be poorly crafted. Indeed, during our work, we were very surprised to find that officials from the Department of Finance, otherwise extremely competent people, were unable to justify this tax which, as we know, could be very damaging for the aerospace industry and its workers.

Aircraft manufacturers came to committee to tell us that, as it stands, the tax will have a significant impact on the entire aerospace industry. They estimate losses of $1 billion in revenue as well as 1,000 direct jobs gone. It is important to put this in the broader context, where the Canadian aerospace industry has lost almost 30,000 jobs in 2020 alone and the sector’s contribution to Canada’s GDP has decreased by $6.2 billion.

Our first instinct was to ask Department of Finance officials the following: If 1,000 direct jobs and $1 billion in revenue are about to be jeopardized because of this luxury tax, can we assume that a study of the anticipated revenue has been conducted, to assess whether the advantages outweigh the disadvantages? Much to our great surprise, we were told that no such studies had been done. Since I’m sure you are as shocked as the Finance Committee members were, let me quote the relevant part from the evidence.

The Director General of the Sales Tax Division with the Department of Finance, Phil King, appeared before the committee on May 31. I asked him the following, and I quote:

Following the consultations, the Aerospace Industries Association of Canada indicated that it estimated that the tax could result in the loss of approximately 1,000 jobs in Canada and lost sales of between $500 million and $1 billion.

In your consultations, did you estimate the impact of this tax on Canadian jobs in the aerospace industry? I have nothing against taxing the wealthiest; it’s a matter of social equity. However, has the impact on workers been assessed?

He provided the following answer, and I quote:

To respond directly to the senator’s question, no, the department has not done an economic impact estimate on the auto, boating or aviation sectors. There are a couple of reasons.

First of all, there are few other examples of such taxes to which we can appeal to look at the impacts, and the economic literature on this type of tax is fairly thin. In particular, that’s true of the aircraft sector.

So we don’t have an estimate of specifically what the impacts could be, but we have, at the very least, consulted fairly extensively with industry and heard some of the impacts that the senator had mentioned.

Just to be clear, C-19 introduces a tax on luxury items to help the government balance its budget after it had to spend significant amounts during the pandemic. According to the government, the idea is to get the wealthy to contribute. This tax applies to different items, including aircraft mainly produced in Quebec. However, the government is unable to say whether this tax will bring in more than what it will cost in terms of job losses, employment insurance, lower GDP, and so forth.

It is nonetheless quite astonishing that a G-7 country would proceed by trial and error without taking the full measure of the potential negative impact that this tax could have on the flagship businesses of Quebec’s economy.

I admit that the lack of a cost-benefit analysis, even a cursory one, tends to reinforce the argument of those who claim that this luxury tax is primarily an electoral ploy by the government to show that it is attacking the wealthiest one per cent.

If the goal is to balance the budget by taxing the wealthy, I think it would have been more effective to increase income taxes to better target the wealthiest members of our society, reconsider certain tax loopholes and revisit our tax treaties with some complacent jurisdictions. However, I must admit that, from an election perspective, that seems less impressive than a tax on luxury items.

I must say that we are very concerned about the lack of a cost‑benefit analysis. That is why the Standing Senate Committee on National Finance added an observation to its report on Bill C-19 to recommend that the Department of Finance conduct a real study on the effect this tax would have on Canada’s aircraft market and jobs before imposing this tax on the aerospace industry.

As several committees and several colleagues pointed out, it is shameful that we have so little time to study such a big and important bill.

We have criticized the use of omnibus bills to pass measures that have nothing to do with the budget many times in the past. For example, as the Standing Senate Committee on Legal and Constitutional Affairs indicated, it is appalling that the government is including amendments to the Criminal Code to tackle antisemitism in a massive budget implementation bill.

