I call this meeting to order.
Welcome to meeting number 40 of the House of Commons Standing Committee on Finance.
Pursuant to Standing Order 108(2), the committee is meeting on the subject matter of Bill , an act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures.
Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely, using the Zoom application. Per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.
I'd like to take a few moments to make a few comments for the benefit of the witnesses and members.
Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you're not speaking. For interpretation for those on Zoom, you have the choice at the bottom of your screen of the floor, English or French. For those in the room, you can use the earpiece and select the desired channel.
I would remind you that all comments should be addressed through the chair.
For members in the room who wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.
I request that members and witnesses treat each other with mutual respect and decorum.
I would now like to welcome today's witnesses. We have a contingent of officials with us today from 12 agencies and departments. They are the Canada Border Services Agency; Canada Revenue Agency; Correctional Service of Canada; Department of Citizenship and Immigration; Department of Employment and Social Development; Department of Finance; Department of Foreign Affairs, Trade and Development; Department of Industry; Department of Indigenous Services; Department of Justice; Privy Council Office and Treasury Board Secretariat.
Members, with so many agencies and departments, if your question is being directed to a particular agency or department, please make sure that you inform that agency or department how you're directing your question.
Before we move to members' questions, we'll have a formal introduction of our officials by Mr. Nicholas Leswick.
Mr. Leswick, the floor is yours.
Thanks so much, Mr. Chair.
I just want to say exactly that. Absolutely, I agree with Mr. Fast, and I think everybody here agrees on that. The budget implementation act is critical. We are spending a lot of money. There needs to be due oversight and we must have sufficient time.
My understanding is that we have a game plan for this week, Mr. Chair, and I know that on Thursday, we're going to be deciding on what additional meetings we want to have. If it is determined that we need some officials back on any sections as many times as possible, I think we can make that decision on Thursday. I know that I'm very open to that. I agree that we have to make sure we feel very comfortable with what has been introduced and what's in this budget implementation act.
I'd also say, Mr. Chair, I haven't been on the committee for that many years, but I know that sometimes we have our Minister of Finance with us for one hour, sometimes for two hours. I know that it changes depending on the topic and depending on our time limitations.
That's it. Thank you.
Thanks very much, Mr. Chair.
Thank you to all of our officials who are here today, both on screen and in person, and for your hard work every day on behalf of Canadians.
In my riding of Etobicoke Centre, a lot of folks are concerned about fiscal responsibility. They want us to make sure that we have the programs in place that are needed to support Canadians, to grow our economy and so on, but they also want to make sure that we're fiscally responsible. One of the components that I get asked about regularly is debt management.
In the budget, there is an annex that speaks to the debt management strategy. I'm just wondering if you could walk us through what our debt management strategy is in terms that my constituents can understand. What are our plans going forward as far as the federal debt goes?
Now I'm going to be more specific.
The entire aerospace industry in Quebec and Canada, as well as the Quebec business community, really seem to be up in arms here.
With respect to the interpretation and application of the tax, there's considerable concern and uncertainty about the aircraft that will be exported and about the part concerning personal use relative to business use, which is fixed at 90%.
I addressed this point several times during the briefings on the notice of ways and means motion. The industry is still up in arms, and we have to get some answers and clarification on the application of this tax. As regards the 90% threshold, I was told many times during the briefings that it would depend on how the Canada Revenue Agency interprets it.
I'll repeat the examples I was given. I'd like to know whether the Department of Finance or the CRA can answer these questions. We have to get some clarification before we vote on the bill.
The business use threshold is currently set at 90%.
Let's say a business, which I'll call company A, purchases an aircraft for business use. When the aircraft isn't used by the business, it's leased to a charter flight business, which I'll call company B. Now let's imagine that company B leases that aircraft for personal use.
Can the officials at this meeting tell me whether that aircraft is considered as being used for personal or business purposes, given that company B subleased the aircraft to be used for personal purposes?
