3. Budget 2023

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Ministerial Mandate and Priorities

The Department of Justice received funding in Budget 2023 to advance three key ministerial priorities:

1. $83.9M over five years, starting in 2023-24, and $18.7M ongoing for the independent Miscarriage of Justice Review Commission;
2. $95.8M over five years, starting in 2023-24, and $20.4M ongoing to help Indigenous families access information about their missing and murdered loved ones, and to enhance victim services to support their healing journeys; and
3. $43.5M in 2023-24 to maintain federal support for immigration and refugee legal aid services.

Budget 2023 also committed funding to key policy initiatives of interest to Justice led by other departments such as investments to continue to support Canada’s Anti-Racism Strategy and funding to advance gender equality in Canada, with a particular focus on Indigenous women, women with disabilities, 2SLGBTQI+ people, as well as migrant, newcomer, Black and racialized women.

Initial Budget Assessment

Legislative Requirements:

Budget 2023 contains in excess of 40 initiatives of interest to Legal Services Units (LSUs) clients, including:

• Criminal Code and related legislation (predatory lending, money laundering and Proceeds of Crime (Money Laundering) and Terrorist Financing Act;
• Tax related measures (Alternative Minimum Tax, General Anti-Avoidance Rule, tax credits supporting a clean economy and others);
• Matters related to the health of Canadians (Canada Health Transfer, Canadian Dental plan, Food and Drug Act);
• Initiatives intended to strengthen the economy or protect workers (Canada Growth Fund, Employment Insurance, a new Canada Innovation Corporation Act, Canada Labour Code amendments for the gig economy, pregnancy loss, replacement workers);
• Important measures to deter, detect, and prosecute financial crimes, protect financial institutions from foreign interference, and protect Canadians from the emerging risks associated with crypto-assets; and
• Others related to the Citizenship Act, Immigration and Refugee Protection Act, Customs Act, Canada Transportation Act, Clean Fuel Regulations, and federal pensions.

*Details of some of these legislative initiatives are discussed in further detail below.

Other Investments Relevant to Justice:

• $111.4M to bolster bilingualism in our justice system, including through the translation of judgments of national interest, and to support cultural and educational activities, including the training of early childhood educators in minority-language communities outside Quebec. (Implementation of Action Plan for Official Languages, 2023-2028.)
• $24.5M over five years, starting in 2023-24, for the Department of Canadian Heritage to double funding for the Court Challenges Program. This program is administered independently and provides support for legal cases of national significance that clarify and assert official language rights and human rights.
• $359.2M over five years, starting in 2023-24, with $5.7M ongoing and $1.3M in remaining amortization, to support a renewed Canadian Drugs and Substances Strategy, which would guide the government’s work to save lives and protect the health and safety of Canadians.
• Immigration, Refugees and Citizenship Canada (IRCC) and the RCMP will receive $10M over five years, starting with $4M in 2024-25, to implement biometrics to help expedite the processing of citizenship applications. IRCC would receive $530M in 2023-24 to provide short-term accommodation for asylum seekers otherwise unable to find shelter.
• Cracking down on “junk fees” by strengthening existing tools or creating new ones, including through new legislative amendments, which the government said could include targeting high roaming charges for cell phones, high event and concert fees, excessive baggage fees, and unjustified shipping and freight fees.
• Amending the Canada Labour Code to create a new stand-alone leave for workers in federally regulated sectors who experience a “pregnancy loss,” including during adoption or surrogacy, through miscarriage (up to one-quarter of pregnancies) and still birth (one per cent of pregnancies) and introducing amendments to the Canada Labour Code to “improve eligibility for leave related to the death or disappearance of a child” for workers in federally regulated sectors.
• $49M over three years on a cash basis, starting in 2023-24, to the RCMP to protect Canadians from harassment and intimidation, to increase its investigative capacity, and more proactively engage with communities at greater risk of being targeted by foreign interference, covert activities and threats. Budget 2023 proposes to provide $13.5M over five years, starting in 2023-24, and $3M ongoing to Public Safety Canada to establish a National Counter-Foreign Interference Office.
• Legislation to eradicate forced labour from Canadian supply chains.
• Amendments to the Special Economic Measures Act and Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Act) to support the effectiveness of the seizure, forfeiture, and disposal framework introduced in 2022 as a means of holding Russia accountable for its illegal invasion of Ukraine.
• Clean Investment Tax Credits including a 15 per cent “clean electricity” investment tax credit for eligible investments in non-emitting electricity generation systems, abated natural gas electricity-fired electricity generation, stationary electricity storage systems, and equipment for the transmission of electricity between provinces and territories; a refundable “clean technology manufacturing investment tax credit” equal to 30 per cent of the cost of investments in machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle certain critical minerals essential to clean technology supply chains; a “clean hydrogen investment tax credit” with levels of support ranging between 15 and 40 per cent of eligible project costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support; expanding the investment tax credit for carbon capture, utilization and storage investment to cover additional equipment and to be available for dedicated geological storage projects in British Columbia; and expanding eligibility for the clean technology investment tax credit to include eligible geothermal energy systems.

