Budget Implementation Bill C-97
Thank you very much for your speech, Senator Boehm. I’m the critic for Bill C-97. I’ll be giving you the other side of the story on some of the issues raised by Senator Boehm, including the one Senator Patterson just addressed.
Honourable senators, before I speak to the specifics of Budget 2019 and Bill C-97, I would like to reflect on the four budgets of this government. As you know, one of the primary objectives of this government was to grow the middle class. In fact, Budget 2016 was titled: Growing the Middle Class. This was followed by Budget 2017: Building a Strong Middle Class, then Budget 2018: Equality and Growth for a Strong Middle Class, and now Budget 2019: Investing in the Middle Class.
Over the past four years, Minister Morneau was asked on many occasions to define the “middle class.” After all, how can the government determine if the middle class has grown if it doesn’t know who is in it? Minister Morneau never did define the middle class.
Earlier this year, the OECD, Organisation for Economic Co-operation and Development, of which Canada is a member and Senator Boehm has referred to earlier, issued a report on the middle class. According to the OECD, the middle class in its 36-member countries is actually shrinking. Middle class shrinkage was sharper in Canada than the OECD average. After four budgets focused on the middle class, it’s disappointing that a government committed to measuring results has never reported on whether they were able to actually grow the middle class.
Honourable senators, the last comprehensive review of Canada’s tax system was carved out in the 1960s, more than 50 years ago, and I can actually remember that time. Since then, our tax system has accumulated a patchwork of credits, incentives and other changes, many of them major. It has created a complex and inefficient system.
Many organizations have called for a comprehensive review of our tax system, including the OECD, the International Monetary Fund, the Business Council of Canada, the Chartered Professional Accountants of Canada, the Canadian Chamber of Commerce and so on. Even the government’s own Advisory Council on Economic Growth, headed by Dominic Barton, in 2017, recommended a targeted review of our tax system, noting it has been decades since the last significant review.
Canada is falling behind other jurisdictions, including the U.S., the U.K., New Zealand and Japan, in keeping our tax system competitive. The tax system is fundamental to creating a competitive environment, encouraging business to invest and expand. It creates quality jobs, encourages innovation and produces revenue to fund government programs and services.
Honourable senators, the Standing Senate Committee on National Finance met with representatives of CPA Canada and the Canadian Chamber of Commerce to discuss several aspects of Budget 2019. The Chartered Professional Accountants of Canada indicated that it supports the measures to accelerate business investment, but more needs to be done to bolster competitiveness in the long term and a comprehensive review of the tax system is needed. Such a review would help make the tax system simpler, fairer and more competitive. In the absence of such an announcement in the budget, CPA Canada noted that this was a squandered opportunity. There is a groundswell of support for a full-scale tax review in Canada and a much-needed assessment would pave the way for an improved system that best positions the country for economic and social growth.
The Chartered Professional Accountants of Canada is one of the largest national accounting organizations in the world, representing more than 210,000 members. In February of this year, it commissioned a public opinion survey on Canada’s tax system, which was conducted by Nanos Research. The survey reported several interesting findings. It found that almost half of Canadians — 47 per cent — say the tax system has become more complex than it was 10 years ago, while 37 per cent say it has stayed the same. Only 5 per cent feel that the tax system is less complex.
The public opinion survey also found that 81 per cent of Canadians see a comprehensive tax review as a priority for the federal government. Of those, more than one in three, or 35 per cent, say it should be a high priority — an impressive number for a topic such as tax reform.
Honourable senators, many of our country’s leading tax experts are members of CPA Canada. Based on their knowledge and that of other CPA members, CPA Canada has issued two reports supporting a review of our tax system.
The first report looked at how other countries have approached tax reforms and reviews. The second report addresses why Canada’s tax system needs an urgent overhaul. The final report will explore how an independent tax system can be designed to maximize the benefits.
Honourable senators, when Minister Morneau appeared before our Finance Committee last Wednesday, several senators asked him why he has not undertaken a comprehensive review of our tax system. While Minister Morneau indicated it is always important to listen to people, he said, “A complete overhaul of the tax code is not currently something on our agenda,” to which one senator responded, “Who are you listening to? If not the 80 per cent who is looking for a tax review, it must be the 20 per cent that says we don’t need it.”
