Finance Committee on Nov. 20th, 2023

[The Chair, Liberal, Peter Fonseca]

Welcome to meeting number 121 of the House of Commons Standing Committee on Finance.

The committee is considering matters related to committee business and, more specifically, the motion of PS Rachel Bendayan, which was previously stood on Thursday, November 9, 2023.

Today's meeting is taking place in a hybrid format pursuant to the Standing Order 15.1. Members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the members.

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I remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

We have PS Bendayan who would like to speak, and then MP Lawrence.

Go ahead, PS Bendayan.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair.

Mr. Chair, I appreciate the introduction you provided at the beginning of the meeting, but for the sake of procedure, I move that the committee resume debate on my motion on the Canada pension plan, a motion that I first moved formally on November 6, 2023.

By way of background, I do think it is relevant to remind the Canadians listening, and even those in this room, that I put this motion on notice way back on November 2. I moved it on November 6, at which point we did have the beginning of a filibuster. I moved it again on November 9, which was followed by more than two and a half hours of a Conservative filibustering to avoid getting to a vote on this motion.

I certainly hope that now, after several weeks, members have come to the committee with either proposals for amendments or the intention to vote one way or another on this important motion, so that we can get back to the housing study that had commenced and was a productive use of our time with witnesses.

I certainly hope to come back to that as soon as possible, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, PS Bendayan.

I have MP Lawrence, and MP Blaikie after that.

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

Thank you, Mr. Chair.

With your indulgence, I would just like to congratulate all of the members and witnesses whom we heard on our week of travelling from coast to coast. I thought there were great questions and even better answers from many of our witnesses. I had the pleasure of being there for Quebec City, Toronto and Winnipeg. I'm sure all stops were great.

As I said earlier, I just want to make sure my comments are anchored in the motion. I'll just read the first line of the motion:

Celebrates the Canada Pension Plan as the foundation of a secure and dignified retirement for tens of millions of Canadians and a pillar of Canada’s economy;

My remarks will focus mainly on Canada's economy per the motion.

We are of course, in an extremely difficult economic time, really with extremes that we haven't seen since the Great Depression. Philip Cross, of course, the noted academic and statistician has said that we have the worse GDP since the Great Depression. We're actually contracting. I believe it's per person GDP. Those numbers are obscured a little bit.

For those Canadians listening at home, they may be confused when they hear the Liberals say, we had an increase in GDP. Our increase in population is obscuring the actual economic numbers because while the absolute numbers are higher, the actual per Canadian numbers are lower. This government is in some respects successfully obscuring the truth. But you know what, Canadians feel it. The people of Northumberland—Peterborough South are very much aware of the economic times.

We see other indicators such as food banks being at record levels. I believe it's two million Canadians per month who visit food banks. I heard a statistic just this morning that fully a third of food bank attendees, customers—I guess "clients" may be the best way to refer to them—are new. These are folks who have never been to a food bank before. I heard a great interview this morning of one of the individuals who is in charge of a food bank.

You can imagine the energy, exhaustion and the stress it would take for someone who had never been to a food bank and probably never thought they would ever go to a food bank. Yet this government, instead of focusing on these very critical issues, is obsessed with scoring political points, to sow division. We all know from the first Prime Minister Trudeau of policies that, if not a willful, are certainly negligent, and of efforts that have alienated large portions of our country. Traditionally that might be viewed as western Canada, but I can tell you that in rural Ontario it's the same thing.

The folks in my riding, in part of rural Canada, very much feel like they are alienated and aren't thought about or cared about by this government. You see that even more so in the carve-out from the carbon tax. Yes, I'm glad that the Prime Minister got the memo from the Atlantic members of caucus who said that they can't campaign on this. We can't go back. We can't face our residents with a carbon tax at $80 a tonne.

I'll just remind people on the record as well, because there was some confusion—I'm sure it was honest confusion—on the road when I said carbon taxes had quadrupled. In 2019, the carbon tax was $20 per tonne. It is now $80. Four times $20 is $80. Sorry, it will be in the spring of 2024. I should correct that. We have the quadrupling of the carbon tax and in many cases a very meagre rebate coming back the other way.

We get this exemption, this carve-out, this acknowledgement that in fact the carbon tax is leading to an affordability crisis, as we heard from Tiff Macklem. He shared with us that 16% of inflation is actually directly because of the carbon tax and that 33% of inflation over target is directly because of the carbon tax. Those are all numbers.

