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C-15 Budget Implementation

Honourable senators, I'm pleased to sponsor Bill C-15, the government's budget implementation act.

Before I proceed with my comments, I would like to thank the Honourable Senator Smith and his committee for their due diligence in their advance study of the Budget Implementation Act. Over the coming days we will benefit significantly from the work they have done.

Bill C-15 contains amendments to various acts required to allow implementation of key measures contained in Budget 2016. With this bill, and the budget it supports, the newly elected government seeks to improve Canada's position in a shifting world economy by investing in a long-term, inclusive plan for growth. More importantly, I believe this bill is proof positive of the government's new and optimistic approach to economic management that supports Canadians by investing in our future.

The Canadian economy — and indeed economies the world over — are undergoing dramatic changes that could potentially disrupt our future growth. In that environment, there is a consensus in Canada and around the world, from organizations like the IMF and the OECD, that governments should be investing in their economies to spur economic growth for the future.

Budget 2016 recognizes that there are no quick solutions to many challenges facing Canada's future prosperity, and it addresses this by taking a strategic and comprehensive approach to long-term growth. Fortunately for this country, we are better prepared than most to make the necessary investments in the economy with a debt-to-GDP ratio that is by far the lowest of any G7 country.

I know, as a former secretary of the Treasury Board during the program review period, how difficult, but necessary, expenditure reduction has been to put us in this position.

We also at the present time benefit from interest rates that are at record lows, so Canada can borrow on excellent terms.

Though Canada's economy has fared well, both before and after the recession, the core of the Canadian economy continues to feel squeezed: the middle class. And rightly so.

Among the wealthiest 0.01 per cent of Canadians, their after tax, after transfer incomes have risen dramatically in the past 30 years. Individuals earning more than $1.8 million per year have on average seen their incomes rise by nearly 156 per cent in that time, after taking inflation into account.

The net result is that even though there has been economic growth over the past three decades, it has not benefited the middle class. The need for more inclusive growth is not new. It has long been understood that as a strong economy starts, it starts with the middle class.

Colleagues, I'd like to take a few minutes to discuss Budget 2016 before I move on to the specific measures in the budget before us.

Infrastructure is vital to strengthening the economy and growing this middle class. That is why this budget proposes major new investments in infrastructure from coast to coast to coast. Studies consistently show that when there is slack in the economy and interest rates are low, for every dollar a government spends on infrastructure, greater economic activity is generated.

The government's proposed infrastructure investment will be made with a focus on long-term growth but will also include initiatives that will make a difference in the immediate future.

To help families and communities struggling right now, the first phase of the government's infrastructure plan invests $11.9 billion over five years to modernize and rehabilitate public transit, water and waste management systems, provide affordable housing and protect infrastructure systems from the effects of climate change.

The budget also invests $3.4 billion over five years to help maintain and upgrade national parks, harbours, federal airports, ports infrastructure and border infrastructure and to support the cleanup of federal contaminated sites across Canada.

Over the course of the next decade, the government plans to invest more than $120 billion in infrastructure, all of which will benefit Canada going forward. These initiatives will accelerate the transition to a low-carbon, clean-growth economy, enhance broadband access for rural communities and deliver many other benefits for Canadians.

So, too, will enhancing the country's capacity to spur innovation. Within the next year the government will put forward a new innovation agenda that will outline a vision for Canada's economy as a centre of global innovation, renowned for its science and technology, entrepreneurialism and globally competitive companies.

To promote this plan, Budget 2016 includes new measures to boost Canada's capacity to innovate and grow the economy. Canada's universities, colleges and research institutions attract the best and brightest from around the world to create hubs of discovery and innovation, which in turn help companies grow and compete more effectively.

To support these centres of excellence, the government will provide the highest annual funding increase in over a decade for discovery research through Canada's granting councils, an additional $95 million per year.

It will also invest $2 billion over three years for a new post- secondary institution strategic investment fund to modernize on- campus research, commercialization and training facilities. Through these initiatives, our colleges and universities will be able to modernize research labs, retrofit buildings used for advanced training and expand on-campus incubators that support startups as they grow their businesses. This will create cleaner and more modern campuses today and better economic conditions for tomorrow.

These investments all reflect the government's core belief that the advancement of basic science and the development of intellectual capacity are key drivers of the innovation agenda. By working together, business, post-secondary institutions, governments at all levels and other stakeholders can accelerate economic growth. Budget 2016 will invest $800 million over four years to support innovation networks and clusters designed to increase collaboration and create value through innovation, helping to ensure Canada is at the forefront of technology advancement in the 21st century.

