Evidence of meeting #18 for Bill C-30 (39th Parliament, 1st Session) in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ethanol.
A recording is available from Parliament.
Liberal
David McGuinty Liberal Ottawa South, ON
Okay, so you don't challenge the verification, or non bona fides, of these credits? You have confidence in the system as constructed. Is that right?
Andrew Jackson National Director, Social and Economic Policy, Canadian Labour Congress
My understanding is that it's possible to buy credits that are bona fide—not that all credits available are bona fide.
Liberal
David McGuinty Liberal Ottawa South, ON
You agree that Kyoto is a process and that we ought to move to the next phase to bring developing countries, using your words, more fully into the framework in the next phase.
Liberal
David McGuinty Liberal Ottawa South, ON
And this is a good journey that we're on, a good process that we're on under the Kyoto process, under the UNFCC.
Can I go to your call for a climate change investment fund. Because today is all about fiscal tools, I'm trying to understand better how this climate change investment fund might work. Your brief doesn't go into too much detail on fiscal issues. You talk a bit about the accelerated capital cost allowance and the oil sands, you talk about the need to use other fiscal issues, but you don't actually put forward to us here at committee more detailed measures. Could you help us understand how this investment fund would operate in practice?
National Director, Social and Economic Policy, Canadian Labour Congress
We don't speak to these issues in great detail. I think the fundamental point that's being conveyed is, if we bring in an emissions cap and trade system, if there is auctioning of permits as part of that, such that there are revenues attached to that system, those should be recycled into expenditures on climate change mitigation measures. It does seem to make some sense to have one umbrella fund under which a series of specifically dedicated funds would operate. I think it's important to have that sense of a loop between revenues from fiscal instruments being expended for the purposes for which those funds are being collected--in particular, I think, in dealing with large final emitters, the concept that where it's needed, funding support would be available to help them deal with those caps. We should be at a serious enough level to force real change.
Conservative
The Chair Conservative Laurie Hawn
Okay. We're deferring to Mr. Scarpaleggia for the last three and three-quarter minutes.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
Thank you.
Mr. Thompson, has your office studied the value for money of 100% write-offs for the development of the oil sands?
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
Mr. Chairman, no, we haven't.
Mr. Scarpaleggia, that's getting into the area of what we call tax expenditures. We've done some work in that area, mainly trying to encourage the government to publish at least a listing of what these expenditures are, but in terms of looking at the effectiveness of that particular measure, sir, we have not.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
So I imagine it wouldn't be within your purview to study the effectiveness of tax-deductible transit passes.
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
What we would do in terms of any program--and that's an example--is this. Our mandate allows us to ask this question: do the people who run the program know whether it's effective? If we feel that they don't know or they're not trying to find out, we would comment. Under our mandate we don't go in and do an evaluation ourselves. It's a peculiarity of our mandate, sir.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
Will you be exploring that issue as to whether that decision was a rational economic environmental decision or whether it was ideology driven?
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
Are you talking about the bus passes?
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
I wouldn't think so. We would look at the program, once put in place, to see whether it was being managed reasonably well. We would like to see whether or not, as I mentioned earlier, the people who were running the program knew whether it was working. Beyond that, we wouldn't go into the—
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
Well, that would be a good question to ask, actually, whether it's working. I would hope that your office would do that as soon as possible.
I'm glad to see you here. You've come to the environment committee. We're talking today about fiscal instruments, and we've just heard from you that you can't do studies on the value for money of fiscal instruments. So I'm a little perplexed.
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
Perhaps I may comment on that, Mr. Chairman.
What we've done in the area of fiscal instruments...take the 2004 chapter, sir, that we did, that I referred to in my remarks. We looked at what the Department of Finance was doing as it put its tax policy together. They themselves, the Finance officials, said in 2001 in their SDS that they were going to take a good look at the tax system in a number of ways. One of them was to take, we thought, a broad-based look at the tax system to see whether or not there were impediments within it to good integration of the environment in the economy. Now, we called them to account for that, actually, in 2004, which is part of what we do as auditors, and we didn't see any evidence that they had done that in a systematic way. So we reported that in 2004. That's the kind of work we can do on issues like that. Actually, we'll come back and look at that again.
Bloc
Bernard Bigras Bloc Rosemont—La Petite-Patrie, QC
Thank you very much, Mr. Chairman.
First of all, Mr. Thompson, welcome to the Committee, and a warm welcome to all of the witnesses.
