I call this meeting to order. This is the 62nd meeting of the Standing Committee on Finance. The orders of the day are pursuant to the order of reference of Monday, May 14, 2012. We are continuing our study of Bill .
Colleagues, as you know, we are continuing with part 4. We are starting with division 31.
We have officials with us from Transport Canada to discuss division 31.
If you'd like, you can give us an overview of this specific section, and then we'll have questions from the members on it.
Good afternoon. I'm Karen Swol from Transport Canada.
The amendment we're going to present to you is on the Railway Safety Act. It's division 31, part 4. The amendment to the Railway Safety Act is as a result of a DRAP initiative from budget 2012, which reduced funding to the grade crossing improvement program.
The grade crossing improvement program provides funding to railways and road authorities to make improvements to federal railway crossings across Canada. The reduction involves reducing the federal contribution portion from 80% funding to 50% funding.
In order not to download additional costs to the road authorities, which are provinces and municipalities, the following amendments to the Railway Safety Act are being proposed.
The first amendment, which is in subclause 484(1) is an amendment that limits the amount that the Canadian Transportation Agency can apportion to road authorities to a maximum of 12.5% of the construction and alteration costs. This is traditionally what the provinces and municipalities have paid in the past.
The second amendment, which is subclause 484(2), provides the Governor in Council with the regulation-making power to exempt any railway work, or any person or railway company, or any group or class of persons or railway companies, from the first proposed amendment.
The remaining clauses, numbers 485 and 486, are administrative in nature. Clause 485 includes the regulation under proposed subsection 50(1), which includes a list of the regulations under the Railway Safety Act, and clause 486 is a coming-into-force clause.
I had the good fortune early in my career of being a signal maintainer on the CNR, so I installed a lot of miles of crossing protection, for about a six-year period.
In the past one of the problems we had with level crossings was the accidents on them. You had to have a certain body count before they would actually invest in those crossings. It was a huge investment in those days for the municipality.
What I'm hearing is that now we're reducing the share of the cost that the federal government would have.
Is there anyone else on this division?
I want to thank you very much for being with us here today, presenting to us, and responding to our questions.
We'll now ask officials from Finance to discuss division 32, with respect to the Canadian International Trade Tribunal.
Welcome to the committee. Please give us an overview of this division.
First, my name is Dean Beyea. I'm the director of the international trade policy division at the Department of Finance.
Division 32 amends the Canadian International Trade Tribunal Act.
The Canadian International Trade Tribunal is a quasi-judicial institution within Canada's trade remedy system. The CITT conducts inquiries into complaints relating to unfair trading practices, that is, dumping and subsidizing. The CITT reports to Parliament through the . The Tribunal is currently composed of a chair, two vice-chairs, and up to four regular members, who are appointed by the Governor in Council.
Clauses 487 and 489 amend the CITT Act to replace the two vice-chair positions with regular permanent member positions.
Is there anyone else? No?
Thank you very much for your presentation and for being with us here today.
We'll now move on to division 33, on the International Centre for Human Rights and Democratic Development Act.
We have an official from DFAIT with us.
Welcome to the committee. Perhaps you could give us a brief overview, and then we'll have questions.
Mr. Chair, my name is Olivier Nicoloff. I am the Director, Democracy, Commonwealth and Francophonie Division at the Department of Foreign Affairs and International Trade.
On April 3, the Government of Canada announced its intention to close Rights and Democracy as part of its efforts to save money and be more effective. Because of the challenges that organization had experienced in the past, it was decided that it was now time to look to the future.
On April 5, the government announced the appointment of an interim board of directors whose mandate would essentially be to wind up the organization. Under the direction of the interim board, Rights and Democracy is now working on the effective winding down of its foreign programs while minimizing the impact of that work.
The Government of Canada remains committed to promoting freedom, democracy, human rights, and the rule of law around the world every day. From Canada's ambassador and embassy personnel around the world to the staff at the Department of Foreign Affairs and International Trade and the Canadian International Development Agency in Ottawa, Government of Canada officials continue to work to support democracy and human rights internationally. The Department of Foreign Affairs and International Trade funds democracy support projects around the world, mainly through the $3 million democracy envelope of the Glyn Berry program. DFAIT's democracy support is complemented by a much larger envelope for long-term good governance, human rights, and support for the rule of law managed by the Canadian International Development Agency, which totalled about $204 million in 2010-11.
Thank you, Mr. Chair.
Thank you for the question.
I would say we are dealing today with a situation, with a world that is quite different from the one we knew in 1988 when Rights and Democracy was established. You're talking about the role that NGOs can play abroad. In fact, NGOs are much more active and much more present than they used to be. But the capacity of the government to act abroad is also quite different, I think, from what it was in 1988. I'm thinking, for example, about the Internet, and the capacity to communicate more directly with different groups and organizations in different circumstances. So I think one of the quick questions the government has to answer is whether the tools we had in the past to do that type of work are the tools we still need today.
I would offer you too, sir, that what we saw in the Arab Spring had a lot to do with technology, young people together, but it was NGO-type groups working with them via the Internet and other methods that offered them the kind of support that's essential.
There's a huge distrust level around the world between certain governments, without naming too many of them—the situation we saw happening in Egypt, where they removed the head of state, but the regime fundamentally is still in place there. So there's more access to that country than say Iran, so organizations like Rights and Democracy working through there, would have an opportunity to do a lot of good.
I'm really concerned about taking it within the walls of government, at least in the perception of people. I'm not critical of the work at DFAIT. I think the work they do is fine. It's not from that point of view, it's from that arm's length feeling of trust that's needed.
Welcome to our committee.
As I understand it, the centre for rights and democracy has an international mandate to promote, advocate, and defend democratic and human rights as set out in the Universal Declaration of Human Rights. That international declaration is, of course, very close to Canadians because the principal drafter, John Humphrey, was a Canadian. It has become something that we've been very proud of as Canadians, that we have played this role internationally as a promoter and defender of human rights and democracy.
Having served as an election observer, I know that Canadians are well respected around the world. We're proud to represent our country in promoting democracy, but also in promoting human rights, which are certainly not meeting up to the universal declaration in many countries around the world.
I have to say, first of all, that I find it distressing that over time, with government appointments to the board of Rights and Democracy, conflicts, frictions, and some degree of chaos, it seems, have come about under this government. From afar I have to say it looks as though the government's been attempting to control the work of Rights and Democracy as opposed to allowing it to be an advocate and promoter of human rights independent from the government.
What kind of reaction have you had, internationally and domestically, from those who work in the field of human rights and the promotion of democracy to the proposed closure?
Thank you for the question, but I am not sure I have understood it properly.
As I said earlier, there were problems and tension over the last two years. The minister decided it was time to move past those problems and to shut down the organization as an efficiency and cost-saving measure.
When the minister took office, we met with him. Obviously we explained the various programs and partners through which those programs were implemented. The question that kept coming up in terms of promoting democracy was whether the tools available were the ones that were needed today, and it was underscored that those were the criteria that should be applied in making decisions.
I want to thank the witnesses as well for being present.
I want to get beyond the blame game here. I'm very appreciative that you're present, and the work that your fellow colleagues have done is commendable. But you mentioned a very important aspect of why this decision was made, and that is the question of the tools that are necessary to accomplish the goal. So I'd like you, for the benefit of those who would want to place blame for political, partisan reasons about why this is closing, to explain to them the difference between the situation in 1988 in these countries with the presence of NGOs and the presence of government and the situation we have today, which led to this decision surrounding the question of whether we have the tools.
If you could clearly articulate that, I'd really appreciate it.
I hope I can be clear, then. Thank you for your question.
I think essentially, because of the much larger role that NGOs play on the international scene, the capacity they've developed in the past, and communication in general, plus because of the mentality—if you would allow me to say so—we have this capacity to engage much more directly with different organizations on the issues we're dealing with and the needs we are facing. This is much easier than it used to be in the past. NGOs in general are accepted now as legitimate partners of government in having a role to play, and it's much easier for us to be in contact with them than it was in the past. We need also, I think, to be more focused. We're facing challenges that are quite new, such as those we're seeing with what's happening in the Middle East and North Africa, for example. There is also the question of how we can be really efficient in doing this.
One thing I personally found striking was the difficulty in simply getting there rapidly and getting a good clear view of what is needed, with our partners—because we need to work with our partners—and then making specific proposals about where Canada can really make a difference. These are the sorts of challenges we are facing in democracy support today.
