End of sitting

Federal-provincial relations

Health care stand-off continues

The health care system continues to struggle with capacity and critical staff shortages and faces major challenges in addressing huge surgery backlogs and the delivery of basic services. More than six million Canadians do not have a family doctor. Nationally, the pediatric care system is overwhelmed, with some children’s hospitals operating at 180 per cent capacity. In Ottawa, the Children’s Hospital of Eastern Ontario recently was forced to call on the Red Cross, more commonly associated with disaster relief, to help with the surge in illness. 

Against this backdrop, the federal, provincial and territorial (FPT) health ministers met in Vancouver in early November. The aim of the ministers’ meeting was to agree on a health human resources action plan, which federal and provincial officials had been working to develop for months; Canada is the only developed country without a national health care human resources strategy. While the health ministers were meeting, the premiers issued a joint news release declaring that “no progress” had been made, prompting federal Minister of Health Jean-Yves Duclos to abandon the talks with his counterparts. The provinces want more federal money for health care with no strings attached while the federal government says it is willing to transfer more money but wants assurances that its additional dollars will buy system reforms.

In more recent developments on health care: 

• On December 1, Nanos Research’s weekly tracking poll reported that health care has surpassed inflation and jobs as the top unprompted national issue of concern among Canadians.  
• On December 9, the premiers met virtually and demanded a meeting with the prime minister to resolve the funding stand-off. In response, Deputy Prime Minister and Finance Minister Chrystia Freeland said Canadians are “frustrated and frightened” by the significant strains facing the country’s health care system, stressing that federal and provincial governments need to find solutions, instead of focusing on dollars. 
• In a news conference on December 12, NDP leader Jagmeet Singh demanded the prime minister meet with the premiers on health care funding and requested an emergency debate on the crisis in children’s hospitals across the country. He said if the PM doesn’t take action on health care, the NDP will pull their support from their Supply and Confidence Agreement to support the Liberals. 

Provincial challenges to federal authority and the Constitution

Over the fall, three provinces – Alberta, Saskatchewan and Quebec – have attempted to challenge federal powers by unilaterally amending the Constitution. 

In Alberta, the Alberta Sovereignty Within a United Canada Act was introduced in the Legislative Assembly by Premier Danielle Smith as Bill 1 on November 29 and passed on December 8. It gives the provincial cabinet authority to “direct provincial entities to not enforce specific federal laws or policies with provincial resources.” Here’s how the act will work: 

• A legislator will introduce a motion identifying a federal initiative that is “unconstitutional or harmful” to Alberta, its people or economic prosperity, and recommend to cabinet how to respond or counteract the initiative.  
• On passage of such a motion by the legislature, cabinet will be able to direct various “provincial entities,” including municipalities, provincial agencies, school boards, universities, hospitals, municipal police forces and groups tasked with administering provincial programs to refuse to enforce the federal initiative. (Before the bill was passed, the government removed previous controversial provisions that would have allowed cabinet to rewrite provincial laws without legislative approval; this measure – almost certainly unconstitutional – was dropped.) 
• As outlined in the Throne Speech that opened the legislature, the kinds of federal initiatives the act could be used to counteract include “the use of fertilizer by our farmers, or attempting to prevent us from developing the very energy resources that power our provincial and national economies, …persecuting owners of legal firearms, inappropriately invoking emergency powers, or intentionally interfering in the delivery of provincial healthcare, education or child care.” 

Supporters of the government’s move compare it with the federal power of “disallowance”, claim that it is chiefly a reaffirmation of the constitutional division of powers which are routinely transgressed by Ottawa, and note that it does nothing that the courts wouldn’t eventually do but merely speeds up the process to create greater certainty. 

In the wake of Bill 1’s introduction, most legal experts concluded that it is unconstitutional. Critics have expressed concern that provincial entities and industrial sectors may face a “whipsaw” when caught between conflicting laws: provincial directions to oppose federal initiatives and their desire to participate in or benefit from federal policies and programs. Some Alberta business leaders have suggested the uncertainty caused by the act will chill private sector investment intentions in the province. In addition, some Indigenous chiefs have said the act infringes on treaty rights and called for it to be withdrawn.  

For his part, Prime Minister Trudeau said he was not interested in a confrontation with Alberta over the act. “I’m not going to take anything off the table, but I’m also not looking for a fight. We want to continue to be there to deliver for Albertans,” he said. 