Innovation and economic growth are also essential in Canada's plan to attack climate change. Our environment and economy go hand in hand. This new spirit of collaboration with provincial and territorial governments is paramount in addressing the global threats posed by our changing climate.

The government is committed to working with provincial and territorial partners towards the new pan-Canadian framework on clean growth and climate change. Accordingly, the budget proposes investments in new clean technology projects that address climate change, air quality and clean water to support provincial and territorial actions that significantly reduce greenhouse gas emissions.

This includes expanding eligibility for accelerated capital cost allowances in two important and emerging areas: power for electric vehicles and electric storage, as well as launching regional discussions to identify the most promising electricity infrastructure projects to reduce greenhouse gases.

As announced in March by the Prime Minister at the first ministers' meeting in Vancouver, the government will create a $2 billion low-carbon economy fund.

Honourable senators, the government also recognizes the importance of a renewed relationship with indigenous peoples based on mutual respect and support, and the future success of indigenous peoples in this country must be at the heart of all initiatives undertaken by the government.

In economic terms, the arguments are irrefutable. With an aging population, the Canadian economy needs more workers. The indigenous population is Canada's fastest growing, but First Nations, Inuit and Metis peoples need a more effective path to this prosperity.

Budget 2016 proposes investments of $8.4 billion over the next five years to ensure indigenous peoples have a better stake in Canada's prosperity. This is in keeping with the spirit of the Kelowna Accord concluded in 2005, thanks to the leadership of former Prime Minister Paul Martin.

Improving the educational outcomes of First Nations children living on-reserve is critical to improve their quality of life and allow them to contribute to stronger communities. Currently, only 38 per cent of First Nations peoples aged 18 to 24 living on- reserve have completed high school, compared to 87 per cent for the non-indigenous population.

To address this critical issue, Budget 2016 proposes to make substantial investments in primary and secondary education on- reserve, totalling $2.6 billion over five years starting with 2016-17. It proposes investments in literacy and numeracy programs and special needs education.

To support the immediate needs of First Nations children and to begin a process of reform to strengthen the First Nations Child and Family Services Program, Budget 2016 proposes investing $634.8 million over five years. Program reforms will be developed in partnership with First Nations stakeholders. The goal is to ensure that programming emphasizes the prevention of harmful conditions for children rather than interventions after harm has occurred.

First Nations living on-reserve are more likely to experience poor housing conditions and overcrowding than the general population. To address this urgent need on-reserve, Budget 2016 proposes to provide $554.3 million over two years again beginning in 2016-17.

Of this amount, $416.6 million over two years would be provided to Indigenous and Northern Affairs Canada to address immediate housing needs on-reserve. An additional $137.7 million over two years would be provided to Canada Mortgage and Housing Corporation, most of which would support the renovation and retrofit of existing housing on-reserve.

The need for affordable housing is also particularly high in the North and Inuit communities. To address urgent housing needs in these regions, Budget 2016 proposes to provide up to $177.7 million over two years, again starting in 2016-17, to provinces and territories through the Investment in Affordable Housing initiative. Specifically over two years, $8 million would be provided to Yukon, $12 million to the Northwest Territories and $76.7 million to Nunavut.

Honourable senators, green infrastructure investments on- reserve can help protect the environment and the health and safety of communities. Over the next five years, the government proposes to improve waste water infrastructure and waste management systems by providing $2.24 billion to First Nations communities to support such improvements.

To complement the social and green investments being proposed on-reserve, Budget 2016 also proposes an additional $255 million over two years, again starting in 2016-17, to the First Nation Infrastructure Fund. These funds would support investment in a range of complementary infrastructure areas, such as roads and bridges, energy systems, broadband connectivity, as well as existing physical infrastructure to mitigate the effects of natural disasters and fire protection services.

Better health care is also an urgent need for indigenous peoples. The government proposes to repair and build nursing stations and residences for health care workers in indigenous communities. It will also put an end to the crisis of boil water advisories on reserves through investing nearly $2 billion through waste water infrastructure and better drinking water monitoring systems.

Honourable senators, Canada is universally praised worldwide for our compassion. We have been called the most admired country in the world. The government is committed to further strengthening Canada's place globally by rebuilding our international infrastructure and reinforcing support for multilateral institutions. The budget proposes allocations of up to $586.5 million over three years including $450 million for the Global Peace and Security Fund, including initiatives to promote pluralism; $106.5 million for the International Police Peacekeeping and Peace Operations program; and $30 million for the Counter-Terrorism Capacity Building Program.

Last November, the government committed $678 million over six years to resettle 25,000 Syrian refugees by February 29, 2016. Budget 2016 commits new funding to resettle an additional 10,000 government-assisted Syrian refugees over the course of 2016.

