Hill Update: Pre-Budget Consultations

House Finance Committee Report 


Summary of Committee Recommendations

Trudeau’s Address to AFN Special Chiefs Assembly

House Of Commons Finance Committee’s Pre-Budget Consultation Report:
Creating The Conditions For Economic Growth: Tools For People, Businesses And Communities

Yesterday Dec 7th, House of Commons Finance Committee Chair the Hon. Wayne Easter tabled into the House the Committee’s Pre-Budget Consultations in Advance of the 2017 Budget. The report contains 81 recommendations, broken down into the categories of People, Business, Communities, and the Federal Government’s Finances and Policy Making Process. These were then further broken down into issue specific sub-categories such as transparency in policy making, climate change, public safety, agriculture, tax rates, employment, Indigenous issues, and education among many others.

The report was generated after receiving 442 briefs, and heard from 214 groups and individuals in Ottawa and in various cities throughout Canada. According to the introduction of the report, “the Committee selected economic growth as the theme that would guide the consultations this year…within a context of lower-than-expected and slowing growth in Canada and worldwide, including in the United States and some of Canada’s major trading partners”

Read below to see selected policy recommendations most relevant to our clients sorted by section. As a reminder, you can read the whole report here.

SUMMARY OF COMMITTEE RECOMMENDATIONS:

PEOPLE

HEALTH

  • A new Health Care Accord, ensure that the accord that includes a national prescription drug program; enhanced investments in home care, a mental health strategy and investments in information technologies that support improved management and accountability measures
  • The creation of a comprehensive and integrated national dementia strategy

EDUCATION AND SKILLS TRAINING

  • Increased funding to organizations and initiatives that deliver literacy and essential skills programs and services
  • Expand pre-apprenticeship training programs and launch a pilot program that identifies and establishes regional or sectoral consortia of firms that connect apprentices to employers
  • Increase funding to initiatives aimed at filling Canada’s information and communications technology skills gap through programming in digital skills and coding education
  • Establish a six-month, interest-free grace period for those accessing the Canada Student Loans Program

EMPLOYMENT

  • Review all federal spending on skills training and labour market development, whether cost-shared with the provinces/territories or otherwise, in order to determine the relevance and responsiveness of this spending to labour market needs across the country.

PERSONAL TAXES

  • Review the effectiveness of the disability tax credit and consider making it refundable
  • Expand the Canada Revenue Agency’s interpretation of the Income Tax Act, or amend section 118.3 of the Income Tax Act, to include all activities related to insulin administration in the disability tax credit’s eligibility criteria
  • Ensure that the Community Volunteer Income Tax Program operates throughout the year and assists individuals in determining their eligibility for benefits

SENIORS

  • Implement a senior’s index to determine the amount by which Old Age Security and Guaranteed Income Supplement benefits should be increased

INDIGENOUS

  • Support the First Nations Financial Authority explore whether its funding model should be expanded nationally
  • Conduct an immediate review of, and undertake reforms to, the First Nations child welfare system
  • Ensure that federal employees receive training on the recommendations contained in the report of the Truth and Reconciliation Commission
  • Remove the 2% funding cap in an effort to address the program backlog in relation to Inuit, Métis and First Nations students for the Post-Secondary Student Support Program
  • Invest in reconciliation education at post-secondary institutions that request such education
  • Invest in Indigenous leadership and education programs and provide additional funding to the Indspire Building Brighter Futures: Bursaries, Scholarships and Awards program to support Indigenous students pursuing postsecondary education
  • Fund the establishment of Indigenous controlled universities

GUARANTEED INCOME

  • Undertake a multi-year, longitudinal study and implement a pilot project consistent with the concept of a guaranteed income

VETERANS

  • In relation to veterans recognize the loss of career progression in its financial benefits, ensure that those who have incurred a serious service-related illness or injury and who have had their careers end prematurely receive an income support that includes an escalating feature that accounts for this lost career opportunity
  • Implement a life-long benefit as an option for injured veterans
  • Create a veterans education benefit in order to help veterans re-enter the workforce and to expand Canada’s skilled labour force. This benefit should fund the full costs of up to four years of college, university or technical education for Canadian Forces veterans after they complete their service
  • The implementation of a national post-traumatic stress disorder program for veterans, as well as other safety and security personnel under the federal jurisdiction

