Introduction

In June 2023, the House of Commons Standing Committee on Finance (the Committee) launched its annual pre-budget consultations by inviting Canadians to submit written briefs to share their priorities for the 2024 budget. The Committee then held pre-budget hearings in the fall between 21 September 2023 and 17 November 2023. While some of these hearings were held in Ottawa, the Committee had the opportunity to travel across the country for the first time since 2018 to hear from a wider range of Canadians. As part of these hearings, the Committee also held “open mic” sessions, which allowed even more Canadians to participate in the budgetary process. As well, the Committee invited other standing committees of the House of Commons to hold meetings and provide recommendations for the pre-budget consultations within their respective subject matter expertise.

Following these presentations from nearly 170 groups and individuals, and after having received over 850 written briefs, the largest number ever received for that process, the Committee presents a report on its priorities in advance of the 2024 federal budget.

The report is divided in five chapters, which reflect the wide range of views and proposals the Committee heard during its pre-budget hearings and present the Committee’s recommendations in each of these areas. These chapters organize the subject matter of the pre-budget consultations into the following categories: support for businesses, support for people, support for communities, climate change and energy policy and federal fiscal framework and government. In addition, Appendix A contains the proposals from organizations and individuals who appeared before the Committee. The topic areas discussed during the “open mic” sessions, as well as in the written briefs, are categorized in Appendix B and C, respectively.

Support for Businesses

The Canadian gross domestic product (GDP) grew by 5.3% and 3.8% in 2021 and 2022 in the aftermath of the recession caused by the COVID-19 pandemic. Since then, annualized real GDP growth has declined, from 2.5% in the first quarter of 2023 to -1.1% in the third quarter of 2023. This slowdown in GDP growth is largely the result of the Bank of Canada’s restrictive monetary policy since the spring of 2022 and the ensuing increase in interest rates in response to elevated levels of inflation. Despite the slower economic growth, the unemployment rate has remained low relative to historical standards, although it has increased from 5.0% in January 2023 to 5.7% in January 2024, which is more in line with pre-pandemic levels.

Going forward, the Bank of Canada expects that GDP growth will remain close to zero during the first quarter of 2024, and that it will gradually increase in the following quarters “as the effects of past interest rate increases on growth begin to fade and the recent easing in financial conditions supports demand.” On an annual basis, the Bank of Canada projects that the Canadian economy will grow by 0.8% and 2.4% in 2024 and 2025, respectively.

However, in Budget 2022, the federal government recognized that if Canadian businesses continue to underinvest in innovation and their growth compared to their foreign counterparts, Canada will experience the lowest per-capita GDP growth among Organisation for Economic Co-operation and Development (OECD) countries from 2020 to 2060. Indeed, the Canadian economy has been facing a continuous decline in productivity growth over the past few decades.

Figure 1 shows that, between 1980 and 2022, Canada’s productivity growth rate decreased from 102% to 77% of the rate of the United States, and from 108% to 93% of the rate of the average of the G7 countries. It also clearly shows that this relative decline in productivity growth led to a relative decline in Canada’s average living standard compared to the United States. Between 1980 and 2022, Canada’s average living standard as measured by the GDP per capita ratio decreased from 93% to 75% of that of the United States. In 2022, Canadians had an average living standard of US$57,000 compared to US$76,400 for Americans.

Figure 1—Ratios of Canada's Productivity Growth to that of the United States (U.S.) and the Average of the G7 Countries, and Ratio of Canada's Gross Domestic Product Per Capita Ratio to that of the U.S. (%)

Source:  Figure prepared by the Library of Parliament using data obtained from Bergeaud et. al., “Long-Term Productivity Database,” Database, accessed in October 2023; and the Organization for Economic Cooperation and Development, “Level of GDP per capita and productivity,” Database, accessed in October 2023.

Productivity, or what economists call “Total Factor Productivity (TFP),” is a measure of economic performance that compares the amount of goods and services produced (output) with the amount of labour and capital used in producing those goods and services (inputs). Growth in productivity occurs when the output increases more rapidly than labour and capital inputs. Productivity growth serves as the primary means whereby economic growth can surpass what could be achieved solely by increasing labour and capital inputs. For example, according to Statistics Canada, around 90% of the growth in Canada's per capita output over the past 40 years can be attributed to productivity growth.

Given the importance of productivity to the average living standard of Canadians it is crucial to understand what determines its growth rate over time. Economic research emphasizes the important role of new ideas, which are non-rival and infinitely usable, in determining long-term living standards. An “idea” denotes a conceptual framework, a design or a blueprint for doing something. Basically, it is a set of instructions that entail using existing objects in a way that increases output. Since people discover ideas, the long-term progression of living standards depends on the rate at which the population of a country produces new ideas that increase productivity.

One possible explanation for the decline of productivity growth in Canada, as well as in other advanced economies, is that the growth rate of people searching for new ideas appears to have declined. In addition, evidence suggests there is an overall decline in the productivity of research in various academic areas. As the total fertility rate in Canada and other countries has significantly declined over the past decades, there is a potential challenge in generating new ideas due to a slower population growth, which in turn affects the growth in the number of researchers, entrepreneurs and scientists searching for new ideas. Finding solutions to address this issue and to increase Canada’s research activities are key for stopping the decline in productivity growth.

Regarding support for businesses, witnesses spoke about industry and innovation, agriculture, food and fisheries, transportation, tourism, financial institutions and payments systems, temporary relief measures and the regulatory environment.

Industry and Innovation

On the topic of industry and innovation, witnesses made proposals related to programs supporting innovation such as the Strategic Innovation Fund and tax incentives for investment, including in intellectual property (IP), as well as proposals in favour of financial support for research and development, commercialization and venture capital. Other witnesses proposed measures to support the business data ecosystem and protections for IP.

A number of witnesses also advocated for the development of industrial strategies by the federal government, including for aerospace, artificial intelligence and semiconductors. Finally, the Committee heard proposals related to electric vehicles (EV) manufacturing and supply chains, competition policy and the retention of talent in technological sectors.

Recommendation 1

Commit to a comprehensive review of innovation programs to eliminate duplication and establish “freedom to operate” structures, including as part of the launch of the Canada Innovation Corporation.

Recommendation 2

Review all capital programs designed to support innovators to prioritize grants over loans, augment funding thresholds where it makes sense, mandate the formulation of strategic intellectual property plans and streamline access for businesses.

Recommendation 3

Convene a federal‐provincial‐territorial innovation summit.

Recommendation 4

Provide incentives that encourage Canadian venture capitalists to invest in Canadian companies by offering compelling financial supports that de‐risk investments.

Recommendation 5

Modernize research and development programs by helping companies undertake high‐risk research where near‐term returns on investment and commercialization are absent.

Recommendation 6

Make needed changes to the Strategic Innovation Fund to increase access to funding support.

Recommendation 7

Increase and coordinate commercialization funding to enable regional organizations with a national platform to supercharge start‐ups across the country.

Recommendation 8

Promptly release the findings of the review of the Scientific Research and Experimental Development tax incentives and expand the eligibility criteria to include incremental innovations.

Recommendation 9

Introduce an equipment modernization and cybersecurity tax credit.

Recommendation 10

Support the creation of wet lab spaces across the country, providing opportunities for start-ups in a wide variety of industries to arrive at a proof of concept and viable product stage, including in the life sciences sector.

Recommendation 11

Support research, development and innovation at post‐secondary institutions across Canada through targeted funding supports to advance research or aid in the commercialization of ventures created within the post‐secondary system.

Recommendation 12

Ensure robust intellectual property protection of innovative products that give innovators the confidence to invest time and significant resources into research and development that spans over many years.

Recommendation 13

Increase funding to combat the heightened risk of intellectual property migration resulting from the scale of the United States’ CHIPS and Science Act and develop a national semiconductor strategy.

Recommendation 14

Explore the creation of a national industrial strategy, in partnership with businesses across Canada and economic sectors, to drive a cohesive approach to economic growth that leverages Canada’s traditional and emerging economic strengths.

Recommendation 15

Establish a consistent, green and shared industrial strategy that provides for targeted investments in the energy transition that create quality jobs, environmental gains, and investments within the territory and make strategic use of government procurement from an environmentally responsible perspective.

Recommendation 16

Create industry councils to bring together all levels of government, business, and labour and convene every two years.

Recommendation 17

Develop a dedicated artificial intelligence commercialization and intellectual property strategy with a focus on scaling Canada’s domestic artificial intelligence technology firms, including incentive programs for the responsible adoption of Canadian artificial intelligence technologies.

Recommendation 18

Increase support for capital development projects and the adoption of advanced technologies in the manufacturing sector to markedly increase Canada’s productivity and bolster industrial development opportunity.

Recommendation 19

Collaborate with the United States to build a North American electric vehicle industry and supply chain beyond the Inflation Reduction Act.

Recommendation 20

Provide more support and incentives to encourage domestic manufacturing production and value-added exports, including support for small and medium-sized manufacturing companies in their export contracts by offering them more programs to mitigate the risks associated with their first forays into international markets.

Recommendation 21

Develop a long‐term national aerospace industrial strategy that includes clear plans for defence.

Recommendation 22

Create a national space council to compete in the race for the new space economy, with the federal government playing a pivotal role in convening industry partners and fostering the space sector as regulator, capital provider, or operational partner.

Recommendation 23

Encourage investment in currently uneconomic minerals by assessing potential benefits of support for supply chain resiliency or strategic value, including cases in which global players have significant command of global supply or pricing dynamics.

Recommendation 24

Develop and implement a forest sector industrial strategy, in collaboration with key rights-holders and stakeholders.

Recommendation 25

Prioritize the allocation of spectrum through measures such as increasing the quantity of spectrum available and subsidizing rural deployment.

Recommendation 26

Examine the adverse consequences of foreign direct investments in the technology sector, particularly with regard to talent acquisition.

Recommendation 27

Examine competition policy that currently allows industry consolidation for a small number of oligopolistic firms.

Recommendation 28

Strengthen competition rules to allow more small and medium‐sized businesses to compete and lower costs for consumers.

Agriculture, Food and Fisheries

With respect to agriculture, witnesses made proposals for additional support for the sector, including through business risk management programs and initiatives for the development of sustainable agriculture practices and value-added processing. Witnesses also remarked that the government should match continued investment in the On-Farm Climate Action Fund with additional resources for the establishment of soil carbon sequestration.

A number of witnesses also discussed tax-related issues, such as intergenerational transfers, the Underused Housing Tax and tax incentives for the purchase of farm equipment. In addition, the Committee received proposals related to a critical farm input strategy, the Pest Management Regulatory Agency, animal health, trade and supply management and the right to repair for farmers.

On the topic of food, witnesses discussed support for food banks and local food systems, food manufacturing and the grocery industry code of conduct. Regarding fisheries, the Committee heard proposals related to scientific research and stock assessments, owner-operator fisheries, fishing licenses and other support measures for fisheries, such as the Atlantic Fisheries Fund.

Recommendation 29

Expand the AgriStability program by increasing the coverage rate to 85% of the reference margin while maintaining the compensation rate at 80% as introduced in the Sustainable Canadian Agricultural Partnership.

Recommendation 30

Continue to support farmers through the Advance Payments Program by increasing on a permanent basis the interest‐free limit for advances.

Recommendation 31

Implement a special assistance program specifically for the agricultural sector to limit the impact of higher interest rates on the financial health of agricultural businesses.

Recommendation 32

Strengthen investment in agriculture by partnering with businesses on research, product development and the commercialization of the agri‐food sector, while developing policy mechanisms and supports to incentivize private‐sector research and development investment.

Recommendation 33

Support capital investment in agricultural processing to help Canada meet global food demand, while promoting value‐added economic activity in commodities bound for export.

Recommendation 34

Implement a new national grant program modelled after the Canada Digital Adoption Program, which would support on‐farm risk management planning and mitigation.

Recommendation 35

Protect farmland and facilitate succession by creating an agricultural gifts program and a fund to support access to farmland.

Recommendation 36

Spend aggressively to achieve the objectives and indicators that will be established under the Sustainable Agriculture Strategy.

Recommendation 37

Foster sustainable agricultural practices by providing funding to train and hire 1,000 additional advisory services officers and by expanding the On-Farm Climate Action Fund.

