Senator Gold: Thank you for your question. I will certainly make inquiries to better understand the substance of your question.

The changes that may occur to the MAID regime will be a function of the work of the special joint parliamentary committee and whatever legislation is introduced — legislation which, of course, we will have a role to review and oversee.

Hon. Mary Coyle: Honourable senators, my question is for the Government Representative in the Senate.

Senator Gold, Infrastructure Canada introduced a Climate Lens tool in 2018 that set clear reporting requirements and enabled the estimation of expected reductions in greenhouse gas emissions for federally funded infrastructure projects.

However, the Commissioner of the Environment and Sustainable Development in the Office of the Auditor General found in their recent report that Infrastructure Canada had “. . . let go of too much.” They had weakened those reporting requirements when they updated the Climate Lens tool in March 2021. This means there is no longer accurate and reliable information on which to assess and report on those government-funded infrastructure projects, neither in terms of climate resilience nor greenhouse gas emissions.

Senator Gold, could you tell us how the Minister of Intergovernmental Affairs, Infrastructure and Communities plans to address this serious gap in reporting requirements, and how the government will ensure that federally funded infrastructure projects align with Canada’s net-zero targets and its newly released Emissions Reduction Plan? Thank you.

Hon. Marc Gold (Government Representative in the Senate): I thank the senator for the question. The government is committed to investing in infrastructure that will help us get to net zero, and is committed to working with the provinces, territories and Indigenous communities to ensure that clean energy can circulate and be used in Canada rapidly and efficiently.

Regarding the specifics of your question, colleague, I will make inquiries with the government and report back to the chamber in a timely manner.

Senator Gold: Thank you for your question. I will certainly add this to my inquiries to which I referred, but I take this opportunity — and thank you for providing it to me — to remind the chamber that the report of the Auditor General was unique in the sense that it was promulgated and published during the process through which the government is working on its plan and its implementation. That has given the government the ability to make the course adjustments as necessary to take into account the very valuable input of the Auditor General.

Thank you for your question. I will get back to the chamber with an answer as soon as I can.

[Translation]

Hon. Julie Miville-Dechêne: Senator Gold, two years ago, the government banned 1,500 different models of assault-style weapons in Canada. It was a good measure. Not surprisingly, gun manufacturers have already started to circumvent the rules. The group PolyRemembers recently exposed several manufacturers who are selling new assault-style weapons in Canada, which are often easily modifiable to increase magazine capacity but are exempt from restrictions.

In 2019, New Zealand resolved this issue by banning semi-automatic centre-fire rifles and shotguns. In 2020, former public safety minister Bill Blair said he intended to address regulatory gaps to prevent this circumvention.

Will the government act soon to close these loopholes in its assault weapons regulations?

Senator Gold: Thank you for the question, Senator.

I fully understand the urgency, the frustration and the importance of this issue. That said, you need to understand that cabinet committee discussions are confidential. I’m not in a position to answer your question, except to say once again that the government is taking this very seriously and will be making announcements soon, I hope.

Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. I will answer as government representative. The short answer is that the government is reviewing the opinion provided by the Court of Appeal of Alberta. It will be considering its next steps, including a strong consideration of an appeal.

Let me say a few words, because this is an important issue with which we’re all engaged as parliamentarians. The Impact Assessment Act was designed to reflect the needs and values of Indigenous people, the public and investors so that they could have confidence that project decisions were made in their interests and that Canada can thrive on sustainable development. The government worked with provincial and territorial governments when developing the legislation to ensure that their views were considered and that jurisdictional responsibilities were respected while working toward the common goal of meeting the needs of Canadians. Whether it is safeguarding our natural environment, creating economic opportunity, protecting our health or preserving the culture, heritage and rights of Indigenous people, the Impact Assessment Act requires a holistic consideration of a project’s impacts. Working collaboratively with provinces supports a single impact assessment process for major projects that considers all project impacts.

For these reasons, honourable senators, the government remains committed to the implementation of the federal impact assessment process. The Government of Canada will continue to work with Alberta and other jurisdictions toward effective and efficient project assessments.

Finally, I return to the court’s decision. Honourable senators, here perhaps you will allow the constitutional lawyer in me to slip into my answer. The decision of the Court of Appeal of Alberta is advisory in nature. As such, honourable senators should understand that the act and the regulations remain in force.

Hon. Marc Gold (Government Representative in the Senate): Thank you. I will certainly make inquiries.

