Bill C-234

An Act to amend the Greenhouse Gas Pollution Pricing Act

This enactment amends the Greenhouse Gas Pollution Pricing Act to expand the definition of eligible farming machinery and extend the exemption for qualifying farming fuel to marketable natural gas and propane.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Chair.

Thanks to all of our witnesses for being here for this important conversation.

Mr. Jovanovic, I'll start with you. You said in your opening remarks that a double payment could result from Bill C-234 getting passed in addition to having the rebates that have already been passed through Bill C-8. You said that this could come at a cost to households, if I'm not mistaken. I think that's what you said.

Could you clarify what you meant by that?

[Miodrag Jovanovic, Assistant Deputy Minister, Tax Policy Branch, Department of Finance]

Thank you.

Thank you for the opportunity to appear today concerning private member's Bill C-234, which seeks to remove the fuel charge on the use by farmers of natural gas and propane for heating and drying activities.

The Greenhouse Gas Pollution Pricing Act, the GGPPA, currently provides upfront relief from the fuel charge to farmers for gasoline and diesel use in eligible farming machinery, such as farm trucks and tractors. The GGPPA also provides relief of 80% of the fuel charge for natural gas and propane used to heat an eligible greenhouse.

Private member's Bill C-234 would expand fuel-charge relief to farmers by modifying the definition of eligible farming machinery to include grain dryers and property used to heat or cool a building or similar structure. It also seeks to expand relief by adding natural gas and propane to the current list of qualifying farming fuels.

Private member's Bill C-234 is being studied while, on June 9, another government bill, Bill C-8, received royal assent.

Recognizing that many farmers use natural gas and propane in their operations, Bill C-8 introduced a refundable tax credit in order to return a portion of fuel charge proceeds to farm businesses operating in backstop jurisdictions—Manitoba, Ontario, Saskatchewan and Alberta—starting with the 2021-22 fuel charge year.

If fuel charge relief for farmers were extended through Bill C-234, farmers in backstop jurisdictions would receive double the compensation by benefiting from the refundable tax credit included in Bill C-8, while also being almost fully relieved from the fuel charge. Such double compensation would come at the expense of households or other sectors in those provinces.

Through the refundable tax credit, the total amount to be returned is generally equal to the estimated fuel charge proceeds from farm use of propane and natural gas in heating and drying activities in backstop provinces. This ensures that all the proceeds collected from this farming activity are returned to farmers. It is estimated that farmers will receive $100 million in the first year, with this amount expected to increase as the price on carbon pollution rises.

The refundable tax credit is designed to allocate total fuel charge proceeds according to farm size, as measured using total farm expenditures. In this manner, the credit aims to help farmers transition to lower-carbon ways of farming by providing support to farmers, while also maintaining the price signal to reduce emissions.

This is a different approach than that proposed in private member's Bill C-234. Bill C-234 would directly relieve fuel charges on natural gas and propane used in eligible farming activities and thus would completely remove the price signal intended by the carbon pricing regime.

I would like to conclude by noting, as mentioned already, that I'm joined today by my two colleagues, Jenna Robbins and Gervais Coulombe. We would be very happy to answer your questions.

Thank you.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

I appreciate the dialogue to better understand Bill C-234. On March 25 when you made your speech, you said, “farm producers and farmers do not get credit for any of the environmental good that they do on their farms” and “they get no credit for any of the carbon sequestration of their crops. They get no credit for their grasslands or woodlots.” I was wondering if you could clarify and elaborate on what you were speaking about then.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

Mr. Lobb, thank you for presenting this bill, which is truly important in order to support agriculture, which feeds our fellow citizens and many other people on the planet. It is important if we want agriculture to remain competitive.

I would like a few clarifications about the parliamentary budget officer's conclusions regarding Bill C‑234.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I know from talking with Philip, in the last Parliament, about one thing that led to Bill C-206. We heard mention of the so-called “harvest from hell”—the really wet harvest that forced a lot of farmers to run their grain dryers overtime. It really ballooned their costs.