I'm sure this is honest confusion, but I have heard many Liberal and even NDP members in the House, and even in this very committee, get very confused on that point and say things like it's only 1.5%. That's just not true. That's not what the governor said. The governor said, and he confirmed it, that it was actually 60 full basis points, which is 16% of inflation.

There is no doubt that by having that exemption, that carve-out only for Atlantic Canada.... I should be fair, though. I want to be completely transparent and make sure that we have all the facts. It does apply to other people across the country who heat their homes with oil. The reality is that the majority of people who heat their homes with oil are out on the east coast, which is where the Prime Minister's caucus was very upset. It's going to make many Canadians feel left out in the cold, literally and figuratively.

It's the logic, Mr. Chair, that really.... I don't understand it. I hear Minister Wilkinson say, you don't understand. Fuel oil is really bad for the environment, so we have to take the carbon tax off it. But then that same guy will say, you don't understand, gasoline is really bad for the environment so we have to quadruple the carbon tax. There's a complete gap of logic.

Every time I hear this debate, not even as a partisan or as a Conservative but as someone who studied philosophy at university, I don't understand the logic of it. Either the carbon tax leads to less of something, and so we should put it particularly heavily on bad things, or it doesn't, and then we should remove it all and, instead, allow Canadians to have the resources they need to make the decisions they need to. Actually, that brings me to Bill C-234.

As some of you might be aware, I originated Bill C-206—it's a private member's bill—back in 2019. That was the predecessor to Bill C-234, which was to remove the carbon tax from propane and natural gas for farmers. This would affect farmers from coast to coast to coast.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, I have a point of order based on relevance. The Conservative member is talking about a bill that is currently before the Senate and that has absolutely nothing to do with the motion on the floor at this committee.

[The Chair, Liberal, Peter Fonseca]

MP Lawrence, you were talking about the economy. Perhaps you could get back to the economy and to PS Bendayan's motion on the CPP.

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

Thank you very much. I'll anchor my comments to make sure that the connection is clear.

The carbon tax is having a huge impact on the economy, and we actually heard that testimony. You don't have to take my word for it, Mr. Chair. You can take Tiff Macklem's word for it. The number one problem with the economy—which I think is universally agreed upon by Bill Morneau, John Manley and Minister Freeland—is inflation.

We heard testimony from the Governor of the Bank of Canada that 16% of that inflation or 33% above target is directly related to the carbon tax, so one really can't talk about the economy without talking about the carbon tax.

I know that might offend the sensibilities of some Liberals because this is the signature piece that has really—it hasn't really accomplished anything on the environment. In fact, all it's doing is actually, as I had the opportunity to talk about a little bit, pushing Canadian companies to either leave fully or to put their manufacturing offshore so that they don't have to pay a carbon tax.

In places like Guangdong province or in West Virginia, where they may rely heavily on coal, they don't have to pay the carbon tax, which means that instead of having clean Canadian natural gas powering industry relatively efficiently, we have the same products being made in Guangdong province, in West Virginia and elsewhere in the world where they power with coal.

I would much rather have the hydroelectric dam in Niagara Falls powering and creating manufacturing in Ontario as opposed to having coal in the outskirts of Beijing and around other industrial areas where they don't have the same clean tech that we do here in Canada.

Getting back to the bill I was talking about, which was Bill C-206, agriculture is a primary part of the economy, and I think one of the most critical parts of the economy. We want to talk a little bit about how carbon tax interrelates with agriculture, both of which are critical to the economy.

I had the great pleasure of introducing Bill C-206 in Parliament in 2019, which was a bill to exempt natural gas and propane from the carbon tax regime for farmers. As I said, it would affect farmers from coast to coast to coast, but particularly those who are drying grain. This was on the heals of—excuse the language; it's the term they use in agriculture circles—“the harvest from hell”. It was a very wet harvest, which created a very moist grain and corn. Individuals had to pay tens of thousands of dollars in carbon tax. That continues to this day, and that was at $20 per tonne. As I said, it's been quadrupled now to $80 per tonne. We heard great testimony on the road. I hope that members of the government, particularly, were listening to CAPP and other expert witnesses.

We took that all the way to the Senate, Mr. Chair. We got it all the way there, and unfortunately, Prime Minister Trudeau called his unnecessary $600 million election, so it stalled there in the Senate.

To my great relief and admiration, my great colleague Mr. Ben Lobb brought it back in the form of Bill C-234. I might say that Mr. Lobb actually improved the bill to include barn heating amongst other small but important amendments that he made to that bill.

