The Department of Finance 1997 Sustainable Development Strategy: Progress in 2000-01

Key Issue: Integrating the Economy and the Environment

Strategic Goal: Making the tax system more responsive to environmental considerations

Continue to assess effectiveness of tax measures with a view to encouraging greater energy efficiency and the use of renewable energy.

Analyze tax-related proposals from several of the "Tables" established as part of the national consultation on climate change policy options.

Progress in this period: The Department has continued to study and evaluate existing tax measures that encourage energy efficiency and the development of renewable energy resources. In addition the Department was engaged in consultations with relevant departments (i.e. Environment Canada, NRCan) to research other methods with the view of evaluating current practices.

Contribute to the study undertaken by the Canadian Energy Research Institute, which will consider a range of policy options including the effect of tax depreciation policies for investments in district energy systems.

Progress in this period: This study was published in May 2000.

Develop a catalogue of information on energy taxes and transportation taxes in Canada.

Continue work on a catalogue of existing taxes on energy consumption and the transportation sector. Consult with provinces on the description of provincial tax structures and rates.

Performance Indicator: Release of the catalogue.

Progress in this period: The catalogue covering both the corporate income tax system and the existing federal and provincial taxes on energy consumption was published in May 2001. The catalogue can be found at: http://www.fin.gc.ca/toce/2001/sdscat_e.html

Strategic Goal: Reducing or eliminating subsidies

Work with other government departments and international trade and economic organizations to identify subsidies that distort the economy and reduce or eliminate them.

Continue to participate in a wide range of domestic and international forums to find greater scope for disciplining trade-distorting subsidies.

Progress in this period: The Department, in partnership with DFAIT, has actively pursued efforts to improve subsidy disciplines regionally and multilaterally. These efforts include support for subsidy negotiations under the World Trade Organization aimed at restricting trade distorting subsidies which would have positive implications from both an economic and an environmental perspective.

Examine the use of economic instruments in Organization for Economic Co-operation and Development (OECD) countries.

Continue to examine the use of economic instruments by OECD countries.

Progress in this period: The Department is a regular participant in international meetings on environmental policies and taxation and continues to monitor international policies and experience. Of particular interest are instruments that are intended to foster conservation and renewable energy.
The Department evaluates all country–specific experiences when considering the appropriateness of tax-based economic instruments for use in Canada.

Contribute to the international work under way in 2000 through continued membership in the OECD Working Party on Economic and Environmental Policy Integration and the sub-group on Taxation and the Environment.

Progress in this period: The Department provided input to Environment Canada as part of the preparatory process for the newly formed Working Party on National Environmental Policy at the OECD (the successor to the Working Party on Environmental and Economic Policy Integration). The Department also attended the inaugural meeting of the new group with Environment Canada. Finance has commented on matters surrounding tax policy and has ensured that Canada’s interests and concerns on the issue of economic and environmental policy integration have been appropriately communicated to the other member countries.

Consider options for domestic and international tradeable permit schemes, credits and related approaches for reducing greenhouse gas emissions.

Chair the multi-stakeholder Tradeable Permits Working Group (TPWG). The TPWG will release an options paper to the Climate Change Secretariat in early 2000.

Performance Indicator: Release of the TPWG Report

Progress in this period: The options paper has been released and published electronically at the National Climate Change Process website http://www.nccp.ca/NCCP/national_process/issues/tradable_e.html

Continue to participate with other government departments in the further refinement of the Kyoto flexibility mechanisms.

Progress in this period: The department continued to participate in the development of the federal government’s approach to international negotiations on the Kyoto Protocol, including for the sixth Conference to the Parties of the United Nations Framework Convention on Climate Change.

In addition, a report was prepared and presented on the impact of various GHG reduction scenarios on Canada, as part of the National Climate Change Process.

Encourage the sustainability of private woodlots and habitat protection for endangered species.

Monitor the forest industry’s response to the Canada Customs and Revenue Agency’s revised interpretation bulletin on woodlots.

Progress in this period: The Department has continued to review the issue of sustainability of private woodlots and has maintained ongoing dialogue with the forest industry.

Work with Environment Canada to balance regulation, enforcement and stewardship in order to protect species at risk. Provide advice on which instrument(s) could be used to encourage voluntary stewardship and to address issues surrounding possible compensation.

Progress in this period: The department participated in the interdepartmental working group on stewardship.

Work with Environment Canada on valuation mechanisms for the purposes of eco-land and the Species at Risk Act.

