Archived - Supplementary Document to the Department's 2011-12 Departmental Performance Report (DPR) Regarding Sustainable Development

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The Department of Finance Canada is a participant in the Federal Sustainable Development Strategy (FSDS). The FSDS was tabled by the Government of Canada in October 2010, in accordance with the Federal Sustainable Development Act. The FSDS represents a major step forward for the Government of Canada by including environmental sustainability and Strategic Environmental Assessment as an integral part of its decision-making processes.

This website outlines the Department of Finance Canada’s FSDS implementation strategies and corresponding performance information for 2011-12. The following logos are used throughout to indicate the Department of Finance Canada’s activities which directly contribute to the themes of the FSDS.

Theme I: Addressing Climate Change and Air Quality


Theme I: Addressing Climate Change and Air Quality

Theme II: Maintaining Water Quality and Availability


Theme II: Maintaining Water Quality and Availability

Theme III: Protecting Nature


Theme III: Protecting Nature

Theme IV: Shrinking the Environmental Footprint – Beginning with Government


Theme IV: Shrinking the Environmental Footprint – Beginning with Government

The information provided on this website is supported by the 2012 FSDS Progress Report. The Progress Report uses state of the environment indicators to demonstrate the Government of Canada’s progress towards environmental objectives and sustainable development goals and targets laid out in the FSDS. These indicators track progress on measures of environmental and socioeconomic issues at broad outcome levels. The 2012 Progress Report will be made available on Environment Canada’s Federal Sustainable Development Strategy webpage.

1. The Department of Finance Canada's Vision for Sustainable Development

Economic and fiscal policy frameworks and decisions that promote equity and enhance the economic, social and environmental well-being of current and future generations.

The Department of Finance Canada's vision for sustainable development represents the ideal which the Department strives to achieve through all of its activities and delivery of its mandate.

2. Departmental Decision-making and Sustainable Development

A. Managing Sustainable Development

The Department of Finance Canada is the Government of Canada's primary source of analysis and advice on the broad economic and financial affairs of Canada. In addition to preparing the budget, the Department plays an important role in the development and implementation of government policy. As a "central agency" the Department provides analysis and advice on the economic merit and fiscal implications of policy and program proposals developed by other government departments. In its central agency capacity, Department of Finance Canada officials serve as members of a broader team of federal officials that review options for, and the implications of, proposals that are presented to Cabinet. Policy development also takes place within the Department on those issues and areas of responsibility that fall within the Department's own mandate, including tax and tariff legislation, major federal transfers to the provinces and territories, regulatory policy for the financial sector and representing Canada within international financial institutions.

As a policy-oriented department, Finance Canada differs from other government departments in its generally limited direct involvement in delivering programs and services to Canadians. Nevertheless, the Department has a clear role to play in contributing to the Government's sustainable development efforts. Sustainable development requires the long-term sustainability of the economy, social programs, the environment and natural resources. This is consistent with the basic principle of sustainability as set out in the Federal Sustainable Development Act. While the Department’s mandate is most evidently linked to the economic and social pillars of sustainable development, the Department continuously strives to recognize the implications of its analysis and advice on all aspects of sustainable development, and to take into account the linkages between economic, social and environmental sustainability. In some cases, this will ensure that economic, social and environmental goals are advanced together. In others, it will entail trade-offs, but with informed decision-making and choices that reflect careful deliberation.

Economic growth is an important aim of sustainable development in that it contributes to a high quality of life for Canadians, provides the fiscal capacity for governments to address environmental and social issues, and ensures that the Canadian economy remains strong in the face of long-term challenges (such as an aging population, improving productivity and globalization). For example, population aging will bring with it future economic and fiscal challenges and put downward pressure on growth in living standards. By taking action now to ensure long-run fiscal sustainability, and by identifying effective policies that encourage investment in the drivers of economic growth, such as human capital, physical capital and innovation, the Government can help to ensure a high standard of living for future generations. The Department addresses this challenge through responsible fiscal management, economic policy advice, sound framework policies (such as those related to taxation and financial markets), and ongoing analysis of Canada's current and long-run economic and fiscal position.

The Department of Finance Canada believes that safe, healthy and caring communities that provide all citizens with equal access to opportunities are vital to the creation of a strong, competitive, vibrant and sustainable economy and society. Sustainability in social policy is achieved in the Department by: working with partners in other departments to identify policies that support investments in people and their communities; working in cooperation and collaboration with other orders of government, which often have the primary responsibility for these policy areas, to ensure policy consistency and, where appropriate, stable and predictable funding; and developing specific policies which support this goal (such as tax policies and financial sector regulations).

