Finance committee  Costing disaster relief is certainly something that would be possible. One would need to look at various government departments and, in fact, at various levels of government. The difficulty would probably lie in determining which part of that disaster relief is due to climate change and which part is due to naturally occurring events—events that would have occurred anyway, without climate change—and also the part that is due to people choosing to live in certain more risk-prone areas, which is also a factor with cities expanding and people choosing to live in certain areas.

Finance committee  The cost of inaction is something that is real and tangible, but what we've been saying is that the cost of inaction would be minimized if everybody else did something and Canada didn't play a part. It's something that needs to be addressed at the global level if it is to have a meaningful impact on reducing greenhouse gas emissions.

Finance committee  I wouldn't want to contradict the Governor of the Bank of Canada on something as fundamental to his mandate as inflation. On the other hand, I don't want to suggest what the governor could or should have done had there not been a carbon tax. It's clear that economic theory would have it that if the carbon tax had been eliminated or didn't exist, inflation would have been lower.

Finance committee  Increasing the inclusion rate for capital gains is something that acts as a disincentive, generally speaking, on capital investment. However, what the government did was increase the inclusion rate for capital gains above a certain threshold and increase the lifetime capital gains exemption for shares in small businesses.

Finance committee  That seems to be differential treatment for two businesses that are roughly the same size.

Finance committee  If that's not the reason, that certainly will be the effect, because usually you have budget secrecy exactly to avoid these situations. That's usually the reason why budgets are tabled at or after four o'clock: to avoid having impacts on stock markets, for example. It was a bit surprising to see that the budget was still a secret thing.

Finance committee  Right now, we just have the government's estimates for the entire fiscal year, and I think they put capital gains tax revenues from this measure at $6.9 billion, if I'm not mistaken.

Finance committee  Yes. If there was to be a credible prospect of this change being reversed or other changes to capital gains tax, it's quite possible that those with substantial amounts at stake could alter their behaviour in the hopes of avoiding this increase or taking advantage by doing what's likely to be most beneficial for them.

Finance committee  I think that if we were to remove that $6.9 million of revenues from the revenue side, that would obviously push the deficit higher by an equivalent amount.

Finance committee  When we looked at carbon pricing, we looked at what is being proposed and implemented by the government, which is a carbon tax. As we all know, it's a pricing on pollution as well as an output-based pricing system, so that's what we consider. My office does not have the mandate to self-initiate looking at alternative proposals that could be better or worse than what is being proposed, unless I'm requested to do so by a House or Senate committee, which has not been the case for this, so we have not looked at alternative ways of reducing Canada's greenhouse gas emissions.

Finance committee  Given the mandate of my office, we are often asked to cost the cost of proposals rather than their benefits. It's very difficult to estimate the benefit of a carbon tax, and it's typically not something we do. We don't generally do cost-benefit analysis. That's the reason why we have not done it in the case of the carbon tax.

Finance committee  The difference can be explained quite simply. Conceptually, we looked at the demand that comes from demographics and repressed demand, and came up with the estimate you mentioned. Our aim is not to re-establish a particular price level. CMHC, for its part, made its estimate by assessing the number of units that would be needed to return to the level of affordability that existed in 2003–2004.

Finance committee  Since there wouldn't be much cost to individuals, there would be an increase in demand. In other words, people who go without drugs because of their cost would become more willing to take the drugs they need. This would be offset by the economies of scale associated with group purchasing.

Finance committee  I was as surprised as you were by the differential treatment and timing of these tax changes. The cigarette tax increase came into effect immediately, because we didn't want people to rush to the convenience store to buy cheaper cigarettes. However, on capital gains, we don't mind giving two months' heads-up to those who could rearrange their taxable business or affairs to escape the higher capital gains rates.

Finance committee  There is definitely a cost to doing nothing, but there's also a cost to doing something. It's a difficult conundrum for policy-makers, because, no matter what we do, there's a cost. If we do nothing, there's a cost; if we do something, there's a cost.