Environment Committee on May 17th, 2007

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

One of the roles of Finance is looking to the future of the Canadian economy, making predictions with greater uncertainty as you go further out, regarding both the potential benefits and threats to the Canadian economy. If one of the leading current threats to the global economy, identified by countries around the world, is an increase in global temperatures or an increase in the variability of weather, and so on, why have we not yet engaged, as a country that is very dependent on natural resource extraction, in that type of analysis?

[Paul Rochon]

As I said, we have engaged in two fashions. We published a number of economic studies that are now somewhat dated. Also Environment Canada has undertaken a fair bit of work, and we've been involved with them.

As to the costs and benefits of climate change per se, there's a fair bit of uncertainty regarding what the physical impacts will be. It will happen over a long period of time. These are stock effects, as opposed to flow effects.

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

That's interesting to me.

One of the witnesses who came before us while we were studying Bill C-30 implored us to consider the whole Kyoto Protocol and those types of messages, less as an environmental negotiation than as an economic one.

I'm becoming more and more concerned with our economic preparedness and the soundness of our analysis.

I have a question about Bill C-30. This bill was rewritten, as you know. Were you conferred or consulted with in terms of the economic impacts of the rewritten form of the clean air and climate change act?

[Richard Botham, Chief, Knowledge and Innovation, Economic and Corporate Finance Branch, Department of Finance]

Do you mean, were we consulted concerning the amendments proposed by the parties?

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

Not proposed. As the bill stands right now, a series of changes have been presented back to the House. Has Finance Canada been consulted as to the cost, economic or otherwise, of introducing that bill into law? Have you done a similar analysis on Bill C-30, as was done on Bill C-288?

[Denis Gauthier]

I don't believe so.

[Paul Rochon]

We haven't done it on Bill C-30.

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

The reason I raise it again is that the minister has made claims as to the cost, but we're still trying to find out who he asked about it. No one has come forward yet and told us that they were consulted.

Has Finance Canada done any analysis on the effectiveness of a carbon tax and its cost to the Canadian economy?

[Denis Gauthier]

We did some a long time ago.

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

How long ago was it?

[Denis Gauthier]

It was probably in the early 1990s, at the time of the Rio meeting and all that. There is a published discussion paper that was looking at various alternatives to the—

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

Has there been any analysis since then?

[Denis Gauthier]

Since then, I don't know; I'd have to ask Benoit, but probably around 1992 we did one looking at what a carbon tax would make.

[Benoit Robidoux]

Yes, Denis is right. It was published in 1992. Other analyses we did afterward were all done with permit—[Inaudible--Editor]—and a carbon tax.

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

I was a recent United Nations meeting, and the European Union, under the direction of France, talked about levying essentially a tax on countries that do not fulfill their obligations under the Kyoto Protocol. Has Finance Canada engaged in any modelling as to what those taxes could look like on Canadian products being exported? Have we any engagement with the European Union on this? This measure is gaining some momentum from our European counterparts.

[Denis Gauthier]

There are discussions. Our G8 representative in the department, who attends all those international meetings, is making us aware that those discussions are gathering now, but there has not been work so far, or actual proposals that we could study.

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

Okay.

How much do we trade with the European Union, in terms of our total domestic output? Is it in the 15% range? Would that be high?

[Paul Rochon]

Oh, I think that would be high. Yes.

[Benoit Robidoux]

That would be high. We trade basically 80% to 85% with the U.S., so the rest is the rest of the world.

[Paul Rochon]

Mexico would be significant.

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

The Mackenzie Valley pipeline is a project that has been ongoing for the last 20 years or more. This current government talked about having a share or a stake in this. Were you consulted in the costs, the potential of putting—? An amount of $2 billion was thrown around by the government officials at one point. Has the government come to you to see what that money would look like, where it would come from?

[Denis Gauthier]

Yes, we've been consulting the proponents of various scenarios that they're discussing with the government in terms of different fiscal incentives. We've been consulted on a range of them.

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

We often talk about the costs of implementing our Kyoto Protocol obligations. Has Environment Canada or the government engaged you in the potential economic benefits of engaging in greenhouse gas mitigation and reduction? Have we done any analysis?

[Denis Gauthier]

Do you mean of the benefit of action?

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

Yes. Have you been consulted on the economic benefits, the specific benefits?