Thank you. That's the first time we've had such a clear response to that concern. However, that's not the answer the industry was expecting. Consequently, there'll be a lot of concern over this, but I'll be able to put the matter to the minister again in a few minutes.
The industry tells us that the aircraft manufacturer must ensure that the purchaser, company A, will be using it for business 90% of the time. However, company A doesn't have complete control over the hours during which the aircraft is being used because it doesn't do business with company B, which doesn't know in advance what the percentage of use will be.
We're being told this will be very difficult to apply. I hope regulatory or legislative amendments are made in short order. That would help make it all more flexible and usable. As we all know, the aerospace industry was hit hard by the pandemic.
The commercial aviation sector is recovering more quickly. So the entire cluster is relying on this, but we now have an act that raises more problems for the industry.
Having said that, I want to thank you for giving me a clear answer.
Mr. Chair, how much time do I have left?
I want to start with a question about the proposed changes to establish an EI board of appeal or a new way of doing that. One of the mentions in the bill says that the board of appeal wouldn't be able to consider any questions of a constitutional nature. Now, I know that earlier this year the tribunal issued a decision highlighting sex discrimination in the EI Act, particularly in regard to maternity leave provisions and the way they interact with eligibility for regular benefits.
I'm wondering if that exclusion in the act would, first of all, mean that the tribunal could no longer issue decisions like that, which lean on the Constitution to provide feedback about the overall EI system, and whether that could have any retroactive effect on decisions like the one from earlier this year.
I'd put that question to whomever the most appropriate official from the Department of Employment and Social Development would be.
I'm happy to take that question.
Your question was about how the original payment authority, which was included in Bill , was essentially—I think to answer that in simple terms—just merged into this new bill so that when this bill receives royal assent, the government will have the authority to make those payments.
You then had some questions about what the requirements were. The government wanted to provide this funding to help municipalities deal with the revenue shortfalls associated with the public transit ridership declines that occurred during the pandemic. They wanted to do a little bit more in terms of incenting provinces to support housing construction as well. So, there are a couple of broad requirements that were asked of provinces in order to be eligible to receive the funding. There is a requirement to match the federal contribution. There was a requirement to allocate more or less according to transit ridership among their municipalities, so it's to pass on that funding to municipalities to achieve the objective of the payment. That was meant to be used towards transit operating shortfalls or could be used towards investments in transit capital or investments in housing.
There was an understanding or a request that provinces agreed to undertake to work with their municipalities to accelerate their efforts to improve housing supply in collaboration with those municipalities.
Thank you very much, Mr. Chair.
Thank you to all the officials who've joined us today. It takes a lot of work to put together a bill of this size. It's one of the largest we've seen, so thank you for all of your hard work. I'm glad we're not billing by the hour with the number of people we have, but it's good to have so much intellectual capacity here.
My colleague Mr. Baker started by talking a little bit about fiscal responsibility, so perhaps I'll take the opportunity just to ask a few high-level questions. What is the spending growth from this year, projected, versus the year just before COVID? That's the 2019-2020 year versus the 2022-23 projected year.
While we look it up, I'll give you the numbers I see. Maybe we can see whether they're correct. In 2019-20, it was $360 billion. In 2022 it was about $450 billion. I'm rounding some these numbers. That includes the debt management charge. Is that about right?
No problem. I've done the math, so if we look at budget 2021 and compare the revenue from budget 2021 and the budget revenues from budget 2022 projected out through the forecast, there's $170 billion in extra revenue that the government is going to get over the next five years, or is projected to get, versus what it thought it was going to get last year.
In fact, the entire fiscal plan of the government is based upon inflation. You don't have to answer that question. That's more of a political statement and not a question fair enough for officials.
However, the entire fiscal plan of the government is based on inflation staying high because that's the only way they're going to be able to pay for any spending promises. That to me is an interesting observation.
How many civil servants have we decided or are projecting to add through the forecast, on a gross and net basis, over the next five years? Is that a number that we could get?
