Finance Committee on Oct. 4th, 2016

[The Chair, Liberal, Wayne Easter]

That's your time there, Raj.

Mr. Aboultaif, go ahead.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm going to continue on the same question for Ms. Vipond regarding the publicly funded drug plan.

The first question that comes to mind is, where will the money come from? Before that, what is the cost of such a thing on the system?

[Siobhan Vipond]

Again, I apologize. I don't have that report right in front of me to pull those numbers. There are a few important factors. One is that right now we are outsourcing the responsibility of pharmacare either onto the individual or onto businesses. There are a lot of employers who supply supplementary health benefits that pay for pharmaceuticals. I think that right now, across the board, what we are seeing is a significant increase to those costs for employers, and of course that will disproportionately affect smaller employers. Our taking on this responsibility to provide quality health care collectively will mean that employers will save that money, which, especially for medium and small businesses, will mean that they turn around and have more cash flow, which is helpful. But it also means that, when people are taking their recommended medication and what is required for them to live a healthy life, it is less of a burden on our health care system.

I will also send you the report I am referring to, and I apologize that I didn't bring it with me. It does go into detail that, although it looks like an expensive system, when you look at where we are spending and overspending, which is in emergent care and long-term care.... When people are unable to take their medications and follow the doctor's orders, that is very expensive for our system, or we are not dealing with it until it's very severe. There is a price tag connected to that, and it's very high.

When you look at the comprehensive system overall, you see that pharmacare outside of hospitals is a very important part in order to ensure that we are keeping our health care at a responsible cost and we are getting value for it.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I can understand the side of government people. They're not covered under private programs. However, don't you think what you're proposing is going to lead to two things? First of all, it could lead to an increase in the business tax in order to cover the cost that is missing from replacing the system by another, and second, it could impact on some labour availability or labour opportunities. They also contribute to the general revenue of the country or the government.

[Siobhan Vipond]

Sorry, I just need clarification on the second part.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

If this were to happen, we would probably have to increase the business tax in order to cover for the loss that we will miss on the other side.

[Siobhan Vipond]

That will not happen with public pharmacare. If you look at what we are paying right now for our health care system, if you include pharmacare, pharmacare will more than pay for itself. Collectively, drug costs will go down. You don't have to go farther than the newspaper. The increased cost of drugs is in the news constantly. If drugs are purchased on a broader scale, then the costs come down, which will help. There are also very expensive usages in our system, for example, patients not having the ongoing care that they need and costing our system more. Consider someone who is diabetic, who is making decisions because of finances and not taking the proper level of insulin or they're not testing as much as they should because they can't afford it; that costs our system more. Although on the surface it looks like we are purchasing a whole bunch of drugs, what we are doing is looking at health care in a more thorough way. If we deal with it at each level, overall we will end up with a system that is more cost-effective. It will not cost the Treasury more money to implement a pharmacare program.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Okay.

A question to Mr. Rabik. You mentioned carbon pricing. How big is the forest industry in Alberta?

[Brent Rabik]

We are $1 billion-plus in annual revenue. We are $100 million in annual expenditures within Alberta. I believe that we are the fourth largest provincial forest sector in Canada.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

How much is carbon pricing going to impact the industry in Alberta?

[Brent Rabik]

There are a couple of aspects. There are pros and cons. On the cost side of it, as it's playing out in Alberta right now with the climate leadership plan, there'll be an impact on diesel fuel in particular, our ability to get the trees from the forest to the mill site, then subsequently, the pass down through the rail system, and then trucking to get product to market. On the other side, we see a benefit where the industry is largely carbon-neutral and we have opportunities to get our product into the market. At a kraft pulp mill like ours, we sell green power into the grid, and from that we receive credits from the government, that we sell back into for others, into the coal industry and whatnot, to meet their offset obligations.

The offset market is growing and it is hugely important. I think we can encourage further decarbonization by developing practices that reduce those GHGs, and again with the trading system, like we have in Alberta, there are opportunities to monetize those.

Overall, I think the industry sees a benefit to neutrality in terms of carbon pricing. We see that we're part of the solution to getting their biofuels. There's an opportunity to create bio-jet fuel from forest biomass. That depends more on the pricing infrastructure than it does on the technology. We've heard from the solar industry as well that competition from the U.S. is a big factor, where our policies don't necessarily keep up or the incentive programs are so significant in the States, they make investments here very difficult.