Honourable senators, Budget 2019 includes the government’s debt management strategy for 2019-20 and sets out the government’s objectives, strategy and borrowing plans for next year. Borrowing activities include the ongoing refinancing of government debt coming to maturity, the implementation of the budget plan and the financial operations of the government.
As honourable senators may recall, the Liberal government, as part of its 2015 election platform, promised modest deficits of $10 billion a year, with a return to a balanced budget by this year, 2019-20. However, in its first budget, the government abandoned its promise to run smaller deficits, along with its promise to balance the budget by this year.
Since its election, the federal government has incurred deficits of $17 billion in 2016-17, $19 billion in 2017-18, $15 billion in 2018-19, along with a projected deficit of $19 billion for this year. There is no plan ever to return to a balanced budget, as promised. I think I did see something about the 2040s, but that’s so far off.
While there has been much emphasis on Canada’s market debt, which is projected to reach $754 billion at the end of this year, the debt of its Crown corporations is often ignored. The total liabilities of these Crown corporations do not appear in the market debt of the Government of Canada, nor in the consolidated financial statements of the Government of Canada. However, as agents of the Crown, the government is ultimately legally liable for their actions and for their liabilities.
It is estimated that the debt of these Crown corporations will reach $316 billion by the end of this fiscal year. In recognition of this reality, government, in enacting the Borrowing Authority Act in 2017, included the debt of these Crown corporations as a component of the new legislation.
If we look at Canada’s debt over the years, we can see that government debt, including that of Crown corporations, was $918 billion at the end of the 2014-15 fiscal year, just before the current government was elected. In its 2019 budget, the government indicates that its debt, including Crown corporations debt, will reach $1.07 trillion. In other words, the current government, since its election in 2015, will have increased Canada’s debt by $152 billion.
Honourable senators, there is a cost to carrying debt. This year, public debt charges are expected to be $26 billion, up from $23 billion last year and $21 billion the previous year.
Projections for public debt charges for the next four years also indicate an increase: $28 billion in 2020-21, $30 billion in 2021-22, $31 billion in 2022-23, and $33 billion in 2023-24.
Past debt charges and projected debt charges clearly indicate that debt charges have already increased significantly over the past four years and will continue to increase in the future. As our debt increases, and if interest rates increase, so will the cost of servicing our debt. As public debt charges increase, there will be less funding for other government programs.
Honourable senators, I would be remiss if I did not provide further comments on debt and interest rates.
CMHC recently indicated that Canadian household debt reached a record high at the end of 2018, even as mortgage activity slowed, as Canadians continued to take on more non-mortgage debt.
The Bank of Canada, in its Financial System Review last month, identified the main vulnerabilities and risk to financial stability in Canada, indicating that:
The vulnerabilities associated with high household debt and imbalances in the housing market have declined modestly but remain significant.
The Bank of Canada continued on to say that:
Despite this progress, we need to remain vigilant as the overall level of indebtedness continues to be high, with a large portion of that debt held by indebted households.
Also included in the Bank of Canada’s Financial System Review is a reference that fragile corporate debt funding is emerging as a vulnerability.
Honourable senators, we should not think that the Government of Canada, which has assumed a significant amount of debt over the past four years, is immune to risk.
The Bank of Canada, in its financial review, continued on to say that:
The overall risk to the Canadian financial system has increased slightly since our last assessment in June 2018 . . . caused in part by global trade policy uncertainty, last year’s oil price decline, ongoing difficulties in the energy sector and expanded risk taking in global financial markets.
The International Monetary Fund has also provided commentary on Canada’s economy. Every year, the International Monetary Fund sends a team of economists to most of its 189 member countries to assess the state of their economies.
Last month, the International Monetary Fund released its preliminary findings of its most recent consultation with Canada. The report indicated that risks are evolving as the federal election approaches.