I appreciate that. I've been to some of these countries, like the Republic of Congo, for example, and I have to say that the Government of Canada is viewed by many of these countries as a very good partner.
A partnership between these countries is respected, and really the focus is to continue to work together to stop some of these violations from occurring. I know that while I was there I was commended on the fact that some of our businesses are also in place in these countries, which helps to bring about some of the watchdog attitude to help prevent human rights abuses and that kind of thing.
I heard that Canada, as a whole, was very well received in these countries. Have you heard the same?
Thank you, Mr. Nicoloff. Thank you very much for being with us today and responding to our questions. We appreciate that.
We will bring the next officials forward with respect to division 34, Health of Animals Act. We have officials from CFIA here with us.
Welcome to the committee. Thank you for being here. We look forward to your overview of these clauses, and then we'll have questions from members.
I'm Colleen Barnes, the executive director of domestic policy at CFIA.
Thank you for giving me the opportunity to speak with members of the committee today. I am here to describe the proposed changes to the Health of Animals Act.
Before I begin, I want to be clear that these changes will have no impact on food safety in Canada and our continued strong food safety system.
In general the proposed changes to the act would allow the minister to declare primary and secondary control zones in order to manage animal disease outbreaks, foreign and domestic, in Canada.
The objective of this is to provide for additional mechanisms to address animal diseases. For the most serious diseases, eradication is and will continue to be our initial response. Often they can include the quarantine of farms and other premises, and in many areas we are successful in eradication. However, in some instances a disease can become so well established that eradication measures are no longer possible and quarantine is no longer effective.
The approach we are proposing in these amendments will provide us with new measures to respond to these types of situations.
Mr. Chair, I can go clause by clause, or pause here and take questions from members.
It's a little concerning. It's not anything out of your answer but the fact of why is this in a budget bill, if we don't have any financial impact? It just strikes me as being very strange. We would think this should be a separate bill someplace else.
In fact, I met with some people who were talking about the various types of cages for animals, for instance. They put nine hens in an area where they don't even have the space to spread their wings, for instance, or the de-billing, or some of the other things that happen to these animals.
You would think that if we were going to get into some kind of a look at the legislation, we'd do it in a more holistic way. I can't see why it's in a budget bill.
My name is Nancy Leigh, and I'm here on behalf on the Canada School of Public Service.
The school provides training for federal government employees and these proposed amendments are legislated changes to the Canada School of Public Service Act to eliminate its board of governors.
Currently the board provides the deputy minister with strategic advice by reviewing strategic direction, business planning, and performance results. The proposed changes are being made to align strategic oversight in a more transparent, risk-based manner, and to reduce the costs.
I want to assure you that oversight of the school will continue through existing mechanisms such as audits from the Office of the Comptroller General; the annual management accountability framework assessments; annual performance reporting, including the Departmental Performance Report and the Report on Plans and Priorities; as well as a five-year report to Parliament.
Our deputy minister will receive strategic advice from our direct clients, who are deputy ministers, through various deputy minister committees.
With respect to the Bank Act, as you know, when we talk about adopting clear, complete and exclusive national standards, it affects a number of areas, in particular consumer protection. The contracts issue was and still is recognized as a matter under shared jurisdiction. The provinces and the federal government take complementary action.
In April, the Quebec Minister of Justice wrote to Mr. Flaherty, I believe. After analyzing the bill, he said he was very concerned that the federal government wanted to assume exclusive jurisdiction over an area that had been under shared federal and provincial jurisdiction until that point.
Do you think that is going to be the case and might the constitutionality of this clause create problems?
My name is Suzanne Brisebois. I'm the director general of policy and operations at the Parole Board of Canada.
Thank you, Mr. Chair and members of the committee, for the invitation to speak to you today. I will keep my remarks brief, as we're discussing a single amendment.
As you know, the Parole Board of Canada is an independent administrative tribunal that has exclusive authorities under the Corrections and Conditional Release Act, or CCRA, to make decisions on the conditional release of offenders.
The CCRA and its regulations guide the board's policies, operations, training, and parole decision-making, and provide the legislative framework for the corrections and conditional release system in Canada. Bill proposes to eliminate the requirement for in-person hearings for certain types of reviews. This change will save the board $1.6 million annually.
Specifically, clause 527 of Bill seeks to modify paragraph 140(1)(d) of the CCRA to remove the requirement for a panel hearing following the suspension, termination, or revocation of parole or statutory release. Instead, these decisions will be conducted by board members and the office by way of a paper review. Offenders will continue to be provided with all the information being considered by the board at least 15 days in advance of the review. They may make representation in writing for the board's consideration.
It is important to note that this change is specific to post-release decisions. The board will continue to conduct hearings for pre-release decisions involving day and full parole releases. Moreover, the board will retain the right to conduct an in-person hearing where it is deemed warranted.
Protection of society is of paramount concern to the Parole Board of Canada. Public safety will be protected and the rules of fundamental justice will continue to be respected.
Thank you for your time. I'm able to take questions should you have any.
Thank you for being here.
There's a federal corrections facility in my riding. It's like a halfway house. There's always a lot of concern about when people get to that facility, although it has an excellent record.
What do you think the impact will be of not having a panel review? Do you think there will be any increase or decrease in the number of people who may get conditional release? Do you think there will be any impact?
I always think that when people appear in person there is an emotional connection that doesn't appear on paper, and it can be advantageous to having a thorough assessment of a person. So what do you think the impact of this change will be on the conditional release of prisoners?
This release is specific to offenders who are already in the community on either parole or statutory release. So the review by the board has already been conducted in terms of, for instance, an offender being granted day or full parole. Those are decisions that the board may determine. That has already been conducted in most instances. Unless the offender waives the hearing, those decisions are conducted by way of a hearing.
So for these cases, we're really speaking of post-release decisions, where the offender has already been reviewed by the board by way of a hearing, typically, and the post-suspension decisions are for cases where an offender is in the community and may have breached their condition of release, or their risk may have changed to the point where the release is suspended. They're re-reviewed by the board. Their case comes before the board.
Welcome. I never thought, when I came on this committee, I'd be learning about fisheries, rail safety, the parole system. I thought we were dealing with finance.
Anyway, I really appreciate the work you do. We have halfway houses in Hamilton. We have a number of facilities. We've had some serious negative events there, but we've also had a long history of some good-quality service to our community, and it's appreciated.
I was wondering when your department first decided that this was a necessary change.
I understand. It's just that in the particular area of your work, I'd be far more interested in having a change come about because of the need for the change as opposed to the need to reallocate some money someplace.
I don't doubt that you've worked diligently in getting here, but I am surprised, because that was going to be one of my questions: why was this not a legislative bill separated out here someplace? This isn't your doing, but it's gotten wedged into this bill along with so many other things. That was my point when I started this round of questioning.
So you really answered my question. If you hadn't been asked to do this to save money, this wouldn't have taken place because it wasn't part of your department's plans.
Okay. Thank you. I appreciate that very much.
I appreciate your coming before our committee. Thank you.
We will move on to division 38, to the Coasting Trade Act, and to our Transport Canada officials.
Thank you very much for being with us today. If you want to give us an overview of these clauses, then we'll have questions from members.
I'm Louise Laflamme, working in the marine policy group at Transport Canada. I'm here to talk to you about division 38, clause 531.
First, the Coasting Trade Act reserves Canada's coasting trade for Canadian vessels. Coasting trade includes the transportation of goods and passengers between points in Canada and any marine activity of a commercial nature. When above the continental shelf, these activities must be in relation to the exploration and exploitation of the minerals and natural resources of the continental shelf.
What the clause proposes to do is to amend the Coasting Trade Act to add a new exemption from obtaining a coasting trade licence for seismic activities that are above the continental shelf and are in relation to the exploration for its minerals and natural resources.
Thank you very much for your insights today and for responding to our questions. We appreciate that very much.
We will move on, then, to division 39, Status of the Artist Act.
We welcome Ms. Duff back to the committee.
We'll ask you to give an overview of these amendments. Then we'll have questions from members.
My name is Lawrence Hanson. I'm the director general of strategic policy for Environment Canada. I'm joined by my colleague Maxime Lessard-Lachance.
The decision to dissolve the National Round Table on the Environment and the Economy was a product of decision-making under the deficit reduction action plan and was signified as such in budget 2012. The elimination of the round table will result in annual savings of about $5.1 million starting in 2013. As the has indicated, the decision to dissolve the round table is predicated on a change in the environmental policy landscape since the round table was created 25 years ago. At that time there were few independent sources of advice on economic and sustainable development issues, and the round table filled the void. Since that time there's been a proliferation of environmental groups, think tanks, academia, etc., that can provide sophisticated analytics and advice on a range of environmental issues.