The irony, though, is that those extreme wet-weather events are going to become more and more frequent, thanks to climate change. A common refrain we hear at this committee is that farmers are on the front line of climate change.

In the time you took to draft Bill C-234, did you reach out to any of the farmers being impacted in that way and seeing increasing frequency in the use of their grain dryers?

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you very much, Chair.

Welcome to the committee, Mr. Lobb.

I think we can all agree that this is one of the best committees, if not the best, and we're all trying to work together here and make lives better for farmers.

In the last Parliament, it was nice to see Bill C-206 clear the House of Commons. We delivered it to the Senate, but unfortunately it was interrupted by an election.

However, maybe you could tell me what some of your big takeaways were when you looked at the journey that Bill C-206 took through the legislative process. What were your big takeaways, and how did that influence how you drafted Bill C-234?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

Welcome to the agriculture committee, Mr. Lobb. I know you have the opportunity to represent the second-best riding in Ontario. I don't want to make anyone jealous, but I do have the opportunity to visit your riding often, with my in-laws living there.

Mr. Epp touched a little bit on a key difference between Bill C-206 and Bill C-234. Mr. Lawrence's previous bill touched on qualifying fuels. You're focusing on property used for the purpose of providing heating or cooling.

Why does your bill differ from Mr. Lawrence's bill?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Another industry whose president was a constituent of mine was the head of the Canadian mushroom growers and Highline Mushrooms. I know there are mushroom facilities across Canada. Considering that mushrooms are food—despite the fact that my wife won't eat them—it's my understanding that your proposal in Bill C-234 would also cover them. Is that correct?

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

I do have some prepared comments. Normally I would wing it, but seeing how it's five minutes and I didn't want to go over the time and miss a point, I made some prepared comments today.

Good afternoon. Bill C-234 is a bill that amends the Greenhouse Gas Pollution Pricing Act. Bill C-234 is a bill that will help farmers by eliminating the carbon tax for the purposes of growing food, and cutting the carbon tax on propane and natural gas used to heat barns and to dry corn, beans, grains—i.e., food.

Agriculture provides many benefits to society. Firstly, it provides food to our nation and other nations that are unable to.... Secondly, agriculture is the number one economic driver in Ontario and one of the top economic drivers in our country. It provides a rural way of life, passed down through generations, and provides jobs throughout the value chain—in processing, trucking and shipping, to name just a few.

Agriculture also provides numerous benefits to our environment. Firstly, crops, grasslands and woodlands are natural carbon sequesters. Farmers practise ethical crop rotation, plant fall cover crops and are concerned about the quality and overall health of their soil. Farmers are involved with on-farm environmental plans, which also have manure management plans built into them. Nothing is wasted on your farm. From the tools passed down through generations, to lumber, scrap steel behind the shed, or even a corn kernel that didn't find its way to the bin, there's always a way. Farmer are environmentalists, recyclers and stewards of the land.

A friend of mine, who has a sizable hog farm in the region, sent me a heating bill for the period of November 30 to December 31, 2021. His bill from Enbridge was as follows: customer charge, delivery, vendor admin fee, transportation to Enbridge and gas supply charge, for one month, $8,473, before the carbon tax. The carbon tax was an astonishing $2,918, and one penny, in memory of Jim Flaherty. Now, if you factor in what that is on the original $8,400 bill, that's astonishing, and also factor in the HST charged on top of the carbon tax.

Some may say, “Well, Ben, we have that covered now with the carbon rebate that was delivered in Bill C-8 in the fall economic update as relief for farmers.” Well, in my opinion, and in the opinion of many, the carbon rebate falls short, maybe almost 100% short—88%, likely. For the last year, it was $1.47 per $1,000, and in this economic year, it's $1.73 per $1,000. On $10,000 of eligible expenses, your rebate is $14.70.

Now, remember that heating bill I told you about of the hog farmer in Huron County? It was $8,473.60, and his carbon tax bill was $2,918. It's not really fair: $12.50. Where I'm from, that's about four king cans, which is not much.