I recognize that my time is up, Mr. Chair, but if we can't get that here today, it would be very helpful if we could get that in writing from the Treasury Board Secretariat.
Thank you so much, Mr. Chair. I also want thank all of the officials for their excellent work and for being here today.
As Mr. Chambers said, these budgets are huge amounts of work, and I really appreciate everybody's being here.
I just want to comment off the top very quickly. I think Mr. Chambers asked some really excellent questions, and I think we'll get some additional information from you.
For those who are listening, it's really important, when we're making comparisons with the time before COVID to take into consideration the geopolitical situation and crisis that's under way right now, and the high levels of inflation that haven't been seen in almost three decades, which we're experiencing right now.
We're still fighting COVID. We're still helping the Canadian economy to recover in many ways. As to whether inflation will staying high for the next five years, I don't think anybody can make any prediction given the fact that the world is highly unpredictable right now. I just wanted to provide some of those additional comments because I think it's important for us to have those in mind as we have this conversation.
My first question is about the labour market and jobs recovery. My understanding is that Canada has recovered quite well in terms of jobs recovery to where we were when COVID first started. My understanding is that we recovered about 112% of the jobs, whereas in the United States, I think their employment levels are still 2.3% below prepandemic levels.
Can someone confirm that, please?
Thank you for the question. I'll take a shot at it.
You're exactly right. The labour market recovery has exceeded expectations on all sorts of labour market metrics, whether it be employment creation, hours worked or participation rate. We're completely outperforming where we thought we'd be six or 12 months ago.
It's exacerbated into some of these labour markets shortages that we're seeing on a pan-Canadian basis. The government has made efforts on two fronts really: pure labour supply, which is how many hours are worked in the economy, and then addressing elements of skills matching and skill shortages in certain areas.
In labour supply, there are a couple of things. One is that the government made a huge effort in moving forward to implement the national early learning and child care program last year, which would hopefully catalyze the participation of new parents into the workforce. Likewise, there is a pretty ambitious immigration program as well, which brings new workers into the country. Again, that's just from a pure labour supply perspective.
On skills, it's a combination of skills training programs, sectoral support programs that were announced in the last budget, foreign credentials recognition and temporary foreign workers, which I know straddles both labour supply and skills matching. There have been a number of initiatives to advance on both of those streams.
Thank you once again, Mr. Chair.
Once again, I'm going to discuss the luxury tax that would apply to aircraft used for personal purposes.
We realize the tax applies to sales made in Canada, not to sales of aircraft for export. However, the tax is designed in such a way that the manufacturer pays the tax on all aircraft, including those that are exported, and is reimbursed once they've been exported. It's all done on a quarterly basis, as we were reminded during the technical briefing.
However, industry representatives tell us the quarterly basis is a problem because, in actual fact, an aircraft sold to a person outside Canada may remain in Canada for several additional months to be modified as the purchaser wishes and therefore may be in the country far more than three months longer.
For the primary manufacturer that exports these aircraft, the exported portion represents a very high percentage of its production, approximately 90%. That therefore reduces the manufacturer's cash flow because it's required to pay the luxury tax on every aircraft produced, whereas a very small portion of its production is sold in Canada or to Canadians. That causes a liquidity problem.
In real terms, as a result of months of waiting, this may represent hundreds of millions of dollars that have to be advanced because that's how the tax is designed.
My question is for the Department of Finance representatives.
Was this problem considered, and what solutions were proposed?
Thank you to the officials for being here today.
I want to paint a little picture of where I live—Miramichi-Grand Lake in New Brunswick—and how this budget affects it.
Miramichi-Grand Lake, my riding, is the size of Prince Edward Island. There are probably about two places to plug in an electric car. Most people who order them are waiting a year—and sometimes two—because they can't get them and, of course, the government has basically stood by and watched China grow its ability to produce lithium.
The people where I live drive SUVs, trucks and muscle cars. They have boats. We have a marina. We live on one of the greatest salmon-fishing rivers in the world.
