Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. The government knows that the stigma and discrimination that continue to fuel homophobia, biphobia and transphobia must be eliminated. The government knows that online hate is real hate and that online violence is real violence. The government has committed to introducing a bill to fight harmful online content. I have been informed that the government has appointed a group of experts to assist it in its work.

The government intends to introduce this bill in a timely manner, as indicated in Minister Rodriguez’s mandate letter. In recent months, Minister Rodriguez and caucus members have held 13 round tables across the country, where they listened to the experiences and concerns of members of the 2SLGBTQI+ community. The minister also held a virtual round table on gender-based violence and discrimination. What the government heard was that the status quo is no longer acceptable and that platforms and social media must be held responsible for the content that they host. The government is continuing its work and remains steadfast in its commitment to introduce an online safety bill that will protect communities, equity groups, children and Canadians.

Hon. Diane Bellemare: My question is for the Government Representative and concerns employment insurance. I asked you this question a while ago, but we know that the government announced that there would be a reform proposal in the summer of 2022. It is now December 12 and there is still no reform proposal.

Do you have an idea of when we will see a substantive reform proposal for employment insurance? What process will the government use to collect its ideas and once again consult Canadians about specific proposals?

Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. I am advised that in the past few years there were several technical exchanges between the CFIA and Ukrainian officials. To alleviate concerns expressed through industry engagement, the CFIA sought additional assurances regarding the food safety and animal health controls in Ukraine — and Ukrainian officials assured that their standards and controls are still at the same level as they were at the time of the audit, and that they can inspect and certify exports as per the certificate conditions. The CFIA finalized the export certificate only with effective assurances from Ukraine; the certificate contains rigorous food safety and animal health conditions.

The CFIA maintains a robust import inspection system to verify that imported products meet Canada’s federal regulations. New imports of any meat products from a newly approved establishment undergo full inspection for the first 10 shipments. Imports from Ukraine would also follow this process, and only compliant shipments will be released to the importer.

I am assured that the CFIA intends to hold poultry products imported from Ukraine to the same strict scrutiny as poultry products produced in Canada, or originating from other countries. I am advised that, to date, the CFIA has not received any information or evidence contrary to the assurances that have been provided by Ukraine, and Ukraine has continued to export poultry products to other countries, such as the members of the European Union.

Colleagues, all food sold in Canada, whether it’s domestic or imported, must comply with Canada’s federal regulations. Where non-compliance is identified, the CFIA takes immediate action — regardless of country of origin. Actions can range from mandating minor label corrections to product detentions, import entry refusals, suspension of foreign establishments, product recalls or cancellation of import licences.

Senator Gold: No, I’m not of that opinion. However, I will commit to finding out about the next steps of the process. I hope to find out more about the progress being made within the government and I will inform the Senate as soon as I have information.

[English]

Hon. Raymonde Gagné (Legislative Deputy to the Government Representative in the Senate), pursuant to notice of December 8, 2022, moved:

That, on Tuesday, December 13, 2022, Wednesday, December 14, 2022, and Thursday, December 15, 2022, once the Orders of the Day have been called, the Senate only deal with Government Business and Commons Public Bills;

That, notwithstanding the order of September 21, 2022, the sitting of Wednesday, December 14, 2022, continue beyond 4 p.m., if necessary, and adjourn at midnight, unless earlier adjourned by motion; and

That, on Wednesday, December 14, 2022, Senate committees be authorized to meet for the purposes of considering government business, as well as the committee to which Bill C-235, An Act respecting the building of a green economy in the Prairies, may have been referred, if that has happened, even though the Senate may then be sitting, with rule 12-18(1) being suspended in relation thereto.

She said: I defer to Honourable Senator Gold.

Senator McCallum: Senator Cotter, there are a lot of unresolved issues here for rights holders in this bill. How will the lived experiences of rights holders in the Prairie provinces be meaningfully addressed when you see Alberta and Saskatchewan, with Manitoba not far behind, ignoring the rights holders in the acts that they are bringing forward? How do you see that being addressed in this bill?

Senator Cotter: As you will see in the bill, Senator McCallum, there is a requirement of consultation and dialogue with Indigenous leadership in the Prairies. That’s a mandate imposed upon the minister who coordinates this work, and, I presume, the other ministers who will have a role here.

Maybe I could answer this with an example of what I think is an opportunity lost in the past, but may be there in the future.

When you think about economic opportunity — let me focus on that first — the opportunities for Indigenous people, but particularly First Nations, have been badly circumscribed by treaties, treaty lands and reserves. I think you and I are on the same wavelength there. In fact, a lot of those, if you look at the maps — Saskatchewan is, perhaps, the worst case — are not just being put on small, postage stamp-sized reserves, but also at the margins of a productive economy in the province, at least in the days when agriculture seemed like the story. So Indigenous people and communities never had a chance to get off the ground.

The place where those conversations have been the richest have been in relation to traditional territories. Not the postage stamp-sized reserves, but the areas where First Nations tended to live traditionally, which often covered vast areas.

One of the ways of trying to build an economy is to create opportunities for Indigenous people and communities to tap into those resources. It’s tricky if you’re a provincial government because usually tapping into those resources — which conventionally provincial governments have understood to be theirs or belonging to all the people — are a source of revenue to run the programs of the province. What you need is a partnership with the province and the Government of Canada because in the Constitution Indians and land reserved for Indians are the constitutional responsibility of Ottawa. It’s possible for the Government of Canada to support those developments, sometimes with support for equity, but also support for sharing the constraints or the opportunity costs for the provinces.

Ottawa has not always been open to that. I don’t know where this will go. I am hoping that imaginative ideas to unlock that potential that was taken away will occur. There are people a lot smarter than me coming up with these ideas, but I think there is a remarkable amount of potential to do that if the goodwill is there.

Provinces are vulnerable in some respects. Sometimes when oil revenues and others are really good, it looks pretty good, but provinces are vulnerable to having to give up large amounts of their tax base. But partnerships with the Government of Canada, which has a fiduciary obligation here and was the mechanism for taking away that opportunity, I think there is a duty that rests with Canada.

I hope that is at least partly helpful.

Hon. Dennis Glen Patterson: May I ask a question of Senator Cotter?

Senator Cotter: Yes, of course.

Senator D. Patterson: Senator Cotter, I note your expressed hope in your remarks, in speaking to this bill today, that it be a legacy for the bill’s sponsor, the late Jim Carr — someone whom we all respect and who died, unfortunately, before the bill could be dealt with in the Senate, although he lived to see it receive third reading in the House of Commons.

In that connection, creating what I think you called a legacy for the late Prairie MP, I would like to ask you this: Is it your hope and intention, as I’ve heard widely discussed, in sponsoring this bill soon after it being received in the Senate that the bill be rushed through committee, including hearing witnesses and clause by clause, then third reading this week in the chamber, three days before we recess for our scheduled Christmas break?

Senator Cotter: Thank you, Senator Patterson. As you know, I’m not the architect in coordinating how things take place in this chamber.

With respect to the bill, I think there will be some good dialogue if we can get it to committee on an expeditious basis. The story of the bill is really not today or tomorrow or Thursday. The story will be, if we pass the bill, what the Government of Canada will do in the coming 12 months to create a pathway to a sustainable economy in the Prairies. That will be the time when the dialogue will be the richest, in my respectful view, and getting that under way soon is fairly important.

Senator D. Patterson: Thank you for that answer. Senator Cotter, you’ve spoken eloquently as a senator from Saskatchewan in favour of the bill. Can you explain why the Provinces of Saskatchewan and Manitoba expressed opposition to the bill in committee in the other place?

Senator Cotter: Thank you for the question. I’m not a mind reader, but let me say that one of the reasons I tried to talk a bit about the constructive constitutional role the provinces have played — and Saskatchewan has played a big role, though not the only, by far — is because there are some tensions around whether this can be a trap for provinces, perhaps. I don’t think it is. I think what we have faced in the country of late is reluctance to have meaningful dialogue to build the country together. That is certainly the feeling I have vis-à-vis some of the Prairie provinces, and I would include my own province in that.

There is no mechanism by which this bill can take away rights of provinces. In fact, that’s a principle of Canadian law. I’m hopeful that the provinces are reluctant because of the level of tension and rhetoric but not because there isn’t something to be gained here. I think the first few conversations will show that to be the case.

I understand the tension. My own province has reluctance in terms of its relationship with the Government of Canada. That is borne out in some of the evidence. However, in working together, the opportunities are so meaningful for us. Some of these areas — agriculture is a good example — are joint areas of jurisdiction. It seems to make sense that we would engage in dialogue to move that forward.

Hon. Pamela Wallin: Thank you, Senator Cotter, for your comments. You’ve talked about the fact that you want to pursue a sustainable economy on the Prairies. I believe that we have a sustainable economy on the Prairies if it’s allowed to grow and reflect the local needs.

When we’re talking about some of the concerns and resistance to this bill, just this summer we heard the federal government talking about reducing fertilizer use by 30%. Farmers are, in fact, the best stewards of the land. It is in their own interests and best interests to make sure the land is preserved and used wisely.

You spoke about the fertilizer sector, the potash industry. When we hear comments like that from the federal government, it creates concern about whether the best interests of the Prairie provinces are being put forward by this government.

Senator Plett: Well, let me answer that in two ways. Number one, in the other place, we very regularly have time allocation, so it’s clearly being done. They do it all the time. They have done it for 150 years, Senator Patterson.

We have not had time allocation; we have had negotiations. This was done not by the executive branch but by five elected leaders in their respective caucuses. They decided the timelines here. In my opinion, they were unanimous in that decision.

Hon. Senators: Agreed.

(At 10:14 p.m., the Senate was continued until tomorrow at 2 p.m.)

Hon. Brent Cotter moved second reading of Bill C-235, An Act respecting the building of a green economy in the Prairies.

He said: I rise to speak to Bill C-235 this afternoon. I do so with mixed emotions. As we heard in the remarks of Senator Gagné earlier today, we are moving forward with the bill and I am sponsoring a bill which, in the House of Commons, was led by Honourable Jim Carr who passed away yesterday after a heroic battle with cancer.

I did not know Mr. Carr well, but I greatly admired him — a view that was widely held in both this place and the other place. Indeed, Mr. Carr continued his work as a parliamentarian right up to the last day of his life. I hope this bill will be both his legacy and a meaningful contribution to strengthening a sustainable economy in the Prairie provinces of Canada.

In remarks that appeared in The Globe and Mail obituary with respect to Mr. Carr, the last sentence is a quote from him which reads, “How could we not be humbled by the greatness of this magnificent country?”