With Bill C-8, this carbon program once again asks the farmer to be the government's line of credit. The farmer is currently the government's line of credit for business risk management programs like AgriStability, as well as HST and your rebate. Now we're asking farmers to once again be the government's line of credit for the carbon tax rebate. With rising inputs—seed, fertilizer—the farmer's line of credit is maxed out, folks.

To summarize, farmers are price-takers, they are not price-makers. They do not make the market. They are within the whims of the weather. The market is in Chicago; the crops in the Midwest, Brazil and other places; and there are trade deals, whether they work effectively or they are not enforced; rail lines; ports that may or may not be functioning properly; the lack of container capacity in this country; and geopolitical tensions that we've seen in Europe this year, all have an impact.

In this committee, you have the opportunity to help a neighbour, maybe a hard-working rural family you've never met before. You can help a farmer.

Thank you.

[The Vice-Chair, Conservative, John Barlow]

I call the meeting to order.

Thanks very much, colleagues.

We have Mr. Lobb with us this afternoon, and we will be going over Bill C-234. Most people know the instructions for how committee works, so I won't go into them too much. I just have a few reminders.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2001. The proceedings will be made available through the House of Commons website. Please be aware that the webcast will always show the person speaking, rather than the entirety of the committee. Taking screenshots or photos of your screen is not permitted. For members participating in person, keep in mind the Board of Internal Economy's guidelines for mask use and health protocols.

I don't think I need to go through all of the steps for Mr. Lobb. I know he is quite well aware of them, and we want to make sure that we use the best of his time today.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, May 30, 2022, the committee is commencing its study of Bill C-234.

I would now like to welcome our witness for the first panel, Mr. Lobb, member of Parliament for Huron—Bruce. I know everyone is very familiar with our colleague.

Mr. Lobb, you'll have five minutes for your opening remarks, and then we'll proceed with the rounds of questions. I'll try to give you a signal when you have one minute left. Please proceed with your five-minute introduction.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor.

Colleagues, we have just a minute or two before the bells. Let me, on behalf of all of you, thank our witnesses.

Thank you, Mr. Ruest with Richardson and Mr. Saik, appearing for himself—we certainly welcome your testimony—and Ms. King and Mr. Graham.

I apologize, Mr. Graham, that we weren't able to get you in, but Ms. King stepped in and did a great job.

Thank you so much.

Colleagues, we'll call it there. On Thursday, we are going to be studying Bill C-234. Mr. Lobb has confirmed and will be before the committee.

On Monday, the intention is to go to one two-hour panel on cannabis, as Mr. MacGregor asked. I need your witnesses, so that the clerk has them. If you haven't already sent some of your witnesses to the clerk, please do so by the end of today.

I think we'll leave it at that. We'll let everyone make sure that they're able to vote.

Thank you. The meeting is adjourned.

Opposition Motion—Measures for Immediate Financial Relief

[John Barlow, Conservative, Foothills, AB]

Madam Speaker, I will be splitting my time with the member for Simcoe North.

We are talking about an affordability crisis in the House today. I am very confident that I am not the only member of the House who is getting dozens and dozens of calls and emails every single day from constituents who are very concerned about their ability to put food on the table, put fuel in their cars, heat their homes and put their kids in the activities they enjoy the most. What we are talking about here in our opposition day motion is reducing taxes to make life more affordable for Canadians by eliminating the GST on fuel and the carbon tax.

What I am hearing is somewhat unbelievable. The argument from the Liberals and the NDP is that somehow eliminating a point-of-sale tax does not put more money in the pockets of Canadians. I am not sure how one can even argue that. In fact, their argument against this is that retailers are going to collude to ensure that savings are not passed on to Canadians. I can say from experience that in Alberta, where the provincial government has removed the provincial sales tax on fuel, fuel is about 20¢ cheaper than anywhere else in Canada. Albertans are benefiting from a government that has seen the difficulties Canadians are facing, has taken action to address them and has passed savings directly to Canadians.

