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View Dominic LeBlanc Profile
Lib. (NB)
View Dominic LeBlanc Profile
2018-02-13 10:09 [p.17096]
moved that Bill C-68, an act to amend the Fisheries Act and other acts in consequence, be read the second time and referred to a committee.
He said: Mr. Speaker, it is a great privilege for me to speak in the House of Commons on this important legislation. You, Mr. Speaker, are a former minister of fisheries and oceans yourself and will understand the significance of the Fisheries Act in communities like the ones you and I represent, so it is a privilege for me to have this opportunity to stand in the House.
Canada is uniquely blessed with an abundance of freshwater and marine coastal areas that are both ecologically significant and linked to the economic prosperity of Canadians. Our government knows that we have a responsibility to steward these resources for future generations while maintaining economic opportunities for many people and communities who depend on them.
In my mandate letter, the Prime Minister asked me to restore lost protections and incorporate modern safeguards into the Fisheries Act. In 2012, the government got rid of a number of fish habitat protection measures without engaging indigenous peoples, fishers, scientists, conservation groups, coastal communities, or the general public in any meaningful way and without their support. What made that decision even more unacceptable was the fact that the changes were buried in a 430-page omnibus bill in the hope they would slip by unnoticed. Canadians definitely noticed.
Indigenous and environmental groups were especially concerned with changes made to the act and rightly perceived those amendments as weakening what should be of shared concern for Canadians: the protection of fish and fish habitat. Industry partners were thrust into uncertainty with regard to their responsibilities under the act.
Our government has worked and consulted with a broad range of Canadians, and we encouraged everyone to be part of this important conversation. Provinces, environmental groups, fishers associations, indigenous groups, and thousands of Canadians helped shape the amendments currently before the House of Commons.
The proposed amendments to Bill C-68 are part of the government's broader strategy to review environmental and regulatory processes and cover several key themes, including partnership with indigenous peoples; supporting planning and integrated management; enhancing regulation and enforcement; improving partnerships and collaboration, including with industry; and monitoring and reporting back to Canadians.
The Fisheries Act is one of Canada's oldest pieces of legislation. It was enacted shortly after Confederation. It has been amended very little since that time, which is why it needs to be updated and modernized. To that effect, Bill C-68 adds new provisions dealing with the objectives and considerations that must be examined in the decision-making process under the act. The proposed objectives seek to create a proper management and control framework for fisheries and the conservation and protection of fish and fish habitat, particularly through pollution prevention.
The new considerations under these amendments are designed to clearly guide the responsibility of a minister of fisheries and oceans and the Canadian Coast Guard when making decisions under the act. Bill C-68 proposes amendments that would restore protections for fish and fish habitat to ensure that these protections apply to all fish. We are reintroducing the prohibition against the harmful alteration, disruption, or destruction of fish habitat, as well as the prohibition against the death of fish by means other than fishing.
We are also introducing measures that would allow for the better management of projects that may be harmful to fish or fish habitat through a new permitting scheme for big projects and codes of practice for smaller ones, so that industry partners, as well as everyday Canadians, can be certain about their responsibilities but not unreasonably burdened when undertaking small, local projects.
In the past, uncertainty in the act has caused some uncertainty among project proponents with respect to their obligations and responsibilities. The proposed amendments create regulatory authorities that will make it possible to establish a list of designated projects, including the commitments and activities that will still require a licence.
Our goal is to streamline these processes, and we will be engaging with provinces and territories as well as indigenous peoples and stakeholders to decide which kinds of projects should be on the designated project list.
We are also formalizing the creation of a proponent-led habitat banking regime. Habitat banking is an international best practice for offsetting project impacts where a freshwater or marine area is created, restored, or enhanced by working to improve fish habitat in advance of a project's impact.
Habitat loss and degradation as well as changes to fish passage and flow are all contributing to the decline of freshwater and marine fish habitats in Canada today. It is imperative that Canada restore degraded fish habitats. That is why amendments to the Fisheries Act propose requiring the consideration of restoration as part of project decision-making.
These amendments provide clearer, stronger, and easier rules to establish and manage ecologically significant areas and provide stand-alone regulations to protect sensitive or important fish habitats. Given the important ecological characteristics of sensitive areas, certain types of work and activities may be prohibited and others may be identified as being subject to a special information gathering under a new authorization regime.
During the review of the 2012 changes to the Fisheries Act, we heard over and over again about the need to improve access to information on government activities related to the protection of fish and fish habitat. Indigenous communities, industry associations, environmental groups, universities, and my colleagues on the House of Commons standing committee all talked about the importance of transparency in the decision-making process under the act.
In order to re-establish public confidence, we are proposing amendments to establish a public registry, which would be available online. By enabling greater transparency, the registry would allow Canadians to hold the government to account in its federal decision-making with regard to fish and their habitat.
Fisheries resources and aquatic habitats have important social, cultural, and economic significance for many indigenous peoples. The respect for the rights of indigenous peoples as well as taking into account their unique interests and aspirations in fisheries-related economic opportunities and the protection of fish and fish habitat are important means of renewing our relationship with indigenous peoples.
For instance, the Fisheries Act is being amended to require the minister to consider any potential adverse effects resulting from decisions the minister might make in accordance with the rights of Canada's indigenous peoples, as set out in section 35 of the Constitution Act, 1982.
In addition, our government recognizes the importance of the traditional knowledge of Canada's indigenous peoples in sound decision-making regarding fish and fish habitat.
Indigenous peoples across Canada, and other Canadians from coast to coast to coast, can rest assured that the government will act to protect the confidential traditional knowledge that indigenous people would share with the government under the provisions of this legislation.
Many indigenous communities are in close proximity to areas where projects that may affect fish and fish habitat are proposed, and many communities see new roles for themselves in how these decisions are made.
We have proposed long-overdue amendments that would provide for the making of agreements with indigenous governing bodies to further the purposes of the act, as we have done in the past with provinces and territories.
There are currently no legislative or regulatory requirements in place with respect to the rebuilding of depleted fish stocks.
