Finance Committee on April 9th, 2024

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

The simplest way to do it would be to adopt an amendment, rather than let the Department of Finance send the ball back to the Canada Revenue Agency, which sends it back to Revenu Québec. The provision would then end up not applying.

Is that right?

[Josée Landry]

Yes, you are entirely correct.

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

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Now we're going to MP Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Pentland, the Department of the Environment Act presently identifies Environment and Climate Change Canada as the lead federal department on all matters relating to water. It is not assigned to any other department. Bill C-59 enacts the Canada water agency act which would establish the Canada water agency as a stand-alone entity on this matter.

In what ways would the Canada water agency be more effective as the lead on fresh water in comparison to the current situation?

[Ralph Pentland]

The Minister of the Environment would also be the minister responsible for the Canada water agency. Right now, as I said before, there are 3,000 or more employees across the federal government in the water field. About a thousand of those are in Environment Canada, and they're all meeting their own legitimate responsibilities. The other 2,000 in other departments are all meeting their responsibilities. However, they're not meeting them together in the most effective way.

The main thing the agency would do would be to bring everybody together in the federal government with common policies, eliminating gaps and overlaps and fragmentation. By bringing everybody together, they would work better with everybody else in the water sector, namely, other governments, the private sector, farmers and municipalities.

We need all hands on deck to deal with climate change, indigenous rights and other emerging issues which are critically important right now.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Soucis, my French is not very good, so I am going to ask my question in English.

On average, how much do clients currently pay out of pocket for psychotherapy and counselling therapy? How impactful would the removal of GST/HST be on clients in helping them access services?

Ms. Landry can also answer my questions.

[Josée Landry]

Thank you, Mr. Chair.

On average, a one-hour consultation costs about $100 per person. If there are four consultations a month, or one consultation a week, that amounts to about 5,000 hours of consultations a week, if we count only the professionals we represent today. The total of 5,000 hours a week is equivalent to 20 hours of consultation per week, per professional.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

Members, we are going to suspend as we transition to our second panel of witnesses.

We're going to ask this first panel of witnesses to stick around, because members still may have questions for them.

MP Thompson, before I suspend, do you have something?

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

Yes. I'd like to ask for unanimous consent, Chair, from my colleagues, that we all agree that the second panel be given the full hour for witnesses to answer questions.

[The Chair, Liberal, Peter Fonseca]

If we have unanimous consent not to disturb the panel and allow the witnesses and the members to ask the panel questions, then we will not be able to disturb and allow for the witnesses to receive questions.

[An hon. member]

I'm not consenting.

[The Chair, Liberal, Peter Fonseca]

There is no consent.

We will suspend.

[The Chair, Liberal, Peter Fonseca]

Members, we're back. I know it's a little rushed, but we have to get back on track here and make up some time.

We do have all of our witnesses here. The witnesses from our previous panel are still with us, and we thank them for that. If you have questions for them, we'll ask them to come to the table and you can pose your question to one of those witnesses.

Right now, we have before us, from the Canadian Credit Union Association, Mr. Michael Hatch, vice president, government relations,

From the Quebec environmental law centre, we have competition law researcher Julien Beaulieu.

From Pathways Alliance, we have the vice president of government relations and public policy, Mr. Mark Cameron.

Welcome.

We're going to hear some opening remarks.

We'll start with Mr. Hatch, please.

[Michael Hatch, Vice-President, Government Relations, Canadian Credit Union Association]

Thank you so much, Mr. Chair and honourable members, for inviting me to speak at this committee today.

My name is Michael Hatch. I am the vice president of government relations with the Canadian Credit Union Association.

Our members manage assets worth almost $600 billion, and we serve nearly 11 million Canadians. There are over 2,000 credit union locations. We are, as many of you will know, the only financial institution with a physical presence in nearly 400 communities across Canada, many of which are represented here today.

Credit unions and regional centrals employ over 30,000 Canadians and provide full-service financial services while being fully Canadian owned.

We are pleased to appear today to comment on Bill C-59, which contains many measures of importance to our sector and to Canadians.

First of all, we were extremely pleased to see in last year's budget an update to the definition of “credit union” in the Income Tax Act. The current definition—too often enforced by CRA—dates from the early 1970s, so that makes it older than a lot of people in this room. It's no longer remotely relevant for today's world and has had negative tax consequences for co-operatively owned financial institutions in recent years. Last year's budget proposed language that will solve this problem, and we urge Parliament to pass this as soon as possible.

