Environment Committee on June 10th, 2019

[The Chair, Liberal, John Aldag]

Good afternoon, everyone.

Welcome back to the commissioner, her team and all of the departmental officials who are here.

The purpose of today's meeting is to hear from the commissioner on her most recent reports. I think there are four of them. We're going to start with a 10-minute opening statement by the commissioner.

Although we had also asked the departments to give opening statements, I think we will skip those and just get right into the questions if there's agreement to do that. We have one hour for this portion of the meeting, so I really would like to get into the interactions and discussion.

With that, Commissioner, we will turn it over to you to hear your opening statement.

[Julie Gelfand, Commissioner of the Environment and Sustainable Development, Office of the Auditor General]

Thank you very much.

Mr. Chair, I am pleased to be here today to discuss our spring 2019 reports, which were tabled in the House of Commons in April. I am accompanied by Kimberley Leach, Sharon Clark and Heather Miller. All three are principals, and they were responsible for our audits.

I'm going to talk to you about three audits. Our first audit focused on aquatic invasive species. This includes everything from zebra mussels to Asian carp and green crabs. These species are introduced into Canadian waters by ships, recreational boats and trade. They compete with native species for food and habitat, and they have negative impacts on ecosystems and economic activities like fisheries and tourism. They can damage beaches and docks, build up in water intake pipes and cause problems in hydroelectric facilities.

We found that, despite long-standing commitments to do so, Fisheries and Oceans Canada and the Canada Border Services Agency have not taken the steps required to prevent invading species from becoming established in Canadian waters.

Fisheries and Oceans Canada didn't know which species or pathways posed the greatest threats to Canada's environment and economy. They didn't know which species or pathways to monitor, and they didn't have an overall picture of which species had become established or where.

Fisheries and Oceans Canada had developed only one plan to respond rapidly to an invasion, and this was for four species of Asian carp, a very important species to be worried about, so we are ready to respond to an invasion of that species.

In addition, Fisheries and Oceans Canada and the Canada Border Services Agency did not adequately enforce the Aquatic Invasive Species Regulations. This was in part because they did not sufficiently support fishery and border services officers.

Let's turn now to our second audit, which focused on the federal government's role in protecting fish and their habitat from waste and effluent released into water at active mine sites.

Environment and Climate Change Canada and Fisheries and Oceans Canada determine whether a natural water body can be used to store waste from mines. We found that the departments adequately reviewed storage options, consulted local and indigenous communities, and did not authorize any deposit unless the mining companies met all the necessary conditions.

Metal mines such as zinc, copper, nickel and now diamond mines are authorized to release certain concentrations of specific harmful substances in their releases of effluent. We found that Environment and Climate Change Canada monitored the environmental effects of this effluent on fish. They provided technical guidance, they collected and verified the information, and they used this data to introduce stricter effluent limits.

Environment and Climate Change Canada reported high compliance with effluent limits by metal mines; however, we were concerned that the department's reporting was not comprehensive because it did not have complete information for roughly a third of the mines. We also recommended other improvements, including that public reporting about environmental effects provide the location of mines and that measures be considered when environmental monitoring shows that effluent is affecting fish—for example, through changes in growth rates.

We examined the oversight of non-metal mines as well. These include potash, coal and oil sands mines. Environment and Climate Change Canada did not consider the risks of non-metal mines to decide how often and which sites to inspect. We found that non-metal mines were inspected less frequently than metal mines. In our view, inspecting non-metal mines regularly is important, because these mines are not authorized to release any effluent that may be harmful to fish or their habitat.

I will now turn to our last two reports, which focus on subsidies to the fossil fuels sector.

The first deals with tax subsidies, and the second with non-tax subsidies, such as grants or loans at favourable rates. This issue is important because Canada and other countries have committed, through the UN and the G20, to phase out inefficient fossil fuel subsidies.

For both Environment and Climate Change Canada and Finance Canada, we found that their definition of “inefficient” was so broad that it could not guide their work.

We found that Finance Canada's assessments of whether tax subsidies were inefficient focused almost exclusively on fiscal and economic considerations—they did not include adequate consideration of social and environmental issues.

On the non-tax subsidies side, we found that Environment and Climate Change Canada's work to identify inefficient fossil fuel subsidies was incomplete. The department considered only 23 of over 200 federal organizations to compile an inventory of potential non-tax subsidies. It did not include all regulatory organizations with mandates in the fossil fuels sector, nor did it include all research granting organizations. It also did not include publicly funded projects that were designed to, for example, increase production of fossil fuels.

These four reports conclude my time as the Commissioner of the Environment and Sustainable Development, as I will be leaving the position in the fall. It has been an incredible honour to serve you in this role.

I hope that parliamentarians and Canadians find these reports and recommendations useful and worthy of follow-up, now and in the future.

Mr. Chair, this concludes my opening remarks. We'll be pleased to answer any questions you have.

Thank you very much.

[The Chair, Liberal, John Aldag]

Excellent. Thank you so much for that overview of the four reports. With that, we will jump into the questions that we have.

I am sure that the departments will be able to provide some of the responses they would have provided in their prepared statements as we get into the discussion for the next 50 minutes or so.

First of all, I have Ms. Dzerowicz for six minutes of questions.

[Julie Dzerowicz, Liberal, Davenport, ON]

Mr. Chair, before I get into my questions, could you describe who's around the table so that I can direct my questions, please? I just need to know which departments are here so I can direct my questions.

[The Chair, Liberal, John Aldag]

Sure. We have with us Fisheries and Oceans, Environment Canada, Finance and the Canada Border Services Agency.

Those are the four groups represented here today. I don't think I missed anybody, right? Okay.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you. It's just because we have so many people.

I want welcome all of you.

