Proceedings of the Standing Senate Committee on
National Finance
Issue 31 - Evidence - December 11, 2012
OTTAWA, Tuesday, December 11, 2012
The Standing Senate Committee on National Finance, to which was referred Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures, met this day at 9:30 a.m. to give clause-by-clause consideration to the bill; and in camera for the consideration of a draft report on Supplementary Estimates (B) for the fiscal year ending March 31, 2013.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on National Finance.
Honourable senators, we have two matters on our agenda for today. The first is the report on Supplementary Estimates (B) and the second is to give clause-by-clause consideration to Bill C-45. I propose that we go in camera now to deal with the report on Supplementary Estimates (B).
Normally, when we go in camera we pass a motion permitting staff who have helped us work on these particular matters to stay in the room, even though we are in camera. Is that agreed?
Hon. Senators: Agreed.
The Chair: Thank you.
I will read the second motion. It is moved:
That the committee allow the transcription of today's in camera meeting;
That one copy be kept in the office of the clerk of the committee for consultation by committee members present, and the committee analysts; and
That the transcript be destroyed by the clerk when authorized to do so by the Subcommittee on Agenda and Procedure —
— that is the steering committee —
— by no later than the end of this parliamentary session.
Could I have a motion to that effect? Thank you.
The reason for that is so that there can be consultation if there has been a discussion about some changes and a handwritten note is not quite clear, we can go back to the transcript to ensure what was said is reflected. Are there any other reasons? Is that it? Is everyone okay with that? It is not an unusual motion in any event.
Thank you. Those two motions have been carried.
(The committee continued in camera.)
(The committee resumed in public.)
The Chair: Honourable senators, we are now dealing with Bill C-45. As senators know, during the subject-matter study of Bill C-45, we held 12 meetings, met for over 21 hours and heard from 65 witnesses. We have now received Bill C-45 and are at the stage where we will soon begin going through the bill on a clause-by-clause basis.
Before we do this, I would like to remind senators of a number of points. I know that senators from both sides are very eager to ensure that this committee does the best we possibly can do so that when the Senate takes up the bill again at third reading, the report will have information that we will be able to take back to the Senate from the work that we have done.
I want to thank all honourable senators for the extensive work that we did with respect to Bill C-45. It was an extensive amount of work out of our normal sitting time, and I think we did the best we could do under the circumstances.
If at any point a senator is not clear where we are in the process as we begin our clause-by-clause consideration, please interrupt me and ask for clarification. We must do our utmost to ensure that we at all times have the same understanding of where we are in this clause-by-clause process. If members ever have questions about the process or the propriety of anything going on, they can raise a point of order. As honourable senators know, the chair will listen to the arguments, decide when there is sufficient discussion of the matter, and make a ruling.
The committee is, of course, the ultimate master of its business within the bounds set out in the Senate, and a ruling can be appealed to the full committee by asking whether the ruling shall be sustained. As chair, I will do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation, and I ask all of you to think of other senators and to keep your remarks to the point and as brief as possible.
Finally, I wish to remind honourable senators that if there is ever any uncertainty as to the result of a voice vote, then any of you could ask for a show of hands. The clearest route is a roll call. At that time the clerk will advise us who is entitled to vote, and then we will go through the roll call. Senators are aware that any tied vote negatives the motion in question. That is our rule here in committee. If it is tied, it does not pass.
If there are any questions about any of the above, please let me hear from you now. If not, then we will proceed, if you agree.
The question is: How do we proceed? This bill is divided into 516 clauses. We could spend the morning going through 516 clauses, and the outcome, I am sure, would be not very different from a different approach which I will propose to you. We are masters of our own fate here, so you let me know if this is acceptable.
I propose that we deal with the title and the usual preliminary motions, and then, when we go into the body of the bill itself, we deal with the four distinct divisions, Divisions 1, 2, 3 and 4. We will deal with each of them in order. Let us say that we start with Division 1. If there are any comments with respect to that division, I will receive your comments. Then I will call for a vote on the entire division and then move to the next one.
At the end, of course, I will ask whether the bill as a whole should pass or not pass, et cetera, and we will then go back to the title. That is the usual way to proceed, other than the body of the bill, where I am suggesting that, to expedite the 516 clauses, we deal with it in the four distinct parts, because Part 4 has about 24 divisions.
Is that an acceptable way to proceed? Thank you. That is the way we will do it.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
We have to do clause 1 separate because it deals with the title. Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
Is it agreed, with leave, that the clauses be grouped according to the parts of the bill as described in the table of provisions of Bill C-45, namely Parts 1 to 4?
Hon. Senators: Agreed.
The Chair: Agreed.
Part 1 is entitled ``Amendments to the Income Tax Act and Related Regulations.'' Shall Part 1, which contains clauses 2 to 73, carry? Are there any comments with respect to Part 1 or shall that part carry?
Senator Callbeck: I would like to make a couple of comments. This is the problem we get into with omnibus bills that are 400 and some pages in length in that there are things in here that I think are good. If it had been stand-alone legislation, certainly I would be agreeing to them, like the Registered Disability Savings Plan; that seems to be very positive. We heard from witnesses on that.