Recommendation 38

Provide a stable and predictable budget for agronomic and agri-environmental research and innovation.

Recommendation 39

Provide an organic certification cost-share program.

Recommendation 40

Amend the eligibility criteria for the Agricultural Clean Technology program to make it accessible to smaller businesses and standardize access regardless of client type.

Recommendation 41

Ensure that sustainability initiatives are focused on farmers and help them adapt to the effects of climate change.

Recommendation 42

Implement measures to support sustainable agriculture to help Canada become a leader in sustainable and innovative agriculture with a resilient and diversified food system.

Recommendation 43

Provide a 40% investment tax credit to small-scale agricultural businesses that purchase equipment to ensure growth and profitability.

Recommendation 44

Introduce a permanent accelerated capital cost allowance across all classes of farm equipment that would allow producers to depreciate 100% of their capital allocated to purchases of farm equipment for the first fiscal year.

Recommendation 45

Ensure that any changes to the Income Tax Act provisions regulating intergenerational transfers do not discourage genuine family transfers from taking place.

Recommendation 46

Eliminate or limit taxable capital gains on the gifting or low-cost sale of certain farm assets to a nephew or niece.

Recommendation 47

Establish a personal silvicultural savings and investment plan for Canadian forest owners.

Recommendation 48

Advocate for the elimination of non‐tariff barriers to trade in international trade agreements.

Recommendation 49

Implement measures to support a farmer’s right to repair their farm machinery.

Recommendation 50

Provide incentives for food and beverage manufacturing companies to invest in innovation and boost competitiveness through increased automation and digitization.

Recommendation 51

Ensure a consistent and coordinated approach to support supply chain resilience for Canada’s food system, including by:

• implementing the recommendations of the National Supply Chain Task Force;
• investing in on-going monitoring and intelligence gathering related to global and Canadian food supply chains;
• investing in measures to buffer Canada’s food system from external shocks and support food supply chain resilience, starting with a critical assessment of key risk factors and vulnerabilities along the food supply chain;
• establishing protocols for engaging stakeholders in the event of a serious national or regional food supply chain disruption; and
• working with sub-national governments to ensure a coherent approach to emergency management, including a single point communication system for industry.

Recommendation 52

Reduce dependency on food imports by investing in intra-provincial and interprovincial food transportation, warehousing and cold storage infrastructure to decrease food waste, transportation costs and greenhouse gas emissions.

Recommendation 53

Help ensure that healthy eating is affordable in public institutions by enhancing the infrastructure and capacity of partner institutions and agencies.

Recommendation 54

Make investments to enhance access to nutritious and traditional foods, sustainable food systems, and environmental protection initiatives.

Recommendation 55

Make important commercial species, such as mackerel, snow crab, seal, northern shrimp and northern cod, a priority in assessing the health of Canada’s marine species and determining management plans based on those assessments.

Recommendation 56

Increase funding resources for robust fishery science to support management decision‐making.

Recommendation 57

Provide funding for scientific research to establish baseline data in fishing areas where on‐water wind generation is proposed.

Recommendation 58

Reduce the number of licenses for some species of fish, such as groundfish, tuna, herring and mackerel by a minimum of 50% through a targeted license buy‐back program to put these fisheries in line with available quotas.

Transportation

Regarding transportation, witnesses presented proposals to support the development of airports and improve the passenger experience, including through the streamlining of customs and immigration procedures. Other witnesses made proposals related to a national supply chain strategy and rail interswitching.

The Committee received proposals for incentives for the purchase of EVs, and for improving the supply of EVs in Canada. On that topic, the Committee also heard about EV sales mandate, measures to reduce the number of fossil fuel vehicles and initiatives to support the installation of charging infrastructure.

Recommendation 59

Invest in government modernization initiatives and services that will improve the passenger experience through Canadian airports.

Recommendation 60

Expand the current verified traveller program to be a true domestic trusted traveller program similar to the TSA PreCheck program in the United States.

Recommendation 61

Launch a review of the Canadian Transportation Agency’s mandate and provide it with greater independence, authority and commensurate funding needed to respond more effectively to supply chain issues.

Recommendation 62

Continue purchase incentives for zero-emission light duty vehicles by:

• basing the zero-emission vehicle (ZEV) rebate program on the price relative to electric range;
• funding ZEV rebates through a feebate system where purchases of the most polluting new vehicles would be subject to polluter-payer fees;
• establishing an income-tested incentive program to make ZEVs more accessible for low- and modest-income consumers;
• removing the iZEV program cap for high-use vehicle fleets, such as taxi, carshare, rideshare, and ride-hailing companies;
• working with trusted electric vehicles organizations to educate and supporting the industry salesforce; and
• implementing a green scrappage program for polluting vehicles which would offer rebates for zero-emission modes of transportation.

Recommendation 63

Continue purchase incentives for zero-emission medium-, heavy-duty, and off-road vehicles by:

• continuing predictable and long-term funding for municipalities, transit agencies and school bus operators to help them convert their entire fleet buses to electric, including by making funding more readily available to the latter through the ZETF program and launching campaigns to raise awareness of financing opportunities; and
• accelerating business cases for medium- and heavy-duty zero-emission vehicle fleets with funds for transition planning and for the purchase of electric trucks.

Recommendation 64

Accelerate access to electric vehicle (EV) charging infrastructure by:

• setting targets aligned with Natural Resources Canada’s latest reports on public and residential infrastructure needs in key areas, including specific targets for northern, rural, and Indigenous communities;
• introducing provisions in the upcoming review of the National Model Building and Electrical Codes to have all new residential parking spots be “EV-ready” and 20%-40% of new non-residential parking spots include the basic electrical infrastructure needed for EV charging;
• establishing charging hubs on underused government-owned lands, particularly in high-density urban areas, open to all charging operators without exclusivity, and accessible to the public;
• supporting the installation of newer, more efficient electrical panels and EV charging infrastructure as part of existing home energy retrofit programs; and
• establishing a dedicated grant-based incentive program to support the deployment of large-scale EV charging installations and electrical service upgrades, to facilitate the medium- and heavy-duty segments, particularly in the truck sub-sector.

Tourism

With respect to tourism, the Committee received proposals related to air route development, the motor coach industry, cruise ships, ferries and ports. As well, witnesses advocated for investments in tourism infrastructure and assets, and increased capacity to accelerate temporary residence procedures for international tourists and the processing and clearance of cruise ships.

Recommendation 65

Fund the development of a dedicated workforce strategy for Canada’s Indigenous tourism industry.

Recommendation 66

Provide core funding to Tourism HR Canada to bolster strategic initiatives in support of tourism workforce growth.

Financial Institutions and Payments Systems

On the topic of financial institutions and payments systems, witnesses made proposals on the development of an open banking system in Canada, including in relation to its governance structure and rules for data sharing among participants. In addition, witnesses commented on the development of a real-time payment system.

The Committee also heard proposals related to the regulatory environment for mortgages, restrictions on pension plans’ investments abroad, taxation of financial institutions, financial consumer protection, financial literacy and the anti-money laundering and anti-terrorist financing regime.

Recommendation 67

Strengthen oversight and governance of Canada’s open banking system by creating a fit‐for‐purpose entity to manage the administration of the system.

Recommendation 68

Publish a code of conduct that specifies the rules for data sharing in Canada’s financial sector, ensuring that all accredited participants in Canada’s open banking system must meet a common and transparent set of requirements and standards.

Recommendation 69

Support Payments Canada’s efforts to build a new real‐time payment system.

Recommendation 70

Amend the Canadian Payments Act to give banks, credit unions, and regulated payment service providers equal access to Canada’s real‐time payment systems.

Recommendation 71

Introduce regulations to require pension funds to set aside reserves for investments in foreign assets to encourage more investments in Canada.

Recommendation 72

Establish a permanent round table involving industry, government and regulatory representatives mandated to conduct semi‐annual reviews of Canada’s regulated mortgage ecosystem, particularly the impact of new regulations on lenders of all sizes, and to develop a framework to assess government proposals, ensuring that they address the unique needs of small and mid‐size regulated financial institutions and avoid negative consequences.

Temporary Relief Measures

Witnesses who spoke on the topic of temporary relief measures requested an extension of the deadlines for Canada Emergency Business Account loans, as well as modifications to the Regional Relief and Recovery Fund and Highly Affected Sectors Credit Availability Program to provide more flexibility with respect to repayment. Some witnesses also discussed measures to help small and medium-sized businesses (SMEs) recover from the impacts of the 2023 forest fires and COVID-19 pandemic.

Recommendation 73

Establish a program to provide non-repayable contributions or interest-free loans to small and medium enterprises affected by the summer 2023 forest fires.

Recommendation 74

Further extend the Canada Emergency Business Account repayment deadline and extend access to the forgivable portion for up to two years to the end of 2025.

Regulatory Environment

On the topic of the regulatory environment, a number of witnesses argued for increased collaboration with provinces, territories and industry to reduce internal trade barriers, such as those related to labour mobility, licensing and transportation. Witnesses also discussed environmental impact assessments, the delivery of permits, regulatory efficiency, including for small businesses and health products, and the one-for-one rule. In addition, the Committee was presented with proposals on regulatory fees for cannabis producers, export permits and controls, electricity sector regulation and Transport Canada’s aeronautical certification capacity.

Recommendation 75

Champion the implementation of mutual recognition to remove inter-provincial trade barriers and establish a public registry to raise awareness of barriers to inter‐provincial trade and to encourage governments to justify or eliminate them.

Recommendation 76

Provide clarity, certainty, and predictability on the environmental impact assessment rules for major projects.

Recommendation 77

Modernize Canada’s regulatory framework to improve environmental, social and economic protections while increasing investment, growth and jobs.

Recommendation 78

Add an economic and competitiveness mandate for regulators to encourage manageable regulations that support economic growth and take into account Canada’s competitiveness in the global marketplace.

Recommendation 79

Ease the regulatory burden facing Canadian businesses, and work with industry and our international trading partners to ensure regulatory efficiency and alignment.

Recommendation 80

Provide resources to enhance Transport Canada’s aeronautical certification capacity.

Recommendation 81

Ease processes for export permits and export controls and harmonize them with those of Canada’s allies.

Support for People

On 22 June 2023, the Canada Disability Benefit Act (CDBA) received Royal Assent. The CDBA provides the legislative framework for a new benefit that will be delivered by the Government of Canada. As stated in the CDBA, its purposes are to reduce poverty and to support the financial security of working-age persons with disabilities who, as highlighted in the preamble, often face barriers to employment and experience economic and social exclusion. According to Employment and Social Development Canada, it “is a key commitment and is the cornerstone of Canada’s Disability Inclusion Action Plan [(the Action Plan)],” which aims to make Canada more inclusive of people that identify as having one or more disabilities.

Statistics Canada’s most recent Reports on Disability and Accessibility in Canada (the Reports) states that, in 2017, there were 3.7 million adults of working-age (between 25 and 64 years old) who identified as having one or more disabilities, representing 20% of the total population in that age group. When compared with adults of working-age without disabilities, adults of working-age with disabilities had a lower rate of employment (59% versus 80%). Figure 2 shows that the employment rate is significantly lower for those with more severe disabilities across all age groups. As well, working-age adults with disabilities were more likely to work part-time, had a lower median personal after-tax income and were more likely to be living in poverty.

Figure 2—Employment Rate of Canadian Population Aged 25 to 64 Years, by Disability Status, Severity, Age Group and Sex 2016 (%)

Source:  Figure prepared by the Library of Parliament using data obtained from Stuart Morris et al., A demographic, employment and income profile of Canadians with disabilities aged 15 years and over, Statistics Canada Canadian Survey on Disability Reports, 2017, 28 November 2018.

As the preamble of the CDBA also highlights, these challenges and barriers may be compounded as a result of other intersecting identities, such as Indigenous status, gender and age, resulting in additional barriers for persons with disabilities. As noted in the Action Plan, while approximately 20% of the general Canadian population aged 15 years and over had at least one disability, the rate was almost one in three for Indigenous people. With respect to gender, the Reports found that “men with either milder disabilities or no disabilities had higher rates of employment than women within almost every age group.” With respect to the impact of age, the Reports noted that the rate of employment of adults with more severe disabilities aged 55 to 64 years was almost half that of those aged 25 to 34 years (30% versus 54%). Finally, the Reports stated that the level of personal income of adults of working-age is “strongly related to the severity of disability,” with women having overall lower levels of personal income than men.