In Saskatchewan, the provincial government in early October introduced the Saskatchewan First Act, which proposes to allow the province “exclusive jurisdiction” over aspects of the environment, including the exploration for non-renewable natural resources and the “development, conservation and management of non-renewable natural and forestry resources.” Saskatchewan Justice Minister and Attorney General Bronwyn Eyre said it “asserts that the constitutional doctrine of interjurisdictional immunity applies to exclusive provincial legislative jurisdiction the same way it applies to exclusive federal jurisdiction.” 

In Quebec, after three members of the opposition Parti Québécois refused to swear allegiance to King Charles and were barred from sitting, the National Assembly passed a law that adds a section to the Constitution Act exempting Members of the National Assembly from the requirement to swear an oath to the King. Most constitutional experts view the new law as unconstitutional without a minimum of federal parliamentary assent.

The national economy

StatsCan numbers released in late November revealed that economic growth slowed to 0.7 per cent in the third quarter. While exports of oil and agricultural commodities were booming, they were offset by service sector output that was essentially flat, and the manufacturing sector shrank by 0.1 per cent. Household spending declined by 0.3 per cent and the household savings rate increased by 5.7 per cent, suggesting that Canadians are preparing for a difficult 2023. The annual Food Price Report released in early December predicted that the typical family’s food bill will rise by more that $1,065 next year from this year’s record high level. Last week, an IPSOS-Global News poll found that 53 per cent of those surveyed were fearful about having enough food on the table, up nine points from just a month ago.  

On December 7, the Bank of Canada (BOC) raised its benchmark interest rate by another 50 basis points to 4.25 per cent, the seventh increase this year and the highest the rate has been in 14 years. In his year-end speech in Vancouver this week, BOC Governor Tiff Macklem said, “If high inflation sticks, much higher interest rates will be required to restore price stability, and the economy will have to slow even more sharply.” This comment suggests that for the near-term, the bank would rather err on the side of going too far in raising borrowing costs, for fear of losing control of inflation expectations. The BOC’s next rate setting will be on January 25, 2023. 

On December 15, the U.S. Federal Reserve raised the target range for the federal funds rate to 4.25 to 4.50 per cent, also forecast raising rates through next year, and not lowering them until 2024. Looking forward, we should expect that the Bank of Canada will likely work to ensure that Canadian rates do not fall below U.S. rates, as the American “Inflation Reduction Act” is already starting to create a competitive disadvantage for existing and prospective investment in Canada. 

The Canadian Real Estate Association released statistics in mid-December, showing the average house price in November was 12 per cent lower than a year ago, and about $200,000 lower than in February of this year. The cooling is generally attributed to higher interest rates, which are seeing new buyers “stress-tested” at around 7 per cent.   

Public Order Emergency Commission (POEC)

The highlight of the fall political season was the six weeks of public hearings of POEC’s study into the invoking of the Emergencies Act, chaired by Justice Paul Rouleau. Seventy-six witnesses testified before the Commission, including protest participants, law enforcement representatives, federal cabinet ministers and officials from the three levels of government. 

In exercising its mandate, the Commission has some challenging issues to settle: 

• Did the government have a valid legal reason to invoke the Emergencies Act and were the strict legal conditions established by the Act met when it was invoked by the federal cabinet? 
• Was Canada facing a threat that “cannot be dealt with by any other law of Canada,” as the Emergencies Act requires? 
• Did the government have “reasonable grounds” to opt for a broader interpretation of “threats to the security of Canada,” than the definition in the Emergencies Act?   
• Given the fact that provinces and police forces failed to act to end the illegal activity of the convoys, did this justify use of the Act? 
• Since it was conceived and written 34 years ago, before 9/11 and before the advent of the internet and social media, is the Act still “fit for purpose” in today’s world? 

With the public hearings completed, there is one critical question for the government to answer: whether it will lift the veil of solicitor-client privilege and release to the commission the department of justice’s legal opinion that declaring a public order emergency was justified under Canadian law.  

Justice Rouleau’s final report with findings and recommendations must be tabled in the House of Commons and Senate by Feb. 20, 2023. 