Mr. Thompson, this is your first official appearance before the Standing Committee of the House of Commons on the Environment and Sustainable Development since your taking over from Ms. Gélinas. I must say that your presentation is very shy compared to those Ms. Gélinas has made to us in the past.
You state in paragraph 21 of your report that, in 2004, the Office of the Commissioner did an audit of several issues relating to fiscal commitments made in its sustainable development strategy of 2001. However, Ms. Gélinas was much more forceful. She devoted an entire chapter — chapter 3, in 2004 — to this issue and stated, to summarize her chapter: “Greening the tax system: Finance Canada dragging its feet”. I see nothing in the presentation you have made to us today that fits with this analysis. I would like to quote a paragraph drawn from her report: “The tax system has a huge potential to create incentives to improve the environment. Finance Canada is dragging its feet when it should be showing leadership”. And, there were, elsewhere in the report, elements that showed us where we were headed. Bill C-48, which was passed, provides close to $250 million per year in fiscal incentives to Canada’s oil industry. I therefore would like you to flesh out the conclusions of this report demonstrating that, in fact, the Canadian tax system is far from becoming green and that, on the contrary, it allows the rewarding of major polluters. Could you tell us more about this chapter 3 of the 2004 report?
Interim Commissioner, Office of the Commissioner of the Environment and Sustainable Development
Mr. Chairman, c'est un plaisir for me to be here.
I've picked just a couple of incidents, a couple of recommendations from that chapter, because I had 10 minutes to speak this morning. But you're quite right, the chapter itself goes into a good deal more detail. It has three basic recommendations in it, only one of which I picked up.
Perhaps I might impose upon my colleague Mr. Arseneault to go into a little more detail on that chapter. Is that reasonable?
Richard Arseneault Principal, Office of the Commissioner of the Environment and Sustainable Development
As you know, departments are required to produce sustainable development strategies every three years. When we established the position of Commissioner of the Environment, we also created the obligation for departments to tell us how they will go about greening their operations, their decision-making. In the case of Finance Canada,
what are their business lines? Well, there is the tax system, which is key in terms of business lines for CRA.
Furthermore, in the context of the federal budget, two major challenges are facing the country. We asked the department to explain to us its sustainable development strategy, in other words how it was going to go about “greening” these aspects. Clearly, we had nevertheless noted certain commitments that did offer good potential. The department had made a commitment to analyze the Canadian tax system in order to see where improvements in this regard might be made. We unfortunately observed, as you have just stated, that the department was dragging its feet. Those words still hold true today. That is what we saw at the time, and that is what we would say again today. Mr. Thompson had 10 minutes to provide this information this morning.
We made recommendations to the department. In our view, the department was not doing what it had committed to do. It had committed to carrying out this analysis of its sustainable development strategy for parliamentarians. We also noted that its in-house capability in the area of environmental analysis was deficient. We asked questions about this because we had seen a certain number of unsatisfactory analyses. We had made recommendations to the department. The department more or less ignored what we had said. It stated that it would continue to do what it was doing because it had not received any clear signal from its political masters with regard to what their wishes were. And this is the situation we are faced with today.
Bloc
Bernard Bigras Bloc Rosemont—La Petite-Patrie, QC
Do you believe that bills such as Bill C-48 provide a means to combat greenhouse gases? Do you believe that it represents a fiscal measure that will assist in respecting our Kyoto targets?
Principal, Office of the Commissioner of the Environment and Sustainable Development
If we had done a strategic environmental assessment, then we would probably have established that there were links to be made. Unfortunately, such was not the case. The department did not do its duty. The implementation of a strategic environmental assessment is a requirement. Cabinet decided in 1990 that this would be a requirement on the part of departments.
Finance Canada, when we did our audit, had not yet committed to doing that. Since then, however, we have clarified the way in which the department works and it has put a system in place. We have not yet verified that the system is working properly, but at the time, the department was not doing this auditing. It had told us, in response to an environmental petition we had received, that there was a system in place. But when we did our audit, we realized that that was not so.
Bloc
Bernard Bigras Bloc Rosemont—La Petite-Patrie, QC
Thank you.
Mr. Baker, I would like you to reassure me. Yes, the production of ethanol can, in the context of a climate change mitigation policy, reduce greenhouse gas emissions, but some people believe that this activity has negative externalities, for example the pollution of waterways, be they rivers, or small streams. Secondly, some people say that the energy gains from the production of ethanol would not be as large as estimated.
I would like you to tell me — in fact I would like you to reassure me — that there is a way of fostering an ethanol culture in Canada while at the same time facilitating maximum energy gains and minimum negative external effects in the area of river pollution.