As stated in the preliminary report:
The global economy is slowing, low oil prices, aggravated by domestic pipeline constraints, have dampened exports and business investment, while private consumption and residential investment — important contributors of Canada’s recent rapid growth have decelerated in line with the slowdown in the housing market, rising interest rates, and slower real income growth. While the deal to overhaul NAFTA was signed, the new USMCA awaits legislative approval, and trade tensions between the U.S. and its major trading partners continue to cast a shadow over [Canada’s] economic outlook.
The Canadian Chamber of Commerce, in its testimony at the Finance Committee, indicated that the federal debt and deficit, with increasing debt and continuing deficits, presents challenges. Canada’s fiscal flexibility is extremely limited, and there is no clear plan for returning to balance. They said this is a terrible long-term policy, and failure to get our fiscal house in order increases Canada’s vulnerability whenever the next economic downturn occurs.
CPA Canada also stated that while the government has continued its commitment to reduce Canada’s debt-to-GDP ratio, the government has provided no target for elimination of the deficit.
CPA Canada further stated that Canada needs a plan for fiscal stability, one that establishes a target date for a return to a balanced budget over the medium term. The government must demonstrate that it has a plan to rein in spending and address the persistent deficits. This would greatly assist in creating business confidence and minimize the burden on future generations.
Even Kevin Page, our former Parliamentary Budget Officer, commented in a recent article that:
The increase in federal debt and associated interest on the public debt will raise legitimate concerns about the government’s capacity as a fiscal manager.
He goes on to say:
If the economy slides into a recession between now and the election, the government will look seriously unprepared.
Honourable senators, Budget 2019 expands the Rental Construction Financing Initiative, which was first introduced in Budget 2017. It provides low-cost loans to encourage the construction of rental housing across Canada. Projects must meet certain criteria to qualify. The program was enhanced in Budget 2018 to build 14,000 new rental units over the life of the program.
Budget 2019 proposes to further expand the program, with an additional $10 billion over nine years. With this increase, it is estimated that the program would support 42,500 new rental units across Canada.
Budget 2019 indicates that five projects, representing 500 rental units, have been announced.
Senators questioned why there were only five projects representing 500 units for a program announced two years ago. CMHC officials indicated that they still expect to meet the targets and that it takes time to build a rental building. Their explanation was:
. . . so there is a bit of a lag between when we start the program and take applications and fund it.
I must say, to take two years and to only have 500 units announced was very disappointing with regard to that program.
Budget 2019 also proposes to introduce the first-time home buyer incentive program, and Senator Boehm has commented on that. This program was referred to the Senate Social Affairs Committee. However, the CEO and President of CMHC testified at our Senate Finance Committee and discussed this budget initiative.
Under this program, an incentive of 5 per cent or 10 per cent of the home purchase price would be provided by CMHC; 5 per cent would be provided for an existing home and 10 per cent would be provided for a newly constructed home. The 10 per cent shared equity mortgage for newly constructed homes is intended to help encourage new home construction in areas that have housing supply shortages.
To qualify, the participant must be a first-time homeowner, household income must be less than $120,000 a year and the insured mortgage plus the incentive cannot exceed four times the household income. The incentive would allow eligible first-time home buyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with CMHC. It is expected that approximately 100,000 first-time home buyers would be able to benefit from the incentive over the next three years.
The government has committed a significant amount of funding to this program. In fact, $1.25 billion over three years: $250 million this year, half a billion dollars next year and half a billion dollars the following year. The government has indicated that the program will be implemented September of this year.
The first-time home buyer incentive will be a shared equity mortgage that is to be repaid when the participant sells their home. Further details on the program will be needed to understand how the program will actually work. For example, if a home is sold for less than the outstanding mortgage, how will CMHC recoup its investment? The formula under which CMHC will recoup its investment has yet to be disclosed.
However, as much as the plan has been promoted, it is not without its critics. Critics say the plan will increase demand for houses. It will also increase supply, but while the new homes are being built, house prices most likely will increase. In markets where prices have stabilized or declined, it could reverse improved affordability. However, CMHC officials indicated that they were confident the program will essentially have no impact on housing prices.
The biggest and most visible threat to Canada’s economic stability is record-high household debt tilted heavily toward mortgages. In fact, Canadians have the highest debt load in the Group of Seven economies, so this program will encourage more people on the margins to take on more debt, while contributing to higher housing costs that got Canadians into their current debt problems.
