Finance Committee on Nov. 16th, 2023

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

MP Morantz, go ahead, please.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Mr. Norejko, I want to say that I feel your pain. It seems that this government has never met an industry that they didn't want to kill. They brought in a very political, partisan tax that penalizes your industry. They didn't have an economic impact statement until we forced them to come up with one, and it was a sham of an economic impact statement. It talked about losses in the aerospace industry of $2 million to $4 million and maybe 20 jobs. We now know, based on your testimony, that it's far worse than that.

I'm going to give you an opportunity to talk about the actual economic impact. I also want to note that we had Mike Mueller at this very committee back in the spring, and he said many of the same things that you've said.

I also want to point out that my riding has a major footprint for the aerospace industry. In my riding we have Magellan, StandardAero, Boeing, the Winnipeg airport and others, so I'm hearing this directly from my constituents as well.

Could you comment on a couple of things? What is the actual job loss in your estimate as a direct result of the carbon tax? Also, what was the reduction in the number of airplanes that could have been sold, had the tax not been in place?

[Anthony Norejko]

The way to frame it is that, for every aircraft that we lose, it's approximately 7.1 jobs, so seven jobs. This is, again, $116,000. We pay $3 billion in wages, and this is just direct aviation operations and manufacturing, and this is the impact.

From just one of our manufacturers the year previous, we know that there were at least 18 aircraft, just from one of our manufacturers, and this results in approximately $800 million in missed sales.

Now, to assemble an aircraft, whether it's in the riding that you just mentioned, in yours or across this country, there are so many individuals, Canadians, who are employed to make these aircraft, both directly putting them together and installing the parts. At a minimum, there are 50 employees per assembled aircraft, so let's say that we take the largest manufacturer in Canada, Bombardier, for business aircraft. If they see production lines slowing down, there are materially at least 50 people per aircraft who would need to go away, let's say, if we lose those aircraft.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

On the number, though, did I hear you say 25,000 jobs directly or indirectly earlier?

[Anthony Norejko]

That is the total for industry to date, but we estimate that, with the luxury tax, it was far greater than the 20 jobs. I think 2,000 jobs was from the HEC study that was undertaken with our colleagues, so that was $149 million in wages and, I think, $30-odd million in taxes.

Just from that one study alone, 2,000 jobs would be materially impacted as a result of luxury tax.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

The $800 million, is that since the time the carbon tax came in?

[Anthony Norejko]

It's one year.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

That's one year, so that's close to a billion dollars in economic activity as a result of this silly tax in your industry. Is that correct?

[Anthony Norejko]

Yes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

On to another subject, the carbon tax is clearly a failed policy, and it's literally falling apart. One of the things I'm wondering about is whether the carbon tax has made air travel for consumers generally more expensive. When you go and pay for your airline ticket, are you paying more every time you fly because of the carbon tax?

[Anthony Norejko]

Of course, fuel is the number-one expense, whether you're in an airline or in business aviation operations. Jurisdictionally, provinces are enacting low-fuel standards, and this adds costs to that fuel per litre. Yes, whether it's related to a carbon tax, the airport operations or an air navigation service provider, costs for Canadians are going up. This translates to higher ticket costs. That is one input.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I'll go to Ms. Yedlin for a moment. In 45 seconds, tell me, do you agree that...?

The Governor of the Bank of Canada said, when he was at this committee, that the carbon tax amounts to 0.6% of all inflation. You've talked about affordability. If the carbon tax didn't exist, that would bring the federal government 33% closer to its target inflation rate of 2%, inflation now being 3.8%. It would make it 3.2%, which would give the Bank of Canada more room to reduce interest rates. Would you agree that it would help?

[Deborah Yedlin]

I think that it's an interesting issue to contemplate. The Bank of Canada governor did speak to the Calgary Chamber of Commerce in September, and he also made the point that it's a very small amount of money, but, when you look to change behaviour, if you go back to the publications of the Ecofiscal Commission by Chris Ragan out of McGill, if there is a desire to change behaviour, a carbon tax is the best way to do it. The issue is how it is administered, how it is applied and where it needs to be considered in terms of the impact it has in various sectors.

As I said at the beginning of my remarks, blanket policies are not helpful, and there are regional differences. There are sectoral differences that really need to be considered in this context.

Having said that, we know that companies have started to model their business cases assuming that the carbon tax doesn't go away, so certainty is a very important part of where we're at right now.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Morantz.

Now we'll go to MP Dzerowicz, please.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you, Mr. Chair.

I'm going to direct my questions to Mr. McLauchlin, but I'm going to stop at about 30 seconds before my time ends so I can address the inaccurate disinformation that Mr. Morantz is pushing forward on the price on pollution.