IMMIGRATION

  • Invest funds to reduce wait times for processing immigration applications and work visas

ARTS AND ATHLETICS

  • Amend the Income Tax Act and the Copyright Act in order to provide for artists’ resale rights in Canada
  • Increase funding for the Athlete Assistance Program
  • Increasing funding for the Canada Book Fund and the Canada Music Fund, create a music export fund

BUSINESS 

CORPORATE TAXES

  • Conduct an exhaustive review of the tax treatment of intergenerational transfers of businesses
  • Recognize the income earned by campgrounds and storage facilities as “active business income” for the purpose of determining eligibility for the small business deduction
  • Review and alter capital cost allowance rates to reflect changes in technology and the useful life of assets

SUPPORT FOR NEW AND EXPANDING BUSINESS

  • Establish a process by which regional economic development agencies are able to access additional core funding for large-scale investments
  • Support angel investment by investing in a nationally coordinated network supporting angel investment

EMPLOYMENT

  • Address processing issues and inflexible features of the Temporary Foreign Worker Program that are negatively affecting employers’ access to workers in a range of sectors.
  • Improve the Express Entry program, with a view to enhancing service standards and processing applications more quickly
  • Address the processing issues and inflexible features of the Temporary Resident Visa Program, particularly in order to assist Canada’s tourism sector
  • Provide greater financial incentives to small and medium-sized employers that hire people with disabilities
  • Increased contribution to the various federal and provincial/territorial labour market agreements in relation to people with disabilities

RESEARCH, DEVELOPMENT, INNOVATION AND COMMERCIALIZATION

  • The establishment of a Canadian centre for international research partnerships dedicated to building multisectoral, multinational research programs focused on late-stage technology development
  • Consider the establishment of an automotive research and development centre within the National Research Council of Canada
  • Commit to a multi-year increase in direct federal investments in applied research at colleges and institutes
  • Contribute to cluster capacity–building through the establishment of a small cluster coordinating office
  • Create a first patent program to subsidize the expenses incurred by small and medium-sized businesses obtaining a first patent

AGRICULTURE

  • Suggest that the Auditor General conduct a complete audit of the sale and disposition of the assets of the Canadian Wheat Board
  • Provide additional funding to rebuild scientific, technical and research capacity at Agriculture and Agri-Food Canada and reverse the reductions made to AgriStability and AgriInvest
  • Enhance AgriInvest by allowing farmers to make a withdrawal from Fund 1 without first having to make a withdrawal from Fund 2, provided that any such withdrawal is invested in eligible projects
  • Establish a limited statutory deemed trust that protects produce sellers and growers during bankruptcy

FORESTRY

  • Ensure the stability of wood supply through aggressively combatting the spruce budworm, and through renewing and enhancing commitments to research efforts
  • Consistent with Canada’s international trade obligations, explore possible support measures for Canadian softwood lumber producers in the event that the U.S. government imposes countervailing or anti-dumping duties on Canada’s softwood lumber exports to the United States

MANUFACTURING

  • Develop a national auto strategy that would ensure a timely and coordinated approach to maintaining current, and attracting new, assembly plants
  • Supporting advanced manufacturing through investments in sectoral development initiatives, particularly in the aerospace and space sector

RESOURCE EXTRACTION

  • Provide direct support to, Canada’s resource extraction sector to assist in the development of clean technologies designed to reduce energy consumption and greenhouse gas emissions
  • Review the recent changes made to the Atlantic Investment Tax Credit, the Corporate Mineral Exploration and Development Tax Credit, accelerated capital cost allowance rates, the Canadian Exploration Expense and the Canadian Development Expense