Progress in this period: A valuation mechanism was established and is now in operation.

Strategic Goal: Reforming legislative and regulatory frameworks

Continue to provide a policy framework conducive to environmental protection and a positive investment climate through regulatory reform and harmonization.

Continue to participate in the interdepartmental consultation process on the review of the Canadian Environmental Protection Act to ensure that the Act will enhance the protection of the environment while maintaining the competitiveness of the Canadian economy.

Progress in this period: The department participated in the CEPA review process, including the consultant’s report on Risk Management.

Participate with other departments in the Five-Year Review of the Canadian Environmental Assessment Act.

Progress in this period: The department contributed to the development of an amended Canadian Environmental Assessment Act and funding package to support its implementation by federal departments.

Key Issue: Building the Future

Strategic Goal: Prospering in a knowledge-based economy

With other government departments, examine the role of environmental industries in a knowledge-based economy.

Conduct an analysis of environmental industries and assistance provided by government.

Progress in this period: Regular contacts with environment industries representatives. Announced funding of $100 million to the Sustainable Development Technology Fund to support the development and demonstration of climate change and clean air technologies.

With provinces, adopt initiatives to improve benefits for children.

Make a third investment in the National Child Benefit and seek increased provincial and territorial investments in families.

Performance Indicator: Increase in the National Child Benefit.

Progress in this period: The Economic Statement and Budget Update increased the NCB supplement by $100 in addition to the increase of $200 in the NCB supplement announced in the 2000 Budget.

Also, provinces and territories have reinvested savings in programs and services for all low-income families with children, for example: Saskatchewan’s Building Independence programs; Ontario’s Child Care Supplement for Working Families; and the Northwest Territories’ and Nunavut’s Healthy Children Initiative.

Reduce income taxes for families.

Progress in this period: Introduced significant tax reductions for all Canadians reducing taxes by 27 per cent on average – about 35 percent for families with children.

Strategic Goal: Building a strong society

Ensure predictable and growing federal funding for health and social programs.

Maintain long-term funding arrangements for all major federal-provincial/ territorial transfer programs.

Performance Indicator: Increased funding for health care.

Progress in this period: Bill C-45 was passed, legislating $23.4 billion in funding for health care and early childhood development through 2005-06.

Commitment was made to announce CHST funding levels for 2006-07 and 2007-08 by the end of 2003-04.

Ongoing work and research reviewed periodically with provinces and territories to consider options leading to the next Equalization renewal in 2004. A work plan has been developed with provincial officials which outlines research requirements and timelines.

Meetings were also held with territorial officials to consider changes and new approaches to Territorial Formula Financing leading to the next agreement in 2004. The research objectives set out in the established work plan were met in 2001.

Ensure the financial security and stability of the public pension system.

Work towards amending the Canada Pension Plan Investment Board (CPPIB) regulations.

Progress in this period: In August 2000, the regulations were amended to allow the Canada Pension Plan Investment Board to actively manage up to 50 per cent of the assets it allocates to domestic equities.

Federal-provincial work will continue the review of other important issues to keep the CPP in step with changing times.

Progress in this period: Completed an assessment, in conjunction with provincial officials, of a number of issues identified by provincial Finance Ministers at the December 1999 federal-provincial Finance Ministers meeting.

Ongoing development, in conjunction with provincial officials, of the work plan for the 2001-2003 financial review of the CPP.

Continue to monitor the Old Age Security and Guaranteed Income Supplement programs to ensure that they are financially sustainable.

Progress in this period: Sustainability of OAS/GIS programs not at risk.

Full indexation of OAS high-income recovery threshold part of Budget 2000 tax package.

Strategic Goal: Ensuring that the tax system contributes to a strong economy and society

Examine the report of the Technical Committee on Business Taxation, including any proposals relating to the environment.

Examine the recommendations of the report in conjunction with the department’s ongoing analysis of options for improving the efficiency of the Canadian tax system. Conduct this examination in parallel with the work to develop a National Implementation Strategy for addressing Canada’s Kyoto target.

Progress in this period: The department has examined the Technical Committee report in conjunction with its ongoing analysis to improve the corporate tax structure, and as part of the review of measures that might address certain issues related to the National Implementation Strategy.

Budget 2000 announced a five year plan to lower the federal tax rate for the service sector that faced relatively higher tax levels compared to other sectors in the Canadian economy. No changes in tax levels were proposed for either the manufacturing or the non-renewable resource sectors. This approach is consistent with the Technical Committee’s overall perspective of moving towards a more internationally competitive tax structure with less variation across industrial sectors.