Colleagues, the issue of whether the justification, which was multifold and included economic considerations, did or did not pass a test was, first, one that we assessed as parliamentarians and decided in light of the legislation and the progressive elements in the back-to-work legislation as sufficient to pass a Charter test. It is also the role of the courts to so assess.

I would remind colleagues that, first, this back-to-work legislation was an absolute last resort. The government did not take it lightly. Secondly, as colleagues know, the Port of Montreal is Canada’s second-largest container terminal. It handles 35 million tonnes of cargo representing $40 billion worth of goods a year. The work stoppage had the potential to cause severe and lasting damage to our economy. It was highlighted by the declaration provided on behalf of the Chamber of Commerce of Metropolitan Montreal.

The damage to the economy was estimated, through the modelling, to be somewhere between $40 million to $100 million per week. There was a judgment of the government, supported in Parliament, that the legislation was essential to safeguard the public interest. To the extent that a court would disagree, we would, of course, respect the decision of the court, but I think the government remains satisfied that it had met the standard under the Charter.

Hon. Raymonde Gagné (Legislative Deputy to the Government Representative in the Senate): Honourable senators, pursuant to the order adopted December 7, 2021, I would like to inform the Senate that Question Period with the Honourable Ginette Petitpas Taylor, P.C., M.P., Minister of Official Languages and Minister responsible for the Atlantic Canada Opportunities Agency, will take place on Wednesday, May 11, 2022, at the later of the end of Routine Proceedings or 2:30 p.m.

[English]

On the Order:

Resuming debate on the motion of the Honourable Senator Boniface, seconded by the Honourable Senator Gold, P.C., for the second reading of Bill S-7, An Act to amend the Customs Act and the Preclearance Act, 2016.

Hon. David M. Wells: Honourable senators, I rise today to speak on Bill S-7, An Act to amend the Customs Act and the Preclearance Act, 2016. In my remarks today, I will address several issues related to this bill. First, I think it is important to review the government’s rationale for the legislation and to understand that this bill has come to Parliament very late, with the result that there is a legal gap in Canada’s border enforcement. Secondly, I want to touch on some of the serious questions and challenges that arise from certain provisions of this bill. Finally, I would like to comment about the way in which the legislation has been brought forward and what, I think, this reveals about the very serious problem we have with the government’s reactive approach to policy-making.

Unfortunately, colleagues, this bill fits a pattern. The pattern is that of a government that is both highly reactive in its policy-making and extremely slow in its policy implementation.

First, let me address government’s arguments in relation to the purpose of the bill. The government’s arguments were presented by Senator Boniface here last week. In her remarks, Senator Boniface reviewed the fact that Bill S-7 arises from a decision rendered by the Alberta Court of Appeal in October of 2020 finding that examination procedures used by the Canada Border Services Agency, or CBSA, when it comes to the content of personal digital devices was unconstitutional. These devices were, until recently, examined under the terms of paragraph 99(1)(a) of the Customs Act. The court’s reason for striking down this provision of the act in relation to personal digital devices was that the act itself imposed no limits on such examinations.

For many years, CBSA officers have been using section 99(1)(a) of the Customs Act and its definition of “goods” to incorporate personal digital devices.

As Senator Boniface pointed out, digital devices have the ability to hold documents which might contain an individual’s entire life history and include the most private information about any person.

The Court of Appeal found that although persons crossing international borders must have a lower expectation of privacy than is normal in a free and democratic society, the scope of information that border officers have access to when examining personal digital devices suggests that some reasonable limits are required.

Senator Boniface quoted the Court of Appeal decision as follows:

We are mindful that protecting the privacy interest in an individual’s personal electronic devices while recognizing the need for effective border security will involve a complex and delicate balancing process. It will be up to Parliament, should it choose to do so, to devise a new approach that imposes reasonable limits on the ability to conduct such searches at the border.

Colleagues, this is what we are doing today with this bill.

While the court referenced the fact that Parliament must decide whether it wishes to enact a law on this matter, the reality of our political system is that it is up to government to bring forward legislation to address the legal gap that has resulted from the Court of Appeal’s decision.

In this regard, we should be under no illusion that we do now, indeed, have a significant legal gap. That is because, although the decision of the Alberta Court of Appeal is only applicable to Alberta, the Ontario Superior Court has now also ruled that the same section of the Customs Act is unconstitutional, thereby extending this legal limbo to Ontario.