The commissioner of environment and sustainable development, as well as our colleagues on the Standing Committee on Fisheries and Oceans, have recommended that any revisions to the Fisheries Act should include direction for the restoration and recovery of fish habitat and fish stocks.
Environmental groups have also called on the government to adopt measures aimed at the rebuilding of depleted fish stocks within the Fisheries Act. This is why we are proposing amendments that would require decisions affecting a stock in the critical zone to consider whether there are measures in place aimed at rebuilding that stock, and, when a minister is of the opinion that habitat degradation is a cause of the decline of the stock, whether measures are in place to restore such habitat.
This positive obligation on governments and greater transparency, we believe are essential to strengthening the Fisheries Act.
We also heard Canadians' views on other important issues related to the Fisheries Act. Although the number of aquariums that keep cetaceans in captivity for public display has fallen overall, this is still a sensitive issue that Canadians are deeply concerned about.
Our government recognizes that it is now wrong to capture these magnificent creatures for public display. Consequently, we are proposing amendments to the Fisheries Act that would prohibit the capture of a cetacean when the intent is to bring it into captivity, except in circumstances where the cetacean is injured, in distress, or in need of rehabilitation.
The Senate has, for a long time, done good work in respect to this important issue. I want to salute former Senator Wilfred Moore of Nova Scotia and others in the Senate who have continued to press this important issue in the minds of Canadians.
Some 72,000 Canadians make their living from fishing and fishing-related activities. Most of them, including self-employed inshore harvesters, are part of Canada's growing middle class. In many places across Atlantic Canada and Quebec, the fishery is the economic, social, and cultural heart of communities. As the fisheries minister, one of my duties is to ensure that these important traditions endure. However, threats remain to this way of life. Fish harvesters, particularly in Atlantic Canada and Quebec, have told us time and again that they need greater protection for their economic security, and they need help to ensure their economic independence.
It was clear to me that these important policies, like the owner-operator and fleet separation policies, were being circumvented by controlling agreements, which threaten the independence of the inshore and midshore fleets by removing the control of licences from individual harvesters to larger corporate interests. The amendments we are proposing would entrench existing inshore policies into law, with all the legal enforcement power required to protect small coastal communities and independent inshore harvesters.
I stand firm in supporting the economic and cultural fabric of these coastal communities. Our government has recognized that a licensing regime that supports independent inshore harvesters is critical to the economic livelihood of these communities and the families and Canadians who depend on them.
As I said, we looked at ways to strengthen the independence of the inshore sector and enforce the act more robustly. That is why we are proposing amendments that enshrine a specific power in the Fisheries Act, rather than a policy, in order to develop regulations that support the independence of inshore commercial licence holders. The amendments proposed today would entrench into law the power to make regulations on owner-operator and fleet separation policies in Atlantic Canada and Quebec.
In so doing, this act helps to protect middle-class jobs in our coastal communities by ensuring that present and future fisheries and oceans ministers may consider the preservation and promotion of the independence of licence-holders in commercial inshore fisheries in the decision-making process.
I want to thank a number of organizations that have played a key role in these amendments with respect to owner-operator and fleet separation. The FFAW, the Maritime Fishermen's Union, le Regroupement des pêcheurs professionnels de homard du sud de la Gaspésie, the Gulf Nova Scotia Fleet Planning Board, the Prince Edward Island Fishermen's Association, and the Canadian Independent Fish Harvester's Federation have been instrumental in this important work.
Fishing can be a dangerous occupation, involving many risks not only for fish harvesters, but for the marine environment as well.
With the unprecedented death of 12 North Atlantic right whales in the Gulf of St. Lawrence from June to September last year, we know that Canadians expect prompt and urgent action by their government. This is why we are proposing amendments to the Fisheries Act that provide a new fisheries management order power to establish quick and targeted fisheries management measures. These measures will be used for 45-day increments where there is a recognizable threat to the conservation and protection of our marine ecosystems. The proposed fisheries management order power is meant to address emerging issues when a fishery is already under way and when time-sensitive and targeted measures are also paramount.
In my mandate letter, I was asked by the Prime Minister to increase the proportion of Canada's marine and coastal areas that are protected to 5% by the end of 2017, and to 10% by 2020, which is the target we are now on track to achieve. I am pleased to report to the House that we have not only achieved our 2017 target, but we will continue to work diligently to ensure that we surpass the 10% commitment through the United Nations Convention on Biological Diversity.
To help us fulfill these international commitments and obligations, we are proposing amendments to the Fisheries Act that provide ministerial authority to make regulations to establish long-term spatial restrictions to fishing activities under the act specifically for the purpose of conserving and protecting marine biodiversity.
We are also proposing amendments that will strengthen the act. During the many public engagement sessions that were held, Canadians made it clear that they wanted to see more fishery officers, conservation officers, and patrols, as well as more offenders being caught and punished.
To incorporate modern protection mechanisms into the act, some amendments are being proposed to clarify, strengthen, and modernize enforcement powers under the act, for example by empowering fishery officers to intercept any vessel or vehicle and require it to be moved to a place where an inspection can be carried out.
The proposed amendments also seek to increase the authority of the courts with respect to seizure and forfeiture under the act, and allow the use of alternative measure agreements to address certain contraventions.
As I mentioned earlier, the Fisheries Act is one of the oldest and most important environmental laws in Canada. It was passed in 1868, just one year after Confederation, and did not change much until the late 1970s, when habitat protection provisions were first added by one of my predecessors, who, coincidentally, was my father, Roméo LeBlanc.
Then, as now, the act remains a model among Canada's environmental laws. That is why we have ensured the amendments we have introduced to the Fisheries Act include updated and modern tools that are the hallmarks found in other environmental legislation. We are proposing modern provisions such as the power to create advisory panels, fee-setting authorities, and provisions respecting the collection of information.
I consider myself privileged to stand in this House, as my father did in 1977, to introduce amendments to the Fisheries Act that served his generation. I hope that this new modernized act will live up to my father's legacy and do for our generation what he and the previous Parliament did for theirs.