Honourable senators, let me be clear. I think we need to pass Bill C-19 in order to help pensioners, the unemployed, students, workers, and, generally, Canadians. However, I do not want this support to be interpreted as condoning the actions of the government that unfortunately has a bad habit of pushing around parliamentarians by imposing far too strict deadlines to study complex bills containing hundreds of measures that often have nothing to do with the budget. This is a terrible practice and is certainly inconsistent with the government’s claims that it is in favour of transparency and sound management of public funds. Thank you. Meegwetch.

Honourable senators, I want to first thank Senator Moncion for her sponsorship of this bill and her excellent speech. I also want to thank Senator Marshall. I think we may have only four more budgets that Senator Marshall may be giving great reviews of — maybe better reviews, in another year. We’re all appreciative of the time you take to describe the different elements, Senator Marshall, very reliably, regardless of who the sponsor is.

Colleagues, I want to speak to Bill C-19, the budget implementation act, 2022, referencing Budget 2022 that was titled: A Plan to Grow Our Economy and Make Life More Affordable. It was billed as a:

. . . plan for targeted and responsible investments to create jobs and prosperity today, and build a stronger economic future for all Canadians.

I am always pleased to see the government invest in innovation, but innovation alone will not secure the prosperity of our grandchildren and future generations to come. For us to get a strong return on that innovation investment, we will need to align government policies, including procurement polices, regulations and legislation.

We have no time to waste. We are in a global competition for economic opportunity as the world transforms due to digitization and climate change. Right now, it doesn’t look good. The OECD predicts that Canada will be at the back of the pack in terms of economic performance through 2030 and in the three decades that follow.

So I am going to make three points that I hope will help to focus attention on what is needed to generate economic return from innovation.

Point 1: The government needs to catalyze and accelerate private investment in innovation.

The pandemic highlighted the potential for governments to innovate, but I feel we have slipped back to where innovation is the exception, not the norm. We have to start applying an innovation lens to our most pervasive problems in our society and economy with agility, speed and scale.

Government has a role in catalyzing private investment and accelerating innovation in the private sector. Unfortunately, this is because we’re much better inventors than we are innovators. We have a fabulous research engine, but we are still searching for that transmission that will convert all that research power into the opportunities, jobs and prosperity that Canadians increasingly need.

Achieving this is and has been difficult. Deputy Prime Minister Freeland stated in her budget speech that innovation and productivity are the Achilles heel of our economy. I agree with her. Indeed, many governments, no matter the political party, have been unable to tackle this issue effectively. This is not a new problem in Canada.

This problem was also highlighted by the Senate’s Prosperity Action Group, led by Senator Harder. Our report highlighted the following two points. First, over a period of 50 years, Canada’s productivity growth has declined considerably. In 1970, Canada’s GDP per hour worked was roughly $1 less than in the United States and $1 more than the G7 average. By 2019, Canada’s GDP per hour was $18.10 less than the US and $9.50 less than the G7 average.

Second, in 2019, Canadian businesses were investing approximately $15,000 per worker in machinery, buildings, engineering, infrastructure and intellectual property. However, businesses across the OECD were on average investing $21,000 per worker — 40% more — and in the U.S. it was $26,000 per worker — nearly 75% more than in Canada. That is a predictor of the productivity of those workers and our prosperity in the future.

According to the OECD, in 2020 Canada had the lowest level of business investment as a percentage of total investment in the G7. However, it had the highest household investment level and the second-highest government investment level as a percentage of total investment compared to the G7 in 2020.

It is this final point that I would like you to focus on: Canada has the highest level of household investment and the lowest level of business investment despite having leading levels of government investment. If we’re going to deliver the promise of Budget 2022, a plan for targeted and responsible investments to create jobs and prosperity today and build a stronger economic future for all Canadians, our government must find ways to successfully catalyze and accelerate private investment in innovation. And we must hurry up and build that transmission, or else we won’t be able to afford the engine or the fuel for research.

Point 2: There is an urgent need for greater competition. Over the past year, we have seen a revival of the debate surrounding Canada’s competition law and policies. You all know how grateful I am to Senator Howard Wetston for his incredible effort to facilitate the consultation and debate around the Competition Act.