We're not seeing the million jobs referred to here today. It's nice to hear. We don't see them in Miramichi-Grand Lake. In Miramichi, we were a port facility, dating back to the mid-1800s and right up until the early 1990s, and then it slowed, so in recent years, the river hasn't been dredged. A company from Quebec wanted to dump $12 million on their own dime into the port. The were called “Groupe Gagné”. The government's role was to fix the navigational aids for $1.5 million. They said no, which stifled a minimum of 15 to 20 companies that would have been producing wood pellets, lobster, wood products, steel, fabrication products.... Basically, the current government has stifled every economic opportunity we had locally.
Now, with respect to this budget, inflation is currently at 6.7%, but it's 7.4% in New Brunswick, so it's much worse in my home province—as I've said—with no sign of it slowing down.
I don't see immediate relief for Canadians inside of this budget, but I'm going to ask the officials today, what in Bill is going to address the inflation crisis that Canadians and Miramichi-Grand Lakers are facing today?
Mr. Chair and members of the committee, thank you very much for inviting me to speak to Bill .
I apologize for joining you virtually. I was supposed to be with you in person, but my flight was cancelled this morning as a result of fog in Toronto.
The budget I tabled last month was published during Canada's quick and remarkable recovery from the recession caused by COVID‑19. Canada has experienced one of the fastest employment recoveries in the G7. We've recovered 115% of the jobs we lost during those terrible first months. By comparison, the United States has recovered only 93% of lost jobs.
More than three million jobs have been created or recovered, and our unemployment rate has fallen to 5.3%, its lowest point since we began collecting comparable data nearly 5 decades ago. Our real GDP is 1.5% higher than it was before the pandemic. According to the International Monetary Fund, the IMF, Canada will have the strongest economic growth of all the G7 countries this year and in 2023.
I have some good news: last Thursday, S&P once again confirmed Canada's AAA credit rating. We owe that in part to the emergency support measures we put in place to keep Canadians and the Canadian economy afloat. We also owe it to the remarkable courage and determination Canadians have shown in the past two years.
But we still do have challenges ahead.
Inflation, a global phenomenon, is making things more expensive in Canada too. Snarled supply chains have driven prices higher at the checkout counter. Buying a house is out of reach for far too many Canadians. Russia's illegal and barbaric invasion of Ukraine is directly contributing to higher food and energy prices both here at home and around the world. This impact is hitting the most vulnerable the hardest.
We need to do better as a country at innovating and encouraging small businesses to grow. We need to continue to address the existential threat of climate change, which is why, with the investments outlined in this budget and through Bill , our government is focused on growing our economy and making life more affordable for Canadians.
One of the pillars of our plan is investing in the backbone of a strong and growing country, our people. People need homes in which to live, but Canada simply does not have enough of them.
This budget represents the most ambitious plan that a federal government has ever put forward to tackle that fundamental issue, and it will put Canada on a path to double the number of new homes we will build over the next 10 years.
We also need to make the housing market fairer, which is why, for example, Bill will legislate a two-year ban on foreign investors. Homes need to be for Canadian families to live in. They cannot be a speculative asset class.
We will also make all assignment sales of newly constructed or renovated housing taxable for GST and HST purposes.
As well—and this is something that I know members of this committee care about deeply—Bill will help seniors and people with disabilities live and age at home by doubling the home accessibility tax credit's annual limit to $20,000, which will make upgrades such as wheelchair ramps more affordable.
A country and a growing economy also require an expanding labour force. Thanks to Bill , we'll be making it easier for skilled immigrants, whom our economy needs, to settle in Canada. This will help increase the government's ability to select candidates from the express entry system pool who meet the needs of Canadian businesses.
We will also be investing in the talented and determined workers who are already here and making it more affordable for specialized tradespersons to move here and find jobs.