The provisions in the budget implementation act do a few different things. First, the existing National Round Table on the Environment and the Economy Act would be amended to allow the round table to begin to dispose of its assets and deal with its liability so that it can wind down its affairs during its final fiscal year of operation.
A second series of transitional measures relates to the actual activities of disposing those assets as need be, and at a period when the round table ceases to exist, any of its liabilities or surpluses would revert to the crown. At the time of coming into force, the appointments of the existing members of the round table would come to an end.
Finally, the other significant portion of the legislation relates to the actual dissolution itself. The National Round Table on the Environment and the Economy Act would be repealed and the round table dissolved at a date of coming into force to be determined by order in council at a later date.
Mr. Brison asked the questions I wanted to ask. Fortunately, I have two more.
First, you say that groups like the David Suzuki Foundation and the Pembina Institute are going to do the same work. I think they do excellent work, but, and correct me if I am wrong, we now have the National Round Table on the Environment and the Economy. That group had a very specific objective, while groups like the David Suzuki Foundation, the Pembina Institute and other environmental organizations will be doing work that will sometimes deal with the impact on the economy, and sometimes not.
Do you not think there may be a loss in terms of effectiveness if an organization that focuses on the relationship between the environment and the economy disappears like this?
I have a supplementary question. I am then going to share the rest of my time with Ms. Nash.
I find this really strange. You talked about think tanks and environmental groups. Am I mistaken? I thought the National Round Table on the Environment and the Economy was not a think tank or an environmental group. I thought it was an advisory committee with members appointed by the government to make recommendations on an action plan for the environment and its impact on the economy.
Today, that work is being eliminated. Instead of having an advisory committee, there will be think tanks and environmental research groups. Possibly we can trust their judgment; that will obviously depend on the goodwill of the government.
Can you confirm that this was in fact an advisory committee, and not a think tank or an environmental group? Are we not losing quite a bit, since its members were appointed by the government and they had more influence by making positive recommendations about public policy?
I'll just use the last minute or so here.
I want to return to this notion about other environment groups taking on this role. Certainly the Minister of Natural Resources talked about environmentalists and other “radical groups”. There have been other comments by government ministers. I guess I have to say that I have very little confidence in this government taking advice from organizations dedicated to reducing greenhouse gas emissions or taking on the challenge of climate change, when the government seemed to have difficulty listening to its own body, the round table, in that regard.
How can this change inspire the confidence of Canadians that the government will genuinely seek and take the advice of these organizations, which in many cases are critical of the government's actions?
In fact, I read some of the reports of the round table. I know they did a recent water study and a report on that and had a consultant doing that. Indeed, over the years, I think the last six or seven, they have produced the same report on GHG emissions, and to my mind, reached the same conclusion every single time, except maybe the numbers changed a little bit.
We will continue to receive a lot of information and a lot of advice from the Government of Canada employees who work for Environment Canada. I think there are 7,000 or 8,000 individuals, somewhere in that neighbourhood, but it's one of the larger departments and one of the larger cost bearers of taxpayers' money as well, if I'm not mistaken.
Those are my points. Thank you very much.
I'm Pamela Miller, director general of the telecommunications policy branch at Industry Canada, and with me is my colleague, Allan MacGillivray. Division 41 would amend the Telecommunications Act to make two separate sets of changes. First, the amendments in clause 595 would implement the changes to telecom foreign investment restrictions that were announced by the Minister of Industry on March 14. They will allow telecom carriers with less than 10% of total annual revenues from the provision of telecom services to operate in Canada without being subject to the Canadian ownership and control requirements. These changes will help telecom companies with a small market share to access the capital they need to grow and compete. Carriers that are so qualified would be able to continue to operate if they grow organically past the 10% threshold, provided that the increase beyond 10% did not result in the acquisition of another carrier or of assets used by another carrier to provide telecom services.
The second set of amendments pertains to the enforcement functions for the “do not call” list. The changes in clauses 596 to 601 would permit the Canadian Radio Television and Telecommunications Commission, the CRTC, to impose fees on telemarketers to support the CRTC's cost of enforcing the “do not call” list and other telemarketing rules made under the telecom act. These amendments would also allow the CRTC to delegate responsibility for collection of these fees to a third party. By these actions, the cost of the enforcement and investigation shifts from the CRF to the telemarketing industry, thereby saving money.
In brief, those are the two sets of changes that are being made through these amendments.
Thank you. That was my question.
There is also a specific question I would have liked to submit to the industry committee, on which I used to sit, but because we are the ones who are examining it....
As I understand it, three companies in Canada have more than a 10% market share. Hypothetically, although it is in the realm of the possible, we can imagine that one of the new entrants is bought by an American, European or other company, its market share comes to 15% to 20% of the market within 10 or 12 years, and the share of one of the three existing companies that have more than a 10% market share declines to 15% or 20% of the market.
Am I mistaken if I say that the two companies would be subject to different rules: one would have access to foreign capital and the other would not?
I also want to go back to something that's in the binder. I take special note that we're always being told that we're running out of time, but many of the answers to the questions being posed by the other side are actually in the binder that we were provided with. One of the questions that was asked, in fact, deals with the whole idea of mergers and whatnot. I'm just simply going to ask the question that's in the binder. What happens if companies grow beyond the 10% limit? Do you have the answer to the question that's in the binder that was provided to all committee members?
If not, let me read it. The answer is:
||If a company grows beyond the 10% limit through normal expansion of its business, it will continue to be exempt. But if a company exceeds the 10% limit through mergers or acquisitions, the company would no longer be exempt from telecommunications foreign investment restrictions.
I read that simply because I note that we are running out of time. We have a number of other divisions that are going to come before us. I would remind all members of our committee that we really do want to push forward so we can get this done.
The delay for the sake of delay, the repetition for the sake of repetition, the arguing for the sake of arguing just isn't helping the cause. We really do need to get through this, but I thank you for your time.
I will not dwell on the fact that the question I asked earlier was entirely different from the one asked by Mrs. Glover, since I have another question.
We are talking about an amendment to the Telecommunications Act. Is it not the usual practice, when a bill is introduced separately, that is, when it is not part of a budget implementation bill, to have it examined by the relevant committee, in this case, the Standing Committee on Industry, Science and Technology?
I want to thank you both for being with us here today and for responding to our questions on this section.
We will move to the next division, please, which is division 42.
We're dealing with the Employment Equity Act. We have Mr. Child with us.
Please give us an overview of this section.
The proposal in division 42 is to repeal subsection 42(2) of the Employment Equity Act, which currently provides that the minister shall ensure that the requirements under the federal contractors program are equivalent to the requirements under the Employment Equity Act. The proposed new subsection removes the equivalency requirement, so that it provides for a greater flexibility in the administration of the federal contractors program, which is the Treasury Board contractors program.
Just by way of a bit more background, the Employment Equity Act applies to the federal private sector and the federal public service itself. The federal contractors program applies primarily to provincially regulated employers that employ 100 or more employees. So the federal contractors program essentially gets at those who are not governed by the Employment Equity Act federally.
Thank you, and welcome back to the finance committee.
The federal contractors provisions under the Employment Equity Act have meant that significant employers who are federal contractors have had to reflect the goals of the Employment Equity Act in terms of hiring disadvantaged groups, such as people with disabilities, women, first nations, people of colour. The Employment Equity Act itself came from a human rights complaint that found there was discrimination in employment and these designated groups were under-represented.
The act was designed not only to encourage federal jurisdiction employers but those major contractors to do a better job in overcoming systemic barriers to employment.
Why would we want to take a step backwards? Are we saying to these designated groups that somehow their human rights are not as important as they were when Judge Rosalie Abella made her landmark human rights decision?
My name is Mireille Laroche. I'm the director general of employment insurance policy at HRSDC. This is my colleague, Mark Hodgson, from the Department of Finance.
In the budget implementation bill there are six proposed changes to the Employment Insurance Act. I will go through them in sequence.
The first change proposes to align the calculation of EI benefit amounts with local labour market conditions. This proposes a new approach to calculating EI benefits that would come into force on April 7, 2013.