In addition to persons with disabilities, witnesses discussed measures related to employment and labour, immigration, education, skills training, health care, Indigenous Peoples, children, families and social policy and seniors and retirement.

Persons with Disabilities

On the subject of support measures for persons with disabilities, a number of witnesses commented on the new Canada Disability Benefit. Some witnesses also highlighted the need to provide additional financial support for persons with disabilities, including for Indigenous persons with disabilities. Lastly, the Committee heard evidence on the Canada caregiver credit.

Recommendation 82

Make investments to support the Assisted Living Program’s integrity and adjust for population growth and inflation.

Recommendation 83

Properly fund First Nations to meet the requirements for accommodating modern accessibility standards and addressing iniquities faced by persons with disabilities.

Recommendation 84

Implement an interim benefit for people with disabilities of working age, enhance the Child Disability Benefit and caregiving benefits.

Recommendation 85

Adequately fund the Canada Disability Benefit to address poverty and food insecurity among people with disabilities.

Recommendation 86

Expand the Canada caregiver credit by making it a refundable tax‐free benefit.

Employment and Labour

Regarding employment and labour, a number of witness testimonies addressed Employment Insurance. The Committee heard suggestions to develop and maintain the workforce in certain sectors, such as aerospace, manufacturing and exports, tourism, and health care. Immigration, older workers and employment programs were also mentioned to the Committee as possible solutions to the labour shortage. The Committee also heard proposals to improve the Temporary Foreign Worker Program, as well as to promote Canadian talent, productivity, research and innovation. Lastly, some witnesses spoke about working conditions, approaches to managing labour disputes, and protection measures for federal public sector employees and health care workers.

Recommendation 87

Adopt the recommendations contained in the report of the Expert Panel on Modern Federal Labour Standards, including anti‐reprisal protections for non‐unionized workers taking collective action in the workplace, and pilot sectoral bargaining in the federally‐regulated private sector.

Recommendation 88

Establish an annual government contribution to the Employment Insurance program.

Recommendation 89

Reform and improve the Employment Insurance program, including by:

• providing up to 50 weeks of regular Employment Insurance benefits;
• increasing eligibility across sectors and job classifications, including making Employment Insurance benefits available to self‐employed performers;
• increasing Employment Insurance benefit rates and raising the ceiling on insurable earnings for all recipients to ensure a livable income;
• extending the Employment Insurance benefit period to a maximum of 52 weeks for caregivers who temporarily quit their jobs to care for a family member;
• ending the 50‐week restriction on combined special benefits and regular benefits, which disproportionately punishes women; and
• extending Employment Insurance access to all migrant workers.

Recommendation 90

Substitute permanent immigration in place of low‐wage, temporary migration and reform the Temporary Foreign Worker Program and International Mobility Program by:

• replacing tied work permits with open permits;
• establishing a pathway to permanent residency for all low‐wage migrant workers who want to apply; and;
• giving workers participating in the Temporary Foreign Workers Program the right to change employer; and
• simplifying the application process, increasing transparency for applicants, providing greater predictability for employers, and identifying measures to address processing delays particularly for applications originating in Quebec.

Recommendation 91

Create dedicated tourism and food service sector streams with a permanent residency track under the Temporary Foreign Worker Program.

Recommendation 92

Expedite the implementation of the trusted employer program.

Recommendation 93

Temporarily waive the Labour Market Impact Assessment requirement for restaurant employers.

Recommendation 94

Make urgent and necessary changes to the Employment Insurance program for seasonal workers in the tourism and fishing industries, in particular in Newfoundland and Labrador.

Recommendation 94

Address the issue related to the adjusted unemployment rate, which has put many seasonal workers in a position to be either short on qualifying weeks or short on qualifying hours for Employment Insurance benefits.

Recommendation 96

Implement permanent solutions to seasonal employment challenges, such as programs or incentives, to bridge into year‐round employment.

Recommendation 97

Adopt an older worker strategy that promotes and supports older persons who wish to return to work or to continue to work beyond retirement, including through enhanced incentives, while at the same time supporting employers to be successful in their line of business.

Recommendation 98

Introduce a refundable career extension tax credit to allow experienced workers to keep working.

Recommendation 99

Reverse reductions to the Canada Child Benefit, retire Canada Emergency Response Benefit (CERB) debt and implement a CERB repayment amnesty.

Recommendation 100

Work with provinces, territories and municipalities to ensure a coordinated approach to affordable housing, public transportation and other infrastructure needed to support a local workforce.

Recommendation 101

Invest in and develop an aerospace workforce development plan, which includes skilled labour programs, streamlined immigration processes, and youth engagement initiatives.

Recommendation 102

Introduce a tax credit for nurses and other health care professionals that incentivizes the retention of health care professionals and their return to the workforce.

Recommendation 103

Provide funding to support development and implementation of a national workforce strategic plan – as well as a secretariat that would support this plan – for agriculture and food and beverage manufacturing.

Immigration

On the topic of immigration, witness testimony addressed the application process and delays, as well as the role of immigration in the Canadian economy. Witnesses also discussed the Canada–United States Safe Third Country Agreement, the sponsorship agreement between Syria–Antigonish Families Embrace and Immigration, Refugees and Citizenship Canada, and the process for recognizing foreign credentials. Lastly, witnesses highlighted the importance of support services for immigrants and funding for these services.

Recommendation 104

Reinvest in North African embassies to reduce processing times for immigration applications from this area.

Recommendation 105

Develop strategic, skills‐based immigration programs aligned with labour needs, including those of the manufacturing sector.

Recommendation 106

Continue to provide funding to immigration support services.

Education

With regard to education, witnesses highlighted the importance of investing in and providing funding for education, particularly to support First Nations post-secondary education, both in terms of infrastructure and the institutions themselves, as well as academic programs and scholarships. The Committee also heard testimony about research needs and student needs for housing and mental health support.

Recommendation 107

Make investments based on real needs to close the educational attainment gap and address critical funding shortfalls in language, education transportation, and facilities.

Recommendation 108

Make investments to immediately build, replace, repair, and expand First Nations schools and teacherages and eliminate overcrowding.

Recommendation 109

Make investments to support students, institutions, community‐based programming, and ongoing technical tables in advancing First Nations Post‐Secondary Education models.

Recommendation 110

Make investments to expand adult education programming that meets the unique needs of First Nations adult learners.

Recommendation 111

Instruct the Canada Mortgage and Housing Corporation to revise the National Housing Strategy to prioritize and establish a funding program to assist universities to build affordable, accessible on‐and‐off campus student housing.

Recommendation 112

Unlock housing supply by investing to support the addition of 75,000 student-oriented units to be completed within six years.

Recommendation 113

Commit to a national post‐secondary framework that sets out robust and reliable funding and standards for all post‐secondary education institutions in the country, ensuring affordable, accessible, quality public education for all, and decent working conditions for those employed by these institutions.

Recommendation 114

Establish a minimum threshold per institution for awarding Canada Graduate Scholarships at the master’s and doctoral levels so that these scholarships are distributed more equitably among Canadian universities.

Recommendation 115

Increase both the number and value of graduate student scholarships and post‐doctoral fellowships and significantly invest in Canada Graduate Scholarships (CGS) programs at the master’s and doctoral levels by:

• increasing the annual value of CGS awarded by the three granting councils and adjusting it annually for inflation;
• doubling the number of master’s and doctoral CGS; and
• extending the duration of CGS by 12 months to reflect the expected duration of most master’s and doctoral programs.

Recommendation 116

Expand undergraduate research opportunities through existing granting council programs.

Recommendation 117

Increase the budget of the granting councils for core programming, as recommended by the Advisory Panel on the Federal Research Support System, and earmark funds for non-medical research so that grants better reflect disciplinary diversity in the health and social services field.

Recommendation 118

Significantly invest in Canadian Heritage to support producing, publishing and disseminating science in French.

Recommendation 119

Ensure, in collaboration with academic institutions, that all federal departments have budgets to support their research needs to fulfill Canada’s science and technology priorities.

Recommendation 120

Invest to hire 1,200 new counsellors to address the ongoing mental health crisis in Canada’s post-secondary institutions.

Recommendation 121

Invest and work with provincial, territorial, municipal and Indigenous partners, as well as various stakeholders, to develop a national school food policy and work toward a nutritious school meal program.

Recommendation 122

Design, promote and increase support for financial literacy programs delivered to Canadians through the Financial Consumer Agency of Canada.

Recommendation 123

Create 750 new Canada Research Chair positions for early and mid‐career researchers (Tier II) with five years of research operating support and funds for research infrastructure.

Skills Training

On the topic of professional training, witnesses discussed access to professional education, literacy and the role of training programs. The Committee also heard proposals regarding retraining programs and work-integrated learning and internships, as well as strategies to fund both workforce training and workforce development.

Recommendation 124

Invest in a strong workforce development strategy that explicitly recognizes care work and infrastructure under the Sustainable Jobs Plan.

Recommendation 125

Establish a permanent “tripartite plus” advisory council to provide advice and recommendations to the minister with respect to skills development and labour‐market policy.

Recommendation 126

Prioritize broad access to vocational education, training and apprenticeship opportunities for all workers, with targeted incentives to increase opportunities for disadvantaged and underserved groups including women, Indigenous workers, youth, lower‐skilled workers, workers with disabilities, newcomers to Canada and workers of colour.

Recommendation 127

Ensure core funding for literacy organizations and invest in a new national workplace literacy program delivered in partnership with trade unions.

Recommendation 128

Collaborate and implement permanent solutions to seasonal employment challenges, such as re‐skilling programs and support to aid in the transition to work.

Recommendation 129

Replace the Canada training credit with a voluntary professional development savings plan.

Recommendation 130

Promptly announce future investments under the Student Work Placement Program up to 2030.

Recommendation 131

Enhance the Canada Summer Jobs program to return to the 2021 level of funding.

Recommendation 132

Collaborate with provinces and territories to enable programs for enhancing skills and reskilling to meet labour.

Health Care

With regard to health care, the Committee received suggestions to improve health care services available to First Nations that respect their autonomy. Some witnesses also discussed the care economy and funding for the care sector, as well as recruiting and retaining health care professionals trained abroad. Lastly, other witnesses discussed needs for mental health and dental services, crises prevention and intervention services, health care innovation, and issues involving cannabis regulation and a national pharmacare plan.

Recommendation 133

Enhance the First Nations health workforce to bring care closer to home and ensure care across their lifespan.

Recommendation 134

Make investments to ensure First Nations effectively lead the implementation of distinctions‐based health legislation.

Recommendation 135

Convene a care economy commission tasked with planning, coordinating, and overseeing the necessary investments, policy changes and regulatory reforms needed to systematically strengthen care work and care services in Canada.

Recommendation 136

Work with provinces and territories, unions, employers and regulators to develop a national strategy to ethically recruit, register and retain internationally educated nurses and other health care professionals in the Canadian health care system.

Recommendation 137

Include measures in bilateral health agreements with provinces and territories that phase out private nursing agencies from provincial spending.

Recommendation 138

Implement a dental insurance program for seniors or, in the absence of an agreement with the provinces and territories, provide eligible individuals with direct financial support for dental care.

Recommendation 139

Accelerate current plans to introduce a national, public pharmacare program in Canada, realigning with implementation timelines contained in the final report of the Advisory Council on the Implementation of National Pharmacare in order to bring in full universal public pharmacare by 2027.

Recommendation 140

Ensure that the new pan-Canadian pharmacare program complements the existing system in Quebec to maintain the latter’s flexibility and universality.

