Evidence of meeting #69 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 information.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Julie Gelfand  Commissioner of the Environment and Sustainable Development, Office of the Auditor General
Andrew Hayes  Principal, Office of the Auditor General
Tim Williams  Committee Researcher

4:10 p.m.

Liberal

The Chair (Mrs. Deborah Schulte (King—Vaughan, Lib.)) Liberal Deb Schulte

We'll get started.

Thank you very much.

Welcome, Ms. Gelfand and Mr. Hayes. You are back to give us a chance to hear your report and ask questions. I know everybody is ready for that.

I know we're late, and I apologize. We had votes in the House, as you know.

We'll get started right away, if everybody is ready.

Ms. Gelfand, the floor is yours.

4:10 p.m.

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

Madam Chair, thank you.

Members, I feel like you are all friends and neighbours at this point.

Thank you for the opportunity to discuss our spring report on fossil fuel subsidies.

Joining me at the table is Andrew Hayes. He was the principal responsible for the audit.

This audit report is part of a suite of audit reports that will be presented to you, to Parliament, in 2017 pertaining to the tools the federal government has to help Canada reduce greenhouse gas emissions and meet its international commitments.

This fall, audit reports will be tabled on climate mitigation, climate adaptation, and funding for clean energy technology. When you combine that with fossil fuel subsidies, we're looking at basically four parts, or four aspects that the federal government controls in terms of climate and reducing greenhouse gas emissions.

As well, in early 2018, a collaborative report on climate change prepared with the provinces and territories will also be tabled, as a special tabling.

In 2009, Canada and the other G20 countries officially recognized that inefficient fossil fuel subsidies undermine efforts to deal with climate change, encourage wasteful energy consumption, reduce energy security, and impede investment in clean energy sources. As a result, the G20 countries committed to phase out these inefficient fossil fuel subsidies. They have reaffirmed this commitment every year since.

It is also worth mentioning that, in September 2015, members of the United Nations, including Canada, adopted the sustainable development goals, otherwise known as the 2030 Agenda. One of the targets under these goals is to phase out harmful fossil fuel subsidies in a manner that protects the poor.

Our audit focused on whether Environment and Climate Change Canada and the Department of Finance supported Canada's G20 commitment to phase out and rationalize inefficient fossil fuel subsidies while providing targeted support for the poorest.

Finance Canada is responsible for the tax side of the commitment, while Environment and Climate Change Canada is responsible for the non-tax side.

To begin with, we asked the departments to explain how they defined the G20 commitment, including what is meant by “inefficient fossil fuel subsidies”, “rationalize”, and “support for the poorest”.

A clear definition is important for two reasons. First, each G20 country was left to define what an “inefficient fossil fuel subsidy” is in the context of the country's national circumstances. Second, without a clear interpretation of the meaning of the commitment, the departments cannot identify the inefficient fossil fuel subsidies that should be considered for phase-out or rationalization.

We found that the departments had not defined what the G20 commitment means in the context of Canada's national circumstances.

On the non-tax side, Environment and Climate Change Canada's responsibility began with the November 2015 mandate letter from the Prime Minister. The non-tax side of the commitment is important, as it covers things like government grants and contributions, government loans or loan guarantees at favourable rates, government interventions to lower prices in markets, and research and development funding.

Our audit found that Environment and Climate Change Canada didn't yet know the extent of non-tax measures that could be inefficient fossil fuel subsidies. However, in February of 2017, during the time of our audit, the minister approved a plan with timelines to identify these measures and to interpret the G20 commitment.

On the tax side, the Department of Finance approached the commitment by focusing on identifying tax measures that are specific to the production or consumption of fossil fuels and that provide a preference to taxpayers. We found, however, that the department didn't consider a number of tax measures that applied specifically to the oil, gas, and mining sectors. We also found that the Department of Finance didn't have an implementation plan to support the phase-out and rationalization of tax measures that are inefficient fossil fuel subsidies.

During the audit, the Department of Finance refused to provide us with information we needed to conclude whether the department analyzed the social, economic, and environmental aspects of tax measures related to the fossil fuel sector.

Recently, the government introduced an order-in-council that should give us access to budget information in the future.

We have sent a letter to the Department of Finance asking for the information that it did not provide to us during the audit. At this point, we are waiting to see what the department will give us. Once we have that information, we will determine what it means for our work.

Until the Departments of Finance and Environment and Climate Change Canada complete the work we identified in the audit, we can't provide assurance that Canada will meet its G20 commitment. Meeting this commitment is important. It will have a positive impact on the health of Canadians and the environment by reducing greenhouse gas emissions and wasteful consumption of fossil fuels, and by encouraging investments in clean energy.

Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you very much.

4:15 p.m.

Liberal

The Chair Liberal Deb Schulte

Thank you very much. I really appreciate you coming and presenting this in front of the committee. I know you already did it once before it was presented, and it was deemed to be important to this committee. That's why we wanted to have you come here, so we really appreciate it.