Under the new approach the required number of best weeks, which would range between 14 and 22 weeks of employment earnings, that would be considered for the purposes of calculating benefits would be determined in accordance with the local unemployment rate in the region where the client resides.
The second change pertains to the refund of premiums to a self-employed person. It would ensure that insurable earnings as well as self-employed earnings were taken into account when determining whether a self-employed person who has opted into the program to receive special benefits can be eligible for a premium refund.
The third measure regards the administration of overpayment of benefits. This amendment would provide discretion in pursuing potential overpayment arising from employer bankruptcy or wrongful dismissal. It would provide this discretion under two conditions: first, if more than 36 months have elapsed since the layoff or separation from employment; and second, if the administrative costs of determining the overpayment would likely exceed the amount of the repayment.
The fourth change pertains to the assignment of benefits program within the EI program. It would remove the requirement that claimants have to consent in writing to have deductions made from EI benefits to reimburse any provincial government for social assistance or welfare payments that they would typically receive prior to receiving their special benefits or regular benefits.
The fifth change pertains to premium rate setting and is in response to the public consultations that were held on this matter in the fall. It has three broad elements. The first one provides for an earlier announcement or notice of the new EI premium rate for the coming year by advancing the date by two months, that is, from November to September. The second change proposes to amend the EI Act to change the premium rate setting per se. Under this proposed change, the premium rate would be set annually at a seven-year break-even rate to ensure that the EI operating account is in cumulative balance at the end of that period. This rate-setting mechanism would come into force once the EI operating account has returned to a cumulative balance. The third change within the premium setting proposal is to affix the legislative limit on year-to-year changes to the premium rate to 5¢ per $100 of insured earnings.
The last proposed change is with regard to connecting Canadians to an available job. It proposes to amend the Employment Insurance Act to provide the Canada Employment Insurance Commission with the authority to develop regulations pertaining to the definition of suitable employment for various types of claimants and also to define what would constitute a reasonable job search.
In your presentation I heard the terms “premium rate” and “insured earnings”. Very clearly some kind of misunderstanding has been happening for awhile, in that unemployment insurance is not a government program in the sense of being funded out of government moneys. It has been funded for years out of premiums.
My understanding is that at one point, probably in the 1990s, it actually had built a surplus to about $55 billion, which was directed into general revenues. Is that correct?
Is there anything further?
A voice: No.
The Chair: Okay. Thank you very much for being with us here today.
We'll call officials forward for division 44, Customs Tariff act.
You have a point of clarification, Ms. Glover.
I call the meeting back to order.
We will have the officials from Finance, I believe, on the Customs Tariff act, which is division 44.
I'll just remind colleagues that we have bells at 6:30 and we have votes at 6:45. I'm not certain at this point how long votes will take, so for those who are on our panel at 6:30, obviously the committee will be coming back after that time.
We welcome our officials to the table. Could you give a brief overview of this section, and then we'll have questions.
My name is Dean Beyea. I was here earlier. I am the director of international trade at the Department of Finance. I'm here with my colleague, Patrick Halley, and Alec Attfield from the Canada Border Services Agency.
Division 44 amends the Customs Tariff. There are two primary changes. First, there is a tariff reduction that supports the energy industry. Clauses 620 and 621 eliminate a 5% tariff on imported fuels used in energy and electricity generation. The tariff was imposed recently as a result of a CBSA tariff classification decision, therefore the budget simply restores duty-free status. This will enhance the competitiveness of the sector and reduce the cost of electricity generation.
The second element amends the travellers' exemptions in the Customs Tariff. Those are clauses 622 to 624. They amend the Customs Tariff to increase the value of goods that may be imported duty and tax free by returning Canadians after absences from the country of more than 24 hours. The amount moves from $50 to $200; and for absences greater than 48 hours, from $400 to $800. This measure will facilitate the border processing of Canadian travellers and harmonize the more than 24-hour and 48-hour exemption levels with those of the United States.
Hello, and welcome to the finance committee.
I want to ask a question about the increase in the ability of travellers to the United States or to any other country to bring back an increased value of goods to Canada. Diane Brisebois, the head of the Retail Council of Canada, has expressed concern for Canadian retailers—that those in border communities could be affected by these increased customs allowances for Canadians, which could impact retailers, especially along the border.
What is your response to that? Have you done any studies, or do you anticipate what the outcome will be?
Certainly if you're spending a night or two it's very different from going across the border for a quick trip back and forth. It's been interesting. It might speak to my age, but I remember that about 15 to 20 years ago people were really concerned about Canada losing to cross-border shopping. Then of course the dollar changed, and all of a sudden we had Americans coming up and spending significant amounts in Canada. It seems to have fluctuated with time.
Is there anything that shows if we're harmonizing with the States? There are probably some numbers in terms of net back and forth. I guess that's my first question.
On my second question, I was slightly over my limit and went through my NEXUS to make sure I'd claimed it. For the sake of retrieving some fairly insignificant dollars of duty, it was certainly very manpower-intensive. There's probably a point when the actual cost and intensity of the manpower to collect $20 is not worth the trade-off.
Can you maybe speak to both those issues?
I'm going to call this meeting to order. This is the resumption of meeting number 62 of the Standing Committee on Finance.
Our orders today, pursuant to the order of reference of Monday, May 14, are to continue our study of Bill . I want to thank all of our witnesses for their patience. I apologize for the vote. That was unexpected this evening. We do have eight people to present to us during this session.
We have, first of all, Ms. Vivian Krause. We have Mr. Mark Blumberg. We have Mr. Dan Kelly from the Canadian Federation of Independent Business; and Mr. Dennis Howlett from Canadians for Tax Fairness. We have Mr. Jamie Ellerton from EthicalOil.org; we have Mr. Blair Rutter from the Grain Growers of Canada; and from Imagine Canada, we have Mr. Marcel Lauzière. By video conference we have Mr. Tom King from the Prospectors and Developers Association of Canada.
Again, thank you so much, Mr. King, for staying with us.
We want to thank you all for being with us. You each have a maximum of five minutes for an opening statement, and we will go in the order that I read. We'll start with Ms. Krause, please.
My name is Vivian Krause.
By way of background, I'm a director of a federally registered charity, and I worked with UNICEF for 10 years in Guatemala and Indonesia. In that capacity, I was trained in program management and also trained to watch for the misuse of charitable funds. I have a master of science degree, and over the past year or so, I've written a series of articles published in the Financial Post about the science and the funding of environmental campaigns, particularly the campaigns against B.C. farmed salmon and against Alberta oil.
I support the budget allocation that will allow the CRA to prompt greater transparency and accountability within the charitable sector, particularly among politically active and foreign-funded non-profits, and I'm grateful for the opportunity to explain why.
As I see it, in some instances—and campaigns against aquaculture and against oil tanker traffic are prime examples—environmental activism is being funded in such a way that market and economic interests are being protected. Whether or not this was the funder's intention, this is the net effect of these campaigns.
Ten years ago, I was employed in the salmon farming industry at a time when that industry was under vigorous scrutiny and attack from environmental groups. Several years after I left the industry, I came across a grant that prompted me to look back at the campaign against salmon farming from a perspective that I missed when I worked in the industry, a marketing perspective.
What I found was a grant for environmental organizations to coordinate a media and marketing campaign to shift consumer and retailer demand away from farmed salmon. In hindsight, it became clear to me that by scaring consumers, environmental groups were de-marketing farmed salmon, in other words swaying market share away from farmed salmon. This is precisely what they were funded to do by the Gordon and Betty Moore Foundation, an American foundation that has granted $90 million to environmental groups in British Columbia.
As I tried to piece together the funding of the campaign against salmon farming, I also came across dozens of grants for something called a tar sands campaign. In total I found grants to 40 organizations for $10 million over two years, all from a single American foundation, the Tides Foundation. Earlier this year, Sun News unearthed a detailed PowerPoint presentation from the Rockefeller Brothers Fund in which they explained how the Rockefellers, the Tides Foundation, and other American charitable foundations are funding a tar sands campaign to block the Mackenzie pipeline, the Northern Gateway pipeline, and to block oil tanker traffic, but only on the coast of British Columbia—never mind the dozens of oil tankers that bring oil to the United States on a daily basis. The only tankers that the Rockefeller Brothers are concerned about are the tankers that would transit Canada's strategic gateway to Asia.
By depicting Alberta oil sands as tar sands, environmental groups are helping to create the perception of a dichotomy, albeit a false one, between dirty energy and clean energy. To my surprise, I found that this is exactly what they have been funded to do as part of a strategy to sway investment capital towards renewable energy and away from the competition, fossil fuels.