I have largely thrown away my previously prepared remarks, not feeling that they were particularly appropriate in light of Mr. Carr’s death. They were very bureaucratic, I thought. Indeed, I lay awake much of last night trying to reconstruct a set of remarks for today. It is remarkable that, at 3 a.m., you would think that you’ve produced a magnificent speech in your head. However, thinking about it at 7:30 in the morning, in the harsh light of day, you think you might have lost your mind.

In any event, I’m going to go forward with that speech, and will do my best to deliver something that I hope is meaningful, somewhat personal and, hopefully, uplifting. Wish me luck.

I will speak only briefly about Bill C-235 itself. The bill is straightforward. It is a framework bill which tries to do two things. First, it requires ministers of the federal government, a group of six or so, to work together under the leadership of the minister responsible for economic development in the Prairie region to develop a framework for cooperating with provincial, municipal and Indigenous leaders and the private sector, as well as organizations that represent employers and employees, to better coordinate the implementation of federal programs in the Prairie provinces that will help to build a green and sustainable economy in the Prairies.

The second part of the bill requires organizing a wide range of consultations with these groups in order that the plan will be better coordinated and responsive to the needs of Prairie people. The proof will be in the pudding, of course, in relation to these consultations and negotiations, but I’m hopeful that through this process — assuming the bill is adopted — the federal programs will become more responsive to the needs of Prairie communities.

I do want to speak a bit about the Prairie economy, and about the identity and commitment of Prairie people. In these remarks I will ramble a bit, but I will bookend the remarks with two stories that seem appropriate both to the Prairies and, I hope, to celebrate Jim Carr’s love of the Prairies and his own commitment.

Years ago, when I was a young lawyer, I was driving my car to court somewhere and I was listening to a segment of “Morningside” with Peter Gzowski. Interestingly enough, the theme that morning was the subtle beauty of the Prairies. The beauty on the Prairies, I think it’s fair to say, is subtle.

A premier of Saskatchewan used to say regularly to people from British Columbia, “You have not even started your mountain removal project. In Saskatchewan, we’ve finished ours.” It was kind of a defence mechanism, if I could call it that.

Mr. Gzowski had three commentators on the show, one artist from Winnipeg, a poet from Edmonton and a writer from Saskatchewan; I think it was Sharon Butala. They offered their perspectives on what was certainly subtle in the beauty of the Prairies, and I got all of that. Unlike his normal engagement, Mr. Gzowski intervened in the radio program to say that he wanted to describe his first experience and encounter with the Prairies. He then began telling a story of travelling by train across eastern Saskatchewan one blustery January day.

He did not share this on the radio but in fact he was travelling from Toronto to Moose Jaw, Saskatchewan, to take up the position of the editor of the Moose Jaw Times Herald newspaper. He described riding in the train that day. In the coach section, there was another fellow with him, and he said the two of them stared out the window of the train, looking at the bleak, overcast, windswept, snowy environment, a bitterly cold one. After about an hour of riding in silence, he said to the other fellow, “So, what do you think?”

I have to be careful in my response here, honourable senators.

The person replied, “Biggest expanse of blank-all I’ve ever seen.”

I listened to that story with a chuckle but decided to write to Mr. Gzowski about a different experience that I’d had. It’s the only letter I’ve ever written in this context in my life. This was something that happened to me when I was 17 years old and riding the train from Windsor, Ontario, back to Saskatoon to start university. I had worked on a car-assembly line for the summer to make money for university. I was on my own, not very worldly, insecure and lonely.

On the second day of the journey, I awoke and looked out of the window. It was early morning and we were in southeast Manitoba. If I had looked hard, I might have been able to see young Senator Harder or maybe young Senator Plett. I didn’t actually see them, but what I did see was miles and miles of amber waves of grain, swaying in the summer breeze, golden in the light of an early morning sun. Even today, it is moving to me. And I thought, “I’m home.” I actually started to cry. I don’t usually tell people that part. Apparently, Mr. Gzowski read the letter on “Morningside,” although I never heard it, but I did feel a bit of redemption for my love of the Prairies and my hope for the future of the Prairies.

Beneath the superficiality of Mr. Gzowski’s story and beneath the ice and snow, there is a marvellous region of Canada, a region of opportunity and potential. Much has been achieved through the hard work of those who settled the land and who have come there since, but there is still much opportunity and much potential.

Now, it’s important to note that much of that opportunity and potential came from removing opportunity and potential from Indigenous peoples. Whether it was denial of culture, religion or removal from lands to postage stamp reserves, often at the margins of Saskatchewan’s most productive land, or just outright discrimination, we have a lot to do to recreate that world of opportunity that was denied to Indigenous people for so long.

One part of this bill focuses exactly on this. We have road maps for this work, as you know. Hopefully, they will be successful. If there is time, I will return to this point.

I want to talk next about Saskatchewan’s economy for a few minutes. I know this is a Prairie initiative, but I want to respect the fact that there are some things about which I know essentially nothing. I will limit my remarks to Saskatchewan.

Saskatchewan’s economy and its links to sustainability offer almost limitless potential. In the north, we have an abundance of materials, including critical materials that will be needed for zero-emission vehicles and so many other energy systems. We have the largest supply of uranium reserves in the world. We have the largest-known reserves of potash in the world. A senior executive at one of the potash companies told me 40 years ago that Saskatchewan had enough known reserves of potash to meet world demand for the next 2,000 years. Maybe we’re down to 1,960, but there’s still a lot of potash.

My main focus, though, with respect to these remarks and the Saskatchewan economy will be about agriculture. I think there is a certain criticalness to this aspect of the talk. There are various reasons, but this one is as follows: A couple of weeks ago, Senator Black, the chair of the Agriculture Committee, took us to the Canadian Agriculture Museum here in Ottawa. We learned a lot. One of the things we learned — and I think I knew this intuitively — is that the vast majority of arable land in Canada — that is, land capable of being used for farming — resides on the Prairies. In fact, if I remember correctly, 47% of the arable land in this country is in Saskatchewan. That’s pretty remarkable.

Let me say this at once, something not widely known is that farmers are great stewards of the land. It is obviously in their interests to do so since their future livelihoods, and the livelihoods of their sons and daughters who might decide to carry on farming, depend on sustainability and productivity into the future. I want to immediately debunk the idea that farmers, or Saskatchewan people in general, are not committed to environmental stewardship. In fact, although I don’t know the most recent polling, when polls were done on the level of Canadians’ commitment to the environment, the people of Saskatchewan came out first year after year.

Let me tell you a small story — a tiny story, really — that reinforces for me a commitment to environmental stewardship.

My former father-in-law farmed in western Saskatchewan. He was a successful farmer and business person. He was attentive to the world around him. In his younger years, he’d been a hunter and did not have a particular opposition to those who hunted during hunting season. But at the end of goose-hunting season, every fall, usually November, year after year, he would go out with his truck and a small motorboat and seek out small lakes and ponds and dugouts to rescue Canada geese who had been shot by hunters but had only been injured. If these geese were left on their own, unable to fly and perhaps unable to recover, they would freeze to death — a slow, horrible death — as the ice in these ponds closed in on them.

Let me tell you, it’s not easy to rescue a Canada goose. No matter how smart they are, they cannot tell the difference between somebody who is trying to save them and somebody who wants to cook them for dinner, and they are mighty strong. But, every autumn, he persevered. Indeed, at one point, he had rescued 24 Canada geese and nursed them back to health so that they could be released again into the wild. I thought that was a pretty great unpublished commitment to the natural environment.

Now, I have a bit more about agriculture and the evolution of agriculture in Saskatchewan. There has, in fact, been a revolution in farming practices on the Prairies. Land use is now governed by science and technology. Guided by university researchers, farmers now use their land in much more extensive ways than in generations past, achieving two or three remarkable things at the same time. First, the land is more productive and generates more income for farmers. In fact, I’m told that due to research findings at the University of Saskatchewan, which created opportunities for more intensive use of farmland and making it healthier, it increased the revenue to Saskatchewan farmers by $1 billion per year. That was done through healthy and more sustainable practices, creating a sustainable environment.

Farmers now do little or no tilling. They use cover crops and crop rotation, and they bring the soil back to good health through these practices. And it sequesters carbon. At the Agriculture Committee, we heard evidence that of all the farmland in this country, Prairie farmland has made a spectacular contribution over the last 20 years to carbon sequestration and more is possible.

Any of these changes would have been challenging for farmers and for the rural economy of my province, but there is also no shortage of opportunities. As it became clear that, guided by science, farmers could and should and did expand the repertoire of crops, wise and committed entrepreneurs appeared.

I will give one example. A young trade policy adviser with the government of Saskatchewan, who used to work for me, saw the potential for a dramatic expansion of the production and export marketing of pulse crops into the Middle East. Murad Al-Katib, a young man of Turkish ancestry but living in the small town of Davidson, Saskatchewan, established a company to do just that. Working with scientists, farmers and the supply chain, he has built a world-class business in seeing the processing and marketing of pulse crops to parts of the world that rely heavily on them for nutrition.

It’s one of many amazing stories of opportunity. It is also done in ways that, at the farming end, make sustainable use of farmland for future generations.

When I hear that people are dismissive of the commitment of farmers to climate change or are uncaring about the environment, I have two thoughts: First, it’s wrong; and second, it’s not really just a generalized communication or critique that is fired off to an unknown recipient. In Saskatchewan, we are so close to the farming community that it feels like an insult to each of us individually.

I concede that more needs to be done — and will be — but constructive engagement between Ottawa, the provinces, organizations and others will make possible and significant positive change. Mr. Carr’s bill will help in that regard, even if perhaps only modestly.

Let me also talk about one other dimension of Saskatchewan that I think is relevant to agriculture. Over time, we are going to see a moderation of oil and gas production. It’s fair to say it will not be eliminated; even the Minister of Natural Resources has said that, however much progress we made with respect to other forms of energy and transportation, we will need to buy products from oil and gas side of the equation that can produce what we need, societally.

Agricultural production, then, provides a remarkable opportunity for us. First, there is trade revenue internationally. It is good for our economy now and will be even better in the future, both in terms of sustainable production and the opportunity to add value to what we grow now and export. It’s good for the Canadian dollar, helping us keep costs down. Hopefully, when we have to import things, we don’t have to pay $15 for a pineapple.

Second, one of the great challenges of the future worldwide will be food security. Our agricultural potential has the remarkable ability to address food security. We will do a very good thing in this world by sustainably producing what the world needs to feed itself. My friend Mr. Al-Katib is a perfect example of that.