In fact, our own Bank of Canada says that Canada’s high household debt is the central bank’s top domestic financial vulnerability. In addition, the International Monetary Fund has warned Canada about its high debt levels and the pressure on Canadian households to pay down their debt.
CPA Canada, in its testimony, commented on the proposed first-time home buyer incentive, citing several concerns. First, they said that the proposed program implies that CMHC is taking on direct exposure to the mortgage market at a time of record household indebtedness and rising interest rates.
Second, CMHC taking on part of a buyer’s mortgage simply allows the borrower to leverage further. CPA Canada went on to say that in a supply-constrained housing market that already has sufficient demand, pushing more buyers into a higher level of debt is unlikely to impact supply in isolation.
Mortgage Professionals Canada also expressed concerns regarding the first-time home buyers incentive program. The difficulty they have with the program is that it doesn’t assist anyone to qualify to purchase a home that wouldn’t already have qualified.
They also indicated that the program limits the mortgage size to four times the actual household income, whereas a family with reasonable credit would generally qualify for a traditional insured mortgage of around 4.7 or 4.8 times their household income.
Mortgage Professionals Canada also indicated that, to their knowledge, the program was conceived and announced without significant industry consultation.
The House of Commons Finance Committee also met on the first-time home buyer incentive program. I’m summarizing some of their discussions that provide insight into the program.
MPs indicated that at recent Public Accounts Committee meetings, nobody seemed to know the details of the program. The head of CMHC said the board of CMHC only found out about the program on the night of the budget. MPs at the House of Commons Finance Committee indicated that the program is intended to help 100,000 first-time home buyers, but they could not determine where that number came from.
Other information on the program was not available from CMHC, including the application process, the terms and conditions of the program, what happens in the event of a mortgage default, the repayment terms and amounts and the undertaking by CMHC of a risk assessment.
In summary, discussions at the House of Commons Finance Committee were similar to those at the Senate Social Affairs Committee. That section of the budget bill was sent to the Social Affairs Committee. I’ll have some other comments on that later on when I get into the reports of the committees.
Given that this budget initiative is estimated to cost $1.25 billion over the next three years, I would have expected the program to be more fully developed.
Honourable senators, I want to talk a bit about Phoenix because there’s a significant amount of money provided in the budget to fix Phoenix.
As you know, the Phoenix pay system for federal public servants is the result of the Transformation of Pay Administration Initiative. This led to the Phoenix pay system, whereby more than half of the federal government’s public servants have experienced pay problems, causing hardships to thousands.
The Auditor General of Canada issued two reports on Phoenix. The Phoenix pay system is still currently used to administer the pay of approximately 300,000 federal public servants.
In 2016, after Phoenix was launched, problems arose. The causes of the failure were multiple, such as failing to manage the pay system in an integrated way with human resources processes, not conducting a pilot project, removing essential processing functions to stay on budget, laying off experienced compensation advisers and implementing a pay system that was not ready.
The total amount of investments to respond to pay issues of the Phoenix system now stands at $1.2 billion. I’ll just give you a rundown as to where that money has gone.
During 2017, there was $142 million invested to build capacity, enhance technology and support employees; in other words, to help fix the problems that were being identified. Budget 2018 last year set aside $431 million over five years so that Public Services and Procurement Canada and Treasury Board Secretariat could hire staff, build capacity, enhance technology and support employees, again to fix the problems of the Phoenix pay system. It also set aside $5 million over two years towards the Canada Revenue Agency to process income tax reassessments on pay issues.
In Budget 2018, the Government of Canada also set aside $16 million over two years for Treasury Board, beginning in 2018-19, to work with experts, federal public sector unions and technology providers in order to establish a way forward for a new pay system and establish a temporary next generation human resources and pay team as a pay solution for the Government of Canada. It is expected that this initiative will result in recommended options during this month. We’re anxiously waiting to see what those options are going to be.
Minister Qualtrough, in her appearance before the National Finance Committee, said that work has already begun to move away from Phoenix and begin development of the next generation of the federal government’s pay system. Budget 2019 provides an additional $22 million in 2018-19 to address urgent pay administration pressures to continue progress on stabilizing the current pay system.
