Environment Committee on April 14th, 2016

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

I thought we were just having that.

[The Chair, Liberal, Deb Schulte]

No. We're going to get back to rounds of questioning and then we will get into committee business afterward. I wanted to make sure that we all agree that we need more questioning and more time. Thank you.

Mr. Aldag.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

With that, Mike and I are going to be sharing the time.

I have a couple of questions. I'd like some brief examples, and then we'll move on in the interests of time.

On the first one, I'm quite interested in this idea of culture change, Dr. Boyd. You mentioned briefly in your statements the consequences in the European examples for what I think was non-compliance, essentially, or not achieving what the objectives of the future generation's legislation would be. I'm wondering if you could briefly give us a sense of what some of those consequences look like. I'm trying to get a sense of what form that might take in a kind of carrot-versus-stick approach.

Then I'd like to hear from other guests if we actually use that, and if there are consequences, or if it's simply that we have legislation. What are the consequences if legislation isn't followed? I'm trying to get a sense of what that might look like.

[Dr. David Boyd]

Thank you.

If the government doesn't comply with its own legislated requirements, the consequences are that citizens, members of the public, can then hold the government accountable by taking them to court. If you look back at the history of environmental assessment in Canada writ large, you will see that for decades we had an unenforceable cabinet directive that wasn't applied, and that it was a court decision brought by citizens in Saskatchewan that actually led to the drafting of the first Canadian environmental assessment law. Since that time, many citizens' groups across the country have held the government accountable to its own environmental assessment law. That's how the legal system works.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Is that the same in the European examples you talked about? It's that legal mechanism. We've also heard that one of the options available would be not paying bonuses to senior executives, as an example; it's an incentive to implement.

I'm wondering if there might be things outside of that, some innovative examples that you saw in Europe to ensure compliance, but if they're the same kinds of tools we have, then that's what we work with.

[Dr. David Boyd]

Yes, I can't say that I've seen those kinds of innovative tools in Europe. I know that in some Latin American countries there are financial penalties both for senior civil servants and for politicians who fail to comply with legal requirements, but that's not something that is really common or widespread.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

For our other guests, we've talked about the idea of withholding bonuses. That was something that witnesses said. Is that the kind of penalty that we tend to see or are there other instruments? Did we ever withhold portions of budgets for not submitting strategic plans and things like that? If a submission goes to cabinet and doesn't have a strategic environmental assessment, it seems like we still approve the project, so what mechanisms exist to try to encourage departments to comply?

[Les Linklater]

Again, just to perhaps provide a bit of clarity, I think Dr. Boyd was referring in his initial comments to environmental assessment legislation where clearly when there is no compliance, there are penalties and redress through the courts. If we're talking about strategic environmental assessments and the application of the cabinet directive in terms of strict sanctions or penalties, I think it's very hard to judge, given the fluidity of the policy process.

In terms of the work that the Privy Council Office, Finance, and Treasury Board do with individual departments, there's a lot of oral exchange back and forth in terms of policy proposals, where it may be identified early on through the preliminary scan that an SEA is required or that the environmental impacts or the sustainability impacts wouldn't warrant it, and it's dealt with in a verbal exchange. There's a comparable example I like to use in terms of gender-based analysis, where that back and forth takes place during the policy development process.

If a strategic environmental assessment is deemed to be required, then our expectation, through our work with the department, is that they will fulfill that and provide that advice to ministers through the policy process.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Okay. That's great.

The other question I have is about trying to find a way whereby we can have the greatest leadership in the development of the sustainable development strategies and so on. There have been suggestions of relocating from environment and sustainable development to a central agency. Also, then, we see from Dr. Boyd his recommendation 5 on this idea of shared responsibility.

I'd like your thoughts on what would position us for the greatest success. Obviously, it seems that the current place where the leadership is parked is maybe not the most effective. It's not getting the attention of the wider government body. What would be the appropriate response? Is it this idea of shared responsibility or is there a better central agency that could take the lead responsibility?

[Les Linklater]

I think what is clear is that, internationally, there is no one-size-fits-all, and that for different countries and different circumstances, different models are going to have a better return.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Right, so for Canada...?

[Les Linklater]

For Canada, my view would be that the current construct, while not perfect, is a great foundation to build on. With the priorities that the current government is placing on the environment and climate change, we have a huge wealth of expertise within environment and climate change, where the office is currently located, where they've gone beyond the mandate they have under the FSDA, and in fact they are pulling together from the various departments the inputs for the FSDS. They are providing the oversight and pulling on the science within their department to be able to work collectively with departments across government to do this.

