Finance Committee on Nov. 16th, 2023

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

Would the chamber like to see the passage of Bill C-234?

[Deborah Yedlin]

Yes.

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

Those would be the questions.

[The Chair, Liberal, Peter Fonseca]

MP Morantz, that's a lot of questions there. We said one question and an answer.

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

I thought you said one minute.

[The Chair, Liberal, Peter Fonseca]

Okay. I apologize.

MP Baker.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Just quickly on the issue.... There's been a lot of conversation. I mean, we're here to listen to you, not so much to espouse our political views from our end. However, I do just want to flag for common understanding that what's been done has been talked about as an Atlantic Canadian policy. It's really a Canada-wide policy, but of course, it affects Atlantic Canada more than anybody else. That's the first thing I would say.

The second thing is that it's a temporary carve-out. I think that's an important nuance. It's not dismissing any of the feedback that we've gotten on that aspect of things. I just wanted to flag that so that the facts are clear as we walk out of here.

Ms. Lachance, I am going to go back to my earlier question.

The francophonie is important. In my opinion, it involves both a cultural and an economic aspect. We also have a duty to French as an official language. Could you add to your earlier answer to the question of why it is important to protect French and support the francophone community?

[Nathalie Lachance]

I think it is central to who we are as Canadians, so it is important to protect French, and I agree with you that we also have to look at it from both the economic and the cultural perspective.

There are so many places in the world where more than one language is spoken. In Canada, we sometimes get bogged down in the two languages. I think it is important to recognize the crucial role played by the francophonie, both in Canada and on the international scene.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

MP Ste-Marie, go ahead, please.

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

Thank you, Mr. Chair.

Ms. Lachance, can you add anything to your testimony, in one minute?

[Nathalie Lachance]

I would just like to encourage you to consider the importance of the francophonie when you are preparing your submissions for the budget. It would be a good idea to make sure that all agreements signed with the federal government include language clauses. That is how we manage to get all these services and programs on the ground.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Our final questioner is MP Blaikie.

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

Mr. Norejko, at the time the luxury tax was implemented, the government made a choice to put the tax on the manufactured product. There was talk about taxing the use or the rental of jets and about other ways of implementing a luxury tax that would be less damaging to the manufacturing industry in Canada.

Do you want to speak a little bit about some of the options that the government has in order to retain a luxury tax of a particular type, but one that would have less of a negative impact on the manufacturing sector in Canada?

[Anthony Norejko]

What I would say very briefly is that, first, as we've put in our submission, the 50 plus 1%, in effect, it's recognizing that—as the Income Tax Act does for these assets—as the threshold for business use. What was put in place was 90%, which is a higher threshold than the Income Tax Act states itself. That's a principal one. The use of charter aircraft and fractional aircraft is an opportunity. This is what translates to buyers in Canada or users of these services who are either commissioning U.S. base entities to do their flying or just not buying the aircraft altogether. As you've all seen, perhaps, on this road show, it's very difficult to connect Canadians across the country. There's no direct service between Ottawa, the nation's capital, and here—Edmonton, Alberta—or Winnipeg or other places. These decisions, these impacts, mean that it makes it that much harder and more costly for Canadians to move around the country at a high level. That's what I would say luxury tax does.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Blaikie.

On behalf of the committee, I want to thank all of our expert witnesses for their testimony for our pre-budget consultations in advance of our 2024 budget. You were excellent.

On that note, we are going to suspend for five minutes as we transition to our second panel.

Thank you.

[The Chair, Liberal, Peter Fonseca]

We're back.

This is meeting number 119 of the Standing Committee on Finance. We're doing our pre-budget consultations in advance of the 2024 budget.

For our second panel of witnesses, if you were not here, we were just talking about being delighted to be here in Edmonton, in beautiful Alberta, and to be on the ground, because we haven't done this for five years. It's been a long time since our committee has been able to travel, but we are travelling the country. We started in the Atlantic. Yesterday we were in Winnipeg; today we are here in Edmonton; and tomorrow we'll be in Vancouver before heading back to Ottawa.

We thank you for coming before us, and we look forward to hearing your testimony. At this time, you're going to have an opportunity to introduce yourselves in your opening remarks. You each have five minutes before we get into the members' questions.

With us today we have, from Edmonton Global, the chief executive officer, Malcolm Bruce. From Electric Mobility Canada, we have Daniel Breton, president and chief executive officer. From Fairness Alberta, we have Bill Bewick, executive director. From Friends of Medicare, we have Chris Gallaway, executive director. From the National Cattle Feeders' Association, we have Greg Schmidt from the board of directors, as well as the president and chief executive officer, Janice Tranberg.

