Environment Committee on May 17th, 2007

[Denis Gauthier]

No. We've been consulted on the cost, not on the benefit—not to my knowledge.

[Paul Rochon]

The benefits are quite difficult to quantify. They could take the form primarily of new technologies and innovations that are developed. That's a very uncertain process.

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

One imagines that if the government says it's going to initiate so many megawatts of wind power or if one imagines the government incentivizing the auto industry to make low-emission cars, industry is quite capable of talking about the projected economic benefits of any particular government subsidy or tax measure. We do this all the time, do we not? I mean, we do this with the oil sands. The accelerated capital cost was meant to derive a certain amount of economic benefit, and the government makes that choice based upon some projections.

I'm not understanding why we remain in the framing of this issue as the economic costs of doing something about climate change.

[Denis Gauthier]

Maybe Benoit wants to extend this point, but some of those benefits are captured in the economic modelling, I think, of the plan. For instance, introducing the regulation will lead to a renewal of the capital stock, and as that capital stock is renewed—In the case of the steel industry, carbon sequestration and a pipeline leading to that will have a beneficial impact on the steel industry, so when you do the macro-modelling, it's embedded.

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

Do you do that?

[Denis Gauthier]

It has been part of the--

[The Chair, Conservative, Bob Mills]

Your time is considerably over.

I'll go to Mr. Harvey next, please.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Thank you for appearing before us to testify this morning. We appreciate your presence here, and are learning some very interesting things.

If I understand correctly, you estimate that the cost of the plan put forward by the Conservative Party, which is aimed at reducing greenhouse gas emissions by about 20 per cent, will cause a drop of some 0.5 per cent in GDP. Do you believe that the financial study of the economic cost of Bill C-288 is credible, and was properly carried out?

[Paul Rochon]

I believe it is a reasonable study.

[Luc Harvey, Conservative, Louis-Hébert, QC]

You believe it's reasonable. Does a 0.5 per cent drop in GDP have a negative impact on the economy, on jobs as a whole, on the unemployment rate and on other factors?

[Paul Rochon]

That's a good point. We need to take into account the fact that our economy is growing at a rate of 2 or 3 per cent a year. A 0.5% drop in GDP is not huge—the impact would correspond, say, to a loss of 50,000 jobs.

[Luc Harvey, Conservative, Louis-Hébert, QC]

During the study of Bill C-288, the projected cost was calculated at 8 billion dollars, not 100 billion dollars, which would amount to a 7.5% drop in GDP. Eight billion dollars amounts to about 0.5% of GDP, while 100 billion is thirteen times that much, or 7.5% of GDP.

What would a 7.5% drop in GDP represent?

[Paul Rochon]

It would be much more significant. In the very short term, it would probably lead to an economic recession—a drop in both output and employment—within one or two years.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Are we taking about a major or a minor recession ?

[Paul Rochon]

It would be a fairly significant recession in comparison with what Canada has experienced so far.

[Luc Harvey, Conservative, Louis-Hébert, QC]

How many years back would Canada be dragged if its GDP were to drop by 7.5%?

[Benoit Robidoux]

It's a short-term cost. The long-term impact on the economy would be different. The economy would be weaker, but would rebound later. Measures of this kind would have fairly significant economic impacts, even over a 10-year period.

We would see some decline, as in the 1980-1982 economic recession. Some people would be affected quite significantly, though it is difficult to make any precise determination.

[Luc Harvey, Conservative, Louis-Hébert, QC]

We're talking about projections, and we come up with calculation models. There are different ways of seeing things. But we can judge whether a study is reasonable and whether it corresponds to the standards that an industry or a department has established.

You believe that the calculations are reasonable in both cases, and that, even though it's hard to predict the future, there is no real problem with the calculations.

[Paul Rochon]

Yes, that is what we believe.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Thank you very much, Mr. Chairman

[The Chair, Conservative, Bob Mills]

Mr. Vellacott.

[Maurice Vellacott, Conservative, Saskatoon—Wanuskewin, SK]

Thank you very much.

I want to delve into some of the same areas there.

[The Chair, Conservative, Bob Mills]

Mr. Vellacott, perhaps you can stay with the current plan, not just Bill C-288.

[Maurice Vellacott, Conservative, Saskatoon—Wanuskewin, SK]

I'm talking about the new regulatory framework. That is the intent of my questioning here.

I think many have said it's pretty strong action. Some recently in the committee have said it was stronger than they—

[Mark Warawa, Conservative, Langley, BC]

On a point of order, Mr. Chair, I'm just questioning why you have instructed Mr. Vellacott—I know that Mr. Cullen has just talked to you. Is that the reason why?