Environment Committee on June 14th, 2017

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Definitely there will be questions I look forward to putting to the Minister of Finance.

I've always been of the mind that, within the bundle of perverse incentives, it's not just the direct spending and the tax incentives but it's also the failure to regulate or the delay in regulation. I have sat at many tables where industry pushes and wins delay after delay, the methane regulations being an example. That is a direct financial benefit to the fossil fuel industry. I'm wondering if, within those definitions, you've looked at something beyond just the straight tax measure.

[Julie Gelfand]

In this audit we looked at the straight tax measures and the non-tax measures, which were, as I said earlier, loan guarantees, better interest rates, and research and development.

The issue of regulation that you're talking about, we are looking at right now, and we will be tabling a report on mitigation. What the government is doing to reduce our greenhouse gas emissions and regulate is one of the things they have said they would do. We will be looking at that and tabling that in the fall.

When I introduced this concept and said there was a suite, I was looking at all the tools the federal government has, and I cut it up in terms of fossil fuel subsidies and support for clean energy, which is almost the opposite. You try to stop supporting the “bad” greenhouse gas emitters and start supporting the “good”, the ones that don't emit greenhouse gases, then at the same time look at how well we are reducing our emissions overall, and also how we are adapting. How is the federal government getting ready to adapt to the changes that we're already seeing? That was the suite when I mentioned the suite of climate change audits this year. Two were to be in the spring, but we've moved the clean energy one into the fall because this audit on fossil fuel subsidies became an issue of access to information.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

When the government finally brings forward what was requested, which is a plan and a timeline, will you also be looking at the different factors they look at? For example, we've signed on to a number of international commitments and obligations. A number of political commitments have been made, and of course there is the G20 and sustainable development. Are you also going to be measuring against that? I look at the government saying they are committed to shifting toward cleaner sources of energy and greater energy efficiency. Will you also be measuring whether or not they are addressing incentives that negative that?

[Julie Gelfand]

At this point we're looking at the four audits I mentioned. That doesn't stop me in the future from looking at something like that. I can audit against government commitments. If the government has said it will do x, I can audit against x. I cannot audit against my own idea of what things should be. I audit against what the government has said it will be.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I'm not suggesting that. I'm suggesting that undertakings are made: reduction in greenhouse gases, bringing forward methane regulations, and so forth. You will have a list of those things, if there has been action, where there might be a perverse incentive that could be delaying that.

[Julie Gelfand]

In the fall we will be looking at all the measures the government has said it would do to mitigate and therefore reduce greenhouse gas emissions.

[The Chair, Liberal, Deb Schulte]

You have 30 seconds.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I have just one quick follow-up. Are you going to be raising any kind of objection to their ruling on cabinet confidences? I notice a 2002 Supreme Court ruling, Babcock v. Canada, that says it used to be that cabinet confidences were absolute but now they are supposed to be weighed against the public interest. I'm wondering if you're going to be pursuing this grader in their obligation to reveal information.

[The Chair, Liberal, Deb Schulte]

You have 10 seconds.

[Julie Gelfand]

I can tell you that that the Auditor General feels very strongly that his act indicates that he has access to all information except cabinet confidences.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks.

[The Chair, Liberal, Deb Schulte]

John Aldag.

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

Thank you.

It's always a pleasure to see you, Ms. Gelfand.

I've heard a lot about fossil fuel subsidies and would say that it's not something that I knew a lot about, so I was quite excited to see the report. I dug into it when we got it. I'll tell you that I was disappointed when I got to the end of it. It wasn't the quality of the work or the findings; it simply didn't give me a clear sense that this government and previous governments have been on a clear path to getting to where we've committed to going.

From the conversation, I assume I'm reading that correctly, and that there's really a lot more work we need to do to get from the 2009 commitment to the phase-out of these inefficient fossil fuel subsidies by 2025. Am I missing something? It seems that the message in the report is that there's a lot of work yet to do.

[Julie Gelfand]

Because the Department of Finance didn't do a really good job at establishing what the population may or may not be, it's hard for me to tell you whether or not there's a lot of work to do on the tax side. On the non-tax side, it's clear that the government does not have a clear idea of how it is subsidizing the industry through loan guarantees and research and development. It does not yet have that information. The minister has developed a plan, with some timelines, so they will be gathering that information. We can do a follow-up audit to look at that.

It's hard for me to tell you whether or not there's a lot of work to be done, because we don't have confidence in the work that Finance Canada did. They can't prove to us what they did do and whether or not it shows that they looked at the entire population properly.

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

Thank you.

I was a bit intrigued in terms of a few references in the document about this idea of support for the poorest. One of the recommendations on page 8 gets into a bit of that, but I don't fully understand it in the Canadian context. Are we saying that there's a role for these fossil fuel subsidies to protect the poor? It talks about “the importance of providing those in need with essential energy services”. Do we know how much that element of this agreement will play into the Canadian context? I was a bit confused by that. It seems that a lot of our energy is for export. Are we subsidizing in Canada for export markets? How does that fit in? I really was unclear.

[Julie Gelfand]

The G20 commitment indicates that we are going to rationalize and phase out inefficient fossil fuel subsidies and take care of the poor while we do so. The sustainable development goal has a similar target.

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

Are we talking about our domestic poor or are we talking the world's poor?

[Julie Gelfand]

What we said in our audit was that the government actually didn't define these things. This is part of the reason why I can't tell you if there's a lot of work to be done: because they haven't made these definitions. What does “poor” mean in the Canadian context? If we reduce an inefficient fossil fuel, first of all, what's the definition of that? Then, how will it have an impact on something else that they still have yet to define? The G20 commitment is broad enough and actually asks each country to define these. They have to bring it into each country's context, define it, and then go through the process of rationalizing and phasing this out without having a severe impact on the poor.

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

With that, I guess it will be up to the departments to define if we'll subsidize for our own poor or for the world's poor. Is that how I'm reading it?

[Julie Gelfand]

It's up to each country to define it in their own context.

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

Okay. That's very interesting.

Mike has realized that he missed a question and wanted to come back to it.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Yes, there was one point that I wanted to look at. In the report, there's this one sheet that goes over the changes that were made from 2011 through to 2015, and the costs, the projected impact on the budgetary balance. At the bottom of that page, there's a note saying:

The Canadian exploration expense allows corporations to deduct 100% of their expenses for unsuccessful exploration in the year incurred. This measure also includes the cost of environmental studies and community consultations related to exploration.

Is that true?

[Julie Gelfand]

It's in our audit, it's true.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

One hundred per cent of environmental studies and community consultations are paid for by the taxpayer.

[Julie Gelfand]

It's a tax credit.