Bill C-30 (39th Parliament, 1st Session) Committee on March 28th, 2007

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Well, maybe I'm doing it on my account. It's possible.

[The Chair, Conservative, Laurie Hawn]

Monsieur Bigras, did you have some clarification to add to that?

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

I do not mind repeating. The Motor Vehicle Fuel Consumption Standards Act has been in existence since 1982 but never came into force. Right?

According to our amendment, this act will come into force 30 days after Bill C-30 receives Royal assent. Is that clear?

[Some honourable members]

It is clear.

[The Chair, Conservative, Laurie Hawn]

It is totally clear.

Mr. Blaney, everything's clear to you? Okay, good.

Now, before we do call the vote on this, though, amendment L-34 in clause 52 also addresses the coming into force of the act. If clause 51, which we're about to vote on now, is carried, then L-34 cannot be put.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

[Inaudible--Editor]...different sections. Is L-34 not a reference to...? It's the same line? No, one is referencing 51 and one references 52. Is that not true?

[The Chair, Conservative, Laurie Hawn]

Fair enough. L-34 then will not be moved.

So we're back to the question on BQ-17.

Mr. Cullen, I think we did call the vote.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

He is not sure.

[The Chair, Conservative, Laurie Hawn]

Are we happy with calling the vote? All those in favour of BQ-17 will please so indicate.

(Amendment agreed to)

Shall clause 51 carry as amended?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I raised my hand before you called the vote.

[The Chair, Conservative, Laurie Hawn]

In fairness, I thought you were just getting ahead of me.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

No, I'm keen, but I'm not quite that keen.

[The Chair, Conservative, Laurie Hawn]

I will hear, Mr. Cullen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It's a question on NDP-36.1 I want to ensure, before we pass clause 51....

[The Chair, Conservative, Laurie Hawn]

That's a new clause.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Yes. Thank you. I just wanted to be absolutely clear.

[The Chair, Conservative, Laurie Hawn]

I'm calling the question on clause 51.

(Clause 51 as amended agreed to)

[The Chair, Conservative, Laurie Hawn]

We are now on new clause 51.1 and we have NDP-36.1.

Before I ask Mr. Cullen to speak to that, I have to say I have some concerns about the relevance and admissibility of this one.

This amendment proposes changes to the regulations accompanying the Income Tax Act, dealing with tar sands ore. I have two concerns about the admissibility of this amendment, which I would like the member to address in his presentation.

First, as the committee has already heard, an amendment must always be relevant to the subject matter of the bill. This rule is expressed on page 654 of House of Commons Procedure and Practice, Marleau and Montpetit.

As I look at it, the bill is concerned with greenhouse gases, air pollution, the classification of energy-using products, and the establishment of motor vehicle fuel consumption standards. On initial examination, the relevance of this amendment is not clear to me, and I would appreciate it if the honourable member could establish that.

Secondly, the amendment is proposing tax measures. I would appreciate an explanation of the impact. Let me explain why. If the amendment seeks to remove or reduce a tax exemption or a tax deduction, this would have the effect of placing an additional charge on the taxpayer. Such charges, as with all measures to create or increase taxes, must be preceded by the adoption of a ways and means motion in the House.

As stated on page 655 of House of Commons Procedure and Practice, Marleau and Montpetit, an amendment is also inadmissible

...if it creates a new charge on the people that is not preceded by the adoption of a Ways and Means motion or not covered by the terms of a Ways and Means motion already adopted.

So I would appreciate, Mr. Cullen, if you could address those points during your remarks.

I'll hear from other members as well before making a decision.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair.

First of all, in terms of relevance, we think this is highly relevant. I don't know if it was a preamble to your question, but you raised the issue of what this bill deals with. Bill C-30 deals with energy production and consumption and greenhouse gas emissions in this country.

Government has available to it a number of tools that it uses to direct private investment. It uses public investment and policy to guide some of the things that occur within our borders.

One of the things that was brought forward in the mid to late 1990s under a former Liberal government, with a Conservative government in Alberta, was an incentive program, essentially, to spur on development of the Athabasca tar sands, which at the time had been deemed not commercially viable for a number of years. The incentive was to help direct investment into those tar sands, which, as Mr. Jean will attest, has met with extraordinary success. The pace of development has been encouraged by this.

The reason this is deeply relevant is that this is one of the policy signals that government has sent to industry, particularly the private sector in energy production. We have talked all the way through the Clean Air Act about various policy signals that get sent through this bill, whether they're a limitation to certain activities or an encouragement of other ones, on motor vehicles. We've talked about targets as a country, about large final emitters, the largest polluters in the country, as being essentially limited in the amount of greenhouse gas pollution they can produce.

