Finance Committee on Sept. 25th, 2023

[David Dodge]

Bringing inflation down is going to take time. Once we got off track.... Just as we know from the seventies, it takes time. It takes a lot of effort on the part of the government. It takes a lot of effort on the part of the central bank.

[Adam Chambers, Conservative, Simcoe North, ON]

I appreciate that.

One item driving inflation back up over 3% is volatility in energy prices. That's one of the key drivers. Do I have that right?

You're much smarter than I am. If the government reduces the price or the taxes on the good that's partially driving inflation and those price drops in the form of tax reductions are passed through to the consumer, does it not stand to reason that this would have a lowering effect on inflation?

[David Dodge]

You can lower a single price, absolutely, by providing a subsidy or in a tax. You can change a single price. That's undoubtedly true.

Can you change what's going on overall?

To change what's going on overall, of course, what is important from the government side is the balance—not a single price. To the extent that the government wanted to make a contribution to a more rapid disinflation, then a balance between revenues and expenditures.... We should have had much more revenue relative to expenditures than we have had.

Directionally, that is absolutely correct. For any single price, you're affecting the relative prices of different products. That's quite a different story from trying to deal with the level as a whole.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

You mentioned debt-service costs as a percentage of revenue. I think you put out that, in your mind, there's a rule of thumb of about 10¢. We were approaching 10¢ in the last budget. For the last budget's economic projections, everyone—most economists—believed that interest rates would be lower today and through the end of this year than they were at the budget. They're actually at least a per cent higher.

By the way, the government is rolling over $421 billion of debt this year. Debt-service costs are going to explode, not to mention the losses at the Bank of Canada.

What happens when we breach that 10¢, in your mind? What do we have to think about? What does the government have to figure out in order to bring that number back down?

[David Dodge]

If you're spending 10¢ out of every tax dollar that you collect on servicing past debts, that obviously leaves you with less to spend on providing current goods and services.

The problem that we collectively face now and going forward is that we're going to have growth of the economy or growth of the base revenues of government that will be equal to or perhaps even less than the interest rates. The burden of past debt will increase year after year rather than being eroded.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Governor.

I'm getting the hook from the chair here.

[The Chair, Liberal, Peter Fonseca]

That is the time, MP Chambers. Yes, it does go quickly.

We're going over to MP Weiler, please, for six minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you very much, Mr. Chair.

It's a pleasure to welcome all the witnesses today.

Thank you so much for your introductions and for the submissions you made in advance.

First, I'd like to ask some questions of the Green Budget Coalition. I look forward to your formal submission in due course.

Particularly for Mr. MacDougall, I recently read a report from the Pembina Institute that was looking at this year of profits for the oil sands. It showed that, if things hold, it's looking at the second most profitable year in the last decade. In spite of that, 75% of the cash flow is going to dividends and share buybacks. In spite of what we might be seeing on our smart phones and TVs and, ironically, on public transit from the Pathways Alliance, your report shows there's actually been no new investment in emissions abatement in the oil sands.

As Canada's largest and fastest growing source of emissions at 28%, why do you think there has not been investment to date? What actions do you think the government should take to ensure those companies invest in emissions abatement so they're able to do their fair share?

[Scott MacDougall, Senior Adviser, Pembina Institute, Green Budget Coalition]

Thank you for the excellent question, which covered all kinds of the background information required to answer. That's great.

I'm going to start with the second question, if I may, in terms of what's going to be required because, in part, it answers a little bit of the first part. The companies have, in many cases, said that certain policies that have been proposed need to be finalized, such as the investment tax credit for carbon capture sequestration. There are some great signs. The draft legislation is out and looks pretty good, so fingers crossed that it will get finalized pretty soon.

Also, they talk a lot about the necessity of greater certainty around carbon pricing, which often translates as carbon contracts for difference. Things are going a little slower on that, and a lot of folks have indicated they're holding off some investments while waiting on that legislation. Carbon pricing offers the lion's share of incentives for low carbon and decarbonization investments in Canada, so greater certainty on that is a huge force multiplier for the policies Canada already has in place.

I have to admit I'm not entirely convinced that voluntary.... I mean, those incentives are excellent and necessary to support those investments, but I'm not entirely convinced we will see the level of voluntary investment and decarbonization we would need. Therefore, I believe Canada's proposed cap on oil and gas sector emissions is absolutely needed. I'm very happy to hear Prime Minister Trudeau reiterating his commitment to see that at least drafted and out in public this fall. That's great.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Great. Thank you very much for that.