Recommendation 141

In consultation and collaboration with, municipalities, provinces, territories and Indigenous peoples, increase specific mental health funding to provinces and territories either through the Canada Health Transfer or by creating a Canada mental health transfer, as well as to the federal Non-Insured Health Benefits Program, and accelerate the delivery of increased and sustained funding to existing and new organizations and service providers across Canada that deliver trauma-informed mental health-related programs and services, such as:

• peer supports;
• eating disorder recovery programs;
• supports for school-aged children, located in schools;
• targeted supports for specific groups such as youth, Indigenous populations, Black and racialized young women and girls, Two-Spirit, lesbian, gay, bisexual, transgender, queer, intersex people and individuals with sexually and gender-diverse identities;
• supports in the child and youth sector;
• supports for mental health literacy and emotional regulation and empathy training for families, parents and children and youth;
• supports on university and college campuses;
• sexual assault and violence survivor supports;
• supports in rural and remote communities, including clinical and virtual care; and
• culturally sensitive supports for immigrant, refugee, and newcomer women and girls and temporary residents.

Indigenous Peoples

On the topic of Indigenous peoples, some witnesses called for increased investment, particularly to address inequality and ensure the full participation of Indigenous peoples, while ensuring that their right to self-determination and their land rights are respected. Witnesses also discussed settling specific claims and organizing government procurement. The Committee heard proposals to improve infrastructure and access to housing and to ensure that sustainable development goals and objectives to mitigate climate change are implemented.

Some witnesses spoke to the Committee about proposals seeking to respect the Jordan principle, to promote mental health for Indigenous workers and to ensure that charitable organizations can maintain and increase their service offerings for Indigenous peoples. The Committee also heard proposals involving economic reconciliation, poverty reduction and post-secondary education for Inuit and Métis communities. Lastly, some witnesses highlighted the importance of setting the record straight, acknowledgement, economic reconciliation, commemorative activities and respecting the United Nations Declaration on the Rights of Indigenous Peoples.

Recommendation 142

Make investments to support ongoing inflation relief benefits for First Nations Income Assistance program clients.

Recommendation 143

Make investments for First Nations youth to thrive and support their transition into adulthood.

Recommendation 144

Implement the recommendations of the United Nations Committee on the Elimination of Racial Discrimination with respect to its recent periodic reports on Canada, including reform of federal laws, policies and regulations to bring them into compliance with the United Nations Declaration on the Rights of Indigenous Peoples.

Recommendation 145

Allocate sufficient funding for First Nations‐led processes to ensure Canada’s laws, policies, and regulations meet the objectives of the United Nations Declaration on the Rights of Indigenous Peoples.

Recommendation 146

Take the necessary steps and effective measures to meet the obligations of the United Nations Declaration on the Rights of Indigenous Peoples Act.

Recommendation 147

Invest in First Nations‐led engagement on laws, policies, processes, and mechanisms that support the implementation of self‐determination and land rights.

Recommendation 148

Make investments to support interim and transformational approaches to accessing lands and resolving over 1,300 additions to reserve applications.

Recommendation 149

Create a new center for the resolution of specific claims to coordinate the co‐development and joint implementation of reform to the way specific claims are resolved.

Recommendation 150

Invest in the formal recognition of First Nations and landless First Nations.

Recommendation 151

Make investments to build First Nations capacity and community‐led Sustainable Development Goals implementation.

Recommendation 152

Make investments in First Nations‐led climate action.

Recommendation 153

Make investments toward capacity building, First Nation‐led initiatives, and ensure Crown‐led stewardship and governance respect inherent rights, Treaties, title, jurisdiction, and knowledge systems.

Recommendation 154

Make investments to enable First Nations to perform good governance and provide adequate services to their citizens no matter where they reside.

Recommendation 155

Create a new First Nation‐led procurement organization to support First Nations businesses in securing procurement opportunities and meeting the federal 5% Indigenous procurement target.

Recommendation 156

Provide investments for First Nations engagement in the Cannabis Act review.

Recommendation 157

Support truth and commemoration including by undertaking to ensure First Nations‐led approaches in national commemoration activities and monuments and repatriating artifacts and remains.

Recommendation 158

Acknowledge Indigenous customary laws and legal norms and resolve First Nations overrepresentation in the criminal justice system.

Recommendation 159

Strengthen First Nations mental wellness workforces to reduce burnout and increase access to holistic, culture‐based, and intergenerational trauma‐informed interventions.

Recommendation 160

Acknowledge Canada’s obligation to provide adequate, predictable and sustainable funding to close socio‐economic and infrastructure gaps faced by First Nations.

Recommendation 161

Ensure that first nations enjoy the same standard of living as non‐indigenous Canadians and achieve equity and equality for all.

Recommendation 162

Bridge the digital divide for First Nations by meeting the minimum broadband standards outlined in High-Speed Access for All: Canada's Connectivity Strategy.

Recommendation 163

Continue to provide funding to organizations providing child and family services to urban, rural and northern Indigenous people.

Recommendation 164

Move more quickly, with respect to loan guarantees for Indigenous people in large resource projects, so projects can start and economic Indigenous reconciliation can be realized.

Recommendation 165

Acknowledge the importance of Indigenous people’s involvement and support partnerships in economic development renewables projects by allowing Indigenous entities, not just taxable corporations, to fully participate in investment tax credits.

Recommendation 166

Continue to invest in Jordan's principle so that First Nations children can get access to the medical and mental health services they need.

Recommendation 167

Consider an expansion or investments in the Urban Programming for Indigenous Peoples program in ways that continue to allow child and family services organizations to expand their service delivery.

Recommendation 168

Provide investments for each First Nation to establish and maintain formal and culturally relevant emergency management programs.

Recommendation 169

Make investments to implement the National Inquiry into Missing and Murdered Indigenous Women and Girls Calls for Justice.

Recommendation 170

Make investments to establish First Nations police agencies comparable to other policing agencies.

Recommendation 171

Support reconciliation and provide predictable, sustainable funding for the reclamation, revitalization and maintenance of First Nations languages, cultural heritage and arts.

Recommendation 172

Make investments to urgently reverse Indigenous language decline and support initiatives in non‐school settings.

Recommendation 173

Increase funding to the Post-Secondary Student Support Program and Métis and Inuit Post-Secondary Education Strategies to support Indigenous students in attending post-secondary education.

Children, Families and Social Policy

With regard to children and families, witnesses highlighted to the Committee the importance of investing in Indigenous youth. The Committee also heard proposals about Canada’s food policy, day care services, including the national childcare program, and tax relief for child care costs. In terms of social policy, witnesses discussed income assistance and income support programs, including safeguards for certain tax credits. Other witnesses proposed implementing a guaranteed basic income program. Lastly, discussions touched on the Social Innovation and Social Finance Strategy and funding for charitable organizations.

Recommendation 174

Continue and expand targeted fiscal supports for hard‐hit Canadians, such as the GST credit and the Canada Housing Benefit.

Recommendation 175

Work with other levels of government to transform the social assistance system in order to implement a guaranteed basic income for working-age adults aged 18 to 64, including those living on reserves, migrant workers, temporary and permanent residents and refugee claimants.

Recommendation 176

Determine collaboratively with provincial and Indigenous governments which programs would be replaced, if any, and which would continue, be updated or expanded when needed, which should include provincial employment and training programs and counselling and rehabilitative services and supports, when the guaranteed basic income is implemented.

Recommendation 177

Expand non‐profit and publicly owned early learning and childcare with more funding to the Early Learning and Child Care Infrastructure Fund.

Recommendation 178

Invest in the development and implementation of a national action strategy on volunteerism to support volunteer activity across the country and the organizations that rely on the work of volunteers to support Canadians.

Recommendation 179

Transform the Canada Workers Benefit into an enhanced Canada working‐age supplement to support people aged 18 to 64 living with poverty and food insecurity.

Recommendation 180

Create a fund to support a national pilot program for food banks to drive food bank innovation, evolution and impact across the country.

Recommendation 181

Fund the creation and implementation of a workforce development strategy in collaboration with the charitable sector.

Recommendation 182

Safeguard and assure the continued success of the Terry Fox Humanitarian Award, which has served over 1,027 young Canadians who have uniquely demonstrated extraordinary humanitarian contributions to local, regional, and global communities while overcoming significant obstacles in their pursuit of post‐secondary education.

Recommendation 183

In consultation and collaboration with, municipalities, provinces, territories and Indigenous peoples, continue to fund organizations and initiatives that support women's safety, reduce poverty and foster economic empowerment, such as universally accessible and affordable childcare, safe and affordable housing and shelter space, and access to education, training and employment opportunities.

Recommendation 184

Commit to dedicating a portion of menstrual equity funding to ensuring that women and all individuals who menstruate who are living in situations of poverty and/or homelessness have access to menstrual products.

Recommendation 185

Increase financial transfers to low-income households.

Seniors and Retirement

On the topic of retirement income and seniors, the Committee heard proposals about retirement savings and income plans, as well as the benefits paid under the Old Age Security Act. Some witnesses also mentioned Alberta’s proposal to opt out of the Canada Pension Plan and programs providing support for seniors.

Recommendation 186

Implement measures to address challenges associated with the high cost of living and financial security.

Recommendation 187

Simplify the application process for the New Horizons for Seniors Program.

Recommendation 188

Increase the Guaranteed Income Supplement for all seniors.

Recommendation 189

Increase the Old Age Security pension for seniors aged 65 to 74and review the method for indexing to account for wage growth in Canada.

Recommendation 190

Implement more robust measures to raise the average age of retirement by:

• launching an awareness campaign and developing an action plan to promote the retention and hiring of experienced workers;
• increasing the income threshold below which the Guaranteed Income Supplement is not reduced; and
• reviewing the restrictions, conditions and tax implications involved in converting a Registered Retirement Savings Plan to a Registered Retirement Income Fund.

Support for Communities

Prior to the COVID-19 pandemic, Canada was already experiencing a shortage in housing supply. According to analysis from Scotiabank published in May 2021, “the number of housing units per 1,000 Canadians has been falling since 2016 owing to the sharp rise in population growth.” The result was that Canada had the lowest number of housing units per residents of any G7 country that year, with 424 units per 1,000 residents compared to an average of 471 for G7 countries. As well, the analysis indicates that an “extra [100,000] dwellings would have been required to keep the ratio of housing units to population stable since 2016.” Even if Canada were to achieve that level of new residential construction, it would still leave the country well below the G7 average.

One consequence of the shortage in the supply of housing is decreased housing availability in the rental market. Figure 3 shows that since 2016, the rental vacancy rate has decreased in many Canadian cities, in particular since 2020. The Canada Mortgage and Housing Corporation (CMHC) noted that despite strong increase in the supply of purpose-built rental apartments in 2022, demand was higher, leading to a decrease in the national vacancy rate from 3.1% to 1.9%, the lowest rate since 2001.

Figure 3—Rental Vacancy Rates in Apartment Structures of Six Units or More, Selected Census Metropolitan Areas (%)

Source:  Figure prepared by the Library of Parliament using data obtained from Statistics Canada, “Table Canada 34-10-0127-01: Mortgage and Housing Corporation, vacancy rates, apartment structures of six units and over, privately initiated in census metropolitan areas,” Database, accessed 10 November 2023.

Factors that can influence housing supply include land and construction costs, as well as geographical constraints (e.g., oceans and mountains) and municipal land-use planning restrictions, which fall under provincial, territorial and municipal jurisdiction, and limit the types of homes and where they can be built. Geographical constraints and municipal land-use planning restrictions can limit the potential for supply to grow in response to higher prices.

The federal government has taken several measures to reduce construction costs in order to increase the supply of new housing units in Canada, such as the Rental Construction Financing Initiative and the Rapid Housing Initiative. More recently, it introduced Bill C-56, An Act to amend the Excise Tax Act and the Competition Act. In particular, the bill, which received royal assent in December 2023, increases the rate of the GST New Residential Rental Property Rebate from 36% to 100% and removes the phase-out thresholds for certain purpose-built rental housing projects, which effectively eliminates the GST on such projects.

When housing supply is somewhat responsive to changes in prices, or in other words “elastic,” such measures that increase housing supply through direct government provision, capital contributions, loan subsidies or tax measures may lead to an increase in the quantity of new housing supplied. However, according to the International Growth Centre (IGC), when implemented in the context of municipal land-use planning restrictions “that create housing supply inelasticity,” these measures “cannot increase the total housing stock, but rather serve to crowd out unsubsidised housing with housing built by subsidised developers.”