For the Public Service:

• Several announcements of interest including:
  • An action plan for Black Employees in the Public Service, including $45.9M over three years, starting in 2023-24 to Treasury Board Secretariat for the creation of a Mental Health Fund for Black public servants and to establish dedicated career development programs, including to prepare Black public service leaders for executive positions;
  • $6.9M over two years, starting in 2023-24, to the Treasury Board of Canada Secretariat to advance a restorative engagement program to empower employees who have suffered harassment and discrimination, and to drive cultural change in the public service. Of this amount, $1.7M would be sourced from existing departmental resources. Funding will also support a review of the processes for addressing current and historical complaints of harassment, violence, and discrimination;
  • Reduction in spending on consulting, other professional services (particularly management consulting), and travel by roughly 15 per cent of planned 2023-24 discretionary spending in these areas, for savings of $7.1B over five years, starting in 2023-24, and $1.7B ongoing;
  • A roughly 3 per cent reduction of eligible spending by departments and agencies by 2026-27 to reduce government spending by $7.0B over four years, starting in 2024-25, and $2.4B ongoing, with no impact on direct benefits and service delivery to Canadians; direct transfers to other orders of government and Indigenous communities; and the Canadian Armed Forces;
  • An expectation of similar reductions for federal Crown corporations to realize savings of roughly $1.3B over four years starting in 2024-25, and $450M ongoing.
• In total, these proposals represent savings of $15.4B over the next five years.
• Of note, when asked by media during the Budget Lock-up, Minister Freeland specifically denied that any budgetary savings would be found from a Public Sector hiring freeze or layoffs.

Continuing Commitment to Intersectionality:

Budget 2023 supports JUS’ ministerial mandates to advance the path of reconciliation, address systemic inequities and disparities embedded within our society and core institutions, and ensure that public policies are informed and developed through intersectional lens frameworks.

A quick cross-section of these initiatives reveal funding to support advancing gender equality both domestically and internationally, with commitments to support people living in rural communities, organizations working with equity-deserving groups, the development of an Early Child Care System, and proposed amendments to the Canada Labour Code to include a new leave for pregnancy loss.

Budget 2023 also funds initiatives to increase access to family justice, sexual and reproductive health care and affordable housing. Funding is provided for immigrant and refugee legal aid, to fight systemic racism, discrimination and hate, and to build on Canada’s Anti-Racism Strategy. In addition, investments will fund initiatives geared to accelerate the path of reconciliation by supporting the National Action Plan to end the Tragedy of Missing and Murdered Women and Girls, including 2SLGBTQI+ people and providing support to victims, survivors and families. It also supports initiatives that aim at increasing access to health services for Indigenous children.

Background:

Finance Minister Chrystia Freeland tabled her third Federal Budget on March 28, 2023, with a view to a fiscally prudent path to stability and future growth in times of inflationary pressures, rising interest rates and geopolitical tension experienced globally. Budget 2023 will continue the efforts to reduce government spending seen in the 2022 Fall Economic Statement to bring the pace and scale of the growth of government spending back to a pre-pandemic path. To this end, Budget 2023 focusses on the economy and more particularly its global slowing, inflation and economic growth with targeted affordability measures, increased public health care funding and the transition to a green economy.