I want to start off with two clarifying comments, just because they worried me.

You talked a little bit about how Alberta is trying to break the relationship between the city and the federal government. Can you just take a moment to explain that?

Then I also want you to clarify something for me. You were talking about retroactive pay and fees the federal government did, so could you just clarify that? I want to make sure that I know what you're referring to.

[Paul McLauchlin]

I'll go really quickly.

Actually, within the mandate letter that was provided to the Ministry of Municipal Affairs, it was distinctly stated to ensure that the relationship exists between the province and the municipalities and not the federal government, so it was explicitly stated to Municipal Affairs.

Also, I'm quite active with the Federation of Canadian Municipalities. There is a trend that provinces are starting to make sure that the relationship is between the province and the federal government and not the municipalities, not a jump over. There was an announcement in Calgary of accelerated funding for housing, which I think has got some issues with the federal and provincial governments. They're not in attendance.

As it relates to retroactive pay, there was a negotiated agreement between the federal government and the RCMP as it relates to back pay. Quite literally, it was negotiated and any of the municipalities that pay for the RCMP got a nice bill in the mail. We did ask for that to be waived or absorbed, the $180 million, and that was not waived by the federal government. Again we were not at the table negotiating and someone wrote a cheque with our butt.

[Julie Dzerowicz, Liberal, Davenport, ON]

Just quickly on the first item, what would you like us to do around the city and the federal? I agree we need to have that relationship as well. Do you have a recommendation around that for us?

[Paul McLauchlin]

My recommendation is understanding that local government is the most accessible government. We're the government of proximity, as President Pearce, the president of the FCM, has said. It's understanding that we have a role, we're fiscally prudent and we're closest to the people. When we get caught between federal and provincial fights, who actually loses is the people. We only have one taxpayer, so I think everybody needs to come to the table and realize that we're pretty efficient in the ways we provide deliveries and services, and fiscally efficient. We need to start having that relationship.

[Julie Dzerowicz, Liberal, Davenport, ON]

I appreciate that.

I want to go to the conversation you started introducing around disaster recovery and resiliency.

Do you believe that you have the data you need? What I'm talking about is this. Do we have the right flood mapping? Do you know where we need to rebuild and not rebuild? Do we have the data that we need, or is there more work that we need to do in order to really start putting into place the plans around resiliency?

[Paul McLauchlin]

Small population centres with low density probably don't have the capacity to actually provide the analysis of that type of information. There is some flood-mapping data done by the Insurance Bureau of Canada. The Province of Alberta had some flood mapping that it just will never release for whatever reason. We've asked for it for 10 years, and it turns out that it will never leave the halls of the provincial government.

We need to model risk from a local level, from all levels, and I think we need to start using that risk model. We need to start going away from a one-in-a-100-year flooding to one in 250. There's drought mitigation, and all these resiliency conversations we need to have. If you have a dollar, are you better to spend the dollar on mitigation or on adaptation? I'll be honest with you. It's probably a dollar on adaptation. I think that we need to start looking at it that way. That's not speaking against renewables or any of those other pieces, but, from a municipal rural lens, adaptation is the key place.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'm 100% in agreement with you. I co-founded an environmental group, but I 100% agree with you.

If you have specific recommendations, not just around flood mapping but also around whether it's fire or anything else, please let us know. I think there's a whole slew of things that we can be doing around emergency management, but I think we're looking for what we need to do.

There's another thing I wouldn't mind hearing from you on. As the world becomes more unpredictable and unstable, I always think about building more resiliency at home. This is around food security. Have there been conversations around ensuring that we work with the agricultural base to make sure that we have food resiliency and security here in Canada?

[Paul McLauchlin]

You probably heard some of the media on the moratorium, on the pause that they call a moratorium, on renewables in Alberta. The lens that we had, and the concern we had, was actually food security and saving good-quality agricultural land. Pivots in southern Alberta were being removed and solar panels were being placed on that land. With the severe drought this year, the land that had irrigation pivots on it could have been in production.

I think we need to have this big conversation around food security and food preservation, whether it's urban sprawl or otherwise. I think it's a very important topic, and we need to start, again, going through those priorities. Food security needs to be part of that climate change resiliency conversation as Canadians.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Just looking at the time, we have about five minutes for this excellent first panel, so we're going to have one minute per party to be able to ask a question and get an answer.

We're going to start with MP Morantz.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Just quickly, I wanted to just get clarification on one point, Ms. Yedlin. Would you agree that it would be fair to have a carve-out or a pause for home heating for all Canadians?

[Deborah Yedlin]

I would agree with that because we have very different jurisdictions. As I said, blanket policies are not applicable in this case and also when we talk about the clean electricity regulations.