COMMUNITIES 

INFRASTRUCTURE AND ITS FINANCING

  • Ensure that infrastructure funds for northern and remote communities have a focus on transportation infrastructure, such as bridge replacement and roadway renewals that will effectively enable trade and growth for Canada’s agricultural sector
  • Investing in higher speed, high frequency passenger rail service allocating funding to VIA Rail’s Quebec City-Windsor Corridor fleet-renewal project and proceeding with VIA Rail’s procurement process
  • Ensuring that small National Airports System airports are eligible for infrastructure funds
  • Working with telecommunication companies that agree to participate in a rural broadband program that would be funded through changes to the capital cost allowance rates for classes 8, 42 and 46, which address communications networks equipment including broadband networks and working to develop a support program for cellular coverage (mobile Internet) for regions that are not served or are underserved
  • Undertake a review of the municipal infrastructure funding formula to ensure that – like the permanent and indexed Gas Tax Fund – funding is long-term, predictable, sustainable and dedicated

HOUSING

  • Commit long-term funding to address the forthcoming expiration of federal operating agreements in relation to geared-to-income rental housing
  • Re-examine the definition of housing affordability that is used by the government and Canada Mortgage and Housing Corporation
  • Renegotiate the funding agreements in relation to housing to ensure the existence of firm targets for the number of new rental units to be built annually
  • Extend the affordable housing programs for seniors and for victims of violence that were announced in the 2016 federal budget and that are set to end in two years

ENVIRONMENT AND CLIMATE CHANGE

  • Encourage the use of electric vehicles by investing in the infrastructure that is needed to support these vehicles, such as charging stations
  • That the Government of Canada reduce the use of diesel power for electric power generation in Indigenous communities through clean energy projects

FEDERAL FINANCES, POLICY MAKING, AND THE GOVERNMENT

FEDERAL FINANCES

  • Undertake a comprehensive tax review with the objective of simplifying the Income Tax Act

GOVERNMENT

  • Reinstate in-person Canada Revenue Agency services so that these individuals have more individualized supports
  • Increase its investments in official development assistance with the goal of investing 0.35% of gross domestic product within the next three to four years

CONSERVATIVES AND NDP RESPOND

The Official Opposition Conservatives issued a dissenting report, claiming that “the Committee’s report asks the federal government to double down on a failed plan; one that will result in more reckless spending, lower economic growth, fewer jobs and higher taxes.” The Conservatives, concerned that 36 of the 81 recommendations proposed by the majority Liberal report, call for additional spending for the 2017 budget, have called on the Government to reduce the cost of doing business in Canada and not add more to the already high deficit, return to a balanced budget and scrutinize spending and crown corporation practices to eliminate waste.  Specifically, the CPC call for:

  • Review and propose updates to the Capital Cost Allowance to reflect changes in technology and the shorter working life of particular assets, including in industries such as oil and gas, renewable energy, telecommunications, trucking and construction;
  • Deliver on its promise to reduce the corporate income tax rate for small business from 10.5% to 9%;
  • Introduce a hiring tax credit for businesses that can be applied to payroll tax obligations, such as Employment Insurance or CPP contributions;
  • Support indigenous students pursuing academic programs by providing an amount of $30 million per year for five years for the Indspire’s Building Brighter Futures: Bursaries, Scholarship and Awards program;
  • Present an infrastructure plan that prioritizes small communities in rural Canada;
  • Do not introduce any new excise taxes on the consumption of foods and beverages;
  • Not introduce new taxes on online services, including internet service providers and digital streaming;
  • Include in the budget a full assessment of the economic, employment and fiscal effects of the government’s plan for a national carbon price for fiscal years 2017/18 to 2021/22.

The third-party NDP supplementary report found that “The committee’s main findings have failed to introduce a clear path forward to meet the challenges we face”. Highlighted NDP recommendations include:

  • Invest $155 million in First Nations child welfare services, an additional $50 million per year for the Post-Secondary Student Support Program for Indigenous students
  • Reverse the Conservatives’ cuts to health care transfers and restore the funding escalator in the next Health Accord
  • Eliminate the Employee Stock option deduction, restore small business tax cuts,ensure that municipalities of all sizes can access necessary infrastructure funding
  • Provide a fund to help deploy mobile internet coverage in communities that are poorly or not served
  • Establish a federal minimum wage of $15 and begin addressing precarious work by ending unpaid internships
  • Provide a clear strategy and timeline for the phase-out of fossil fuel subsidies

TRUDEAU’S ADDRESS TO AFN SPECIAL CHIEFS ASSEMBLY

On December 6, 2016, Prime Minister Justin Trudeau delivered a speech to a Special Chiefs Assembly. This event was held in Gatineau (Québec) by the Assembly of First Nations (AFN). The Prime Minister’s speaking notes can be found here.