In 2021, the Bank of Canada estimated that the median housing supply elasticity was 2.2% among all Canadian cities, which means that a 1% increase in home prices in the median Canadian city was associated with a 2.2% increase in housing supply. However, it found significant differences across cities. For example, the estimated supply elasticity was 0.63% in Vancouver, 0.89% in Toronto and 4.3% in Winnipeg.

According to the IGC, when a city’s housing supply is inelastic, “[u]nlocking land for housing requires removing the constraints to, and thus lowering the costs of, obtaining formal land that is well-connected to the city.” Examples of these constraints include stringent land-use planning restrictions and challenges securing well-located government land for housing. In 2020, the C.D. Howe Institute estimated that these constraints added on average $230,000 to the price of a new home across the eight most restrictive Canadian cities and $644,000 in Vancouver.

To address municipal land-use planning restrictions, Budget 2022 announced that $4 billion over five years would be provided, starting in 2022–2023, to the CMHC to launch a new Housing Accelerator Fund that will target the creation of 100,000 net new housing units over the next five years. As stated by the Minister of Housing, Infrastructure and Communities, this program “was created to incentivize local governments to implement structural and lasting reforms that will increase the supply of housing.” He indicated that following negotiations to access funding under the program “cities like London, Calgary, Hamilton, Halifax, Kitchener, and Vaughan have recently made progress to end exclusionary zoning. Others are proactively changing their zoning rules and permitting process in anticipation of a decision on their Housing Accelerator application.”

In a September 2023 report, the CMHC estimated that 3.5 million more housing units are needed by 2030 to restore housing affordability. The report also presents two additional scenarios, due to changes in economic and demographic projections:

• The “high-population-growth” scenario considers what would happen to the supply gap if current immigration levels were extended until 2030. In this case, the supply gap would increase to 4 million housing units.
• A “low-economic-growth” scenario results in a supply gap of 3.1 million more housing units. This scenario is the result of weak economic growth and the current immigration policy ending by 2025.

With respect to housing supply gaps in different provinces, Ontario and British Columbia have the largest portion of the 3.5 million housing supply gap, due to the housing supply not keeping up with demand over the past 20 years in major urban centres.

Going forward, the CMHC expects a significant decline in housing starts, not only because of higher interest rates, but also because of ongoing labour shortages and high costs of materials. As a result of this slowdown in supply growth, as well as renewed demand, CMHC expects housing prices to increase in 2024. High housing prices and immigration levels are also expected to increase demand for rental units and hence increase rents.

In addition to housing, witnesses addressed the topics of arts, culture and language, infrastructure and safety and security.

Housing

With respect to housing, witnesses emphasized the importance of federal collaboration with provincial and municipal governments as well as with businesses and non-profit organizations. Witnesses called on the federal government to play a leadership role in regulatory reform across all levels of government and in incentivizing private-sector investment and entrepreneurship. The Committee heard many proposals to expand funding programs to increase the supply of affordable housing, particularly social and non-profit housing. Some witnesses cited low-income households, newcomers, and rural and Indigenous communities as requiring targeted support and policy consideration. Others proposed various reforms to taxation and mortgage regulations, increased use of public lands and improvements to the housing data ecosystem.

Recommendation 191

Pursue greater policy coordination through a forum for relevant stakeholders, including federal, provincial, and municipal officials responsible for housing, infrastructure and immigration, as well as representatives of the construction industry and advocacy groups, to correct supply‐demand imbalances generating the housing affordability crisis.

Recommendation 192

Incentivize innovation to bring down costs of building homes and focus on measures and incentives to stimulate Canada’s housing supply.

Recommendation 193

Avoid adding costs through codes and regulations by streamlining approvals for local government, and increase capacity of approval bodies.

Recommendation 194

Accelerate the rollout of the National Housing Strategy’s Federal Lands Initiative and introduce a dedicated five‐year, Public Land Acquisition Fund to acquire additional land for the construction of non‐market, affordable rental housing.

Recommendation 195

Allow for the pro‐forma land value to be captured by non‐profits seeking to build housing on their land when proposals are brought forward to it.

Recommendation 196

Allocate capital funding to the Affordable Housing Fund to build a minimum of 100,000 new units per year, in conjunction with provincial partners and other public contributions.

Recommendation 197

Combine the terms and conditions of some of Canada Mortgage and Housing Corporation’s programs, like MLI Select, for funding new rental projects.

Recommendation 198

Create a housing acquisition fund to assist the community housing sector to acquire existing affordable rental buildings.

Recommendation 199

Make the Rapid Housing Initiative a long‐term program with recurring and predictable funding beyond 2024.

Recommendation 200

Launch and implement the Co-operative Housing Development Program as part of a wider strategy to double the non‐market housing across the country.

Recommendation 201

Reduce cost pressures that emanate from the actions of private companies with an ambitious expansion of affordable and non‐market housing, and exercise better control over the cost of housing and the cost of rent.

Recommendation 202

Reallocate National Housing Strategy funds to and invest massively in social and affordable housing, both for acquisitions and renovations, to address the housing crisis, combat homelessness and counter the decline in housing starts, including by providing resources for construction, alongside the provincial and municipal governments, and by providing grants to guarantee the tenants’ return to and maintained occupancy of the premises regardless of income.

Recommendation 203

Create a national housing plan that recognizes that decent housing is a human right, starting with a commitment to the necessary resources to ensure all Northerners have access to affordable and adequate housing, by national standards and building codes, within five years.

Recommendation 204

Ensure that federally financed housing is affordable for low‐income families, while reflecting the diverse needs of families with children, and increase the assistance to low-income households through various transfers and tax credits.

Recommendation 205

Make investments in housing for First Nations to address overcrowding, unit replacement, new lot servicing, repair needs, on‐reserve migration, and population growth.

Recommendation 206

Eliminate the stress test on mortgage transfers, switches, and renewals for mortgage holders in good standing to help Canadians find the financing solutions that best fit their needs and budget.

Arts, Culture and Language

Witnesses who spoke about arts, culture and language proposed to strengthen protections for artists’ rights, particularly to adapt to technological developments and align with international standards. The Committee heard calls for permanently increased funding for cultural events, the arts and journalism, particularly for independent producers and local media outlets. Witnesses also requested increased funding for francophone groups, Indigenous languages, and official language minority communities. It was also proposed that the government continue to include language clauses in transfer agreements to the provinces and territories and support equity, diversity and inclusion in the media industry.

Recommendation 207

Implement market-based solutions that encourage fair remuneration of rights-holders for use of copyright protected work through reform of the Copyright Act, and ensure that the Act protects all creators and copyright holders and that the educational publishing industry is sustainable.

Recommendation 208

Preserve the educational fair dealing exception under the Copyright Act.

Recommendation 219

Update the Copyright Act to ensure artists are compensated when their work is used, expand moral rights provisions to strengthen artists’ common law “right of personality” and strengthen economic rights provisions to keep up with international standards, and technological advancements.

Recommendation 210

Expedite amendments to the Copyright Act and support reforms that benefit Canadian-owned independent music.

Recommendation 211

Introduce legislation to provide protections for performer’s images, likeness, voices, and performances to prevent unauthorized replacement of human performances by artificial intelligence technology.

Recommendation 212

Institute an un‐waivable right for performers in making available fixed performances to on‐demand and interactive streaming, both for sound recordings and audiovisual recordings.

Recommendation 213

Introduce tax measures to incent businesses to advertise with private sector Canadian news outlets and bring fairness to the different tax treatment of advertising purchased from foreign websites to ensure media organizations are not deprived of revenues.

Recommendation 214

Provide an annual operating budget for all community, Indigenous, and campus‐licensed radio stations, which could be established and administered by the Community Radio Fund of Canada.

Recommendation 215

Make advertising with campus and community radio stations mandatory for all government advertising campaigns.

Recommendation 216

Increase funding for the Local Journalism Initiative and ensure the funding is timely.

Recommendation 217

Continue efforts to achieve a more equitable, diverse, and inclusive recorded media industry.

Recommendation 218

Expedite the regulatory implementation of the Online Streaming Act through the Canadian Radio-television and Telecommunications Commission to ensure the long‐term viability of Canada’s public interest broadcasters and avoid irreversible cuts to operations and programming they support.

Recommendation 219

Ensure that new funding mechanisms resulting from the Online Streaming Act prioritize FACTOR and Musicaction.

Recommendation 220

Increase annual contributions to the Canada Music Fund to ensure better and more stable funding for the music sector, taking into account inflation, labour shortages and the unique circumstances of the entertainment sector, with a view to providing export and financial support for:

• the production and marketing of recorded music and shows, especially of benefit to emerging artists, and
• workforce retention and training.

Recommendation 221

Fulfill the commitment to a permanent increase to the Canada Music Fund along with additional funding for new live programming.

Recommendation 222

Provide permanent funding to Canadian Heritage’s arts branch, heritage programs and the Canada Council for the Arts to ensure a resilient, equitable future for the Canadian arts and culture ecosystem, its workers, buildings, and communities.

Recommendation 223

Implement the Minister of Canadian Heritage’s mandate letter commitment to support Canadian authors and book publishers by permanently increasing funding to the Canada Book Fund.

Recommendation 224

Make the enhancements to the base budget of the Canada Arts Presentation Fund and the Building Communities Through Arts and Heritage program in 2019–2020 permanent.

Recommendation 225

Increase funding for the Canadian Heritage’s Endowment Incentives component of the Canada Cultural Investment Fund for existing performing arts recipients.

Recommendation 226

Support core operational funding for arts organizations to foster institutional and workforce stability.

Recommendation 227

Streamline granting processes to make them more accessible and support multi‐year funding to encourage strategic and advanced planning, effective use of funds and sustainability.

Recommendation 228

Review the eligibility requirements for existing funding streams, such as tourism grants, major events grants and Canadian Heritage funding programs, with consideration of the current composition of the arts sector, which includes increasingly interdisciplinary organizations working in modern and innovative ways.

Recommendation 229

Encourage audience attendance by implementing a tax credit for individuals to buy tickets to Canadian theatre productions; and investing in a public campaign through Destination Canada that promotes Canadian live performances as a tourist experience and to encourage audience return.

Recommendation 230

Provide adequate and permanent funding for the implementation of the Action Plan for Official Languages 2023-2028.

Recommendation 231

Increase funding allocated to francophone community and language organizations to account for inflation and the new obligations under the under the Action Plan for Official Languages 2023-2028.

Recommendation 232

Provide specific core funding to all minority francophone and Acadian women’s organizations to prevent them from reaching a breaking point and set aside a specific envelope for organizations representing francophone and Acadian women as part of the funding allocated to all federal institutions.

Recommendation 233

Provide sufficient resources so that francophone immigrants in the regions may live adequately and thrive in their language and culture.

Recommendation 234

Permanently increase funding to support post-secondary institutions in official language minority communities.

Recommendation 235

Create a post-secondary bursary program for students whose first language is French, with an envelope equivalent to that of the existing program for students whose second language is French.

Recommendation 236

Continue to include language clauses when transferring funds to provinces and territories for various initiatives.

Recommendation 237

Support francophone caregivers by investing in better access to services and resources.

Infrastructure

With respect to infrastructure, witness proposals centred around public transportation, drinking and waste-water infrastructure, and trade-enabling infrastructure such as ports, rail, and airports. The Committee also heard proposals for investment in recreation and tourism-related infrastructure. Many witnesses emphasized the importance of collaboration between all levels of government and industry. Some suggested reviews and reforms of funding criteria, amounts and mechanisms, particularly with respect to funding for both urban and rural municipalities.

Recommendation 238

Establish a forum for ongoing tri‐partite engagement on the development of a sustainable, long‐term funding model for public transit.

Recommendation 239

Together with the other levels of government, improve funding for public transit, including by

• advancing ongoing support for public transit by two fiscal years;
• renewing the emergency operating funding of 2022, and
• providing additional funding for asset quality maintenance in order to preserve current service levels, and enable more people to benefit from modern, efficient public transit.

Recommendation 240

Make investments across the drinking water supply chain to eliminate drinking water advisories in First Nations communities.

Recommendation 241

Make investments across the wastewater supply chain in First Nations communities to address chronic underfunding and mitigate threats to health and wellbeing due to inadequate sanitation.

Recommendation 242

Make investments in all season roads to increase access to affordable goods and services for First Nations communities.