View Fin Donnelly Profile
NDP (BC)
View Fin Donnelly Profile
2018-02-13 10:32 [p.17099]
Madam Speaker, I would like to thank the minister and his team for bringing this overdue legislation to the Fisheries Act and modernizing it. One of the concerns I have is that this was not brought forward sooner. It was promised in the last election, and we wanted to see that soon after the 2015 election. However, two years later, we are here.
I am also very pleased to see that there is a focus on rebuilding plans in this act. This is a very positive move forward. We hope it is followed up with strong regulations to ensure that those plans have the needed teeth.
One thing we are disappointed to see, on the NDP side, is that salmon aquaculture is left with that conflicting mandate of conservation, and promotion of that industry that is harming our wild salmon. As well, there is no inclusion of environmental flows for fish. The minister mentioned strengthening owner-operator provisions for the inshore fleet on the east coast and Quebec, but was there any consideration for bringing that same focus on the west coast of British Columbia in Canada?
View Dominic LeBlanc Profile
Lib. (NB)
View Dominic LeBlanc Profile
2018-02-13 10:33 [p.17099]
Madam Speaker, I thank my colleague from Port Moody—Coquitlam for the work he and colleagues did on the Standing Committee on Fisheries and Oceans. We think that the 32 recommendations they made are largely incorporated into the amendments we are proposing in this legislation. We obviously look forward to working with him and other colleagues on the committee.
I share his sense of impatience. I wish we had been at this stage some months ago. However, we thought it was important to consult with Canadians and listen carefully to what people had to say in order to benefit from the best advice we could get from partners, provinces, indigenous and environmental groups, and associations representing fishers. We took time to get it right. I look forward to working with my colleague from Port Moody—Coquitlam and other members, if they think there are ways to improve, amend, or strengthen the legislation. We would obviously welcome those suggestions and look forward to that process.
He referred to the owner-operator circumstance on the west coast. We understand that this is a permissive part of the legislation. In Atlantic Canada, these policies have existed successfully for a long time. I have heard people on the west coast say they want to have that conversation, and we would obviously be open to talking to the industry and harvesters on the west coast to see how these successful policies could also benefit communities there.
View Robert Morrissey Profile
Lib. (PE)
View Robert Morrissey Profile
2018-02-13 10:35 [p.17099]
Madam Speaker, this new Fisheries Act has been well received on the east coast by fishers, particularly the protection it will afford to the owner-operator, which goes to the heart of our inshore fishery in Atlantic Canada.
One of the issues there is concern on is that there is a hint of rescinding or transferring licences to new holders after a fixed period of time. Inshore fishers work for years to pay off the debt attached to their vessels, licences, and gear. They rightly see those assets as their only pension plan for their future.
Could the minister elaborate on whether he is anticipating any changes that would impact on the ability of those inshore fishers to transfer their licences and receive remuneration for that?
View Dominic LeBlanc Profile
Lib. (NB)
View Dominic LeBlanc Profile
2018-02-13 10:36 [p.17099]
Madam Speaker, I thank my colleague from Egmont for his question, and also for his understanding and his advocacy in this important work.
The Prince Edward Island Fishermen's Association has spoken to me a number of times about how lucky it is to have an advocate of his experience standing up for fishers and for that industry, which is so important in his province and for Atlantic Canada. It is a privilege to work with my colleague.
I had made some comments at a speech in Nova Scotia last summer. Some particular interests have distorted those comments in the subsequent period. In no way is there a plan or a desire on the part of the government to prevent the transfer of these licences that, as my colleague has noted, have successfully allowed for retirement planning, financial planning, and intergenerational transfers amongst harvesters. This is something we want to encourage.
What I did ask last summer, and I feel that we need to have this conversation, was how we could work with these harvesters and these communities to help support this intergenerational transfer. The cost of these licences in some cases is becoming prohibitive. Are there financing mechanisms that can be looked at, where the independence of these harvesters can be preserved, while at the same time encouraging this important transfer that my colleague referred to?
I will do anything I can to work with harvesters to support that.
View Dominic LeBlanc Profile
Lib. (NB)
View Dominic LeBlanc Profile
2018-02-13 11:30 [p.17107]
Madam Speaker, I want to thank my colleague from Port Moody—Coquitlam for his comments and for the New Democratic Party's support of this legislation.
I take the member's comments that he and his party do not think the bill is perfect. We do not pretend that it is; however, we think it is a significant improvement, and we would be happy to work with him and other colleagues in the House of Commons in the committee process, obviously, on ways to strengthen it.
I took note of the member's comments with respect to the issue of environmental flow. He is right that the West Coast Environmental Law group has done terrific work on this. It inspired some of our thinking on this important issue. I would work happily with him and other colleagues on that important issue and on ways to strengthen it.
I take his comments with respect to regulations as well. It is something that has to be done in a rigorous and transparent way. We would again welcome suggestions to make sure that we get that part right.
My colleague referred to this in a question following my remarks. He is from the province of British Columbia, and I think he may have an interesting insight into how policies like owner-operator and fleet separation could in fact improve the economic security of the harvesters on the west coast. I wonder if he has suggestions on how we could take some of the benefit of these policies and see an improvement in the economic circumstances of people he and my colleagues would represent on the west coast.
View Fin Donnelly Profile
NDP (BC)
View Fin Donnelly Profile
2018-02-13 11:31 [p.17107]
Madam Speaker, I know it is a very difficult challenge to try to bring what is now entrenched in Atlantic Canada and Quebec over to the west coast, which has a very different regime that has been developed over the years. However, I think it is done with consultation, working with the industry, working with a commitment to see things differently, and looking at how we benefit coastal communities that are impacted by modernization and changes.
We have dramatically seen a change over the years of losing our fish processors, and so we have to find a better way to include and ensure that our coastal communities benefit. We have to look at adjacency policies and how we incorporate what has worked in Atlantic Canada and Quebec into the west coast approach, which is definitely far advanced in terms of ITQs. We also need to look at what is best and how we can incorporate best practices, obviously, with the fish unions, those who are involved in processing and with fishing, and the commercial fishing sector, and listen to how that can change.