Legislation

The early part of the sitting was dominated by the government playing catch up on easing the pain of the rising cost of living on low income groups. The following bills were passed in the fall sitting: 

Bill 31, Cost of Living Relief Act, (Targeted Support for Households) was passed at all stages and received Royal Assent in mid-November. The Bill contains two measures: 

• The Canada Dental Benefit will provide eligible parents or guardians with up to $650 tax-free per year for two years to cover dental expenses for children under 12. The benefit is available to families without access to private dental insurance and with an adjusted family net income under $90,000. The Canada Revenue Agency (CRA) began receiving applications and processing payments for the benefit starting on December 1. For a tough analysis of the new program’s “confused and confusing program design,” see “The federal dental plan may fall short of expectations.” 
• The one-time top-up to the Canada Housing Benefit will provide a tax-free payment of $500 to low-income renters. It’s available to applicants with an adjusted net income below $35,000 for families, or below $20,000 for single Canadians, who pay at least 30 per cent of their adjusted net income towards rent. The CRA began receiving applications and processing payments for this top-up starting on December 12. 

Bill C-32, Fall Economic Statement Implementation Act, 2022: This bill includes certain provisions of the Fall Economic Update of November 3, 2022, and certain provisions of the budget tabled in Parliament on April 7, 2022. C-32 is at third reading in the Senate, completed committee stage and is likely to be adopted and receive Royal Assent before the Senate rises for the holidays.

Consideration ongoing

Bill C-11, Online Streaming Act 

• Current status: At consideration in committee in the Senate, with many amendments 

Bill C-18, Online News Act 

• Current status: The bill passed in the Commons on December 14 with expensive amendments, and now goes to the Senate.  
• Google and Meta have criticized it and Meta has threatened “to consider removing news from Facebook in Canada rather than being compelled to submit to government-mandated negotiations that do not properly account for the value we provide publishers.” 

Bill C-21, Firearms 

• Current Status: At consideration in committee in the House of Commons. 
• The ostensible purpose of Bill 21 was to implement the government’s promised ban on handguns, but after the bill had passed second reading and after the committee studying the bill had heard from witnesses, the government introduced amendments that would dramatically expand the scope of “prohibited weapons” to include scores of hunting rifles and shotguns. Included in the amendments was a 307-page list detailing which firearms would be banned, and which would be exempted.
• The resulting backlash has included not only the hunting and farming communities, but also the Conservatives, the NDP, the Bloc, one Liberal backbencher and the three territorial premiers. A meeting of Assembly of First Nations chiefs on December 8 unanimously rejected the proposed amendments, saying they abrogated treaty rights and would criminalize firearms used by First Nations people to hunt. In response, the government extended the committee’s study period, but opposition members requested two more meetings to hear from witnesses on the amendments. The prime minister and minister of public safety have both promised that the process will allow time to “get this right.” The government had hoped to have consideration of the bill wrapped up by the holiday break, but this clearly did not happen. 

Bill C-26, An Act respecting cyber security, amending the Telecommunications Act and making consequential changes to other Acts.

• Current status: At second reading in the House of Commons 

Bill C-27, Digital Charter Implementation Act  

• Current status: At second reading in the House of Commons 

Bill C-33, Strengthening the Port System and Railway Safety in Canada Act 

• Current status: At second reading in the House of Commons 

Bill C-29, National Council for Reconciliation Act 

• Current status: At second reading in the Senate  

Bill C-34, National Security Review of Investments Modernization Act 

• Current status: At second reading in the House of Commons 

Bill C-35, Canada Early Learning and Child Care Act 

• Current status: At second reading in the House of Commons 

Bill C-228, Pension Protection Act 

• Current Status: At second reading in the Senate 

Bill C-235, Building a Green Prairie Economy Act 

• Current Status: At second reading in the Senate 

Bill S-242, An Act to amend the Radiocommunication Act (spectrum licence holders) 

• Current Status: At consideration in committee in the Senate 

New legislation introduced

Two important pieces of new legislation were introduced and given first reading as the sitting drew to a close: 

National Security Review of Investments Modernization Act 

On December 7, Minister of Innovation, Science and Industry (ISED) François-Philippe Champagne, announced the introduction of Bill C-34, the National Security Review of Investments Modernization Act, to update the Investment Canada Act and introduce “new tools to ensure that Canada can continue to address changing threats that may arise from foreign investments.” 