Colleagues, here I think it is important to note the nature of the cases that have triggered these rulings in both Alberta and Ontario. Each of these cases involved the importation of child pornography. I know that every senator in this chamber will agree that these offences are among the most disgusting and dangerous crimes which can be perpetrated. They are also crimes which prey upon the most vulnerable and innocent in our society.

In her remarks, Senator Boniface stated:

It is imperative that we take this incongruity seriously in the meantime. I implore you, colleagues, not as the sponsor of this bill, but someone who was involved in law enforcement for a long time, to prioritize Bill S-7 for our consideration. We can’t let this incongruity stand for a day longer than necessary for two reasons. First, training modules can’t occur for CBSA officers until the finalized version, and the finalized wording, of the bill passes through Parliament. Second, and most importantly, each day that passes from here on out can be used by those actors seeking to import obscene materials, such as child pornography, into Canada.

Naturally, I agree with that, colleagues. I think we all do you. However, I must point out that the court gave the government 18 months to respond to its ruling. It initially gave the government 12 months and then extended it for another 6 months. Yet, we now have a situation where Senator Boniface first spoke to the bill on behalf of the government on the very day that the court’s extension of the provisions of paragraph 99(1)(a) of the Customs Act expired. How does this happen? In fact, I approached Senator Gold two days prior, noting that the expiry was on our doorstep. Colleagues, I’m just the critic.

In my view, there is no excuse for this. There is particularly no excuse for this given the fact that what the government is now proposing to legislate in Bill S-7 is — to use Senator Boniface’s own words — already being done. What Bill S-7 does is take the previous internal policies of CBSA when it comes to the examination of personal digital devices and proposes to put them into law. Somehow, doing this took 18 months and counting.

In relation to this, I, again, want to quote the Alberta Court of Appeal:

We are mindful that protecting the privacy interest in an individual’s personal electronic devices while recognizing the need for effective border security will involve a complex and delicate balancing process.

There is not any complex and delicate balancing process at all in Bill S-7. Instead, what we have is merely a cut-and-paste of the existing internal policy of CBSA into law. That’s what I was told in the departmental briefing and in the critic’s briefing.

This is extremely unfortunate because there are very serious privacy concerns which are at play here, and I will highlight a few. First, there are the legal criteria that will be used to justify the initiation of an exam of a personal digital device. The threshold for that will be there must be “a reasonable general concern.” That’s a quote, colleagues: a reasonable general concern. CBSA briefing notes state that “a reasonable general concern” could be triggered by a multiplicity of indicators or such concern could be triggered by one more significant indicator. No specific contravention is required. The concern need only relate to a contravention of legislation related to the import or export of goods.

This means that the term “reasonable general concern” could, in fact, mean almost anything. Each of those words reasonable, general and concern are the lowest possible bar you can come up with. If the CBSA officer said a traveller looked nervous, that would be grounds for a full search of a device — not just for the bad guys, but for every Canadian who is subject to a secondary search. During debate last week, our colleague Senator Busson stated that “. . . it worries me that this bill will create difficulties for border officers to search questionable personal digital devices . . . .”

Yet, our colleague Senator Simons stated:

I’m worried that might open the door for searches that are more aggressive than they were under the regime of regulations that border agents were using beforehand.

In fact, colleagues, it wasn’t even under regulation, it was simply policy and there were no controls or protections for Canadians whatsoever.

Senator Omidvar stated that if a reasonable general concern is to be triggered by the behaviour a border officer notices, that is “. . . hugely subjective.”

I would agree with that since it is made all the more subjective because the triggers could be multiple indicators, which are not defined for us. Or it could be a singe indicator, again, not defined. Or as one of our colleagues correctly stated in the briefing, it could be racial profiling. It could be nothing. Colleagues, if a Canadian is pulled in for a secondary search, it could be for no valid reason.

What is contributing to the confusion is the fact that, as Senator Simons correctly argued, there is no precedent in Canadian law for the legal use of the term “reasonable general concern.” The government has rejected the idea of employing the more familiar legal term of “reasonable grounds to suspect” by arguing that this term is not appropriate for the border context. Here, I think we need to understand the specific legal arguments. The fact that the Alberta Court of Appeal apparently declined to impose a threshold of “reasonable grounds to suspect” in its ruling may support that argument. What we need to understand as legislators is precisely why that is the case and why the simple codification of CBSA’s policy is the best approach. We have had no explanation from the government on that important point and the question was asked directly to them. We can’t really be sure about what the term “reasonable general concern” actually means. As I said earlier, “He looked nervous” could be enough.