Budget 2019 also proposes to invest an additional $523 million over five years, starting in 2019-20, towards Public Services and Procurement Canada and Treasury Board Secretariat to ensure that adequate resources are dedicated to addressing pay issues. It also establishes $9 million towards the Canada Revenue Agency to process income tax reassessments.
The government has established a new service delivery model to process pay transactions, which is a pay centre employee initiative known as Pay Pods. It is expected that the use of resources would be more efficient and that pay transactions are processed more rapidly during the Pay Pod system.
We were told when we met with the minister in April, that by May— last month— all 46 departments served by the pay centre would use the Pay Pod model.
Honourable senators, Bill C-97 deals with overpayments. The Phoenix pay system has been underpaying some public servants, and it has also been overpaying other public servants. Under the current legislation, an employee who has been overpaid is required to pay back the gross amount of the overpayment to the employer and the employee is to recover from the Canada Revenue Agency the excess income tax, Canada Pension Plan contributions and the Employment Insurance premiums that were deducted by their employer when the overpayment was made.
Clauses 33, 45 and 50 of Bill C-97 establishes that under certain conditions, an employee who was overpaid due to a system, administrative or clerical error would be able to repay to their employer only the net amount of the overpayment received in a previous year rather than the gross amount.
Under the new rules, the Canada Revenue Agency would be able to refund directly to the employer the income tax, CPP contributions and EI premiums withheld on an overpayment remitted to the Canada Revenue Agency on behalf of the affected employee. As a result, affected employees would no longer be responsible for recovering these amounts from the Canada Revenue Agency and repaying the gross amount to their employer.
For these new rules to apply, the employee must have repaid their employer or made arrangements to repay within three years following the end of the year in which the overpayment took place. Where these conditions are not met, the current rules would continue to apply. Public or private sector employers may elect to apply these new rules for any overpayment after 2015 as long as they have not previously issued a T4 correcting this overpayment.
Witnesses appearing before the National Finance Committee stated that since neither retirees nor employees were responsible for overpayments, they should not bear the burden of gross repayments, years of income tax confusion and challenges or financial hardship and uncertainty.
Honourable senators, I want to say a few words now about money laundering. This issue was referred to the Standing Senate Committee on Legal and Constitutional Affairs, but I was interested in this topic. I was doing a bit of research before that section of the bill was referred to another committee. I want to talk about it and then, later on, I can refer to what the Legal and Constitutional Affairs Committee had to say about the issue.
Honourable senators, in Budget 2019, the government lays out its concerns regarding money laundering. For the past few years, the issue of money laundering has played out in the media in British Columbia. Last year, the B.C. government retained retired RCMP Deputy Commissioner Peter German to conduct an independent review of money laundering in Lower Mainland casinos. His report was released in March 2018.
More recently, two other reports have been released on money laundering in real estate, luxury cars and horse racing. These reports were commissioned in September 2018, following a widespread concern about the province’s reputation as a haven for money laundering.
The first report was from an expert panel on money laundering, which was appointed by the B.C. government to review money laundering in the real estate sector. The second report was from Peter German’s second review into money laundering, focusing on the construction industry, real estate, luxury cars and horse racing.
The C.D. Howe Institute also released a report entitled, Why We Fail to Catch Money Launderers 99.9 percent of the Time. In this report, author Kevin Comeau says that Canada’s anti-money laundering protections, especially as they pertain to real estate, are among the weakest of those of Western liberal democracies and billions are being laundered in Canada annually.
In addition, the House of Commons Finance Committee issued a report in November of last year on their review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The Standing Senate Committee on Banking, Trade and Commerce also issued a report in 2013 titled as follows: Follow the Money: Is Canada Making Progress In Combatting Money Laundering and Terrorist Financing? Not Really.
The federal government has been criticized for not taking enough action to counter money laundering.
Budget 2019 commits $11 million this year and $141 million over five years to the RCMP, Public Safety Canada, Canada Border Services Agency and FINTRAC to strengthen Canada’s anti-money laundering and anti-terrorist financing regime.