I would implore the minister to meet with Chief Ernest Alfred, and take the content of his letter to heart.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2018-02-13 11:40 [p.17109]
Madam Speaker, I will be splitting my time with the hon. member for Mission—Matsqui—Fraser Canyon.
I am very proud to take my spot today in the House of Commons to bring the voice of my constituents to Ottawa and speak to the proposed amendments to the Fisheries Act. There are several substantive reforms, and I would like to take the opportunity to speak about many of them. However, realistically in the time allotted, I would like to spend my time on one major issue, and that is the protection of the independent inshore fishery that is contained in the proposed revisions to the act. In particular, I would like to share some of my thoughts on the economic security that this measure would provide to rural communities like the ones I grew up in.
Madam Speaker, I hope you will afford me a bit of latitude to provide context that I believe is very necessary to explain the significance of the bill to my constituents at home in Central Nova.
I am from a community called Merigomish. It is a small community on the Northumberland Strait in Nova Scotia. I grew up in a family with six kids. I have five sisters. My parents were teachers. My parents stressed that we should get an education so we could bolster our careers in the future. I am happy that my sisters and I all took advantage of their advice and made that investment. That investment in time and resources is something I was very pleased and prepared to make. What I do not think I was adequately prepared for, and I would suggest the same would be true of my family members, was that on the back end of our education, when we were looking to join the workforce, we were not necessarily prepared to leave the place where we were raised to make a living.
If I rewind the clock to a year before I made the decision to run for office at what my family was doing, I had two sisters, both professionals in the medical industry, who moved to Ontario to find work. I became a lawyer and found a job that I absolutely loved in Calgary, Alberta. I have two younger sisters who both became teachers, one of whom moved from Nova Scotia to New Brunswick to find a job at a private school. The other was raising her daughter full time while her husband flew in and out of the Middle East so he could make a living for their household. My youngest sister was finishing up her studies at StFX and has since moved to the city of Halifax to find a job with a great accounting firm there.
If someone had asked us 10 years before what we wanted to do with our lives, I do not know that we would have had the answer, but I expect we would have said we wanted to be around home. The reality in many small towns and communities is that is not an option. I am thankful for the mobility we have as young people and professionals in Canada, but the opportunity to make a living in the community where we were raised is not a reality for far too many people.
However, there is a glowing example of an industry that allows people from the community where I was raised to stay in the community where they grew up and make a good living there. That is the fishery. If I look at my community now and go down to the wharf in Lismore, I can find Kelly, a classmate of mine from grade 2, who is still working in the fishery today. A former baseball teammate, Ryan, is a fisherman on the Northumberland Strait as well.
I was engaged in a back and forth with a constituent recently, whose husband is the owner and operator of a lobster fishing vessel. What she told me demonstrates the importance of the fishery to local communities. His annual expenditures, before he catches a single fish, were $82,000, and 90% of the expenses he incurred were spent in Pictou County alone, which is a small part of Nova Scotia. The remaining 10% were incurred with other businesses within the province. If fishermen are guilty of anything, it is of spending money in their own communities and supporting their neighbours, so they can stay in their communities as well.
The economic benefits of the fishery are perhaps obvious but worth stating. We now export over 100 different species in seafood alone. Last year, we had a record-setting $6.6 billion in seafood exports. We are pursuing trade deals with Europe, for example, through CETA, which has knocked down tariffs for the seafood sector, particularly shellfish, which will help drive the price up for seafood.
There are 72,000 Canadians who make a living in the fisheries or fishing-related activities. However, it is one thing to share these stats and talk in terms of contribution to GDP and billions of dollars, but it is more difficult to ensure that the benefits of this growth accrue, not only to the wealthiest Canadians who may have some sort of a corporate interest in the fishery, but to people who are doing work on the ground or, in this case, in our waters. This is why this bill before the House of Commons is so important. It is going to help bolster the economic security not just of fishermen but of rural communities, and allow them to stay alive.
If I look at measures contained in the bill that are going to help protect the economic security of rural communities, I have a lot of hope. My hope comes not just from the words in the legislation, but from my conversations with the minister. This is a project that I have been advocating for and working on for two years. This is a project that I have been seeking advice on from local fishermen, to ensure that their voices are not just represented in the House of Commons but embedded in the legislation we are looking at today.
Upon the passage of this bill, the minister would have the authority to consider economic, social, and cultural factors when making decisions about licensing. The minister would specifically have the authority to consider the need to protect and preserve an independent inshore fishery.
It is incredibly important for the communities I represent that the licence-holders retain the benefit of their licence. It is incredibly important that the licence-holders are the ones who are actually fishing.
The bill also contains measures that prohibit certain kinds of corporations from owning a fishing licence. This is not some sort of anti-corporate tirade; there is a very real danger posed to rural communities by some of the commercial relationships that exist in the fishery today. There are large corporations who have the ability to snap up a number of different licences, so to speak. What they might try to do is buy out 50 fishermen. The fishermen can still fish, but the benefits of their licence are going to come to those who have a large facility, where they can add value to the product. That can be a good thing, but over time there could be practical implications for the captain of a fishing vessel who has been supporting his family, and perhaps his parents before him were supporting their family. That captain who is making a good living today could become a minimum wage employee in the future. That does not sit well with me.
It is one thing to take my word for it, but in speaking with my constituents, they had something to say. I would like to share a statement from the Northumberland Fishermen's Association and someone I have incredible respect for, Ronnie Heighton, who is a strong advocate not just for the fishery but for the rural economies more generally. This letter says, “It is vital to the core industry that individual fishermen be required to fish their licence personally. The fleet separation policy is crucial to ensure that those that generate an income from fishing are not a processor but instead an individual licence-holder. The importance of supporting middle-class jobs by keeping these benefits from individual fishing within our communities is essential to the local economy.”
I thank Ronnie for sharing this information with me, for the education, and for being someone I can lean on when I need advice on how to best represent the interests of fishing communities here in the House of Commons.
I would also like to take this opportunity to thank the minister, who has been a fabulous partner to work with on this file. His father, perhaps decades before, started a project, and his son, the hon. minister, is now finishing the job.