We're here now again. It's back in the Senate. Unfortunately, the Liberal government in the so-called independent Senate, and I do say “so-called”, is utilizing pressure on the senators it controls.

They can call them Liberals. They can call them whatever they want to call them. They listen to their master in Prime Minister Trudeau, and they are currently stalling that bill.

One of the reasons I think they might be stalling it is that the environment minister, Mr. Guilbeault, has said that if there's one more carve-out, he will resign as environment minister. That carve-out, I believe, is coming.

We have the support there, so I would call on the Prime Minister to.... If he has to choose between his environment minister and Canadian agriculture, the choice is easy. You go with Canadian agriculture. I'm sure Mr. Guilbeault, despite his criminal record, is eminently employable. I believe he'll be just fine, going forward.

The question is on the carbon tax. We should have farmers, and will likely have farmers, as exemptive, as long as the Liberal senators don't hold it up too much.

By the way, to anyone listening, please write your Liberal MP—

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, I have a point of order.

I am renewing my point of order on the subject of relevance. With much respect, my colleague has not respected your direction, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Again, MP Lawrence, please stick to the motion:

1. Celebrates the Canada Pension Plan as the foundation of a secure and dignified retirement for tens of millions of Canadians and a pillar of Canada's economy;

2. Recognizes the important contribution of the Quebec Pension Plan which was established independently at the same time as the Canada Pension Plan; and,

3. Stands with the majority of Albertans who are opposed to Premier Danielle Smith's dangerous plan to withdraw from the Canada Pension Plan that threaten the pensions of millions of seniors and hardworking Canadians from coast to coast.

Let's focus on that.

[Adam Chambers, Conservative, Simcoe North, ON]

On the same point of order, Mr. Chair—

[The Chair, Liberal, Peter Fonseca]

Go ahead on the point of order.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

I believe the member was getting there. With respect, agriculture would be a strong pillar of Canada's economy—

[The Chair, Liberal, Peter Fonseca]

That's not a point of order.

The member can speak, but I would ask the member to focus on the motion.

Go ahead, MP Lawrence.

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

Thank you, Mr. Chair.

I think it actually is self-evident that the carbon tax is affecting farmers, and agriculture is a big part of the economy. If this member is saying somehow that agriculture is not part of the Canadian economy, I wish he would just come out and say that, because my farmers certainly feel differently than that.

Perhaps, Mr. Chair, I might speculate that maybe their lack of respect for farmers is leading to the extreme food insecurity that millions of Canadians are facing right now. I firmly disagree with the member that agriculture is not.... I believe agriculture is part of the economy, and I'm going to continue to talk about it. It says it right here—“a pillar of Canada's economy”—so I'll continue to talk about it.

Talking about agriculture this year, the testimony we heard to this very finance committee in Winnipeg, from agriculture groups and farmers themselves, was no doubt.... They agreed that probably the best solution is not any more carve-outs, but to cancel the carbon tax once and for all. When you think about it, is there any other button this government could hit that would reduce inflation by 16% tomorrow, and from being 33% above target? What other policy lever would be that effective in fighting inflation? Honestly, I mean this. When I no longer have the floor, what's their answer to reducing inflation? I have a policy right now that will reduce the rate of inflation by 16% and 33%.

Although I agree with most of Mr. Macklem's testimony on the impact of carbon tax on inflation, it should be pointed out that he just talked about the direct impact, and he was only talking about fuel. That's not even the full impact on inflation; it's actually just part of it. The other thing he said.... I know members across the aisle, whom I respect, have said, “Well, yes, Phil, but it's only for one year”—and it's true that he did say that. But the reality is the carbon tax is set to increase all the way to 2030, to 170 tonnes, which means it will have an impact on inflation every year until 2030. So, it doesn't stop this year. The impact on inflation will continue to go forward, because when you cancel the carbon tax, you eliminate not only the carbon tax now, but the future increases as well. That's a question I'm looking forward to putting to Governor Macklem going forward, because it is clear, basic logic on that.

When you look at the overall divisive policies of this government and the carbon tax carve-out, what you see is that the carbon tax is getting more and more holes in it. In fact, it's almost untenable going forward, because you have the heating oil exemption; you'll have the farmer exemption, hopefully, soon; and then there are other exemptions that are not in there, which I don't understand quite why. No one has been affected by the affordability crisis more than persons with disabilities. Why should there not be a carbon tax exemption for persons with disabilities?

