Evidence of meeting #163 for Environment and Sustainable Development in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was households.
A video is available from Parliament.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I should get back to you on this one.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Okay, sure.
Here's my question.
When the government announced its pan-Canadian framework on clean growth and climate change in October of 2016, it also announced the price, starting at $10 a tonne and moving to $50 a tonne by 2022. The assumption at the time was that this would be an economy-wide price, a price not only across all economic sectors but also across the entire country, and hence when provinces stepped up to the plate, the federal backstop would kick in.
Let's use 275 megatonnes as the rough number for emissions from those four provinces. The effective price is quite a bit lower than that. If the backstop is covering almost all of the emissions in those four respective provinces, in 2019 you get an effective price of roughly $10 a tonne across those economic sectors, and by 2022 you get an effective price of roughly $25 a tonne, rather than $50 a tonne.
I point that out as a disconnect between the price that was announced three years ago and what the effective price is. Most economists have indicated that they think Canada needs to go to an effective price of $130 a tonne or more by 2030 in order to meet the Paris accord targets.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
What we looked at includes the direct cost to households. It includes the output-based pricing system, whereby large emitters can trade among themselves, and if they go above the average for their sector, they have to pay the price on what's above that.
You're right that it—
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
I guess it's safe to say that the output-based pricing system has an effective price per tonne that's quite a bit lower than the price retail consumers would pay at the pump, for example.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's a fair assessment, indeed.
Conservative
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Mr. Giroux, let me come back to what we talked about earlier.
If we do not generate enough money with the carbon tax, where will the government find the money needed to pay what I will call the “royalties to Canadians”?
My understanding is that that program funds itself, that 90% of the amount generated by the tax goes back to taxpayers and that they will receive more money than the estimated amount they will have paid. However, if your models indicate that you will not make the total amount required, where will you find the money to pay the rebates to taxpayers? Will you reduce them, or will you go elsewhere?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The federal model provides that the government will return 90% of the revenues generated by the tax to taxpayers. Those rebates are paid to taxpayers slightly in advance.
Therefore, if the total amount of rebates to taxpayers is higher than the amount the government is able to obtain through the tax, future rebates will have to be reduced accordingly to ensure that the 90% is met.
If the government ever decides to freeze the amount of rebates or still make the scheduled payments, there will have to be a mechanism to pay back the difference or make up the shortfall.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
I have one last, simple question.
In that study, have you measured the reduction in greenhouse gases in those four provinces?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, we have measured it. We started from assumptions or data provided to us by, among others, the National Energy Board. I'm looking at a 22-page report and I can't find, unfortunately, the page where the reductions are mentioned. We have—
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No. I think I'm confusing that with the data report.
Liberal
The Chair Liberal John Aldag
You can think about it. We do have one more round with Mr. Godin in six minutes, so we'll give you a chance to respond at that point.
We'll go over to Ms. Dzerowicz for six minutes.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you very much.
Thanks for your excellent presentation.
I'm going to ask you some fairly general questions, just because these are the questions that I hear at the doors and what my constituents ask, so it's nice for me to be able to play the answers back directly from those who are writing the report.
You've mentioned that 80% of households will get back more than what they pay in increased costs as a result of carbon pricing. Focusing just on Ontario, how much will they pay? We know how much they're going to get back in Ontario, but how much will they actually pay? If they're going to get back more, what is it that we've estimated that they'll pay?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Thank you.
In Ontario, we've estimated that starting in this current fiscal year, they will pay between $131 for the lowest-quintile households and up to $401 for the richest quintile.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's $401.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Okay.
That's in your report. It has listed how much they pay for year one.
Liberal
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Of course.
For the second quintile, it's $179, and for the third, it's $245.