I am proud to see this legislation go forward, and I am proud to be a representative for my communities. I campaigned in 2015 to be a voice for my constituents in Ottawa and not the other way around. Seeing the words that my constituents have spoken to me embedded into legislation, knowing it is going to enhance the economic security of rural communities and rural coastal communities throughout Atlantic Canada, makes me extraordinarily proud to stand in this House today.
View Fin Donnelly Profile
NDP (BC)
View Fin Donnelly Profile
2018-02-13 17:38 [p.17159]
Mr. Speaker, one think that will be strengthened in the Fisheries Act is the focus on the inshore fishery, the owner-operator principle. We support that element of the legislation.
My hon. colleague talked about the importance of protecting habitat and biological diversity. However, one of the shortcomings of the bill is that there is no protection for environmental flows, which is about the quality and quantity of the water in rivers and that habitat which is so vital to the protection and flourishing of the fishery. Could my hon. colleague comment on the importance of protecting environmental flows and securing that water for fish?
View Ken McDonald Profile
Lib. (NL)
View Ken McDonald Profile
2018-02-13 17:39 [p.17160]
Mr. Speaker, my NDP colleague is on the fisheries and oceans committee.
It is important we look at all aspects of protecting the environment and the habitat. It is no good protecting one part of it if we do not protect it all. Water flow is certainly a big part of that. As I said earlier, I look forward to the bill coming to committee and having amendments put forward.
The member mentioned the owner-operator policy, which is very important to individual fishers in Newfoundland and Labrador. Instead of seeing large companies buying up quotas and farming them out to fishermen, the individual fishermen are the people who should hold those quotas. They should see the benefits of it, with the money going back to the communities in which live.
View Karine Trudel Profile
NDP (QC)
View Karine Trudel Profile
2017-02-06 11:13 [p.8468]
Madam Speaker, today I am so very pleased to add my voice to the chorus of those across Canada who support Bill C-274, an act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation). I would like to thank my colleague from Rimouski-Neigette—Témiscouata—Les Basques for introducing this bill. I know he worked long and hard to make sure this bill is written in such a way as to protect everything that matters to our small businesses.
As we all know, our small and medium-sized businesses are the bedrock of our economy. Whole families make a living thanks to them.
I am from Saguenay—Lac-Saint-Jean, where life can be very different from that in big cities. Many of my colleagues, such as those from Abitibi and the Lower St. Lawrence, as well as some of the other provinces, are familiar with those differences.
The reality in our regions, in places like Saguenay—Lac-Saint-Jean, is that there are often only two, three, or four large businesses that contribute to their economies. Most of the time, small and medium-sized businesses are the main contributors. Many of our small businesses have only three or four employees, but they are what are sustaining our regions. We are seeing this more and more. The men and women of our regions are developing projects and new ideas and are doing their part every day to keep our regional economies going.
At the same time, our small and medium-sized businesses are facing many problems that make it harder for people back home to succeed. For example, the customer base is much smaller in our region.
Another problem is the shortage of young people willing to take over these businesses. It is really hard for SMEs to find people to take over, so when an entrepreneur is lucky enough to have someone in their family they can count on to take over the family business, that creates wealth for our communities. When people are lucky enough to have a family member to carry on a family business, it means they can pass down traditions, and for some, even memories. It means they can pass on what they have learned through experience and hard work.
Unfortunately, there is a great injustice. Federal legislation penalizes business owners and dissuades from passing on their life's work to members of their family. The reason is quite simple: when a business is sold to the owner's children or another relative, the profit from the sale is considered a dividend and is taxed as such under the Income Tax Act. On average in Canada, a dividend is taxed at roughly 35%.
If the business is sold to someone who is not part of the family, who is not a relative but a stranger, then the profit is considered a capital gain. In that case, there is a lifetime exemption of roughly $825,000 for a business and about $1 million for a farm or a fishing vessel. The remaining capital gain is taxed at about 25%, on average. That explains the difference between the sale to a stranger and the sale to a child or another family member.
We have to do something about this unfair situation. I have met with business owners in my region. They all agree on this. That is why various stakeholders in the Saguenay—Lac-Saint-Jean region support Bill C-274.
I will quote Carl Côté of the Saguenay-Le Fjord chamber of commerce and industry.
Business succession is a major economic issue, especially in remote areas. Family businesses play an important role in economic development and they must have support. At present, they are subject to very unfair tax treatment. Family business succession is an issue that we are following closely...
The former president of the Union des producteurs agricoles du Saguenay—Lac-Saint-Jean, Yvon Simard, believes that it is appalling that, in 2016, the dismantling and sale of companies to a stranger is subject to less tax than the sale or transfer to a family member, someone who could pursue their parents' dream and continue farming in the Saguenay—Lac-Saint-Jean region.
When we contacted businesses in my riding, dozens responded and supported the NDP's efforts. Many deplore the current situation and hope that this injustice will be addressed.
I would like to read a few comments I received about this. They paint a clear picture of the reality facing small businesses and what the people of Saguenay—Lac-Saint-Jean are going through.
A motel owner said that this is a major problem and that his father thought about selling the business to a stranger because it was more beneficial for him than to sell it to a family member.
Another business owner said the following: “I co-own a business with my son, so who do you think I will sell my shares to? However, by selling to my son, I am going to lose a lot of money. It is not fair.”
Finally, the owner of a small business said, “Two years ago, I sold my business to my son. It is unacceptable that I was penalized because of this unfair provision. It is a double standard.”
It is completely unacceptable for these business owners to be penalized for selling their company to a family member. We are not talking about opening the door to tax avoidance. We are talking about correcting the inequity that exists in the Income Tax Act, which considers the sale of a family business or farm to be a capital gain. Things should work the same whether the business is sold to a family member or a stranger. Bill C-274 simply seeks to correct the inequity, so that the process is the same regardless of whether the company is sold to a family member or a stranger.
In my opinion, my colleague's bill is well written and prevents tax avoidance. The bill is very clear about that. Our SMEs should not be penalized because of this inequity.