Management and Accountability

The Assistant Deputy Minister of the Economic Development and Corporate Finance Branch, the Department of Finance Canada's sustainable development champion, is responsible for coordinating activities and reporting with respect to the Department's contributions to the FSDS and sustainable development more broadly.

The Resources, Energy and Environment Section of the Economic Development and Corporate Finance Branch, under the general direction of the Department's sustainable development champion, coordinates departmental sustainable development management, policy and activities. The main coordination vehicle is the Sustainable Development Working Group (SDWG), which consists of officials from all branches and is chaired by the Chief of the Resources, Energy and Environment Section. The SDWG is responsible for coordinating the implementation of commitments related to sustainable development within the various branches of the Department, and contributes to reporting on plans and progress with respect to these commitments.

FSDS Reporting

Environment Canada's Sustainable Development Office is responsible for preparing government-wide FSDS Progress Reports at least once every three years. The first report was completed in April 2011 and tabled before Parliament in June 2011. A second and more substantive Progress Report is scheduled for 2012. These reports offer an opportunity to assess progress in implementing the FSDS, to re-evaluate FSDS goals and targets and to benefit from lessons learned. The Department of Finance Canada contributes to government-wide progress reporting through its participation in the FSDS Assistant Deputy Minister Committee and Director General Committee, which are co-chaired by Environment Canada and Public Works and Government Services Canada.

The Department of Finance Canada evaluates its own contribution towards sustainable development, including activities and initiatives supplementary to those captured in the FSDS, as part of the annual Report on Plans and Priorities (RPP) and Departmental Performance Report (DPR) processes. All departments table a DPR before Parliament after each fiscal year reporting on the status of activities outlined in the previous RPP. The Department of Finance Canada seeks other opportunities to report on progress in meeting its sustainable development objectives to the Department's sustainable development champion and the Departmental Coordinating Committee, a senior committee comprising general directors from each branch within the Department and other senior officials, as required.

B. Strategic Environmental Assessment Planned Highlights and Commitments

The Department of Finance Canada has made considerable progress in implementing the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. The Department’s officials are better equipped today to use Strategic Environmental Assessment (SEA) as a tool to ensure environmental considerations are given due treatment in departmental proposals as a result of annual information sessions, the development of guidance material for managers and staff, and the support of branch SEA Coordinators.

In 2011-12, the Department of Finance Canada updated its SEA processes to be consistent with the revised Guidelines for the Implementation of the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, released by the Canadian Environmental Assessment Agency in October 2010. To better integrate the FSDS and SEA, internal processes were updated to encourage consideration of the impact of departmental proposals on achieving FSDS goals and targets. This was accomplished first and foremost by updating the Department's SEA questionnaire, which is the primary tool used by Department of Finance Canada analysts to conduct SEAs. The Department’s internal SEA webpage was also updated, to provide a one-stop portal for all matters relating to SEA.

The Department of Finance Canada tracks the number of preliminary scans and full SEAs it completes and has committed to report this information each year in its DPR. In 2011-12, a total of 81 preliminary scans and 11 full SEAs were conducted. Some departmental initiatives were found to potentially have positive and/or negative effects on the environment and achieving goals and targets in Themes I – Addressing Climate Change and Air Quality, II – Maintaining Water Quality and Availability and III – Protecting Nature of the FSDS. Further information on the results of full SEAs conducted by the Department of Finance Canada in 2011-12 is available on the Department’s public statements website.

3. Departmental Activities/Initiatives (FSDS Themes I-III)

A. Linkage of the Department's implementation strategies to the Program Activities

The Department of Finance Canada provides effective economic leadership through its clear focus on one strategic outcome: a strong and sustainable economy, resulting in increasing standards of living and improved quality of life for Canadians. All program activities relate to this strategic outcome. Currently, the Department's implementation strategies related to goals and targets under Themes I and III of the FSDS are all elements of the Sub-Program Activity 1.1.1: Taxation (part of the Program Activity 1.1: Economic and Fiscal Policy Framework).

B. Department's implementation strategies

Theme I: Addressing Climate Change and Air Quality

The following implementation strategies are related to the FSDS Theme I – Addressing Climate Change and Air Quality:

Goal 1 – Climate Change: reduce greenhouse gas emission levels to mitigate the severity and unavoidable impacts of climate change.

Target 1.1 – Climate Change Mitigation: Relative to 2005 emission levels, reduce Canada’s total greenhouse gas emissions (GHG) by 17 per cent by 2020.