I want to turn next, and finally, to a few thoughts about federal-provincial relations and the Constitution. I know that this is top-of-mind for some, and fair enough, but I would like to at least put the Saskatchewan engagement on these questions in a bit of a larger context. First, as you all know, Saskatchewan only became a province in 1905. As well, in the conventional ways of thinking about it, it did not come to be the owner of subsurface minerals until the 1930s, pursuant to the Natural Resources Transfer Agreements. In fact, at that point, Saskatchewan and Alberta were finally made whole as provinces for the first time.

Moving forward in time, you will recall having heard about the conflict in Alberta in the early 1980s regarding the National Energy Program. In Saskatchewan, perhaps, you may have heard about the challenges with respect to natural resource extraction and management in the 1970s. I want to speak particularly about that and how it was handled in Saskatchewan, as well as federal‑provincial relations writ large over the last 40 to 50 years.

In the 1970s, Saskatchewan sought to regulate the rate at which potash, oil and gas were being extracted and sold in the international markets. Particularly, it was intended to slow production and have oil and gas, and potash, sold at higher prices, generating higher royalties for the province. It was — it needs to be acknowledged — an interference in the business model and the business plan of the companies that were operating.

However, it’s also worth thinking about this point: The oil and gas, and potash, being extracted belonged to the citizens of Saskatchewan. You can see a public purpose argument in trying to make sure that there was — what is the language of economists, Senator Marshall — a “fair rent” for those.

During that period of crisis, as I would call it, the companies argued that the conservation regime was an unconstitutional provincial task. This position was supported by Ottawa. The Province of Saskatchewan was taken to court, and they were successful. This required Saskatchewan to pay back losses to the companies in the amount of approximately $1.5 billion. For a province like Saskatchewan, particularly in those days, it was an enormous amount of money that the provincial budget would have to absorb. I don’t know what the provincial budget was at the time, but I’m guessing it was $3 billion or $4 billion. It was a lot of money.

What did the Premier of Saskatchewan do? He complained publicly, of course, and bought a few potash companies. But on the constitutional front, Mr. Blakeney and Mr. Lougheed, who had issues of his own with Ottawa, went to Ottawa and worked out a new regime that was responsive to provincial interests. What they didn’t do was pass a law declaring provincial interests. They got to work to solve the problem.

For decades, that has been the Saskatchewan way.

Let me offer two other aspects of the same approach, although not quite directly related to federal-provincial relations in terms of resources but pretty darn important nonetheless. The point I’m trying to make is that Saskatchewan always has been and continues to be a good partner in this federation.

In 1980, there was a logjam in first ministers’ negotiations regarding how the Constitution would be patriated to Canada and how it would be amended. Ottawa and some provinces took one position, which was unilateral authority for Ottawa, and a number of other provinces took different positions. The matter went to the Supreme Court on a constitutional reference.

Saskatchewan crafted a new position, essentially that there may be a law that authorizes unilateral patriation, but constitutional conventions, which aren’t laws but are almost laws, call for a more engaged process. The Supreme Court of Canada took exactly this position, and its decision unblocked the logjam and produced a modern Constitution for Canada in Canada. Anybody who is deeply connected with the history of constitutional law in Canada credits Saskatchewan with identifying the solution to that problem.

A second example occurred in 1995. You will recall that the referendum on Quebec secession narrowly failed that year. I think it’s fair to say that Ottawa did not have a clear plan forward for a significant period of time. The premiers at the time — led by premiers Romanow and McKenna — stitched together a provincial plan to extend an olive branch to Quebec to encourage Quebecers to stay within the federation.

At a meeting of premiers, convened in Calgary, a unanimous so-called “Calgary declaration” was issued — unanimous with the exception of then-Premier Bouchard, who had a different idea — to extend that olive branch. That included premiers Klein and Harris. Further, and not much known at the same time, then‑Premier Romanow convened a group of advisers to help him think his way and the province’s way through to try to be helpful on the national unity dialogue. He brought together Michel Bélanger; John McCallum, then the chief economist at the Royal Bank of Canada; former Premier Blakeney; and in particular, former Premier Lougheed. I attended those meetings, and I thought Mr. Lougheed gave Mr. Romanow the very best advice.

Subsequently, the Government of Canada passed the Clarity Act that set out rules going, forward should there be a future referendum on secession. The bill contemplated a requirement of a clear question and a clear majority answering “yes” to that question. What the bill didn’t say is what the consequences of the outcome would be. That matter was also sent to the Supreme Court of Canada.

Only a few provinces intervened; Saskatchewan was one.

I was instructed by the premier at the time to put together the greatest constitutional minds available in Saskatchewan to help craft the best, most constructive intervention that we could make. Let me tell you, there were some great constitutional minds in Saskatchewan at the time. I have a list, but I won’t read them off. They would be embarrassed.

The real question, when you think about it, is: Does a vote on secession count for nothing, as probably it would in the United States, or does it trigger the departure from Canada by one region or province? It is a harsh set of options. Some viewpoints were that it leads to secession. Others were that it means nothing.

This was an important case. Chief Justice McLachlin of the Supreme Court of Canada has told me that this was by far the most important case she decided in her legal career.

Saskatchewan crafted a position to the effect that if there is a “yes” vote on a clear question by a substantial majority, the consequences are that it triggers good faith negotiations on whether to secede, and if that is to proceed, what the terms of that will be. That’s the position adopted by the Supreme Court of Canada in a long but powerful judgment.

The point here is that Saskatchewan has punched above its weight in federal-provincial relations constructively in this country for decades, and there is no reason why we will stop.

Notwithstanding that there is a significant amount of tension within the federation on issues of federal and provincial jurisdiction these days, and some might say this bill contributes to it, I would say the opposite. It calls for the provinces, the federal government and the whole collection of entities that have interest in the Prairie economy to work together. This bill would be, in a small way, an opportunity to achieve constructive federal-provincial relations.

The good news is that I’m now coming to the end of my remarks. I want to tell you a story. I probably do this too much. There is a guy who flew into New York City from some international location. He arrived at the airport, and he was in the baggage area. He saw a golden telephone. He asked people, “What is with this golden telephone?” Someone said, “It’s a direct line to God.” He said, “How much does it cost?” The person said, “It’s $500 a minute.”

He carried on in his journey and flew to Toronto. Apologies to the people from Toronto. He gets to the baggage area, and there is another golden telephone. He says, “What is this all about?” They said, “It’s a direct line to God.” He said, “Well, how much for a call?” They said, “It’s $100 a minute.” He said, “Oh, that’s interesting.”

He carried on in his travels to Saskatoon. He arrived in the baggage area, and there is a golden telephone. He said, “What’s the story?” They said, “It’s a direct line to God.” He said, “How much is it?” They said, “It’s 25 cents.” He said, “I don’t get that. It’s $500, $100.” “Well,” they said, “it’s because it’s a local call.”

I feel that way about Saskatchewan. I hope you feel that way about your place. You might be asking for golden telephones in the baggage area of your town or city. For me — a bit of an exaggeration — Saskatchewan is heaven. I hope this is the case for you as well where you are.

My point here is that through working together using mainly ploughshares, occasionally swords when it’s necessary to fight, we can build a great and sustainable economy and country. Mr. Carr’s bill does a bit of this. I like to think of it as a love letter from him to the Prairies.

I hope you will support Bill C-235 and help to have these golden telephones be local calls everywhere. Thank you.

Senator Wallin: I did just ask it.

Senator Cotter: I think I got a question out of that, Senator Wallin. Thank you.

You chose an extremely good example. My sense of the fertilizer reduction issue is that Ottawa didn’t know enough when it came forward with that proposal. Dialogue would improve that. Federal programs are being developed and will get rolled out. We have to do everything we can to ensure those programs are responsive to what farmers, small business people and the resource industry really need and can move forward with.

I worry about the situation where nobody will talk to them, Ottawa does something, and then the people who wouldn’t talk to them say, “You did the wrong thing.” With the greatest of respect, that’s not the best way to build a country; rather, it’s Ottawa consulting and the recipient consultees genuinely sharing their views so that the programs can be constructed and adapted to the best possible set of goals.

Senator D. Patterson: Senator Cotter, I think you’ve discerned that I’m concerned about the process and ensuring this important bill gets the scrutiny it deserves.

As you know, the Province of Alberta was in the middle of a leadership vote when the bill was considered at committee in the other place, so the committee did not hear from one of the three Prairie provinces. I’m sure you will be following the process of the bill and perhaps participating in committee as sponsor. If an important issue is raised in committee, as sponsor, are you open to considering amendments to this bill?

Senator Cotter: I don’t have a definitive answer to that. I have received advice that, because of Mr. Carr’s passing, if the bill does get amended, it would create real problems on its return to the other place. As you know, I’m a 30 handicap in terms of the rules of this place and the other place. But if you were to say to me, “Senator Cotter, are you open to an amendment that would jeopardize the bill?” I would be very reluctant to that.

I think the point would be that if this bill has defects and someone has a brilliant idea about how to make it better, I’m open to that. I’m not willing to make a commitment as sponsor. And it’s not solely my decision, as you can understand; the committee will decide.

Hon. Tony Loffreda moved second reading of Bill C-32, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022.

He said: Honourable senators, I rise today at second reading to speak to Bill C-32, fall economic statement implementation act, 2022. I am honoured to serve as sponsor of this important piece of legislation that includes measures announced in the Fall Economic Statement dated November 3 as well as other previously announced measures from Budget 2022.

[Translation]

Before I address some of the important measures in the bill, I’d like to begin by saying a few words of thanks.

First, I’d like to thank Senator Gold and Minister Freeland for their confidence in allowing me to serve as the Senate sponsor of this bill. I also thank them for all the support they’ve given me and my office.

Second, a big thank you to our colleagues on the Standing Senate Committee on National Finance, ably chaired by the Saint-Léonard sensation, Senator Mockler. We began our pre-study of Bill C-32 on November 22, and since then we’ve held eight meetings, received more than 50 witnesses and a dozen briefs, and sat for close to 15 hours.

Third, I want to thank the Standing Senate Committee on Indigenous Peoples for its assessment of Division 3 of Part 4 of Bill C-32, which I’ll touch on briefly today. I intend to give it more coverage in my speech at third reading.

[English]

As all honourable senators know, Bill C-32 contains 172 pages, 4 parts and 29 separate measures. I will go through them all today — no, I’m just kidding.

The first 21 measures are found in Part 1 and make changes to the Income Tax Act. There are many good measures in the bill that will help families and individuals cope with the increasing cost of living. Other measures are mostly technical in nature or consequential.

For everyone’s sake and sanity, I will not address every single measure in the bill. After all, I only have 45 minutes. It’s in these moments I wish I was the Leader of the Opposition with unlimited speaking time.

