Archived - Supplementary Document to the Department's 2012-13 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.

The 2010-2013 FSDS continues to guide the Government of Canada's sustainable development activities, including with respect to the content of this website. The 2013-2016 FSDS will be the basis for year-end performance reporting in Fall 2014.

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

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, the legislative and regulatory framework 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 of Finance Canada addresses this challenge through responsible fiscal management, economic policy advice, sound framework policies (such as those related to taxation and the financial sector), 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 and financial sector policies).

Management and Accountability

The General Director 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, and a second report was tabled in February 2013. 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.

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 2012-13, a total of 273 preliminary scans and 9 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 2012-13 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 economy and sound public finances for Canadians. All programs 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 1.1.1: Taxation (part of the Program 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 have been taken to help ensure a return to balanced budgets by 2015. In particular, action was taken to ensure that the temporary measures under the stimulus phase of the Economic Action Plan ended as scheduled, government operations were reviewed to identify areas for savings and improved service delivery, and action was taken to close tax loopholes and improve the fairness and integrity of the tax system.

Over the longer term, the new legislated growth path of the Canada Health Transfer beyond 2013-14 and the gradual change in the age of eligibility for the Old Age Security program starting in April 2023 will help ensure that public finances and social programs remain sustainable beyond the current five-year fiscal planning horizon.

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 that will achieve the Government's commitment to reduce the federal debt-to-GDP ratio to 25 per cent by 2021. It will also leave the flexibility to respond to unexpected economic shocks.

In October 2012, the Department of Finance Canada released a document entitled Economic and Fiscal Implications of Canada's Aging Population. The report confirmed that the Government's actions to ensure a return to balanced budgets over the medium term and preserve social programs will help ensure the sustainability of Canada's public finances over the long term.
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 2012-13 to support the announcement of numerous tax measures in Budget 2013 that contribute to the Government's agenda to support economic growth and an improved standard of living, for example:
  • Supporting businesses in the manufacturing and processing sector through a two-year extension of the temporary accelerated capital cost allowance for new machinery and equipment, helping businesses retool to remain competitive in the current global economy.
  • Expanding support for small businesses by increasing and indexing the Lifetime Capital Gains Exemption.
  • Encouraging businesses to invest in clean energy generation and conservation equipment by further expanding tax support for clean energy generation.
  • Improving the fairness and integrity of the tax system through measures such as: (1) enhancing anti-avoidance rules that prevent corporate loss trading, (2) ensuring that the tax consequences of disposing of a property cannot be avoided by a taxpayer by entering into “synthetic dispositions” or character conversion transactions, (3) enhancing anti-avoidance rules designed to prevent the use of non-resident trusts to avoid Canadian income tax, (4) extending the application of the thin capitalization rules to non-resident trusts and corporations operating in Canada, and (5) strengthening the rules that are designed to restrict the deductibility of farm losses.
  • Combating international tax evasion and aggressive tax avoidance by: (1) extending the reassessment period for reportable tax avoidance transactions and tax shelters, (2) requiring certain financial intermediaries such as banks to report international fund transfers of $10,000 or more to the Canada Revenue Agency (CRA), (3) providing the CRA with new tools to enforce tax rules and to obtain more detailed information from Canadian taxpayers regarding their foreign income and offshore assets, (4) introducing a new program to pay individuals for information regarding international tax non-compliance, and (5) announcing a consultation on possible measures to curb tax treaty shopping.
  • Enhancing the neutrality of the tax system across sectors and regions by phasing out tax preferences, such as: (1) accelerated deductions for capital expenditures in the mining sector, (2) the additional deduction for credit unions, and (3) the Labour-Sponsored Venture Capital Corporations tax credit, and (4) by repealing the rules for International Banking Centres.
  • Introducing a number of measures to make the tax system simpler and to facilitate and improve compliance, for example by making it less time-consuming for pension administrators and employers to refund a contribution to a Registered Pension Plan as a result of a reasonable error.
  • Working collaboratively with provinces and territories to improve the efficiency and simplicity of the tax system, for example by enhancing the application and administration of income tax collection agreements.
  • Supporting families and communities by announcing new tax measures, such as the enhancement of the Adoption Expense Tax Credit, the introduction of a new temporary First-Time Donor's Tax Credit, and the expansion of tax relief under the GST/HST for home care services.
  • Supporting initiatives that encourage the exercise of direct taxation powers by Aboriginal governments, for example by entering into sales tax administration agreements.

