Finance Committee on Oct. 19th, 2023

[The Chair, Liberal, Peter Fonseca]

Thank you.

We'll go to MP Blaikie, please.

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

Thank you, Mr. Chair.

Mr. Duceppe, even if we had a federal program, we could have a common form negotiated and planned under provincial leadership. The fact that a program is paid for by the federal government doesn't mean that the provinces don't have an important role to play.

[Yvan Duceppe]

I fully agree with you, but it still has to work. I agree with you that this system can be imported into all provinces if there is good provincial leadership.

Obviously, we understand that pharmacare is a provincial responsibility.

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

Absolutely.

To ACTRA, could you say a bit more...? When you talk about some of the challenges that actors in Canada are facing as a result of artificial intelligence, what are some of the things you would like to see done by us here, as legislators, in order to be able to afford the appropriate protections to people in the entertainment industry?

[Marie Kelly]

Thank you for that question.

It is one of the greatest tools of our industry, which is also one of the greatest threats. You have individuals who have been victims of this, like Tom Cruise. I happened to be down in Los Angeles for the SAG-AFTRA negotiations, and I know that someone as big as Tom Cruise was very interested in what was happening when it came to AI and having protections. Jennifer Aniston has been a victim of it.

We think the government needs to step in, and it needs to step in quickly, to make sure that we have three things. We'll go through the three Cs with you.

The first is consent. You have to make sure that, for an individual who is giving consent to have their image used, it is informed consent and it's not buried somewhere in the middle of a 10-page document. Eleanor can tell you that, when she shows up to the set, she is often given a large document to sign, without her agent or the union being able to go through it. You cannot bury it somewhere. We need to know what you're asking for, so there's consent.

There's control. It needs to be that we have some level of control over usage. For example, taking someone's image and putting it in a pornographic production is not okay. It is not okay. I can tell you there's an actor-performer who had her voice stolen and put into a pornographic production. Her voice is recognizable. Her business is now diminished, and there is no coming back from that. We need to have controls put in place by our government to protect people.

The last thing is compensation. That's the work of performers. They have given that work and they've been paid for that work, but only that work. Taking it, stealing it and putting it somewhere else takes away their livelihoods. It goes without saying, but some of the most precarious workers in this country are actors. They have to go to an audition for work every single day, free of charge. They have to memorize lines. They have to go into an audition. They have to create a performance that they get paid nothing for, and then they have to hope they can weave together enough of their work so that it allows them to subsist in this country.

We need to give the most precarious workers—the ones you all love to see on the screen—some fundamental protections so that they can continue to work in our country and they can have the security to know their work won't be stolen from them or misused.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Blaikie. We're well over. I think there's going to be an opportunity, but we want to make sure we get to our last round.

It's over to MP Lawrence, please.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry. Did Ms. Noble have something she wanted to say?

[The Chair, Liberal, Peter Fonseca]

Yes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Go ahead.

[Eleanor Noble]

I just quickly wanted to say that the EU is already ahead on this. The U.S. is behind. It would be great to have Canada up front on this issue.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence, for giving that time.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Of course—no problem.

My questions will be for Mr. Dachis.

I will say that this panel is fantastic. Honestly, I would like to ask every one of you questions, but I'm going to focus on Mr. Dachis.

I just want to make a bit of a statement. Then I'll get to my question, Mr. Dachis.

Given that the Liberal-NDP government has been spending taxpayer dollars at an almost incredible rate—a hundred billion dollars more a year than it did in 2019 or pre-COVID—creating what is projected to be a $46-billion deficit and increasing spending on average by $13 billion every six months, we know that this NDP-Liberal government will be unable to stop themselves from spending increases, even though they promised significant cuts to the government going forward.

We also know that if this government does not balance the budget we will be committed to high inflation and high interest rates for the foreseeable future and a worsening economy. If you don't believe me, here's a list of individuals who link deficits to high inflation and high interest rates: John Manley, former Liberal finance minister; Bill Morneau, former Liberal finance minister; Chrystia Freeland, current finance minister; David Dodge, former Bank of Canada Governor; and Tiff Macklem, current governor of the Bank of Canada. All these individuals from multiple political spectrums agree that the more this government spends, the worse the economy gets.

Given that, and given that the government won't stop spending, here's my question. There will be a tax increase coming from this government, Mr. Dachis. In order to balance the budget, how much would the HST have to be increased by to balance our budget?

[Benjamin Dachis]

What we do at the C.D. Howe Institute is that we take a look out to the future. In what the government has been doing in their outlook for the future in terms of many decades out and what their projected debt-to-GDP ratio is, they have assumed that everything is going to be hunky-dory on the economy for the next couple of decades, but we all know that's not true. We all know that a recession is probably going to come at some point in that period. Then the questions become how much, how bad it is when it comes, how long.... No one knows that.

What we do is that we forecast a range of different assumptions about when that might happen and look at the average of what various recessions might look like. Looking out many years from now, in order to keep under a reasonable assumption of about what kind of recessions we might get in the future, just to get our debt-to-GDP down back to our prepandemic level, we're looking an increase in the GST rate of 2%. If we're looking to pay back all of the debt accumulated during COVID, it's a GST that's 4% higher.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much.

We would be looking at a significant tax increase if in fact the spending is not under control—perhaps up to as high as a 4% increase in the HST. We know that with this government, even though they have committed to significant spending cuts, it likely won't happen. That hasn't been the track record, as they spend $13 billion every six months. We're looking down at a future of high inflation and high interest rates and/or increases in taxes. Is that a fair summation, or would you disagree with that?