Ongoing monitoring of current developments in the taxation of businesses in Canada and in other relevant foreign jurisdictions.

Participate in international forums as necessary to ensure that the Canadian tax system remains competitive and up-to-date.

Progress in this period: The department continually monitors developments in business taxation in Canada and relevant foreign jurisdictions. All recommendations from any interested party for changes to the corporate income tax system, whether to address social or economic objectives, are thoroughly reviewed.

The department is an active participant in international fora such as the OECD in order to remain up-to-date on developments in other countries.

In 2000, the Department announced a number of tax measures to achieve social and economic objectives. These measures include:

• The restoration of full indexation;
• The reduction of all personal income tax rates;
• Significant tax relief for low- and modest-income families with children, people with disabilities, and caregivers;
• Doubling the education amount to $400 a month for full-time students, and $120 for part-time students;
• Reducing the capital gains inclusion rate to one-half;
• Enhancing the tax treatment of employee stock options; and
• Legislating a schedule for reducing corporate income tax rates.

Key Issue: Participating in the Global Economy

Strategic Goal: Negotiating international environmental agreements

Analyse approaches for domestic action on climate change.

Work with other government departments to review the output of the issues tables for consideration in a National Implementation Strategy to address climate change.

Performance Indicator: Development of a national strategy on climate change with the provinces.

Progress in this period: Budget 2000 announced $700 million for climate change and other environmental initiatives, including a $100 million Sustainable Development Technology Fund to support climate change and clean air technologies. In the 2000 Economic Statement and Budget Update, the federal government announced a $500 million, 5-year Government of Canada Action Plan 2000 on Climate Change. Measures in Budget 2000 and the Action Plan form the federal contribution to the First Business Plan of the National Implementation Strategy on Climate Change for reducing greenhouse gas emissions in Canada.

Strategic Goal: Negotiating international trade and investment agreements

Work with the Department of Foreign Affairs and International Trade (DFAIT) on the relationship between trade and environment in the context of the OECD and the WTO.

Participate in the integration of trade-related environmental issues in international trade negotiations.

Performance Indicators: Participated in the development of Canada’s position regarding trade and environment. Participated in the policy development on methodologies for undertaking environmental reviews of trade agreements.

Progress in this period: Provided input into the instructions for the OECD, WTO and UNEP meetings on trade and the environment.

In addition, Canada’s Environmental Assessment Framework for trade negotiations was made public in February 2001. This new Environmental Assessment Framework will be applied initially to the World Trade Organization agriculture and services negotiations, to the FTAA negotiations, and later to those related to any future or regional trade agreements.

Review requests to remove tariffs that may be disincentives to the acquisition of environmental technology products.

Continue to undertake reviews of such requests as they are received.

Progress in this period: No such request was received during the period.

Strategic Goal: Developing an environmental assessment framework for export credit agencies

Co-operate with DFAIT and the Export Development Corporation (EDC) to establish, through the OECD’s Export Credit Group, a multilateral framework for the environmental assessment of projects financed with official export credits.

Help prepare DFAIT and EDC for meetings of the OECD’s Export Credit Group for the purpose of developing a multilateral approach to the environmental assessments of export credit agencies’ financed projects.

Performance Indicator: Signature of the OECD Council Recommendation on Common Approaches on Environment and Officially Supported Export Credits, which defines the minimum environmental review process to be applied to projects benefiting from government-supported export credits.

Progress in this period: Canada played a key role throughout the negotiations. The delegation successfully introduced a transparency clause that will oblige Members to make information on environmentally sensitive projects available to the public on an annual basis. It also contributed to the strengthening of the proposed review process.

Negotiations were concluded in June 2001 and a proposed text was presented to OECD members. However, it was rejected by the US.

Negotiations therefore began again in September 2001 in order to meet the end-2001 Ministerial deadline.

Strategic Goal: Involving international financial institutions (IFIs)

Press the issue of sustainable development in the institutions for which Minister of Finance has primary responsibility.

Work towards progress in the areas of poverty reduction, environmental protection, improved governance, reduction of unsustainable debt burdens and partnerships with civil society.

Progress in this period: Following lengthy consultations with shareholders and civil society groups, the World Bank amended its environmental policies in 2001 to improve environmental safeguards for its projects. The World Bank is also increasing its focus on social sector issues in its country programming. Within the World Bank and IMF, as well as the multilateral community more generally, Canada has spoken strongly in favour of a country-led development and has stressed the need for better harmonization of development assistance programmes, including the adoption of more consortium approaches among donors.