Part of the rationale for creating the renewable energy industry is to protect the environment, but there is more to it than that. American funders say themselves in their written strategy papers, which I'd be pleased to provide to the clerk, that their agenda is to further the energy security, the energy independence, and the national security of the United States.
Fundamental to the issue of charitable status is that of public benefit. I can see how the campaign to prop up Alaskan commercial fisheries and the communities that depend on them helps to provide a benefit to the American people. I can see the same thing for the campaign to block Canadian oil exports to Asia, but I do not see how it benefits Canada when Canadian charities lend themselves to an American campaign against a Canadian industry.
I have two concerns.
First, I don't see that these campaigns are exclusively charitable, which is what charities are supposed to be. I do see that they're protecting economic and trade interests.
Second, in the tax returns I have reviewed for some charitable foundations, I have found surprisingly high salaries, with payments of millions of dollars to consultants. I have also found relatively large payments to charities where the spouses of directors are involved, as well as questionable payments to PR firms and so-called investment firms where the directors of charities are involved.
As someone who is a director of a charity, I know that the Canadian people are generous and trust the charitable sector. It's important that this trust be kept, so I support the budget allocation to promote greater transparency and accountability.
Thank you for your invitation to testify today.
My name is Mark Blumberg. I'm a lawyer and partner at the law firm of Blumberg Segal LLP in Toronto. I'm an editor of our firm's website, GlobalPhilanthropy.ca, which deals with legal and ethical issues facing Canadian charities.
As I testified on May 8, the charity and non-profit sector in Canada plays a vital role in this country. The committee is currently reviewing the 2012 budget, which has various provisions affecting the regulation of charities. I am most interested in those provisions dealing with transparency.
In my view, the most important provision in the budget is that which gives CRA the ability to suspend a charity's receipting privileges if the charity files an incomplete annual return. This provision and related education will emphasize the importance of charities' completing the T3010 annual return as accurately as possible. It will provide CRA with greater tools when a charity is being deceptive in its filing, such as if a charity were to have millions of dollars in fundraising expenditures but would put down zero in fundraising costs.
The budget adds some transparency requirements on political activities, especially when funded from foreign sources. I would point out that charities currently disclose quite a bit, and this would just be adding to what is currently disclosed. Currently, charities disclose the amount of foreign income received; the name of any foreign donor giving over $10,000, which is disclosed to CRA but is confidential information; whether the charity has carried out political activities; and how much is spent by the charity on political activities. The additional transparency exclusively related to political activities will not affect the ability of Canadian charities to conduct allowable political activities. In fact, much of the information that will be captured on the T3010 is already available from public sources such as the U.S. Form 990 filings and websites of the Canadian charities.
There has been recent coverage of political activities and cross-border philanthropy. It's important to recognize that, while charities are forbidden from being involved in partisan political activities, they play an important role in policy and political discussion. Registered charities can engage in allowable political activities as long as they are non-partisan, related to their legal objects, and limited resources are used, which generally means less than 10% of resources.
We are pleased that the 2012 budget did not include restrictions on political activities by Canadian charities or impediments to foreign charities and individuals supporting Canadian charities. We've written about charities and how they report their political activities, and we would argue that there is significant room for improvement in reporting on the T3010 questions already being asked, not to mention additional questions that may be added.
CRA will have additional resources to do outreach and education to help charities understand the rules. They'll probably conduct more audits on charities, and some of those audits will involve political activities. Many charities incorrectly assume that they're not allowed to do any political activities. I think after a few years of education by CRA they will come to be more knowledgeable and understand that charities can, and in many cases, should be involved in political activities. They just have to do it within the rules that are set out for them.
It's important that there is improved transparency in the charitable and non-profit sector. Canadians, especially donors, are asking for it. I would reiterate that I made a couple of proposals with respect to section 241 of the Income Tax Act to try to improve transparency. Specifically, the first idea was to allow the CRA to disclose serious non-compliance with legal requirements by registered charities and other qualified donees prior to revocation. Currently, CRA has to wait until after the revocation to let people know that, for example, a charity has been involved in a $600 million scheme. They can't say anything about it until after the revocation.
The second idea was to allow the CRA to disclose information contained in the non-profit organization's information returns, which many non-profits already have to file every year, but which CRA is forbidden by section 241 to disclose. These are short forms filed by many non-profits that set out their name, their revenue, and things like that. Whereas charities have to provide quite a bit of information on the T3010, we are not able to know, and CRA is not able to tell us, who these non-profits are and what their revenues are.
So those were two suggestions that I made with respect to changing section 241, and there's no cost to changing it. It's a matter of removing the shackles on CRA and allowing it to put out information on those two points.
I think that greater transparency will reduce the abuse of non-profits and registered charities, increase the chance that those who abuse charities are discovered quickly, and increase public confidence in the sector, which is vital for fundraising and increasing donations.
Thank you very much for having me here at the committee.
Thanks very much to the committee.
I did provide a short deck of some slides about the 2012 budget for your attention.
I want to say at the very beginning that we are very grateful to government for finally moving on marketing freedom for Canadian wheat and barley growers. Our members are very pleased about that. Survey after survey of our western grain and barley growers showed that this was something they had wanted for a long time. We're grateful that it has finally come to be.
In fact at meeting on Vancouver Island this weekend, some of our representatives, who were out there calling on our Alberta members, told us that they didn't believe this would happen before they died, but they are very happy that it has.
I want to say from the outset that there are a number of small business-related concerns right now. Many of them have been touched on in the budget. An awful lot more work needed to be done on several of them.
The good news is that there is starting to be a greater degree of optimism among small and medium-sized businesses, and that optimism is turning into hiring. We have started to see a bit of a break. More of our members are looking to hire employees than to let go of employees, and that is a really positive outcome that has just occurred in the last couple of months.
Still on the top of our members' agenda are the total tax burden, government regulation, employment insurance, the shortage of labour—again, growing very quickly. The 2012 federal budget did contain progress on eight of the top twelve issues that we had recommended.
The biggest measure we had suggested was to make progress on renewal of the EI hiring credit. We're very pleased that has occurred. That has been very positively received by our members, and I believe it is related to the higher degree of optimism among small and medium-sized firms at this point in time.
When we asked our members during the recession what was most helpful to them, they felt that the freezing of EI premiums was the single measure the government took that did help them out.
We've seen more recent changes on employment insurance, and while not directly related to the budget, it has directionally gone in ways that our members do favour. Minister Flaherty's comments that there are no bad jobs other than being unemployed have resonated very well with our membership.
The real proof is going to be in the implementation of some of these new provisions, and that is what concerns us. Right now with respect to EI, you're not supposed to get benefits if you quit or you're fired, but everyone knows you can go into the EI office with a good sob story that the boss was mean to you and have benefits reinstated in about two minutes. It does concern us that some of the new changes that have been put in place are actually going to have a direct impact.
I do want to raise concern, though, that these changes have been made through regulation. It took quite some time for these changes to come to the public, and it's something I would suggest is better debated with the full knowledge of where the government is headed. We're pleased to see that the information is finally out for us to make decisions on.
With respect to employment insurance, 22% of our members told us they feel they're competing against EI for workers, and 16% of our members said they have been asked by employees to lay them off so they can collect employment insurance. The need for change is very clear.
The shortage of labour among small and medium-sized businesses is growing in every Canadian province. This has been characterized as a western Canadian issue, and it's not. After Saskatchewan, the second highest level of concern about the shortage of labour is in Newfoundland and Labrador. That's coming from thousands of small and medium-sized business owners.
Okay. There have been some recent changes to the temporary foreign worker program, which was referenced in the budget itself. Most of the changes are positive. We like the direction they're heading in, but most of the changes do apply to immigrants with higher skills. They do not apply to those who are in the more modest skill set, in entry-level positions, those in semi-skilled professions, and in the trades.
We really do feel that for the temporary foreign worker changes to be effective they need to apply to all temporary foreign workers. We are hoping that the permanent skilled immigrant program can be expanded to mimic more of the benefits of the temporary foreign worker program—things like allowing temporary foreign workers to stay in Canada through the Canadian class. It's a great decision. Again, it cuts out those who are in the lower-skilled categories, which is something we feel needs to be addressed.
With respect to OAS changes, we have brand new survey data from our members. Again, directionally our members support it. A quarter of our members do oppose the OAS changes, but our members strongly feel these changes need to apply to public service employees so that public service pensions mimic the new retirement age set out in OAS.