First up is Mike Bossio.

4:15 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

Thank you, Chair.

Thank you, Ms. Gelfand, once again, for providing us with information that is so valuable if we're going to meet or not meet our targets.

To be perfectly blunt, I still find it appalling that we're even in the situation that we're in today, still subsidizing fossil fuel energy. We always seem to find excuses—either it's not the right time, or we're trying to make sure we have a level playing field for our corporations to compete with other countries that have subsidies—but at the end of the day, they've just finished going through a very profitable period of time, and there was no reason whatsoever to continue with the subsidies. Right now, yes, they're in a difficult time, but at some point, we have to decide that we're going to take seriously our commitments on the G20 side.

Have you looked at how other G20 countries are meeting these obligations and what they're doing that could provide some guidance to Canada as to how we can do a better job?

4:15 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

During the course of our audit, we did not do a benchmarking with other countries, so unfortunately I can't provide that information.

It is a good idea.

4:15 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

So we don't even really have an understanding of where Canada sits, even in terms of how lacking we are.

Right now, in your report, it sounds as though potentially we won't meet these targets, if we continue moving at our present pace. Would you say that's correct?

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

We can't provide you with an assurance regarding whether or not Finance Canada has done a thorough review of the potential population of inefficient fossil fuel subsidies, because that's not really the way they looked at it.

First of all, they haven't defined it yet, so they have to do that. Then they have to go in to their population of tax measures and pull out all the ones that would meet that definition. Right now they have gone in to look at those that they consider to be favourable to taxpayers, but they haven't done an overall review of what might be inefficient, and therefore what we need to reduce.

Our audit does indicate that several fossil fuel subsidies have been reduced and/or eliminated, starting in 2011 and proceeding even up until the last budget. Our concern is that we haven't seen the analysis to see whether or not they've actually looked at the whole population properly, so that we feel comfortable that they've done the due diligence that's required, so that I could tell you whether or not we will meet the G20 commitment.

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

Is part of that because they haven't given you the data that would enable you to determine whether or not they've done this analysis and to what extent?

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

That is correct.

In our audit, we mentioned that they told us there was about 243 pages of information which they felt at the time they could not provide to us, and that it would have the information we required.

Now, as a result of the new order in council, we have written them a letter asking to see that information. Based on what we get from them, we will then determine how we use that information and whether or not to launch a new audit immediately or in a year from now. We have to wait to see what information they provide to us.

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

They haven't given you a timeline as to when they're going to provide that information.

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

Not yet.

These are all great questions that you could ask the department.

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

That's why I'm asking you.

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

I'm not the department.

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

No, no, but—

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

—sending that message.

What other measures do you see Canada doing that we're not doing now that could help us to achieve those targets, or other data points that aren't being touched on and need to be touched on?

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

As I mentioned, there are two types of measures. There are the tax measures that Finance is responsible for, and then all of the non-tax measures.

Environment and Climate Change Canada has developed a plan with timelines as to when they will get that information. They've indicated that each ministry will be responsible for looking at that information and deciding whether it's inefficient and how to reduce it.

We will be waiting, again. It's a topic for another potential audit: when will Environment Canada have all that information? Then we'll have a good sense of all the non-tax measures, which could potentially be quite valuable in terms of government grants, loan guarantees, and research and development.

4:20 p.m.

Liberal

Mike Bossio Liberal Hastings—Lennox and Addington, ON

Thank you very much.

4:20 p.m.

Liberal

The Chair Liberal Deb Schulte

Next up is Mr. Eglinski.

4:20 p.m.

Conservative

Jim Eglinski Conservative Yellowhead, AB

Thank you.

I'd like to thank both Julie and Andrew for coming today and meeting with us.

You mentioned that there have been six fossil fuel subsidies that have been reformed since 2009. I was wondering if you could tell us which ones those were.

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

If you go to page 9 of our report, they're quite technical. There's a whole list of them. You'll see all the different tax measures and when the budget was.....

There is, “Expenses of oil sands and oil shale leases and property, previously treated as Canadian development expenses...are treated as Canadian oil and gas property expenses..”.

They're very detailed.

4:20 p.m.

Conservative

Jim Eglinski Conservative Yellowhead, AB

Can you tell me how many of those were done under the Conservative leadership and how many were done under the Liberal leadership?

4:20 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

Well, of the ones you see here, five were done up until 2013. For 2015, I'm not sure of the exact date. Up until 2015, there are six, according to our report.

Remember, again, that we aren't convinced that Finance Canada has done a good survey of the entire population in order to come up with the list of inefficient fossil fuel subsidies.

4:25 p.m.

Conservative

Jim Eglinski Conservative Yellowhead, AB

You don't know what kind of costs were saved out of that. I guess those are in those pages.

4:25 p.m.

Commissioner of the Environment and Sustainable Development, Office of the Auditor General

Julie Gelfand

Yes, it is—