Under the bill, we propose to establish a labour mobility deduction to enable tradespersons to relocate temporarily to a work location.This measure will grant tax deductions of up to $4,000 per year for transportation and temporary relocation expenses in an effort to reduce labour shortages in the specialized trades.
Bill will also continue our government's work to ensure that we have a robust tax system in which everyone pays their fair share. Through this legislation, our government will speed up the creation of a public registry of federally incorporated corporations to happen before the end of 2023, two years earlier than planned, to help counter illegal activity, including money laundering, corruption and tax evasion. Let me point out that this is only a first step.
This work is particularly pressing as Canada works hard with our allies through the new Russian Elites, Proxies, and Oligarchs Task Force to target the global assets of Russia's elites and those who act on their behalf.
This brings me to how Bill will allow the government to cause the forfeiture and disposal of assets held by sanctioned people and entities and to use the proceeds to help the people of Ukraine. Canada is leading the way on this effort as part of a group of allies. We would be the first member of the G7 to take this important step, and I can think of few better ways to pay for the very expensive rebuilding of Ukraine than with the seized assets of Russia's leaders.
To save time, I will quickly state some of the other measures set forth in Bill . I'm certain these measures will be supported by the members of this committee and my colleagues in the House.
Bill C‑19 provides for the introduction of a tax on luxury motor vehicles, aircraft and boats.
It proposes a tax cut for businesses engaged in zero-emission manufacturing activities.
It will also entitle employees to 10 days of medical leave in certain sectors such as air, rail, road and marine transportation, as well as banking, postal and delivery services.
It will put money back into the pockets of Canadians even more—
Thank you very much. My clock says it's 12:08 and I am coming to a conclusion.
It will put money back in the pockets of Canadians even more often by changing the frequency of the climate action incentive payment. The payment will now be paid every three months instead of once a year at tax time.
Lastly, the bill will help the provinces and territories clear their surgery backlogs by providing an additional $2 billion to the Canada Health Transfer.
Mr. Chair, Bill will make a real difference in the lives of Canadians. It will help to grow our economy, it will create good jobs, and it will help us to continue building a Canada where nobody is left behind.
I hope that all honourable members here will support its swift passage through the House in the weeks to come.
Thank you very much.
Let me just thank the finance officials who are with you there. They have worked so hard on this budget, on supporting Canadians, and I'm grateful to them for their presence today.
I'm happy to answer your questions.
Minister, I'd like to ask you a question on the luxury tax. You are familiar, I'm sure, with the law of unintended consequences, and many in the boat business, many in the aircraft business and many in the car business are saying that the law of unintended consequences is going to catch up to you on this luxury tax. It is a complicated tax. It's a tax on not only boats. It's a tax on not just aircraft. It's also on improvements made after the fact to those products.
So my question is this. There are serious fears that this is going to undermine the competitiveness of those industries. There are serious concerns that the timing and implementation of this tax are going to mean that contracts are going to be lost because many of these products are custom-made to a purchaser's specific requirements, and they are now starting to cancel contracts because the tax has been applied after the fact, after these contracts have actually been finalized.
Has Finance Canada done an assessment of the economic impacts this tax will have on the boat, car and aircraft manufacturing sectors in Canada, and if so, what did those assessments show?
Thank you for your question.
Ms. Chatel, I want to thank you for your hard work on this committee and in your rural riding.
I completely agree with the two ideas you proposed in your question.
First, the green transition is of key importance for Canada and the entire world. Second, it's absolutely essential that we include the rural economy in that green transition, and the budget absolutely tends in that direction. I want to emphasize that much work remains to be done and that I'm eager to forge ahead with you.
I want to point out that a provision outlined on page 84 of the budget concerns the rural economy and the measures we're taking. We understand that there are special needs.
I'm going to talk about a few important measures, the first of which is the critical minerals strategy, which represents a $3.8 billion investment. It's important for the entire country, but especially for the rural communities. Furthermore, the decision to double the labour mobility tax deduction to $4,000 will be very effective in helping people move around the country. This is a very important decision concerning the labour shortage in rural communities.