This is an issue that is very close to me personally. As I noted in my maiden speech in this chamber, I was fortunate enough to serve both as the founding Executive Director of the Immigration and Refugee Board and Canada's first Deputy Minister of Citizenship and Immigration. This experience reinforced for me the fact that new citizens are vital to strengthening the Canadian economy and providing a safe haven for those fleeing war-torn countries.

I am pleased that Budget 2016 proposes an additional $25 million to support faster and more predictable processing times for family sponsorship. The new funding will be used to target specific application backlogs in Canada and overseas, and to reduce processing times for sponsorship decisions. Through this investment, application backlogs will be reduced and waiting times will be significantly shortened.

Considering Canada's favourable conditions and the need to ensure long-term growth, let me now highlight some of the key measures of Bill C-15.

In December 2015, the government began strengthening the middle class by introducing significant tax cuts. Since the start of the year, roughly 9 million people see more money on every paycheque. Bill C-15 will enable further targeted investments to grow the economy while creating better opportunities for middle class Canadians and those working hard to join it.

One of the signature measures is the new Canada Child Benefit. This measure is a significant policy innovation that will lift hundreds of thousands of children out of poverty in the process. The Canada Child Benefit, or CCB, is simple, targeted and tax free, unlike the systems of benefits it replaces. It values fairness and will deliver more money to 9 in 10 Canadian families. Once this benefit is implemented, families with children under the age of 18 will receive the cheques starting in July, provided Bill C-15 is adopted by this Parliament in time.

Let's look at some examples. A single mother with one child under the age of six and earning $30,000 a year will receive an annual benefit of $6,400 tax free. A family earning $90,000 with two children receives $5,650, an increase of $2,500 from the current system. More importantly, this new program will target those Canadians who need it most.

Measures like the middle class tax cut and the Canada Child Benefit will help families directly but will also have an important impact on the economy as a whole. Specifically, it will deliver a much-needed boost to the backbone of Canada's economy, namely small business.

Budget 2016 will give small businesses what they need most, a growing economy and customers to buy their goods and services. It will build on the 10.5 per cent tax cut that small business received on January 1, 2016, and other measures that support innovation and access to global markets put forth by Canada's government.

Providing better support for the middle class and our small businesses depends on investments that foster stronger economic growth. Notably, this bill addresses the affordability of post- secondary education systems by making it more accessible. Bill C- 15 makes amendments necessary to increase the Canada Student Grants amounts by 50 per cent, from $2,000 to $3,000 per year for students from low-income families, and from $800 to $1,200 for students from middle-income families. It is estimated that 250,000 students from across the country from low-income families, 100,000 students from middle class income families and 16,000 part-time students will get more help each year as a result of these measures.

In addition, to help these students gain experience, the government will create up to 35,000 additional jobs for young Canadians in each of the next three years under the Canada Summer Jobs program. Bill C-15 will allow for investments to create clean jobs and to strengthen co-op and on-the-job learning opportunities to better help our young people succeed after graduation.

Canada is at its best when all citizens have the opportunity to reach their full potential and are treated fairly, and the contributions from every segment of society are valued. As a nation, we are united by these beliefs which have made Canada the model it is for the world.

Though I firmly believe that we need to continue to strengthen this condition, we nevertheless face significant challenges in doing so. For the first time in Canada's history, there are more seniors over the age of 65 than there are children under the age of 15. Think of that. Over time there will be fewer Canadians working to support the overall population. Ensuring strong, inclusive growth will be even more challenging than ever. Managing this demographic shift requires that Canada do more to invest in this next generation in post-secondary education, training and innovation. The standard of living of all Canadians, not just our seniors, depends on it.

To meet this challenge, Bill C-15 enacts budget proposals to increase the Guaranteed Income Supplement up to $947 annually for the most vulnerable single seniors starting in July 2016, which will support those who rely almost exclusively on Old Age Security and GIS benefits and may therefore be at risk of experiencing financial difficulties and difficulties in saving for their retirement.

Most of these single seniors are women, who are more likely to find themselves in poverty than men, and this measure will make an enormous difference in improving their quality of life.

This enhancement more than doubles the current maximum GIS top-up benefit and represents a 10 per cent increase in the total maximum Guaranteed Income Supplement benefits available to the lowest-income single seniors. This measure represents an investment of over $670 million a year and will improve the financial security of over 900,000 single seniors across Canada.

Single seniors with annual income — other than OAS and GIS benefits — of about $4,600 or less will receive the full increase of $947. Above this income threshold, the amount of increased benefit will be gradually reduced and will be completely phased out at an income level of $8,400. Benefits will be adjusted quarterly with increases in the cost of living.