We're going to hear your opening remarks right now, and we'll start with Edmonton Global, please.

[Malcolm Bruce, Chief Executive Officer, Edmonton Global]

Thank you very much for the opportunity to speak with you today and provide input into the budgetary process.

I'm going to focus on one particular subsector, even though we are globally competitive in five, where we see tremendous investment and growth.

As noted, my name is Malcolm Bruce. I'm the CEO of Edmonton Global, the Edmonton metropolitan region's economic development agency. Our shareholder group is the 14 member municipalities that make up the Edmonton region.

The Edmonton region is driving historic and almost unparalleled growth in Canada. At the forefront of this particular growth opportunity is hydrogen. This is one the best solutions for those industries that are really hard to electrify. Think about heavy industry, chemicals, advanced manufacturing production, concrete, steel and glass, things that require intense heat to be created. There are also things that need to move very long distances: heavy-haul trucking, mining, farming and vehicles such as transportation trains, long-distance bussing, cargo ships and airplanes. These things can't be easily plugged in or economically viable if they need to spend a third of their lives charging.

Today, the Edmonton region is by far the largest producer of hydrogen in Canada. If the Edmonton region were a country, right now we would be the second-largest producer of hydrogen in the world. Almost all the hydrogen currently is used in heavy industry. Most of it has a fairly large carbon footprint. This is changing.

Right now, Air Products is building the world's largest net-zero hydrogen facility in Edmonton, at a cost of $1.6 billion, making it truly a global-scale project. Hydrogen and our capabilities in carbon capture enable other massive net-zero projects to happen here first. Heidelberg Materials has planned to renovate and build the first and largest-scale net-zero cement facility right here in the region.

Solving the carbon challenge for industries like cement production is where our biggest gains will come from. We need projects like this if Canada wants to meet its net-zero commitment. For perspective on how important decarbonizing cement is, if you took every electric car in the world in 2022 and doubled their combined battery efficiency, that would be roughly equivalent to the carbon impact of decreasing the cement industry's emissions by 1%.

Heidelberg's project, a project they want to build here, isn't reducing it by 1%. They are reducing it 100%, showing to the entire industry that this is possible. They've chosen Edmonton to be the global leader and example.

Our partners in Alberta's Industrial Heartland Association, which is located in the northeast quadrant of the region, are very close to making a number of announcements by a global Fortune 500 company that will create the largest and first net-zero ethylene and polyethylene facility. Should this $12-billion project go forward and be approved by the company's board, this will produce, again, another global-scale net-zero hydrogen facility that will need to be built, equivalent to the Air Products one and probably larger. This company has signalled that this project will be roughly twice the size of the Air Products one and take over as the largest net-zero hydrogen facility in the world.

Our region is also working on massive-scale multi-billion dollar projects around Mitsubishi, Shell, Petronas and many others. These projects are focused on shipping net-zero hydrogen, mainly as ammonia, to Asia and California.

We can not only help decarbonize Canada, but also have a significant impact on the world. It's Canada's time, and the path to net-zero runs through the Edmonton region. These are investments being made by some of the world's biggest companies. They are serious, and they want to move quickly.

When I listed these projects, almost all the words that I said, except for Air Products, were “planning to”, “signalling” and “intention.” Many of these deals are not done. These projects are Canada's to win, but they are also Canada's to lose. Frankly, global investors aren't confident in Canada's ability to deliver. The trust our nation has built over generations is quickly dissipating, as investors watch our nation create roadblocks and squander away many of our nation's biggest economic opportunities, in particular around resource development. Global energy transition is real. Canada can be a leader in this space.

Companies search out environments that are predictable and transparent and move with speed. Right now, Canada is failing on all of these fronts. We are slow to act, slow to approve and confusing to investors and, rather than building projects, we're building uncertainty and risk. We need to shift our thinking and our approach to policies and regulations to empower the kinds of investment we want: to become enablers rather than gatekeepers.

Environmental stewardship and indigenous inclusion should be part of the assets that are sought out. Done right, inclusion makes projects far stronger and more sustainable and can significantly reduce the risks.

At Edmonton Global, we're extremely optimistic about our future for the region and the future of Canada. This is absolutely the best place to live and to grow a business if you want to make a difference and have an impact.

Don't get me wrong: We will find success either way. Our fundamentals are strong, our talent pool is well educated and young, and our financial, legal and social structures are the envy of the world. The question is, how much of the opportunity will be realized? If we—

[The Chair, Liberal, Peter Fonseca]

We've gone over time. Thank you.