There are a lot of other measures, but I'll stop there so you can ask another question, if you wish.
Thank you for your question.
To begin with, I'd like to say that I agree with you that housing is a key issue for all Canadians, both in major cities such as Toronto, where I am today, and in rural communities.
It's an extraordinarily important challenge because Canada is a country that believes in population growth. Our country believes that immigration is an integral part of our society and of our economic growth plan. However, a country with a growing population has to build more houses. That's a fundamental challenge.
Certain measures will really help people living in rural communities. The tax-free first home savings account is very important for young families.
I also want to discuss a measure for creating strong rural communities. We're going to increase the maximum amount of forgivable Canada student loans by 50%, which means up to $30,000 in loan forgiveness for nurses and up to 60,000 for doctors working in rural communities. As you very well know, that's very important for young families that want to stay in rural communities and for seniors.
Thank you very much, Mr. Chair. I apologize for the inconvenience.
Good afternoon, Minister. Thank you for being here and for your presentation.
My team and I have begun to examine the budget implementation bill. It's very long and complex but contains a lot of interesting measures. So I see it as a positive.
As my speaking time is limited, even though it was just doubled, my questions will focus more on problems.
I'd like to have some clarification of what Mr. Fast said.
The Bloc Québécois agrees with the principle of the tax on certain luxury items. However, about an hour ago, the finance department representative confirmed that no study had been done on the potential impact this tax would have on the sales, jobs and revenues of the manufacturing sectors and thus on gross domestic product. We obviously condemn the fact that no study was done before the tax was introduced.
Now I would like to discuss more specifically the luxury tax that would apply to luxury aircraft. It wouldn't apply to an aircraft that's to be used for business but would if it were used for personal purposes. The entire aerospace industry in Canada and Quebec, as well as the Quebec business community, are up in arms because the bill, as drafted, raises many concerns and doubts about the application of this tax.
Those doubts and concerns may be summed up in two points. The first is the 90% threshold for business use. The second is the fact that the tax has to be paid on all manufactured items, including those that'll be exported.
I won't dwell on the first part, which concerns the 90% threshold.
This issue was raised by the industry. An hour ago, the department representatives told us that, when company A purchases an aircraft for business purposes, it will often assign management of that aircraft to company B when it's not using it, given the high cost of the aircraft. Company B then leases the aircraft to other clients, to business people. However, it may also lease it for personal purposes. The department representatives told us an hour ago that, when that aircraft is subleased for personal purposes, it falls within the 10% margin and isn't considered as being used for business.
Is that correct?
Minister, I want to follow up on a question having to do with the GIS clawbacks. I understand there is a small part of this bill that is meant to make some tweaks to help ensure that seniors aren't penalized for having availed themselves of pandemic benefits.
However, there isn't anything similar for working-age families who rely on the Canada child benefit, who have also experienced clawbacks of the CCB as a result of having taken CERB or other kinds of pandemic income support. I want to ask what your government's plan is to address those folks.
I've had meetings with parents who have been affected by that CCB clawback. One thing that's come out loud and clear from that group is that, unlike some of the seniors who were quite prepared to come forward and tell their stories, there are a lot of recipients of the Canada child benefit who are worried about telling their story. They're worried about the stigma and shame that can come with being a working-aged person who's been facing difficult circumstances and now having to ask for help. They've expressed concern about people their kids go to school with hearing about them and being made fun of on the playground if their parents are telling stories of hardship publicly. It's made it harder to make the issue a political issue for the government, because they haven't been willing to come forward and tell their stories. However, their suffering is no less real.
I'm asking you what the government's plan is to address families who have been affected by the Canada child benefit clawback.
Thank you very much for the question, and thank you for your hard work and the collaboration. Thank you for pointing out the work we have done together on the GIS and seniors who received the CERB. I think there was a widespread consensus in Canada that our most vulnerable seniors were particularly hard hit by the pandemic, and the hardship it imposed and that this was an important action to take. We're glad to be following up on it.