Given the current geo-political situation, Budget 2023 offered little new investment in the defence and foreign policy portfolios; however, funding has been allocated for Bill C-41, An Act to amend the Criminal Code and to make consequential amendments to other Acts to support changes to the Criminal Code to create a mechanism to allow humanitarian aid in areas controlled by terrorist groups. Budget 2023 also provides Ukraine with a $2.4B loan to be provided via the International Monetary Fund Administered Account for Ukraine as well as a donation $200M of existing operational equipment from the Canadian Armed Forces, including eight previously announced Leopard II Main Battle Tanks.

Given current economic growth projections, the Government forecasts the deficit will be reduced to $14B by 2027-28 but notes that balanced budgets should not be expected for the next five years. As a result, initial analysis suggests that not all Justice Budget requests were funded; however, this remains subject to confirmation by the Department of Finance.

Annex A: Budget Item Breakdown by Themes in Letter to Department of Finance

Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023

Bill C-47 proposes to strengthen Canada’s anti-money laundering and anti-terrorist financing regime to support the investigation and prosecution of these crimes. It also proposes to crack down on predatory lending by lowering the criminal interest rate.

Anti-Money Laundering:

• The government takes the issue of money laundering and terrorist financing very seriously. That is why the government has proposed measures to strengthen investigation and prosecution of these serious crimes and to protect the security of our communities and the integrity of the financial system.
• As part of these measures, Bill C-47 would amend the Criminal Code to enable the disclosure of tax information to support a criminal investigation into serious financial crimes, and to enable law enforcement to seize digital assets that may be confiscated as proceeds of crime.
• These measures address findings of the Cullen Commission by facilitating law enforcement’s efforts to “follow the money” and identify proceeds of crime, and to preserve proceeds of crime for criminal forfeiture.

Criminal Interest Rate:

• Predatory lenders can take advantage of many vulnerable people in our communities by extending high interest rate loans. That is why
  Bill C-47 proposes to amend the Criminal Code to lower the criminal interest rate from 60% effective annual percentage rate to 35% annual percentage rate (APR).
• The Bill also provides the Governor-in-Council with the ability to exempt through regulation any agreements or arrangements from the criminal interest rate provision and the ability to set a limit through regulation on the total cost of borrowing under a payday loan agreement – in this case, $14 on every $100 borrowed.
• These measures follow consultations led by the Department of Finance to address predatory lending. Lowering the criminal interest rate means that fewer Canadians will be trapped in a cycle of debt and will have more money to pay off their debts, contributing to a more prosperous country for everyone.

Anti-money laundering Qs & As:

Question: How do these amendments respond to concerns raised by the Cullen Commission?

Answer: The Cullen Commission recommended measures to increase the number of investigations into money laundering, and to increase efforts to pursue the recovery of proceeds of crime. The proposed Criminal Code amendments would assist law enforcement in implementing these measures.

Question: Why isn’t more being done by way of Criminal Code reform to respond to the Cullen Commission critical findings and recommendations?

Answer: Canada’s criminal law measures to address money laundering in the Criminal Code fulfil our international obligations and have resulted in positive findings by the Cullen Commission. That said, we are considering additional reforms to the Criminal Code to better respond to the challenges associated with money laundering and financial crimes and look forward to the upcoming Parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Criminal Interest Rate Qs & As:

Question: Why did it take the government so long to propose amendments to address predatory lending?

Answer: These amendments are informed by the views of stakeholders flowing from a nationwide consultation on the issue of cracking down on predatory lending. The Department of Finance received over
100 high quality submissions from industry, consumer advocates and provincial governments. The Government is taking action today to advance these changes.

Question: How did the Government determine a new rate of 35 per cent APR?

Answer: Last year, the Department of Finance undertook a public consultation on the matter, during which it received high-quality feedback from a broad range of stakeholders, including industry, consumer advocates, and provincial governments. Their views helped inform the determination of the new proposed rate, which is equivalent to the maximum interest rate in Quebec. Quebec is the only province that sets a maximum rate for consumer loans.

• The Department of Finance will continue to engage with stakeholders on any further reductions in the rate, or further revisions to the payday lending exemption within the Criminal Code.

Question: Why is the government proposing a regulation making power to exempt agreements or arrangements from section 347?