In addition to the funding, Bill C-97 proposes amendments to the Criminal Code and Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
As I mentioned earlier, this section of the budget implementation act on money laundering was referred to the Standing Senate Committee on Legal and Constitutional Affairs, and I will comment further on this item later in my speech.
Honourable senators, the budget bill adds three new measures to the Income Tax Act to provide support to Canadian journalism. Senator Boehm has referenced this and described it in his speech. I’ll just mention the three new measures and provide some comment.
First of all, it establishes a digital news subscription tax credit for subscribers. It would also amend the definition of qualified donee, which presently includes registered charities, to include registered journalism organizations registered by the Minister of National Revenue. This would enable journalism organizations to issue official receipts for donations.
A third new measure in Bill C-97 introduces a 25 per cent refundable tax credit on wages paid to eligible newsroom employees.
To implement this program, the government has identified eight organizations which have been invited to name a member to the independent panel of experts to assist in implementing these measures, including recommending eligibility criteria. The government also proposes to establish an independent administrative body, which will be responsible for recognizing journalism organizations as being eligible for the three measures. The government argues that a strong and independent news media is crucial to a well-functioning democracy.
However, the program has been heavily criticized since the people who lobbied for assistance are now the people responsible for defining the criteria for eligibility, and they are the same people who will be the beneficiaries of the program.
As Mr. John Miller, a professor at Ryerson University, stated:
Bill C-97 runs to more than 106,000 words, and 4 of those words concern me . . . “qualified” or “registered” journalism organizations, which will be the only ones receiving federal support.
. . . Who qualifies journalists? Where are they registered? Who benefits?
He also expressed concern that the danger here is that the government has power over news organizations.
The cost of the program is significant. Budget 2019 discloses that the cost of this program over the next five years will be $594 million.
A number of issues were discussed during our committee meeting. The program infringes on the independence of the press, as media organizations will now be subsidized by the government. While the government has established an independent panel of experts to recommend eligibility criteria, if you look at the Budget 2019 document, the budget has already established the eligibility criteria. Of particular concern is the inclusion of Unifor on the independent panel of experts.
In addition, the Canadian Association of Journalists, which is a member of the panel, has raised a number of concerns about the transparency of the process. It has called for the panel’s terms of reference, meeting minutes and agenda to be public. It has also called for the full list of applicants applying for funding to be posted online.
No information on the independent administrative body has been released, so we do not know how this body is to function.
Honourable senators, here is the main concern I have with regard to this program. When this government was elected in 2015, it focused on how to achieve results on promised actions. Departments were required to establish performance indicators for the program, and a Results and Delivery Unit was created in the Privy Council Office. A deputy minister was appointed to head it up.
Despite the fact that $594 million will be spent to support journalism, no one has told us what this $594 million is supposed to achieve. I know Senator Boehm used the words “bolster” and “enhance,” but for $594 million, I think that the government should be more precise as to what it expects the $594 million to achieve.
What results can we expect? What happens after year five when the funding ceases? Those are questions that haven’t been answered.
Honourable senators, I want to move now to zero-emission vehicles. We had a meeting at the finance committee on zero-emission vehicles, which was very interesting and educational.
Budget 2019 proposes several measures that will encourage more people and businesses to purchase zero-emission vehicles to reduce greenhouse gas emissions.
Bill C-97 proposes that zero-emission vehicles be eligible for a first year enhanced capital cost allowance rate of 100 per cent in the year that the vehicle is put in use, up to a maximum of $55,000.
To be eligible for this enhanced capital cost allowance, a vehicle must be fully electric, a plug-in hybrid with a battery capacity of at least 15 kilowatt hours or fully powered by hydrogen.
Bill C-97 also extends the accelerated capital cost allowance to vehicle charging stations. This initiative is estimated to cost $130 million over five years.
The measure to support business investment in zero-emission vehicles is estimated to cost $265 million over five years. There’s lots of money being devoted to this initiative.
In addition to the accelerated capital cost allowance for businesses, Budget 2019 proposes to introduce a new federal purchases incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a manufacturers’ retail price of less than $45,000. This initiative is expected to cost $300 million over three years.