Thank you for the excellent presentation. We are going to miss you this fall. Thank you so much for all of your wonderful work.

In my riding of Davenport, I hold way too many climate action town halls. I will tell you that one of the things that comes up all the time is our fossil fuel subsidies and whether we could be going fast enough. Because I only have six minutes, I'm going to direct my questions to that issue, if that's okay.

I have one question for Ms. Gelfand, and then I think I'd like to direct my questions to Finance after that.

You indicated that “We found that Finance Canada's assessments of whether tax subsidies were inefficient focused almost exclusively on fiscal and economic considerations”, but didn't adequately consider “social and environmental issues”. Can you just explain that to me so that I can better direct my questions after this?

[Julie Gelfand]

If you think of sustainable development, you usually think of three legs of a stool. You look at things from an economic perspective, a social one and an environmental one. We were expecting the Department of Finance, when it was reviewing potential fossil fuel subsidies, to be looking at all three parts of that stool. What we found was that the majority of their analysis focused almost exclusively on the economic side, without being able to show us that they had done a social analysis and an environmental analysis of those potential subsidies.

[Julie Dzerowicz, Liberal, Davenport, ON]

Okay. Thank you.

I quite often ask officials where we're at with fossil fuel subsidies and their elimination. The response I get is that we've eliminated seven out of eight inefficient tax subsidies for fossil fuels. That's seven out of eight. Also, we're trying to define inefficient non-tax fossil fuel subsidies. That is the answer I get.

I've had a panel discussion in my riding. I've asked the panellists, who are experts in the industry—professors and lawyers who work a lot in this area—if we can move faster in eliminating fossil fuel subsidies, and they have said, yes, we can. In particular, we can move faster on fossil fuel subsidies, whether tax or non-tax subsidies, that go directly to supporting increased greenhouse gas emissions. I'm sorry: we can move faster to eliminate fossil fuel subsidies that, yes, are subsidizing greater greenhouse gas emissions.

I guess that's my question. In my riding, they just want to hear that we are 100% of the way there, as opposed to 80% of the way there. I want to be able to respond to them about why we're not able to move faster in eliminating these fossil fuel subsidies.

I don't know who I'm directing this question to. I know we have a lot of people here. Who are the Finance officials here?

Thank you.

[Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch, Department of Finance]

Thank you very much for the question. I'll speak to the tax side. Maybe colleagues from Environment will wish to speak to the non-tax side.

Over the past decade, governments have eliminated, phased out or rationalized eight out of nine income tax fossil fuel subsidies.

[Julie Dzerowicz, Liberal, Davenport, ON]

Right.

[Andrew Marsland]

By our assessment, there are nine subsidies. We define a subsidy by reference to whether or not it is a tax expenditure. Every year, we publish a report and table it in Parliament, which deals with all tax expenditures. That identifies those that are specific to the fossil fuel sector. Eight out of nine have been rationalized.

[Julie Dzerowicz, Liberal, Davenport, ON]

What's the last one that has not been eliminated?

[Andrew Marsland]

On the last one, just recall that the commitment to the G20 is to rationalize, to phase out, inefficient fossil fuel subsidies. There is another tax expenditure, which is flow-through shares. It is not exclusive to the fossil fuel industry and essentially provides a mechanism that assists corporations in obtaining financing. That applies to the mining sector and the fossil fuel sector, as well as the clean energy sector.

That's the one remaining tax expenditure that is somewhat specific to the fossil fuel sector. Now, we've continued to look at that to determine whether it's inefficient. There are reasons for that measure across a number of sectors.

[Julie Dzerowicz, Liberal, Davenport, ON]

When we say “inefficient”, are you saying that it's actually used to expand extraction? Is that what it means?

[Andrew Marsland]

Well, it's a question of inefficiency—

[Julie Dzerowicz, Liberal, Davenport, ON]

I don't want to.... Unfortunately, I have, like, three minutes or three and a half minutes left.

[Andrew Marsland]

Yes. Unfortunately, it's not something that's susceptible to a kind of simple definition.

[Julie Dzerowicz, Liberal, Davenport, ON]

Okay. Yes.

[Andrew Marsland]

What we do when we assess an inefficiency or efficiency of a measure is to look at things like the need for policy intervention and whether it's relevant. We look at whether it's effective in achieving its stated objective. We look at the compliance costs associated with it.

[Julie Dzerowicz, Liberal, Davenport, ON]

I have 30 seconds left.

I don't know if you can actually submit the answer to this committee, but I'd really like to understand why we're not able to eliminate this last one, and, on the inefficient non-tax fossil fuel subsidies, how come we're not further along in eliminating them?

If you can't respond in the 30 seconds left, could you could please submit something to this committee? I have a lot of representatives, a lot of people in my riding, who are demanding answers to this, and I'm not able to get answers to it.

[Hilary Geller, Assistant Deputy Minister, Strategic Policy Branch, Department of the Environment]

I'll try to do this in 30 seconds.

Very quickly, the Department of the Environment has done a very extensive review. We identified 36 programs that could potentially be subsidies and concluded that four of them were, but none of them were inefficient.

I think probably the key thing is that Minister McKenna launched a consultation in early April, just to—I think in her words—ensure that we've got it right. It's a very important exercise, and that consultation will wrap up on June 30.

[Julie Dzerowicz, Liberal, Davenport, ON]

Okay, but we're still on track to eliminate it all by 2025, or trying to do that earlier?

[Hilary Geller]

The leader's commitment is by 2025. That's right.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

[The Chair, Liberal, John Aldag]

Guests, we do have some new departmental officials who may not have been here before. We use a card system. The yellow card means that you have one minute left. The red card means that you're out of time, but finish your thought and we'll move on to the next person.

With that, Monsieur Godin, you have six minutes.