Finance Committee on Oct. 26th, 2023

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

Thank you, Chair.

Welcome to all of the witnesses.

Could I begin with Professor Purdon, please.

In a recent article, you argued that carbon pricing has minimal impact on the cost of living. Could you elaborate on that, please?

[Mark Purdon]

No, that's not what I was saying.

The question that was posed to me by the journalist was whether carbon pricing was the primary cause of inflation. Inflation is a reality. We're all feeling it, but the carbon pricing in Quebec is not the primary cause of that inflation. It's more the macroeconomic and political situation in Canada and the world right now, with conflicts, rising energy prices, shutting off oil, the results of COVID and the supply chain disruptions. In that context, my comments were to the effect that we can't blame the rising cost of living on carbon pricing.

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

Thank you.

On the same thread, there are those who say that, if we cut the price on pollution to reduce the price on fuel and everything that depends on that in the production chain.... If we went with this idea, would the impact on the cost of living remain minimal or would that have a tremendous impact on the cost of living?

[Mark Purdon]

I think that if you want to project how carbon pricing and associates of carbon pricing.... We can talk about the price of the emissions allowances on the carbon market or the backup carbon price. There are also the clean fuel regulations that have been introduced, which you could say are a carbon price, although it's a differently structured instrument.

We are going to see rising costs. The carbon tax is supposed to rise to $170. That would add about 32¢ to a litre of gasoline, given its current carbon content. I think clean fuel regulations would add 17¢ by 2030.

Yes, it's going to be politically sensitive. There's a lot of public opinion research out there that suggests carbon pricing increases.... If you transform that into a sort of number that people can understand like the price of gas, people are not so excited about it.

One thing I can mention here, and I reference it a bit more in detail in my submitted comments, is that we did a public opinion survey last year in Quebec. We asked people about different carbon pricing scenarios, higher and increasing, and one thing that came out in the results was very interesting. We also asked if they had an electric vehicle. When people own electric vehicles, that trend of declining support for increasing carbon pricing falls off. People are ready to support a higher carbon price because they have an electric vehicle. The downside is that only 8% of our respondents of our sample had electric vehicles, so it was sort of a very minor effect. The implication is that, if more people have access to these clean technologies, they're going to support more ambitious climate policy in Quebec or in Canada.

The final note I would say is that the carbon price in Quebec is linked with California. It's much lower, $47 versus $65. I know these numbers are a little wonky, but it's quite effective in the sense that a lot of emission reductions are being achieved in California. I know there's a critique that it's an outflow of capital from Quebec to California, but this is the situation with a lot of our economy. We buy things from the U.S. and other countries because it's cheaper for some reason. There's a logic behind that.

California is a bit of an outlier in the United States. Washington has come online. Nova Scotia is part of this Western Climate Initiative. It's generally cheaper, from my read of the literature, to reduce emissions in the United States relative to Canada. There's going to be a bit of that price advantage if we do emissions trading systems linked with the United States. It may be something to explore because it does allow costs to be brought down. There are concerns whether we are going to be able to hit that $170 target for the federal carbon tax. I know that for some of the Conservatives in the room, it's a very salient political issue right now.

There are some structures. I will just say that recently, in the past few years, emissions trading systems have been emerging in many other countries. China has one. There may be concerns there. India and Brazil are also establishing ones. There are some carbon climate finance mechanisms that are being developed under the UN under the Paris Agreement and the Glasgow Climate Pact that will also have some opportunities for reducing emissions in co-operation with other developing economies where costs of reducing emissions are lower.

It's something that Canada might want to revisit and consider.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Thompson.

Now we go to the Bloc and MP Chabot, please.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you, Chair.

I would like to thank the witnesses for being here and for taking the time to share the best potential solutions to be found in the budget.

I would especially like to thank the representatives of OXFAM-Québec. My first questions will be addressed to them.

You began by explaining the context in which we find ourselves, which is one of crisis. Indeed, we are facing a housing crisis, a humanitarian crisis, major wars, and they are all alarming. To combat inequality, and particularly gender inequality, such as the circumstances of women and girls, one of your recommendations is that the Canadian government increase its international aid, that it devote its fair share of the budget, in other words. You recommend that $1.2 billion be added.

How can we convince the federal government to invest this amount of money? After all, this is an investment, not an expense.

What changes could this investment make?

[Léa Pelletier-Marcotte]

Thank you for the question.

I will begin answering.

I will yield to my colleague afterwards.

I think the first way to convince the government would be to use its own rhetoric, which is intended to be the rhetoric of a feminist government with a feminist international aid policy that presents itself as the defender of rights and equality across the whole world, as well as at home.

For Canada to make good on this promise, make a real difference and promote equality for women and girls around the world, it would have to use its own rhetoric to convince it to increase funding for foreign aid.

We're using the 2021 and 2022 figures because last year, before the 2023 budget was adopted, we had already made a request for additional funds to meet expectations.

However, that didn't happen. Instead, budget cuts were made. That's why we're reiterating our request this year, so that the government really does keep its promise.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you.

[Diana Sarosi]

Yes, of course there's more incentive, but there's also a very pragmatic incentive in the sense that we all know that countries that are gender equal are more stable and more prosperous.

Right now we're seeing a backlash against women's rights and gender equality around the world. I don't think it's a coincidence that at the same time we're seeing increased crisis, militarization, conflict and so on. From a very pragmatic standpoint, it's in favour of Canada's security itself.