What this government policy has done is encouraged the investment in a very energy-intensive form of energy production, also a very carbon-intensive form of production. The estimates vary, but it takes more than a barrel of oil in energy equivalents to produce a barrel out of the tar sands, and the greenhouse gases that are produced through that barrel of energy, once all is said and done, are extraordinarily high when compared, obviously, to some of the other forms available.

We think there's a certain amount of fairness in what we proposed, simply on the basis of the profitability of this sector right now. We were talking about this in question period today, I think with reference to some industries in Quebec. The Prime Minister talked about encouraging investment in a faltering industry in Quebec by allowing such an accelerated capital cost allowance to encourage a sector that is in some trouble. That certainly cannot be said of the upstream oil and gas sector in northern Alberta. Trouble is not what they're in, in terms of economic viability. They're doing quite well, as well as any company or any set of companies has ever done in Canadian private industry history. They're doing, by all accounts, extremely well, with $20 billion-plus profit this past year.

That's all well and good, and that's not the concern we have. The concern is over why we would continue to offer incentives to do more for an industry that's so clearly profitable in and of itself, with the price of a barrel of oil being, on any given day, between $55 and $70, and as high as $80, while the cost of production--Mr. Jean will probably have the exact figures--is in the low twenties. Why would a government policy continue to exist beyond the point where investment needed to be encouraged? There have been three extremely large major oil sands projects announced within the last 10 days. The enthusiasm for the sector is overheated, to say the least.

There's something about a market failure in this when we've had the community of Fort McMurray, through their town council--Wood Buffalo would be the appropriate jurisdiction for the town--ask for an actual moratorium on further projects. We've asked the provincial and federal governments to respond to this. Its infrastructure is hurting and all the rest.

But what this motion does--and the reason it's relevant--is it speaks directly to the national targets we just previously set. It speaks directly to where you want to put Canadian tax policy and incentives and why you would want to put them towards the most energy-intense and greenhouse gas emissions-intense form of production possible. We've heard from industry at the natural resources committee that they have an expectation that things will continue to rise, and that even on an intensity basis--which we don't agree with--things will get worse in the coming years and not better.

All these factors play in, and the relevance to the bill, we believe, is inherent and somewhat self-evident.

In terms of the additional charge to the taxpayer, this is not an additional charge; this is a removal of what essentially works out to be a subsidy. There's no taxpayer in the country who is going to feel the burden of this change. In fact--and we have encouraged this government, as we did the previous one--if they wish to give incentives to energy production, there are lots of willing players at the table who can produce high-quality energy, with many jobs available in sectors that are not clearly as profitable as the upstream oil and gas sector is in northern Alberta.

We absolutely think it's in order. We think it's relevant, and we're very curious to hear from other members of the committee as to their opinions on this. And of course if they're not in favour, we'd like them to justify the reason for this tax policy to be there, because why it needs to continue is simply beyond us and any sound economic analysis.

[The Chair, Conservative, Laurie Hawn]

Go ahead, Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chairman.

First, I'd like to applaud the government and this Prime Minister for taking steps in relation to the capital cost allowance and for actually taking that money in the future and making the opportunity for that money to go directly back into green investments.

[Some hon. members]

Hear, hear!

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I think that's a great step forward, and it shows the dedication that this Prime Minister and this government have to the environment.

I want to clear up some ignorance. By this I mean the lack of understanding and lack of knowledge of this member and many of the other members of the House in relation to many things I have heard from Mr. Holland and Mr. Cullen and other members from many parties.

The first is that it's not tar sands; it's oil sands. The reason it's oil sands is because it's oil that's coming from them, not tar.

Fort McMurray is a city. The municipality is the largest in North America, and it encompasses something in the range of 120,000 square kilometres.

In 1965, the plant site of Suncor, and I'm going to use that as an example, was started, and it employed very few people. It was in the hundreds, as there were only about 1,800 people in the community at that time. It continued to struggle for some period of time, until 1987. We heard from Dee Parkinson-Marcoux, who was the president and CEO of Suncor at that time, who gave evidence that they almost closed down Suncor because of lack of profitability over the last 20 years.

If you look at the profits of this particular corporation and the only other corporation that has been going for some period of time, you will find that over the average life expectancy of that particular corporation, the profits have not been good. They are good now because of the price of oil, but they have not been good. On an average basis, on a year-to-year basis, over the lifespan of the corporation, it has not been a success story. Now, yes, it is, but it has not been.

I would suggest that they expect some kind of return on investment. And why do I say that? I had to laugh when there were conversations by members about not being able to start small oil sands projects in the future. There is no such thing as a small oil sands project, because it takes upwards of $3 billion—yes, that's right, $3 billion—to even consider starting an oil sands project of any magnitude, of any size, whether it be SAGD development or raw mining.