Recommendation 243

Advance the implementation of the national infrastructure assessment and develop, jointly with industry and all orders of government, a 25‐year plan for infrastructure investment that includes housing and trade‐enabling infrastructure.

Recommendation 244

Make investments to meet basic community infrastructure needs, including buildings, ports and wharfs, transportation infrastructure, and utilities and lend greater support to municipal capital projects and services which facilitate economic development.

Recommendation 245

Prioritize funding for infrastructure projects under direct federal control, such as investments in capacity and added security for marine, rail and air transportation, and military assets, as well as to infrastructure that supports population growth and support the movement of goods through to the world, such as the Investing in Canada infrastructure program for regional and local infrastructure and national trade corridors funding.

Recommendation 246

Immediately set aside funds to establish a high-speed, high-frequency rail connection between Quebec City, Montreal and Ontario, with an accelerated schedule of completion.

Recommendation 247

Immediately confirm the allocation of increased federal funding to support expansion plans at the Port of Montréal (Contrecoeur terminal) and the Port of Saguenay (industrial port zone).

Recommendation 248

Enhance the Airports Capital Assistance Program to meet the urgent needs of local and regional airports.

Recommendation 249

Invest significantly in federal airport infrastructure to reduce their major asset maintenance deficit.

Recommendation 250

Review the high tariff rates charged to air carriers that use Canadian airports.

Recommendation 251

Permanently increase the funding allocated to the Canada Community-Building Fund for municipal infrastructure, and quickly reach agreements with provinces and territories to ensure that funding is transferred without any new conditions regarding how that funding will be used.

Recommendation 252

Modernize funding for municipal infrastructure projects by further extending the eligibility period for and expanding the scope of financial assistance programs.

Recommendation 253

Reinvest in sports and recreational facilities to ensure the health and well-being of the population and increase access to quality facilities.

Safety and Security

A few witnesses made proposals about safety and security, such as more funding for Indigenous-led security programs, cybersecurity, fraud prevention, and gender-based security and justice initiatives. The Committee was asked for greater investments to implement the Calls for Justice of the National Inquiry into Missing and Murdered Indigenous Women and Girls. The Committee also heard proposals for the government to consult and collaborate with municipalities and provinces when negotiating contracts with the Royal Canadian Mounted Police.

Recommendation 254

Allocate additional funds to organizations like the Canadian Centre for Cyber Security to increase individual cyber security awareness and cross‐industry collaboration.

Recommendation 255

Protect critical infrastructure, supply chains and businesses from cyber threats by supporting investments in IT and operational technology security that help critical infrastructure operators of all sizes develop and deploy prevention‐first cybersecurity strategies.

Recommendation 256

Create a small and medium enterprises (SME) cyber defence fund and redirect funding from lower‐priority government spending so Canada can help SMEs improve their cyber resilience and close the cybersecurity investment gap.

Recommendation 257

Encourage, in cooperation with the private sector and the provinces and territories, the universal adoption of a pan-Canadian trust framework based on the principles laid out in the Digital Identity White Paper to ensure the interoperability of secure digital identification and authentication across Canada in all spheres of activity and maximize the benefits to Canadians.

Recommendation 258

Create a direct income verification mechanism between lenders and the Canada Revenue Agency as a means to dissuade mortgage document fraud.

Recommendation 259

Provide funding to enhance judicial education on intimate partner violence and coercive control.

Recommendation 260

In consultation and collaboration with, municipalities, provinces, territories and Indigenous peoples, ensure that an intersectional approach is applied to the National Action Plan to End Gender-Based Violence and the Federal Strategy to Prevent and Address Gender-Based Violence, and that commitments to funding for organizations serving victims and survivors are included in the National Action Plan to provide a comprehensive continuum of culturally appropriate services in one location, to facilitate access to these services for victims and survivors.

Recommendation 261

Top up its investment to implement the National Action Plan to End Gender-Based Violence and earmark funding specifically for organizations representing francophone and Acadian women in minority communities.

Recommendation 262

While respecting the jurisdiction of sports organizations, fund education, training and support for volunteers, with the goal of providing them the tools to better support athletes and ensure that athletes’ safety and Safe Sport are always taken into account.

Recommendation 263

In consultation and collaboration with, municipalities, provinces, territories and Indigenous peoples, fund the development of a red dress alert for missing and murdered Indigenous women, girls and Two-Spirit people.

Climate Change and Energy Policy

As reported by the Intergovernmental Panel on Climate Change, the unprecedented global warming observed by scientists in recent decades, caused principally by rising emissions of greenhouse gases (GHG), will have short- and long-term impacts on several aspects of Canadian society, including on health, food security, the economy and infrastructure. For example, Figure 4 shows an increasing trend in insured losses resulting from catastrophic weather events in Canada over the 2008–2022 period.

Figure 4—Catastrophic Insured Losses Resulting from Severe Weather Events in Canada (billions of 2022 dollars)

Note:      Insured losses for a given weather even are considered catastrophic when they reach $30 million or more. These figures are in 2022 dollars. Data for 2021 and 2022 are preliminary.

Source:  Figure prepared by the Library of Parliament using data obtained from the Insurance Bureau of Canada, 2023 Fact of the Property and Casualty Insurance Industry in Canada, 2023, pp. 15 – 26.

Since Arthur Pigou’s work in 1920, economists have consistently recognized pollution as a negative externality in both production and consumption. A negative externality refers to the unintended and adverse consequences of an economic activity that affect third parties who are not directly involved in the activity, leading to a market failure. This concern goes beyond the immediate pollution and includes potential future damages caused by long-term phenomena such as climate change. Thus, GHG emissions caused by individuals, businesses and governments represent a negative externality.

The most effective approach to climate change policy seems to lie within fiscal policy rather than monetary policy, a point of view that was also underscored by the Governor of the Bank of Canada during his 30 October 2023 appearance before the Committee, during which he stated that climate change policy is not part of the Bank’s mandate and should remain the responsibility of governments. Many economists propose fixing the market failure caused by individuals, businesses and governments neglecting GHG emissions in their activities during production and consumption. This can be achieved through carbon pricing mechanisms, such as a direct tax on GHG emissions or cap-and-trade policies, or indirect means, such as subsidies and tax credits for clean energy and technology research and development.

On the one hand, certain economists view a direct tax on GHG emissions as the most efficient way to make polluters consider the social costs of their GHG emissions, and favour this approach over subsidies. According to them, taxes can provide companies with the flexibility to reduce emissions through various means – such as renewable energy sources, energy efficiency, or production cuts – whereas subsidies target specific alternatives for particular aspects of the emissions challenge.

On the other hand, some economists argue that a combination of policies may be the most effective approach for achieving rapid and profound decarbonization, while others argue against carbon pricing. While carbon taxes are implemented locally, the impact of climate change is a global issue. Proponents argue that when a province or country imposes a carbon tax, its residents – including the businesses that operate there – bear the financial burden, while the benefits can also accrue to people in other regions and countries. Consequently, they contend that jurisdictions that choose not to implement carbon taxes can essentially rely on others to shoulder the cost of reducing GHG emissions – a market failure known as the free rider problem.

The U.S. government chose not to incorporate a carbon tax in its Inflation Reduction Act (IRA). Apart from a tax on methane emissions, the IRA predominantly relies on subsidies rather than taxes. It encompasses a range of tax incentives designed to encourage both businesses and households to transition to cleaner forms of energy. Specifically, the IRA includes provisions for businesses, such as tax credits, aimed at promoting investments in solar, wind, and other non-carbon-based power generation methods. For households, it introduces incentives to foster the adoption of EVs, as well as encourage residential energy retrofits, such as the installation of heat pumps and rooftop solar panels.

One of the key provisions pertains to the production tax credit for clean electricity. Under the IRA, any company engaged in the generation of new carbon-free electricity, such as wind or solar power, qualifies for incentives based on the quantity of electricity produced. Additionally, the IRA incorporates measures intended to encourage the use of emerging technologies, including carbon capture and utilization, as well as clean fuels, notably green hydrogen.

In September 2022, the House of Commons Standing Committee on International Trade studied the impacts of the IRA on Canadian firms, with a focus on the following sectors: automotive, clean energy and clean technology, and critical minerals. Most witnesses spoke about the challenges for Canadian firms resulting from the IRA’s incentives for clean energy and clean technologies. According to several witnesses, these challenges include:

• the potential loss of Canada’s leadership position to the United States in undertaking decarbonization efforts;
• the establishment of the United States “as a very attractive market” for investments in clean energy;
• the inability of Canadian clean energy and clean technology firms to compete with their United States’ counterparts for investments and skilled workers; and
• the relocation of certain clean technology investments from Canada to the United States.

In Budget 2023, the federal government announced various measures to support the development of clean electricity and technologies, amounting to a total of $18.5 billion over five years. Of that amount, $17 billion is related to diverse tax credits aiming to encourage investments in these sectors. One key measure is the introduction of a new investment tax credit for clean electricity. This tax credit has been structured to extend eligibility to public entities and Indigenous communities and is applicable to both new projects and refurbishments.

Witnesses who addressed climate change and energy policy made proposals related to the transition to net-zero, carbon pollution pricing, the energy sector, and adaptation and preservation measures.

Transition to Net-Zero

With respect to the transition to net-zero, witnesses suggested certain federal actions concerning employment and labour matters, including facilitating worker transition to a low-carbon economy, for example by investing in the creation of new programs to support regional planning and career choices for sustainable jobs, providing safe and unionized working conditions and supporting underrepresented groups, ensuring prevailing wages and apprenticeship requirements, and passing Bill C-50, Canadian Sustainable Jobs Act.

Dealing with this transition, witnesses expressed the need for the creation of new funding or increased funding for climate-related home upgrades, the Futures Fund, decarbonizing the electricity grid, transitioning fishing vessels, green hydrogen contracts for difference, support for manufacturers, a home appliances and electronics repair fund and a reusable container and packaging fund. Witnesses also expressed the need to cease funding for “polluting projects.”

With respect to taxation, witnesses requested that the government provide tax credits for aluminium decarbonization, create more eco-taxes and binding regulations, and expedite green tax measures.

Witnesses also expressed a need for certainty in federal carbon capture plans, stakeholder consultations and industry-related policies, incentives for sustainable aviation fuel and modernization, as well as tools for SMEs to measure and mitigate their carbon footprint.

Addressing general federal policy matters in this area, witnesses suggested increased federal leadership in the development of a green economy and faster progress on the Greening Government Strategy, while enhancing productivity, closing the competitive gap with the United States, ending fossil fuel use by 2050, advancing a sector-agnostic national GHG offset system, raising greater awareness of green programs.

Finally, with respect to specific transition policy matters, witnesses spoke about the role of financial institutions and the Canada Infrastructure Bank, support for municipal sustainability initiatives, emission standards, end-of-life battery use, domestic content criteria, and incentive programs for provincial GHG reductions.

Recommendation 264

Improve Bill C-50, Canadian Sustainable Jobs Act, before passage, including ensuring a strong voice for workers through their unions in the proposed Sustainable Jobs Partnership Council and pass the Bill so that workers have a seat at the table when shaping industrial policy.

Recommendation 265

Increase the Futures Fund’s budget and expand it to cover all provinces and territories.

Recommendation 266

Scale up investment in transition planning, job creation, and worker supports to ensure workers and communities have a smooth transition to a low‐carbon economy.

Recommendation 267

Foster a net-zero economy, while respecting workforce agreements with provinces and territories, by investing in workforce development through tax credits covering tuition for sustainable careers, by increasing funding for “skills in a net-zero economy,” by investing in the creation of a new program to support regional planning and fund initiatives that create sustainable jobs, and in innovation to decarbonize the industrial sector and in the economic diversification of communities affected by the transition.

Recommendation 268

Include job‐quality requirements in Budget 2024’s decarbonization investments to ensure low carbon jobs are safe, well‐paid, and afford workers a say at work through access to a union.

Recommendation 269

Support a renovation wave for climate resilient homes and affordable home by expanding and coordinating existing investments and programs to centrally deliver home upgrades to ensure impactful investments that integrate health, affordability, and adaptation targets, and accommodate the unique needs of Indigenous, northern and remote communities.