This was something we were very clear about before tabling the budget. When it comes to further measures associated with pandemic support, it was very important in this budget to turn the page. It was very important to be clear that we had undertaken extraordinary spending during the pandemic. That was the right thing to do. It supported a lot of vulnerable people. We're also seeing that it was economically the right policy. We prevented scarring, and Canada's economy really has come roaring back.
It was also very important to make clear with this budget that the period of extraordinary pandemic support was over. We were facing a new set of economic challenges. I'm very sensitive—and you make a very strong point—about families and children and the inappropriate but real social shame that people may feel if they are poor. That's wrong, and I want to acknowledge that I'm grateful to you for making that point.
I will say this is a budget that believes in supporting working people. The Canada workers benefit will start to be delivered to people and will make a real difference.
Finally, I also want to point to the fact that unemployment today, at 5.3%, is at the lowest level it has been since comparable figures were collected. That is a real accomplishment of our whole country and supports working people very much.
Minister, I notice that you didn't answer that.
Second, let's talk about what is in here for wineries. Minister, we're nine weeks before July 1, which is when the exemption for 100% Canadian content ends. Many, many wineries that have opened up since 2007 have never paid a cent in excise and now they will be charged for that.
Minister, your own budget implementation act here, on page 106, talks about a grandfathering for product that is made before. However, supply issues are making it so that people cannot bottle their wine; they can't find the bottles. Do you take some responsibility for this? Will you support an amendment to allow for product that has been made before July 1 but that is not bottled to still be considered excise-exempt?
Thank you very much, and thank you very much, Deputy Prime Minister, for being with us here today.
As we all know, over two months ago, Russia began a full-scale, further invasion of Ukraine. We know that the Ukrainians have been outmanned and outgunned. Despite that, they've shown great courage in defending their homeland. I think that courage has inspired Canadians and people around the world.
Notwithstanding that courage and resolve, the situation in Ukraine is, of course, dire. This is an existential issue for the Ukrainian people. It's a humanitarian disaster, with Russia committing war crimes every day, and committing genocide, in my opinion. It's a threat not only to Ukraine's security but to global and Canadian security.
Ukrainians are not just fighting for themselves—for their own freedom and homeland—but for all of us, and we need to fight for them. You, Deputy Prime Minister, have been helping to lead that fight. Some of that has been in public. Much of that has been behind the scenes, as it is for ministers and MPs in our democracy. I want to thank you for your leadership on this issue. Dyakuyu.
My first question for you is regarding the fact that you allocated $500 million in funding for military aid to Ukraine and $1 billion in loans to Ukraine in the budget. I want to thank you for that. President Zelenskyy indicated that Ukraine urgently needs heavy weapons.
Could you tell us how soon the $500 million in funding could be deployed?
Thank you very much Mr. Baker for the question.
Look, our Parliament, our political discourse in Canada, is naturally adversarial, and that is part of us being a healthy democracy, but there are issues where we all agree.
I have to say that I'd like to thank you, Yvan, for your work on Ukraine, but I also want to recognize the Conservatives, the Bloc and the NDP for their support of a very strong Canadian position on Ukraine, for the clarity with which Canada has recognized that this war is illegal, that it is barbaric and that war crimes are being committed, and for the unanimous consent on the genocide motion.
I've discussed all of these measures and really the unanimous Canadian support for Ukraine directly with Prime Minister Shmyhal, and it really does make a difference. It makes a difference in terms of encouraging other countries to support Ukraine. It makes a difference for the Ukrainians to know that we as a country are there for them, and that, really, this is one point on which we agree.
Thank you, everyone.
On the military aid, I agree with you, Mr. Baker: It is the Ukrainians who are fighting and dying. They are fighting our fight. It is our responsibility to be sure they have the tools to do the job. That's why we did specifically earmark $500 million in the budget for military aid. That aid is being sent from Canada. Our allies are sending aid as well.