To get back to the capital cost allowance and the Liberal bill of 1996, I think, where they put it in at that particular time.... I'd also like to talk about what corporations require. They require certainty. Certainty is important to being able to look forward over a long period of time, or at least five to 10 to 12 years, to see what their investors are going to get back and to plan appropriately.

I would like to bring to everyone's attention that Suncor Energy was named as one of 10 “green giants” in business. It was named by Fortune magazine in its global list of 10 corporations because it goes beyond what is required to operate in an environmentally sustainable way. They just received this award about two weeks ago. In the world, it is one of the top 10, globally, environmental corporations. That was by Fortune magazine.

There is going to be $100 billion worth of development by 2020 in that area, but as well, for every one job created in that area, which will be somewhere in the neighbourhood of 100,000, there are 600,000 jobs created in the rest of this country—600,000 jobs for every one job in that area. And yes, we do have a problem with infrastructure, and I've brought it up in the House since I was an opposition member. We have a huge problem with infrastructure, but what we don't want to do is create what the Liberals did with the national energy program back in the eighties, when I saw every single business in my community fold and die. It is not a good thing to see a community die, and I don't want to see it happen again.

I'm interested in certainty and I'm interested in relevancy. This is not relevant to this particular section.

Mr. Chair, I would bring to your attention page 711 in Marleau and Montpetit. I've quoted it several times. I'm going to try not to do it one more time, but this is an “amendment which either increases the amount of an appropriation, or extends its objects, purposes, conditions and qualifications”, and as such it is inadmissible.

I would refer you further to a decision by Speaker Fraser, when he spoke specifically in relation to this, on page 93 in the Journals of the House of Commons of Canada, February 5, 1973. “(T)he citation refers not only to the amount of a charge but also to its objects, purposes, conditions and qualifications”, and as such it's inadmissible, Mr. Chair, and it should not be considered and cannot be considered as an appropriate place to bring forward this particular amendment.

[The Chair, Conservative, Laurie Hawn]

Is there any other discussion on that?

Mr. Cullen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

On the question around the ways and means, this is not an introduction of a tax; this is removal of an incentive.

I well hear Mr. Jean's points, and I've often heard him talk about the desperate situation in terms of infrastructure in his community. I very much appreciate that there was hardship brought on by previous Liberal governments in the national energy program.

The specific thing this speaks to, which I didn't hear in his comments--and certainly that's fine--is trying to equate a national energy program with the removal of a subsidy to give incentive to an industry at its very beginning stages. Now that the industry is well on its way and doing very well, to consider that you need to give incentive to that doesn't make any sense.

In addressing this bill, the chair raised two questions of admissibility. One of them, in terms of a ways and means motion, is not an increase in taxation at all; it's the removal of a subsidy.

In terms of the relevance of the bill, he applauds the government's action to seek to remove this. So in principle he believes, and more importantly his government believes, that this should no longer be there.

This motion we brought forward calls into question the timing and the length of time. The phase-out proposed by the current government doesn't even begin until 2011, and then it follows some years after that. If we believe in the principle and we know it's right, then it's just a basic question of fairness. That's why we brought the motion forward. We have an enormous number of projects being announced right now. No one has ever said on scale or size...of course, oil sands projects are large, and there isn't a small one out there.

I ask that you look across the spectrum at where energy industries are right now. While Alberta and Canada realized there may have been a need in 1996 for an incentive, no sensible person would say there's a need for an incentive for this industry right now.

Why would you give an incentive to an industry that's doing fine on its own? That's not the role of government. That stems from something else, where you start to pick and choose favourites. There's no need for it. There's no rational economic need for it, and there's certainly no environmental need for it.

If the projections go from the current output to upwards of five million barrels a day, which is what industry has on the books, and it is moving quite quickly to this, our concern is how government can credibly and seriously enter into negotiations at the international level about restricting greenhouse gas emissions, and at the same time have an incentive on its books to do more of what all within and outside industry say is one of the most energy intensive and greenhouse gas emitting forms of production. They're counterintuitive points.

All we're pushing forward in this motion is, and I'm waiting for other committee members to suggest that it's not correct.... But why are you giving incentive to an industry that's doing so well? You did it in the past. It was done. To continue on for eight more years is not tax fairness. It absolutely undermines the work of the Minister of the Environment and others when they go on the international scene and suggest that Canada is serious about getting control of greenhouse gas emissions. In effect, we're saying please do more; please do as much as you possibly can before this 2011 phase-out period that will last until 2015 at a minimum.