That was great. We'll have an opportunity for a lot more during members' questions.

We'll now hear from Electric Mobility Canada.

[Daniel Breton, President and Chief Executive Officer, Electric Mobility Canada]

Thank you for giving me the opportunity to appear before the Standing Committee on Finance.

My name is Daniel Breton. I am the president and CEO of EMC.

Founded in 2006, EMC is a nationally based industry organization dedicated exclusively to the advancement of electric mobility and an opportunity to support the Canadian economy while fighting climate change and air pollution. EMC is the unifying and authoritative voice for electric transportation in the country.

Electric Mobility Canada has a wide range of member organizations including light, medium, heavy-duty, and off-road vehicle manufacturers, ship builders, infrastructure providers, electricity suppliers, tech companies, research centres, governmental departments, universities, mining companies, fleet managers, unions, and so on.

Let me personally invite all of you to our conference right here in Edmonton at the EXPO Centre. Right now, we're having our trade show here, where you'll see electric cars, trucks and buses.

Here are EMC's top recommendations for the 2024 budget.

For light-duty vehicles, continue purchase incentives for new passenger EVs, but focus on the EV-only range to include more long-range electric cars, SUVs and pickup trucks. Introduce a fiscally neutral feebate system to have the most polluting vehicles fund EV incentives for new vehicles. Make EVs more accessible for low- and modest-income households through a dedicated program.

Make it easier for taxis, car share or ride-share to go electric by removing the iZEV cap for fleets. Actually, there was good news yesterday from Transport Canada on that front: going from 10 to 50 electric cars that could get a purchase rebate for car sharing.

Support consumer EV education and industry sales force training—this is a big need. Establish a green scrappage program that gets fossil fuel vehicles off the road, and replace them with zero-emission modes of transportation, whether battery electric or hydrogen. Adopt an ambitious ZEV sales transportation regulation program to make sure that all Canadians have access to a growing supply and variety of EV models.

For MHDV, pursue purchasing incentives for the segment and work with the provinces to match funding. Pursue funding for electric transit buses and pursue long-term funding for municipalities and transit agencies to convert their fleet to electric. Make the electric school bus incentive program simpler and more efficient so companies can apply and get the funding they need for transition. Increase funding for the integration of electric trucks into commercial fleets. Implement a phase-out of fossil fuel vehicles at federally regulated properties such as ports, rail yards, parks and airports.

Make electric off-road vehicles more affordable—many companies in Canada make electric off-road vehicles, one of them being snowmobiles, obviously—by introducing a federal rebate, as Yukon, Vermont and other jurisdictions did. Implement a ZEV sales mandate for off-road by 2035, similar to New Jersey, New York and California.

Support the electrification of Canada's ferry services. No one talks about this, but it's important. In Norway, I saw that 50% of the whole ferry fleet was already electric. We recommend that the federal government work with regional and provincial ferry agencies, as well as Crown corporations like BC Ferries, to launch a program to support the electrification of ferry services across Canada to lower GHG emissions, air and water pollution, and underwater noise and, in the process, create a Canadian zero-emission marine industry to become a North American leader.

On EV charging infrastructure, set and fund targets for EV charging stations or fuelling stations for hydrogen for all types of vehicles in every Canadian region. Make one million condominiums and apartments EV-ready over four years. Add EV charging requirements to national building codes. Support right-to-charge rules for residents of multi-unit residences. Accelerate rural, remote and off-road access to charging, as we saw in last week's report from the Auditor General.

As you can see, the transition to electric transportation will call for sustained support from the federal government, not only to ensure that it succeeds, but also because the Canadian and foreign companies involved need the market to be predictable in order to invest in the medium and long terms.

Collaboration among the provinces and territories, the first nations, municipalities, and the federal government is essential if Canada wants to be a global leader in the electrification of transportation.

We have to ensure that future generations will have access to sustainable, well-paid jobs everywhere in Canada, from mining to assembly, from research to education, from sales to maintenance, and from British Columbia to the Maritime provinces, including, obviously, Alberta.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Breton.

We would all be at the expo if we didn't have to be in Vancouver tomorrow. Thank you for that invitation.

Now we're going to hear from Fairness Alberta.

[Dr. Bill Bewick, Executive Director, Fairness Alberta]

Thank you for the invitation to appear.

I’d like to start with Fairness Alberta’s motto: “Proudly Canadian. Fiercely Albertan”. We're a group of Canadians who believe Albertans have not been treated fairly by federal economic and fiscal policies. We believe that by respectfully but assertively raising awareness across Canada about the basic facts on these policies, we can persuade a majority to support meaningful reforms that will strengthen both national productivity and national unity. I can’t imagine two higher priorities for your committee, and they are currently very intertwined.