Witnesses told us that more than 40 electric vehicle models are available for sale. The number is expected to grow significantly over the next few years. This compares to seven models that were available in 2011.
They also told us there has been a direct correlation between increased consumer adoption rates of electric vehicles and those jurisdictions that have provided consumer purchase incentives. There is a correlation.
The proposed $130 million investment over five years to deploy new recharging and refuelling stations is welcome, but, as one witness said, there is still a good way to go in that respect.
Fleet turnover is about 8 per cent per year, so the introduction will take some time.
Witnesses also told us that weather impacts and patterns of use have an impact on batteries. Witnesses indicated that on average a 340-kilometre distance is at the high-end range, depending on the vehicle, the type of battery and the load that’s placed on the battery. Even driving behaviour of the individual can drastically change battery performance and distance travelled.
Witnesses also indicated that there is clearly a need to expand the recharging network.
A representative of the charging industry indicated that a complete charge for a normal electric vehicle takes about 15 to 25 minutes and that more charging stations will instill confidence in electric vehicle owners.
This was all very interesting and informative.
Budget 2019 sets a target — the government has set a target for this program — to sell 100 per cent of zero-emission vehicles by 2040, so that’s a ways off, with near-term targets of 10 per cent by 2025 and 30 per cent by 2030.
While 2030 and 2040 are a way into the future, witnesses seem to be a bit reluctant to comment on those dates, but they were willing to comment on the 10 per cent target by 2025. They said right now, we are below 4 per cent, so we may reach 10 per cent, depending on the rebates, accessibility of charging stations and types of available vehicles.
Another witness felt that the established targets, while ambitious, are achievable with the right mix of policies.
We had three main witnesses, and there was a fourth witness who came to the table to answer questions on the recharging network. At the end of that hearing, all of our witnesses were very supportive of these vehicles.
Interestingly, at the end of our meeting, Senator Mockler asked the three witnesses — well, the three witnesses were supportive of the Budget 2019 initiatives, none of the three own an electric vehicle.
It was an interesting session. It sparked my interest in having an electric vehicle.
Honourable senators, I want to talk about the Canada training benefit. Budget 2019 proposes to establish a new Canada training benefit, with the objective of helping Canadians get the skills they need in a changing world.
The benefit is going to be administered by the Canada Revenue Agency. Under this program, eligible workers would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000, which could be used for training fees. I think Senator Boehm has talked about this program.
To be eligible for this benefit, individuals must be between the ages of 25 and 64, have earnings between $10,000 and $150,000 a year, and workers would be able to apply their accumulated Canada training credit balance against up to half of the cost of training fees.
Workers would claim this refund when they file their tax return. Since the Canada Revenue Agency will be administering this program, an updated balance of their Canada training credit will be included in the information the agency sends to Canadians each year.
The committee heard from five external witnesses when we studied this section of Bill C-97. They raised several issues with regard to this new benefit.
I’m going to list them because they had quite a few comments. There are eight.
First of all, Dan Kelly from the Canadian Federation of Independent Business said there is no role for the employer, who would be required to provide leave regardless of whether there is a business-related benefit.
The second comment is that the $250 annual credit may not be sufficient to buy meaningful training.
The third comment was a worker will have to wait until tax time to receive their refund.
Another complaint, I guess, is that only half of the cost of training, not the full amount, will be covered.
Witnesses also said the program itself and the administration by the Canada Revenue Agency increases the complexity of our tax system. I’ve talked about that before.
There should be a definition of what to expect in terms of long-term labour impacts, again, talking about the results of a program.
The benefit is restricted to workers between the ages of 25 and 64 years. As Senator Boehm has mentioned, many people work now past the age of 64. Perhaps 64 years is cutting it off too quickly.
Individuals have to have earnings of $10,000 a year.
It was most disappointing to hear that none of our five witnesses had been consulted on the bill, and especially so since a representative of the Canadian Federation of Independent Business was one of our five witnesses.
Honourable senators, one of the benefits of sitting on the National Finance Committee is that you learn about all the government departments and agencies.
