Finance Committee on Feb. 16th, 2016

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

My first question is to Mr. Pedersen.

Climate change is something that I'm very interested in. I have some questions in terms of your idea for a more national model of a climate change panel, as I think you referred to it. For the sake of background, I was a municipal councillor for about 10 years, an Ontario member of the Toronto and Region Conservation Authority, as well as Rouge Park before it became part of Parks Canada.

I'm trying to understand your model based on my experience and whether there are any similarities or not. If not, that's fine; it's just what's coming to mind.

In regard to the national policy framework or panel, you mentioned you would create what is existing in B.C. and you would make it national. Are you talking about creating that model, or could you expand the existing panel that you have now? I would assume there are legalities, and this is where my background with TRC and Rouge Park comes in. Whomever endowed the money may not have allowed you to create the expansion, or did they? That's my first question.

[Thomas Pedersen]

Thank you very much for the question.

The government of British Columbia endowed the Pacific Institute for Climate Solutions with $90 million in 2008 to provide the knowledge base and the policy development for the benefit of British Columbia exclusively.

I've directed the Pacific Institute for Climate Solutions for most of the last seven years, and we've finessed that a little bit so that we can justify.... For example, we have a major study under way on the integration of the western Canadian electrical grid. We are designing this project to explore how much the CO2 emissions from Alberta and Saskatchewan can be reduced by taking good advantage of British Columbia's and Manitoba's hydro power.

So we justify that study even though it goes outside the boundaries of British Columbia on the basis that it is important to British Columbia.

We're not saying that we would expand that particular institute nationally. Rather, we would have an Ottawa-based institute, possibly based at the University of Ottawa. We've had preliminary discussions with Allan Rock, the president of the University of Ottawa's team, and they're quite willing to host it.

The point would be that with the model we've established—which is a multidisciplinary model that draws upon all of the pools of talent that we have in our NGO, university, private industry, and entrepreneurship sectors and within our research labs in little pots across the country—we pull the best talent together, put it around one table like this, and put one question in the middle of that table.

For example, it might be transportation policy for Canada toward the middle of the century. What should it look like? How do we get there? Should we electrify our vehicle fleets nationally? Should we focus on hydrogen? Should we be supplanting our internal combustion diesel engines with methane from Canadian sources? British Columbia would like that; we have a lot of methane.

All of these things need to be looked at, but not just through the lens of engineering. You have to have a full economic analysis and you have to have human behavioural psychology built in. I'm sure you saw that as a municipal councillor. You have to find ways to get around Nimbyism, or the “I'm not going to change, because my dad used to drive a truck like this, and I'm going to drive a truck like this.” You have to find ways to deal with all of those challenges.

The best approach is to have that multidisciplinary framework. That's what we did at the Pacific institute, and it's working.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

I completely agree in terms of the psychological aspect. The inventor of the recycle bin is actually from my riding, and a big component of it was the social pressure of putting it next to the garbage can.

Municipalities understand the cost of climate change. But in terms of...and this actually is an interesting question in the sense that, with Mr. McSweeney as well, in the cement industry.... How do you correlate some of the differences in legislation?

For example, in my municipality, when I was a regional councillor we had a water pollution control plant redesigned to disperse sewage in Lake Ontario. When dealing with the province and the Ministry of Environment it actually scored less environmentally friendly to create a better dissolvent, because there was more concrete needed for the facility itself. The quality of the water going into Lake Ontario would have been better, but how the cement was made ranked it at a worse environmental rating.

How do you correlate the two priorities in terms of wanting cleaner water and taking the hit on having more cement in the building itself?

It's an interesting question because you're both sitting next to each other right now, but it was a major frustration. How do we bring that together in terms of having these standards? It builds into my criticisms of LEED as well. A bike rack is scored and ranked the same as geothermal, so what do you think a developer is going to install to get a point?

How do we crack down on some of these legislative issues, and is that something, Mr. McSweeney, that your organization does as well?

[Michael McSweeney]

Why don't I take a crack at that?

First off, cement is a powder. It's a finely ground powder, and cement only goes into concrete, which is sand, water, and gravel, at a 7% to 10% ratio. When we make cement, we produce approximately 750 kilograms of greenhouse gases per tonne of cement, but with only 7% tp 10% going into concrete, we're down to about 75 kilograms, which puts us very comparable to other building materials.

I would always say that you first have to understand what we're talking about: the difference between cement and concrete. There is no other market for cement other than concrete. You look at what it's going to be used for, and I would say that anything to do with having clean water would be worth the investment in concrete in order to treat that water. We shouldn't be having any sewage going into lakes and rivers that is untreated. I, like you, spent 10 years on city council so I have a very good understanding of that.

[The Chair, Liberal, Wayne Easter]

Thanks for that.

We turn to Ms. Raitt for six minutes, please.

[Lisa Raitt, Conservative, Milton, ON]

Thank you very much, Mr. Chair.

