Finance Committee on April 18th, 2024

[Yves Giroux]

I'm not sure what the impact on productivity would be, but in terms of the impact on prices, we would expect to see inflation reduced. The quantum would depend on many factors including the competitive framework, to which Mr. Boswell can probably speak much better than I can.

But, yes, if we were to eliminate the carbon tax, one would expect prices to, if not decrease, at least grow at a slower rate than would otherwise be the case.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thank you.

[The Chair, Liberal, Peter Fonseca]

We're well over the time.

We're going to MP Baker now for five minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks, Chair.

Thank you to all our witnesses for being here.

I will direct my questions to Monsieur Giroux.

The Canada carbon rebate makes eight of 10 households better off, if I read your report correctly. Can you clarify that this is, indeed, the PBO's conclusion?

[Yves Giroux]

Yes. When we looked at the direct carbon tax paid by households, the indirect carbon tax paid by households through goods and services they buy, as well as the GST that's levied on that, and we subtracted the carbon rebate, we found that about eight out of 10 households were better off when we looked at the money in versus money out.

Yes, that was indeed the case.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much for that.

Implementing clean technology and carbon-capture tax credits is a big step forward, I believe, in reducing industry emissions.

We heard from industry last week about the emissions reductions possible through the investment tax credits, and we know that reducing emissions will help limit climate impacts on our economy.

I understand you have done research of climate impacts on Canada's GDP. Could you speak to that and submit that to our committee as well?

[Yves Giroux]

Sure. We did look at the impact of climate change on Canada's GDP. We also looked at the impact according to some key sectors. We found that changes that have already happened in terms of average precipitation and temperature levels across the country have indeed had a negative impact on GDP. This impact is expected to increase as climate change worsens or is felt more acutely across the country.

That was from a report we did, I think, last year. I would be happy to share it with the committee.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much for that. We would appreciate that.

What I hear you saying is that climate change is hurting the prosperity of Canadians. The Canadian Climate Institute has found, for example, that the GDP has taken a $25-billion hit over the past 10 years due to climate impacts. This is expected to grow to a $103-billion reduction in GDP over the next three decades.

As an economist, when you are given that forecast, what impacts on economic growth do you expect we could see in Canada moving forward?

[Yves Giroux]

If I remember correctly, over the next several decades, we expect the GDP to be negatively impacted to the tune of about 5% or 6%, although it's difficult to be absolutely certain that this will, indeed, be the impact because we're projecting economic growth and the impact of climate change several decades into the future. However, based on what is known about the science of climate change and the overall weather patterns, that's our best estimate.

The numbers you quoted from the Climate Institute I cannot speak to because I haven't seen the analysis, but they seem to be, roughly speaking, in the ballpark and not out of whack to me.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

So it's impacting our prosperity and it's negatively impacting economic growth into the future. I hear you about how it's difficult to estimate with precision, but is it fair to say it will have a significant impact on our economic growth and our prosperity in the years to come?

[Yves Giroux]

It's totally fair to say that.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Okay. Is it fair, therefore, to say that not acting on climate change costs Canadians significantly?

[Yves Giroux]

There is definitely a cost to doing nothing, but there's also a cost to doing something. It's a difficult conundrum for policy-makers, because, no matter what we do, there's a cost. If we do nothing, there's a cost; if we do something, there's a cost.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

On the issue of the cost, the Governor of the Bank of Canada has been here at the committee and he has spoken. He has been asked several times the question you were asked about the impact of carbon pricing on inflation. He gave us a figure. If I recall correctly, if you removed the carbon tax, the impact would be about a 0.1% one-time reduction in inflation, so that's negligible.

My last quick question would be: Would your office be prepared to study the impacts of climate change on the federal government's fiscal balance sheet?

[Yves Giroux]

It's something that would be very difficult to do. It would require us to make assumptions that would certainly be easy to dispute. It's something that, if the committee decided to ask us to do, we could give it a try, but it would be very, very difficult for us to do.

We've done difficult things before. I'll get beaten up when I go back to the office for saying that, but we could certainly give it a good college try.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I appreciate that, thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker. That's the time.

Now we're going to go to MP Savard-Tremblay, please, for two and a half to three minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

Mr. Giroux, you regularly mention that it would be beneficial to review the budget cycle, particularly the main estimates. Would you care to comment on that?

[Yves Giroux]

Of course. As parliamentarians, you are called upon to vote on the main estimates, i.e., budget appropriations. You are being asked to vote on the main estimates during the months of March and April, when the budget itself has not yet been tabled. So you have budget appropriations that essentially represent the status quo in government spending, what I referred to in a Senate committee as “last year's news”. You're being asked to vote on last year's news, when we all know that a budget tabled by the Minister of Finance will significantly change the game and alter the financial needs of government departments and organizations.

You are therefore being asked to vote on budget appropriations which, as everyone knows, do not reflect reality. The budget changes the game, forcing the government to present supplementary appropriations A, B and, often, C. You don't get a global and accurate picture of the government's financial needs when you vote on the main appropriations. So there's a disconnect between budget appropriations and what's in the budget.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I'd like clarification on an exchange you had with a colleague in the first round: Should departmental plans be amended after the budget is tabled to take note of the additional investments or resources that certain measures will require?

[Yves Giroux]

This would be a good way for you, as parliamentarians, to have a better idea of the overall plans of each of the departments and agencies and what they're going to do over the course of the year. Mr. Boswell may disagree, but it would require work for these agencies. However, it would give you a better perspective on their overall activities during the fiscal year, rather than a partial picture based solely on major appropriations.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Since you asked if Mr. Boswell disagreed, I'll give him the right of reply.

[Matthew Boswell]

I guess I would say that I don't think it's appropriate to take a position on that.

[The Chair, Liberal, Peter Fonseca]

Well, that was a short answer. Thank you for that.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

He neither agrees nor disagrees, quite the contrary.