On that, despite the fact that we're 1,000 days from the introduction of legislation with respect to the Canada disability benefit, and it's been over one year since the enabling legislation, we still don't have it funded. This government has to be fair to persons with disabilities, and we heard great testimony on that, with respect. We are now “double punishing” persons with disabilities, who unfortunately, and to the great criticism of our society, are often at the lowest quintile of economic performance. This is not a reflection on them; it's a reflection on us as politicians.

I'm hoping that the fall economic statement finally funds this benefit, which I believe had unanimous support in the House of Commons. But now, in addition to that, we're going to charge individuals a carbon tax, which is very difficult.

Canadians who are most economically vulnerable in general are often hurt disproportionately by regressive taxes like the GST and the carbon tax. I had the opportunity to talk to a poverty advocate. He said that, in his experience, only 4% of those who are most financially vulnerable, those at the bottom of the economic spectrum, file their income taxes. For those individuals making an income of over $20,000 to $25,000, they are paying taxes, and it's a net economic loss. For those unfortunately not reaching that threshold, or even sometimes higher, they are in receipt of net benefits.

For example, if individuals who have had difficult economic times, for whatever reason, do not file their income tax returns, which according to that poverty advocate is 96% of them, they don't get the carbon tax rebate. However, the reality is, on the meagre earnings they carve out—and I'm sure they are doing their best to make more but for whatever reason, obstacles and barriers are in their way that I'm sure are beyond their control—they have to pay carbon tax. If they are paying rent, they are either paying it directly or paying it indirectly through heating costs. They are probably using some type of transportation that likely requires some type of fossil fuel, and once again, they are paying for that in dollars.

We had further testimony from the City of London as well, and they talked about how difficult it was. That, Mr. Chair, was some of the more startling testimony about the number of individuals who lost their lives on the city streets in London. It was deeply moving for myself and, I'm sure, for the other members. They agreed that one thing we could do as parliamentarians would be to reduce the cost of heating. Many of the organizations that provide solace, or care, or respite to individuals who find themselves unhomed have to pay the carbon tax. That is at the cost of providing more benefits to individuals who are in the most difficult circumstances we could imagine. Instead of buying extra winter coats, they are having to pay for the carbon tax.

It's incredibly difficult for me to understand why a government that has mired our country in a housing crisis, where mortgages are up two or three times, where rent is up two times, and that's if you can find a place.... In some communities in my riding, like Cobourg and Port Hope, they are facing vacancy rates of less than 1%, so even if you have the $2,000 or $2,500 a month to pay for housing, it just doesn't exist. I just cannot understand why the government continues to go in the direction of making life more difficult.

Quite frankly, the root of a lot of those issues is our productivity crisis. Canada, unfortunately, is ranked near the bottom of the OECD with respect to productivity. I hope, in the fall economic statement, they are looking through a lens of productivity. If I were advising the Minister of Finance—maybe she's listening, but I don't know—I would put every single economic policy through a productivity lens. In some cases, there might be things that outrank productivity, but, for everything this government does, they should look at the productivity of it, because even inflation is affected by productivity.

Of course, we've heard a lot from the Governor of the Bank of Canada Tiff Macklem, who talked about inflation and the effect of demand on inflation. However, there are two sides to it. There are two sides to the ledger. There's both demand and supply. What the Governor of the Bank of Canada is attempting to do is reduce demand. He's trying to get fewer dollars chasing goods. He's doing that mainly by talking about monetary policy, reducing the money supply and increasing interest rates. That reduces the money. He's even, unprecedentedly.... I have to admit, I was a little taken aback at the finance committee that he was so forthright. Good on him for calling for the federal government, which was spending at a growth rate of 3.5%, to bring it down to under 2%. Otherwise, it would be at cross-purposes or unhelpful to his efforts.

There's the other side. There's the demand side. Slowing demand is painful. Slowing demand increases interest rates, which makes mortgages more expensive. It also causes unemployment and puts you on that path towards recession and maybe even “stagflation”.

Now, there's another way. There's another side of the ledger. We call that “supply”. The study of that is called “supply-side economics”. If we can increase the number of goods, society becomes more prosperous. It doesn't come with the pain that reducing demand does. In fact, it's the exact opposite. If you increase supply, you increase economic opportunities for everyone. You increase prosperity. You increase the wealth of the nation. You increase the size of the pie. What I firmly believe this government needs to do, not just to combat inflation now....