Next I'd like to turn to the Coalition for a Better Future.

In your opening, Ms. McLellan, you mentioned that youth are seeing that government needs to act quicker on climate, but I was a little surprised in reading the scorecard for the coalition, which is using the target from the Harper era of only reducing emissions by 30% by 2030. I was hoping you might be able to square that with this committee.

[Anne McLellan]

Our scorecard was developed two years ago now, after a lot of conversation, especially with a number of noted environmental proponents, such as Professor Stewart Elgie. If he hasn't appeared before your committee, he may very well do so. We believe the targets we have set for 2030 in all areas are generally ambitious.

It does not surprise me—and, I think, Lisa—in any way that on an issue like climate change, young people in this country want ambition. I think all of our coalition members would agree that ambition is important. However, we need realistic targets that we hope current technological knowledge will allow us to meet. I am in no way surprised that young people want us to go further faster. I think that's encouraging for all of us, because they will provide the pressure on industry, on all of you and on governments at all levels, in fact, to do more faster.

Our target is one that was developed after much consultation with leading proponents and thinkers in the area, and we believe it's fair.

Go ahead, Lisa.

[Lisa Raitt]

I'd only add that we developed these metrics, MP, between August and October 2021, and that was prior to any further announcements that the government made. We made the decision that these metrics we put together in 2021 are to be frozen in time, because that allows us to measure them year on year. It doesn't mean that there isn't good work being done in trying to exceed these limits, but we're going to stick with what we have in order to compare apples to apples every year.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Weiler.

Now we go to the Bloc and MP Ste-Marie, please.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

First of all, hello to all the witnesses. We have a really great panel this afternoon.

As my colleague Mr. Chambers said, even if we don't have enough time to ask each of you all the questions we would like to, that doesn't mean that the proposals you're making won't be included in our report on the pre-budget consultations.

Mr. Dodge, a special hello to you. I was teaching economics when you were Governor of the Bank of Canada, and it was a pleasure to unpack each of your speeches with students to better understand monetary policy.

That said, my questions will be for the representatives of Réseau FADOQ.

Ms. Tassé‑Goodman, thank you for your presentation.

Mr. Poirier‑Monette, your organization is asking that the guaranteed income supplement be increased by $50 a month. Ms. Tassé‑Goodman said that currently, a person receiving the guaranteed income supplement will earn less than $21,000 a year, which is below the poverty line.

Can you remind us of the importance of increasing the guaranteed income supplement by $50 a month?

[Philippe Poirier-Monette, Special Advisor, Government Relations, Réseau FADOQ]

Thank you very much for your question.

We think that the guaranteed income supplement should be increased by at least $50 a month. As we often say, people aged 65 to 74 would also have liked to benefit from the 10% increase announced for people aged 75 and over.

Basically, right now, we have to ask ourselves some questions. How is it that people who live solely on the guaranteed income supplement and old age security have incomes below the poverty line set by the federal government itself? That's highly questionable.

We're just saying that these benefits need to be increased. We urge the federal government to keep its promise to increase them by $500 per year for a single person and $750 for a couple. They should have already kept their word.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

This commitment by the government goes back two years. Ms. Tassé‑Goodman told us that this was still not done.

Do you think that's an acceptable time frame, given the exceptional inflation we are experiencing these years?

[Philippe Poirier-Monette]

A number of promises have been made to help seniors. We understand that you can't do everything all at once. However, these are the kinds of promises that seniors keep in mind.

We must remember that the people who receive the guaranteed income supplement are the poorest in our society. Their incomes won't change, except based on the consumer price index. These are people whose incomes are essentially fixed. They are being squeezed. That is the only income they have, and they depend on it. As a result, they expected this promise to come to fruition quickly.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That is indeed a real concern, in the context of current inflation. The least affluent seniors who depend on government assistance are below the poverty line. The government has been making promises for two years, but it has yet to do so. As you said, the old age security pension has been increased by 10% for people aged 75 and over. That's fine, but it leaves people aged 65 to 74 out in the cold. Let's hope that this will be reviewed, because there must certainly be fairness.

Ms. Tassé‑Goodman talked about applying for a targeted tax credit to encourage experienced workers to return to the labour market. Can you explain to us in more detail what you are suggesting?

[Philippe Poirier-Monette]

This has been shown in a number of surveys. In particular, the Conseil du patronat du Québec recently conducted a survey to determine what could encourage experienced workers to stay in the labour market or to continue their careers. Tax measures and financial incentives were at the top of the list. About 50% of the respondents said that this was one of the factors that would encourage people to continue working.

