Finance Committee on May 30th, 2024

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Murphy, and thank you, MP Baker.

We'll go to MP Ste-Marie for approximately three minutes.

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

Thank you, Mr. Chair.

My question is for Mr. Murphy.

Which insurance companies would be involved in covering the risk?

[Kevin Murphy]

For the title insurance, we have First Canadian Title as our lead insurer. For the deposit protection insurance, we have Aviva International as our lead insurer.

In the insurance business, they also reinsure, meaning they would sell down some of that risk to other insurers, so Aviva has lined up Zurich, Canada Guaranty and a bunch of others as well, all investment-grade insurers.

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

Thank you.

Ms. Stevenson, with inflation, we are seeing more and more families having trouble eating well. What is your experience with this on the ground?

[Sherry Stevenson]

Yes, that's something we're seeing more and more here in Vancouver. We're seeing some of the families we work with have to reduce meals or quantities of meals, and children are attending school without meals. The school food program is really important in helping families to provide full meals by providing that meal at the school, but it will also help to reduce grocery costs for families.

In some of our youth programs, we actually provide an honorarium to our youth for the work that they do on our schoolyard farm. Sometimes, they are using the honorarium they earn from their hard work on our farm to contribute to their family's groceries as well. It's a little added income. Every little bit helps, whether it's a little bit of extra funds for the work that the youth are doing or having a meal provided in the school and really helping families who are struggling right now.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

MP Davies, you will be our final questioner before we thank this panel.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Ms. Stevenson, I think another of the many positive aspects of a properly structured national school nutrition program is the ability to leverage locally sourced foods. I'm just wondering what impact such a program may have on local growers or on local small businesses etc., and what the economic impacts might be of an investment in a school nutrition program on the community at large.

[Sherry Stevenson]

Well, you can't get much more local than actually growing food on the schoolyard farm and then getting that food into the school lunches. That would be a wonderful benefit, as I've talked about already.

In terms of local growers, there are many partnerships with local farmers already. With this investment in the national school food program, we would definitely be seeing that expand, with schools partnering directly with farmers locally here in B.C. and benefiting our local economy as well. If we can be growing foods right here on schoolyard grounds or within our communities, we'll definitely be seeing the economic impacts and benefits in terms of enabling children to learn about where their food comes from.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'll give you a two-part question, and then I'll be quiet. It will probably be my time.

I'm just curious about what impact the school nutrition program can have on indigenous contribution and indigenous culture, and whether you have any thoughts on that.

Second, just in terms of the health of young people, you know, not only are young kids not eating well, but, when they do eat, they're eating processed foods. What have you seen in terms of the impact of the work you do in terms of the health of our children and young people?

[Sherry Stevenson]

Thank you for all these questions. It's really good, actually, to reflect on these impacts.

In terms of indigenous programming and the impact on indigenous communities, in our experience, one school that we work with particularly is an indigenous alternative education school. We are able to engage with elders and engage youth in learning about traditional medicines and traditional foods. It's really important to incorporate traditional foods in the school lunches and school meals and programming. On our schoolyard farms and in a forest area that we have, we are also growing these types of things. We are definitely seeing the impact, with indigenous youth commenting and providing testimony that they really appreciate those things and are learning more about their cultural foods. This is really important for indigenous food sovereignty and reconnecting to those traditional foods.

In terms of impact on health, what we're seeing is that children are excited about vegetables. The salad bar is the most popular thing at LunchLAB, because they prepared it themselves. Children are curious about trying new vegetables and different foods that they've never had before, including indigenous foods from native sources. All these things are linked together, and we see that the children are really engaged and able to learn throughout the day better when they have that nutritious meal and that connection to where their food comes from.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

We want to thank our witnesses, Ms. Stevenson and Mr. Murphy. Thank you for all you do, your great work and the experience you've brought here. Thank you also for the many solutions to some of our most pressing problems, be it with food security and making sure we're feeding our kids, or our housing pressures and looking to find ways to build more housing.