This issue will be examined in committee if we were to conform to the court’s guidance to “. . . devise a new approach that imposes reasonable limits on the ability to conduct such searches at the border.” Reasonable limits, colleagues. Reasonable limits, the court said. Reasonable general concern is, in fact, no limits. I believe that government has actually not engaged in such an exercise in drafting this bill, having pulled it directly from their policy. It will be up to Parliament; it is up to us, colleagues, to fill the void, all the while, operating under the pressure of the gap in law that the government has created by waiting more than 18 months.

In relation to the examination of personal digital devices at the border, there are fundamental questions as to how exactly officers will perform these examinations. We are told that the examinations will be determined by regulations — regulations which we have not seen and will not create.

Colleagues, as you know, legislation like Bill S-7 allows regulations to be made, but we will not have a say in those regulations because our role is simply to make the law that permits regulations to be made. Therefore, it is our duty to ensure fairness to Canadians in the question of searches while permitting the necessary searches to take place where warranted. And this must be greater than reasonable general concern.

In relation to these regulations, the government has indicated just two things. First, that when the officers examine personal digital devices, they will be obligated to take notes during such examinations. Second, that these examinations will be limited to material that is present or stored on devices at the time that an individual is crossing the border.

At this point, we know very little about the tangible protection that note taking will provide and how the limits imposed on material that a border officer may examine on a personal digital device will be governed. Will it include simple links to a website or files stored on the cloud, which, of course, would not be resident on a digital device?

What we want, in this context, is it to provide border officers with sufficient capacity to intercept obscene or otherwise illegal materials but, at the same time, give Canadians the assurance that their privacy will not be compromised where there are absolutely no grounds. That is the balance we have to strike.

In that context, I was told in the critic’s briefing that CBSA officers that search a personal digital device must first turn off mobile connectivity — or as it is more commonly called “put in airplane mode” — so that there is no access to material that might be simply accessed via the web and not stored on the device. Colleagues, if it’s stored and accessible on the device, it’s fair game. Indeed, that is what I was told.

Colleagues, here is a personal story. I was stopped at the border a number of years back. In fact, in filling out the customs form, I said I had $1,000 worth of goods. I knew the limit was $800, so I went in and said I want to pay the taxes and duties on the additional amount. I went in for a secondary search. They asked for my phone, and I gave them my phone. They asked me to unlock it, and I unlocked it. They searched through my Visa statements. I wasn’t aware of the policy, and I have no reason to be aware of the policy. Ignorance of the law is no excuse, but perhaps ignorance of CBSA policy. The CBSA officer went through my Visa statements and asked, “Where did you buy this? What is this? What is that charge?” So that was a violation of my privacy. They didn’t tell me that they had to turn it to airplane mode, which, of course, they didn’t do. I don’t think they do it in the majority — perhaps all — of the cases.

I asked Senator Boniface after her speech whether it would be appropriate for CBSA officers to also advise travellers to shut down their connectivity. Of course, I wasn’t advised. This might improve the confidence of travellers that their privacy is being protected, but also ensure that illegal material stored on the device is accessible by CBSA officers.

Senator Boniface suggested that we look into this at our committee study, and I believe we need to do just that because it is a critical element. We need to be sure that the regulatory process will be transparent and provide Canadians with the assurances to which they are entitled.

There are other questions on the provisions of this bill that need to be asked. One of the measures incorporated in the bill is a decrease in the maximum fine for interfering with a CBSA officer conducting such a search. Colleagues, it is proposed in the bill that it drop from $50,000 to $10,000 for a summary conviction, and from $500,000 to $50,000 for an indictable offence.

I am not sure how a significant reduction in fines for the smuggling of child porn serves to protect children who are subject to these heinous abuses. In fact, I’m not sure what this provision has to do with any of the purposes of this bill. Colleagues, if anything, offences for crimes such as this should be stronger, not weaker.

In the Senate, we have witnessed a pattern on numerous bills that have come before us with sudden, proclaimed urgency, often arising from last-minute panic associated with poorly thought-out measures or looming deadlines. Colleagues, we saw it more than a year ago on the bill for offshore health and safety. The government had five years to implement offshore health and safety regulations. They sought two additional years and were granted them in a budget implementation act. Then in Senator Ravalia’s bill, which was obviously introduced in the Senate, they sought two more years. We said “no,” and told them to do it in one year. That was passed unanimously in committee, in this chamber and in the other place.