Goal 2 – Air Pollution: Minimize the threats to air quality so that the air Canadians breathe is clean and supports healthy ecosystems.

Target 2.1 – Air Pollutants: Reduce air pollutants in order to maintain or improve air quality across the country and achieve the emission targets which are currently under development in consultations with provinces and stakeholders.

1. Accelerated capital cost allowance (CCA) for clean energy generation equipment

Encourage businesses, through the accelerated capital cost allowance for clean energy generation equipment, to invest in specified equipment that can contribute to a reduction in harmful emissions and diversification of the energy supply (Implementation Strategies 1.1.25 and 2.1.18).

The Government provides an accelerated capital cost allowance (CCA) for income tax purposes under CCA Class 43.2 (50 per cent per year on a declining balance basis) for businesses that invest in clean energy generation and conservation equipment. Class 43.2 includes specified equipment that generates or conserves energy by using a renewable energy source (e.g., wind, solar, small hydro), using fuels from waste (e.g., landfill gas, wood waste, manure) or making efficient use of fossil fuels (e.g., high efficiency cogeneration systems).

The provision of an accelerated CCA is an explicit exception to the general practice of setting CCA rates based on the useful life of assets. Accelerated CCA provides a financial benefit by deferring taxation. This incentive for investment is premised on the environmental benefits of low-emission or no-emission energy generation equipment and its ability to displace consumption of fossil fuels.

i. Relationship between the implementation strategies and the FSDS targets

To the extent that Class 43.2 encourages incremental investment in clean energy generation and energy conservation equipment, it could have an indirect positive impact on the environment. It could contribute to reduction in greenhouse gas emissions, which is relevant to Target 1.1 of the FSDS, to reduce greenhouse gas emission levels by 17 per cent by 2020. It could also contribute to a reduction in air pollutants pursuant to Target 2.1 of the FSDS.

ii. Outline of the non-financial performance information

Providing a modest financial incentive for investment in clean energy generation and energy conservation equipment provides an incentive for businesses to invest in such equipment.

2. Public Transit Tax Credit

Provide tax relief to Canadians who use public transit regularly and encourage individuals to make a sustained commitment to using public transit regularly to help reduce traffic congestion, air pollution and greenhouse gas emissions, through the public transit tax credit (Implementation Strategies 1.1.35.3 and 2.1.22.3).

The Public Transit Tax Credit (PTTC) allows individuals to claim a non-refundable tax credit for the cost of monthly public transit passes or those passes of a longer duration, effective July 1, 2006. The credit was extended in Budget 2007 to electronic fare cards and weekly passes when used on an ongoing basis.

i. Relationship between the implementation strategies and the FSDS targets

As stated in Budget 2006, the objective of the PTTC is to encourage individuals to make a sustained commitment to use public transit regularly to help reduce traffic congestion in urban areas and improve the environment. This measure could contribute to air emissions reductions relevant to Target 1.1: Climate Change Mitigation and to Target 2.1: Air Pollutants of the FSDS.

ii. Outline of the non-financial performance information

The PTTC is intended to encourage individuals to make a sustained commitment to public transit use by providing a tax credit for the purchase cost of monthly public transit passes and passes of a longer duration, as well as electronic fare cards and weekly passes when used on an ongoing basis. The Department of Finance Canada conducted an evaluation of the PTTC in 2011 and found that the key conditions for the measure to be effective in increasing public transit use are present. In particular, evidence suggests that the demand for public transit is sensitive to a permanent price reduction, and that the benefits of the PTTC have been captured mainly by public transit users, as opposed to transit operators through coincidental increases in public transit fares. The PTTC evaluation was published in the 2011 edition of the Tax Expenditures and Evaluations report, available on the Department of Finance Canada website.

3. Green Levy

Impose a Green Levy on the most fuel-inefficient passenger vehicles available in Canada (Implementation Strategies 1.1.42 and 2.1.29).