I'd be happy to take any other questions.
I'm the coordinator of Canadians for Tax Fairness. I thank you for the opportunity to share our concerns regarding this omnibus budget bill.
Since I have very limited time, I'll address just two points: one, the need for a revenue-side solution to the deficit problem; and two, the need for government policy to support increased lobbying and political engagement by charities, not curtailing it as Bill is possibly going to do.
The first point, we need fairer taxes to increase revenue, reduce the deficit, and close the income gap. Austerity is the wrong prescription for an ailing economy. Cutbacks in government spending and layoffs of large numbers of public servants jeopardizes the weak economic recovery.
The main reason for the government deficit is not runaway government spending but ill-advised tax cuts. Thanks in part to corporate tax cuts that have lowered the federal corporate tax rate from 21% in 2006 to 15% today, non-financial Canadian corporations are now sitting on about $500 billion of surplus cash. They are not investing for the most part in job creating expansion because there is weak consumer demand for their goods and services. What they need more than tax cuts are policies that would boost consumer spending. Increasing unemployment, as this budget is expected to do by up to 70,000 full-time jobs if you include both the public and private sectors over the next three years, will not help to boost consumer demand.
The underlying weakness of consumer spending is due in large part to the growing gap between rich and poor. Wealth has become far too concentrated in the top 10% or even 1%, and middle- and lower-income Canadians have seen their income stagnate or decline. The rich, the very rich, can't spend as much as ordinary Canadians because there are very few of them.
What would help our economy, and business in particular, would be policies to redistribute wealth. One of the most effective ways to do that would be to make taxes fairer.
Canadians for Tax Fairness contributed to the alternative federal budget 2012, which included a tax fairness plan that proposed: increasing tax rates on top incomes; reversing the race to the bottom with corporate tax cuts; eliminating unfair tax preferences, and closing tax loopholes and access to tax havens; applying financial activities or transaction taxes; introducing an inheritance tax on large estates; and starting to introduce smart and progressive green taxes.
These tax measures and elimination of subsidies to oil companies could raise an additional $50 billion a year that could go toward reducing the deficit and implementing new programs, such as pharmacare, child care, climate change action, and a poverty reduction plan.
This budget bill has hardly any new revenue measures at all. It is unfair to try to balance the budget by spending cuts alone, which will adversely affect middle- and lower-income Canadians. We need a more balanced approach that would include revenue-side solutions as well.
The second point is to encourage public policy engagement by charitable organizations. I'm surprised and outraged by the attack on the rights—and I would add the responsibility—of charitable organizations to engage in advocacy on public policy issues. The real problem is that we have far too few charitable organizations contributing to public policy dialogue.
As the Canada Revenue Agency noted in their 2003 policy statement on political activities of registered charities:
||Beyond service delivery, their expertise is also a vital source of information for governments to help guide policy decisions. It is therefore essential that charities continue to offer their direct knowledge of social issues to public policy debates.
The $5 million allocation in the budget for special audits by CRA, to see if charities are adhering to the 10% limit on advocacy, and additional restrictions in reporting rules for charitable foundations contained in Bill are sending the wrong message—that government doesn't want to hear from non-government organizations, especially if they disagree with government on environment, gender equality, or poverty issues.
I would have thought that many Conservatives who subscribe to the principles of liberty and limiting the power of big government would have wanted to expand democracy and citizen engagement, not curtail it.
Good evening, Mr. Chairman.
Thank you to the members for having me here today.
My name is Jamie Ellerton. I am the executive director of EthicalOil.org. We are a Canadian non-profit organization that advocates for ethical oil from Canada's oil sands and other western liberal democracies. Ethical oil is produced in countries with high environmental standards that are peaceful nations, where workers are treated and compensated fairly, and have respect for human rights. Conflict regimes, by contrast, oppress their citizens, operate in secret with no accountability, and have little, if any, regard for the environment. What we do is important, but I do not claim that it is charity. It is political, and it is simply not on the same moral plane as true charitable endeavours.
Government accords charities the privilege in exchange for the charitable work they do. The benefits that come with that privilege are quite generous and result in foregone revenue to the government. In Canada there is not a consensus on ethical oil, and promoting one side in a political debate is not charity. I will quote from the Canada Revenue Agency:
||...in order to assess the public benefit of a political purpose, a court would have to take sides in a political debate. In Canada, political issues are for Parliament to decide....
Now, stop for a moment and imagine. If arguing one side of an issue were a charitable act, then arguing the other side would be a charitable act too. Let me read you such an example. The example is deer hunting. It comes from Canada Revenue Agency's policy statement CPS-022, about political activities. I quote:
||The main reason why the courts rule out political purposes for charities is a result of the requirement that a purpose is only charitable if it generates a public benefit. A political purpose, such as seeking a ban on deer hunting, requires a charity to enter into a debate about whether such a ban is good, rather than providing or working towards an accepted public benefit.
If you have to debate whether or not something is charitable, it is not. Mr. Chairman, that policy statement was published in 2003 under Prime Minister Chrétien. This is not a matter of partisanship. It's about the neutral application of tax laws. Politics should never enter into it.
In 1989 Revenue Canada revoked Greenpeace's charitable status because it engaged in prohibited activity. Greenpeace then set up another charity called the Greenpeace Canada Charitable Foundation, which also saw its charitable status revoked in 1998. It had nothing to do with the PC or Liberal governments of the day. It was the CRA doing its job in enforcing the Income Tax Act.
Given this history, why are we discussing this today? The Government of Canada wants to make sure charities are following the rules they agreed to when they applied for charitable status, a classification that gives them generous benefits such as tax-free status and the ability to offer donors deductible receipts.
Mr. Chairman, Ethical Oil has noticed increased political and partisan activities of several organizations that we believe are in violation of charities law for their political and partisan activity. To that end, we have written several complaints to the Canada Revenue Agency detailing how we believe various Canadian charities are violating the law. Whether it's a representative of the David Suzuki Foundation appearing in a TV advertisement for a political party, or Environmental Defence making 50,000 phone calls in one electoral district to attack one member of Parliament, we do not believe this work to be charitable.
Concerns have been raised that this legislation attacks free speech. I do not believe this to be true. No charities doing charitable work have anything to fear from Bill . Charities that are complying with the law today will continue to be if Bill C-38 is passed. What the bill actually does is this. For those organizations that have been given the privilege of charitable status, which includes a generous subsidy from Canadian taxpayers, it requires registered charities to provide greater transparency into their activities in exchange for that privilege.
That is why Ethical Oil supports the initiatives contained in Bill and hopes to see its passage through Parliament.
Thank you, Mr. Chair.
Thank you, committee members, for this opportunity to appear before you today.
My name is Blair Rutter. I am the Executive Director of the Western Canadian Wheat Growers Association, one of 14 organizations that belong to Grain Growers of Canada. I'm here today representing the Grain Growers whose members represent tens of thousands of successful farmers from coast to coast. When the budget was introduced earlier this year, the Grain Growers were pleased to see that expanding trade remained a high priority. Improving access to markets is vital to ensuring growth and prosperity in our sector.
The implementation of marketing freedom for wheat and barley will also grow the profitability of our sector. We are eagerly anticipating an open market on August 1. This move has already sparked private investment in further value-added grain processing and research. The open market success of our canola, pulse, and oat industries gives us reason to be optimistic that we will see similar success stories in wheat and barley.
Grain Growers supports the budget provision that extends the deferred payment tax provision to all Canadian farmers, not only those in the Canadian Wheat Board area. This provision allows farmers a modest ability to smooth out the year-to-year fluctuations in their incomes.
The Grain Growers were also pleased to see the modernization of food safety regulations at CFIA, the Canadian Food Inspection Agency, and Health Canada. We support efforts to reduce regulations and simplify the process by which new products can come to market. We encourage you to continue down this path, especially with respect to the registration of new crop varieties.
To take full advantage of the increased opportunities in agriculture, we ask your committee to address the following issues.
First, we need to continue our emphasis on research and innovation. We were disappointed in some of the cutbacks to agriculture announced in the budget. While we support the change in focus toward early-stage variety development, the 10% cut in core funding of agriculture did affect some front-line research positions. If costs are to be trimmed, it should be in administration and not research staff. In particular, the Grain Growers are concerned that the program relating to important spray technology might be eliminated. This valuable research has reduced farmer input costs and improved our stewardship of the environment. We ask your committee to ensure that funding for this program remains in place.