Last week, Minister announced, for example, that Canada has finalized a contract for eight armoured vehicles manufactured by Roshel. As I know you are aware, Canada is also providing M777 howitzers, and we have provided Carl-Gustaf anti-armour ammunition.
First, I have a comment I want to make. I was really moved by the exchange we just witnessed between the Deputy Prime Minister and Mr. Baker. We obviously support the Ukrainian people too. I can't imagine, even today, that this conflict can last. I'm obviously talking about the Russian invasion of Ukraine and its impact on those millions of people. Our hearts go out to them.
Getting back to the luxury tax on aircraft, the 90% business use criterion is a problem. I briefly mentioned that. There's also the fact that, even if the tax doesn't apply to aircraft that are exported, it's first paid by the manufacturer before being reimbursed on a quarterly basis. The industry reminds us that the delays are often longer. For example, an aircraft must often be modified to the client's satisfaction and must therefore remain in Canada for six more months before being exported. Since most products are exported, the manufacturers wind up with very significant cash flow and liquidity problems.
Does the minister think she can provide the industry and us with specific and satisfactory answers before the vote on Bill ?
Madam Minister, the budget set aside billions of dollars in funding for climate projects. It was somewhat vague on what projects in particular were meant to be funded, but it was very specific about how the money was meant to flow. It's meant to flow through the Canada Infrastructure Bank, except that the Infrastructure Bank has a pretty terrible record on project delivery.
The PBO, from time to time, has commented that it's not even close to being on track to spending its budgeted amount over the 10- to 11-year life cycle of its initial funding. Where it has had some success, to the extent that it has, it has been partnering with municipalities for the purchase of electric buses. However, that has been outside of its public-private mandate. In that area, which is also what the budget talks about—trying to attract private capital—the bank has simply not been a success.
I'm wondering why your government chose to use an unsuccessful investment vehicle as its principal way to deliver funding for projects that are meant to reduce our greenhouse gas emissions.
Let's talk for a second about the rebate for farmers in Bill . Farmers will get about 20¢ on the dollar for the carbon tax through the rebate in Bill C-8. The Conservatives have called for a full deduction, which is already provided for diesel and regular fuel. For farmers, including one in my riding, Larry, whose carbon tax bill on natural gas just for the month of October was $13,000, where do we think that money is coming from?
Further, we talk about prices going up and up. Do we not think that the carbon tax is leading to increases in transportation costs, in food costs?
Again, how is it possible...? This government has ignored, and you in particular have ignored, the warnings of inflation for the last year, despite hearing a number of people, including your mentor Larry Summers, who have been warning about inflation for 12 months or more. “It's global. It's transitory.” It is clearly not any of those things.
There are some simple things that the government can do to make life more affordable, yet Canadians woke up the day after the budget with no immediate relief.
I find it hard to believe that this government is going to continue down that path.
Thank you very much, Ms. Dzerowicz. I am glad you are posing this question, because I know that this is an area you have worked on very, very hard, including in the development of the measures in the budget.
We were very clear, in putting together this budget and in presenting it to Canadians, that one thing Canada needs right now is a growth strategy.
I pointed out in my initial remarks that the IMF sees Canada as having the strongest growth in the G7 this year and next year. However, we also need to be candid with each other, as Canadians, that our country, medium and long term, needs to move to a higher gear when it comes to growth, productivity and investment.
Therefore, this budget proposes some key pillars that will help us do that. One is the Canada growth fund that we discussed earlier with Mr. Blaikie. This will crowd in private investment to the green transition. A second one is a new innovation and investment agency to help tackle this very Canadian challenge of translating our high degree of education, of excellent world-leading research, into commercialization and productivity for our businesses.
Then, finally, a really important element is the $3.8 billion that we're investing in our critical minerals strategy, which is more important now than ever with Russia's war in Ukraine. The world needs critical minerals. Canada is an important supplier. This is important in the green transition, and we're investing to really drive that sector.