We are clearly seeing the looming deadline in relation to this bill. In fact, the deadline has passed. I have not heard any argument that such an approach was unavoidable in this case. I don’t want to get too far off topic, but, colleagues, we have become so used to this occurring that many of us scarcely blinked when we learned that — by the way — today is the deadline.

The Court of Appeal of Alberta signalled 18 months ago that it expected a very different approach from the government. To reiterate, the court said:

We are mindful that protecting the privacy interest in an individual’s personal electronic devices while recognizing the need for effective border security will involve a complex and delicate balancing process.

Colleagues, I couldn’t agree more. It now falls to us in Parliament, as the court said, to devise an approach that imposes limits on the conduct of searches at the border but at the same time ensures that our border is protected.

Colleagues, we have seen that this cannot include loose definitions such as “reasonable, general concern” that have no basis in Canadian law and even less so in practice. Thank you, colleagues.

Senator Wells: Senator Dupuis, you’re absolutely right, that’s what the Court of Appeal said. The new concept chosen by the government is “reasonable general concern,” and that’s what I have issues with because, to me, there is no limit to what might trigger a search. We’re supposed to be given comfort by the fact that we are told they’ll take notes. Well, the notes will be there to protect CBSA, for sure; they won’t be there to protect the individual, in my opinion. They will say the person looked nervous or that it didn’t appear that he was from Canada or whatever. He was sweating and fidgety.

I think that the bar of reasonable general concern — which, exactly as you said, is the new concept presented by the government, which, I guess, follows advice from CBSA — is too low for the protection of the individual’s privacy rights that every law-abiding Canadian should be afforded.

Senator Simons: Thank you very much. It’s so difficult to talk about issues of child pornography because it is such a grotesque and exploitative crime. Online child sexual abuse is a scourge in Canada. There is no one in this chamber who is in favour of it.

What I am concerned about is a question of balance and volume. Every day in this country, thousands of pieces of child pornography are bought and sold and traded online. The amount of it available online is practically infinite.

Yet over the last five years, from May 5, 2017, to May 5, 2022, Canada Border Services Agency seized 392 examples of child pornography at the border that came in on digital media, some on cellular phones and computers but others on hard drives, USB sticks, CDs and DVDs, that kind of thing. That’s 392 seizures in five years, not all of which are on phones and computers. Probably the minority are on phones and computers. I’m not sure.

It seems to me that we are potentially breaching the civil liberties of every international traveller for the sake of stopping a very small hole in the dike, while over here millions of pieces of child pornography are coming over the internet. I want you to tell me whether you think the abridgement of our civil liberties is sufficiently balanced given the minute amount of child pornography that is actually being detected in this way.

Hon. Lucie Moncion: Senator Wells, you did speak a little bit about airplane mode. I don’t know if your phone is different from mine, but switching to airplane mode is just the flick of a finger. However, border officers can also flick it off. Then airplane mode is off, and they can go through your phone. You didn’t touch a lot on this. As critic of the bill, I would like to hear from you on this.

Senator Wells: Thank you, Senator Moncion. You’re correct; it’s easy to do. Unlocking a phone is easy to do — the facial scan or, on some, the thumb print or simply the password.

From my understanding — and I think it was in Senator Boniface’s second reading speech, and indeed in one of the two briefings I had from departmental officials — you are required to give your password to unlock the phone. That is a requirement. If you choose not to give the password, then CBSA has the right to hold the phone and unlock it in whatever ways they unlock phones.

I can’t remember the exact term, but CBSA told me that their policy was that they would only search it in non-connectivity mode. I call it airplane mode, and, yes, it’s easy to switch it off. If they do that, then obviously they would be violating their own policy, as they did in my case. In fact, I didn’t even put it in airplane mode because I didn’t know that was a choice I had. I think it’s a fundamental right, and Canadians should be told that they have a choice, certainly if it’s under policy. If it’s under law, they may not have that right.

You’re right that taking it off airplane mode is simple, but their policy — and this is what they told me — is that their searches can only be conducted without connectivity. Taking it off airplane mode is very simple, and perhaps if we make an amendment to the bill, it will be in law that they have to be informed. I think that would be an amendment that would be worthy of consideration for the protection of the rights of Canadians.