We were also pleased to see in last year's budget bill expanded membership options for credit unions in Payments Canada.

Furthermore, this bill also contains significant reforms to competition law in Canada, and I gather we'll hear more from my colleagues on that. These are largely necessary, should enhance competition and consumer protection and are part of a broader global shift towards enhanced competition law. However, in our sector, there is an important nuance that must be pointed out.

Credit unions, as many of you will know, provide some of the only real competition that exists in financial services in this country. Bill C-59 contains, among other things, significant reforms to the merger review process. Normally, mergers and consolidation are associated with decreased competition. In our sector, the opposite is true, and I can't underline this enough. Credit unions have been consolidating for decades, and this trend will continue.

Far from reducing competition, consolidation has allowed the sector to continue to provide the only competition that exists for the large banks. The recent acquisition of HSBC by RBC will negatively impact the competitive landscape for financial services in Canada, as these are two massive entities. The partnership of two or more small co-operatively owned financial institutions that come together to share costs and increase scale allows them to continue competing with the RBCs and HSBCs of this world. It is our hope, therefore, that a more robust merger review process will not hinder the further consolidation that will be required in the years to come in the credit union sector.

We urge members of this committee and all parliamentarians to pursue a legislative regime that allows credit union consolidation to continue, as this is consistent with enhanced competition in Canadian financial services. As federal policy-makers, the members on this committee have a key role to play in ensuring a regulatory and legislative environment that fosters the competition the Canadian financial services sector so desperately needs.

Far too often, policy coming out of Ottawa towards our sector takes into account the needs, scale and structure of the large banks. This has had very negative impacts on the credit union sector over the years. By working towards a federal legislative regime that allows credit unions to grow and thrive, we can be part of the solution to the ongoing cost of living pressures faced by millions of Canadians. Passing this bill at the earliest opportunity will help a great deal in this.

Thank you so much again for your attention.

I look forward to the testimony of my fellow panellists and to your questions, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Hatch.

Now we'll hear from Monsieur Beaulieu and the Quebec environmental law centre.

[Julien Beaulieu, Competition Law Researcher, Québec Environmental Law Centre]

Hello everyone.

Thank you for having me here at the committee. I am very grateful.

My remarks today will address the topic of greenwashing, and more specifically clause 236 of Bill C-59.

Those who are not familiar with greenwashing should know that it happens when an organization makes false or misleading representations about the environmental characteristics of a product, a brand, an activity, or the organization itself. Greenwashing can involve several environmental characteristics, such as recyclability, greenhouse gas emissions, and impacts on biodiversity.

We see several forms of greenwashing in the market across Canada. They include flatly false representations, vague or generic representations such as the use of fuzzy words like "green" and "sustainable" that no one really knows the meaning of, cherry picking by making selective representations that highlight positive environmental characteristics without mentioning their negative aspects, representations that are not supported by sufficient evidence, and prospective representations that are not based on a concrete action plan.

This greenwashing has harmful consequences for the public and the Canadian economy. For example, it prevents consumers from making informed choices, it gives the offending businesses an unfair competitive advantage, and it denies the real environmental leaders recognition. Greenwashing also erodes consumer confidence and reduces incentives for businesses to innovate so they can offer products that are less harmful for the environment.

Paragraph 236(1)(b.1) of Bill C-59 proposes to tackle greenwashing by requiring that businesses that make representations regarding "a product's benefits for...

[The Chair, Liberal, Peter Fonseca]

Mr. Beaulieu, if you could, for the interpreters, just move back from the microphone a little, because there is some popping and stuff.

Merci.

[Julien Beaulieu]

Right. I'm sorry.

As I was saying, paragraph 236(1)(b.1) of Bill C‑59 proposes to tackle greenwashing by requiring that businesses that make representations regarding "a product's benefits for protecting the environment or mitigating the environmental and ecological effects of climate change" do adequate tests prior to making their representation. In the English version of the bill, the word "épreuve" is translated as "test". In other words, businesses that voluntarily decide to advertise their good environmental performance are to be required to have proof of what they are asserting.

While this provision is a very important step forward, it has four major limitations and it will miss its target if it is not improved.

First, paragraph 236(1)(b.1) would apply only to representations regarding products, so it excludes representations regarding a brand, an activity or an organization. However, as the Commissioner of Competition acknowledged in a letter sent to all members of the committee, many greenwashing cases, such as those regarding the carbon neutrality targets adopted by businesses, do not relate to specific products. We are therefore recommending that the scope of paragraph 236(1)(b.1) be extended to cover all environmental representations by businesses, regardless of their subject.

