Evidence of meeting #151 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pricing.
A video is available from Parliament.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
One of the things he says is that first the policy raises the overall unemployment rate by 1.3%. Second, unemployment effects, regardless of gender or educational category, are significantly different across demographic groups. Males of lower educational levels suffer the brunt of unemployment effects.
Would you say that there is more than just the harm to families in terms of the money that they pay out for carbon tax, but this could also cause unemployment and particularly—
Senior Fellow, Macdonald-Laurier Institute
That's a good point. I hadn't thought of that, but yes, there's going to be a difference by gender too. This is because more men work in the goods-producing industries—manufacturing, oil and gas—that sector is going to be disproportionately affected. So there will be a gender effect, since we're all supposed to have gender analyses about everything we do now.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Yes, and unfortunately that's not being shared with us.
I'll go back to what Mr. Elgie said earlier about the reasons for the relocation of certain companies to other jurisdictions.
First of all, the government is pursuing a multi-layered strategy here. The price on carbon is one, but obviously they're increasing regulations. We had Mr. John Moffet from Environment Canada here. He said that there's going to be more innovation, which he basically said vis-à-vis...to me, it was subsidies. Instead of the invisible hand setting a price within a single market, are we not going to get where we will, because we're part of an integrated economy—Canada, the United States, and in fact the world—be pounded by having higher prices and higher regulation? In addition, we're going to have to subsidize our market.
In fact, Mr. Moffet said that he anticipates market failures. I don't think he means market failures as in “the market doesn't function”. I think he means market failures in terms of how businesses will not be able to compete and therefore we will have to subsidize to keep them open. Are you concerned about the integration of the Canadian economy while seeing some of these policies move forward?
Prof. Stewart Elgie
Yes. I'm really concerned about competitiveness. To be honest, I think the world is going to move to a low-carbon economy whether Canada likes it or not. To me, the challenge is, does Canada prepare itself to be competitive in terms of generating wealth and jobs around where that economy is going? I think that's a real concern.
In terms of the transition, carbon pricing is the most cost-effective way to reduce emissions. I have yet to hear today or anywhere else that someone has come up with a more cost-effective solution to reduce emissions. That said, it's not perfect. There are some things that it doesn't reach as well. Ecofiscal has put out a whole report on that, which I won't bore you with today—but I can give you the link—in terms of the reasons why in the short term you may need other regulations or incentives to help accelerate the transition.
I think we're looking at fuels, coal phase-out, and a couple of other areas where there are going to be specific regulations—methane. Those regulations are necessary because pricing won't do all the work fast enough to get us there, but we do have to deal with the competitiveness impacts of doing that. That's why things like output-based pricing.... That's why I suggested things like the accelerated capital cost allowance. If we're going to be pushing firms to make those investments, let's give them some relief to help lower the costs of doing so.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
But do you see right now that the Trump administration—
Liberal
The Chair Liberal Wayne Easter
I'm sorry, guys. I have to give time to Greg or we're going to be out of time here. Greg is the next questioner.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Thank you very much, Mr. Chair.
I have a question for Ms. Turcotte. Mr. Elgie and Mr. Van Iterson can answer as well.
Ms. Turcotte, I acknowledge that a price on carbon will have an impact on the economy and on the public. However, inaction also has a price.
Can you tell the committee clearly how much it will cost if we do not address the challenge of climate change?
Senior Analyst, Pembina Institute
Yes, absolutely. I have a precise figure for the cost of inaction.
It's $21 billion to $43 billion per year by 2050, according to 2011 estimates from the National Round Table on the Environment and the Economy.
It is substantial.
In the study that Environment Canada published a few days ago, they mentioned an effect of 0.1% on the GDP. In the budget forecasts in April, the effect was 0.45%.
Canada’s Ecofiscal Commission estimates that the impact could be practically nil if the redistribution of income in Canada is considered.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Has the commission also assessed the cost to the economy if we do not act now to tackle the problem of climate change? What cost would that represent in 10 or 20 years?
Mr. Elgie, I see you shaking your head.
Prof. Stewart Elgie
No, the Ecofiscal Commission hasn't done that cost estimate yet, but there are a number of estimates out there. The most high-profile one was done by Sir Nicholas Stern, former chief economist for the World Bank.
His estimate was that the cost of inaction on climate change would be relatively equivalent to the cost of both World Wars and the Great Depression combined. Different people have higher numbers or lower numbers than that, but that's the order of magnitude of not dealing with climate change. Certainly, the insurance industry has seen its payouts for severe weather events go up dramatically over the last 20 years. They're one of the hardest lobbyists at global climate summits because they're on the paying end of the costs of climate change.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Are they on the paying end, or is it the individuals who are on the paying end?
Prof. Stewart Elgie
You're right, but their profits are in the middle of that equation, so they are pretty concerned.
Liberal
The Chair Liberal Wayne Easter
Okay. With that, I think we had a very interesting afternoon from all the panellists on both panels.
I want to thank you very much for coming, for taking the time to put together a submission, and for answering questions.
The meeting is adjourned.