Rather, I will focus my remarks on what I consider are key measures in Bill C-32 that have the greatest potential in helping Canadians weather the inflationary storm we are going through right now, especially as we learn to live with COVID.

I will end my remarks by offering a few thoughts on the economy and inflation in general.

The dream of home ownership is becoming increasingly unaffordable for too many young families and middle-class Canadians, which is why a suite of measures appear in Bill C-32 that target home affordability. They include the anti-flipping rule, the new Tax-Free First Home Savings Account, the homebuyers’ tax credit and the Multigenerational Home Renovation Tax Credit.

The new anti-flipping rule will help ensure profits from flipping homes are taxed as business income if the seller held the property for less than 12 months. Exceptions would apply for individuals who sell their home due to certain life circumstances like death, disability, divorce or a new job, for example. This would ensure that investors flipping houses just for the sake of making a profit pay their fair share, in turn helping reduce housing prices for Canadians who want to buy a property to live in. The government expects this measure will affect about 3,300 taxpayers per year and increase its tax revenue by about $15 million annually.

With the new Tax-Free First Home Savings Account, the government wants to help Canadians who are struggling to make a down payment by encouraging them to save for a home by giving prospective first-time home buyers the ability to contribute up to $8,000 per year on a tax-free basis, with a lifetime limit of $40,000. The government is working with the Canada Revenue Agency and financial institutions to develop the necessary systems to administer this new account. Regardless of when in 2023 the FHSA is set up, Canadians will be able to contribute the full yearly amount of $8,000.

In Budget 2022, the government also proposed to double the First-Time Home Buyers’ Tax Credit from $5,000 to $10,000. Measure (j) in Bill C-32 seeks to implement this promise, which is expected to cost the government approximately $775 million over 6 years, and it should benefit approximately 200,000 individuals per year.

In response to a question from Senator Boehm on this tax credit, officials told us that the tax credit is a flat rate, instead of a flexible credit adjusted based on regional differences, because it will be easier for the CRA to administer. In the end, it was a policy decision by the government.

Measure (l), the Multigenerational Home Renovation Tax Credit, also was first announced in Budget 2022. It seeks to implement a refundable tax credit for eligible expenses to create a secondary unit to permit an eligible person, either a senior or an adult with a disability, to live with a qualifying relation. The value of the credit would be 15% of the lesser of eligible expenses and $50,000, for maximum support of $7,500. This tax credit is for a secondary unit or a self-contained dwelling unit with a private entrance.

For home renovations or alterations, individuals have access to the home accessibility tax credit.

While it doesn’t directly address housing affordability, I would be remiss if I didn’t mention the government’s decision to help students by including a measure in Bill C-32 that permanently eliminates interest accruals on Canada Student Loans and Canada Apprentice Loans.

Beginning in 2023-24, approximately 1.2 million borrowers annually will benefit from this measure. Of the Canada Student Loan recipients in 2020-21, about 61% were women, 6% were Indigenous students and 5% had a permanent disability. The average borrower will save approximately $410 per year in interest thanks to this measure. It is a $2.7 billion investment over the next five years and $556.3 million annually thereafter.

[Translation]

I want to clarify that the government also took into account the fact that Quebec, just like the Northwest Territories and Nunavut, manages its own loan program. Nevertheless, the government has set aside the necessary funds to make this measure available to new graduates in those three jurisdictions.

I wanted to mention this measure for students in the context of my comments on housing affordability because I think it can also help new graduates and tradespeople entering the job market save a little more money for their future home by taking advantage of the new Tax-Free First Home Savings Account.

The measures in the bill won’t solve Canada’s housing problem, but they should make it easier for people to become property owners. As the Canadian Real Estate Association told us, we should concentrate on increasing the available housing stock and on housing innovation.

[English]

As I mentioned earlier, there are 21 measures in Bill C-32 that make changes to the Income Tax Act. Four of those measures related directly to housing affordability.

Now, I would like to shift our attention to five other measures that will amend the Income Tax Act.

First, through measure (d), the government is introducing a new 30% Critical Mineral Exploration Tax Credit for certain minerals to support the green transition and clean technologies. These minerals are used in the production of batteries and permanent magnets, both of which are used in zero-emission vehicles. The anticipated cost of this measure is about $360 million over the next six years.

Canada can, and must, play a dominant role in the global supply chain of these essential minerals. That point was reaffirmed last week when the government published its Canadian Critical Minerals Strategy and recognized that “predictable and efficient regulatory regimes are a prerequisite for Canada’s economic competitiveness” and committed to “making efforts to streamline project assessments and permits.” This is additional good news for the mining industry, which I certainly welcome.

We were told in committee that NRCan helped develop the list of 15 minerals on the eligibility list for the tax credit. In committee, Senator Duncan voiced her support for this measure.

In response to her question about unintended consequences of this measure and regional bias, we were reminded that this is not a regional development measure. As a former banker, it will surprise no one that measures (e) and (f) have generated much commentary from my former banking colleagues.

The first measure, known as the Canada Recovery Dividend, or CRD, proposes a one-time 15% tax on banks and life insurer groups. The tax is payable on the average of 2020 and 2021 taxable income, and there is a $1 billion exemption, which would need to be split between the members of a related group. Banks and insurance companies have five years to pay, starting in 2022. The government explained that Canada’s major financial institutions made significant profits during the pandemic and recovered faster than other parts of our economy — in part due to the federal pandemic supports for people and businesses that helped de-risk their balance sheets.

The government is also introducing an additional permanent tax of 1.5% on the taxable income of banks and life insurers above $100 million. This measure was first introduced in Budget 2022.

When the Canadian Bankers Association appeared before our committee on December 6, they argued that an “efficient tax system is one that is neutral” and that it:

. . . encourages growth and innovation by letting investors, savers and employees make choices driven by where they can get the best return for their capital, labour or knowledge rather than by tax considerations.

While I appreciate the CBA’s position and agree in principle, I also believe that our banks, the bedrock of our economy, have been profitable during the pandemic and can afford to help support Canada’s broader recovery, provided, of course, that this new tax on banks doesn’t trickle down to its clients. These two measures combined, according to the government, should add about $6.3 billion over the next six years.

Third, the government is proposing to require that certain trusts provide additional information on an annual basis to the Canada Revenue Agency. This measure was first announced in Budget 2018.

Since then, the government has consulted widely and is now proposing this amendment, which is intended to help the CRA acquire sufficient information in order to determine taxpayers’ tax liabilities and to effectively counter aggressive tax avoidance as well as tax evasion, money laundering and other criminal activities.

This measure has raised concerns regarding solicitor-client privilege by the Canadian Bar Association and the Federation of Law Societies of Canada, despite the Charter Statement issued by the Minister of Justice. When she appeared before our committee last week, I asked Minister Freeland to reassure us that the measure is constitutional and that no amendments are needed in response to those concerns. She assured us that she is “very confident” that the measure is constitutional. As she said:

We think that we have struck the right balance. We are confident that there is no requirement to disclose solicitor‑client privileged information under this measure.

I will be happy to take questions on this issue later, but I do want to mention that I will speak more in depth on this matter during my third reading speech on Thursday, assuming the National Finance Committee adopts the bill tomorrow morning.

The fourth income tax-related measure I want to speak to is the change to the preferential tax rate for small businesses, provided via the small business deduction. Budget 2022 proposed to phase out access to the small business deduction more gradually, with access to be fully phased out when the combined taxable capital employed in Canada of a Canadian-controlled private corporation and its associated corporations reaches $50 million rather than the current threshold of $15 million. The cost of this measure to government revenues is expected to be $835 million between 2022-23 and 2027-28. It would allow businesses more capital to innovate, increase productivity, hire more staff or increase wages.

This measure was welcomed by both the Canadian Chamber of Commerce and the Canadian Federation of Independent Business, or CFIB, who appeared before us on November 29. Dan Kelly, President and CEO of the CFIB, told our committee that, “Two thirds of Canadian small firms are still facing additional COVID debt that they didn’t have before the pandemic. . . .” That amounts to $110,000 on average. We also learned that 17% of small businesses are at risk of permanent closure due to the damage they have taken on over the course of the past couple of years. Thankfully, and hopefully, some 8,000 businesses should likely benefit from this preferential tax rate, and that number should grow over time. The C.D. Howe Institute also supports this measure and feels it will encourage business growth.

The fifth and final measure I want to address is the increase to the disbursement quota for charities from 3.5% to 5% for investment assets exceeding $1 million. Based on available data, approximately 4,000 charities report holding over $1 million in property not used for charitable activities. I certainly welcome this change. Senators may recall I addressed this issue in the chamber last spring with Senator Gold and called for such an increase. The new rate is expected to increase expenditures on charitable programs and better ensure the timely disbursement of tax-assisted funds towards charitable purposes while allowing for reasonable asset growth.

Mr. Bruce MacDonald, President and CEO of Imagine Canada, told our committee that:

Raising the DQ may allow for more funds to flow to underserved and under-financed communities that have historically received far less funding from philanthropic foundations.

He also reminded us that total foundation assets had “. . . tripled from 2008 to 2019, going from $39.5 billion to $116 billion Canadian dollars.” He went on to say that:

Even the most conservative estimates show that approximately $200 million of new spending will be released when the disbursement quota is raised to 5% . . . .

In committee, when I asked officials why the disbursement quota is not going even higher, we were told that:

. . . increasing it to 7% or 10% increases expenditures in the short term but could have a detrimental effect on the ability of foundations to fund charitable programs over the long term.

We were also reminded that foundations were receiving interest and investment income to the tune of about 5% annually, and that number rises to 7% when the total returns or realized gains on investments are included.

Although I would have initially welcomed a steeper increase, I think the 5% is a good outcome based on the explanation we were provided in committee. It is also the rate in the United States. It will be important to monitor the impact of this measure on the sector. I have no doubt Senator Omidvar, who we all know is a champion and strong advocate for the charitable sector, welcomes this change. Also, the timing couldn’t be better since Canadians are increasingly relying on charities to meet basic needs such as food, clothing and shelter. A recent Ipsos poll from last month showed that 22% of Canadians plan on making use of charitable services, an 8% surge over a similar poll from January.

This was only an overview of five of the measures contained in Part 1 of the bill that amends the Income Tax Act. I felt these were some of the most important amendments in the bill. Quickly, I will simply mention the other measures in this part, including the phasing out of flow-through shares for oil, gas and coal activities, various tax avoidance measures, interest coupon stripping and support for business investments in air-source heat pumps.

While I support the amendments to the Income Tax Act proposed in Bill C-32, I also want to put on the record that tax policy in Canada has become increasingly more complex and convoluted. The latest edition of the act has 3,356 pages. As our National Finance Committee reported last June, highly technical amendments to the Income Tax Act further complicate the entirety of the act and make it seriously difficult for Canadians, including tax experts, to understand how changes affect them. The changes proposed in Bill C-32 are no different.

