ENVI Committee Report

Dissenting Opinion – Conservative Party of Canada

Introduction

Bill C-323, An Act to Amend the Income Tax Act (rehabilitation of historic property) was referred to the Standing Committee on Environment and Sustainable Development on March 23, 2017.

On June 5, 2017, The Members of the Committee unanimously agreed to conduct a comprehensive study on the state of heritage preservation and protection in Canada in conjunction with Bill C-323. The purpose was to provide broader context to the state of built heritage in Canada and examine ways to protect Canada’s historical legacy.

A notably unique approach, examining Bill C-323 in the context of heritage preservation offered the Committee a chance to comprehensively examine the underlying variables affecting the preservation of built heritage and the need to commemorate and recognize Indigenous Heritage Sites. In addition, it offered the Committee a clear picture as to the legislative and regulatory tools currently available to the federal government for the protection of such sites. This approach was affirmed when the Committee unanimously agreed to the following Motion:

That all testimony received under the study of Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property) be deemed to have been received under the study of heritage preservation and protection in Canada.[1]

Legislation, Financing and Regulatory Initatives:

While all Committee Members agreed that the federal government needs to show leadership in heritage conservation, Members disagreed on the financial resources necessary to accomplish these objectives. For example, Recommendations, 1, 2, 3, 4, 5, 6, and 9 all contain implied costs to the public treasury through the introduction of a new legislative framework for Canadian built heritage – especially as these costs pertain to federally owned national historic sites.  For the recommendations listed above, the Committee study did not consider the financial implications of such measures in its analysis.

Similarly, Recommendation 7 advises the government to annually invest 2% of the asset replacement value towards maintenance and repair of federal heritage buildings according to the Treasury Board’s Secretariat’s Guide to the Management of Real Property. As the former Canadian registrar, Andrew Waldron outlined, the Guide is “out of date and needs an overhaul. It hasn't revised its approach to evaluation in almost 40 years. It does not maintain its designations to reflect changes in buildings.”[2] Indeed, recommending guidelines from an out-of-date policy model while simultaneously seeking to create a new legislative framework at a potentially significant cost to taxpayers is a contradictory approach to sound and evidence-based policy development.

That said, while the objectives of the legislative recommendations are laudable, the Conservative Members feel it would be irresponsible, given the large deficits of the federal government and a ballooning federal debt, to unduly burden taxpayers with additional expenses before examining the financial risks and their relationship to current funding programs, such as the $1.3 billion earmarked for heritage buildings referred to by Parks Canada during the study.[3]

Recommendations 8 and 12, by contrast, provide potentially sustainable policy options for the federal government and the private sector without significantly burdening taxpayers with additional expenses. The Conservative Members support financially prudent measures such as adapting the National Building Code to facilitate the restoration and rehabilitation of existing buildings and a federal policy that would encourage departments to consider leasing and purchasing such sites for federal use where appropriate.

National Cost Sharing Program:

Regarding the National Cost Sharing Program referenced in Recommendation 10, the Conservative Members believe financial resources for a funding program need to be properly costed to ensure the appropriate use of taxpayer dollars. Cost-sharing programs can provide positive economic spin-offs for communities when efficiently administered and encourage philanthropy at the local level. All Committee Members recognized the critical role funding programs can play in rural communities and support efforts to ensure federal funds are properly allocated to rural parts of Canada (Recommendation 13).

Tax Incentives:

The Committee heard extensive testimony on the role of tax incentives for the preservation of national historic sites which can return more to the public treasury than the cost of the tax credit itself.  All Committee Members agreed that the federal government should establish a tax credit for the restoration and preservation of buildings listed on the Canadian Register of Historic Places (Recommendation 11).  In Recommendation 14, Committee Members support the federal government considering an initiative modelled on the “Main Street America” program, a tax incentive program which resulted in $131 billion in private investment and the restoration of 42,000 heritage buildings in the United States.[4] Evidence reviewed by the Committee demonstrates that tax credit programs would, if properly structured, reinvigorate small towns across Canada and support job creation in the construction and services industries.[5]  

With respect to Recommendation 11, the National Trust For Canada recommended the federal government implement “a federal heritage rehabilitation tax incentive, such as the measures recently proposed in Bill C-323…[as] a proven way to attract private and corporate investment to privately owned historic places and to give them vibrant new uses.”[6] 

Committee Members heard testimony from Finance Canada and the Parliamentary Budget Officer which calculated the potential cost of Bill C-323 to taxpayers. However, their analyses neglected to analyze the economic spinoffs such measures would have on the Canadian economy and the additional tax revenues such economic activity would generate. Chris Wiebe from the National Trust for Canada addressed the potential costs of a tax credit:

Understandably, the potential cost of implementing a tax credit has been raised at this committee. Deloitte's analysis of the estimated cost of a historic rehabilitation tax credit in Canada found that, far from being a cost to government, these tax credits for commercial properties would create net revenue growth from corporate income tax, GST, and additional personal income tax stemming from new employment.[7]

The Conservative Members of the Committee, therefore, question how the Liberal Members can simultaneously recommend the establishment of a federal tax credit for the restoration and preservation of buildings listed on the Canadian Register of Historic Places in Recommendation 11 and reject Bill C-323 which accomplishes exactly that objective. This is particularly surprising in light of the fact that a number of Liberal Members have publicly spoken out in favour of exactly such a tax credit program. We are disappointed that the Liberal Members of the Committee appear to have been instructed by the Office of the Minister of Environment and Climate Change to vote against this critical tool for protecting Canada’s historic sites.

Heritage Sites and Indigenous People

Regarding recommendations 15, 16 and 17, the Conservative Members believe that the perspectives of Indigenous People on heritage protection and conservation deserve a stronger voice and, therefore, support these recommendations in principle. However, we again draw to the Committee’s attention to the fact that all three of these recommendations appear to entail implied costs to their execution, representing additional stresses to the federal government’s fiscal framework.  

Conclusion

The Conservative Members express profound disappointment that the Liberal Committee Members were eager to support many recommendations with implied fiscal costs, yet rejected Bill C-323, the one concrete proposal before the Committee that represents a net-positive return to the Government.  We note Bill C-323 does not require a Royal Recommendation because it is not expected to have a negative impact on the government’s fiscal framework, yet the Liberal Motion tabled on November 28, 2017 rejecting Bill C-323 cites that alleged negative impact as one of its grounds for rejection.  We are further confounded by the contention that Bill C-323 may have a negative effect on federal revenues when the Liberal Members of the Committee are supporting numerous other recommendations that will have a negative impact on federal revenues.

Conservative Members note that the Liberal government faces significant fiscal challenges and has failed to put forward a plan that would restore the federal budget to balance.  Such a situation is unstainable, yet the majority of the recommendations, if implemented, would exacerbate Canada’s worsening fiscal position.

Finally, the Conservative Members would like to thank the Member of Parliament for Kootenay—Columbia for his vital contributions to this study and for his strong support of Bill C-323.