Prime Minister Justin Trudeau addresses Canadians on the COVID-19 situation from Rideau Cottage in Ottawa on March 23, 2020.
Sean Kilpatrick/The Canadian Press
The Liberal government announced late Monday that it has agreed to change draft legislation that proposed to grant itself wide-reaching new powers to tax and spend without parliamentary approval until Dec. 31, 2021, through an emergency spending bill.
Thirty-two MPs, divided proportionally based on party standing, will be in Ottawa to debate the bill being tabled on Tuesday. It includes sections aimed at adopting some of the fiscal measures announced last week by Prime Minister Justin Trudeau and Finance Minister Bill Morneau.
But a draft version of the bill goes well beyond those measures and includes provisions that would give the minority government the power to act unilaterally for 21 months.
Story continues below advertisement
Conservative Leader Andrew Scheer issued a statement late Monday announcing the Official Opposition will not support a bill that gives the government unlimited powers to raise taxes without a parliamentary vote.
“In a crisis, broad, all-party agreement is essential, especially when the government has a minority in the House of Commons,” he said. “We will authorize whatever spending measures are justified to respond to the situation, but we will not sign a blank cheque.”
Just after 11 p.m. Eastern, Government House Leader Pablo Rodriguez announced that changes would be made to the bill.
“We consulted with the opposition and will bring changes to the draft legislation,” he wrote on Twitter. “We will always work collaboratively and respect the fundamental role of Parliament.”
The statement did not clarify what sections will be changed.
The Globe and Mail has reviewed a copy of the draft bill.
One section would grant cabinet the power to change taxation levels through regulation, rather than through legislation approved by Parliament. It states that cabinet would have this power during the period “before 2022.”
Story continues below advertisement
“For greater certainty, a regulation made under this section may contain provisions that have the effect of repealing or imposing a tax, decreasing or increasing a rate or an amount of tax or otherwise changing the incidence of tax,” the bill states.
The bill contains similar language and timelines regarding government borrowing.
Government officials shared a draft copy of the bill with some opposition MPs Monday in confidence until the legislation is tabled in the House of Commons. Discussions between parties were taking place Monday evening, meaning the final version could potentially be different from the draft.
Parliamentary Budget Officer Yves Giroux, who has reviewed a draft version of the bill, said the new powers would be “unprecedented."
“The draft legislation would provide powers that go well beyond the initial response to COVID-19 announced last week,” Mr. Giroux told The Globe. “It seeks to circumvent Parliament, for both spending and tax, by granting extraordinary powers to cabinet and individual ministers.”
A senior government official said earlier Monday that the legislation is meant to increase benefits as reasonably needed. The official is not being identified because they were not authorized to speak publicly. The official said the bill is subject to negotiations with Mr. Rodriguez and his opposition counterparts.
Mr. Rodriguez’s senior communications adviser would not comment on the bill or the impasse with the opposition parties.
Pierre-Olivier Herbert, a spokesperson for Mr. Morneau, also declined to comment on the contents of the bill because it has not yet been made public.
“I cannot comment on the content of a bill before it is introduced in the House,” he said in a statement. “All parties are working together to ensure that Canadians can get rapid access to the financial support they need.”
The bill has 44 numbered pages and is divided into 19 parts. The first part would implement the measures announced last week, including expanded Canada Child Benefit payments and GST credits.
Part 2 contains the new taxation powers for cabinet. Part 6 would amend the Canada Mortgage and Housing Corporation Act to allow the government to increase the Crown agency’s capital.
Part 8 would amend the Federal-Provincial Fiscal Arrangements Act to allow Ottawa to book increased transfers to the provinces and territories in the fiscal year that ends on March 31.
Other sections contain changes to the Food and Drugs Act, the Canadian Labour Code, the National Housing Act, the Patent Act, the Canada Student Loans Act and the Financial Administration Act, among other legislative moves.
The government's plan is for MPs to pass the bill through all stages Tuesday and for the Senate to do the same on Wednesday.
However, without all-party support, passing legislation quickly becomes more challenging procedurally.
Meanwhile, a report released Monday warns of the economic consequences if mitigation measures such as social distancing and travel bans stay in effect until the end of August. The Conference Board of Canada’s forecast said the country’s real GDP could fall 1.1 per cent in 2020.
“These are extraordinary times. Canadian leaders, business owners and households are facing unprecedented uncertainty," said Pedro Antunes, the Conference Board’s chief economist. “If this scenario holds true, we can expect a deeper and longer-lasting hit to the Canadian economy. Still, governments have acted swiftly to mitigate health and economic impacts," he added. “Once COVID-19 is contained, the economy will rebound.”
The Conference Board estimates that in that end-of-August scenario, the economy could shed 330,000 jobs over the second and third quarters and the jobless rate could climb to 7.7 per cent. The resource sector, tourism and household services will be hit the hardest, the board said, warning they could suffer double-digit drops.
Two former senior Finance Department officials, Scott Clark and Peter DeVries, said Canadians should expect a government deficit of $93.9-billion for 2020-21 – but warned it could be even larger if the pandemic persists into the second half of the fiscal year.
“This could add another $55-billion to the deficit. A deficit of $150-billion (6 per cent of GDP) or higher is very possible,” they wrote in an online post. “But this is a manageable deficit. It is a cyclical deficit, not a structural deficit."
In a letter to the Prime Minister Monday, Canadian Chamber of Commerce president Perrin Beatty urged Ottawa and the provinces to significantly boost aid to small businesses.
“It is critical that governments significantly increase the support provided to businesses to continue to employ their workers,” Mr. Beatty wrote. “Without a substantial increase in that support, thousands of businesses will not reopen after the immediate crisis has subsided.”