[Benjamin Dachis]

I think we also have to keep an eye out for potentially very expensive programs.

We saw the start of the dental program. When you look at the way it is laid out, with its being a federally led program, it's enormously expensive. That's going to be very much overshadowed by a pharmacare program, especially if we see one that is fully single payer, paid by the government. We're looking at potentially very large costs in the future.

If the government is really committed to these kinds of major increases in spending, then in order to keep the fiscal forecast—and stop the chance of the debt-to-GDP spiralling out of control—we need to see it come to the table with matching revenues. The best way to pay for some of these long-term social costs is really with the GST.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence.

Now we go to MP Thompson.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Thank you to the witnesses. It really is quite a tremendous level of expertise. I'm sorry that I can't ask questions of all of you.

I would like to begin with you, Mr. Pineau. You began with a statement from Canada's Ecofiscal Commission. They stated that “carbon pricing will achieve [emissions reduction] outcomes at a lower economic cost than other policies.” Do you agree with this?

[Pierre-Olivier Pineau]

Yes, absolutely. I don't think it's the only tool, but it's a key tool. It's a very important tool, and it's a very efficient tool.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

On somewhat the same idea around the cost of climate damage—and I mean that across all sectors—we know climate damages are costing the Canadian economy. Certainly, I would argue that there's an impact from this on affordability. Investing now in proactive adaptation measures can cut the costs of many types of climate damage. How is Canada doing, both on the adaptation policies in preparation for climate damages going forward and on the mitigation policies to reduce emissions?

[Pierre-Olivier Pineau]

Sadly, I think we're doing very badly.

As I explained, we are spending a lot of money on continuing the same system that pollutes and impoverishes us. There was $81 billion spent last year on individual cars to basically increase the fleet of cars, increasing congestion in our streets and increasing the amount of gasoline consumption, because people are buying trucks instead of cars, just because they like them.

I understand why they like them, but the problem is that our future is under threat because of climate change. We are in a deficit. Some people have a hard time buying food, but some people like having a bigger car. Then they spend $10,000 more on a truck compared to a car, and that's for 1.5 million new vehicles.

We are doing very badly because the investments we're making in pollution aren't being made to get us on a path where we will be more resilient in a changing climate and less dependent on oil. We're not spending the money where we should spend the money. We continue spending money on urban sprawl in wetland areas. We're destroying ecosystems to build new homes when, as I said, the average size of homes continues to increase. We have a crisis of empty spaces in Canada because we have empty rooms because people like to have big rooms.

At the same time, there's an irony and a big paradox because, while some people have a hard time affording a house, we have a lot of empty rooms in our buildings. There should be some kind of ecofiscal policies to make people either rent some rooms in their big homes so that they can make use of the space they aren't using now, or, if they don't want to rent or share, basically they would have to pay higher taxes to help build sustainable houses.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I wanted to draw from a couple of those comments. You referenced the paradox—and I absolutely agree—and the need for the ecofiscal policy. I think I've also read something where you referenced the paradigm shift that's needed across government, obviously, and all of society, to realize the urgency of the climate crisis.

Would you speak on that?

[Pierre-Olivier Pineau]

The urgency is there, but what I'd like to focus on is that while there is a climate urgency we need to act on, there's also a spending urgency. We are spending on the wrong items, and then we are wasting money on pollution and on uneconomic activities. When we put more vehicles on the roads, we are creating congestion and that is lowering our productivity.

Canada has one of the lowest energy to productivity indicators around the world, meaning that we are one of the countries creating the least wealth or having the lowest GDP per unit of energy we're using. This is because we're blessed with a lot of energy and blessed with low prices for energy, but in the long run that makes us non-productive.

We've talked about our productivity problems in Canada, and part of that is linked to the fact that we're using way too much energy to generate wealth, because we don't invest in the energy efficiency equipment that would raise our productivity. The carbon tax is helping on that because it makes investments in energy efficiency more profitable, and it helps Canadian businesses make investments that will structurally make them more productive.

It's not only a question of the urgency of acting against climate change; it's the urgency of getting society to be more efficient.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Thompson.

MP Khanna, welcome to our committee. You'll have five minutes for questions.

[Arpan Khanna, Conservative, Oxford, ON]

Thank you, Mr. Chair.

Thank you for all the testimony we've heard today. Thank you for being here and for joining online as well.

After eight years of this Liberal-NDP government, we are seeing that our farmers are being punished quite a bit. I represent Oxford, a riding of a lot of great farmers who do amazing work feeding our families.

Professor Charlebois, you mentioned farmers playing a role in helping us bring down some of our prices and making sure that groceries are more affordable for Canadians. The carbon tax has been punishing our farmers. We have seen that farmers are paying a lot more now to heat their barns, dry their grain and run their operations. There is a bill now in the Senate, Bill C-234. We're hoping it passes, but it's being blocked by some Liberal senators there.

Do you think eliminating the carbon tax or pausing it would have a positive impact on our farmers and reduce some of their input costs?

[Dr. Sylvain Charlebois]

Thank you for the question.

I think Bill C-234 needs to pass. I think it's a must for farmers, but farmers are being taken care of by Parliament right now. Parliament is giving attention to farmers. The forgotten child in the supply chain is manufacturing, and that's kind of the point I'm making here.

We're talking a lot about retail prices and we're talking a lot about farmers. There is some attention given to farmers, but I think what we need to do is look at where the wealth is created in agri-food. That's in processing and manufacturing. That's where the innovation occurs. There are lots of SMEs in Canada, including in food services, that are really struggling right now due to higher costs. To operate a business now is much more expensive than before.