The Green Levy applies to passenger vehicles with a weighted fuel consumption rating of 13 litres or more per 100 kilometres (55 per cent city and 45 per cent highway) and is imposed at rates ranging from $1,000 to $4,000. The Green Levy is payable by the manufacturer or importer of new vehicles delivered after March 19, 2007 and by the importer of used vehicles, if the used vehicle was originally put into service (in any jurisdiction) after March 19, 2007. The Canada Revenue Agency and the Canada Border Services Agency are responsible for the administration of the Green Levy, working with manufacturers and importers of vehicles to facilitate its application.

i. Relationship between the implementation strategies and the FSDS targets

The Green Levy is aimed at encouraging clean, sustainable transportation choices by Canadians by discouraging the purchase of certain fuel-inefficient vehicles. This measure could contribute to air emissions reductions relevant to Target 1.1: Climate Change Mitigation and to Target 2.1: Air Pollutants of the FSDS.

ii. Outline of the non-financial performance information

The Green Levy was introduced as part of the government’s comprehensive, results-oriented ecoACTION plan which aimed at promoting clean, sustainable transportation choices for Canadians. In particular, the Green Levy aims to continue discouraging the purchase of fuel-inefficient vehicles and to promote the development and deployment of cleaner transportation technologies.

Theme III: Protecting Nature

The following implementation strategy is related to the FSDS Theme III – Protecting Nature:

Goal 6 – Ecosystem/Habitat Conservation and Protection: Maintain productive and resilient ecosystems with the capacity to recover and adapt; and protect areas in ways that leave them unimpaired for present and future generations.

Target 6.1 – Terrestrial Ecosystems and Habitat, Non-Park Protected Habitat: Habitat target to support conservation of priority migratory birds and species at risk will be set by 2015.

4. Ecological Gifts Program

Maintain the incentives for the protection of Canada’s ecologically-sensitive land, including habitat used by species at risk, through ongoing tax assistance for donations of ecologically-sensitive land under the Ecological Gifts Program (Implementation Strategy 6.1.5).

Under the Ecological Gifts Program, Canadian landowners may donate ecologically sensitive land, or easements and covenants on such land, to conservation charities to ensure its preservation in perpetuity. Under this program, donors may benefit from the charitable donations tax credit (for individuals) or the charitable donations deduction (for corporations) on the full value of the gifts of ecologically-sensitive land. In addition, capital gains that have accrued on the donated land are eligible for a complete exemption from capital gains tax.

To protect the public interest, Environment Canada is responsible for certifying:

  • the eligibility of recipient charitable organizations;
  • the ecological sensitivity of the donation; and
  • the fair market value of the donation.

In addition, to ensure the perpetual protection of the donated land, the Income Tax Act imposes special tax liabilities for recipients of ecologically sensitive land if there are any changes in use without the prior authorization of Environment Canada.

i. Relationship between the implementation strategy and the FSDS targets

The Ecological Gifts Program is intended to help Canada’s landowners and conservation groups in their habitat conservation and protection efforts. In particular, donations of ecologically sensitive land can contribute to the protection of non-park protected habitat, including habitat used by species at risk, pursuant to Target 6.1 of the FSDS.

ii. Outline of the non-financial performance information

While the decision to donate ecologically sensitive land is often motivated by non-financial factors, the significant income tax benefits provided through the Ecological Gifts Program provide an incentive to further encourage donations of ecologically sensitive land.

4. Additional Sustainable Development Activities/Initiatives

The Department of Finance Canada's vision for sustainable development – "economic and fiscal policy frameworks and decisions that promote equity and enhance the economic, social and environmental well-being of current and future generations" – is consistent with its mandate to foster a strong economy. The Department's most important contribution to sustainable development lies in the development of advice and policies that ensure fiscal sustainability, contribute to a high standard of living for future generations, and help build strong social foundations. Through the course of its work relating to tax policy, financial sector policy and in its central agency role, the Department can contribute to efforts to integrate sustainable development considerations into policy making. In addition, the Department of Finance Canada can set an example for other organizations through a commitment to sustainable development in its operations.

The Department of Finance Canada has set out several goals, supplementary to those included in the FSDS, which focus on key areas where it can contribute to sustainable development. The Department has focused on making specific commitments in areas relating to its core mandate where it is the lead federal department or has a distinct role in areas where other departments have the policy lead. Each goal is accompanied by a set of objectives and commitments the Department has made towards meeting those objectives.

Goal 1: Fiscal Sustainability and a High Standard of Living for Future Generations
Objectives Targets Results Achieved Linkage to PAA
1a: Promote fiscal sustainability. 1a.1 Return to balanced budgets and ensure the federal debt-to-GDP ratio remains on a downward path. Since the end of the recession, actions – largely focused on responsible expenditure management – have been taken to help ensure a return to balanced budgets over the medium term. In particular, Budget 2011 delivered on the 2010 strategic reviews and launched a comprehensive review of departmental spending. In December 2011, a new growth path for the Canada Health Transfer (CHT) was announced to ensure that the CHT continues to grow past 2016-17 but at a sustainable rate. Budget 2012 presented the results of the comprehensive review and took additional measures to preserve social programs, bring public sector compensation in line with that of other public and private sector employers and restrain overall direct program spending.