As a result, I was pleased to see the provisions in Bill C-19 regarding amendments to the Competition Act. Division 15 introduced amendments to the Competition Act to criminally prohibit wage-fixing, allow private access to the Competition Tribunal on abuse of dominance and expand the scope of abuse of dominance practices. These are welcome amendments that will move the needle forward on the extensive work needed to reform the Competition Act.

However, I was most pleased when the government clearly positioned these changes to the Competition Act as a “down payment” on what we could expect to see. I was not alone. The Banking Committee shared this view and offered the following observation:

The committee believes it is imperative that the Government of Canada follows through on the commitment in Budget 2022 to consult broadly on the role and functioning of the Competition Act and its enforcement regime, and that it do so without delay.

The need for greater consultation on the act is imperative. Competition affects everyone. It is therefore important to have broad consultations to hear a diverse range of voices on how to reform this important law, not just those of traditional incumbents who have the most to gain from maintaining the status quo. We have to reach far beyond.

Beyond changes to the Competition Act, also discussed by Senator Loffreda, we need to have a whole-of-government approach in terms of developing pro-competitive policies and levelling the playing field for new entrants across the board and delivering increased value to Canadian consumers, especially in sectors where large incumbents dominate, like banking and telecom.

To this end, the Competition Bureau has issued a competition impact assessment and a Competition Assessment Toolkit, which can be a vital tool for legislators and regulators. They need to be used by public servants who have to start prioritizing these tools so they can identify anti-competitive practices, policies and regulations across government and make them pro-competitive.

Our economy will never achieve our potential unless governments become more innovative, more willing to change and unwilling to tolerate the statement, “but that’s not how we do things.”

Point 3: The last point I want to make is about regulatory modernization. You heard me speak about this in my third-reading speech on Bill S-6 earlier this week. Canada has a huge problem with command-and-control regulations. OECD data for 2018 shows that Canada leads the OECD in the use of these regulations, and that is not a good thing. By definition, they eliminate the opportunity to innovate because they define the process that must be followed.

To be clear, I’m not in favour of deregulation; rather, I’m in favour of efficient regulation and regulatory modernization that plays a huge role in spearheading innovation, increasing investment and accelerating the growth of business while protecting consumers from risks that rapidly emerge only when regulations stagnate in our ever-changing world.

If you don’t understand the breadth of administrative burden due to how we regulate, please listen again to the speech that Senator Petitclerc just gave. Those issues are in every corner of how we govern ourselves.

In conclusion, we must become fervent in our determination to build an effective transmission that converts the power from our research engine into opportunities, jobs and prosperity. Increased competition creates opportunities for innovative new entrants, and those new entrants push incumbents to invest in innovation versus increasing dividends, bonuses and share buybacks. That’s the benefit of increased competitive pressure. New competitive opportunities increase investment, which further fuels innovation and drives the changes needed to achieve productivity growth.

But the innovation will not convert to productivity growth unless we modernize our regulations so that businesses are empowered to implement innovative new practices that also protect consumers. It is productivity growth that will deliver the promise of Budget 2022. Productivity growth is what will grow our economy and make life more affordable.

However, we have been heading in the wrong direction for 40 years. Change is hard, and we need change. In a recent op-ed in The Hill Times, Professor Ken Coates of the University of Saskatchewan offered:

Tinkering with Canada’s existing innovation policies will not transform the national economy into a creative economic power. Governments need to rethink their approaches and look for innovative innovation policies.

An innovative economy requires an innovative government. Canada is already a G7 leader in investing tax dollars. However, we are an OECD laggard when it comes to updating policies, regulations and legislation that determine how effectively those investments convert into opportunities, jobs and prosperity.

Let’s “double down” and “triple down” on the down payment that Bill C-19 has made in competition law reforms and the good intentions of Bill S-6 as it relates to regulatory modernization.

I hope you now see how those crucial elements are important to fulfilling the promise of Budget 2022. I support Bill C-19 as a down payment on all the hard work we need to do to maximize the return on the government’s investment in innovation. Thank you, colleagues.