As we detail at fairnessalberta.ca, from 2000 to 2018 Albertans sent $324 billion more in federal taxes than was spent by Ottawa back in Alberta. For most of the last decade, that averaged $20 billion per year, or $4,500 net per Albertan.

Don’t get me wrong. When things are going well for our economy, Albertans are very willing to help Canadians with an outsized share of taxes to pay for government, but when federal policies are either unfair to us today or unfairly threaten our economic future, we, like any province, deserve to be not just heard, but reasonably accommodated. Canada is a vast country, with differing provincial realities. The only way it can hold together is by respecting those differences and by reasonably accommodating them.

What are some of these unfair policies? You can review my testimony to this committee in 2020 on equalization and fiscal stabilization being unfair and needing reform. I mention them because they are the most recent examples germane to this committee of the Prairies being refused reasonable accommodation, but the two most important threats to Canada’s economy and national unity are clear: the 42% emission cut by 2030 dictated to the oil and gas sector and the demand for net-zero electricity by 2035.

As you know, Saskatchewan and Alberta do not have major hydro resources or nuclear plants to generate electricity. In the cold and often dark prairies, we’ve moved from relying on coal to cleaner natural gas for power and heat. The other unique element of Alberta’s electricity system is that it is driven by private investment. This has directly contributed to our success in building renewable power.

In 2022, 75% of Canada’s wind and solar investment was in Alberta, but the best available technology to complement intermittent wind and solar is the natural gas peaker plants. We can't replace this entire system with net-zero emissions by 2035, and even trying to get close will drive up costs here far more than in any other province.

With the electrification push across society, we need more investment in generation, but insisting on an arbitrary 2035 date is scaring those investors away. It also puts a chill on investment in any other sector in Alberta, because almost every business relies on affordable, reliable electricity. Without reasonable accommodation, this policy will damage our economic engine, which will hurt all of Canada.

The other damaging policy is the 42% carbon emission cut by 2030 that only the oil and gas sector faces. While other sectors of Canada’s economy are urged, prodded or incentivized to help Canada get closer to the government’s overall target to cut emissions by 40% by 2030, only oil and gas is being forced to meet that target.

The environment commissioner’s last two reports show that Canada overall will not meet this 40% target by 2030. It shows that 95% of the government’s initiatives have no targets. That’s probably because even if it is technologically possible, slashing emissions that much in seven years is totally unaffordable for most businesses and households without drastically reducing output or the standard of living. In other words, it might be a reasonable accommodation.

The Prairies' biggest economic driver, oil and gas, gets no such accommodation, and it alone must get there in seven short years. The oil and gas sector has made massive investments in reducing emissions. The major players in the oil sands are committing to the monumental task of getting to net zero by 2050. They’re pursuing a major expansion of carbon capture and they’re exploring small modular nuclear reactors, but there’s only so much CCS we can get in place in seven years, and there’s no chance of an SMR getting through federal approvals by 2030.

Alberta is leading the way in blue hydrogen as well, but it will take time because it needs CCS. CCS is needed both for oil and gas emission reductions and for significant decarbonization of our electrical grid. It is expensive, though, and if you really want it built by 2030, 2035 or even 2050, it needs long-term policy and funding support, not destabilizing threats.

Without reasonable accommodation for the Prairies, there is only one way to meet the federal demand for a 42% cut in emissions by 2030: massive cuts to natural resource production. This kills jobs, slashes Canada’s exports and reduces tax revenues.

The twin threats of a forced cut to resource extraction combined with anxiety over the reliability of electricity on the prairies are not just going to cost us our prosperity. They will also strangle the economic engine that has been stabilizing federal finances for decades. We were encouraged to hear a government minister say, regarding the heating oil exemption, “We have policies that have to be adapted to provincial realities.”

Without adapting to our provincial realities on these two policies, you will strain not only future budgets but also the fabric of this nation by refusing us reasonable accommodation.

Thank you for the invitation. I look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Bewick.

Now we'll hear from Friends of Medicare.

[Chris Gallaway, Executive Director, Friends of Medicare]

Thank you, Chair and committee members, for having me today.

My name is Chris Gallaway. I am the executive director at Friends of Medicare. We are based here in Alberta. We're a non-partisan advocacy organization and we've been around since 1979 working to improve, protect and strengthen public health care for Albertans and all Canadians.

With my time today, I want to touch on four issues briefly.