It is high time we abolished the unfair tax on the transfer of family businesses. When a business is transferred, potential buyers who are related to the owner should have the same rights and privileges as those who are not.
In closing, I would like to emphasize that all regions will benefit from this. This bill is good for everyone. It is good for our small and medium-sized businesses. In my region, Saguenay—Lac-Saint-Jean, this is the kind of positive change we really need to help revitalize our local economy.
I invite my colleagues in government and in opposition to consider the economic and social benefits of the bill. Facilitating the transfer of family businesses will help make our regions stronger. Something we talk about a lot in the regions is the retention of young people. My riding, Jonquière, is home to many farms and small businesses. We talk about the exodus of young people, who leave to work in big cities. Bill C-274 will boost local economies. Family farms are usually passed down from generation to generation. I visited a farm last winter, and the owners told me that it had been in their family for four generations.
I invite all my colleagues to vote in favour of Bill C-274, introduced by my colleague.
View Ginette Petitpas Taylor Profile
Lib. (NB)
Madam Speaker, today I am speaking on behalf of the government about Bill C-274.
We all agree that small businesses are key to our prosperous communities. They provide important goods and services, create jobs, and weave themselves into the fabric of our communities, in which they have a genuine interest.
The Government of Canada wants the small business sector to remain stable and dynamic. Is Bill C-274 in the best interest of small businesses? The government's position, which I support, is this: the bill is well-intentioned, but the government is very concerned about its unintended consequences and whether it will really work.
The main problem is that it will open the door to tax avoidance. The Government of Canada cannot allow that possibility. The stated purpose of this bill is to amend the Income Tax Act to facilitate the transfer of small businesses and family farm and fishing corporations among family members.
To that end, the bill would dilute two long-standing anti-avoidance rules found in the Income Tax Act. First, we must answer the following important question: why are these anti-avoidance rules in place? Their objective is certainly not to discourage the transfer of small businesses to family members. These rules exist because without them certain individuals would have greater opportunities to engage in inappropriate tax avoidance.
Measures that would introduce tax loopholes would not be consistent with the principles of fairness, economic efficiency, and responsible fiscal management.
As I mentioned, the bill would dilute two long-standing anti-avoidance rules found in the Income Tax Act; specifically, it would amend sections 55 and 84.1 of the act.
I would now like to focus on section 84.1. This anti-avoidance rule may apply when an individual sells shares of one corporation to another corporation that is linked to the individual. When an individual sells shares of a Canadian corporation to a linked corporation, section 84.1 of the Income Tax Act deems that the individual has received a taxable dividend from the linked corporation rather than a capital gain, which is taxed at a lower rate in certain circumstances. Why? It is because the linked corporation could use the proceeds of the dividend paid by the Canadian corporation and give it to the individual in exchange for shares.
In other words, the individual is taxed based on the principle whereby dividends can be extracted from the Canadian corporation in order to be paid to the individual and should be taxable in his or her hands as dividends. Without this rule, such sales between related parties could be used to convert dividends for an individual into capital gains that are taxed at a lower rate, including gains eligible for a lifetime capital gains exemption.
Bill C-274 proposes narrowing the scope of section 84.1 by removing the sale of shares of certain companies from its application. These companies include eligible small businesses and family farm or fishing corporations sold by an individual to another firm owned by an adult child or grandchild of that individual.
This change will allow the owner-operator of a family business to convert the dividends of the corporation into taxable capital gains at a lower tax rate. Such conversions of corporate dividends into capital gains taxed at a lower rate could be done as often as the owner-operator wants to extract the corporation's surpluses and receive a fiscal benefit.
While the main purpose of section 84.1 is to limit the application of the lifetime capital gains exemption, there are similar concerns regarding cases where no exemption is requested because of different personal income tax rates that apply to taxable dividends and capital gains.
In 2017, the highest combined federal-provincial personal income tax rate on capital gains is roughly 17.8 percentage points lower than the rate applicable to dividends.
This difference in personal income tax rates means that for every extra $100,000 that is converted into a taxable capital gain, the federal-provincial savings can be as high as $17,800.
It is important to note that there is nothing stopping a parent from selling their shares of the family business directly to their child or grandchild and claiming the lifetime capital gains exemption on the capital gains, and then claiming as taxable capital gains any other gains from the sale of the shares that are not eligible for the lifetime capital gains exemption.
The anti-avoidance rule set out in section 84.1 applies when the shares are sold to a company owned by the child or grandchild of that taxpayer. The tax rules already allow for the intergenerational transfer of a business directly to a child or a grandchild.
Adopting the proposed changes to section 84.1 would open the door to new avoidance possibilities. This would unfairly benefit wealthy individuals instead of members of the broader middle class.
Based on a series of reasonable assumptions on how Canadians would react to this measure, the Minister of Finance believes that the proposed amendment would cost the federal government between $350 million and $1.2 billion a year. This clearly goes against the government's overall objective to strengthen support for the middle class and those working hard to join it.
It is also important to point out that, according to analyses conducted by third parties, Canada has a good tax system and is an excellent place to do business. According to a KPMG study, total business tax costs in Canada are the lowest in the G7 and 48% lower than those in the United States.
The government is currently making unprecedented investments in infrastructure and innovation that will expand opportunities in the country and result in stronger and more inclusive growth. What is more, the government has lowered taxes for nearly nine million Canadians, and 9 out of 10 families with children now receive higher benefits through our new Canada child benefit program.
That means more disposable income for middle-class Canadians and a stronger economy, which will benefit small businesses.
In closing, I understand the reasons behind Bill C-274. We all want the tax rules to be simple, fair, and conducive to small business growth. However, ultimately, the opportunities for tax avoidance that would arise from the passing of Bill C-274 far outweigh any possible benefit.
Bill C-274 would not make the tax system any fairer. On the contrary, it would give wealthy individuals the opportunity to use private corporations for tax planning purposes. It would result in pressure to weaken other anti-avoidance rules.
For these reasons, I urge the members of this House to vote against Bill C-274.
View Guy Caron Profile
NDP (QC)
Madam Speaker, I am very pleased to speak to conclude this debate on my private member’s bill, Bill C-274.
