Hill Update, Summer 2018 – Analysis and Overview

June 22, 2018

 

After a long and contentious sitting of Parliament, MPs will be back to their constituencies for the summer BBQ circuit and meetings with local residents until September. The Capital Hill Group will give you a run-down of the legislation and political issues on the minds of Parliamentarians, staff, and stakeholders most relevant to your business.

CONTENTS

Major Policy Issues

Marijuana
Cyber Security
Indigenous Procurement
National Data Strategy
Treasury Board Estimates Reforms

Status of Key Legislation

Political Update and Key Upcoming Dates

Trade Update

Major Legislation and Policy Issues

Marijuana

Today, The Cannabis Act cleared its final legislative hurtle when the bill received Royal Assent.  All levels of Government will now have until October 17, 2018 to implement and prepare for the legal sale of recreational cannabis. These preparations include everything from transporting cannabis to the physical stores to training employees to ensuring police and emergency services are prepared. The consumption of recreational cannabis remains illegal until October 17th.
Under legalization an adult of 18 or 19 years of age depending on the province or territory will legally be allowed to:

  • purchase limited amounts of fresh cannabis, dried cannabis, cannabis oil, cannabis seeds, or cannabis plants from retailers authorized by the provinces and territories;
  • possess up to 30 grams of dried legal cannabis or equivalent in non-dried form in public;
  • consume cannabis in locations authorized by local jurisdictions;
  • grow up to four cannabis plants per household (not per person) for personal use, from licensed seeds or seedlings from licensed suppliers;
  • share up to 30 grams of dried cannabis or equivalent with other adults;
  • make legal cannabis-containing products at home, such as food and drinks, provided that dangerous organic solvents are not used in making them.

During the Act’s journey through the Senate there was some contention around two key issues which still remain. The federal allowance to grow cannabis at home-with some provinces and Nunavut wanting to ban home grow. Moreover, some highlight the lack of consultation and inclusion of Canada’s indigenous peoples.  While the federal government maintained firm on its position to allow home grow of up to four cannabis plants they did slightly address the concerns in regards to Indigenous Peoples though a letter a letter from Minister Jane Philpott and Minister Ginette Petitpas Taylor sent to the Senate Aboriginal Peoples Committee whose report recommended delaying the bill by up to a year.

Cyber Security

On June 12, 2018, the Government of Canada announced its new National Cyber Security Strategy. The Strategy is the road map for cyber security in Canada and lays out government initiatives to respond to the challenges and opportunities of cyberspace.

Under the Strategy, the Government’s main priority is to take on a leadership role to advance cyber security in Canada. To that end, the Government will establish the Canadian Centre for Cyber Security(Cyber Centre) under the Communications Security Establishment (CSE) and Department of National Defence (DND), which will consolidate the cyber security operational units of the federal government and act as the operational leader and government spokesperson during cyber security events. The Cyber Centre will be an outward-facing agency and the focal point for cyber innovation and for collaboration between the private and public sectors. It will be the primary point of contact for partnerships and projects with the cyber security sector.

Initial operational capability is expected by Fall 2018 and full operational capability is expected by Spring 2020. The opening of the new facility for the Cyber Centre should occur by Summer 2019.

While the Strategy does not specifically mention procurement opportunities, the Cyber Centre will be the focal point for engagement with stakeholders and the main point of contact for business looking to pursue procurement opportunities with government, present solutions, and develop partnerships in cyber security. Since the Cyber Centre will be established under DND, it will be the department responsible for all operational and innovation issues regarding cyber security. On the other hand, Public Safety Canada will remain the policy authority for cyber security.

Indigenous Procurement

COMMITTEE REPORT:

On June 20, the Government Operations Committee (OGGO) tabled in the House a report:  Modernizing Federal Procurement for Small and Medium Enterprises, Women-Owned and Indigenous Businesses”. Report

The Conservative members of the committee had a ‘supplementary observations’ piece, on page 167.  They wished for more emphasis on the need to simplify bids and help for Aboriginal companies through the application process to be ‘pre-qualified’ to bid on and be better positioned for joint venture opportunities.

