Vol. 146, No. 1 — January 4, 2012

Registration

SI/2011-116 January 4, 2012

CANADA PENSION PLAN

Order Fixing December 31, 2011 as the Day on which Section 44 and Subsection 45(2) of the Economic Recovery Act (stimulus) Come into Force

P.C. 2011-1676 December 15, 2011

Whereas subsection 114(4) (see footnote a) of the Canada Pension Plan (see footnote b) provides that where any enactment of Parliament contains any provision that alters, or the effect of which is to alter, either directly or indirectly and either immediately or in the future, the Canada Pension Plan Investment Board Act (see footnote c), it shall be deemed to be a term of that enactment, whether or not it is expressly stated in the enactment, that the provision shall come into force only on a day to be fixed by order of the Governor in Council, which order may not be made and shall not in any case have any force or effect unless the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the enactment;

Whereas, by section 44 and subsection 45(2) of the Economic Recovery Act (stimulus), chapter 31 of the Statutes of Canada, 2009, the Canada Pension Plan Investment Board Act (see footnote d) was amended;

And whereas the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the amendments;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 114(4) (see footnote e) of the Canada Pension Plan (see footnote f), hereby fixes December 31, 2011 as the day on which section 44 and subsection 45(2) of the Economic Recovery Act (stimulus), chapter 31 of the Statutes of Canada, 2009, come into force.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

To bring into force section 44 and subsection 45(2) of the Economic Recovery Act (stimulus).

Objective

(1) Remove a redundant clause in the Canada Pension Plan Investment Board Act; and

(2) Provide clarity to the regulation approval mechanism described in the Act.

Background

Section 44 of the Economic Recovery Act repeals section 37 of the Canada Pension Plan Investment Board Act (the Act). Section 37 instructed the Board and its subsidiaries to invest in assets in a manner consistent with subsection 206(2) of the Income Tax Act. However, changes to the Foreign Property Rule in 2005 led to the repeal of subsection 206(2). In turn, section 37 of the Act became inconsistent.

Section 45 of the Economic Recovery Act amends the procedure for obtaining provincial approval of regulatory amendments as set out in section 53 of the Act. The purpose is to provide greater procedural clarity. Previously, the practice had been to obtain formal provincial approval of regulations before the Governor in Council made them. In 2007, the Standing Joint Committee for the Scrutiny of Regulations had raised concerns that this approach may contravene the procedure outlined in section 53 of the Act, and could raise questions as to whether the regulations are legally effective.

To provide greater procedural clarity, subsection 45(1) of the Economic Recovery Act (stimulus) [not the subject of this Order] amends section 53 of the Act to allow provincial approval to apply to a regulation that is “the same or substantially the same” as the proposed regulation. Part of the intent of this subsection is that it retroactively applies to the Act, grandfathering all past regulatory amendments brought into force up to the present. To achieve this, the subsection is deemed to have come into force on April 1, 1998. Given that the deemed in-force date of subsection 45(1) is in the past, it does not need to be brought into force.

Subsection 45(2) is a subject of this Order. It adds a clause requiring the federal Minister responsible for the Act to publish the date in the Canada Gazette that a regulation comes into force once sufficient provincial approval for that regulation has been given after the regulation is made.

Implications

Bringing into force section 44 will clear up the technical inconsistency in the Act left by the repeal of subsection 206(2) of the Income Tax Act. Bringing into force subsection 45(2) addresses the issue raised by the Standing Joint Committee and clarifies the procedure for seeking provincial approval of Canada Pension Plan Investment Board Regulations.

Consultations

Under paragraph 114(4)(f) of the Canada Pension Plan, any provision in an act of Parliament that alters, either directly or indirectly, the Canada Pension Plan Investment Board Act, shall not be brought into force until the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the provision.

A formal consultation was conducted in the spring of 2011 and sufficient provincial approval of section 44 and subsection 45(2) of the Economic Recovery Act (stimulus) was achieved.

Departmental contact

Wayne Foster
Director
Financial Markets Division
Financial Sector Policy Branch
Finance Canada
140 O’Connor Street
Ottawa, Ontario
K1A 0G5

Footnote a
S.C. 2003, c. 5, s.10

Footnote b
R.S., c. C-8

Footnote c
S.C. 1997, c. 40

Footnote d
S.C. 1997, c. 40

Footnote e
S.C. 2003, c. 5, s.10

Footnote f
R.S., c. C-8