The results are that we are seeing incremental progress, and through this draft for the first time, we are seeing the inclusion of more of an economic and social policy focus with drawing on the UN sustainable development goals.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Good. Thanks.

I just wanted to hear from Dr. Boyd briefly, if you let me.

[The Chair, Liberal, Deb Schulte]

I am going to have to cut that one off. We are going to have to take that on the next questioning because we are now way over six minutes. I'm so sorry. This is a great discussion.

Mr. Shields, go ahead.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

I'll go way back to the beginning when we started. Mr. Botham, you made some interesting comments, if you can remember back to when you began. You talked about a couple of theme areas you were involved in. The one that got my attention was about agriculture and the possibility of penalties or breaks for agricultural equipment, other kinds of vehicles.

When you deal with a sector—and I know this may be specific for you, but the agricultural sector, in the sense of breaks.... We've heard that the government is looking at taxing and taking away breaks, yet you are talking about incentives and breaks for using more high-tech equipment, and things that leave less of a carbon footprint.

How much do you get down to the level of dealing with those people in the industry to find out what works as far as an incentive or a penalty?

[Richard Botham]

Madam Chair, I have a colleague from our tax policy branch here, and if you'd like to have a detailed answer to that question I would suggest that he would be best placed to provide that to you.

[The Chair, Liberal, Deb Schulte]

Okay. If you'd like to come up right away to do that, that would be fine. Thank you.

[Richard Botham]

It is my colleague Miodrag Jovanovic. He is general director of the tax policy branch, so the work that his group does touches on that directly.

[Martin Shields, Conservative, Bow River, AB]

I think that's important. As we look at regulatory at the beginning, if there isn't some communication and work at the grassroots and industry levels, how does what we do make sense if that isn't happening? Do you get where I'm going?

[Miodrag Jovanovic, Director, Personal Income Tax, Tax Policy Branch, Department of Finance]

Thank you, Madam Chair.

In terms of tax policy, we have a number of measures, and I think Richard mentioned them at the beginning of his remarks.

One of them, and probably the one you are referring to, is the accelerated capital cost allowance for clean energy generation and energy conservation equipment. Essentially, accelerated capital cost allowance means that.... Under normal circumstances, you would depreciate your equipment based on the useful life of that equipment. In order to create an incentive to invest in this equipment, we have what we call an accelerated capital cost allowance, which is basically a higher rate of allowance.

In the case of two key measures we have—what we call class 43.2 and class 43.1—class 43.2 gives a 50% annual depreciation rate, and class 43.1 gives 30% per year. Basically, it allows an acceleration, so it allows a deferral of tax, in a way.

Recently, in budget 2016, we expanded that measure. We allow new equipment: for instance, stand-alone batteries, as well as charging stations for electrical vehicles.

There is a continuous relationship with the sector to make sure that these measures properly reflect the new technologies and advancements, which is why from time to time we have expansion of these, as in budget 2016. That's the role of finance with these measures, and that's how we make sure they properly reflect the needs of the sector.

[Martin Shields, Conservative, Bow River, AB]

I think that's a good point to make in the sense of the incentive process versus the implementation of measures and penalties. I think it's important to know how you want to develop regulations to do that, so I appreciate the answer. Thank you.

I have a quick question for Mr. Boyd.

We had a gentleman from Wales speaking with us. He talked about a 17-year process to get where they got to legislation. To me, in his answers, there was a lot of groundwork and a lot of development. Vancouver didn't get to talking about a green city instantly. My point is, before you do legislation, strategies, and the implementation of penalties, there has to be a lot of work done for years at the grassroots to get this buy-in.

What is your response?

[Dr. David Boyd]

I would just say that we have been working at the grassroots. Canadians have been pushing governments to take more action on sustainable development for decades, and the fact that we still are here discussing the inadequacies of our Federal Sustainable Development Act should serve as an impetus to us to really strengthen that. We're actually trying to implement the desires of Canadians here for stronger action on sustainable development. I think there's huge grassroots support for that.

At the same time, I think that what Wales did... They did a public consultation process called “The Wales We Want”. The United Nations did something similar called “The World We Want”. I think it would be a great 2017, 150th anniversary project to do a public consultation on “The Canada We Want”.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

[The Chair, Liberal, Deb Schulte]

Thank you very much.

We're going to move over to Mr. Gerretsen.

Thank you.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Thank you, Madam Chair.

My first question is for Ms. Gelfand, if you can just answer quickly. What four departments were in your audit, do you recall?