Second, our sector is dependent on a reliable rail transportation sector. We urge all parliamentarians to support back-to-work legislation and restore rail service so that farmers do not bear the cost of lost sales and ships in harbours waiting for grain. We also ask the government to introduce legislation this fall that will address long-standing rail service issues.
Finally, the Grain Growers are seeking the modernization of the Canada Grain Act. The budget makes a special allotment for continued funding of the Canadian Grain Commission at present levels, and we thank the government for this stopgap measure. Making some of its services optional and allowing third-party service providers will lower costs to farmers and ensure the commission is well positioned to meet the future needs of our industry.
Again, thank you for the opportunity to share our views.
Mr. Chair, thank you for the invitation to appear before the Standing Committee on Finance this evening.
I am the President and Chief Executive Officer of Imagine Canada, an umbrella organization for charitable organizations in Canada. Our primary mission is to work to strengthen charities so they can, in turn, better serve Canadians and communities, here and elsewhere in the world.
The federal budget announced new disclosure measures for political activity by charities. Essentially, three things will happen. First, there will be some new questions on the T3010 form, the form that charities have to send off to CRA annually around political activity. Secondly, foundations will now be required to report differently on the 10% for political activity, and finally, there will be what CRA calls “intermediate sanctions” that may be applied in the case of inaccurate reporting.
I have to say I'm very pleased that these measures in no way change the 10% rule for political activity, a rule that has been in place for many years and that has been working well. Charities can still do political activity, as defined by the Canada Revenue Agency, just as before. The changes are in how we will need to report on these activities. The changes are related to new forms of disclosure.
Now with regard to the practical impact of these changes, we will have to see what the questions are, and as you know, the devil is always in the details. But we will be in a better position to comment on specifics once we've seen that information.
We have had some communication with the Canada Revenue Agency, and those discussions have been productive. Our hope is that the reporting burden will be kept to a minimum. We have to recognize the fact that the new measures will add to the reporting and administrative burden of charities, which means adding to compliance and overhead costs. Canadians want us to keep these costs as low as possible. Indeed, during the hearings on charitable giving, members of this committee commented on the need to keep administrative costs as low as possible. So it is imperative that the burden be kept reasonable and that the costs not outweigh any public policy benefit.
That being said, our real concern regarding political activity is the recent public language used by some ministers and some senators that has been, in fact, inflammatory. It is creating real uncertainty and concern within the broad charitable sector in Canada. Many have told us that they are worried about engaging in public policy at all. This goes well beyond the environmental charities. I'm talking about charities involving social services, in poverty alleviation, in social housing, in the arts, in health, in services for people with disabilities, and I could go on.
Whether intended or not, this debate and the language used are impacting the entire sector. Indeed, some ministers and senators appear to have questioned whether charities should play any role in public policy. I'm hearing that a number of volunteer board members from across Canada are expressing worry as to whether they can participate in public policy at all, as they have done for many years, including appearing in front of parliamentary committees such as this one.
Mr. Chair, as you know—and I know you appreciate—charities have a long and proud tradition of working with governments at all levels on crucial policy issues. This has served us well as a country, and it has been valued by Canadians and by governments for very good reasons. Charities work at the coal face of some of the most intractable social, environmental, economic, and cultural issues, dealing directly with individuals and communities. Because they work on the ground, they bring a knowledge base that is crucial, and I would say, complementary to the knowledge that governments bring, and that's a good thing. It often creates debate and questioning, but that's not a bad thing either. Good public policy comes from bringing to the table a variety of different perspectives based on different experiences. As a country, we've benefited from this perspective. I can't imagine why we would want to put this in jeopardy.
Charities and the millions of Canadians who continue to support their work want this positive and productive engagement with the government to continue. Who can argue against what governments and charities have achieved together: smoke-free workplaces, unthinkable 20 years ago; measures to fight drinking and driving—and we're seeing the real success of those—the national child benefit that has had a big impact on child poverty in Canada; the Canada-U.S. acid rain treaty; the Registered Disability Savings Plan, put forward by this government; and more recently, the maternal and infant health strategy that now is being championed by the Canadian government.
What all of these achievements have in common is that none of them would have been possible without the leadership of so many charities and the people that support them, and none of this would have been possible without a strong relationship and partnership between charities and governments.
The very public language used in recent weeks is creating a chill, and that is really difficult for charities across the country. My hope is that with a national conversation now we will begin to celebrate the work of charities in a way that will make us all proud.
In closing, let me say that, contrary to some statements made, charities in Canada are actually committed to transparency and disclosure. Just recently, Imagine Canada launched, with the support of the charitable sector, a new world-leading standards and accreditation program that's being embraced—a program that will ensure that Canadians continue to have trust and confidence. Working with the Canada Revenue Agency, we just launched CharityFocus, a citizen-focused, one-stop portal for information on all 85,000 charities, providing Canadians with a wealth of easily accessible financial and other information about every charity in Canada. I think this is the type of engagement that will benefit all Canadians.
Good evening, Mr. Chair and committee members. I thank you for the invitation to appear before this committee and to offer comments on part 1 of Bill on behalf of the Prospectors and Developers Association. I am co-chair of the association's finance and tax committee, and an associate partner, tax, at KPMG LLP.
The Prospectors and Developers Association of Canada, with more than 10,000 members, both individual and corporate, exists to protect and promote mineral exploration and development and to ensure a robust mining industry in Canada. The Canadian mining industry is a great success story and a fundamental driver of Canada's economy. In 2010 the mining industry employed 308,000 people, contributed $36 billion to the national GDP, and paid $5.5 billion to governments in taxes and royalties. The mineral exploration and mining sector is the lifeblood of many rural and remote communities throughout Canada, and is the largest private sector employer of aboriginals in Canada.
Canada's mining industry plans to invest $136 billion in projects over the next decade on new domestic projects and on the expansion of existing ones. Canada is recognized as a leader in mineral exploration, development, financing, mining, and related technologies, services, and activities. In 2011 we led all countries with 18% of the world's mineral exploration spending. Australia is second at 13%.
The TSX/TSX Venture Exchange is number one in equity capital raised for mining and number one in listed mining companies with 58% of the world's total. At the end of 2011, 43%, or 1,646, of the 3,837 companies listed on the TSX/TSXV exchange were from the mining sector. In comparison, the number of mining companies listed on the Australian stock exchange is 700, and on the New York Stock Exchange and AMEX it's only 141.
Mineral exploration is the essential first step in the mining cycle, and Canada has a number of features that attract investment. We have good geology, a skilled workforce with new training initiatives, and a competitive tax system that includes flow-through share financing and the mineral exploration tax credit, the METC, both of which are unique to Canada.
The METC is important for mineral exploration financing. PDAC's members are primarily small and medium-sized enterprises that rely on equity financing to support early-stage, higher-risk exploration activities. In our pre-budget submissions and consultations, the PDAC recommended the continuation of the METC, asking that it be made permanent in order to provide greater certainty to investors and exploration companies. The METC and flow-through share financing continue to serve a critical role, as they allow junior companies to raise needed capital, keep investment in Canada, and sustain grassroots exploration activity.
The fragile state of the global economy is having a negative impact on company share prices and their ability to raise high-risk financing. Further, project costs are rising as a result of exploration, development, and production taking place in more complex ore bodies and deeper-lying deposits with lower grades and at more remote locations. Without sufficient investor support, companies will carry out less exploration, causing an impact on service companies and individuals, particularly those in rural, northern, and aboriginal communities. As costs rise, financing becomes more critical.
With respect to exploration and equity financing, flow-through shares and the mineral exploration tax credit offer individual Canadian investors an additional incentive to support the higher-risk ventures.
Initiated in 2000 for a five-year period, the METC was reintroduced in 2006 and subsequently renewed for two years. It has since been extended on a yearly basis. We were pleased to see the mineral exploration tax credit included in the March 29 federal budget. Bill would extend the tax credit for an additional year to flow-through share agreements entered into before April 2013.
It is important to note that the METC can only be earned on grassroots exploration conducted in Canada, incurred within a defined time period, and renounced under flow-through share agreements entered into within defined time limits. It should also be remembered that any METC claims are subject to taxation in the year subsequent to the taxation year in which they are claimed. Thus the after-tax saving is closer to 7.5% to 8% versus the actual 15% of the credit.
In conclusion, I'd like to thank this committee for giving our association the opportunity to speak today. We would be happy to answer your questions.