What I am hearing from my constituents, after two years of the pandemic, is that they are exhausted; they are tired. They want to get life back to normal. While they are seeing the light at the end of the tunnel, that the pandemic is all but over and that businesses are opening back up, they see the affordability crisis, where fuel prices are exorbitant, grocery prices are going up and housing prices are going up. A lot of this has to fall at the feet of the Liberal government.

I know the Liberals like to say this is a global issue and that the war in Ukraine with Putin is causing prices to increase. However, I have been in the House pretty much every day and I do not ever recall Vladimir Putin sitting across the way and voting in favour of a carbon tax. I do not recall Vladimir Putin putting forward legislation or a bill to increase the carbon tax on April 1. Maybe I missed that. I am not sure if my colleagues around the House can confirm that Vladimir Putin is the reason the carbon tax went up 25% on April 1, despite an affordability crisis around the world and a war in Ukraine. I am not sure how we put this all at the feet of Vladimir Putin.

Instead of the government offering relief to Canadians when they need it most, the Prime Minister is travelling around the world with no mask in sight, and here at home he is punishing Canadians over and over again with his draconian mandates and travel restrictions, which are not in place anywhere else around the world. That really seems to be the modus operandi of the Liberal government. It is going to punish Canadians at home and do something completely different around the world.

A good example of that is the fertilizer tariff. My colleague across the way does not seem to think that this is a problem and thinks this is a way of punishing Russia. I would invite my Liberal colleagues talk to any farmer, especially in eastern Canada, and ask them if the fertilizer tariff is hurting Vladimir Putin. The only people this fertilizer tariff of 35% is punishing are Canadian farmers. Vladimir Putin, once again, is not paying this tariff; Canadian farmers are paying this tariff. Even before the war in Ukraine, fertilizer prices in many parts of the country were more than double what they were the year before, as a result, in many cases, of the carbon tax. Do members know what makes fertilizer? It is natural gas. Carbon taxes put on natural gas cause prices to increase.

Canadian farmers are being punished and we have offered solutions. We have asked the Liberal government to provide an exemption on fertilizers purchased before March 2, before Russia invaded Ukraine. The Liberals said no. We then asked them if they would offer compensation to farmers who have had to pay an exorbitant price for that tariff. Again, the Liberals said no.

Let me put this in perspective. Canada is the only G7 country putting a tariff on Russian fertilizer, meaning that Canadian farmers are now at a severe competitive disadvantage to our compatriots around the world. They are paying an exorbitantly high carbon tax and they are paying a tariff on fertilizer.

At the same time, we are in the midst of a global food crisis. Food insecurity is probably the number one priority on earth and we are the only country on earth that is increasing taxes and putting a tariff on fertilizer. How does that make us competitive? How does that give us the ability to carry the burden of helping in a global food crisis, which our farmers absolutely want to do? They want to be there to help, but the Liberal government is doing everything possible to ensure that we cannot do that and do not meet our potential.

Despite the Conservatives offering these solutions, the Liberals carry on with this activist agenda, let us say, or the theatrics they are putting on that this is somehow punishing Putin when it is only punishing Canadian farmers. However, it is not just Canadians farmers who are going to feel the impact of this. If Canadian farmers have to reduce their use of fertilizer simply because they cannot afford it, yields are going to go down and the prices of commodities are going to go up. We have already seen the price of groceries go up. In many cases they are up 15%, depending on the product. This is only going to get worse. We are not only talking about countries that have been relying on Ukrainian commodities such as barley, wheat and sunflower oil; this is going to be felt here at home.

My NDP colleagues have been talking about food insecurity here at home in Canada. A lot of that is the result of Liberal policies. The Liberals are the ones increasing the cost of those groceries by increasing the carbon tax, putting a tariff on fertilizer and having additional red tape, making it very difficult for our farmers to do the job they do best and better than anyone else in the world. We are the only country with a government, in a food security crisis, that is asking Canadian consumers to pay more. It is the only government asking farmers to pay more. How does this make any sense whatsoever?