Recommendation 270

Expand the scope of certain programs intended to boost energy-efficient retrofits to also include large rental properties.

Recommendation 271

Pass legislation to ensure that Canadian banks have plans, targets and practices consistent with Canada’s climate commitments and the objectives of the Paris Agreement, including measures to reduce financed emissions.

Recommendation 272

Develop a standard definition for “net‐zero aligned investment,” include emission reduction estimates alongside policies, and support the work of the Sustainable Finance Action Council, particularly its transition taxonomy project.

Recommendation 273

Show leadership in the development of a green economy and continue and expand the made‐in‐Canada supports for clean‐energy investments including in electric vehicles and battery plants in Canada.

Recommendation 274

Commit to economic reconciliation, climate action, Arctic sovereignty, sustainable development and building a resilient pan‐Canadian grid.

Recommendation 275

Speed up and expand clean technology incentives to help manufacturers adapt to and advance Canada’s climate change plans.

Recommendation 276

Limit the production of residual materials by creating a home appliances and electronics repair fund and a reusable container and packaging fund.

Recommendation 277

Provide an actionable plan for a sustainable aviation fuel industry in Canada.

Recommendation 278

Show leadership by accelerating progress on the Greening Government Strategy.

Recommendation 279

Prioritize the substitution of wood products and fibre‐based bio‐products over more greenhouse gas-intensive alternatives as part of its Greening Government Strategy and Canada Green Buildings Strategy.

Carbon Pollution Pricing

On the topic of carbon pollution pricing, witnesses suggested that the government examine emissions trading systems linked with the United States and other carbon climate finance mechanisms, implement additional ecofiscal policies that encourage Canadians to spend less on goods that pollute, implement a mechanism that ensures emissions reductions are verified and reported to a Canadian regulated credit system, and that the government’s carbon pollution pricing mechanism be frozen at its current level with sums collected from small businesses returned to them.

With respect to Canadian farming and food concerns, witnesses remarked that the on-farm exemption for qualifying farming fuel be extended to include natural gas and propane, that the effects of carbon pricing on the affordability of food for Canadians and the competitiveness of Canada’s industries be evaluated, and that a temporary pause on any carbon pricing policies affecting the Canadian food supply chain be considered.

Recommendation 280

Design policies, such as more ecofiscality, to encourage Canadians to spend less on items that pollute and spend more on items that do not pollute.

Recommendation 281

Implement a mechanism to ensure that emissions reductions are measured, verified and reported to the Canadian regulated credit system rather than a voluntary market.

Energy

Regarding energy, a number of witnesses advocated for tax incentives and other measures to support clean and renewable energy, clean technology and carbon capture, utilization and storage, while others argued for a reduction of the support for the oil and gas sector. Witnesses also commented on the development of electricity grids, including in relation to the proposed transition to a net-zero grid by 2035.

Recommendation 282

Implement the investment tax credits for clean electricity, clean technology and clean hydrogen quickly, ensure that they are comprehensive in coverage and consider how they can be further supported and leveraged.

Recommendation 283

Expand eligibility for the clean electricity, clean technology manufacturing, and clean technology investment tax credits to include investments in energy generated using forest biomass and residuals.

Recommendation 284

Ensure that Canada is a competitive jurisdiction for investments in clean hydrogen.

Recommendation 285

Put an end to the financial support of the oil and gas industry as soon as possible.

Recommendation 286

Implement measures to support the development of a zero‐emissions electricity grid based on renewables.

Recommendation 287

Commit to provide direct funding for Nukik Corporation to enable the Kivalliq Hydro‐Fibre Link project to proceed.

Recommendation 288

Directly finance the evolution of Newfoundland and Labrador's electricity grid.

Adaptation and Preservation

Speaking about efforts to adapt Canadian society and industry to climate change, witnesses requested that the government take action on revising or improving disaster-related risk management programs – such as AgriRecovery – to ensure they are more responsive and predictable, provide support to farmers for adapting to the effects of climate change and invest strategically in climate-resilient agriculture. Other witnesses proposed implementing measures to support hurricane readiness for buildings and business operations, increasing investment in the Disaster Mitigation and Adaptation Fund and making it accessible to rural communities, developing strategies and programs to support rural municipalities in making informed decisions related to mitigating disaster risks, and establishing climate adaptation hubs led by colleges to support local communities and businesses in adapting to climate change. Finally, witnesses discussed investing in First Nations-led conservation and biodiversity preservation efforts, and implement the Kunming-Montreal Global Biodiversity Framework.

Recommendation 289

Significantly increase investments in the Disaster Mitigation and Adaptation Fund to accelerate the deployment of climate‐resilient infrastructure.

Recommendation 290

Increase investment in proactive wildfire mitigation and prevention strategies, with a focus on reducing fuel loads in Canada’s forests, in addition to programs already identified through the Wildfire Resilient Futures Initiative.

Recommendation 291

Develop strategies and programs to support rural municipalities in making informed decisions related to mitigating disaster risk, such as flooding, and provide funding for both the FireSmart Canada program to map wildfire risks and for community wildlife mitigation projects.

Recommendation 292

Heed the recommendations of the Climate Proof Canada coalition, the Insurance Bureau of Canada and the Lancet Countdown on health and climate change for Canada with respect to implementing the National Adaptation Strategy, in collaboration with the provinces.

Recommendation 293

Provide funding for retrofits that increase the resilience of residential and commercial buildings and provide greater protection from the impacts of extreme weather events caused by climate change as part of the National Adaptation Strategy.

Recommendation 294

Establish climate adaptation hubs led by colleges to harness the power of applied research to support local communities and businesses in adapting to climate change.

Recommendation 295

Build on the initial funding provided in Budget 2023 to fully launch a national flood insurance program.

Recommendation 296

Invest in First Nations‐led conservation and biodiversity preservation efforts.

Recommendation 297

Deliver on Canada’s commitment to halt and reverse biodiversity loss by implementing the Kunming‐Montreal Global Biodiversity Framework.

Federal Fiscal Framework and Government

Many economists believe that inflation is a fiscal and monetary phenomenon and that price stability over time requires coordination between both fiscal and monetary authorities. According to this view, the ability of a central bank to fully control inflation ultimately depends on the successful stabilization of public debt through sustainable future fiscal plans.

For example, when a government fails to address existing structural deficits, the price level will increase to maintain the sustainability of public debt over the long term, which may cause inflation to deviate from the central bank’s target. As structural deficits grow and the credibility of a government’s fiscal plan diminishes, stabilizing inflation around the target may become progressively more challenging for the central bank. Specifically, when the central bank raises interest rates in response to elevated inflation, the economy may experience a recession, thereby elevating deficit levels and the debt-to-GDP ratio, which may then lead to further inflationary pressures. In such scenarios, instead of curbing inflation, rising interest rates would inadvertently fuel higher inflation, and potentially lead to “stagflation,” meaning an inflation rate higher than the central bank’s target accompanied by a substantial slowdown in GDP growth.

The potential role of fiscal policy is particularly relevant today as many countries, including Canada, are facing an unexpected and rapid increase in prices after two decades of low inflation. Figure 5 shows that total government debt as a percentage of GDP has increased significantly across all G7 countries during that period, except Germany.

Figure 5—General Government Gross Debt as a Percentage of Gross Domestic Product (%)

Source:  Figure prepared by the Library of Parliament using data obtained from the International Monetary Fund, “General government gross debt,” Database, accessed 3 November 2023.

Some economists suggest that large fiscal deficits incurred to sustain the recovery following the COVID-19 pandemic may have played an important role in rapidly rising prices. However, other economists argue that the recent surge in inflation is mostly due to supply shocks, such as the one caused by the Russian invasion of Ukraine, which have led to higher food and energy prices, as well as shifts in demand from services to goods caused by the pandemic combined with supply chain problems, which have led to shortages of many products.

Lastly, it is important to point out that there is no consensus among economists about the optimal levels of public debt and deficit, and whether there exists a robust correlation between these fiscal indicators and inflation. For example, on the one hand, Olivier Blanchard, Professor of Economics at the Massachusetts Institute of Technology and Former Chief Economist at the International Monetary Fund, argued before the pandemic and the recent surge of inflation that additional debt may have no fiscal cost because the interest rate on government debt may be lower than the growth rate of the economy so that the government debt can be rolled over forever. On the other hand, Ryan Banerjee and al. from the Bank for International Settlements found in a June 2023 paper that “changes in fiscal frameworks, which reduce fiscal discipline or make increasing public debt levels more tolerable, may increase upside inflation risks.”

On the topic of federal fiscal framework and government, witnesses spoke about national finances, tax reform and compliance, corporation and business income taxation, personal income taxation, consumption taxes and excise duties and federal departments and the public service.

National Finances

On the topic of national finances, witnesses proposed adopting a new budget approach respecting First Nations, balancing the budget to allow for public investments, and limiting government spending growth or increasing taxes. Witnesses emphasized the government's role in addressing the cost-of-living crisis, housing crisis, and climate disasters despite concerns regarding deficit levels. They proposed measures such as a fiscal anchor, legislative enshrinement of fiscal principles, and enhanced reporting to manage debt service costs. Finally, certain witnesses expressed their view that the assertion that the federal deficit is linked to recent inflation in Canada is not credible.

Recommendation 298

Adopt a new distinct approach for budget‐setting aligned with inherent rights of First Nations, international treaties signed by Canada, and respect for nation‐to‐nation relationships.

Recommendation 299

Recognize that concern with the deficit should be overshadowed by more pressing priorities, such as supporting Canadians through the cost-of-living crisis, the housing crisis, climate disasters and more.

Recommendation 300

Implement policies that complement the Bank of Canada’s policies to slow down price growth and lower the price of government services or offer them for free.

Recommendation 301

Move ahead with a real, comprehensive program review.

Recommendation 302

Recognize that claims that the federal deficit has been a significant cause of Canada's recent inflation are not credible.

Recommendation 303

Apply a more comprehensive gender-based analysis and ensure that the results are accessible to the public at large.

Tax Reform and Compliance

Witness proposals for tax reform and compliance encompassed a multifaceted approach. They advocated for cracking down on employee misclassification, mirroring Australia's tax transparency measures, initiating public consultations on transfer pricing rules, and strengthening international tax cooperation through the United Nations.

A number of witnesses recommended transparency and accountability enhancements for the Canada Revenue Agency, mandatory disclosure reviews, collaboration with Revenu Québec, and the establishment of public registries for beneficial owners. Proposals also included addressing tax avoidance, eliminating double non-taxation agreements, appropriately taxing multinational corporations, and introducing unitary taxation whereby the different parts of a multinational corporation are taxed as a single corporation. Furthermore, there was a call for a foreign policy focus on combating tax havens, regulating out-of-court settlements, simplifying tax legislation, and undertaking a comprehensive review of Canada’s tax system. Additional proposals involved creating a pan-Canadian beneficial ownership registry, streamlining tax filing, intergenerational family business transfers, and incentivizing donations through amendments to the Income Tax Act.

Recommendation 304

Provide leadership and crack down on employee misclassification, which costs taxpayers and workers millions of dollars annually in payroll tax fraud.

Recommendation 305

Follow Australia’s lead in enhancing tax transparency by introducing public country‐by‐country reporting requirements for multinational enterprises and their subsidiaries, including tax residency, ownership breakdown and entity type.

Recommendation 306

Make the fight against tax havens a foreign policy priority for Canada and take action to limit their use by:

• increasing the transparency and accountability of the Canada Revenue Agency (CRA) and ensuring that the CRA works with Revenu Québec;
• reviewing how mandatory disclosure practices work;
• further regulating and restricting the use of voluntary disclosure;
• criminalizing aggressive tax avoidance and cracking down on tax cheats and enablers;
• limiting and regulating out-of-court settlements;
• calling for an international financial registry and expanding country-by-country reporting and making it public;
• eliminating transfer pricing problems by introducing unitary taxation for corporations; and
• getting rid of double non-taxation.

Recommendation 307

Build, implement and maintain a comprehensive single pan‐Canadian beneficial ownership registry.

Recommendation 308

Play a leadership role in securing a global minimum tax for multinational enterprises.