Second, paragraph 236(1)(b.1) does not require that businesses disclose the tests on which their representations are based unless there is a prosecution in the courts. However, without disclosure, it will be difficult for consumers to quickly ascertain, for example by reading a grocery product's packaging, whether a business really has proof of what it is asserting or what it means when it says a product is "green" or "sustainable". Other countries or states, like France and California, already impose disclosure obligations on businesses that make environmental representations. We suggest that Canada adopt the same type of obligation.

Third, paragraph 236(1)(b.1) relates only to representations regarding "protecting the environment or mitigating the environmental and ecological effects of climate change". That wording, which we believe to be too restrictive, could exempt some environmental representations from paragraph 236(1)(b.1), like representations relating to "restoring", as opposed to "protecting", the environment, or to mitigating the "causes", as opposed to "effects", of climate change. To correct the situation, we propose that the scope of paragraph 236(1)(b.1) be extended so that it is more inclusive in order to cover all representations about environmental performance.

Fourth, paragraph 236(1)(b.1) does not specifically prohibit cherry picking, which is when a business tries to boast about the positive aspects of its environmental performance without also disclosing its less glowing aspects. For example, a business might advertise its reductions of greenhouse gas emissions but fail to point out that they were achieved by destroying ecosystems. Something good is being done on the one hand, but on the other hand, nothing is said about what is less positive.

It should be noted that businesses are not obliged to advertise their environmental performance. However, the decision to do so comes with a duty to provide a complete picture of the situation and not choose the facts that put us in a good light while concealing those that make us look bad. We are therefore proposing that paragraph 236(1)(b.1) be amended to expressly prohibit cherry picking.

In conclusion, I will say that we believe these four proposals would definitely make Bill C-59 more enforceable and better able to achieve its objectives in relation to combatting greenwashing, a business practice that we are seeing or that could arise in all sectors of the Canadian economy. Sometimes it is difficult to detect this practice. However, we believe that Parliament's jurisdiction in this regard is clear and settled.

Thank you for your attention.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Beaulieu.

Now we'll hear from Pathways Alliance.

Mr. Cameron, go ahead, please.

[Mark Cameron, Vice President, Government Relations and Public Policy, Pathways Alliance]

Thank you, Mr. Chairman and honourable members.

I am pleased to be speaking to you today on behalf of Pathways Alliance.

Pathways Alliance represents Canada's six largest oil sands producers: Canadian Natural, Cenovus, ConocoPhillips Canada, Imperial, MEG Energy and Suncor. Together, our six companies operate 95% of Canada's oil sands production. The oil sands sector accounts for about 3% of Canada's total GDP and supports 255,000 direct and indirect jobs. Last year, the sector contributed over $20 billion in taxes and royalties to all levels of government in Canada.

We are proud of our contribution to the Canadian economy, but we also acknowledge that we are significant greenhouse gas emitters. That's why, in 2021, our six companies came together to make a joint commitment to achieve net zero in our operations by 2050. Our industry has made significant progress in reducing emissions already. We reduced our emissions intensity, or emissions per barrel, by 23% between 2009 and 2022.

To go further in reducing emissions in order to achieve the kinds of ambitious reduction goals Canada has set for 2030 and the ultimate goal of net zero by 2050, we will need not simply incremental improvements but also step changes in new technology. That's why our six companies are not only committed to long-term emissions reduction but also collaborating on what would be one of the world's largest carbon capture and storage networks in northern Alberta. The Pathways project would involve installing carbon capture units on 14 different oil sands projects, building a 400-kilometre-long pipeline from Fort McMurray to south of Cold Lake, and storing the carbon dioxide from those 14 sites deep underground in saline aquifers.

Carbon capture is the only currently available technology to reduce emissions from oil sands operations in absolute terms between now and 2030. Other technologies, whether small modular reactors, increased use of solvents in oil sands extraction or use of hydrogen for steam generation, may be possible in the longer term, but they are not commercially available today.

Unfortunately, carbon capture is extremely expensive and is, frankly, not economical without partnerships between industry and the federal and provincial governments. That is why we are strong supporters of the concept of the investment tax credits for CCS and other clean technologies. We were pleased when the government first announced their intent to move forward with the ITCs in budget 2021 and have followed this proposal closely, until it was ultimately tabled as part of Bill C-59.

We would strongly urge the committee and the House to pass this legislation this spring and allow CCS projects to start not only in our sector but also in other sectors across Canada. However, we need to be clear that the proposed legislation still presents significant challenges.