I want to get to another part of our opposition day motion. I talked about fertilizer, but I also want to talk about the carbon tax.

The carbon tax is something for which the Conservatives have offered a solution. My colleague from Huron—Bruce offered a private member's bill that would eliminate the carbon tax on farm fuels, Bill C-234. The Parliamentary Budget Officer, in assessing the carbon tax, has said a few things that I think are very enlightening: The carbon tax is not revenue-neutral, the carbon tax increases inflation and the carbon tax does not reduce emissions. This is everything the Liberals are saying the carbon tax will accomplish, and the study by the Parliamentary Budget Officer has refuted all of those claims. Why are we charging this carbon tax on our Canadian farmers? We put forward a solution in Bill C-234 to eliminate the carbon tax from farm fuels.

The Canadian Federation of Independent Business has done the math. In the first year of the carbon tax, Canadian farmers paid on average about $14,000 a year. With the increase on April 1, that goes to $45,000 per average farmer. The Liberals are going to say there is a carbon tax rebate and eight out of 10 families make more off the carbon tax. Again, the Parliamentary Budget Officer, an arm's-length officer of the House, has said that is not the case. In Bill C-8, with the carbon tax rebate, farmers get $1.70 for every $1,000 of eligible expenses. They are getting pennies on the dollar for what they are contributing to the carbon tax. Farmers are price-takers. They cannot afford to carry the burden of the carbon tax when we are asking them to improve yields and their efficiency. It does not make sense.

At a time when we are talking about global food security, we also need to talk about affordability. Our farmers, producers and manufacturers need to be able to do what they do and do it efficiently. I have talked about the carbon tax and the fertilizer price, but there is another issue where the Liberals continue to throw on red tape and obstacles, which is going to be coming out in the next little while. It is front-of-package labelling. That is a direct attack on beef and pork producers in Canada. The United States has already identified this as a trade irritant that will impact our beef exports and increase grocery costs here at home, making things even more unaffordable for Canadians.

In conclusion, our motion is very prudent. It would ensure that we address the affordability crisis facing Canadians, and, most importantly, help our farmers, producers and ranchers, who are doing all they can to address a global food security crisis, ensure that groceries are affordable for all Canadians.

[Branden Leslie]

Sure. Thank you, Mr. Maguire.

There are a few things to touch on. I would certainly recommend it. The connection between food security and a just transition might not seem to be obviously connected, but I think it's very evident that they are. The average price of diesel on a farm in whatever province has largely doubled, it's a significant cost increase, and as mentioned, we can't pass those costs down.

I appreciate Mr. Currie's mentioning of the carbon tax exemption in Bill C-234. That policy is simply taking money out of the pockets of farmers when they go to dry their grain. You have to store your grain at a certain moisture level or it will rot. You will no longer have a product in your bin, and you will have something to throw away. That money is better invested in the new technologies and things like precision agriculture, applying the precise amount of inputs with less application, great, but they're very expensive, but you'd be buying a $600,000 piece of equipment at a time when a lot of farms are lucky to be breaking even.

Last year across much of the Prairies, there was a drought. As you mentioned, this year in southern Alberta and parts of Saskatchewan there's serious drought, and in Manitoba, where I'm from, it's largely under water. It is a challenging time, so I would absolutely recommend considering using that food security lens to be considered as we look to the just transition. It's one thing to aim for this, and I think when we look towards perhaps the electrification of a tractor down the road, that would be a great thing, but there are some substantial changes that—

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

The Greenhouse Gas Pollution Pricing Act exempted on-farm gasoline and diesel. Greenhouses received an 80% exemption, but mushrooms nothing. Bill C-8 obviously is proposing a rebate, and Bill C-234 is proposing an exemption. In broad strokes, can you comment on the impact between the three different processes for mushrooms and for the greenhouse industry?

[Paul Samson]

If you're referring to Bill C‑234 specifically, the government is putting a price on carbon pollution as a critical part of the action plan, and that bill will continue to be debated. I won't refer to the advice that we're proposing to the minister at this point.