Then there is the accelerated capital cost allowance for clean energy. I think that is good, and there are a few other things.
However, what is good, to my way of thinking, is vastly outnumbered by things that I cannot support. For example, the summary states, ``phases out the Corporate Mineral Exploration Development and Tax Credit;'' and then you have ``phases out the Atlantic Investment Tax Credit for activities related to the oil and gas . . . .'' I disagree with doing that right now. I think we have a very shaky economy, and it is a bad move by government to discourage investment in these areas, so I have a problem with that.
When we get to the Scientific Research and Experimental Development investment tax credit, I have a real problem there with the changes that have been made. Certainly we have had witnesses that have explained why they feel that will be a disincentive, that we will lose our international competitiveness and that we will lose jobs in Canada. That is a real big one for me that I cannot agree with.
The TSX wrote a letter to all of us saying that they feel if this foreign affiliate dumping goes through, as proposed in this bill, it will affect as many as 700 companies in this country.
I am saying that there are parts of this legislation that I would love to support, but we are taking it all in Part 1. It is an omnibus bill. You either take it all or nothing. I cannot agree to Part 1.
The Chair: Okay.
Senator Hervieux-Payette?
[Translation]
Senator Hervieux-Payette: I agree with my colleague. What bothers me the most is the fact that people were consulted on a preliminary basis before the bill was referred to the Senate, and yet none of their proposals were taken into account.
The significant decrease in the R and D tax credits is certainly not a good thing given the current global downturn. If Canada truly wants to be a leader as far as exports go, this measure will do precisely the opposite.
The fact that scientific equipment will no longer qualify for the tax credit is regrettable, in my view. Most of the witnesses were totally against that measure. Regardless, helping to create or stimulate employment is not enough; not supporting technical development will put certain sectors at a huge disadvantage. In computers, the equipment might not matter so much; but in biotechnology or engineering-related fields, the equipment does matter, and it is usually so expensive that small companies cannot afford it. And that affects productivity.
Mr. Chair, like my colleague, I find it unfortunate that none of these consultations led to any compromises that would have benefited the government, but especially Canadians.
The Chair: Thank you. We are still on Part 1.
Senator Chaput: I agree with what my colleagues just said. I would point out that one of the positives is the disability savings plan; I support that measure wholeheartedly. But the downside is so significant that I cannot support the part in question.
One of the drawbacks already mentioned is the negative impact this bill will have on scientific research. I find that extremely troubling. Another drawback is the fact that the tax credit will no longer apply to equipment. That sector will suffer because it will no longer be able to access that tax credit. So I am very concerned about that.
[English]
The Chair: May I take it that Part 1 — amendments to the Income Tax Act and related regulations — then, is carried on division?
Senator Chaput: On division.
The Chair: Carried, on division. Thank you.
Part 2 is entitled ``Measures in Respect of Sales Tax,'' clauses 74 to 96. Shall Part 2 carry?
Some Hon. Senators: On division.
The Chair: On division. Thank you.
Part 3 is entitled ``Federal-Provincial Fiscal Arrangements Act.'' Shall Part 3, which contains clauses 97 and 98, carry? Are there any comments?
Senator Callbeck: I would agree with that. It is giving money to the provinces through the equalization payments.
The Chair: It shall carry not on division but unanimously?
Hon. Senators: Agreed.
The Chair: Thank you. Part 3 carries.
Part 4 is entitled ``Various Measures,'' my favourite part. This is clauses 99 to 516. Shall Part 4 carry? Comments?
[Translation]
Senator Chaput: The point I would like to make and the thing I find unfortunate about this part concerns Aboriginals and the government's failure to carry out the required consultations. I have a lot of other problems with it, but that is the one I wanted to call the most attention to. Therefore, I cannot support this part.
[English]
Senator Callbeck: In Part 4, I find myself in the same position as I did with Part 1. There are things here that I would like to support. If they were stand-alone legislation, I would. However, there is no way that I can support other parts there.
I think the construction of the Detroit-Windsor bridge is a great idea. It will make traffic flow better and is good for exports and imports.
Although I do not agree with the name of the hiring tax credit for small business, I certainly support it. I would support improving that because it is small business that really drives the economy. With this credit as it is, it is only good for a company with nine or ten people, and I would like to see that expanded from not only nine or ten, but that it go up to businesses that maybe have fifteen people. I think that is a good thing.
However, here again I am stuck. I agree with things in the budget, but there are just too many things that I cannot agree to. One is that Navigable Waters Protection Act. Projects that would require environmental assessment under the Canadian Environmental Protection Act will be dramatically decreased. I have a real problem with that. One of the biggest problems I have with this whole piece of legislation, or this part, is what we heard from the Aboriginal Committee that reported to us, and the Energy and the Environment Committee, that there was not any consultation.
With the Aboriginal Committee, the report said that there is a formula where the government should have carried out consultations with the Aboriginal people, and they did not. I think this will affect them. There was a formula there, and the government should have been proactive and carried out those consultations.
Things like this make me have to vote against the legislation, even though I recognize there are some good parts to it.