From a forest industry point of view overall, we see a benefit and we see opportunities. The Forest Products Association of Canada has put out a 30-by-30 challenge, so our intention through the industry is to reduce our greenhouse gas emissions by 30 megatonnes by 2030. A big chunk of that will come from sequestration: building more wood buildings and sequestering that carbon into long-lived products like buildings. The technology is there where you can build seven-floor or eight-floor buildings now 100% out of wood rather than concrete, so there are many opportunities.

[The Chair, Liberal, Wayne Easter]

Mr. Cannings, five minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

Well thank you all for coming. I wish I had the time to talk to all of you, but I'm going to try to go through things quickly and get to as many as I can.

I'll start over on the other side, Mr. Gorman, about the solar industry. You talked about these tax credits. I wonder if you had a price tag for that.

We've been talking about pricing carbon. I come from British Columbia where we've had a carbon tax for quite a few years now. It generates about $1 billion to the provincial Treasury every year, but it's revenue neutral, in that other taxes are lowered.

I'm wondering if a small portion of that could be used across the country to fund these tax credits, and how much that would be. If I multiply, with B.C. raising $1 billion, we're talking maybe $10 billion across the country.

[John Gorman]

I would say firstly on the costing of this particular initiative, there are two components. One is an investment tax credit, and a production tax credit would have to be tailored to the Canadian context. It would be done differently than the U.S., although there would be similarities, so that will drive part of the costing issue.

Secondly, we have started that work. The wind and solar industries have now commissioned work to get a detailed costing to this committee and to the federal government over the coming weeks, so that you'll have that information.

As a committee, you have a very difficult task here, particularly when it comes to the electricity sector, to come up with measures that are actually going to incent activity in the various jurisdictions across Canada. Electricity is provincially driven. Every system is very different. The Alberta system is completely different from the way that the Ontario system operates and procures electricity, etc., similarly to B.C.

The objective here, and the beauty about the tax credits, is that it applies equally to businesses and people across the country and allows them to make the investments and take action. Then the provincial systems, each of them being unique, will try to complement what has been provided to the individual, and business, and commercial investors.

As has been proven in the United States, this has been a very effective way of allowing the States to complement what the federal government has done. We have not considered whether or not the provinces themselves would contribute to a federal tax credit like this. I leave that to people like yourselves and others who understand those dynamics to know if that would be practical.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'll jump straight over to Mr. Kershaw.

I want to talk about the costs for young people. You mentioned child care and, in passing I think, the cost of an education.

I'm wondering if you could make two comments: one is about tuition fees and things like that—student loan debt is huge—and also child care, which Ms. Vipond mentioned as well, and the economic impact of having a properly funded national child care program.

[Dr. Paul Kershaw]

It is the case that a younger demographic is earning thousands of dollars less for full-time work, so that's a challenge in and of itself. Then their biggest cost of living—as it has always been—is housing, and that is so much more expensive than the past. In that context, a younger demographic absolutely is having to go and get more post-secondary these days to land jobs that pay less. So student debt, without doubt, is an issue.

If that's the only issue that we focus on for a younger demographic, we miss how the socio-economic vulnerability has really shifted toward younger people. I applaud the emphasis on early childhood education and care from the Federation of Labour in Alberta because child care is typically—outside of Quebec—more expensive than university tuition these days.

We need to recognize that we've had a long-standing conversation about post-secondary. It remains important—there are some things we can do—and the current federal government is making some important changes there that are in line with what the Canadian Alliance of Students Associations would recommend.

There's more work to be done, but we shouldn't think that's the only issue facing young people. In fact, it's sort of like the tip of the iceberg and the bigger issues are below.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Do you have any figures on child care, what the costs would be, the economic benefits for Canada?

[Dr. Paul Kershaw]

There are long-standing benefit-cost analyses for child care. On the one hand, people are clear that the costs are relatively significant at the federal level. To do this right, it's probably about a $5-billion price tag.

On the one hand that sounds very expensive, but on the other hand we routinely increase medical care spending by that amount over a short period of time, and the evidence suggests we don't get as big a bang for our medical care bucks these days. There are interesting trade-offs to consider. Some of the dollars would also be taken on at the provincial level.

