Hon. Joseph A. Day:

Honourable senators, I will try to touch on a few of the highlights in this rather extensive report on Bill C-10, budget implementation. This is the first budget implementation from the budget of January of this year. We are told there will be others — at least one more in addition to the estimates that I talked about earlier — that we will be required to deal with in anticipation of the supply bill the first of next week. Another way that the government obtains permission to implement aspects of the budget and to request funds to do that which they have outlined they would like to do is through budget implementation.

Honourable senators will recall that Bill C-10 came to us back in March and our committee dealt with it on March 10 and 11. That was four or five days after the bill came to the Senate. The committee sat for eight hours and heard from 15 witnesses. The decision to pass the bill was made by all parties because the bill contained a provision that provided five extra weeks for the unemployed. It was therefore critical that the bill get passed and not get lost.

Honourable senators, had we been able to continue our study of Bill C-10, we would have been able to tell you that a pilot project was in place that could easily have been extended ministerially without passing the bill, and it would have allowed for the five-week extension. It was in existence for areas of the country with unemployment of 10 per cent or more, but it could easily have been extended ministerially to all unemployed as a pilot project. The pilot project had been extended twice already.

We voted for this out of ignorance, quite frankly. I think we all should remember that because it is a very good lesson. There are often unintended consequences when we rush into something.

At the time this bill was passed, we were all concerned about not meeting the promises we had made. I had received at least 10,000 messages on this bill, so I know honourable senators received an equal number, particularly with respect to the navigable waters portion of Bill C-10.

Honourable senators, promises were made to those people, so I am very pleased that we were given the opportunity of doing a post-study of the bill instead of a pre-study. For a while, it was difficult for us to get witnesses. However, as time went on and they saw that we were doing good, thorough work on the bill, they anticipated that we would come forward with a good report that would be given proper and due consideration. In the end, the National Finance Committee did have good witnesses, and we proceeded to deal with certain portions of the bill.

Portions of the bill went to other Senate committees. Part 7, navigable waters, was referred to the Standing Senate Committee on Energy, the Environment and Natural Resources. Part 12, competition, was referred to the Standing Senate Committee on Banking, Trade and Commerce. Part 11, equitable compensation, was referred to the Standing Senate Committee on Human Rights. All the other portions went to the National Finance Committee. In the eight hours of previous hearings, we did some work on those other aspects of the bill and we were able to lend our findings to the other committees.

In all, we heard 35 witnesses over 18 hours of meetings. We were unable to study two parts of the bill because we did not have time. One was with respect to equalization. Senators will recall that equalization was resolved once and for all last year, yet here we are less than a year later and the formula has been changed again. We felt that we would be doing an injustice to this subject without consulting the provinces that are impacted by this change. Our committee will undertake to follow up on that matter in due course because we have studied equalization previously.

The second area has to do with national securities regulations and is perhaps better studied by the Banking Committee. It would require extensive study and all of the stakeholders — all of the provinces — would have to be consulted or we would be doing an injustice to that subject.

The report is 44 pages long. It ends with a good number of observations and recommendations. Let me touch on a few of the points, if I may.

The first is with respect to the Canada Student Financial Assistance Act amendments that appeared in the bill. The student representatives who appeared before the committee made several observations on aspects of Bill C-10 that affected students. Of particular interest was their concern with provisions for a temporary three-year expansion of the Canada Graduate Scholarships Program and then it dies.

They were also concerned that the money for the Social Sciences and Humanities Research Council, according to the language of the budget, was to be focused on business-related degrees. They felt that the government should not be involved in determining the particular subject to which the money should be allocated. They felt that it was handled well in the past, so they would prefer to see it remain that way.

We learned that the changes introduced in yet another new formula would place a ceiling on equalization payments. There is a new formula for Ontario, being a recipient province. That will require further study.

On the amendments to Investment Canada, one of the witnesses, Mr. George Addy, Chair of the Policy Committee, Canadian Chamber of Commerce, regarding this particular legislation said:

It had good news and bad news. The good news is that they have increased the threshold —

— this is for the takeover of Canadian companies by foreign companies —

— which now is the scope so that you focus only on big deals. The bad news, in our view, is the national security amendments.

There is, without definition, a prohibition to a takeover if it is deemed to interfere with national security. He said that to establish that exception without explanation causes many problems for the industry.

I told you about the pilot project, honourable senators, with respect to the five weeks. That pilot project was cancelled by this legislation; however, the legislation that gives five weeks only goes to September 12, 2010, and then it is over. The five weeks we all voted for are over September 12, 2010, so, the extension was for just a year and a half.

We have suggested, assuming that the economy is still where it is today or is not fully recovered, that the five-week project that had been in place for a good number of years should be reintroduced and carry on following the expiry of that particular extension of the legislation.

Honourable senators, it is this area on which I would like you to focus.

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Honourable senators, I will return to the more scintillating discussion about Bill C-10 and matters of national finance. Honourable senators will recall that I was dealing with the report of the study done by the Standing Senate Committee on National Finance for major aspects of Bill C-10, in particular the first budget implementation bill 2009-10.

I started to bring to honourable senators' attention, just before we had the previous discussion, the issue of extraordinary financing framework. This is an entirely new area, and it is critically important that we watch it closely. The basic message that I want to send to Senator St. Germain is the importance of the fact that we are authorizing $200 billion of potential liability, and we do not have the structures in place to monitor it. The question we should be asking ourselves is: Are the institutions to which we have given this major additional authority properly equipped to handle this? That is what our Standing Senate Committee on National Finance will have to look into.