Combined, these actions are expected to ensure a return to balanced budgets over the medium-term and put the debt-to-GDP ratio on a downward path, leaving the flexibility to respond to unexpected economic shocks.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.2: Economic and Fiscal Policy, Planning, and Forecasting
1b: Monitor long-run economic and fiscal issues and prospects. 1b.1 Understand the long-run economic and fiscal implications of ongoing domestic and global developments. The Department of Finance Canada continued to regularly monitor and forecast economic and fiscal performance both in Canada and other countries, conduct private sector surveys of the Canadian economic outlook and assess factors affecting future growth prospects, including productivity and population aging. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.2: Economic and Fiscal Policy, Planning, and Forecasting
1c: Develop and support policies and measures that promote the long-run sustainability of Canada’s economy. 1c.1 Provide analysis and advice to the Minister in support of a tax system that raises revenues in an economically efficient, fair and simple manner that is conducive to economic growth and improved standards of living. The Department of Finance Canada provided analysis and advice in 2011-12 to support the announcement of numerous tax measures in Budget 2011 and Budget 2012 that contribute to the Government’s agenda to support economic growth and an improved standard of living, for example:
  • Supporting families and communities by announcing new tax measures, such as the Family Caregiver Tax Credit (in Budget 2011), the Children’s Art Tax Credit (in Budget 2011) and the Volunteer Firefighters Tax Credit (in
    Budget 2011), as well as by improving tax assistance provided to individuals, such as through the Medical Expense Tax Credit (in Budget 2011 and Budget 2012) and the Registered Disability Savings Plan (in Budget 2012).
  • Strengthening the charitable sector by announcing a number of tax measures, such as the enhancement to the regulatory regime of qualified donees (in Budget 2011) and the modification of the rules for registering certain foreign charitable organizations as qualified donees (in Budget 2012).
  • Investing in the health and safety of Canadians by changing the tax treatment of health-related goods and services, such as exempting from the Goods and Services Tax/Harmonized Sales Tax pharmacists’ services (in Budget 2012).
  • Improving the functioning of the tax system by announcing measures, such as incremental improvements to Canada’s system of international taxation (in Budget 2012) and technical improvements to the exemption test on life insurance policy (in Budget 2012).
  • Improving the fairness and integrity of the tax system by closing tax loopholes, for example by limiting the deferral of partnership income (in Budget 2011) and tightening the rules applicable to Retirement Compensation Arrangements and Employees Profit Sharing Plans (in Budget 2012).
  • Enhancing the neutrality of the tax system across sectors and regions by phasing out tax preferences for resource industries, for example through the alignment of the deduction rates for intangible capital costs in the oil sands sector with those available in the conventional oil and gas sector (in Budget 2011), the phase-out of the Atlantic Investment Tax Credit for activities related to oil and gas and mining (in Budget 2012), as well as the phase-out of the Corporate Mineral Exploration and Development Tax Credit (in Budget 2012).
  • Supporting business innovation by streamlining and improving the Scientific Research and Experimental Development tax incentive program (in Budget 2012).
  • Reducing the tax compliance burden for businesses by announcing a number of changes, including simplification of the Customs Tariff  (in Budget 2011); doubling of the Goods and Services Tax/Harmonized Sales Tax streamlined accounting thresholds (in Budget 2012); simplifying administration for partnerships (in Budget 2012); and improving the dividend tax credit system (in Budget 2012).
  • Safeguarding Canada’s Natural Environment by encouraging investment in clean energy technologies, for example by extending qualifying environmental trusts rules to pipelines (in Budget 2011) and expanding tax support for clean energy generation equipment (in
    Budget 2011 and Budget 2012).
  • Supporting initiatives that encourage the exercise of direct taxation powers by Aboriginal governments, for example by entering into sales tax administration agreements.
In addition, the Department of Finance Canada released the 2011 edition of the Tax Expenditures and Evaluations report. The report provides estimates and projections of tax expenditures related to personal and corporate income taxes and the Goods and Services Tax, and includes an analytical paper entitled “Distributional Impact of the Federal Personal Income Tax System and Refundable Credits: Analysis by Income, Sex, Age and Family Status” and an evaluation of the Public Transit Tax Credit.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.1: Taxation

 

Goal 2: Strong Social Foundations
Objectives Targets Results Achieved Linkage to PAA
2a: Ensure stable and predictable funding for health and social programs. 2a.1 Provide timely and accurate payment of Canada Health Transfer (CHT) and Canada Social Transfer (CST) amounts. In December 2011, the Government set the future growth path of transfers to provinces and territories to provide sustainable and predictable funding in support of the provision of health care, education and other programs and services for all Canadians.