As we said at the time, we are concerned about the lack of a comprehensive review of the entire Income Tax Act. Colleagues, consider this: In November 2017, the Income Tax Act had 3,129 pages. Just five years later, the act has increased by over 200 pages. The original Income War Tax Act, adopted in 1917, only had 11 pages and was meant to be temporary. In 1944, the Income Tax Act as we know it today was adopted by Parliament and became a permanent fixture in our lives. That act had 88 pages, and 75 years later, it’s well over 3,000 pages — “the good old days,” some might say.

[Translation]

Many of the measures in Bill C-32 are designed to stimulate and inject capital into the economy as we recover from the pandemic, move toward a lower-carbon economy and compete for much-needed investment.

One of the centrepieces of the bill is the forthcoming Canada growth fund, which can be found in Division 1 of Part 4. Canada’s economic prosperity has traditionally depended on natural resources. The industrial base needs to be significantly transformed if the country is to meet its climate goals and in order to ensure long-term prosperity for Canadians.

Announced in Budget 2022, the Canada growth fund will attract substantial private sector investment in Canadian companies and projects in order to help transform Canada’s economy and seize opportunities to achieve net zero. This will help reduce Canada’s greenhouse gas emissions and create good jobs here at home.

[English]

The measure in Bill C-32 authorizes the Minister of Finance to acquire non-voting shares in an amount of up to $2 billion in a new Crown corporation that will be incorporated to administer the Canada growth fund and to requisition the amount for the acquisition of those shares from the Consolidated Revenue Fund. The amount will provide an initial capitalization for the Canada growth fund to make initial investments and to provide funding for start-up costs.

A lot has been said about this measure, and there is some uncertainty or discomfort about the fund, which is why I would like to take a few minutes to provide a bit more context. The fund is intended to be a new arm’s-length, government-owned investment fund that has yet to be incorporated. The initial $2 billion that appears in Bill C-32 will go towards the fund and help set it up as a wholly owned subsidiary of the Canada Development Investment Corporation, or CDEV. We expect that to happen as soon as possible and that the fund will begin making and attracting investments soon.

Officials before our committee explained that the Canada growth fund was announced in response to the American Inflation Reduction Act to help Canada compete internationally for capital investment. Minister Freeland also stressed that point when she appeared before us, which explains why the government is seeking these funds to start getting money out the door as soon as possible.

It is the intention of the government to introduce legislation in 2023 to establish the permanent structure for the Canada growth fund. I invite senators and the public to consult the technical backgrounder on the Canada growth fund that the government released last month. It’s a very detailed, technical backgrounder and will answer many of your questions. It sets out the governance details of the fund, including its implementation, mandate, operations, financial instruments, investment approaches, performance metrics and transparency and accountability frameworks.

When the fund was first announced last spring, it came with a $15 billion investment, so parliamentarians should also anticipate additional funding requests through future appropriations. In other words, parliamentarians should expect to review and vote on legislation that will create the permanent governance structure of the fund that will seek additional funding.

When Minister Freeland appeared before us last week, I asked her to provide our committee with additional information with respect to the Canada growth fund. As I explained to her at the time, there is a bit of uneasiness among senators in signing off on this initial sum of $2 billion when the governance structure and operational requirements are not yet established. She reminded us of the importance of having a mix of policies in our toolkit to accelerate our green transition and stimulate our economy. She explained that the fund is intended to de-risk private-sector investments in new technologies on a project-by-project basis, to create the jobs of the future and to reduce GHG emissions.

[Translation]

Minister Freeland also told us, in response to a question from Senator Gignac, that the government quickly understood three things earlier this year. She stated:

 . . . first, the green transition is essential and urgent for Canada; second, the green transition will cost a lot and we will need additional funds; and third, government funding won’t be enough. The government will have to create the conditions to attract private capital. That’s what we understood in the spring, and that’s why we created this fund.

I agree with the minister. I believe that the Canada growth fund is an important, timely measure and I’m confident it will succeed in attracting the necessary investments to help us achieve our objectives for a green transition.

For example, our committee received as witnesses representatives from chambers of commerce, small business, the hydrogen and fuel cell sector, the labour sector and the energy storage sector, and they all welcomed the creation of the fund. In fact, the representative from the Canadian Hydrogen and Fuel Cell Association urged the government not to delay implementation of the Canada growth fund and to avoid the mistakes of the Canada Infrastructure Bank, which, according to some, took a while to get off the ground.

We need investment now.

[English]

I understand the hesitancy of some senators in approving such a measure without a permanent structure in place. However, I agree with both the minister and many stakeholders that Canada cannot afford to lose capital investments to our neighbours to the south. We need to compete and we need to create an environment that encourages growth, productivity and new and innovative technologies. Time is of the essence.

I’m looking at Senator Marshall now. I have no doubt she will have a thing or two — or even three — to say about the Canada growth fund, but at this time I will simply end by saying that I commit to monitoring the implementation and activities of the Canada growth fund as it begins its work. I know many, including Senator Marshall, will put pressure on the government so the corporate structure is established as quickly as possible and that the values and objectives listed in the technical backgrounder are honoured. I certainly heard some of the concerns raised in committee and in the media, and I commit to following the progression of this very important initiative.

The Canada growth fund is all about attracting foreign investments to green our economy. But helping foreign nations is also part of Canada’s DNA, which is why the government is proposing to make amendments to the Bretton Woods and Related Agreements Act. For those who may be unfamiliar with Bretton Woods, this act gives the Minister of Finance the authority to provide financial assistance to a foreign state if the Governor-in-Council is of the opinion that it is in the national interest to do so.

Currently, the maximum amount Canada can give to any one state is US$2.5 billion, and US$5 billion in respect to all foreign states. Since the beginning of Russia’s illegal invasion of Ukraine, Canada has already disbursed C$2 billion in direct financial assistance to Ukraine and committed an additional C$500 million through the issuance of a Ukraine Sovereignty Bond.

Two simple changes are being proposed in Bill C-32. First, the maximum amounts have never been increased since the establishment of the act in 1998. The government is proposing to increase the amounts to $7 billion and $14 billion, which more or less accounts for 25 years of inflation. The second amendment changes the currency in the act from U.S. to Canadian dollars. I want to make it clear that no funds are being allocated with this measure. The government is simply asking to lift the ceiling on support that Canada can offer.

The final section of the bill I want to address is Division 3 of Part 4, which deals with the First Nations Land Management Act, which was first adopted in 1999 and ratified the Framework Agreement of 1996 relating to First Nation land governance outside the Indian Act.

The proposed legislation appearing in Bill C-32 will eliminate duplication in the act and create clarity for all partners involved. It’s a First Nation-led, co-developed initiative that would replace the First Nations Land Management Act with more concise legislation. It would continue ratification of the nation-to-nation Framework Agreement and better support this agreement as the central authority through which First Nations transition away from the application of the 44 lands-related sections of the Indian Act.

It’s worth pointing out that at a special meeting of First Nations signatories to the Framework Agreement, a resolution on the proposed bill — what we have before us today — was presented and received unanimous support from First Nation signatories.

Our Indigenous Peoples Committee reviewed this section of the bill and reported back to the chamber on December 5.

Much has already been said about this section of the bill last week. Senators McCallum, Patterson and Francis, who all serve on the committee, shared with us their concerns with respect to the submission provided by the Manitoba Keewatinowi Okimakanak, or MKO, and their request for some amendments related to law enforcement on their lands.

I will not say too much on the matter today. Rather, I will address the matter more fully later this week at third reading. However, if I might, I will simply put on the record some of the comments shared with us from the Lands Advisory Board and the First Nations Land Management Resource Centre.

In a letter dated December 9, Chief Robert Louie, Chair of the Board, confirms that they are “generally supportive of MKO’s position and efforts on First Nation Law enforcement,” but they are not able to support any amendment to the act for the following reasons:

We do not have the approval of the signatories to the Framework Agreements to make any changes to the FAFNLMA wording . . . . Amendments to the Act would create an inconsistency with the guiding Framework Agreement document, which is to say there is nothing in the Agreement now that addresses or refers to the RCMP or Public Prosecutions legislation.

Chief Louie adds that the Lands Advisory Board hopes to continue to support and work with MKO and is:

. . . proposing to continue its joint work on enforcement with Provinces and the Federal government and to continue to obtain its direction from signatory First Nations regarding any appropriate changes to the Framework Agreement.

As Chief Louie writes — and I agree:

. . . granting amendments to the FAFNLMA before seeking First Nation approval is counterproductive to the mutual respect and nation to nation relationship we have worked so hard to build and maintain since the signing of the Framework Agreement in 1996.

I will have more to say on this at third reading.

It would be unlike me to speak to an economic bill without offering a few comments of my own on the current state of our economy.

The Fall Economic Statement was an opportunity for the government to provide Canadians with a mid-year update on the country’s economic growth and the state of its finances. The statement also included the government’s outlook for revenues, program expenses and long-term economic projections.

Like most countries, Canada’s reaction to the pandemic was quick, early and swift. The government provided individuals, families and businesses with the necessary financial support to make ends meet. Despite extraordinary spending measures, Canada is coming out of the pandemic in a relatively good position.

I’ve been working with numbers for most of my life and I can assure you that you can make numbers say what they want. It’s all a matter of perspective, of comparison and of the way one may spin things. As an independent senator, I truly believe that Canada’s economy is faring better than most countries. I agree that we are not out of the woods yet, and there is still a lot of work to be done, but I’m hopeful we are on the right path.

As we all know, Canada’s economy is now 103% the size that it was before the pandemic. Our economic growth so far this year has been the strongest, and our net debt-to-GDP ratio is the lowest among G7 countries. The unemployment rate is 5.1%, and inflation is slowly coming down after peaking in June, thanks, in part, to lower gasoline prices and to the Bank of Canada’s monetary policy.

Last week, the bank increased the interest rate by another 50 basis points, to 4.25% — the seventh rate hike of the year — to lower inflation and bring it back down to its target rate. As the bank stated on the day of the announcement:

. . . Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.

The bank is resolute in its “commitment to achieving the 2% inflation target and restoring price stability for Canadians.”

Of course, inflation is a major issue in Canada, but it’s not the only metric we should use to evaluate our economic position and the health of our economy. For example, among our G7 counterparts, only France and Japan have lower inflation rates than Canada. Canada’s jobs recovery has also outperformed most of its G7 peers and surpassed expectations.