Honourable senators, the $200 billion of extraordinary financing framework is made up of various components, and I will list some of them: $125 billion to CMHC under the insured mortgage purchase program, where CMHC will go out and purchase mortgages from AGI and various companies; $12 billion for the Canadian secured credit facility, which is a Business Development Bank matter; $13 billion through additional credit privileges for the Export Development Corporation and Business Development Corporation; $40 billion more of authorized credit facility for the Bank of Canada. Honourable senators will recall that it was a year ago that we first authorized the Bank of Canada to start investing in Canadian securities and private securities, many different things they had never invested in previously. We raised questions about that last year in our hearings on budget implementation, asking why was that necessary, and we were not able to have a representative from the Bank of Canada talk to our committee at that time. As well, there is $10 billion through the new 10-year Canada mortgage bond launched in the fall of 2002.

Honourable senators, let me tell you a little bit about the new authorities under Export Development Canada. Senator Murray talked about that earlier this evening.

Export Development Canada's mandate is expanded to allow it to support financing activities in Canada. Export Development Canada now operates in Canada and can do so for the next two years. The minister can extend that authority by order-in-council, so they can continue to operate in Canada for an indefinite period. The authorized capital is increased by $1.5 billion to allow institutions to make more loans. Contingent liabilities for corporations are increased from $30 billion to $45 billion. That is insurance. They insure business activity, and that is a contingent liability. If the business goes bad, they are responsible for that, and that has gone up.

The Canada Account limit has increased from $13 billion to $20 billion, honourable senators. What is the Canada Account? The Canada Account is used to support export transactions that EDC is unable to support. If their management says, "No, this is too risky and we cannot get involved," the minister can override and order EDC to get involved in those activities. Those are just some of the activities that I wanted to bring to your attention with respect to EDC.

The Business Development Bank Canada is responsible for managing Canadian-secured credit facility with funding of up to $12 billion. Under this program, the Business Development Bank Canada will purchase asset-backed securities for loans on vehicles and equipment that are brought together by various institutions. Business Development Bank Canada will buy those from them. Asset-backed securities: Where have you heard that one before?

These, honourable senators, are activities that were authorized in Bill C-10. I suggest that this is an extremely important area for us to be overseeing. The typical type of oversight is such that the authority to borrow, or an increase in authority, comes to us in the form of legislation or in the form of estimates. We do not have the necessity for estimates in this particular case.

Honourable senators, I see that my time has expired. I wonder if I might ask for five minutes just to conclude this report.

Hon. Senators: Agreed.

Senator Day: Eric Siegel from Export Development Canada came to talk to us. He told the committee that in January this year, the federal government provided close to $350 million of new capital for EDC. However, this funding was not included in the Main Estimates, or in supplementary estimates referred to the committee because payments made under existing authorizations are included for information purposes only. There is no way we will see any of this funding.

We are authorizing such high limits — for indefinite periods, in certain cases — that we will not see this authorization come back to us again. It is like what happened here a few years ago when we authorized ministers to borrow. We gave borrowing authority to ministers so we never see those authorizations any longer.

Some parliamentarians say, why do we not see those authorizations anymore? It reminds us of what is going on and it is sort of a red flag. We were reminded that we had authorized ministers to spend that money without coming back to see us.

Honourable senators, a good number of points here deserve further work and scrutiny. In particular, I am extremely concerned about this credit facility. It is entirely new; we are allowing our institutions to do something they have never done before.

Let me conclude with two concerns: The first one involves the long-standing use by various governments in the past of the phrase, "The Statutory Instruments Act does not apply" with respect to this particular order. In this bill, there are 15 examples of that phrase. Why is that phrase there? The phrase that occurs on those 15 occasions has the effect of removing from Parliament the right to examine and study those particular orders or statements as regulations. They are not a statutory instrument for the purpose of review of the statutory regulations.

We recommend that an effort needs to be made to clarify the appropriate instances when that type of terminology appears. It appears more and more, and we want to know the justification for that phrase. If the justification is what it appears to be — attempting to avoid scrutiny of Parliament — then we must see that it stops.

The final point, honourable senators, is a concern that I have raised before, and it appears here again. It involves increasing reliance by several governments in the past, and the current government, on omnibus bills to bring forth budget implementation bills. Honourable senators will know that is a matter of considerable concern to the Standing Senate Committee on National Finance.

I will read to you from a February 23, 2005 report by the Honourable Senator Donald H. Oliver:

Honourable senators, we have before us a massive omnibus bill of some 23 separate parts. Bill C-43 ought to have come before us in at least three or more separate bills, one to deal with budget measures per se, one to implement the offshore agreements that were not mentioned by my learned colleague and one to provide the legal framework for the government's Kyoto plan.

Honourable Senator Oliver will remember that particular matter.

Your committee feels that this practice of using omnibus bills to introduce budget measures has the effect of preventing Parliament from engaging in meaningful examination of the myriad policy proposals contained in them. We recommended that this practice cease and we have suggested as an observation, the following options that might be considered by the Senate for dealing with such omnibus bills in the future.

We have said in the past, please do not do this anymore. It is being ignored by the draftspeople of these bills, so we are providing, as an observation, what we might want to do.

Divide the bill into coherent parts and deal with them separately, allowing committees to perform their job properly — like we did here, only do it before; delete all non-budgetary provisions, and proceed to consider only those parts of the bill that are budgetary in nature; defeat the bill by second reading on the grounds that it is an affront to Parliament by way of a reasoned amendment; and finally, establish a new rule of the Senate prohibiting the introduction of budget implementation bills that contain non-budgetary measures.

Honourable senators, those are our recommendations.

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