In addition to growing support for the CHT and CST, $952 million was provided through one-time payments to ensure provinces are protected from any decline in their total transfers (CHT, CST and Equalization) in 2011-12 in recognition of the short-term challenges being faced by provinces as Canada emerges from the global recession.

In 2011-12, the Department of Finance Canada continued to provide accurate payments of the CHT and CST amounts to provinces and territories.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy
2b: Reduce fiscal disparities through Equalization and Territorial Formula Financing programs. 2b.1 Address fiscal disparities with timely and accurate payment of Equalization and Territorial Formula Financing (TFF) transfer amounts. In 2011-12, the Department of Finance Canada continued to provide timely, accurate payments of Equalization amounts to Equalization-receiving provinces and Territorial Formula Financing (TFF) amounts to territories. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy
2c: Ensure the sustainability of the retirement income system. 2c.1 Continue to implement legislative and regulatory changes resulting from the
2007-2009 Triennial Review of the Canada Pension Plan (CPP).
Department of Finance Canada officials managed and supported the successful implementation of the Canada Pension Plan (CPP) 2007-2009 Triennial Review changes proposed by Finance Ministers in May 2009. Changes to the CPP included measures to better reflect the way Canadians live, work and retire, such as providing greater flexibility for those taking up the retirement benefit before the age of 65 to enable them to combine their CPP benefit with work. The CPP legislative amendments were in place as of January 1, 2011. In 2011-12, Finance officials continued to support implementation by monitoring the phasing-in of the changes. Changes will be fully phased-in by 2016. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy
2c: Ensure the sustainability of the retirement income system (continued). 2c.2 Continue to work with provinces and territories to identify ways to help Canadians save more effectively for retirement. In 2011-12, the Department of Finance Canada developed the federal Pooled Registered Pension Plan (PRPP) framework in consultation with provinces and stakeholders, enabled the passage of the PRPP legislation in the House of Commons, and published draft tax rules to accommodate PRPPs. The Department also began developing the regulations that will accompany the PRPP legislation.

Budget 2011 announced that the Government would be moving forward with implementing the recommendations of the Task Force on Financial Literacy. As a first step, Bill C-28 was introduced in 2012 and will establish the position of a Financial Literacy Leader within the Financial Consumer Agency of Canada.

In 2011-12 Department of Finance Canada officials continued to work with provincial and territorial officials, as well as with other federal departments, on options for a modest, fully funded and phased-in expansion of the Canada Pension Plan (CPP).
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.5: Financial Sector Policy

PSA 1.1.4: Federal-Provincial Relations and Social Policy
2c: Ensure the sustainability of the retirement income system (continued). 2c.3 Continue work on the next Canada Pension Plan (CPP) Triennial Review (to be completed by 2012). Budget 2012 announced that federal, provincial and territorial Ministers of Finance have completed their 2010-12 Triennial Review of the Canada Pension Plan (CPP). The review confirmed the financial sustainability of the Plan for at least the next 75 years at the current contribution rate of 9.9 per cent of pensionable earnings.

Finance Ministers also agreed to a number of technical amendments to the CPP legislation and to the CPP Investment Board regulations. The proposed amendments range from consequential changes to the reforms that were made to modernize the CPP in the previous 2007–2009 Triennial Review to changes that will ensure consistency within the different parts of the CPP legislation. Legislative amendments are required to implement these changes.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy

 

Goal 3: Integrating Sustainable Development Considerations into Policy Making
Objectives Targets Results Achieved Linkage to PAA
3a: Evaluate the potential for the use of economic instruments as a policy tool for addressing environmental issues. 3a.1 Evaluate potential changes to the tax system that could contribute to the Government’s environmental objectives, including tax proposals received from stakeholders. The Department of Finance Canada continued to evaluate research and proposals concerning potential environment-related tax measures in consultation with other government departments and stakeholders, including taxpayers, industry associations, and environmental organizations.

Analysis conducted during the year included work supporting the announcement in Budget 2012 of an expansion of the accelerated capital cost allowance (CCA) for clean energy generation equipment under Class 43.2 to include a broader range of bioenergy equipment.