Ms. Blackstock, thank you very much for your powerful statement. I've never heard you speak in person. I have to say it's very emotional and I can understand fully the journey you've been going through, and I hope what I take away today is a lot more understanding.

I only have one question and I just want to understand from your perspective where we are from a legal point of view in the process associated with the tribunal ruling. Is the government seeking some kind of appeal on the ruling? Where does it stand? Are we still waiting to see what happens? I ask it only in terms of trying to understand the recommendations that you made flowing from it and how long it would take for stuff like that to come into place.

[Dr. Cindy Blackstock]

Thank you, Minister.

I can advise you that the tribunal ordered the federal government to immediately cease the discrimination and immediately cease its narrow implementation of something called Jordan's principle. Since the ruling, the government has until February 22 to file a judicial review. To this point, they have not ruled out the filing of a judicial review.

We were proactive because we're concerned about children. One day with inequity in the life of a child is one day too many. Back in January, before the the ruling ever came out, we actually were proactive. We mined those previous studies whose recommendations the government had agreed to, and also the Auditor General's reports, and created first steps. These would not deal with the depth of the inequality but would stop some of the most egregious harms to children. We have sent those to the government. We have yet to receive a response on that. The tribunal has asked us to make submissions on immediate remedies by this Thursday, and we are planning to do so.

[Lisa Raitt, Conservative, Milton, ON]

I've read a lot of the recommendations that you've made because you've floated them on your website. I think the only one that came with any monetary or financial aspect was an immediate—I think it was $110 million—into one of the programs. That was really all I could see from a finance point of view.

[Dr. Cindy Blackstock]

There are other financial things. There has not been an inflation adjustment for many years. Also for prevention services, it's done by a formula base, and we argued that it should be increased from $100, where it was set in 1989 and never increased, to a value of a minimum of $200 to try to keep these children together. There is a cadre of things that will have financial implications.

[Lisa Raitt, Conservative, Milton, ON]

But is it fair to say that we can see a lot of your submissions financially from those submissions that you've made to the government already, and recommendations, and how to deal in the short term?

[Dr. Cindy Blackstock]

Yes, absolutely.

I think we have those in fair detail, and we also have them costed out in a series of reports called the Wen:de reports that were tabled in 2005.

[Lisa Raitt, Conservative, Milton, ON]

Excellent. That's very helpful. Thank you very much.

I guess the remainder of my questions will be going to David Macdonald, Canadian Centre for Policy Alternatives.

What's your growth forecast for next year, Mr. Macdonald? What are you guys saying in terms of what you think 2016...? I assume that you've made a submission to the minister on where you think you're going to land.

[David Macdonald]

The CCPA doesn't do independent growth forecasts. Maybe it's something that we'll look into in the future.

Finance Canada uses, as I'm sure you know, an average of private sector forecasts. That average at present for real growth at my last estimate, which was yesterday, stood at 1.3% real growth for 2016.

[Lisa Raitt, Conservative, Milton, ON]

Yes. Some guys come in at 1.7% and others come in lower, at 1.0%. Where's your head on it? Where do you think we are? You're an economist.

[David Macdonald]

I don't have a model, so I don't have an opinion, of course. That's the economist's answer. I think that—

[Lisa Raitt, Conservative, Milton, ON]

We'll take an average.

[David Macdonald]

Yes. That will be Finance's approach. The alternative federal budget attempts to use Finance Canada's estimates as its foundation as well, so we don't do independent growth modelling per se. The 1.3% wouldn't shock me.

I think what will be more interesting as we go forward in time, as I'm sure you've seen as well—and this is what we've seen over the past five years—is that three or four years from now we will be back at 3% real growth.

[Lisa Raitt, Conservative, Milton, ON]

That's right here.

[David Macdonald]

We're just not getting there. I think what's more concerning is slow growth, in the past and in the future.

[Lisa Raitt, Conservative, Milton, ON]

I'm curious to know what your take is. I know you spoke a lot about the debt-to-GDP ratio, and I'm wondering what you think should be the goal for the government, because you're saying we have lots of room. That's been the point of view.

[David Macdonald]

Yes. The debt-to-GDP ratio is quite low for the federal government at present, certainly the lowest in the G8 by a long shot.

I'm not sure that I have a goal necessarily in mind. Even if we were to maintain the present ratio of 31%, that would mean running a deficit of roughly $28 billion forever, which is at the far range of anyone's estimate for next year's.

[Lisa Raitt, Conservative, Milton, ON]

If interest rates don't go up too high, and if we have the same nominal growth.... Those two factors are important as well.

[David Macdonald]

Yes, and certainly the interest rates are at record lows for the federal government. There has never been a cheaper time for the federal government to borrow, or anyone to borrow money, frankly.

[Lisa Raitt, Conservative, Milton, ON]

Mr. Chair, just two more questions on that.

Does it matter to your organization if the government actually ever gets to balance, or are you more guided by the debt-to-GDP ratio?

[David Macdonald]

I think at this point and for the foreseeable future we shouldn't get to balance, in fact. I think our goal should be for the federal government to actively run deficits.