My time is short, so I'll try to be brief and succinct in my questions.
Ms. Krause, you have made some serious—I don't know if you'd call them allegations, but you've raised some serious concerns with respect to foreign money in Canadian charities skewing the public debate. Is that a fair assessment of what you're saying?
I'd just like to ask you if you have any concrete evidence that you'd like to put before the committee today.
I'd like to ask a question to Mr. Ellerton.
Your organization, Ethical Oil, is something that has grown very quickly in the public eye. If I remember, it was Mr. Levant from Sun Media who raised this as a concept, and it seemed to very quickly explode on the public scene. I'd just like to ask you why you think this has developed so quickly in the public consciousness. I know there are many people who work for Ethical Oil who have connections to the Conservative Party, and there's also been a lot of support through Sun Media.
Why do you think this idea has captured such attention, when it may take decades for other ideas to capture the public imagination?
Thank you very much to each of you.
This chill effect, potentially.... I'm hearing the same from non-profit organizations and boards on those organizations—people who have opinions. For instance, if you run a food bank you probably have an opinion on poverty and poverty-related issues. If you are involved in an environmental organization, say the Pembina Institute, you probably have political views on environmental and related issues.
Mr. Ellerton, you mentioned twice that Greenpeace lost their tax number with Revenue Canada. That was accomplished before we had these changes. Your example proved we have the capacity now legislatively and from a regulatory perspective for Revenue Canada to act. You cited that example.
Isn't that an example that our current approach is working?
Thank you, Mr. Chair. I will share my time with Mr. Adler.
First, I think there's been a lot of talk about charities, and I want to say right upfront that charities play an incredibly important role in our society. Canadians donate very generously to charities, and the rules are basically the same. I think what we have is a rule that talks about 10%, and that if you really are wanting to get into more of a political role, you create, perhaps, a different structure in which to do your advocacy role.
I'm not hearing anyone really disagreeing with that particular premise. I think what I'd like to do is.... Maybe Ms. Krause has had an opportunity to hear from some of the other witnesses. From your research it sounded like there were donations to charitable organizations that focused in on market suppression. Could you talk, from your research, about how you felt that this 10% rule was being violated?
Actually, I have never really raised concern about the political activity of non-profits. My initial concern was that charities are getting involved in marketing campaigns. The problem is that we need activists. Activists play an important role. Sometimes they jolt us out of our inertia and our apathy, and we need them to keep government and industry on their toes. But we need activists to play the role of an honest broker. Once you're involved in a marketing campaign, then you have to stick to the message, you have to sing from the song sheet.
I think across the board all industries need someone keeping an eye on them, and that includes the solar and the wind industry in the energy sector, for example. I'm concerned when we all of a sudden find out our environmental activists, who we count on to play the role of the honest broker, are participating in the Rockefeller Brothers tar sands campaign. How can they do that at the same time they're being an honest broker?
My hope, really, is that we do have activists who are independent, fiercely autonomous, and not beholden to any industry, or any foundation, or anybody who has an agenda—that they truly are independent. That was my concern. It's simply that I don't like to see activism funded as a tactic of marketing.
There are 85,000 charities in Canada. I think it's reasonable to have some resources in this budget to support education, because I think what we're hearing here are concerns, actually, from everyone regardless of their perspective. So CRA impartially, whether it's, I don't know.... I could use all sorts of examples. It doesn't matter what the organization is. CRA is responsible if Canadians are concerned. They should have the ability and some resources, first of all, to comfort charities, to provide the education, and also to provide some support.
With that, maybe I'll turn it over to Mr. Adler.
Yes, really, that is our greatest concern. In our opinion, the system is working, and the 10% is working. There are all sorts of transparencies. These charities are among the most regulated in the country, and it is working. There is very little foreign money coming in. Although the amounts are large, it is minor.
And then, as has been said, the Canada Revenue Agency does its job. When the organizations go too far, then they are deregulated. So that is of less concern to us; we think it is working.
What we are very worried about is the language used at this point by some people to talk about the work done by charities, and that is really making us uneasy. Obviously, what is happening is that charities are increasingly saying to themselves that maybe they will not take any part in developing public policy. And if that happened, it would be disastrous.
When we talk about charities, whether it be for the environment or the war on poverty and so on, certainly we have to make policies. And if they follow the 10% rules, as they ordinarily do, they are making progress for society.
What concerns me in this bill, however, is that it gives the Minister of National Revenue the power to suspend the privilege of issuing tax receipts if an organization devotes too high a proportion of its resources to political activities. In addition, now it says that there will be a "reasonableness" component when it comes to what can be considered a "political activity".
So giving tax receipts is being politicized. We think this is a concern, particularly since you have said that in spite of the rules, charities are somewhat concerned.
I may come back to this if I have any time left.
Mr. Howlett, do you understand that the government is now investing $8 million to attack charitable organizations or make sure they follow the 10% rule, and cutting $250 million in CRA instead of investing in CRA so they can get the money? You mentioned tax havens and tax evasion. Now we're taking resources away from CRA instead of giving them resources so that we can get more from people who are not paying their fair share of tax.
Is that a fair assessment?
Thank you, Chair. I'm going to give the bulk of my time to Mr. Jean.
Before I do that, though, I want to comment on one issue that the Grain Growers of Canada brought up, and that's the rail service, and the impact of the rail strike going on here across Canada.
I know my constituents are calling me and they are really concerned, but not only my constituents. We're actually seeing CP employees calling in and expressing concern. It looks to me that it may not even be the union at fault in this case. It may be management. But I think it's very important, though, when I look at my constituents, and what their needs are.
Mr. Jean, you had a great line of questioning. I think I'd like you to continue along that line because I have many constituents who work in your backyard.
That's not really my question. My question is zeroed in on this.
Hundreds of millions of dollars are going into British Columbia, and primarily to oppose the gateway, or to—in my opinion—fund research and development and fund marine conservation to oppose the pipeline, in my mind, based upon what I read.
But how much money from the foundations has gone to oppose the Keystone pipeline? It is obviously going through much more densely populated areas and going directly to the United States.
It seems a dichotomy because either way it's going to produce oil out of the oil sands. One pipeline goes down to American refineries and the other oil pipeline goes to the west coast of Canada.
There seems to be hundreds and hundreds of millions of dollars set forward to oppose the Northern Gateway, but none are going to oppose the Keystone pipeline. The only difference between the two—because both are going to develop the oil sands—is that one goes to the United States and one doesn't.
They wouldn't be on the payroll.
Mr. Blumberg, you spoke before to this committee, and you were very positive about some of the things we brought forward. Do you think, with these new laws that are coming forward in relation to transparency and accountability for non-profit sector charities, that we are going to be even, as far as transparency goes, with what's taking place in the United States as far as payments to directors, payments to employees, and payments to the top ten earners are concerned? Are we going to be on the same line as they are in the United States as far as their obligation to report?
The U.S. charities file Form 990, which has a lot more information on it than we provide in the T-3010. One useful thing that has come out of this sort of comparison backwards and forwards is that a lot of the information that's come out has come from the U.S. Form 990s. I think we should have more robust information.
Unfortunately, the one regret I have is that these changes will take CRA two years to implement and will cost millions of dollars, just for the transparency stuff. I don't think, in the end, it's going to bring out a lot more than what Ms. Krause has herself brought out. I think it would be better to make the T-3010 more expansive, in my opinion. Ask more questions on things like impact, the number of volunteers the charity has, and things relating to governance, which are really important, and other things that are important. In a way, it's a little bit of a missed opportunity.
I would also point out that charities have to do a lot of disclosure. Maybe I want more, but there is a lot of disclosure. Non-profits in Canada don't make any disclosures. We don't even know what their names are, and CRA can't disclose that. I would say that it would be good not just to compare ourselves to the Americans but to also look at the difference between non-profits and registered charities.
The fact that we have all eight of you here at the same time in a way represents what is wrong with Bill and the way we are going about it now. We have here three people who specialize in charities, one person from agriculture, one person from mining, one person who promotes the oil sands, someone who has been talking about the tax consequences, and someone who comes from independent business, all in a single group.
I am going to try to focus my questions, but five minutes does go by fairly quickly.
My first question is for Mr. Blumberg, Ms. Krause and Mr. Lauzière, in particular.
With the information you have, do you have enough evidence to show that groups in Canada, charities, have laundered money, as a Conservative minister has said?
I am asking all three of you. Go ahead, Mr. Lauzière.