The Department of Finance Canada performed analysis that led to the Budget 2012 announcement of the phase-out of the Atlantic Investment Tax Credit for oil and gas and mining activities, which supports the commitment by G-20 Leaders to rationalize and phase out over the medium-term inefficient fossil fuel subsidies. The Department also performed analysis that led to the Budget 2012 announcement of the phase-out of the Corporate Mineral Exploration and Development Tax Credit.

The Department of Finance Canada finalized legislation implementing the Budget 2011 measures to reduce the deduction rates for intangible capital expenses in oil sands projects to align them with the rates in the conventional oil and gas sector, extend the qualifying environmental trust rules to pipelines, and expand the accelerated CCA Class 43.2 to include equipment that generates electricity using waste heat.

During the reporting period, the Department of Finance Canada also conducted an evaluation of the Public Transit Tax Credit (PTTC), which was published in January 2012 in the 2011 edition of the Tax Expenditures and Evaluations report. The evaluation fulfilled a commitment by the Department to the Commissioner of the Environment and Sustainable Development to undertake an evaluation of the PTTC starting in 2011.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.1: Taxation
3b: Increased knowledge and awareness of environmental and broader sustainable development issues within the department. 3b.1 Organize at least one speaker annually on an issue related to sustainable development. In 2011-12, Department of Finance Canada employees had the opportunity to attend lectures as part of the Department’s regular Speaker Series and the Thomas K. Shoyama Annual Public Policy Lecture. Several lectures dealt with issues of sustainability. In January 2012, Thomas Jenkins, Executive Chairman and Chief Strategy Officer for OpenText Corporation, delivered a lecture entitled “Innovation: A Call to Action”, which focused on Canadian innovation and productivity. A lecture by Lars Thunell, Executive Vice President and CEO of International Finance Corporation (IFC) in February 2012, discussed the IFC’s work to promote sustainable private-sector development in developing countries. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.3: Economic Development and Corporate Finance
3b: Increased knowledge and awareness of environmental and broader sustainable development issues within the department (continued). 3b.2 Conduct research and analysis on environmental and natural resource issues. The Department of Finance Canada has continued efforts to improve its environmental and natural resource knowledge base by conducting research and analysis on issues such as the regulatory system for major economic projects, including in the resource sector. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.3: Economic Development and Corporate Finance
3c: Effective implementation of the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. 3c.1 Update departmental processes and resources related to Strategic Environmental Assessments (SEA) to reflect the revised Guidelines for Implementing the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals, issued October 2010. In 2011-12, the Department of Finance Canada updated its SEA processes to be consistent with the revised Guidelines for the Implementation of the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, released by the Canadian Environmental Assessment Agency in October 2010. This included:
  • Updating the Department’s SEA questionnaire, the primary tool used by analysts to conduct SEAs for policy, plan and program proposals, to allow for the consideration of Federal Sustainable Development Strategy (FSDS) goals and targets when evaluating the environmental impacts of a proposal.
  • Revising the internal SEA guidance document, which can serve as a starting point for analysts without extensive environmental knowledge to incorporate consideration of FSDS goals and targets into their policy advice (e.g., by providing specific information on common environmental issues, their drivers and linkages to the FSDS).
  • Making broader improvements to the Department’s SEA tools and processes, such as increasing the user-friendliness of the SEA intranet web-page and posting training materials online.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.3: Economic Development and Corporate Finance
3c: Effective implementation of the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals (continued). 3c.2 Organize an information session for Department of Finance Canada employees on undertaking Strategic Environmental Assessments. The Department of Finance Canada held an information/training session on SEAs in October 2011. Presentations were given by the Resource, Energy and Environment Section, Economic Development and Corporate Finance Branch of Finance Canada and the Canadian Environmental Assessment Agency. All departmental SEA training materials were updated to reflect the revised Guidelines for the Implementation of the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals and to provide greater focus on practical examples of SEAs. PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.3: Economic Development and Corporate Finance
3d: Integration of sustainable development considerations into Canada’s operations at Bretton Woods Institutions. 3d.1 Encourage the World Bank Group to make an enhanced contribution to environmental sustainability. The Department of Finance Canada has played an important role in advocating for progress made at the World Bank on integrating climate change considerations into its activities. Canada has provided significant financial contributions to the Climate Investment Funds, one of a suite of financing instruments used by the Bank to support climate-resilient and low-carbon investments. Progress was also made on the Country Assistance Strategies and Country Partnership Strategies prepared in fiscal year 2010 (the most recent year for which data is available), where 30 of 34 strategies addressed climate change. PA 1.1: Economic and Fiscal Framework