The proposed amendments include:  

• Pre-notification to government prior to concluding investments in prescribed business sectors; 
• Authority for the Minister to extend the national security review of investments; 
• Stronger penalties for non-compliance; 
• Authority for the Minister to impose conditions during a national security review; and 
• Authority for the Minister to accept undertakings to mitigate national security risk. 

ISED has not yet specified the sectors that would be subject to the prior filing requirement, but the minister identified critical minerals and semiconductors, quantum computing and artificial intelligence, and companies handling personal data as some of them. All sectors to be included will be listed in the regulations that will follow the passage of the bill. 

Early learning and child care 

On December 8, Karina Gould, the Minister of Families, Children and Social Development introduced Bill C-35, “Canada Early Learning and Child Care Act”. The bill completes one of the promises contained in the Liberal-NDP supply and confidence agreement. It also has a strategic purpose: establishing the federal role in child care through legislation is a way to make it more difficult for a future government to dismantle the program. (The Conservatives oppose the Liberals’ approach to national child care, citing choice and extra-constitutionality.)

Bill C-35 provides legal backing for the government’s national child-care plan that would cut day care fees by an average of 50 per cent by the end of this year, and down to an average of $10 per day by 2026. The 2021 federal budget pledged $30 billion in new spending on the national child-care system over five years, with another $9.2 billion annually in succeeding years. 

New policy directions

Indo-Pacific strategy 

The federal government launched its long-awaited Indo-Pacific Strategy in late November, citing the economic and trade promises of the region’s huge markets and aimed at making Canada a “true and reliable partner” in the region. Global Affairs Minister Mélanie Jolie said that to support the strategy, Canada will commit $2.3 billion over five years to expand military, security, trade and diplomatic ties in the region. 

The centerpiece of the strategy is a comprehensive and frank analysis of China as “an increasingly disruptive global power:” “China is looking to shape the international order into a more permissive environment for interests and values that increasingly depart from ours.” Nevertheless, the document states that “China’s sheer size and influence makes co-operation necessary to address some of the world’s existential pressures, such as climate change and biodiversity loss, global health and nuclear proliferation.”  

Expert reaction to the strategy was mixed, with some applauding the document, while others described it as “underwhelming” and said it will accomplish little more than Canada catching up to approaches already adopted by others – or simply codifying the present reality – in dealing with Beijing.  

Indigenous-led conservation initiatives  

In welcoming the delegates to 15th meeting of the Conference of the Parties (COP15) to the United Nations Convention on Biological Diversity in Montreal on December 6, the prime minister committed up to $800 million over seven years, starting in 2023-24, to support up to four Indigenous-led conservation initiatives. Funding is also intended to support the conservation of lands and waters in the Northern Shelf Bioregion in British Columbia, in Qikiqtani Region in Nunavut, and in Ontario’s Hudson Bay Lowlands, as well as the coastline of Western Hudson Bay and southwestern James Bay. Once completed, these projects could protect up to one million square kilometres. 

Critical Minerals Strategy unveiled 

On December 9, Natural Resources Minister Jonathon Wilkinson released the federal government’s $3.8 billion Critical Minerals Strategy. Four concrete steps are proposed to speed up the approval processes for mining projects and implement the strategy: 

• Accelerate processes and timelines under existing regulatory regimes via a concierge service that will be housed within the critical mineral service of excellence within Natural Resources Canada. 
• Review federal regulations and processes to identify opportunities for more rapidly advancing clean growth projects including critical minerals, while protecting the interests of Canadians, protecting the environment and respecting the rights of Indigenous Peoples.  
• Work to align regulations and permitting processes between the levels of government through the regional energy and resource tables.  
• Work with the United States to ensure a robust North American market. 
• Work with the United States to ensure a robust, integrated, North American market. 

The strategy outlines the key areas to which the federal government will allocate funds. These include: 

• $144 million for critical mineral research and development and the deployment of technologies and materials that support critical mineral development for upstream and midstream segments of the value chain. 
• A 30 per cent critical minerals exploration tax credit for targeted critical minerals. 
• $1.5 billion in the Strategic Infrastructure Fund to support critical minerals projects, with prioritization given to the advanced manufacturing processing and recycling applications. 
• $1.5 billion for infrastructure development for critical mineral supply chains with a focus on deposits. 