Hon. Bev Busson: Senator Wells, when you gave your speech with regard to this legislation, you talked about the delay that the government put forward and also, I think, used the words “despicable” and “disgusting” to talk about some of the crimes that we’re talking about here today.

I think the principle of “better late than never” might apply in this case. Although you say there is a difficult balance to be found, wouldn’t you agree that this legislation ought to be forwarded immediately to the committee so they can discuss and debate this balance, accepting that in the gap are, as you called them, innocent victims who are the subject of this whole discussion?

Senator Wells: Thank you, Senator Busson. You make an excellent point. This needs to be law as quickly as possible. I don’t want to say it could have been done 18 months ago, but it should have been done long before now, and I see no reason to delay the process of sending it to the committee.

Obviously, we all have a right to speak on it and that could take time. I don’t know if any of my colleagues that sit with my caucus are going to speak on it. I don’t think so — I haven’t been given any indication — but let’s get it to committee and give it the scrutiny that it deserves. It’s an important issue. It’s not something trite. It’s a serious issue that worst-case scenarios happen. I have no reason to want to delay it or to see it delayed.

An Hon. Senator: They didn’t like that tape.

Hon. Renée Dupuis: Senator Wells, in your speech, you stated that Bill S-7 introduces a new criterion. That is the case.

You referred to the comments of other senators who criticize this bill for introducing a new concept. Wouldn’t you say that the study you would like a committee to carry out — and I believe it is important to carry out this study — should not focus on whether a new concept is being introduced?

The problem is not that this is a new concept, because it was the Court of Appeal itself that introduced it. When the Court of Appeal states that the existing concept may be too strict for the situation we want to address, the legislator could favour a less-strict concept that creates fewer obligations for customs officers.

The fact that it is a new concept is therefore to be expected, but shouldn’t we focus instead on whether the concept chosen by the government in its bill is legally appropriate for the situation we want to address?

We should also not be engaging in scare tactics. As new concepts are often introduced into new laws, should we not instead determine whether this concept chosen by the government is appropriate in the context we want to cover in this bill?

[English]

Hon. Éric Forest: Colleagues, I would first like to thank Senator Marshall for her speech and her comments, which are always relevant. I would also like to congratulate our colleague, Senator Gignac, on his maiden speech in this chamber. His experience will allow him to make a very valuable contribution to the Senate and to the Finance Committee.

I would like to speak briefly today on Bill C-8 to express my discomfort with the tax on underused housing. I would first like to point out that the bill to implement the economic update and budget tabled last fall contains several measures that I deem to be essential. I am thinking in particular of the northern resident tax deduction and the fuel charge refunds for farmers, although this does not apply in Quebec, which is exempt from this charge because of its own carbon pricing system.

Of course, I also support increasing the Canada Emergency Business Account, which saved many businesses during the pandemic by providing over $49 billion in interest-free loans with partial write-offs.

Finally, as you know, in eastern Quebec, as in many regions of Canada, there are several seasonal industries. I think it would be important for the government to renew the flexibility of Employment Insurance so as not to penalize seasonal workers. These transitional measures are essential, but I must say that this patchwork tinkering with the program frustrates me. I look forward to the end of the government consultations on EI reform so we can finally have a modern EI system that affords proper coverage to seasonal workers and self-employed workers, as well as other workers in precarious situations.

Allow me to digress for just a moment. I noted with interest that Senator Bellemare recently introduced Bill S-244 to strengthen social dialogue by establishing an employment insurance council where EI contributors could sit down as equals and discuss the level of coverage they wish to have. This proposition is a nice contribution to the debate and I urge you to consider it.

Coming back to Bill C-8, my problem is with Part 2 of the bill, which seeks to enact the underused housing tax act. Essentially, the government would implement an annual national tax of 1% on the value of vacant or underused residential property owned by non-resident non-Canadians. I share the objective sought by the government to reduce housing prices in this manner to make housing more accessible to Canadian residents. My problem is the way the bill is going about it. First, there is the regulation of housing law. That is a provincial jurisdiction that falls under private law, specifically, property and civil law, and, more generally, social policies and local affairs.

Furthermore, to penalize a practice that is deemed to be undesirable in the housing sector, the government is imposing a punitive tax on the value of the property. It is an area of taxation that, by mutual agreement, had always been reserved for local authorities or local governments. I would like to quote constitutional expert Patrick Taillon on this aspect of the bill:

I see two possible scenarios. The first is to frame the measure as a way of regulating housing law, which would likely make the measure unconstitutional because it goes beyond the jurisdiction of Parliament.