The ask from a younger demographic right now is to recognize the opportunity to start talking about how we spend our money across age groups. Currently, the federal government doesn't report that each year it spends over $21,000 per person over 65, and that's an important thing. My grandmother is 101, and she counts on these things. By contrast, we spend just over $4,000 for young adults. The question is, should we not be inspired to ask if we are doing enough right now for a younger demographic?

A generation ago one in three seniors was poor, and most likely they'd be the poorest in the country. Now seniors report the lowest rates of low income of any age group in the country, no matter how StatsCan measures it. It's beautiful, and it reflects a policy win, but the question now is, are there some other policy adaptations we could make to address the needs of a younger demographic?

[The Chair, Liberal, Wayne Easter]

How fast time flies.

I might mention, Ms. Vipond, when you send in the additional information you're going to provide, just send it to the clerk, and she'll get it to the rest of us.

Mr. MacKinnon, for five minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Merci, monsieur le président.

Thank you all for being here and thank you to Mr. Liepert, and Mr. Aboultaif for their warm Alberta hospitality.

Mr. Merkowsky, thank you for reminding us of the de minimis threshold. At various times we get folks in here advocating on one side or the other of that issue. I think you gave us another potent reminder of the importance of that.

Mr. Gorman, I would like to thank you for speaking in French. Your French is very good, by the way.

I think you remind us, as well as Mr. Rabik, that there are important elements of economic potential in the Canadian economy in one set with tax instruments and others with a good dose of provincial and federal co-operation where we're able to help you make the kind of investments necessary to bring us into a renewable energy future. We also heard from COSIA in the last group that our resource industries are also high-tech industries and industries that deploy advance technologies on a daily basis.

I represent a riding that was literally founded on the forest industry and so, Mr. Rabik, I found your interventions very important.

Could you go a little further with respect to some of your observations around investments in biomass? I forget all of the terms that you used. I didn't make note of them all, but call them energy technologies, energy-saving technologies, or other kinds of technologies that rationalize and help advance your investment.

[Brent Rabik]

There are a number of opportunities. The low-hanging fruit in the forest industry is energy. If we bring trees from the forest, then we convert them into lumber and into pulp and paper products. From that there's a waste. It's usually the bark, the outside of the tree. Traditionally, in certain industries, such as the craft pulp industry, we burn that for our own internal power. We have been green for a long time in the sense that most craft mills are not only energy neutral, but we sell power back into the grid. There are opportunities to enhance that based on your fibre supply and your process.

There are opportunities in the biofuel sector where the biomass can be converted into liquid biofuels, such as ethanol and jet fuel. The technology exists. It's the policy infrastructure that holds it back.

I should also mention that on the energy side, complementary to the wind and solar folks, it's not a competition out there for what's the best technology or setting the right suite of sources out there. Biomass offsets the intermittency of wind and solar. Biomass, in Alberta, could make up 10% of the grid. It's not going to replace all of the coal, but it's another piece of the puzzle that goes to reduce our GHG emissions.

[Steven MacKinnon, Liberal, Gatineau, QC]

It helps the forest industry.

[Brent Rabik]

Yes. I could go on, but don't let me, or the chair will be waving at me again. Just about everything in this room can be replaced by a source from a tree. We can do that now with the technology, and that is where we see the industry going. We can make your cellphones sourced out of wood right now. We can make the films, and we can make most of the components. That's where we see ourselves going.

We are high tech and we're going to be part of the high-tech industry. It takes time to get there. There have been big steps made. We think the opportunities across Canada are tremendous to get there, and that's where we look for the policy support for longer-term technology evolving, particularly on the fuel side. On the wind and solar side, as well, it's about making sure we can be competitive with some of the other jurisdictions.

[Steven MacKinnon, Liberal, Gatineau, QC]

And you've been engaged in some of the innovation policy discussions that are ongoing now with Minister Bains and others.

[Brent Rabik]

We've been focused, at the provincial level, with an interesting change after 44 years in this province. We have to learn a new government, and there are many discussions and opportunities that are created by that. There's a discussion on Friday on the clean tech side of what we can do within Alberta. There are a number of us participating in that.

There is a lot of discussion both federally and provincially. It's very important that we put those conversations together. Too much is being done that is focused either at provincial level or the federal level. We, as industry, need the opportunities. We need both players at the table, and we need to coordinate the efforts.