In each of our ridings, there are small and medium-sized business owners, farmers and fishers. At present, these people do not belong to the wealthiest class, in spite of what the government is trying to say. They are the very definition of middle-class, and people who start up a small business are often people who aspire to join the middle class.
I am extremely disappointed that the government is opposing this bill. I believe they are opposing it for reasons I think are absurd, and I will explain why.
First, the Minister of Finance and his parliamentary secretary believe the bill will cost between $300 million and $1.2 billion. I worked with tax experts on this bill to make sure it will not be too costly for the government. We estimated that, in terms of lost revenue, it will cost between $75 million and $100 million. Is that excessive? The goal is to level the playing field.
In Montreal, the owner of a small window and door business who wanted to transfer his business to his child had to pay over $110,000 more in taxes than if he sold it to a stranger, a person who was not family.
Obviously, there will be costs in terms of lost revenue, but the goal is to level the playing field and allow these businesses to stay within the family for a second or third generation. The figures the government is suggesting can and must therefore be disputed. They should be examined in committee.
That is why I am asking the government and all members of the House to adopt the bill at second reading, so that we can analyze these figures and compare the analyses I have done with various tax experts and the figures from the Library of Parliament, the Union des producteurs agricole, and Raymond Chabot Grant Thornton and other accounting firms, with the government’s figures.
Another argument that the government has made against the bill is the fact that at present, parents may transfer their business to their children and receive a capital gain. That is true, if the child is not incorporated. However, children increasingly are incorporated, since incorporation carries several advantages, including lower interest rates when they borrow and less tax on the amount to be paid to the parents.
I know there are extremely complex issues and tax policy is complex. Nonetheless, Bill C-274, which I have brought forward, is an appropriate response to the injustice that is an incentive for owners of small businesses, family farms and fishing boats to sell their businesses to strangers rather than to their children. They do not do that because they will get rich; they sell their business so they can retire.
I would like to reassure the government that my intention is not for the bill to be too costly. The intent is to bring the bill to committee so it can actually be studied and if needed, if it is really too costly, to be amended. I can guarantee every member in this House that with the numbers the government is putting forth, if the bill will be as costly as it is saying, I will volunteer to actually withdraw it from consideration. I am saying that because I am sure it will not be.
In conclusion, I encourage all members of the House to consider how this bill will affect their constituents. I have the support of more than 150 organizations across the country in Quebec, Ontario, the west and the Maritimes, organizations such as chambers of commerce, municipalities, and organizations that represent farmers and fishers.
If this bill dies before going to committee for an in-depth study of the costs and impacts, those people will be extremely disappointed. They are not likely to have forgotten this by the time the next election rolls around.
I therefore urge all members of the House to vote for this bill at second reading so we can study it in committee.
View Guy Caron Profile
NDP (QC)
moved that Bill C-274, an Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the second time and referred to a committee.
He said: Mr. Speaker, I have to admit that I am very pleased to debate this bill. It is the first time that I have had the opportunity to introduce and debate a private member's bill in the House as I was unable to do so in the last Parliament.
Bill C-274 would correct and eliminate a gross injustice concerning the transfer of our farms and SMEs. This issue is more important than ever. Demographically speaking, 76% of small business owners plan to transfer ownership of their companies so that they can retire within the next 10 years, and 50% of farm owners want to do the same thing, also within the next 10 years.
The injustice that this bill is intended to remedy is that, if someone has a small business, a farm, or even a fishing boat and wants to sell it to his or her children, in a corporate structure, the seller, who is the owner of the small business or family farm in question, will pay much more income tax than if he or she decided to sell to a stranger.
In a very large number of cases, that means choosing between having a larger pension fund by selling to a stranger—since a pension fund is what business owners get when they sell their business—and having a smaller pension fund by selling to one’s children. The difference can be extremely large. If we ignore the tax planning that such a transaction can entail, for the sale of a farm worth $10 million, which, with all the assets, is quite often a reasonable price, selling to a child can cost up to $1.2 million more in income tax than if the farm is sold to a stranger. In the case of the sale of a business worth $1 million, the difference can be more than $300,000 in income tax.
The reason is very simple: if people want to sell to their children, to someone related to them, the difference between the sale price and the original price at the time of purchase is considered a dividend under the Income Tax Act. Consequently, it is treated like a dividend for tax purposes. Across the country, dividends are taxed at about 35% on average.
If business owners sell to someone who is not a family member, in other words, an unrelated person, a stranger, the difference between the sale price and the original price at the time of purchase is considered a capital gain. In that case, there is a lifetime exemption of about $825,000 for a business and about $1 million for a farm or a fishing boat. The remaining capital gain is taxed at about 25% on average. This explains the difference between selling to a stranger and selling to a child.
Obviously, it is unfair. In every constituency, we have business owners. People who want to sell their small business, their family farm, or their fishing boat in the Atlantic provinces, for example, are faced with an extremely heart-rending choice. Will they agree to sell their business to a family member and have $100,000, $125,000, or $150,000 less in their pension fund because they want their child to succeed them, because they want someone in the family to take over a business that they built with their own hands? They may not have the opportunity to do so if their pension fund is not large enough. Unfortunately, instead of selling to their child, who would be willing to take over, they have to consider selling to a stranger.
My bill seeks to correct this injustice. I admit that the bill is somewhat self-serving because this has been an ongoing problem in my constituency. In fact, the bill was prepared in co-operation with the farmers and SMEs in my riding. Rimouski-Neigette—Témiscouata—Les Basques is in the Lower St. Lawrence region, and 12% of the region’s economy is dependent on agriculture.
We have many family farms, especially dairy farms, as well as some maple sugar operations. In my constituency, it is not big companies that drive the economy. It is small businesses.
People, particularly those in the farming community, have been telling me about this situation since I first took office in 2011. They are being forced to choose between selling to a child at a tax loss and selling to a stranger.
The situation has become even more worrisome since there has been talk of land speculation. Certain people want to buy farmland to speculate on its value.
Such people have an advantage right from the start, since their offer means that the person selling the company or farm will have a lot less income tax to pay. The current situation is unfair.