A similar tax credit was introduced in Quebec, the career extension tax credit. This is a progressive measure: an amount is first given to people age 60 to 65 and, after they reach age 65, the amount becomes more generous.

We would like to see a similar federal tax measure. In fact, I believe this was a promise made not just by the government, but also by the Conservative Party during the last election. There are two parties in the House of Commons that are interested in this measure. It would be very appropriate to introduce it. Ideally, it should be a refundable measure, so that people who have very little or no tax payable can benefit from it as well.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

The Bloc Québécois proposed it as well, as did the NDP, I believe. It is sad to see that proposals like this one, which are put forward by organizations like yours and which are unanimous, are slow to be put in place.

On the ground, many seniors in my riding are telling me that, because of inflation, they are having trouble making ends meet. If they go back to work a few days a week, all their benefits are taken away. A tax credit would correct this situation. Let's hope that this will be resolved.

I would also like to ask you about the indexing method, but I think I'll have to wait until my next turn.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

We've exhausted our time, but I'm sure there will be another round.

We are going to the NDP. I do see our permanent member here, MP Blaikie, but I also see that NDP MP Bachrach is joining us for the six minutes of questions.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Chair, it was a pleasure to sit in on the presentations from the witnesses, and I do see that my colleague, Mr. Blaikie, has arrived. Before he digs into the questioning, I'd love to ask a question of Mr. Freedman, since he gave a generous shout-out to my home community. Of course, community radio is important right across the country. Here in northwest B.C., the folks at Smithers Community Radio CICK and Nuxalk Radio in Bella Coola are doing some very important work bringing local news and culture to their communities.

The question is around your proposal, Mr. Freedman, to dedicate a percentage of the money the federal government was giving to Facebook and provide that funding to community radio stations across the country. I wonder if you could elaborate on what that would amount to. I believe you were proposing that 8% of the portion formerly spent on Facebook ads would be redirected to community radio stations. What would that amount to? How does that compare to current federal funding for community radio stations, and what could stations like CICK in Smithers or Nuxalk Radio in Bella Coola do with that increased investment in the important work of community radio?

[Alex Freedman]

Thank you for the question.

In terms of the total number, by some rough estimates, about $140 million is spent annually on advertising, with the majority of that particularly through Facebook and Google, so 8% of that would be just north of about $11 million.

To your question, community radio stations, campus radio stations and indigenous radio stations currently receive next to no funding. There is the local journalism initiative. Of its annual $10 million, we receive $1 million, and we're very grateful for the top-up that came from some of the COVID funding. Generally, though, unlike the funding allocated to public broadcasters or the tax credits for commercial broadcasters, they receive nothing. Many of these stations rely on radio bingo and local advertising. Again, in the post-COVID era, local advertising still has continued to not rebound in the same way we would have hoped.

What would it do? Currently, many stations pay their station managers $20,000 to $30,000 a year. That's not even a living wage. To have some level of continuity would be amazing. We continue to evolve in terms of the role we have to play in how people can get access to these radio stations—livestreaming and the new technologies that are required to podcast—and at the same time, community radio stations, because of their role in these communities and remote communities, must continue to stay on the airwaves.

Technological advancements, which currently are put together with duct tape in some cases but are critical to their ability to move forward, would be enhanced through this sort of funding, as would, very importantly, their ability to do critical programming to unite communities. I think of CJNU in Winnipeg. My colleagues here on the panel know about that. This is a radio station dedicated to nostalgia broadcasting for people who are 70 plus. As we speak about the measures, as my other colleagues on this panel talked about, to support senior citizens, having these stations able to create a community for these people is vital to Canadians.

As another one of my colleagues mentioned, knowledge is power. To be able to transmit that knowledge and make sure that it gets to the people who need it, particularly on a local level, is vitally important.

Thank you for the question.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thanks so much, Mr. Freedman.

With that, Mr. Chair, I'll turn it back to my colleague Mr. Blaikie and thank the committee for allowing me to sit in.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

Thank you, Mr. Bachrach, for subbing in for me while I participated in debate on Bill C-56 in the chamber.

I have a question for the Green Budget Coalition. Often in Canada, when we talk about major energy infrastructure projects, more often than not it's a conversation about pipelines. We know that the current federal government has invested over $30 billion in one particular pipeline.

In your proposal for the next budget, you talked about a zero-emissions electricity grid based on renewables. I wonder if you could speak to the potential for generating employment and wealth out of that kind of grid in addition to lowering Canada's emissions.