Thank you very much.
My name is Chris Ragan. I'm a professor of economics at McGill, but I'm here today as the chair of the Ecofiscal Commission, which is a five- or six-year project designed to help Canadian governments across the country think about how we can improve environmental and economic outcomes at the same time.
I come before you with an unusual budget ask. I will ask for no spending and I will ask for no baubles added to or taken from the tax system. My basic ask is to encourage the Government of Canada to slow down in its thinking about climate policy and to make sure to get the details right.
I'll make four quick points in my five minutes. The first will be the briefest.
The first point is simply on the importance of reducing greenhouse gas emissions. There are many costs associated with greenhouse gas emissions that Canadians feel across the country, whether it is the decline in the economic value of the western forests from the pine beetle, or the decline in the economic value of the mollusc industry in Atlantic Canada, or many things in between. While it is true that Canada represents only about 1.6% of global emissions and this is certainly a global problem, I think Canadians probably would like to be 1.6% of the solution.
The second point is the importance of achieving emissions reductions in the most cost-effective way possible. This is really a central point. After all, on the Ecofiscal Commission, we are first and foremost economists, so we are looking not just at the need to improve the environment but at the need to maintain a prosperous economy as well.
When talking about reducing greenhouse gas emissions in the most cost-effective way, carbon pricing comes to mind. Our report from back in April 2015 showed, with a great deal of modelling province by province in this country, that there is a substantial economic benefit from using carbon pricing rather than using regulatory approaches for reducing greenhouse gas emissions. It's very important that the government take seriously the impact of carbon pricing on the competitiveness of firms and its overall impact on GDP growth, but those things need not be obstacles to a well-designed policy.
My third point is the importance of respecting provincial jurisdictions. First, the environment is a shared jurisdiction between the federal government and provincial governments, but resources and energy are, for the most part, exclusive provincial jurisdictions. I think it's very important, to avoid federal-provincial tensions in this country, that the federal government respect provincial action and provincial jurisdiction.
The second part of that is that when any government starts pricing carbon emissions, there will invariably be revenue generated, and there is a serious political and an economic complication associated with any revenues that are generated within a province and taken back to the centre, which I'll call Ottawa, even though the geographic centre is much closer to Kenora.
I think that if the federal government gets into the game of pricing carbon, you have to think very carefully about how to guarantee that those revenues remain in the provinces from which they are generated.
The fourth point I would make is the importance of getting the details right. I've mentioned a couple of details, but there are many others. There is the fact that Quebec currently has a cap and trade system that is linked to California's and that Ontario will soon be joining it. The presence of California in the cap and trade system between Ontario and Quebec imposes a very interesting constraint on Canadian policy: the idea that the federal government may, as was reported today in the The Globe and Mail, explore the idea of putting on a minimum price, but then thinking about how that minimum price interacts with the existing provincial prices. There are many details.
This is a big file. It's a big issue. I think it is very important that the federal government participate in a very collegial way with the provinces to develop this policy, but I encourage nobody to rush. This is not an argument to delay; this is an argument to get the details right.
Thank you.