The Department of Finance Canada also supported the Government in moving forward with various outstanding technical tax amendments which contribute to the sustainability of the tax system and economic growth by providing greater certainty in the application of the tax laws and strengthening the tax system. For example:

  • On October 24, 2012, the Government moved to implement an important and comprehensive package of outstanding technical tax legislation (the Technical Tax Amendments Act, 2012), which received Royal Assent on June 26, 2013.
  • On December 21, 2012, the Department released draft income tax technical amendments which notably included a number of outstanding technical amendments concerning the taxation of corporate reorganizations.
  • On July 25, 2012, the Department released a legislative proposal relating to specified investment flow-through entities, real estate investment trusts and publicly-traded corporations and on November 27, 2012, the Minister of Finance released a legislative proposal relating to Canadian Banks with foreign affiliates.

The Department of Finance Canada has contributed to the signing of new tax treaties or tax protocols which support sustainable economic growth by preventing double taxation and tax evasion in cross-border transactions. During the period 2012-2013, Canada signed tax treaties or protocols with Serbia, New-Zealand, Luxembourg, Poland, and Hong Kong.

The Department of Finance Canada has also contributed to the signing of tax information exchange agreements with other countries to fight international tax evasion. During the period 2012-2013, Canada signed three new tax information exchange agreements with Liechtenstein, Uruguay and Panama.

In addition, the Department of Finance Canada released the 2012 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. The report includes a profile of Tax-Free Savings Account holders as well as a methodological paper on the tax expenditures in respect of accelerated deductions of capital costs.

PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.1: Taxation
1c: Develop and support policies and measures that promote the long-run sustainability of Canada's economy (cont.). 1c.2 Support financial stability and maintain the safety and soundness of the financial system. In 2012-13, the Department of Finance Canada made significant progress in a number of priority areas to promote a stable, efficient and competitive financial sector.

The Department of Finance Canada developed a number of proposals to minimize government exposure to – and promote market discipline in – the mortgage market, including proposed changes related to the use of portfolio insurance. The Department also advanced work on a resolution regime for Canada's largest banks, which was highlighted in the Budget 2013 announcement of a comprehensive risk management framework for Canada's domestic systemically important banks.

The Department of Finance Canada also worked to protect the financial system from money laundering, including through regulatory enhancements in respect of customer identification and due diligence requirements.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.5: Financial Sector Policy

 

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 and Canada Social Transfer amounts. In 2012-13, the Department of Finance Canada continued to provide accurate payments of Canada Health Transfer (CHT) and Canada Social Transfer (CST) amounts to provinces and territories.

In addition to growing funding for the CHT and CST, $680 million was provided through one-time payments to ensure provinces are protected from any decline in their total transfers (CHT, CST and Equalization) in 2012–13 in recognition of the short-term challenges being faced by provinces as Canada emerges from the global recession.
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 transfer amounts. In 2012-13, 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. The Department also continued the work on the renewal of the Equalization and TFF programs for 2014-15. 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 Implement legislative and regulatory changes resulting from the 2010-2012 Triennial review of the Canada Pension Plan (CPP).

Budget 2012 announced that federal, provincial and territorial (FPT) Ministers of Finance have completed their 2010-2012 Triennial Review of the CPP. The Triennial Review confirmed the sustainability of the Plan for at least the next 75 years at the current contribution rate of 9.9 per cent of pensionable earnings. As part of the Triennial Review, Finance Ministers also agreed to a number of technical amendments to the CPP legislation and to the CPP Investment Board regulations. The proposed CPP amendments range from consequential changes to the reforms that were made to modernize the CPP in the previous 2007-2009 Triennial Review, to amendments that will ensure consistency within the different parts of the CPP legislation.

Department of Finance Canada officials supported the legislative process for the technical amendments, which received royal assent on December 14, 2012. The Department is also working with Employment and Social Development Canada (ESDC) to ensure implementation of the amendments. This includes working with provincial officials to obtain provincial Orders-in-Council for the coming into force of a number of legislative amendments.

Once all provincial Orders-in-Council have been obtained, Department of Finance Canada officials will support the Minister of Finance in proceeding with the federal Order-in-Council that will specify a date for the coming into force of the amendments.

In addition, as announced in Budget 2013, the Government is currently consulting with provinces on permitting qualified persons who are not a resident in Canada to serve on the board of directors of the Canada Pension Plan Investment Board.

PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy

PSA 1.1.5: Financial Sector Policy
2c: Ensure the sustainability of the retirement income system (cont.). 2c.2 Start work on the 2013-2015 Canada Pension Plan Triennial Review (to be completed by 2015). Department of Finance Canada officials have been working with Employment and Social Development Canada (ESDC) officials to determine potential changes that could be explored as part of the 2013-2015 Triennial Review of the CPP. This includes reviewing the impact of the increase in the age of eligibility for the Old Age Security (OAS) program on CPP survivor and disability benefits, as was committed to in Budget 2012. 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 (cont.). 2c.3 Continue to work with provinces and territories to identify ways to help Canadians save more effectively for retirement. In 2012-13, the Department of Finance Canada worked with provinces and territories and introduced the Pooled Registered Pension Plan (PRPP): a large-scale, broad-based pension option available to employees – with or without a participating employer – as well as self-employed workers. The Pooled Registered Pension Plans Act, received Royal Assent in June 2012, and the final regulations came into force in December 2012.