Service delivery challenges

Problems in the basic delivery of public services as well as mistakes in judgement have plagued the government on several fronts this fall: 

Passports and visa delays: Waiting for passports is still a challenge for many Canadians, months after the federal government promised it was on the way to be fixed. This fall, thousands of international students coming to Canadian universities and colleges met weeks of delays in receiving their study permits, as Immigration, Refugees and Citizenship Canada (IRCC) struggled with a backlog of 1.5 million applications for study permits and other temporary resident visas. 

Immigration delays continue: For immigration generally, as of October 31, IRCC had roughly 2.2 million applications in its inventory, with around 1.2 million in backlog, meaning that they exceed the department’s service standards. Unless solutions are found, these delays will only be exacerbated next year as Canada’s immigration target levels rise to 500,000 

Issues management

RCMP communications contract raises questions

Radio-Canada reported that Public Services and Procurement Canada (PSPC) had awarded a contract in 2021 worth $550,000 to Sinclair Technologies for radio-frequency services for the RCMP. One of the system’s purposes is to protect the RCMP’s land-based radio communications from eavesdropping. Sinclair’s parent company, Norsat International, has been owned by Chinese telecommunications firm Hytera Communications since 2017.  

The problem is that the United States Federal Communications Commission (FCC) blacklisted Hytera in 2021, on the grounds that the company poses “an unacceptable risk to the national security of the United States or the security and safety of United States persons.” In addition, Hytera is facing 21 charges in a U.S. espionage case of conspiring to steal trade secrets from American telecommunications company Motorola. On December 8, the federal government suspended the contract after vigorous criticism by the opposition parties. The House Standing Committee on Industry and Technology began a study of the awarding of the contract on December 12. 

Auditor General

After reviewing $210.7 billion in federal spending for pandemic support measures for individuals and businesses, Auditor General Karen Hogan found that at least $4.6 billion went to people and businesses ineligible to receive it. She flagged another $27.4 billion that she said needs further scrutiny. While the government has so far recovered approximately $2.3 billion from recipients who were ineligible, the auditor questioned whether the Canada Revenue Agency’s plan to review payments was sufficient.  

While Employment Minister Carla Qualtrough pledged to work to retrieve the money from ineligible recipients, Canada Revenue Agency Minister Diane Lebouthillier said the flagging of the $27.4 billion by Hogan was “exaggerated” and produced under “pressure by the opposition.” 

Chinese interference in Canada 

There have been recurring stories throughout the fall about Chinese interference in Canadian politics: 

• Still unresolved is the confusion generated by a Global News story alleging China state funding of “a clandestine network of at least 11 federal candidates running in the 2019 election,” and that the prime minister and several ministers were briefed on these activities.  Given the fact that the original story was based on leaked secret CSIS material, other news organizations have been hampered in developing it.  The prime minister and his national security advisor both stated that there had been no direct payments and no influence on electoral outcomes. The Procedure and House Affairs Committee is now set to undertake a study on the allegations.
• Reports continue to surface that China operates a system of “police service centres” in several western countries, including Canada. After a testy exchange with Chinese president Xi Jinping at the G20 summit in Indonesia, Prime Minister Trudeau told the House of Commons, “We’ve known for many years that there are consistent engagements by representatives of the Chinese government into Canadian communities, with local media, reports of illicit Chinese police stations.” In response to these reports, the RCMP announced that it was looking into the issue. 
• Following the launch of the Indo-Pacific Strategy, Public Safety Minister Marco Mendicino announced that the government will consult Canadians on setting up a registry of foreign agents, a move that many China critics have been calling on Ottawa to make. 
• A special secretive parliamentary committee has also been set up to study the controversy of the Chinese Wuhan-connected nationals fired from the Winnipeg microbiology lab – an issue that had flared just prior to the last general election, with the House of Commons as an institution taking on the government over what it saw as undue secrecy over the matter. 

Sexual misconduct in the military 

Last May, former Supreme Court justice Louise Arbour tabled a report on sexual misconduct in the military, making 48 recommendations. and Defence Minister Anita Anand immediately accepted 17 of her proposals. On December 13, the minister responded further to Arbour’s report, accepting the rest of the recommendations.  