PSA 1.1.6: International Trade and Finance
3d: Integration of sustainable development considerations into Canada’s operations at Bretton Woods Institutions (continued). 3d.2 Encourage the World Bank Group to improve policies and performance standards on economic, social and environmental sustainability. The Department of Finance Canada worked with the World Bank to update its sustainability framework used by its private sector arm, the International Finance Corporation (IFC), effective January 1, 2012. This revised framework promotes sound environmental and social practices, encourages transparency and accountability, and contributes to positive development impacts. The IFC’s Performance Standards, which are part of the Sustainability Framework, have become globally recognized as a benchmark for environmental and social risk management in the private sector.

The Department of Finance Canada continued to encourage the World Bank Group to enhance its support to candidate and prospective candidate countries in completing the implementation process for the Extractive Industries Transparency Initiative (EITI). The global EITI, established in 2003, promotes and supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining. Canada is a financial contributor to the Bank’s work with the EITI.
PA 1.1: Economic and Fiscal Framework

PSA 1.1.6: International Trade and Finance
3e:  Support implementation of Canada’s international financing commitment under the Copenhagen Accord. 3e.1 Deliver $290 million in climate
change-related financing through the International Finance Corporation.
As part of Canada's commitment to support mitigation efforts, $291.5 million has been provided to the International Finance Corporation (IFC) to support a broad portfolio of clean energy projects in developing countries. IFC uses the Canadian Climate Change Fund for low-cost financing and grant-based technical assistance to address private clean energy investment barriers, and serves a catalytic role to enable clean energy initiatives to move forward.

As of March 31, 2012, 62 projects were reviewed by the IFC, with 8 projects approved, representing a total of US$36.4 million in direct project funding from the Canadian Climate Change Fund, levering US$435.3 million in funding from IFC's core funding and other multilateral development banks, and US$82.3 million in private sector investment in developing countries. It is expected that these projects will lead to 689,000 tonnes of carbon dioxide equivalent of reduced or avoided emissions per year. A further 30 projects are under development for potential consideration by the Fund.
PA 1.1: Economic and Fiscal Framework

PSA 1.1.6: International Trade and Finance
3f: Encourage export credit agencies to take into account climate change considerations in their decisions on export finance. 3f.1 Address, where possible, financial barriers in the transfer of technologies that will assist climate change mitigation. The Department of Finance Canada participated in the successful conclusion of the OECD discussions on the Draft Sector Understanding on Export Credits for Climate Change Mitigation and Water Projects. PA 1.1: Economic and Fiscal Framework

PSA 1.1.6: International Trade and Finance

 

Goal 4: Integrating Sustainable Development Considerations into Policy Making
Objectives Targets Results Achieved Linkage to PAA
4a: Integrate a management framework to ensure that operations are conducted in an environmentally responsible, economically viable, streamlined and efficient manner. 4a.1: By March 31, 2012, implement an Environmental Management System (EMS) to promote environmentally responsible, economically viable, streamlined and efficient operations. An Environmental Management System (EMS) has been developed to contribute to effective environmental management.

The EMS assists in reducing the environmental impact of the Department of Finance Canada’s operations, aids in establishing the impact of those operations, and assists in monitoring environmental performance.

The Department of Finance Canada’s EMS committee was established and is focusing efforts on Theme IV – Shrinking the Environmental Footprint, aimed at reducing the environmental impact of our offices through activities such as using less paper and buying environmentally friendly products, etc. The Department tracked and reported on progress in the Greening of Government Operations Supplementary table to the DPR, and planned engagement and communications strategies.
PA 4: Internal Services

PSA: N/A

5. FSDS Theme IV – Shrinking the Environmental Footprint of Government

 

Theme IV: Shrinking the Environmental Footprint – Beginning with Government
The Department of Finance Canada is a participant in the Federal Sustainable Development Strategy (FSDS) and contributes to the Greening Government Operations targets through the Internal Services program activity. The department contributes to the following areas of Theme IV (Shrinking the Environmental Footprint – Beginning with Government) of the FSDS:
  • Green Procurement;
  • E-waste;
  • Printing Units;
  • Paper Consumption; and
  • Green Meetings.

For additional details on the Department of Finance Canada's Greening Government Operations activities please see 2011-12 Part III – Departmental Performance Report.

6. Additional Details on the FSDS

For additional information on the FSDS, please refer to Environment Canada’s Federal Sustainable Development Strategy webpage.