The first is finally moving forward on universal single-payer public pharmacare. The facts are out there: Canadians face some of the highest drug costs in the world. Millions of Canadians are struggling to afford their medications, including one in five households here in Alberta. A third of Alberta workers do not have drug coverage, and these numbers are only getting worse with the cost of living going up. We know there will be an initial cost to implementing this national program, but we also know there will be substantial savings—savings for Albertans, for employers, for our governments and for our health care systems. This is well documented in reports from the Parliamentary Budget Officer and others, and the road map to get there is already in front of you in the government's own report from Dr. Hoskins. This is the right thing to do for Canadians' health. It's the smart thing to do for our budget, and we urge you to get on with it in budget 2024.

The second issue I want to raise is around dental care. Here in Alberta over 30,000 kids got to see a dentist because of the Canada dental benefit. I know it's been life-changing for many families and children, and this happened in spite of the majority of our MPs from Alberta not supporting moving forward on dental care. At a time when the cost of living is the top concern, moving forward with dental care for children, for seniors, for folks with disabilities and for so many of those on fixed incomes has never been more crucial. We hope to see this expansion continued in budget 2024.

The third issue I want to raise today is around accountability for our public health care dollars. We see the federal government's role in health care as an important one—funding health care to ensure that we have a robust system in every province and jurisdiction—but when the new federal health transfers were being negotiated, Friends of Medicare and many other groups called for strings to be attached to that funding. Instead, we've seen blank cheques to provinces with no guarantee they even spend the money on health care, let alone that they don't use it to further privatization. In Alberta, we've already seen this as a concern with respect to our pandemic spending. Our auditor general looked at $4 billion in spending on the pandemic and concluded that the provincial government did not provide a clear picture of what was done with the money or what was achieved. We deserve accountability for our public health care dollars and we need to enforce the Canada Health Act in provinces where they are violating it.

The fourth issue I want to raise with you all today is around indigenous health. The health inequities we're seeing in indigenous people in this province are completely unacceptable. The federal government has a clear role in addressing this and stepping up as a meaningful partner. That means stepping up to address barriers to access, to address the backlog in health infrastructure in indigenous communities, to address the social determinants of health and to look at the systemic racism we're seeing in our health system and our programs.

That must include urgent action on the drug poisoning and mental health crises that we're seeing. This summer, Treaty 6 chiefs declared a state of emergency given the number of their people who were dying in this crisis. Five nations in northern Alberta have followed suit. The grand chief for Treaty 6 at the time was quoted as saying, “If harm reduction isn't available, our People will die.” There's an urgent need, and the federal government needs to be at that table.

There's so much more I could say on that: on the need to keep the promise on status for all and on regularization so that everyone can access health care, on enforceable long-term care standards, and on the need for a national staffing strategy in health care. There are many issues, but with my time today I will leave it at that. I look forward to the questions from committee members today.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Gallaway.

There will be opportunity for you to expand on those issues in questions.

Now we'll hear from the National Cattle Feeders' Association.

[Greg Schmidt, Director, Board of Directors, National Cattle Feeders' Association]

Thanks for the opportunity to participate today. We appreciate it.

My name is Greg Schmidt. I'm a producer and an owner-operator of a cattle feedlot just north of Edmonton here, in the Barrhead region. I'm not used to this type of setting, but we'll give it our best.

The National Cattle Feeders' Association is the voice of Canada's cattle feeders. We work to improve the competitiveness of Canada's beef sector.

Our pre-budget recommendations address food affordability by tackling challenges at the farm gate, and our recommendations ensure Canadian agriculture is sustainable and can track alongside our global competitors.

Recognizing that Canada is in a time of fiscal restraint, our budget requests do not come with large price tags. NCFA presented four recommendations to this committee within our written submission, but today we'll focus on just two of those.

First, we recommend that the government consult on and develop a critical farm input strategy to ensure Canadian farmers have an affordable and stable supply of critical farm inputs needed to competitively produce high-quality agriculture products. The sector is facing unprecedented challenges to the accessibility and affordability of farm inputs such as fertilizer, feed, seed, machinery and fuel. Input costs have skyrocketed. The majority of these costs cannot be passed down the value chain, making farming in Canada increasingly less profitable.

Recent transportation challenges make obtaining inputs difficult due to rail and port strikes, as well as rural roads and bridges that are unable to withstand extreme weather. Geopolitics will continue to challenge access to farm inputs, and alternative pipelines need to be considered for Canadian agriculture to compete globally.

Just as the government has invested in a critical minerals strategy, it must now build and fund a critical farm input strategy. Without this, the consequences will be significant, both for producers and for Canadians at the grocery store.