In my humble opinion, the Fall Economic Statement was prudent, focused and not overly expensive. Yes, there are some major-ticket items that are necessitating significant sums of money in Bill C-32, but overall, the bill is expected to generate revenues and not increase deficits. This is good news, in my view.

At my request, I asked Minister Freeland’s office to provide us with a costing breakdown of all the measures contained in Bill C-32. I was pleased to see that between 2022-23 and 2027-28 the government is expecting net revenues of over $4 billion with Bill C-32. These revenues are attributed in good part to the Canada recovery dividend and the additional tax on banks and life insurers.

Some have argued that measures in this bill, in addition to the measures in the two Cost of Living Relief bills we adopted this fall, will further increase inflation and continue to put financial pressure on our economy and on the pocketbooks of Canadians. I would respectfully disagree. Other prominent Canadians agree with me.

Yves Giroux, the Parliamentary Budget Officer, or PBO, looked at the inflationary impact of Minister Freeland’s announcement in September, and he found that it will have a minimal impact on inflation. He believes it might be a 0.01% increase. This is from our PBO.

Mr. Giroux’s predecessor and Parliament’s very first PBO, Kevin Page, appeared before our Banking Committee on December 1, and we asked him about inflation. It was nice to see him. In response to a great question from Senator Gignac, Mr. Page briefly addressed the Fall Economic Statement, and submitted that there was a modest amount of measures in the statement, but he didn’t see it as inflationary. As he said — and I would agree — “Even if we have inflation, we still have to retool the Canadian economy so we reduce our emissions.”

The government made it clear in its Fall Economic Statement:

We are providing targeted inflation relief, because that is the right thing to do.

But we cannot support every single Canadian in the way we did with emergency measures at the height of the pandemic.

To do so would force the Bank of Canada to raise interest rates even higher. It would make life more expensive, for everyone, for longer.

So as the central bank fights inflation, we will not make its job harder.

I agree with this statement, while recognizing that lower‑income and moderate-income Canadians — and some of the most marginalized individuals in our communities — need the government’s help.

Furthermore, I was pleased to read in the news that Minister Freeland recently told her cabinet colleagues that if they want money for new programs in the next federal budget, they will have to provide at least 25% of new operating costs requested from money within their own departments — for example, by considering trimming expenses, or cutting some programs.

I very much welcome this initiative. If Canadians are expected to live within their means, Canadians also expect their government to try to do the same.

As Minister Freeland told us in this chamber in October, Canadians are cutting back on costs right now, and the government needs to do that, too.

Honourable senators, I am happy to report that I have reached the section in my speech that says in bold letters, “Conclusion.”

An Hon. Senator: How many pages?

Senator Loffreda: Two and a half pages. This is an important bill.

Colleagues, no bill is ever perfect, particularly with these massive bills that focus on the economy and address a number of issues. I have tried to address the most important issues, and will do so at third reading. As an independent senator, I am proud to sponsor this bill because I feel many of the measures in Bill C-32 will help address affordability challenges; raise revenues; assist Canadians with home ownership; implement measures to tackle tax avoidance and evasion; grow our small- and medium-sized enterprise, or SME, community; increase productivity and create jobs; and attract major foreign investments in order to grow our green economy.

In 12 days, many Canadians will be celebrating Christmas. Families and friends will gather in celebration of the most festive time of the year to talk about the past year, and to look to the future with hope and inspiration.

We know many Canadians are struggling, and have had a tough couple of years. Food banks and charities are having a difficult time keeping up with demand. But I’m sure most would agree that Canada has bounced back from the pandemic better than anticipated, and in a better position than its G7 counterparts.

We have countless reasons to be hopeful for what lies ahead. As Minister Freeland said, “. . . we have a well-built house with a solid roof, and we have survived far colder winters before.”

Colleagues, Canadians can look to the horizon and see a glimpse of hope that better days are coming. I am confident we will get through the upcoming economic slowdown and what I expect to be a mild recession. But we all know that winter always turns to spring, and flowers will be blooming in no time. Thank you.

Senator Housakos: Thank you, Senator Loffreda, for expressing very eloquently the government’s point of view as independently as you might have done. I will, independently of course, ask some questions on behalf of taxpayers in this country — starting with the fact that we saw the Auditor General put out a report very recently calling into question $27.4 billion of COVID spending that you allotted the government. Of course, we participated in getting a lot of that COVID spending out the door very quickly. Clearly now, the Auditor General has questioned the transparency of a lot of that spending.

What in this bill — what mechanisms — and what action has the government taken to make sure that a lot of the programs you just highlighted, and a lot of the new spending that will be taking place, will have better checks and balances than, clearly, the previous couple of budgets that we approved?

Senator Loffreda: Thank you for the question, Senator Housakos. It’s very relevant as, in my previous life, I was an auditor — way back more than 20 years. I started in 1984. How many years is that? I lost count. It’s 38 years, right? So it’s over 20 years.

But I think what does matter here is there are a lot of measures that are there for tax avoidance. A lot of measures are there to show that fiscal responsibility is imperative. I think the government is showing that.

You are right; the Auditor General did state that there has been a lot of COVID spending that has been distributed that must be recovered. We have to recover those funds, so we have to put measures in place to adequately look over as to how they could be recovered.

But this bill — Bill C-32 — is basically the Fall Economic Statement. It’s going forward. It’s putting in measures of tax avoidance, updating the Income Tax Act and looking at ways that we could go against tax avoidance. I’m fully in support of these measures in the bill. Hopefully, in the future, we will have additional measures that will be productive, and go against the unnecessary COVID spending that did occur.

Senator Housakos: Senator, of course, in the budget you talked about the Canada growth fund. Well, I can tell you that the only thing we have seen, over the last few years, that has been growing is — number one — deficits in this country because we’ve seen this government run deficits year after year. We have seen growth in the debt. We have a historic debt right now in this country — thanks, of course, in large part to successive budgets this government has passed.

Of course, as a former auditor yourself and a banker, you must be very concerned right now that, over the last couple of years, we’re spending significantly more to service the debt than we did a couple of years ago. As interest rates continue to climb, in large part because of inflationary policies — and as you have seen in this particular bill as well, you talk about stimulants. You talk about injection of funds which, in effect, are increasing taxes. You talked about a program where you’re taxing banks and insurance companies, and somehow the government makes it look like they are taxing the rich, but the truth of the matter is that will be passed on as well to Canadian consumers through higher insurance premiums, banking fees and so on and so forth.

Are you concerned that we are not doing enough to bring spending down, and to control the debt and deficit — and, as a result, as interest rates are growing, curb the interest we’re paying on the national debt?

Senator Loffreda: Senator Housakos, there is always a concern. If I take a look at the last financial statement — as you know, I love the numbers — our debt stands at $1.134 trillion as of March 31, 2022. The federal debt-to-GDP ratio was 45.5% — down from 47.5% in the previous year. As reported by the International Monetary Fund, or IMF, Canada’s total government net debt-to-GDP ratio, which includes the net debt of the federal, provincial, territorial and local governments, as well as the net assets held in the Canada Pension Plan and the Quebec Pension Plan, stood at 33.2% in 2021. This is the lowest among the group of G7 countries, which the IMF expects recorded an average net debt of 101.2% of GDP the same year.

Obviously, interest rates are increasing. Like I said, this bill brings in net revenues. But to return to the Canada growth fund, because that’s the more relevant question here in this bill — in our committee, there was worry, or concern, about the permanent structure not being in place; the $2 billion is for the purchase of non-voting shares. But in my experience with many technology companies, the largest challenge to an acquisition was the integration.

In this case, the Canada growth fund — and I would always ask the technology companies, “Why are you merging, or why are we acquiring the company? Why don’t we have a clean slate or a blank sheet?” Because technology evolves so quickly that the equipment is obsolete; the ideas are obsolete. So it’s important to have a clean slate, move it forward, come up with creative new ideas and get the proper CEO and proper board in place.

The Canada growth fund, in this situation, is the right decision. It’s going forward. The technical backgrounder says it all.

I’m comfortable that the $2 billion is a fine investment. It’s to keep up with our major trading partner, the U.S., and many countries around the world. I have the list here of all the countries that have invested around the world. We’re just investing a portion of that. If we look around the world, the European Union has invested €26.2 billion, the Netherlands has invested €13 billion, France has invested €7 billion and Australia has invested $10 billion.

So I think that $2 billion for the Canada growth fund for start‑up costs to put it together with a clean slate and technology is important because the infrastructure is obsolete. At times, it’s important to start with a clean slate, a clean sheet of paper and the results are much better.

Like I said, the financial statement is here. I could spend 10 minutes going through it. But what is important is that we are in a better financial position than other G7 countries. We rank at the top of the list in many aspects of many measures and metrics. Inflation is not the only metric to measure economic prosperity. Other measures do so, such as job growth and job creation. There are 1 million job vacancies in Canada, and there are 1 million people not working in Canada. It’s important to bring solutions in this chamber and to look at solutions.

I’m comfortable with the bill. Thank you for your question.

Hon. Elizabeth Marshall: Honourable senators, I rise to speak to Bill C-32, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022.

Bill C-32 is comprised of four parts. Part 1 proposes 21 amendments to the Income Tax Act. Part 2 proposes amendments to the Excise Tax Act and this year’s Budget Implementation Act. Part 3 proposes amendments to the Underused Housing Tax Act, which was enacted last June as part of Bill C-8. I spoke to Bill C-8 at second reading and again at third reading. Part 4 of the act proposes a number of other measures, including an act entitled “Framework Agreement on First Nation Land Management Act.” Senator Francis spoke to that portion of the bill last week. Part 4 also includes clauses on eliminating interest on federal student loans and apprenticeship loans.

The proposed changes to the Income Tax Act in Part 1 of this bill will have a significant impact on tax revenues. Some amendments will increase tax revenues for the government while other amendments will reduce tax revenues. Finance officials told us that the net impact of these amendments will increase tax revenues by $4.2 billion over six years.

Government revenues, and especially tax revenues, have increased significantly over the past three years. Total revenues have increased 33% over a three-year period, from $334 billion in 2019-20 to this year’s estimated revenue of $445 billion, or 10.4% annually on average.

I have excluded the two COVID years from my calculations, and have compared financial information from 2019-20, the last year before COVID, to the current fiscal year.

Personal tax revenues have increased 24% over the three-year period from $168 billion in 2019-20 to this year’s estimated revenue of $209 billion, or 7.5% annually on average.

Corporate tax revenues have increased 82% over the three-year period from $50 billion in 2019-20 to $91 billion this year. That averages out to 22% annually over the three years.

In summary, the most significant increase in government revenues over the past three years is corporate tax revenues.

In this bill, the government is proposing additional taxes on corporations, including the Canada Recovery Dividend, the additional tax on banks and life insurers and the tax on the buyback of shares.