The essential character of the bill, its pith and substance, is provincial.

That is the most logical way of framing the measure. Ultimately, only the courts can confirm that interpretation of the situation, after the fact, and if they do, it will automatically lead to the nullity of the measure.

Otherwise, the second scenario, or possible interpretation, is to conceal the true character of the measure behind the tax penalty associated with this federal regulation of housing law. To do so would be to claim that this is merely a tax, setting a dangerous precedent. Introduced without the benefit of co-operative federalism, the measure would likely upset the delicate fiscal balance of the Canadian federation.

[English]

In other words, if the bill is interpreted as a new tax, the bill will be unfair. Without negotiations and the co-operation with the provinces, a federal property tax compromises our fiscal balance. Since Confederation, the property tax has been a local and provincial tool. It’s not a good idea to borrow this tool from local authorities.

[Translation]

As you know, history has taught us that once the federal government wades into an area of taxation, it never leaves. Senators will recall that, during World War I, corporate income tax was supposed to be a temporary measure. The same thing happened during World War II, when personal income tax was to be short-lived. You know as well as I do that these areas of taxation are still the purview of the federal government, even though its tax base is far greater than that of the provinces, which are grappling with exponentially huge health care costs.

I appreciate that the underused housing tax does not represent a significant source of revenue for the government. I object more to the principle of it. I have a hard time imagining how the federal government can meet its objective without interfering in an area of taxation that is already too narrow to meet the needs of municipalities, which have been handed an increasingly long list of responsibilities over the years.

As you know, it is well documented that municipalities rely on property taxes. Cities in Quebec draw nearly 70% of their revenue from property taxes, according to a 2018 estimate by UMQ. This reliance is exacerbated by the dematerialization of the economy. Online shopping, remote work and Airbnb-type short-term rentals all contribute to a loss of commercial spaces and a shrinking municipal tax base. Municipalities’ reliance on property taxes has adverse effects in terms of real estate development, which is often done at the expense of the environment, wetlands and agricultural areas.

I fear that by acting like a pickpocket, the federal government is depriving municipalities of revenue sources and accelerating the fiscal imbalance phenomenon I described earlier. In fact, the underused housing tax act does the exact opposite of what the municipalities were asking for in the municipal white paper presented 10 years ago by the Union des municipalités du Québec. At the time — and it is still the case — they called for tax and financial reforms to allow them to diversify municipal revenue sources. This request was based on the idea that the municipality is the most appropriate political body to meet the needs of citizens at the local level.

Furthermore, in this capacity, municipalities should have the jurisdiction and authority necessary to respond to the present and future needs of their citizens, the discretion to make decisions in the local public interest, and the means to put in place to respond to those needs. They should also have the autonomy to establish and finance these measures. Another thing they need is for higher levels of government to refrain from dipping into their local sources of revenue.

Ultimately, the UMQ hoped to obtain new sources of independent funding to allow municipalities to move away from property taxes. No one ever imagined that the federal government would dip into the tax base normally reserved for municipalities. The Union des municipalités du Québec wrote to Minister Freeland on April 19 to express its opposition to the federal government’s proposal to impose a tax on the value of underused residential buildings.

I would like to quote the letter:

On the one hand, the proposed tax would set an unfortunate precedent, given that property taxes represent the only significant source of independent revenue available to municipalities.

On the other hand, municipalities already have a competent and efficient bureaucracy to administer property taxes. Duplicating this bureaucracy would represent additional costs for Quebec and Canadian taxpayers, at a time when municipalities are already facing recruitment difficulties in several areas. This measure would exacerbate this concrete issue that is affecting many municipalities.

According to the UMQ:

It would be more appropriate for the federal government to use tools other than property taxes to positively affect the housing market. Such tools could include increased investment in social and affordable housing, as was the case in the 2022-23 budget.

To conclude, I believe that the federal government is playing a very dangerous game by intruding into an area traditionally reserved for local governments. Even if the courts were to rule that the bill is valid, there is a risk that the federal government would compete with the very modest fiscal capacity of municipalities. We cannot forget that. At the very least, the federal government must have an ongoing conversation with the provinces on this issue and consider other more respectful and effective ways to address the country’s significant housing shortage.

[English]

At the very least, I invite my colleagues who will study this bill in committee to seriously consider this issue which calls into question the foundations of fiscal federalism in the country.

Thank you, meegwetch.