Evidence of meeting #140 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was amendment.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Lindsay Gwyer  Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance
Maximilian Baylor  Director General, Business Income Tax Division, Department of Finance
Philippe Méla  Legislative Clerk
Clerk of the Committee  Mr. Alexandre Roger
Gregory Smart  Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
Sonia Johnson  Director General, Tobacco Control, Department of Health
Samir Chhabra  Director General, Strategy and Innovation Policy Sector, Department of Industry
Martin Simard  Senior Director, Corporate, Insolvency and Competition Directorate, Department of Industry

1:05 p.m.

Liberal

The Chair Liberal Peter Fonseca

We will have a recorded vote.

(Amendment agreed to: yeas 6; nays 0)

(Clause 28 as amended agreed to on division)

Members, we are going to suspend now for 10 minutes, and then we'll be back and go straight through until two o'clock.

1:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

We're back, members.

We have about 35 minutes, and right now we have no amendments that I know of for clauses 29 to 35.

Do we have unanimous consent to group those?

1:25 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

We don't, but we will keep asking.

1:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Shall clause 29 carry?

(Clause 29 agreed to on division)

(On clause 30)

1:25 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

We'd like to make some comments on clause 30.

1:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Go ahead, MP Lawrence.

1:25 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Clause 30 is in respect to the climate action incentive credit. I just want to take the opportunity to briefly set the record straight, because it was right here in the finance committee—if you don't believe me, just pull up the Hansard—that the Governor of the Bank of Canada, Tiff Macklem, said that 0.6% of inflation was directly responsible for the carbon tax. That was prior to the April 1 increase, so now it's actually 0.8%.

That's in the Hansard. That's exactly what Mr. Macklem said. He'll be here, so if you don't believe me, please, I encourage you to ask him during Thursday's session.

That's more than a third of inflation. In fact, if we remove the carbon tax—according to Mr. Macklem's calculation, not mine—we would then be within the range of inflation that the Governor of the Bank of Canada has set , which then would set the stage for decreasing interest rates and reducing everyone's mortgages. I know every single one of us has talked to a constituent who has said that their mortgage is too high and too expensive and they're close to losing their home.

All we have to do is scrap the carbon tax.

Also, the PBO, in another bit.... Like I said, I'm just trying to be an advocate for the truth, specifically with respect to the carbon tax.

Liberals will say that eight out of 10 Canadians are worse off. That's just not true. You have to take into account both the fiscal and economic impacts, because you can't live in a country without economic impacts. When you take account of both the direct costs and the indirect costs of the fiscal or economic costs, the majority of Canadians are worse off, even with the rebate or the incentive. Those are the facts. That's the reality, guys.

I would just love it if we could speak honestly about the carbon tax and let Canadians decide.

Thanks very much.

1:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Lawrence.

I have Mr. Morantz and then Ms. Dzerowicz.

1:25 p.m.

Conservative

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

I just want to reiterate what my colleague, Mr. Lawrence, has said, because I was in the meeting on October 30. All members of the finance committee were there, and the bank governor was very clear. He said that the carbon tax, at $65 a tonne, added 0.6% to inflation and that if it were to be removed, inflation would be 0.6% less.

Now, Liberal members of this committee have spun that to say that it's only one time, which is really a red herring of an argument. Of course you can remove a carbon tax only once, but the reduction in the inflation rate is in perpetuity. It's locked in forever. If you remove 0.6% off inflation, that's always gone.

Then what the governor said was that if you add $15 a tonne, it goes up by 0.15%, so that's actually what has happened. It's not just 0.15%. The cumulative aspect of the carbon tax at $65 a tonne was 0.6%, and if you add on $15 a tonne, it's now 0.75%. You can round it up to 0.8% if you want, but that's the reality of it.

When the governor is here on Thursday, I'm sure we can get him to clarify that.

Also, I'm very interested in asking him what his position and the bank board's position would be on interest rates if the inflationary aspect of the carbon tax wasn't a factor anymore.

Thank you.

1:25 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, MP Morantz.

MP Dzerowicz, go ahead, please.

1:25 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

Thanks so much, Mr. Chair.

I do think it's important for us to go back to the actual transcript of the meetings that we're talking about, because we have something different from what Mr. Lawrence has indicated.

The most recent time that our governor came, in February, he confirmed that the annual increases in carbon pricing raised the average economy-wide price level by 0.1 percentage points and indicated that this would be negligible compared to other determinants of inflation within Statistics Canada's consumer price index calculations. It's also a one-time increase.

It's important for people to know that often, when you're talking about 0.1% or 0.016% or point whatever, it's hard to articulate to the public what that means. I think part of it is just making sure that people understand that it's a one-time cost. It's tiny and negligible, according to what our governor has indicated, compared to other determinants of inflation within the Stats Canada consumer price index.

Thank you.

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, MP Dzerowicz.

MP Lawrence.

1:30 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Thank you very much.

The confusion—and I'll be generous to my colleagues and call it “confusion”—might stem from the fact that the governor has talked about two different things. One is that he's talked about the annual increase in the carbon tax, of which he has ascribed 0.15% to the increase. However, of the overall carbon tax, he's ascribed 0.6%. I'll quote Governor Macklem in response to my question:

The second question you asked me was what the effect of inflation would be if the carbon tax were eliminated. That would create a one-time drop in inflation of 0.6 percentage points.

That's from the transcript.

Earlier on, I asked him about increases, and he said:

One question is how much the increases in the carbon tax are adding to inflation each year. That number is about 0.15 percentage points....

We add the 0.15%—and I actually asked him about this—to the 0.6%, and he said that it's actually, all together, 0.8%.

The current rate of inflation is 3.1%, I believe. Oh, it's 2.9%, so that's fully a quarter, if not almost a third, of inflation. If we removed that 0.8%, we'd be down to 2.1%.

The Bank of Canada's range is 2%, so we'd be within the margin of being within range, which would then allow us, guys, to reduce mortgage rates, reduce interest rates and get the economy going just by cutting the carbon tax.

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Lawrence. I think that's the discussion.

Shall clause 30 carry?

(Clause 30 agreed to on division)

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Shall clause 31 carry?

(Clause 31 agreed to on division)

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Shall clause 32 carry?

1:30 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Mr. Chair, could I interject?

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

Yes, Mr. Lawrence.

1:30 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Could we possibly group clauses 31 to 35, unless there's...?

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

We already voted on clause 31. It was carried.

MP Ste-Marie.

1:30 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Of course, I always support proposals to group clauses, but I'll ask—

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

I'm not getting interpretation.

1:30 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Can you hear me?

1:30 p.m.

Liberal

The Chair Liberal Peter Fonseca

I can't hear you very well. Hang on one second.

Yes, I can hear you now, MP Ste-Marie. Go ahead, please.

1:30 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

That's very good, thank you.

This time, I'm going to ask that clause 35 be voted on separately, as I'll have a few comments to make about it. However, the other clauses can be grouped together for voting purposes.