Continue to urge all IFIs to undertake more meaningful consultations with non-governmental organizations (NGOs) and other representatives of civil society.

Progress in this period: The World Bank is in the process of consulting the public on a new disclosure policy that should see an expansion of Bank material made available to the public. In 2001, the Bank began to disclose many background policy discussion papers related to current replenishment exercise for the International Development Association (IDA), which provides interest-free loans to the world's poorest countries.

Encourage the European Bank for Reconstruction and Development (EBRD) to pay greater attention to the social aspects of transition in project selection and to co-ordinate with the World Bank, as necessary, to mitigate these costs.

Progress in this period: Finance has supported the EBRD's emphasis on good governance as a prerequisite to ensure social inclusion. Finance has stressed the need to develop and strengthen social systems to address the needs of those left behind in transition economies and has encouraged the EBRD to work with other IFIs, especially the World Bank and IMF.

Finance has supported the EBRD's efforts to strengthen small business networks. A key Canadian priority has been supporting EBRD activities related to micro, small and medium enterprises, to facilitate broader participation in the benefits of the market, including employment opportunities.

Continue to ensure that EBRD project selection meets the highest standards of environmental due diligence and that staff at the domestic financial institutions that lend EBRD funds are adequately trained to assess the environmental consequences of projects.

Progress in this period: At the Annual Meetings of the EBRD, Finance has stressed the importance of sustainable development in transition economies. Finance has also stressed the role the EBRD can play to ensure stable growth that is environmentally sound by holding its business partners to the highest standards of business practice.

Key Issue: Greening Operations

Strategic Goal: Integrating environmentally sound practices into everyday departmental operations

Adopt sustainable procurement practices.

Develop and implement "green" procurement initiatives directed at acquiring environmentally friendly products.

Performance Indicator: Completion and use of a purchasing guide by 2003.

Progress in this period: Research and development of the procurement guide is underway.

Implement motor vehicle management practices that support a reduction in greenhouse gas emissions.

Comply with the Alternative Fuels Act.

Performance Indicator: Compliance with the Alternative Fuels Act.

Progress in this period: Continued to maintain compliance with the Alternative Fuels Act.

Performance Indicator: Value and per cent of E10 fuel purchases.

Progress in this period: Updated list of ethanol fuel providers for use by Departmental drivers and the general employee population.

Minimize the amount of solid waste produced.

Evaluate waste reduction programs.

Performance Indicator: Number of new waste reduction programs evaluated and implemented.

Progress in this period: Evaluated and expanded multi-material recycling programs to include plastics and Styrofoam.

Evaluated and implemented side-saddle waste bins as a part of a pilot project to reduce waste generated at the desk. Due to the project’s success, the program will be bridged out to the entire department.

Researched battery recycling options.

Strategic Goal: Increase and encourage the environmental awareness of employees

Establish current baseline data on employee participation and use of "green" programs and communications, where feasible.

Conduct a study of employee participation in "green" programs and communications.

Performance Indicator: Participation rate in the Department’s internal environmental programs.

Progress in this period: Collected statistical data regarding daily use of energy (computers and workspace lighting), paper use, waste disposal practices, and ethanol use.

Compiled employee participation rates in existing environmental stewardship programs (i.e., Environment Week, Earth Day, Infosite [Green Operations] and Pantyhose recycling program).

Modify, revise and/or promote the existing green programs and communications, in accordance with the results of the initial baseline study.

Existing programs and communications will be re-evaluated and updated so that they reflect current departmental practices.

Performance Indicator: Creation and implementation of communication strategy.

Progress in this period: Worked with a consultant to research the development and implementation of a communication strategy.

Performance Indicator: Modification, revision and promotion of existing programs and communications. Completed extensive revisions to the departmental intranet (Infosite) to ensure the accuracy and timeliness of all information pertaining to the greening of the department’s operations.

Organized, promoted and implemented Environment Week events and Earth Day activities in co-ordination with other departments.

Created and distributed to all employees a promotional Waste-Free brochure to advertise the new multi-material recycling program.

Increased communications on a departmental level through the use of the Enviro e-mail account, leading to growth in employee interaction on subjects pertaining to the greening of operations.

Increased awareness to Senior Managers through presentations on waste reduction initiatives and Environment Week.

Distributed awareness material to pilot study participants.

Important Notices