My bill is designed to resolve the situation so that the sale of a family business or farm to a child will be treated as a capital gain, the same as if it were sold to a stranger.
There is no real reason to oppose such a measure. There are three reasons why such a measure may have been opposed in the past. First, this type of measure could open the door to aggressive tax avoidance, which is why things are the way they are now. However, my bill eliminates that possibility by requiring the buyer to retain his shares for a minimum of five years, except in case of death. People who retain their shares for five years do so because the family transfer was genuine and not because they were trying to work the system to avoid paying income tax.
The second reason why such a measure may have been opposed in the past is the argument that only the richest farmers or entrepreneurs would benefit from the measure. Once again, that is not the case with my bill because it deals only with transactions of $15 million or less. All transactions over $15 million, like those involving big farms or companies, are excluded from the terms of Bill C-274.
The third reason why such a measure could have been opposed, the last one I can think of, is the cost of the bill. Obviously, there will be a cost in lost revenue for the government. However, that cost is estimated not in the hundreds of millions of dollars, but between $75 million and $90 million. I know that different figures are being advanced, particularly by the finance department, but mine have been corroborated by many tax experts. The reason why we are talking about $75 million to $90 million is that, at present, all of this potential income tax paid by people who are selling small businesses or family farms is reduced through tax planning.
I can back up these figures with the following facts. Quebec, which has its own income taxation system, identified the same problem. It corrected it in its 2015 budget, and the correction has been implemented since March 2016. Its approach to fixing this problem is somewhat different than mine, but ultimately, Quebec estimates that eliminating this injustice will cost it some $15 million in lost revenue.
If Quebec loses $15 million, I think it is quite plausible that the lost revenue at the federal level would be around $75 million to $90 million.
This flagrant injustice has to be corrected. Speaking of injustice, imagine for a moment if the situation were reversed. Imagine if, currently, the rules for selling to a stranger and selling to one's child were the same, and then imagine if a member tabled a bill seeking to make selling to a stranger more appealing, would the House find that acceptable? Would it pass such a bill? Of course not; the question answers itself.
I would like to point out that I am not the only person in the House to note the problem. From what I understand, I should have the support of a great many, if not all, of the opposition members. I am eager to hear the speeches.
Let us not forget that, in June 2015, before the last election, the Liberal member for Bourassa tabled Bill C-691, which sought to correct this injustice regarding SMEs. My bill, at least so far as the SME component is concerned, was modelled on his bill as well as on that of my colleague from Berthier—Maskinongé, who drafted a number of clauses for farms and for fishing companies. My colleague from Joliette at the time also drafted a section on transactions between siblings.
My Liberal colleague at the time acknowledged the problem, and so did the government of Quebec, which then corrected it. I expect the hon. members to consider all of the small businesses and family farms in their ridings. I would also like members representing coastal constituencies to consider the impact this might have on fishing companies.
We are talking about small businesses and people who have worked all their lives to try and earn a living, people who, often, found themselves having to get their family business up and running again, as well as those who created it from scratch and now want it to stay in the family.
What this government has always been telling these Canadians is that they have to suffer this injustice when they sell their business to their children. In my opinion, that is totally unfair. Allow me to explain.
My colleague from Pierre-Boucher—Les Patriotes—Verchères had tried to table a bill in the wake of a situation that occurred in his riding and that made the headlines in May. Christian Tremblay, of Armoires Tremblay, in Saint-Mathieu-de-Beloeil, wanted to sell his company to his son Patrick, a company worth $1.7 million.
Imagine his surprise when he found out that, if he sold it to his son rather than to a stranger, he would have to pay $100,000 more in income tax. He considers the situation quite unfair. Will he sell to his son and make $100,000 less on a $1.7-million sale, or will he sell to a stranger so that he can keep that money in his account? The issue is receiving media attention, and thousands of new cases are bound to come up, at a growing rate, because of the demographic shift we will be going through over the next 10 years.
I would also like to talk about a problem that my bill will remedy, particularly in the regions. I would say that my bill may have greater importance in regions such as mine than it might have in major urban centres, because we are facing an exodus of young people.
In my constituency, young people are leaving the region for lack of employment opportunities; they go to school in urban centres, never to return again.
My bill will not fully remedy this situation. However, it will give our young people one more reason to stay in the region by giving them a better chance of acquiring the family business. It is something I hear about all the time in Rimouski-Neigette, Témiscouata and Les Basques, and I know that MPs from the regions have observed and heard the same thing.
I have covered a lot of kilometres in Canada promoting my bill. For two weeks last summer, I toured the Atlantic provinces talking to chambers of commerce, farming organizations and fishing organizations, to tell them about my bill, obviously, and find out if they would like to support it. In large part, they said yes.
I did the same thing in some parts of Quebec and Saskatchewan not long ago, and I will continue doing so until we vote on the bill at second reading. I think it is working, because I have enjoyed extraordinary support.
I organized a news conference when I introduced my bill last May. At my side was Dan Kelly, president of the Canadian Federation of Independent Business, who supports this bill.
I also have the support of the major chambers of commerce, including the Fédération des chambres de commerce du Québec, the metropolitan Montreal chamber of commerce, and different regional chambers in my riding and my region, as well as all over Quebec. Furthermore I have the support of the Canadian Federation of Agriculture, the Union des producteurs agricoles, the UPA, and other agricultural organizations all over the country. Finally, I have the support of fishers’ organizations, including the Nova Scotia Fish Packers Association, and I will have others as well. I will not abandon this fight.
I hope to have the support of the members of the House, who will see that this is not a partisan issue, but one that affects each of their ridings all over the country. In my view, it is a victory for common sense to vote in favour of this bill and so bring about tax fairness.
My bill rules out any possibility of fiscal abuse. It rules out the possibility that it will be disproportionately costly for the government, and it ensures that the richest owners or farmers are not going to be the ones to benefit.
Hence there is no reason to vote against this bill. I am eager to hear my colleagues on debate, and I hope to have their support so that this bill can be referred to the Standing Committee on Finance for second reading.
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