We have proposed a number of important changes, which we have submitted both to Finance Canada and to this committee. I can't go into all of the issues now, but let me mention a few of the matters that we see as being most critical.

First, in our view, the rate reduction after 2030, effectively reducing the ITCs in half, is too steep and too fast. There are significant schedule risks in being able to get a 400-kilometre-long pipeline and 14 capture projects costing over $16 billion from the drawing board to in-service within six years. If there are delays for any reason—regulatory or legal challenges, labour shortages, supply chain challenges—companies may miss the 2030 deadline and therefore lose half of the available ITC. At a minimum, we think the projects that are under construction before 2030 should be able to receive the full ITC rate until the project is complete.

Second, Bill C-59 states that the ITCs would only become available when equipment is acquired, not when expenses are incurred. Again, given supply chain and other challenges, we think this is a difficult requirement. Companies cannot make hundreds of millions of dollars in expenditure decisions without knowing when those expenditures will be eligible for the ITC and whether they will get the full rate at that time.

Third, we are concerned about the provisions that allow ITCs to be clawed back if the ownership of carbon capture infrastructure changes hands, even if the infrastructure is still being used for its intended purposes. This could pose challenges if oil sands facilities change ownership, or even if we were to bring in indigenous partners as equity owners of CCS infrastructure. We think it should be clear that ITCs will not be clawed back as long as CCS infrastructure is still used for carbon capture.

There are a number of other important issues that we have raised, which are outlined more fully in our brief, such as the definition of “refurbishment expenses” versus “development expenses” and the role of the Minister of Natural Resources versus the Minister of National Revenue in looking at future clawbacks and several other important issues.

I want to make clear that we believe this legislation should still move forward, even if we can't address these issues right now. We believe that, for the ITCs to achieve their intended effect, we will have to deal with these questions, either now or in the future, before projects are able to achieve final investment decisions.

With that, I thank you for your time and look forward to hearing your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Cameron.

Now we are going to move to members' question time.

In this first round, each party will have up to six minutes to ask questions of these witnesses and also of the former panel's witnesses, if you have them.

We're starting with the Conservatives, and I believe it's MP Lawrence.

MP Lawrence, you have six minutes.

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

Thank you.

It was interesting testimony by all parties here.

My questions will focus around Mr. Hatch.

There were a number of proposals included in the fall economic statement regarding financial services. Conservatives, of course, believe that competition is key in the economy in order to deliver better, more efficient and effective services for the consumer and end user.

A couple of the proposals that Conservatives have been making for many years have been real-time rail, increased membership to Payments Canada, as well as open banking.

In the fall economic statement, the actual framework for open banking did not come into place, despite many promises before. That's supposed to be in the budget coming up on April 16.

With that in mind, does the credit union have any thoughts with respect to what the open banking framework should look like?

[Michael Hatch]

That's a multipronged question, but I appreciate it. I'll do my best to be efficient.

On open banking, we've been working on this since at least 2018 under the previous minister, Bill Morneau, who launched the first process on this. We've been working and waiting since then for some kind of federally regulated and legislated framework on open banking.

Our most important objective as a credit union sector has been that credit unions should have the ability and opportunity, but not the obligation, to participate in an open banking framework. That's recognizing the different needs of 200 smaller, co-operatively owned financial institutions. That has been reflected in most of the work that we have seen come out of finance and the government so far. We obviously eagerly await next week's budget to see what that's going to look like from a legislative point of view.

As we know, budgets are legislated over a long time horizon. Here we are in April 2024 talking about budget 2023. If the open banking components of this year's budget are in the second budget bill in the fall, then there's a good chance that goes into next year. That gets into the opportunity of being disrupted by an election. Obviously, we have no control over the timing of that.

It depends on what happens in the next 12 to 15 months legislatively with open banking, whether it indeed passes into law, and the framework that the minister is set to propose next week. We would hope that if there was an election or if there was any delay related to that, then whoever is successful in that election and in running the country after the fact would take that into account and not impose any further delays. We've been waiting since 2018. Obviously, there's been a pandemic and lots of other issues in the interim that the government's had to deal with. We would hope that it would be a priority for whoever comes into power.

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

I would agree wholeheartedly. I think you said relatively clearly—I look across to our government members here—that the hope is it's implemented quickly.

I believe we're falling behind many of our other OECD peer nations with respect to open banking legislation. I believe that the U.K. has it in place, as well as many others.

Maybe you could comment on that briefly.