[Translation]
Senator Hervieux-Payette: I think everyone on our side agrees that throwing everything but the kitchen sink in this part makes no sense. My colleagues claimed this kind of thing was done regularly, but in actual fact, an omnibus bill normally contains only the budget measures and possibly certain provisions that need to be adopted very quickly in order to correct previous measures that could cause implementation problems. That is not the case here. Given the overhaul of the Canada Grain Act, for instance — which alone accounts for a couple dozen pages of the bill — we could have studied that division separately and heard from people in the sector. So that should not be included in this part of the bill.
Interprovincial trade came up but was not dealt with very effectively; the amendments in this bill will certainly not do anything to diminish tariff barriers between provinces. It is ridiculous, on one hand, to impose small meaningless fines and, on the other hand, not to compensate those who are successful before the administrative tribunal.
Every item in this part has an effect on some group or another. Those groups did not get to have their say. The measures concerning the public service and retirement are just a few examples that come to mind. I thought the Constitution set out some sort of formula recognizing bargaining rights as far as labour relations in Canada go. As far as I know, no consultations or negotiations with public service employees were held. When lawmakers amend such fundamental measures, it is incumbent upon them to consult the other party. This bill makes those changes unilaterally. Regardless of the economic situation, it is possible to make changes while consulting public servants. They are a realistic group and understand that Canada is currently more than $600 billion in debt. It is not unreasonable, then, to have included them in a round of negotiations. It is a matter of principle; when an employer changes the working conditions of employees, the employer has to sit down with them at the bargaining table. That was not done here.
For those reasons, then, because this process does not respect the usual democratic process undertaken by a Parliament — in other words, consultation of those affected — and because this bill is a catch-all for everything the government wants to deal with quickly, I do not believe the bill does what it is supposed to, in any way.
Therefore, Mr. Chair, I have no choice but to vote against this.
[English]
The Chair: Thank you. I take it that Part 4 is carried, on division?
Some Hon. Senators: On division.
The Chair: On division. Thank you.
Shall Schedule 1 carry? What is in Schedule 1?
Senator Buth: It is the list of navigable waters.
The Chair: Oh, yes. It is the list of navigable waters and lakes.
Some Hon. Senators: On division.
The Chair: Shall Schedule 2 carry?
Senator Callbeck: What is that? Where are these schedules?
The Chair: They are usually at the back.
To what does Schedule 2 relate?
Senator Chaput: Oceans and lakes.
Some Hon. Senators: On division.
The Chair: Oh, sorry: Schedule 1, then, is a territory, the city of Windsor. It looks like the area for the bridge in Windsor, and Schedule 2 is the lakes and streams, et cetera.
Now that we have verified Schedule 1, do you still wish that to go on division?
Senator Callbeck: Well, I support the bridge.
The Chair: This is just the region where there would be no lawsuits, et cetera.
Now that we have verified that, does Schedule 1 carry?
Hon. Senators: Agreed.
The Chair: And Schedule 2 will carry on division?
Senator Chaput: Yes.
The Chair: Shall clause 1, which contains the short title, carry?
Some Hon. Senators: On division.
The Chair: On division.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried. Thank you.
Shall the bill carry?
Some Hon. Senators: On division.
The Chair: On division.
Is it agreed that I report this bill back to the Senate at this time?
Hon. Senators: Agreed.
The Chair: Thank you. I shall do so at the earliest opportunity.
Honourable senators, that concludes Bill C-45. Again, thank you very much for your hard work and diligence in dealing with that extensive piece of legislation. I appreciated working with you all.
We had one other matter for this committee, and that is the cross-border shopping issue. That report has been circulated. We have time set aside for that for tomorrow evening at our normal sitting time. We have done a lot of work here today, so perhaps we should just ensure everybody reads the report and is ready to discuss it tomorrow evening at our normal time.
Out of an abundance of caution, I would ask your permission to file a motion to extend the time for reporting back from December 31, which is the current time, to the end of fiscal year, March 31, 2013. That way we will not get caught in a bind and it will not disappear on us if we happen not to get it done by the end of December 31, 2012, before we adjourn.
Senator Buth: We are just so close that I think we should wait until tomorrow evening to see how the discussion on the report goes.
The Chair: If I do that and I file the motion on Thursday and we adjourn Thursday evening, our report is gone — it has disappeared.
Senator L. Smith: If I can interject, Mr. Chair, we talked about the fact that we think there is an opportunity to do some public relations work. There may be a challenge if we submit the report and it goes through such that we will not necessarily have that opportunity to do the type of PR to position the report. We think we could get something good out of this. Will we get something good out of this just before Christmas, when people's minds are focused elsewhere? Let us be honest.
Senator Chaput: Exactly. It is not the right time.
Senator L. Smith: People are shutting down to a certain extent. That was the issue.
Senator Hervieux-Payette: In this case, I think we need a good communication plan. The report is one thing, but how we get that in the public arena is another. I have not seen any plan that should be prepared by our communications staff. What do we highlight? Also, prepare the visual for that.
The Chair: We are now switching from a public broadcast to an in camera session. I am reminded by the clerk that we are still in public. I am sorry; that is my fault.
(The committee continued in camera.)