When the budget implementation bill was tabled over in the House of Commons, and we were looking at the various sections, some of the sections I thought would come to the finance committee didn’t come to the finance committee; they went to other committees. The reports that were issued by the different committees on their sections of the budget implementation bill goes to the Senate finance committee. I took the reports and was reading some of them to see what concerns they had with certain parts of the bill. Some of the parts of the bill I found interesting, such as the issue Senator Patterson raised with regard to the two new departments. The section on money laundering was very interesting.
I was going to go through all of them. I don’t know if I have the time. I’m going to sort of start at the end and talk about the Standing Senate Committee on Aboriginal Peoples. They were to look at Division 25 of Part 4 of the bill, and that has to do with the two new departments.
In the finance committee, when those two new departments were created, every time someone came from those two departments we would ask what the status was of the new legislation governing the departments. When we questioned the witnesses, we found it sometimes confusing as to who was responsible for what programs. I’ll give you an example.
When witnesses came from those two departments, we would always ask them to clarify what they were responsible for. As an example, it seems like there were several departments involved in housing for Indigenous peoples. Between the two new Aboriginal departments and CMHC, it got confusing at times, so we were waiting for the new legislation.
As Senator Boehm said, it was back in August 2017 that the Prime Minister announced the dissolution of Indigenous and Northern Affairs Canada, so we were waiting for the new legislation.
I was kind of surprised when somebody told me, “Oh, the legislation for those two new departments is part of the Budget Implementation Bill, so it’s right at the end.” So ever before I knew it was going to go to the Aboriginal Peoples Committee, I thought the Finance Committee would get it, because we were interested in it.
I did read it. Now, I don’t know what I expected before I read the bill, but after I read the two bills, I really thought that the legislation was superficial. I don’t know why and I don’t know what I was expecting, but whatever I was expecting, it doesn’t meet my expectations.
When I went to the Aboriginal Peoples Committee, I was very interested in what they had to say. Senator Patterson did reference some of it. He referenced a letter written by the Assembly of First Nations and I have it here. These are excerpts from the report of the Standing Senate Committee on Aboriginal Peoples.
. . . the Assembly of First Nations informed the Committee that there was a lack of meaningful consultation on the creation of the two departments and a potential third ministry.
The committee also said:
Further, the Assembly of First Nations felt that “there has been insufficient time for First Nations governments and representative organizations to thoroughly review and analyze the Bill, obtain legal opinions on the matters raised, and prepare submissions.” The lack of consultation led some witnesses to state that their treaty rights were violated and some recommended that Division 25 of Part 4 be deleted from Bill C-97.
So the Standing Senate Committee on Aboriginal Peoples made two recommendations in its report, and here’s what they said in their first recommendation:
That the Standing Senate Committee on National Finance amend Bill C-97 by deleting Division 25 of Part 4 and reintroducing it in the Senate as a stand-alone bill to allow better participation of Indigenous rights holders in the legislative process.
In its second recommendation, the committee said:
That Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada:
- undertake additional consultations with Indigenous peoples, communities, and organizations on the replacement of the Department of Indian Affairs and Northern Development with two new departments and potentially a third Ministry of Northern Affairs;
- report back to the Committee within one year on the consultation process and progress made to address issues raised, such as the concerns of First Nations with pre-1975 treaties and whether the Minister of Northern Affairs should be a discretionary or mandatory appointment.
Those were the two recommendations of the Standing Senate Committee on Aboriginal Peoples.
Now, there are several other committee reports that interface with what we did at the Finance Committee. I wanted to talk about the Legal and Constitutional Affairs Committee because they looked at money laundering. They were authorized to look at that section of the budget implementation act. Here’s what they said in their observation:
The committee acknowledges that Bill C-97 contains amendments aimed at enhancing the capacity of law enforcement, prosecution services and FINTRAC to deter, prevent, investigate and prosecute money laundering activities. However, the committee is of the opinion that the government is not demonstrating the leadership that is necessary to effectively combat money laundering and to make up for the losses caused to public funds. According to recent expert reports and information released by the British Columbia government, losses range from $40 to $100 billion per year. The federal government appears to rely on international bodies, and even the provinces, before taking action.