Our government has had to take Canadians out of countries around the world. That is a huge financial drain, but also a logistical dilemma.

Our supply chains are affected. We are not our own economy; we're part of the rest of the world. Everything is affected by what happens in the rest of the world.

It's really a good—

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

I still have a little time and I'd like to ask another question, if you don't mind.

What you are saying is very informative.

You've proposed a 15% tax on excess profits made by companies during the COVID‑19 crisis and during the financial crisis we're currently experiencing. The government promised that major grocery chains that made a profit will have to lower their prices. Failing that, a 15% tax could be imposed on them.

You advocate a 15% tax on excess profits. Do you think we should adopt this measure or make it voluntary?

[Diana Sarosi]

Yes, we should definitely go ahead with that. Again, we're hearing that the government is struggling to meet its responsibility of delivering public services, yet we're seeing these corporations reaping in record profits.

In budget 2023, a financial sector windfall tax was being introduced. However, that's not enough. It really needs to cover all sectors that are profiting from the crises we're seeing, whether that's the energy crisis, food crisis, housing crisis and so on.

Yes, it's definitely a high priority.

[The Chair, Liberal, Peter Fonseca]

You have 45 seconds.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

It's rather stunning to hear “if they were a sovereign country”… We wouldn't want that for them, but for ourselves, yes.

If we give them plans and practices that are compatible with climate change… Can you tell us a little more about that?

[The Chair, Liberal, Peter Fonseca]

Give a very short answer, please.

[Léa Pelletier-Marcotte]

I'd be happy to discuss this further, but I think we could follow the example of the European Union, which is already quite advanced in terms of banking regulations, efficiency and sustainable finance. I have a report on that subject and could discuss it at greater length.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chabot.

Now we're going to MP Blaikie, please.

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

Thank you, Mr. Chair, and thank you to all our witnesses for appearing today.

My first questions will be for Chief Bernard.

In the last budget there were more details about investment tax credits for a range of clean technologies and things of that nature. I'm wondering what you think the opportunities are for indigenous communities to be able to make use of those ITCs.

In the development of those structures, what could government and policy-makers here in Ottawa do to make sure that those result in meaningful equity stakes for indigenous communities? What is the potential for community benefit agreements and other tools to ensure that it isn't just multinationals coming in and taking things out, but that local people and indigenous people with rights to the land and resources are also economic beneficiaries?

[Joanna Bernard]

I'm going to hand that question over to my colleague, as I believe she was part of that submission last year.

Thank you.

[Julie Pellerin, Senior Director, Economic Development and Infrastructure Branch, Assembly of First Nations]

In response to the question of first nations participating in those programs as well, I think that we also need to address the fact that currently there's not enough funding for the first nations to be adequately prepared to take advantage of those programs, so that's a huge challenge for the first nations.

In our budget submissions, identifying those programs and providing support to those first nations in order to be prepared to take advantage of any programs the federal government puts forward is very challenging, so I might not be able to adequately respond to you, but I think that the mechanism we need to put into place is more important than addressing a specific program.

The pre-budget submission process for the 634 first nations that the AFN advocates on behalf of is not adequate for us to be able to provide the rationale for why we're asking for these priorities to be funded. I think that it's not an investment or a funding request. It is asking Canada to uphold its fiduciary responsibility and, by doing that, our mechanisms that we propose would be a new fiscal relationship whereby Canada negotiates and discusses collectively and collaboratively with the first nations in order to have a different, distinct, first nation-led process for its budget request.

I think as well that, with your permission—thank you for having invited us to present here—maybe I could yield some time to the national chief to do her closing comments.

[Joanna Bernard]

Thank you.

I want to remind you that Canada is delinquent in substantial and overdue debt and continues to incur court costs, lose court cases and settle court challenges. While these are long-term investments, they also represent an opportunity for Canada to repay its debts in good faith to first nations.

I ask for the support of this committee in saying to Canada that it is in all our interests that you pay the debt. Economic reconciliation requires Canada to abandon its adversarial legal approaches to fulfill its fiduciary obligations to first nations. Paying this debt will demonstrate Canada's commitment toward progress in our shared journey towards truth, healing and reconciliation.

With appreciation for your attention, the AFN and I thank you very much.

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

Thank you.

Chief Bernard, with what time I have remaining, I noticed your pin, and I wondered if you could speak briefly to the importance of establishing a red dress alert system in Canada. The New Democrats have been calling for it—

[Joanna Bernard]

It's red on red, and you noticed it. That's great.

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

Yes, I noticed.

New Democrats have been calling for it, and I think that I have had good leadership with my colleague from Winnipeg Centre, Leah Gazan, on this file. I'm wondering if you could speak to the importance of getting that up and going quickly.

[Joanna Bernard]

Oh, absolutely. It's something that goes hand in hand with the MMIWG, the missing and murdered indigenous women and girls. It's very, very important, but I think we might have gone a little too fast in pushing to have the name MMIWG, because we are getting a lot of requests from the Assembly of First Nations across Canada in reference to boys and men. I'm thinking and trying to figure out a solution not to have another set of MMIWG, but try to figure out how we could do this and save funding if we could find an all-inclusive, as well as the 2SLGBTQIA+ community and neglected indigenous peoples.... It's something that's bigger than what it is now, and I'm hoping to get it to that point where everybody and everyone is included and it's all-inclusive.

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

Thank you very much.