The Department of Finance Canada also supported the passage of Financial Literacy Leader Act, which received Royal Assent in March 2013, and the process for the selection of the Leader. The legislation provides for the appointment of a Financial Literacy Leader within the Financial Consumer Agency of Canada.

Consistent with directions from FPT Finance Ministers, Department of Finance Canada officials worked with provincial and territorial officials, as well as with other federal departments, on considerations related to a potential modest, fully funded and phased in expansion to the CPP.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.4: Federal-Provincial Relations and Social Policy

PSA 1.1.5: Financial Sector 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 environment-related tax measures in consultation with other government departments and stakeholders, including taxpayers, industry associations, and environmental organizations.

Analysis conducted during the 2012-13 period included work supporting the announcement in Budget 2013 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 biogas production equipment and equipment used to treat gases from waste.

The Department of Finance Canada also performed analysis that led to the Budget 2013 announcement of the phase-out of the accelerated CCA for capital assets used in new mines and major mine expansions and the reduction of the rate at which pre-production mine development expenses may be deducted for tax purposes, which supports the commitment by G-20 Leaders to rationalize and phase out over the medium-term inefficient fossil fuel subsidies.

The Department of Finance Canada supported the Government in finalizing legislation implementing the Budget 2012 measures to phase out the Atlantic Investment Tax Credit for oil and gas and mining activities, phase out the Corporate Mineral Exploration and Development Tax Credit and expand the accelerated CCA Class 43.2 to include a broader range of bioenergy equipment.

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 2012-13, 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 April 2012, the Department's Thomas K. Shoyama Annual Public Policy Lecture was delivered by Paul Collier. Mr. Collier is Professor of Economics and Co-Director of the Centre for the Study of African Economies at Oxford University, as well as an advisor to the International Monetary Fund and World Bank. Mr. Collier's presentation focused on economic development in Africa and the management of natural resources.

In June 2012, David Roodman, while Senior Fellow at the Centre for Global Development, gave a presentation on microfinance. Mr. Roodman's presentation focused on evaluating the effectiveness of microfinance as a tool to promote economic development in impoverished 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 (cont). 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. 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 Organize an information session for Department of Finance Canada employees on Strategic Environmental Assessment. The Department of Finance Canada held its annual information/training session on Strategic Environmental Assessments in November 2012. 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.

For the first time, the Department also provided a separate briefing on Strategic Environmental Assessment to Department of Finance Canada officials servings as coordinators for the Budget 2013 process.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.3: Economic Development and Corporate Finance
3d:  Support implementation of Canada's international financing commitment under the Copenhagen Accord. 3d.1 Deliver $290 million in climate change-related financing through the International Finance Corporation. The Department of Finance Canada is working with the International Finance Corporation (IFC) to implement the IFC-Canada Climate Change Program. The program promotes private sector financing for clean energy projects through the use of concessional funds to catalyze investments in renewable low-carbon technologies. As of March 2013, funds were committed to 15 projects (investment and advisory), representing a total of US$69.1 million in direct project funding, levering US$291.4 million in funding from IFC's core funding, and US$388 million in private sector investment in development countries.

In January 2013, Canada provided $75 million to IFC's Climate Catalyst Fund. The Fund will invest in developing countries on a commercial basis, with a focus on sectors where there are opportunities to promote the efficient use of risk capital as a way to mitigate and adapt to climate change.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.6: International Trade and Finance
3e: Encourage export credit agencies to take into account climate change considerations in their decisions on export finance. 3e.1 Address, where possible, financial barriers in the transfer of technologies that will assist climate change mitigation. The Department of Finance Canada is monitoring the implementation of the OECD Sector Understanding on Export Credits for Climate Change Mitigation and Water Projects that sets out the terms and conditions for support that may be provided by government-backed support for climate-friendly technologies.

The Department worked with Export Development Canada (EDC) in the successful completion of the negotiations of a new Sector Understanding on Export Credits for Climate Change Mitigation and Water Projects in 2012.
PA 1.1: Economic and Fiscal Policy Framework

PSA 1.1.6: International Trade and Finance

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 Greening Government Operations targets (Theme IV: Shrinking the Environmental Footprint – Beginning with Government) through the Internal Services program activity. The Department contributes to the following target areas of Theme IV of the FSDS:

  • Surplus Electronic/Electrical Equipment
  • Printing Unit Reduction
  • Paper Consumption
  • Integrating Environmental Considerations into Departmental Procurement
  • Green Procurement
  • Green Meetings

For additional details on the Department of Finance Canada's Greening Government Operations activities please see 2012-13 Part III – Departmental Performance Report (DPR).

6. Additional Details on the FSDS

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