We could be in for, as Tiff Macklem and other economists have commented, structural high inflation, meaning we're simply not producing enough goods to meet the demand we have, especially with the large population growth we have. Rather than tamping down demand by saying, “Canadians need to do with less and be happy about it”—which seems to be the calling words of the other side—I believe Canadians can produce more, make more and be more prosperous.

When we increase economic growth—it's been proven over and over again, from JFK to Brian Mulroney—we help the most vulnerable. It's when we get that economic squeeze in supply.... It's not the wealthy in our society. It's not the millionaires who suffer. They'll be just fine. When you're making a million bucks a year and lose 10% of your income, it's probably not a good time. I've never earned a million dollars, but it's probably not a good time. However, if you're making $10,000 a year and lose 10% of your income, you're probably not going to eat some days. It's the most vulnerable who get crushed.

Actually, once again, Governor Macklem came out and pretty much said this. Governor Macklem called inflation “a tax that disproportionately affects the most vulnerable members of society." Once again, I was surprised by Governor Macklem's candour on the topic. I look forward to having him back here again so he can amplify these comments, because inflation is an incredibly corrosive force on our economy. It waters down the wealth of Canadians.

I understand that the governor has to do what he has to do right now to reduce inflation, which is increase interest rates. His job is going to be made harder, meaning he'll have to increase interest rates more if this government can't get their spending under control. In fact, Scotiabank said, in a recent report, that actually a full $700 of the average mortgage is the direct result of this government's profligate spending. In that same report, I believe, they said that investment in housing is down 14%, meaning that we don't have more houses coming online.

We are welcoming newcomers, which is fantastic and great, but we owe it to them as well as to individuals who were born in Canada, to enable them to afford housing. If we can't deliver the housing for newcomers and all Canadians, that's devastating. Not being able to afford a house isn't just that you don't get a lawn; oftentimes people choose not to have families at that point because they just don't have any place to put their children. We are causing all sorts of social and economic pain by not having the appropriate housing plan in place.

Our leader Pierre Poilievre has come up with a common-sense housing plan to reduce taxes, to reduce red tape and to incentivize municipalities to get more housing starts out the door, but right now we're going the wrong way. In fact, in testimony before this very finance committee, the CMHC said that, no, the current policies will not bridge the housing gap, which means we have another nail in the structural inflation coffin.

Our productivity issues are reducing our supply of pretty much everything and now we have housing.... We are unable to increase the number of houses that we need, which would increase housing going forward.

Then on top of that, we're also limiting the ability to make use of our own natural resources. Of course, a large portion of inflation in CPI is actually fuels, such as gasoline, diesel. Because we are limiting our ability to be self-sufficient—even though we have clean, great Canadian natural gas, Canadian energy—the impact of that is we will be increasingly dependent on other countries, meaning we will be dependent on world markets with respect to future fuel prices, which will leave us exposed to a shock in energy prices. This government, in many ways, is creating the perfect storm for structural high inflation.

We need to have a common-sense plan to get this economy back on the rails. Our leader has said very clearly that CPP is something that we believe should continue to be national in scope—with, of course, the noted exemption of Quebec. We would encourage Albertans and Alberta to stay in CPP, but we do have trouble with the language, particularly the third line of Ms. Bendayan's third line in there, third paragraph.

I would like to move an amendment at this point to delete that and replace it with the following, “The Liberal government's policies such as the carbon tax and Bill C-69 are lead to greater division in our country.”

[The Chair, Liberal, Peter Fonseca]

Is that an amendment?

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

It's an amendment, yes.

[The Chair, Liberal, Peter Fonseca]

Is there debate on this? Is there no debate?

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

I will put myself on the list.

[The Chair, Liberal, Peter Fonseca]

Is that for debate on this amendment?

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

Yes, it is. Thank you—

[The Chair, Liberal, Peter Fonseca]

You're speaking to your amendment.

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

Yes, exactly.

I think it's important to note that this Liberal government has continued to put forward policies that divide our great country. Whether it be the carbon tax that I've talked about and will continue to talk about, Bill C-69, which is referred to as the “no more pipelines” bill, or Bill C-48.

Abraham Lincoln famously said that a house divided cannot stand. We need to have a country that is working together. We need from every corner, from Nova Scotia to British Columbia, everyone rowing in the same direction and working together to make this the great country that we know it should and can be.

When we look across our country, we see individuals increasingly feeling as though they are being left out by this government, whether you are a logger in British Columbia or you're working in the oil fields in Alberta.

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

Was that your timer?

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

It was, exactly.

That's to tell me to get started.

That's the one point.

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

That's your preamble done.