The Canada Recovery Dividend is a one-time 15% tax on banks and life insurers. It is based on 2020 and 2021 taxable income. It will be imposed for the 2022 taxation year, and it will be paid in equal instalments over five years. At this time, we are told it is a one-time tax.

Government estimates that this tax will increase corporate tax revenues by $800 million annually beginning this fiscal year and the following four years for total revenues of $4 billion over five years.

The additional tax of 1.5% on the taxable income of banks and life insurer groups applies to taxation years that end after April 7, 2022. Government estimates that this tax will increase corporate tax revenues this fiscal year by $290 million and over $430 million annually in each of four subsequent years. Total estimated tax revenues over the five-year period is $2 billion.

I expect the tax increases of the Canada Recovery Dividend and the additional tax on banks and life insurers will be passed on to consumers, further burdening Canadians with increasing costs as they struggle with high inflation and increasing interest costs.

Effectively, the banks are being taxed but they are passing it on to the consumer, so the additional revenues the government is collecting are really coming from consumers.

Bill C-32 also imposes a 2% tax on the net value of all types of share buybacks of public corporations in Canada. The government has indicated that the details of the new tax will be announced in Budget 2023 and would become effective January 1, 2024. Although the details have yet to be announced, the government estimates that this tax on share buybacks will increase corporate tax revenues by $2 billion over five years and will, as the government states in its Fall Economic Statement, “. . . encourage them to reinvest their profits in workers and in Canada.” It’s ironic that government thinks it can encourage corporations to invest in this country by increasing their taxes.

Mr. Alex Gray from the Canadian Chamber of Commerce, in an interview with The Hill Times, said that the tax will do little to change how corporations invest their earnings. Instead, it sends a discouraging message to Canadian businesses. A similar view was expressed by Mr. John McKenzie, Chief Executive Officer of TMX Group, Canada’s largest stock exchange operator. Mr. Don Drummond, a former associate deputy minister of finance, also told The Hill Times that he disagrees with the proposed tax. He went on to say he does not know why governments meddle in the affairs of businesses.

I do not see how increasing taxes on corporations will encourage them to invest in Canada. I think it would have the opposite effect.

Honourable senators, government spending has increased significantly over the past several years. For the four years between 2016 and 2020, which was the last year before the pandemic, government spending increased 5%, 6.6%, 5.6% and 7.4%, respectively. Compare those increases to this year. Expenditures in 2020, which was the last year before the pandemic, were $363 billion. This year, so far, the government expects to spend $472 billion, as indicated in the Fall Economic Statement and Supplementary Estimates (B), and we’re only part way through the year yet.

In other words, government expenditures increased from $363 billion in 2019-20 to this year’s $472 billion over a three‑year period, an increase of 30%, which equates to an annual average increase of 9%. The expenditures for this year do not, as yet, include some major expenses, such as increases to the Canada Health Transfer and the Department of National Defence.

The Canada Health Transfer is the largest federal transfer to the provinces and territories, and helps pay for health care. It is expected to cost $47 billion this year, increasing to $58 billion in 2027-28.

But we all know our health care system is in crisis, and provincial and territorial premiers are asking for much more — $28 billion more. That far exceeds what is included in the government’s spending plans.

There is also a commitment to increase additional funding for the Department of National Defence for aircraft, ships, submarines, NATO and the modernization of NORAD.

They are also increasing the size of the public service, which has now grown to almost 400,000 members, as indicated in a recent report by the Parliamentary Budget Officer. We do not know what impact inflation will have on the salaries and benefits of its members, but it is expected to be significant.

While government is forecasting declining deficits over the next four years and a surplus in 2027-28 — the fifth year — I cannot see this happening given the spending patterns of this government and the forecast of a recession next year. In fact, the Fall Economic Statement indicates that tax revenues this year will increase by $37 billion more than the estimate in April’s budget. Rather than use that $37 billion to reduce the deficit, government actually spent $21 billion in additional expenditures and debt service charges, leaving only $16 billion to put toward the deficit.

Honourable senators, while increased taxation on corporations and individuals may be seen by the government as a source of revenue to pay for increasing expenditures, increased taxes can have a negative impact on the economy. Both individuals and corporations are mobile and can move to friendlier jurisdictions.

Since government expenditures exceed government revenue, the government has been taking on more and more debt to fund the shortfall. In my past speeches in the Senate, I have indicated how the cost of servicing the government’s debt is increasing. As estimates are refined with the release of each financial document, it is easy to see that interest costs are on a significantly upward trajectory. Despite warnings that additional debt poses the risk of significantly increasing debt servicing costs, the Minister of Finance has assured us on numerous occasions that the government can easily absorb the cost of the additional debt and that the interest on this debt will remain low.

In her 2021 budget speech, the Minister of Finance told us that, in today’s low interest rate environment, not only can we afford these investments, it would be short-sighted of us not to make them. She continued on to say that the government has issued an unprecedented level of long-term bonds at low interest rates to ensure Canada’s debt is sustainable and will not weigh on future generations.

The problem with her plan is that this government does not pay down its debt. It just replaces maturing debt with new debt, which may be financed at higher interest rates. Contrary to what she says, it does weigh on future generations because we are not paying down this debt. Rather, it will be transferred to future generations, and they will have to pay the interest costs — and pay off the debt.

With the increase in interest rates, we can now see the impact it is having on government expenditures. In November of 2020, just two years ago, the government told us that debt servicing costs this year would be $22 billion. In this fall’s economic statement, it has increased from the $22 billion to $35 billion, an increase of 60%. The government’s debt servicing cost is now one of its most expensive programs.

As I’ve already indicated, government revenues are not sufficient to pay for all of government spending, so the shortfall is borrowed. As a result, it is important to oversee government borrowing as there is a legislated ceiling for its debt.

Two years ago, the government amended the Borrowing Authority Act to increase its legislated debt ceiling from $1.168 trillion to $1.831 trillion as of March 31, 2024 — a 56% increase over a three-year period. It’s challenging for parliamentarians to track the current debt at a specific time because this information is not readily available. It is only disclosed in the Public Accounts of Canada. To obtain a more current number, one has to calculate it using the Public Accounts of Canada, monthly reports of The Fiscal Monitor and the financial statements of Crown corporations.

At March 31, 2015, the debt of the government was $918 billion. The most recent Public Accounts of Canada, as of March 31, 2022, indicate that the debt is now $1.5 trillion. Since March, it looks like the government has borrowed — and this is my estimate from looking at The Fiscal Monitor reports — another $10 billion. So government debt is now approaching $1.6 trillion, an increase of $640 billion since March of 2015.

The increase in debt servicing costs is not only attributable to rising interest rates; it is also attributable to a significant increase in government borrowings.

In its annual budget documents and fall economic statements, government provides updates on its borrowing strategies, but there is less information on what actually happened with the debt. So far, we have received two debt management strategies for this year telling us what will happen into the future. But as of today, there is no debt management report telling us what exactly has happened last year. Section 49 of the Financial Administration Act requires government to table its annual report on its debt management program within 30 sitting days after the Public Accounts of Canada have been tabled.

Since the Public Accounts of Canada were tabled on October 27, the Debt Management Report should be tabled by its legislated deadline of December 15, which is this Thursday.

It is now December 13, two days before the legislated deadline, and we’re still waiting. I understand now that the House of Commons may actually adjourn tomorrow, thus deferring the Debt Management Report for last year into the next year. The government is not an enthusiastic supporter of openness, transparency and accountability.

Of the 21 amendments to the Income Tax Act, 5 are related to housing. I will speak to three of the amendments.

Part 1 of the bill proposes to introduce a tax-free first home savings account, a doubling of the First-Time Home Buyers’ Tax Credit and introduce a multigenerational home renovation tax credit.

The Tax-Free First Home Savings Account will allow a potential homeowner to save up to $40,000, or $8,000 annually, tax-free, which can be used to purchase a home. There already exists the Home Buyers’ Plan, which allows home buyers to withdraw up to $35,000 from their RRSPs, which can be used to purchase a home. However, any withdrawals from the RRSP must be repaid within 15 years.

The Parliamentary Budget Officer estimates that the Tax-Free First Home Savings Account will cost $731 million in 2023-24 and $2.5 billion in total over the following three years. While these initiatives sound helpful, it is unrealistic to think that young people will be able to save $40,000 in the Tax-Free First Home Savings Account or use the money in their RRSP if it has to be replaced.

The cost of housing has increased significantly over the past number of years, and interest rates are rising. While the average cost of a home has decreased over the past year, interest rates are rising, and we do not know if or when they will come down.

Bill C-32 also proposes to double the First-Time Home Buyers’ Tax Credit from $5,000 to $10,000 for homes purchased on or after January 1 of this year. This tax credit is non‑refundable. The Parliamentary Budget Officer estimates that the First-Time Home Buyers’ Tax Credit will cost $115 million this year and $470 million over the following four years.

The third housing initiative proposes a refundable multi-generational home renovation tax credit, which, starting January 1, 2023, would provide up to $7,500 to construct a secondary suite for a family member who is a senior or an adult with a disability. I think the government wants to start us doubling up.

Honourable senators, the housing sector has become a key vulnerability of the Canadian economy, a point raised by the Superintendent of Financial Institutions, the President of CMHC, the International Monetary Fund, the Governor of the Bank of Canada and many think tanks and economists.

Interest rates have increased significantly, which has increased homeowners’ mortgage payments. In many cases, the outstanding balances on mortgages now exceed the original amount of the mortgage, or the value of homes are now less than their mortgages. In addition, the unmortgaged debt is increasing as Canadians who are struggling to cope with inflation take on more debt to pay for food, fuel and other necessities. They are using their credit cards to buy their groceries.

While the proposed amendments to the Income Tax Act for potential homeowners may help some homeowners, a more comprehensive solution to the housing crisis is needed. Simply providing some financial assistance to some homeowners will not fix the housing problem.

Part 4 of Bill C-32 will provide the Minister of Finance with $2 billion to buy shares in an unnamed, non-existent corporation. The bill provides no —

Hon. Elizabeth Marshall: Honourable senators, Part 4 of Bill C-32 will provide the Minister of Finance with $2 billion to buy shares in an unnamed, non-existent corporation. The bill provides no information on the corporation except to say that it will be:

 . . . a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund.

The bill does not explain what the term “administering” means. The corporation has yet to be created, and there is no information on the corporation. The bill provides no information on the composition of the board of directors or even if there will be a board. There is no information on the mandate and function of the corporation, no information on the governance structure, nothing on whom the corporation will report to and nothing as to how the corporation will report to Canadians and parliamentarians.