Answer: Section 347 captures virtually all lending agreements and arrangements in Canada, despite the provision being enacted to address loansharking.

A regulation making authority would provide the Government with a way to address this unintended impact and to exempt agreements or arrangements from the operation of the criminal interest rate provisions, such as complex commercial transactions.

Background:

On April 20, 2023, the Government introduced Bill C-47, Budget Implementation Act, 2023, No. 1. The legislation proposes to implement many of the Government’s key commitments in 2023.

Anti-money Laundering:

Budget 2023 announced the government’s intention to introduce legislative amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Criminal Code to strengthen the investigative, enforcement, and information sharing tools of Canada’s anti-money laundering/anti-terrorist financing (AML/ATF) Regime. The below amendments fulfill this commitment.

The Bill proposes two amendments to the Criminal Code to support investigations and prosecutions of financial crime, including money laundering:

• The first is to establish a special search and seizure warrant for digital assets, including cryptocurrency. This would enable a peace officer to seize digital assets, with prior judicial authorization, where there are reasonable grounds to believe that the assets may be subject to forfeiture as proceeds of crime. This warrant would extend relevant Criminal Code provisions pertaining to detention and management orders for seized property and forfeiture, to apply to the new digital assets seizure warrant. It would also maintain safeguards, such as the review of seizure and confiscation available to parties with an interest in the property.
• The second amendment would increase the number of offences for which Attorneys General may obtain following judicial authorization, disclosure of tax information from the Minister of National Revenue for the purposes of investigating offences that give rise to proceeds of crime. This provision is currently only available for certain substance offences in the Controlled Drugs and Substances Act and the Cannabis Act, the possession or laundering of property obtained from the commission of substance offences, organized crime offences and terrorism offences. The amendments would add the following offences: extortion, fraud over $5,000, fraud affecting a public market, human trafficking, corruption and foreign bribery offences. The offences of conspiracy, attempts, counselling, or being an accessory after the fact to the above offences, and the offences of possession or laundering of property obtained from the commission of one of the listed offences, would apply to all offences in the provision.

The statutory parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is expected to begin its work later this year. That review will provide the government with the opportunity to give consideration to additional legislative amendments and other measures to respond to threats associated with money laundering and terrorist financing.

Criminal Interest Rate:

There are three principal changes proposed in this Bill to the criminal interest rate provisions:

• To lower the criminal interest rate from an effective annual rate of 60% to an annual percentage rate of 35%;
• To provide the Governor in Council with the ability to exempt, through regulation, agreements or arrangements or arrangements from the criminal interest rate provisions;
• To provide the Governor in Council with the ability to set a limit, through regulation on the total cost of borrowing under a payday loan agreement.

In the Deputy Prime Minister’s 2021 mandate letter, there was a commitment to “crack down on predatory lenders by lowering the criminal rate of interest.” This built on a previous commitment in Budget 2021 that the Government would launch a consultation on lowering the criminal rate of interest in the Criminal Code applicable to, among other things, instalment loans offered by payday lenders.

Section 347 of the Criminal Code presently provides for an offence of entering into an agreement for – or receiving payment of – interest at a criminal rate. That rate is defined as “an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement”. The reduction to 35% APR will align with Quebec’s existing cap on interest rates for consumers. It also closely aligns with many U.S. States’ jurisdictions.

In 2007, Parliament passed Bill C-26, which amendedthe Criminal Code to provide a legislative scheme that exempts certain payday loanagreements from the application of section 347 of the Criminal Code and section 2 of the Interest Act. To date, nine provinces (with the exception of Quebec and the territories), have been designated by the Governor in Council to receive an exemption for payday lending.

The payday lending industry fills a very real market demand for loan products. Payday lenders lend at rates considerably higher than the criminal maximum when all fees and other charges for such loans are considered.

Until Budget 2023, there was no cap on what provinces and territories, that were designated to receive an exemption, could charge. The payday lending cap under the Budget of $14 per $100 would be in line with Newfoundland and Labrador, which currently has the lowest cap among provinces under consumer protection legislation, except for Quebec.

The Department of Finance will also launch consult on additional revisions in respect of the payday lending exemption and exemptions for certain types of agreements and arrangements.

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