Recommendation 309

Address growing income inequality and generate revenue for poverty reduction programming by eliminating tax loopholes, taxing extreme wealth, making the personal income tax system more progressive and implementing an excess profit tax focused on corporate pandemic windfalls.

Recommendation 310

Undertake a comprehensive review of Canada’s tax system with the objective to improve labour productivity, meet the needs of Canada’s evolving economy, ensure Canada can compete internationally, recommit to tax neutrality, and make it simpler and fairer.

Recommendation 311

Before proceeding with the proposed changes to the Alternative Minimum Tax, determine the impact these changes will have on charitable revenues by conducting an independent economic and financial analysis.

Corporation and Business Income Taxation

Witness proposals on the topic of corporation and business income tax covered a range of strategies. They included advocating for the reinvestment of retained earnings through larger investment tax credits, implementing a temporary general investment tax credit, modifications to certain other tax credits, and reducing the corporate income tax rate. Other suggestions involved creating an IP Box" tax mechanism for IP income, tying the Small Business Deduction to a business’ age, and exempting certain capital gains.

Additionally, witnesses proposed imposing windfall profits taxes on large food retailers, incremental taxes on companies contributing to inflation, and avoiding or deferring new business taxes. Some witnesses made suggestions about taxes on share buybacks. Recommendations also extended to raising the Small Business Deduction thresholds, lowering federal small business tax rates, delaying capital cost allowance phaseouts, increasing the Lifetime Capital Gains Exemption, and providing incentives for Employee Ownership Trusts and worker co-operatives.

Recommendation 312

Encourage the reinvestment of retained earnings with larger investment tax credits back into Canada.

Recommendation 313

Implement a temporary general investment tax credit, applicable to all investments in depreciable assets, including intangibles, at a rate of 5%, effective from now until 2025, followed by a reduction of the corporate income tax rate from 15 to 13%.

Recommendation 314

Maximize the impact of existing flow‐through share tax credits by relaxing the time limit for making qualifying expenditures, especially where regulatory delays prevent the company from spending in an allotted time frame, and making those costs eligible for the “look‐back” rule.

Recommendation 315

Incorporate critical mineral pre‐production costs into the new critical mineral exploration tax credit to spur production.

Recommendation 316

Support investment in intellectual property by small businesses by providing refundable tax incentives.

Recommendation 317

Establish an “intellectual property box” tax mechanism whereby income from patents and other intellectual property generated by activity in Canada would face a lower corporate tax rate.

Recommendation 318

Introduce a windfall tax for companies in all sectors that generate oversized profits due to crises, as well as on large food retailers to fund an extension of the Grocery Rebate.

Recommendation 319

Institute incremental taxes on the profits of companies that have contributed to Canadian inflation through historically high profit margins, including the oil and gas sector and supermarkets.

Recommendation 320

Continue and expand the 2% tax on share buybacks.

Recommendation 321

Apply an effective tax rate of at least 25% to multinationals and move forward with adopting its own tax on digital services, if necessary.

Recommendation 322

Ensure taxes on technology and digital services remain aligned with international precedent and encourage technology development, commercialization and adoption.

Personal Income Taxation

Witnesses’ proposals for personal income taxation included introducing fairness measures when taxing professional artistic income, taxing strike pay as ordinary income, and enhancing the tax treatment of medical expenses by lowering the threshold. Some suggested indexing various tax thresholds, benefit payments, and tax credits to the consumer price index, reducing the base amount of the age credit, allowing income averaging over many years, and introducing a permanent wealth tax.

Recommendation 323

Introduce a four‐year back‐averaging system for professional artistic income to ensure tax fairness.

Recommendation 324

Increase the lifetime capital gains exemption.

Recommendation 325

Introduce a permanent wealth tax on the richest Canadians.

Recommendation 326

Include the Anticosti Island village (Port-Menier) as a prescribed northern zone for the northern residents deductions, given its isolation.

Consumption Taxes and Excise Duties

Some witnesses proposed excluding aircraft from the Luxury Items Tax Act and placing a moratorium on the luxury tax on aircraft pending further industry consultation, funding new spending with a higher GST rate, clarifying misconceptions about taxes on unhealthy grocery products, and eliminating sales tax on groceries. They also proposed adjusting the excise duty formula for cannabis and addressing concerns about the automatic escalator on alcohol excise duty.

Recommendation 327

Exclude aircraft and vessels from the luxury items tax.

Recommendation 328

Review the zero-rated guidelines that apply to products at grocery stores to adapt to the current reality on the shelves.

Recommendation 329

Make adjustment to the excise duty formula for cannabis so that it is limited to a 10% ad valorem rate, and to the operation of the duty, including the requirement to apply an excise stamp on cannabis products.

Recommendation 330

Modernize the Excise Act to lessen the tax burden placed on Canada’s locally owned and operated craft breweries, allowing the industry to continue to grow, add jobs and contribute to local economies.

Recommendation 331

Give a 90% excise duty exemption on the first 50,000 litres of absolute ethyl alcohol (LAA) of production of distilleries, an 85% exemption on the next 50,000 LAA, and a 75% exemption on the last 100,000 LAA bringing production to 200,000 LAA.

Recommendation 332

Change the excise duty exemption for all-Canadian wine produced from honey or apples to also include all fermented products other than grapes.

Recommendation 333

Amend section 178.8(4)(a) of the Excise Tax Act to address the problem of recreational vehicle dealers in Quebec paying the Ontario border tax in addition to the harmonized GST/QST.

Federal Departments and the Public Service

Witnesses submitted several proposals for federal departments and the public service. Firstly, they suggested modernizing procurement processes, revising the federal procurement policy to prohibit the use of replacement workers and increasing the use of Canadian tech procurement and clean procurement policies. Additionally, they proposed amending procurement policies to ensure audiovisual producers adhere to relevant collective agreements and ensuring that advertising agencies engaged by the federal government are signatories to the Alliance of Canadian Cinema, Television and Radio Artists’ National Commercial Agreement. A number of witnesses also advocated for procurement strategies for domestic SMEs.

Other proposals included freezing federal departmental operating budgets for wages at 2023 levels for five years, transitioning employee pension plans to shared-risk models, and introducing mandatory apprenticeship requirements for contractors on federal projects. Witnesses also proposed engaging the Auditor General and industry for reviews, streamlining funding applications for municipalities, and improving hiring and retention of pay advisers.

Some witnesses called for a national inquiry into the Phoenix pay crisis, settlement of class action lawsuits, prevention of racism and discrimination, and the repeal of changes to the Public Service Superannuation Act. Finally, they also proposed increased support for research, the creation of a dedicated office for EV coordination and a shift towards EV adoption within the federal government, including a target of 10% of federal parking spaces being electrified by 2025.

Recommendation 334

Increase government procurement of Canadian tech and use public sector procurement to stimulate cybersecurity innovation in Canada by making government technology procurement practices more agile, challenge‐based, and outcome‐driven.

Recommendation 335

Increase the global competitiveness of Canadian businesses by expanding access to customers, developing a procurement strategy for domestic small and medium-sized enterprises and reviewing procurement policies, including eliminating the lowest bidder rule with a view to enable Canadian businesses to access public contracts.

Recommendation 336

Revise the federal procurement policy to forbid the use of replacement workers, directly or indirectly.

Recommendation 337

Amend federal government procurement policy to ensure that every producer undertaking audiovisual work for the government adheres to all relevant collective agreements.

Recommendation 338

Introduce a mandatory requirement for contractors to hire apprenticeships on all federal procurement and infrastructure projects.

Recommendation 339

Before implementing any cuts, develop a staffing plan for the entire public service that considers the needs across the public service and those of all who receive public services, in collaboration with bargaining agents.

Recommendation 340

Create a body within the federal public service to provide services currently provided by contracted private consultants.

Recommendation 341

Work with bargaining agents to amend the Federal Public Sector Labour Relations Act to bring it in line with measures and protections afforded under legislation in other sectors and include language requiring employers to pay workers properly and on time.

Recommendation 342

Put public safety officers employed by the federal government on par with their counterparts who work in other jurisdictions.

Recommendation 343

Ensure that the recommendations stemming from the current review of the Public Service Disclosure Protection Act are adopted and that the Act is amended accordingly.

Recommendation 344

Find ways to not only hire and train pay advisers but also retain them, using the improved Phoenix Pay System.

Recommendation 345

Launch a national inquiry into why the Phoenix pay crisis happened, how it could have been prevented and why it has not yet been fixed.

Recommendation 346

Renew the negotiated memorandum of agreement on damages for Phoenix pay system errors and make Phoenix general damages compensation non‐taxable.

Recommendation 347

Eliminate the backlog of Phoenix pay problems and pause overpayment recovery until all employees are paid what they are owed due to Phoenix pay system errors.

Recommendation 348

Settle the Black Class Action and Indigenous Class Action lawsuits in good faith by publicly apologizing to Black and Indigenous federal public service workers, providing restitution to address the financial loss and racial trauma suffered and fulfilling the requested remedies outlined in each lawsuit to address the systemic barriers facing Black and Indigenous workers.

Recommendation 349

Work to prevent Anti‐Asian racism, Islamophobia, anti‐Semitism, and all other forms of racism, hate, and discrimination in the federal public service by:

• implementing the Public Service Alliance of Canada’s recommendations;
• requiring all managers and staff in the federal public service to participate in regular training on racism, hate, discrimination and bias in the workplace, and demonstrate acquisition of defined competencies; and
• providing robust resources to protect employees from acts of discrimination, providing proper support when acts occur, and thoroughly investigating and remediating all such situations.

Recommendation 350

Repeal the changes to the Public Service Superannuation Act that raised the minimum, unreduced retirement age to 60 years old with thirty years of service or 65 years with two years of service, for anyone hired into the federal public service after 1 January 2013.

Recommendation 351

Streamline and simplify all federal funding applications for municipalities, including in relation to housing, infrastructure and climate change.

Recommendation 352

Create a dedicated Privy Council Office to coordinate electric vehicle responsibilities across departments and advise the Prime Minister on progress being made towards achieving the government’s electrification goals.

Recommendation 353

Extend the Canadian Chamber of Commerce Business Data Lab’s (BDL) partnership with Statistics Canada by three years to preserve valuable business data assets, while maintaining and expanding the suite of innovative BDL outputs and real‐time data made freely available to Canadian businesses, municipalities, academic researchers, and community groups.

Recommendation 354

In consultation and collaboration with, municipalities, provinces, territories and Indigenous peoples, fund organizations, such as Statistics Canada or other federal departments and relevant organizations and agencies, that are supporting research, or collecting disaggregated and intersectional data, on various issues of importance related to gender equality, including:

• intimate partner and family violence, as well as the prevalence and effects of traumatic brain injuries for survivors of this violence;
• violence against Indigenous women, girls and Two-Spirit individuals living in both urban and rural or remote regions, particularly in the context of resource development projects; and
• economic security, experiences of poverty and economic and financial abuse.

Foreign Policy

With respect to foreign policy, the committee heard testimony indicating that the government should increase its funding for and leadership within multilateral defence organizations. Other witnesses suggested that the government increase international aid funding, particularly for initiatives to empower and protect the rights of women, girls and LGBTQ+ people. Finally, some witnesses suggested that the government increase climate finance to low-income countries and contribute financially to international labour initiatives and the development of technical education systems.

Recommendation 355

Take a leadership role on the North American Aerospace Defense Command modernization and increase defence budgets to meet NATO commitments and propel research and development activity.

Recommendation 356

Increase the international aid envelope over the 2021‑2022 level.

Recommendation 357

Provide a targeted contribution in support of the United States government’s Multilateral Partnership for Organizing, Worker Empowerment, and Rights.

Recommendation 358

Make no further concessions on supply-managed products in future trade negotiations by supporting Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).

Recommendation 359

Withdraw from the Canada‐US Safe Third Country Agreement that puts refugee claimants’ lives at risk.

Conclusion

The Committee thanks Canadians who participated in its pre-budget consultations by preparing briefs and/or appearing before it in Ottawa and across Canada; your views and insights are – as always – invaluable to us in the development of our recommendations to the government. We are hopeful that in developing the 2024 federal budget, the Deputy Prime Minister and Minister of Finance will consider the proposals that were brought to the Committee’s attention and implement our recommendations.