This analysis highlights the main points that could be of interest to clients of the Capital Hill Group. The items below are presented in the order in which they appear in the speaking notes. Relevant quotes are provided where possible and appropriate (indicated in italics).

• Prime Minister Trudeau confirmed the government’s commitment to implement recommendations formulated by the Truth and Reconciliation Commission:

My government supports the 94 calls to action of the Truth and Reconciliation Commission. […] Each of the 94 needs to be implemented. 

Indeed, as the one-year anniversary approaches, I am pleased to confirm that progress is underway on 36 of the 45 calls to action that are under solely federal purview.”

These include, among many others, education, health and criminal justice, and the discrepancies in funding and outcomes on these for Indigenous versus non-Indigenous Canadians.

• The Prime Minister reaffirmed his willingness to adopt and implement the United Nations’ Declaration for the Rights of Indigenous Peoples (UNDRIP).

In May, Minister Bennett went to the UN to make clear our government’s unqualified support for the United Nations Declaration for the Rights of Indigenous Peoples.  We remain committed to its adoption and implementation in full partnership and in consultation with Indigenous Peoples. 

I have asked Minister Wilson-Raybould to lead the work collectively with her Cabinet colleagues and First Nations, the Métis Nation and Inuit Peoples to ensure that this gets done.”

Justice Minister Jody Wilson-Raybould has been more cautious in her approach. For example, during a meeting with AFN in July, Minister Wilson-Raybould explained UNDRIP couldn’t simply be adopted word for word, as some of its articles are incompatible with existing Canadian legislation, such as the Indian Act. This was in response to a campaign by NDP MP Roméo Saganash, who wants to see the full declaration adopted as law. The Minister later elaborated that her strategy is not intended to backtrack on the Government’s commitment , but that “simplistic approaches such as adopting the United Nations declaration as being Canadian law are unworkable.”

• Mr. Trudeau also placed particular emphasis on the concept of a “nation-to-nation relationship,” using the term throughout the speech. On December 7, the Hill Times published a piece where Minister of Indigenous and Northern Affairs Carolyn Bennett and Senator Lillian Dyck (who chairs the Senate Committee on Aboriginal Peoples) are quoted as saying this committee will undertake a study on the meaning of “nation to nation.”

• Prime Minister Trudeau recognized some of his government’s decisions will not be popular among Indigenous Canadians, particularly those relating to pipeline approvals.

Reconciliation does not mean that we […] will agree on everything.

I know that there are people in this room who deeply disagree with our position to move ahead with the Kinder Morgan pipeline. I know there are people here who agree with it. I also know that there are people who deeply disagree with our position not to move forward with the Northern Gateway pipeline, just as there are those who agree with it.

The test of our relationship is not whether we’ll always agree. The test of our relationship is whether we can still move forward, together.”

I know that we will disagree at times – on which path to take, or at what pace.  Some of us might want to push on, others will need to rest.”

• Lastly, it has been reported in the media that the Prime Minister added a comment to his speech that was not included in his speaking notes (see for example this article). These additional remarks concerned Natural Resources Minister Jim Carr’s comments on the week of November 28 that defence forces and police could be called in if pipeline protests get out of hand. Minister Carr later apologized for this, both in the media and by personally calling several Indigenous Chiefs.

On his speech on December 6, Mr. Trudeau called Mr. Carr’s remarks “unfortunate” and recognized his apology. This does however underscore the concept that reconciliation and disagreements are not mutually exclusive.

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Want more information on these and other federal issues? Please feel free to contact your CHG consultant for more in-depth details.