As an essential part of the government's plan to strengthen public pensions and improve the lives of Canadian seniors, the eligibility ages of the Old Age Security program will be restored. Bill C-15 would cancel the provisions in the Old Age Security Act that increase the eligibility age for Old Age Security and GIS benefits from 65 to 67 and allowance benefits from 60 to 62 over the 2023 to 2029 period. This means that Canadians who have worked hard all their lives and who expect help to retire in dignity won't have to keep working in difficult jobs when they should be enjoying their well-earned golden years.

With Bill C-15, the government is also proposing to restore Parliament's oversight of the government's borrowing plans to provide greater accountability and transparency for how the government finances its activities.

As Minister Morneau did — both here in the chamber and on other occasions — I would like to highlight the hard work of Senator Moore for his tireless advocacy for greater accountability and transparency.

Some Hon. Senators: Hear, hear!

Senator Harder: Senator Moore has worked with a number of other senators — Senator Day, as well as former Senators Murray and Banks — in making sure that Canadians understood the importance of this issue.

As senators will know very well, under the current process the government can increase its borrowing without the consent of Parliament. The new borrowing approval process would restore parliamentary oversight regarding the government's market borrowing plans, including the borrowings of agent Crown corporations.

Colleagues, Canada's financial sector remains the envy of many countries around the world. This reputation was the result of hard work and prudent decision making by financial institutions and by the actions of the federal government and regulators.

To ensure that Canada continues to benefit from a strong financial sector, Bill C-15 also proposes to introduce a bail-in regime for Canada's largest financial institutions that will promote financial stability and reinforce that bank shareholders and creditors are responsible for banks' risks — not taxpayers.

Consistent with international best practices and standards developed following the financial crisis, the bail-in regime will enhance the bank resolution tool kit and further support the resilience of Canada's financial sector. The regime would apply only to Canada's largest banks and would allow authorities to recapitalize a failing bank by converting eligible long-term debt into common shares. While the failure of a large bank in Canada is very unlikely, authorities must have adequate tools to be able to preserve financial stability and protect taxpayers in a crisis. Canadians should rest assured that their insured and non-insured deposits will continue to be protected by the Canada Deposit Insurance Corporation.

Honourable senators, Canada's veterans have dedicated their lives to the defence of their country, and they deserve our gratitude, our respect and our support. We have made a solemn promise, and Budget 2016 and Bill C-15 honour that promise. Bill C-15 enhances services and benefits for veterans in recognition of the sacrifices they have made.

The changes in this bill are being proposed because Canadian Armed Forces members, veterans, stakeholders, the Veterans Ombudsman and the government itself have expressed concern that seriously disabled veterans are not assured financial security from the suite of New Veterans Charter services and benefits currently in place.

With the passage of this bill, Canadian Armed Forces members and veterans with service-related disabilities will see an increase in the benefits they receive. Those who incur a severe and permanent service-related disability will benefit most from these changes.

The changes to the Earnings Loss Benefit would be implemented on October 1 of this year. Changes to the Permanent Impairment Allowance and the Disability Award would be implemented on April 1, 2017.

Colleagues, I have said before that Canada's economy is undergoing significant changes. It is critical that Canada's Employment Insurance system adapts to these changes, while continuing to provide help to those workers most in need. For some, help is needed because they have lost their job through no fault of their own. For others, it's because they have left the workforce to raise children or provide care for a loved one. Whatever the reason, no Canadian should struggle to get the assistance they need.

Bill C-15 amends the Employment Insurance Act to, among other things, increase, until July 8, 2017, the maximum number of weeks for which benefits may be paid to certain claimants in certain regions; eliminate the category of claimants who are new entrants and re-entrants; and reduce to one week the length of the waiting period during which claimants are not entitled to benefits.

The purpose of these measures is to assist workers affected by the recent decline in commodity prices. The recent rise in unemployment in some regions has stretched the responsiveness of the EI system. While the use of a backward-looking three- month moving average of local unemployment rates provides a gradual response to changing local labour market conditions and stability against normal labour market volatility, it can result in inadequate support in the case of sudden and sustained deteriorations where hiring rates decline and layoffs increase.

Bill C-15 includes amendments to all acts and related texts that will be required to enable the features contained in Budget 2016. Among them are amendments to the Income Tax Act, the Excise Tax Act, the Employment Insurance Act, the Old Age Security Act, the Bank Act, the Financial Administration Act, the Federal- Provincial Fiscal Arrangements Act and a few others.

The bill enables Budget 2016 — a budget that contains the measures on which this government was elected — to be delivered, and I would urge you all to support this bill.