CHG Analysis:  Although the report was developed over 8 months contains 40 recommendations, many  are well known and obvious.  CHG is hopeful that consultations this summer on a discussion paper on Indigenous procurement, conducted by Indigenous Services Canada with First Nations businesses, combined with a larger roundtable in the Fall with the AFN, Metis, ITK and other organizations, will lead to a final paper or a framework document on how, practically, more First Nations businesses can engage with the GoC on procurement opportunities.

Summary of the OGGO Report:

The Committee made 40 recommendations on how to improve the procurement process,  pointing to 5 main challenges for the identified groups when trying to do business with the GoC:

  1. Complexity of current system
  2. Misaligned approaches
  3. Focus on price, to the detriment of other qualifications
  4. Inclusivity
  5. Failure of Government’s Procurement Strategy for Aboriginal Businesses (PSAB)

Highlights of the recommendations.  The Committee has requested a formal Government response to this critical report.

  • Procurement strategy for Aboriginal Business
    • Government of Canada should:  develop a multi-department approach to administer the Procurement Strategy for Aboriginal businesses;  increase the use of ‘set-asides’; encourage large contractors and suppliers to report on the use of diverse subcontractors and that they post opportunities for these groups on Buy and Sell.
  • SMEs in federal procurement
    • Govt of Canada should:  simplify the procurement process by reducing red tape and shortening the time; better coordination between departments is needed; use plain language and that English and French texts must be consistent; facilitate joint ventures between SMEs and large businesses
    • GoC should consider implementing a simplified procurement process specifically for SMEs or for contracts below a certain threshold, and ensure a prompt payment legislation

For their part, SMEs should:

  • Consult more often the Buy and Sell website
  • Use the resources of the Office of Small and Medium Sized Enterprises to advocate more for SMEs
  • Look to other countries to secure contracts – especially those countries that Canada has trade agreements with.

Lastly, for BCIP:  run the program as part of Innovation Solutions Canada; increase participants and marketing of the program, and encourage more follow on sales for a defined period.

National Data Strategy

Navdeep Bains, Minister of Innovation, Science and Economic Development, has launched a national consultation on digital and data transformation in order to better understand how Canada can drive innovation, prepare Canadians for the future of work, and ensure they have trust and confidence in how their data is used.

Business leaders and academics have been urging the federal government to create a national strategy to harness the expanding power of the data-driven economy, while at the same time the Government must re-assure Canadians concerned about how consumer data is harvested and used online.

Bains said that while technologies such as artificial intelligence and big data are presenting “new opportunities for innovators to create jobs and generate prosperity… to spur digital innovation, investment, and job creation in Canada, citizens must have trust and confidence that their data and privacy will be protected.”

Over the summer, roundtable consultations will take place in cities across Canada with business, academia, civil society and others, with more information on dates and locations to be announced. Because there is strength in our diversity, the roundtables will include women, Indigenous peoples and other under-represented groups. All Canadians are invited to have their say and participate in the Digital and Data Consultations online.

Treasury Board Estimates Reforms

Treasury Board Secretariat President Scott Brison is moving forward with new reserve fund with up to $7-billion that would give it full authority to dispense money for the programs and projects announced in the federal budget. This fund is aimed at getting money flowing to new programs faster and well before the first round of supplementary estimates, which won’t be released until November.

Mr. Brison promised in 2016 to align Parliament’s main spending vote with the budget, which until this year came out after the main estimates—where Parliament approves the bulk of annual spending department-by-department. In the past, because the main estimates were released before the budget, any new budget measures had to be approved later in supplementary estimates

However, Brison’s plans have faced criticism from the Parliamentary Budget Officer and Opposition politicians. “The government’s approach to funding budget 2018 initiatives provides parliamentarians with information that only marginally supports their deliberations and places fewer controls around the money it approves,” Parliamentary Budget Officer Jean-Denis Frechette Frechette wrote in a report on main estimates, while the Conservatives and NDP have accused the government of setting up the fund as a “slush fund” with which the Government could use the fund to re-assign money to politically convenient projects and sources and that lumping $7 billion worth of spending into one vote means Parliament will only get a detailed breakdown after the fact.