A key proposal made by Arbour is the transfer of sexual misconduct cases from the military justice system to the civilian police. This transfer is moving slowly because civilian police forces have rejected 40 of 97 requests from the military to take over cases, citing capacity issues. Speaking before the House National Defence Committee, Ms. Arbour slammed the delays and accused the department of dragging its feet on sexual misconduct. “I am concerned this issue is now the subject of further discussions and considerations. It makes it very complicated. It’s not complicated. You want to abolish that jurisdiction, put it in an act of Parliament. It’s not hard,” Arbour told the committee. 

Foreign policy 

Predictably, Ukraine dominated the foreign policy agenda, with numerous announcements of incremental assistance for the beleaguered country under its tenth month of Russian invasion. Canada’s support for Ukraine has so far totalled about $2.5 billion, with a recent additional $500 million pledged in military and related humanitarian aid. 

The government of Canada has also imposed sanctions on numerous Iranian officials in response to widespread protest and crackdowns in the country. 

Canada-China relations remain considerably frosty, with significant signals – from the Indo-Pacific Strategy to DPM Freeland’s separate recent foreign policy speech – tilting from a neutral multilateralism toward a “work with like-minded democracies” orientation in foreign policy and strategic international trade.  

National political scene

Poilievre elected Conservative leader 

In September, Pierre Poilievre was convincingly elected Conservative leader by a wide margin. His presence in the House of Commons in his new role has led to a more focused approach in Parliament, while also sparking some controversy over his relationship with the press. 

His overall approach has been to focus on inflation and other issues that opportunistically arise – such as Chinese interference – while showcasing a younger a more diverse front bench.  Staff transition, however, remains slow. 

Latest polls 

Mississauga-Lakeshore By-election  

Charles Sousa, the former Ontario provincial finance minister, won the federal by-election in Mississauga-Lakeshore on December 12. With all but one of the polls reporting, Sousa secured 51.2 per cent of the vote. Conservative Ron Chhinzer received 37.3 per cent of the vote and the NDP’s candidate, Julia Kole, secured 4.9 per cent. The Green Party was not far behind the NDP with 3.2 per cent, while the People’s Party of Canada earned the support of 1.2 per cent of votes cast. Turnout was just over 26 per cent. 

Prior to voting day, the Conservatives knew they were facing an uphill battle. Unlike many Liberal cabinet ministers, Pierre Poilievre did not visit the riding during the campaign period. Though the riding tends to be a strong Liberal realm, it was nonetheless predictably discussed by pundits as a test of Conservative appeal under new leadership in an area of the country crucial to his party’s chances of future success. While Mississauga-Lakeshore has not traditionally been a “swing” riding, but it is the kind of riding the Conservatives win when they achieve a majority in a general election.   

Upcoming events

Provincial Elections in 2023

• Alberta: The next Provincial General Election in Alberta is scheduled to be held on May 29, 2023.  
• Manitoba: The next Provincial General Election in Manitoba is scheduled to be held on October 3, 2023. 
• Prince Edward Island: The next Provincial General Election in Prince Edward Island is tentatively scheduled for October 2, 2023. 

Important events in 2023

• January 2023: The premiers have written to the prime minister inviting him to a First Ministers meeting in early January to address sustainable, long-term health care funding through the Canada Health Transfer. (First Ministers Meeting) 
• February 8^th 2023: The Canadian Chambre of Commerce presents the Canada 360° Economic Summit. 
• February 8 – 10^th 2023: The Federation of Canadian Municipalities presents the Sustainable Communities Conference 2023.  
• April 27^th 2023: Public Policy Forum presents the Canada Growth Summit 2023: Standing Strong Globally. 
• May 6^th 2023: The Coronation of Charles III and Camilla.  
• May 19^th – 21^st 2023: The G7 Japan Hiroshima Summit 2023. 
• July 11 – 12^th 2023: The NATO Heads of State and Government will meet in Vilnius for the Summit. 
• September 9 – 10^th 2023: The 18th G20 Heads of State and Government Summit will take place in New Delhi. 
• September 12^th 2023: The 78th session of the UN General Assembly (UNGA 78) 
• September 19 – 20^th 2023: The 2023 SDG Summit. (A High-level Political Forum on Sustainable Development under the auspices of the General Assembly.) 
• November 2023: The 30th Asia-Pacific Economic Cooperation Leaders’ Summit. (APEC)