There is also no information as to the financial management and control over the $2 billion. Since the corporation does not exist, what does the minister intend to do with the $2 billion? Will she retain the money until the corporation is created, or will she invest it — and if so, where?

Of equal concern is the provision in the bill that provides the minister with the authority to draw down, as the bill says, “ . . . any greater amount that is specified in an appropriation Act . . . .” There is no dollar limit affixed to this greater amount.

Honourable senators, the part of Bill C-32 that legislates the spending of $2 billion and more is a mere 17 lines in length and provides no details regarding the $2 billion and more, nor does it provide any information on the referenced subsidiary corporation. In fact, the subsidiary corporation at this point in time does not even exist.

In its Fall Economic Statement, the government indicates that its revenues characterized as “projected other revenues” have been revised downward “due to the impact of higher interest rates on the Bank of Canada’s income.” The Bank of Canada has now reported its first financial loss in its 87-year history — in its third-quarter financial statements — in the amount of $522 million.

Unlike losses relating to the purchase of government bonds, which are covered by an indemnity agreement with the government and which will be paid by the federal government, the indemnity agreement does not cover these losses. With the rise in interest rates, interest on deposits at the bank is increasing. However, interest earned on the Government of Canada bonds, which the bank purchased during the pandemic, is at much lower interest rates. It is this mismatch of interest revenue at lower rates and interest expense at higher rates that is creating the loss for the Bank of Canada.

So the question arises as to how the bank and the government will treat these losses. I had expected that the Fall Economic Statement would indicate how these losses would be treated. Will the government reimburse the bank for these losses? Or will the losses be accumulated on the bank’s balance sheet? Since these losses are expected to continue into the future, parliamentarians and Canadians should be told as to the disposition of these items.

Honourable senators, the timeliness of the financial reporting of the public accounts continues to be a problem. This year, the public accounts were tabled on October 27, somewhat better than the tabling of last year’s public accounts, which occurred on December 14, but still short of September 30, which would be six months after the fiscal year-end.

While the public accounts were tabled this year on October 27, the Auditor General Report was actually dated September 12, after which it took the government 45 days to table it in Parliament. On average, over the past decade, the public accounts have been tabled more than two months after the conclusion of the Auditor General’s audit. In other words, it appears that the government is withholding the tabling of the public accounts.

At a recent meeting of the Senate Finance Committee, Auditor General Karen Hogan assured us that her office would complete the audit of the public accounts in time to allow for a pre‑September 30 tabling. She went on to further say that, typically, she signs off at some point in early September and she would be ready to advance that a few weeks if needed in order to meet all the publication deadlines.

The International Monetary Fund’s advanced standards on financial reporting recommend that governments publish their annual financial statements within six months of the fiscal year‑end. Parliamentarians and Canadians require access to this information on a timely basis so that the information provided is current and not historical.

Honourable senators, the Canada workers benefit is a refundable tax credit to help Canadians who are working but earning a low income. The Fall Economic Statement announced a change in the government’s policy for the Canada workers benefit. Single individuals will receive $1,395 if their adjusted net income is $22,944 or less. For incomes between that amount and $32,244, the benefit is reduced. Families will receive $2,403 if the adjusted family net income is $26,177 or less. For family incomes between that amount and $42,197, the benefit is reduced.

Of the $52 billion of new spending announced in the Fall Economic Statement, $4 billion relates to changes in the Canada workers benefit. Beginning next year, all workers who qualify for the Canada workers benefit based on their income for the previous year will receive an advance payment of the benefit every three months rather than a lump sum payment after filing their tax returns.

However, the revision to the benefit has also introduced a new change. Under the old system, the payment would not have been made until after the worker had filed their tax return. If the worker had opted for a partial advance payment under the old system, any overpayment determined after the worker had filed their tax return would have to be refunded to the government. Under the new system of quarterly advance payments — paid prior to the filing of tax returns — any overpayment calculated when the tax return is filed will not have to be refunded. The substantial cost of this change — $4 billion — is largely due to the government’s decision not to recover these overpayments when workers become ineligible for benefits or eligible for lower benefits.

However, the new system introduces unfairness in the tax system and in the program itself. For example, it will create situations whereby two workers receiving the same salary in a given year will result in one worker receiving the Canada workers benefit because they qualified for the benefit in the previous year. If a worker was eligible for the benefit last year but has a higher income this year, exceeding the ceiling for benefits, that worker will still receive the Canada workers benefit and not have to repay any overpayment. Compare this situation to that worker’s colleague who receives the same salary for that same year but did not qualify for any benefit the previous year. That worker will not receive any of the Canada workers benefit. Not requiring repayment of a benefit for ineligible recipients is a departure from the existing federal tax system.

The Parliamentary Budget Officer told us that the substantial cost of this measure is largely due to the government’s policy decision not to recoup these advance payments when recipients’ incomes rise and they become ineligible for benefits or eligible for lower benefits. He said that not requiring repayment of federal benefits for ineligible individuals is a pronounced departure from the existing federal tax and transfer system.

Honourable senators, two of the proposed amendments within Part 1 of Bill C-32 relate to the Canada Revenue Agency. Part 1 (q) of the bill strengthens the rules on avoidance of tax debts when a taxpayer transfers assets to a non-arm’s-length person for insufficient consideration.

The second amendment is in response to a court decision which called into question the extent to which Canada Revenue Agency officials can require people to answer all proper questions, and to provide all reasonable assistance relating to the administration and enforcement of the Income Tax Act.

The amendment is intended to strengthen the Income Tax Act and other legislation to ensure the Canada Revenue Agency has the authority to require a person to respond to questions orally or in writing. Unfortunately, Canada Revenue Agency officials appearing before our National Finance Committee were unable to explain whether these amendments respond to their recently released Overall federal tax gap report: estimates and key findings for tax years 2014-2018, and whether the amendments will assist the agency in collecting taxes that are part of that so‑called tax gap.

In their recently released report, the agency estimates that the tax gap is in the range of $35 billion to $40 billion. The tax gap is a measure of potential tax revenue loss resulting from tax non‑compliance. Despite recognizing that the tax gap exists and attaching an estimate to it, the Canada Revenue Agency is not making progress to collect the monies owed. Rather, the perception is that the agency focuses on already tax-compliant taxpayers. The collection of even a portion of the $40 billion tax gap would significantly reduce the government’s deficit, and more efforts to collect these monies should be made.

In the Fall Economic Statement, there is a listing of new initiatives along with additional initiatives implemented since Budget 2022. Together, they total $52 billion over six years through to the end of March 2028. However, of the $52 billion, $14 billion represents funding for which no information is available. The Parliamentary Budget Officer, upon testifying at our National Finance Committee, said the unexplained $14 billion is not a one-off, it is the largest amount announced without specific detail since 2016 and the precise number suggests that the government knows exactly what it is going to do with the money. However, when the government does announce the initiatives for this $14 billion, it will not relate back to the $14 billion. Parliamentarians will not be able to reconcile the $14 billion back to anything. We will not know whether the $14 billion will be used, what it will be used for or whether it is simply another a buffer or contingency.

This is not uncommon for this government. It builds in contingencies for expenses, and in establishing its new debt ceiling two years ago, it included a buffer of 5% for additional new borrowings along with a duplicate of the buffer provided five years ago when the debt ceiling was established at that time. The government likes to give itself lots of room to manœuvre when spending and borrowing, and transparency is not top of mind.

In Budget 2022 in April, the government announced two spending reviews that would focus on the overall level of government spending. First, there would be a strategic policy review to assess program effectiveness, identify savings and reallocate resources to adapt government programs and operations to a new post-pandemic reality. The strategic policy review was estimated to save $6 billion over three years beginning in 2024-25.

In a second spending review, the government said it would review previously announced spending plans with a view to reduce spending that has yet to occur — that is the term they used — by up to $3 billion over the next four years, or $750 million a year starting in 2023-24. Note that the government itself made the commitment to focus on spending that has yet to occur and it was this future spending that was to be reduced. In its Fall Economic Statement, the government announced it had already achieved the total targeted savings of $3 billion and more because the uptake of COVID-19 supports in the previous fiscal year — that is, 2021-22 — had exceeded the $3 billion target.

Honourable senators, the government’s commitment in Budget 2022 was to reduce spending in future years, not go back to a time that predates their commitment and use completed programs to take credit for savings that actually occurred before they made their commitment to reduce spending. Obviously, the government is not up to the task of managing their spending. Surely, the government can do better than this. Canadians deserve better.

Before I conclude my comments, I once again raise the issue of much-needed tax reform. The last major review of Canada’s tax system occurred in 1967. Much has changed since then: How we live and work has changed, Canadians are living longer, technology is constantly changing and the proportion of women in the workforce has increased significantly. Our tax system has become a patchwork of new rules, amendments, incentives and so on. It is now over 3,000 pages long. Incidentally, the first income tax legislation in 1917 was — I thought it was 10 pages long, but Senator Loffreda said 11, so we’re close. Our Income Tax Act has become inefficient and complicated for Canadians, businesses and professionals, such as accountants and lawyers. Maybe we would not need so many accountants and lawyers if our tax system was reformed.

It has even become complicated for the government to administer, especially the Canada Revenue Agency, as evidenced by an audit carried out by the Auditor General of Canada in 2017, during which responses to tax questions provided by the Canada Revenue Agency to auditors were incorrect almost 30% of the time. Many professional organizations and many individual Canadians support a comprehensive tax review, including the Chartered Professional Accountants of Canada, the Business Council of British Columbia and the Canadian Chamber of Commerce, as well as committees of both the Senate and the House of Commons.

Once again, I encourage my colleagues to support a comprehensive review of Canada’s tax system. This concludes my comments on Bill C-32. Thank you.

Senator Marshall: I have no idea, Senator Batters. I think you’re talking about the LEEFF corporation. They created that. Actually, that did come up at the Finance Committee and the Department of Finance provided us with all the information. The other corporation you can compare it to, which is probably — well, Senator Loffreda mentioned this, and it’s probably not a good example — the Canada Infrastructure Bank, which wasn’t very successful, but nonetheless, they did create a separate corporation. They actually had the legislation for that corporation, which was included in a budget bill, and we were able to go through it and ask about specific details.

In this case, there is just nothing there. There is no information there at all. It just focuses on the $2 billion-plus. It’s not just $2 billion; I call it $2 billion-plus. We don’t know anything about how it’s going to be controlled or the financial controls. We don’t know anything about it.

I know people are looking at the backgrounder and saying there is a lot of information in the backgrounder. There is some information there, but what should have happened is that all of that information in the backgrounder should have been included in the legislation, and more besides, so that is a big shortcoming.