Status of Key Legislation

Between January and June 2018, 19 Bills passed into law. This brings the total since Liberals were first elected to 64 bills.

Passed into Law
C-24: The Salaries Act This Act allows for 8 new ministerial salaries including the Minister of La Francophonie, the Minister of Science, the Minister of Small Business and Tourism, the Minister of Sports and Persons with Disabilities, the Minister of the Status of Women, as well as three untitled positions to be filled as required such as the Minister of Indigenous Services.
C-45: The Cannabis Act This Act legalizes access to recreational cannabis while controlling and regulating how it is grown, distributed, and sold.
C-46: An Act to amend the Criminal Code (offences relating to conveyances) and to make consequential amendments to other Acts This Act is companion legislation to The Cannabis Act and amends the Criminal Code provisions on drug impaired driving. The Act makes it an offence to drive with a blood concentration level equal or higher to the legal limit, allows government to set blood drug concentrations and allow police to demand a blood, saliva, or urine sample from drivers suspected of having consumed cannabis or certain other drugs.
C-74: Budget Implementation Act No. 1 This Act is a five part piece of legislation that would implement certain provisions proposed in the federal government’s 2018-19 budget. It also enacts the Greenhouse Gas Pollution Pricing Act.
C-211: Federal Framework on Post Traumatic Stress Disorder This Act requires the Minister of Health to assemble provincial and territorial representatives to create a federal framework to address the challenges of recognizing symptoms and providing timely diagnosis and treatment post-traumatic stress disorder.

In the Senate
C-21: Customs Act This Act amends the Customs Act to authorize the Canada Border Services Agency to collect, from specific people and sources, personal information on all persons who are leaving or have left Canada. It also provides officers with the authority to report and examine goods that will be exported from Canada.
C-59: An Act Respecting National Security Matters This bill is intended to insure oversight over Canada’s security agencies including CSIS through an independent oversight agency and an intelligence commissioner.

In the House
C-81: Accessible Canada Act This bill outlines how the Government of Canada will require organizations under federal jurisdiction to identify, remove and prevent barriers to accessibility. It will also create The Canadian Accessibility Standards Development Organization (CASDO).

Political Update and Key Upcoming Dates

Conservative leader Andrew Scheer has his first by-election gain to celebrate, as the Tories romped to victory in Chicoutimi-Le Fjord on Monday, gaining the seat from the Liberals. While a large part of the victory can be attributed to the local celebrity of Conservative candidate and MP elect Richard Martel, a former longtime head coach of the Chicoutimi Saguenéens Quebec Major Junior Hockey League team, Scheer’s team will take satisfaction in that Conservative messaging on giving Quebec more powers around culture and immigration and allowing Quebec to collect federal taxes on Ottawa’s behalf  may be resonating with voters in the province outside of Montreal. The Liberals collected just under 30% of the vote after only winning the seat with 31% in the 2015 election, however they were unable to take advantage of favourable vote splits, as both the Bloc Quebecois and NDP, who have won the riding in the recent past saw their vote share collapse into the single digits.

A number of by-elections will test the parties again over the next few months:

  • Outremont in Montreal, where the NDP will be hard pressed to hold former leader Tom Mulcair’s seat given their struggles in Quebec under Jagmeet Singh, the Liberals will be eager to gain back this seat that was a Liberal stronghold prior to Mulcair snatching it in a 2007 by-election
  • Saint-Léonard—Saint-Michel in Montreal, a longtime Liberal stronghold that the party should hold after incumbent Nicola Di Iorio announced his resignation for family reasons
  • Leeds—Grenville—Thousand Islands and Rideau Lakes in rural Eastern Ontario needs a new MP following the unfortunate passing of Conservative MP Gord Brown – expect an easy Conservative hold
  • Burnaby South in British Columbia will be a test of messaging around pipelines in ground zero for the Trans Mountain Pipeline, which would terminate in Burnaby. NDP incumbent Kennedy Stewart is resigning to run for mayor of Vancouver, and speculation abounds that NDP leader Jagmeet Singh might contest the by-election to get a seat in the House

Other key dates to watch for:

  • June 26 – Federal Provincial Ministers of Finance meet in Ottawa.  Press conference at 3:45 pm
  • July 18 – 20 – Premiers meet in St. Andrews, NB.  Also pre-meeting with First Nations leaders on 18th
  • July 25 AFN elections, Vancouver. 5 running to be National Chief:   incumbent Perry Bellegarde, Saskatchewan; Russ Diabo, Quebec; Sheila North, Manitoba; Miles Richardson, British Columbia; and Katherine Whitecloud from Manitoba.
  • Conservative Party Conference in Halifax, August 23-25
  • Return of the House and Senate: September 17

As well, Prime Minister Trudeau has yet to prorogue Parliament at any point for a new speech from the throne – making this one of the longest sessions of Parliament in Canadian history. With the fall marking the one year point from the 2019 election, Trudeau could use the return of the House to prorogue and hit the Parliamentary reset button going into the last year of his government’s mandate.

Trade Update

TRADE – for Canada – the Good, the Bad and the UGLY
With the rise in the number of countries around the world electing nationalist/populists governments, growing protectionism is attacking the world’s integrated supply chains.  An escalating tit-for-tat trade war between the two largest economies in the world – US and China  – is unfolding now and will no doubt impact the world’s economic wellbeing with some reports saying the it could put the North American economies into a recession.  In addition to tariffs on goods/services, the US is also considering restricting Chinese investment in the US.

The Good:  in Canada, implementing legislation for the CPTPP was tabled last week.  While the NDP blocked unanimous consent, together the Liberal Government and the CPC MPs feel they can pass this trade agreement by/before Christmas 2018.  When passed Canadian goods and services will have free access to 10 countries without having to compete with the US in those markets.

The Bad:   while there are no confirmed dates, NAFTA tri-lateral talks are expected to resume this summer.  Some glimmer of hope, tho they have been contradicted before, on June 19 Sec of State Pompeo, said he’s confident a deal with Canada on NAFTA will be made in the “coming weeks” . The November 6 mid-term elections in America will likely change the numbers in Congress; not sure if new representatives will hider/help modernizing NAFTA – couldn’t be worse than the last 18 months of up and down negotiations.

The Ugly #1:   While Trump has followed through on every threat he has tweeted/announced, Canada had hoped not to be hit with 25% tariffs on steel and a 10% tariffs on aluminum.  But we did.  In response the GoC consulted with industry/unions etc and on July 1 will impose reciprocal tariffs $ for $ in goods from the US.   In anticipation of jobs losses, the Government is working on a support package for workers and companies injured by these tariffs.

The Ugly #2:  Major disruptions to Canada’s economy should the US Commerce department agree (under Section 232*) and impose 25% tariffs on vehicles coming into the US.  TD Bank report said 1 in 5 Canadian jobs would be negatively affected by these tariffs.  With such an integrated auto industry it is inconceivable that American auto and parts makers will not also take a huge hit .  All other countries around the world are collaborating while waiting for the ruling – expected later this summer or into early Fall.  Minister Freeland confirmed June 19 before CIIT committee, that the GoC is working on a plan for reaction and retaliation should Trump follow through on the auto tariffs.

Flash News…
Are Americans having second thoughts on Canadian steel tariffs – or are they just trying to bully Canada into making concessions in NAFTA?  On June 20 US Commerce Secretary Ross admitted Canada, “on its own” was not a national security threat, but Chinese steel coming through Canada and flooding the US is.  He also said the imposition of steel tariffs was related to NAFTA, and that he hopes talks on NAFTA can resume shortly after the Mexican election.   CHG thought:  if Canada is not a threat on steel, how are we a threat on auto imports to the US??   

*US Department of Commerce was order to begin an investigation into  “whether the decline of the U.S. automobile sector threatens to weaken the U.S. economy by reducing research and development, skilled jobs and more advanced manufacturing processes for things like electric and autonomous vehicles”. The deadline for consultations is June 22nd and there will be two hearings in DC on July 19th and 20th.  The process – triggered under Section 232 of the 1962 Trade Expansion Act (allows the government to slap duties on imports it deems a threat to national security – last used to impose steel and aluminum tariffs in March) – could take weeks and or months with the President making the final decision