Thank you very much. We wish you the best with the rest of your day.

Members, we're going to suspend now as we go into our third panel. Thank you.

[The Chair, Liberal, Peter Fonseca]

I call the meeting back to order.

This is panel three. We thank you for coming before the finance committee.

We have with us today Professor Vivek Dehejia, associate professor of economics and philosophy at Carleton University. Welcome back to our committee.

Also with us today, from the BC Diabetes Foundation, we have Dr. Tom Elliott joining us, as well as Ms. Ramya Hosak.

From Dow Canada—welcome back—we have the senior adviser for government affairs, W. Scott Thurlow. Welcome.

On that, we're going to have opening statements from the witnesses.

Professor Dehejia, please go ahead for the first five minutes.

[Vivek Dehejia, Associate Professor of Economics and Philosophy, Carleton University, As an Individual]

Thank you, Mr. Chair. It's a real privilege to be back before this committee again.

When I last testified before you, last month, I reiterated my warning that Canada stood at a crossroads in terms of a macroeconomic situation. That is still very much the case now. I won't repeat all of the data points from my last testimony, which are in your records, but I'll summarize them briefly and make a few quick new observations.

First, as I pointed out, both GDP growth per capita and its underlying driver, productivity growth, are languishing in Canada compared to in the U.S. That imperils the well-being of average Canadians now and into the future.

Recall that in 1960, our average income per person in Canada was basically the same as in the U.S. Now we have less than three-quarters the income per person compared to our friends south of the border. That's really quite extraordinary. Unemployment, likewise, is higher in Canada than in the U.S. due to structural factors.

The reason for this divergence, in my judgment, is the outsized role of the government in the economy of Canada, which very much relates to the budget. As I noted, increased government spending is crowding out private investment. The government now accounts for about a quarter of Canada's GDP—again, in a so-called market economy, that is an extraordinary number—while total business and investment are only about 8%. It's no wonder that our economy is so unproductive, given how socialized we've become.

The recent increase in the burden of the capital gains tax—and the carbon tax, for that matter—can only make this worse.

I believe the finance minister said recently that the budget paves the way for the Bank of Canada to make interest rate cuts. I must confess that I find this logic hard to understand. We've had an expansionary fiscal deficit, which creates its own inflation pressures. In other words, fiscal policy is inflationary, while the Bank of Canada is trying to contract. It's not a good balance, as Governor Macklem himself has acknowledged, very tactfully saying the government and the bank are rowing in opposite directions. I think it's clear what he means.

This budget, if anything, is going to stay the hand of the Bank of Canada's governing council. I think, rather than having a rate cut next month to provide some relief to many of us labouring under mortgages and debt, they may hold off until July, or perhaps even until the fall, because of the extra inflationary pressure the fiscal deficit is creating.

What should we do? I'll be very brief. As I testified last fall and again earlier this spring, it's really about going back to basics. It's a basic message. The three pillars of good economic policy—fiscal, monetary and good, sound regulation—are all badly in need of repair. We've had a fiscal binge in Canada.

Monetary policy, likewise, has been on a bender. The economy is over-regulated. It's stifling innovation, new business creation and private sector investment, and it's creating high-entry barriers for new entrants.

Our economy is highly concentrated, with a handful of dominant, politically powerful and entrenched incumbent firms in all major sectors. They're in everything from cellphone services to groceries, legacy media, banking and airlines—you name it. It’s no wonder that we pay higher prices and get poorer service than our friends in the U.S. for just about everything, and that we are so unproductive.

Lastly, as I reminded members the last time I was here, it’s worth remembering that at the beginning of the 20th century, Argentina had about the same per capita income as the U.S. and Canada, but after 120 years of economic mismanagement, its income is only about one-third of that of the U.S. Ours, as I said, is now only three-quarters. Unless we mend our ways, we risk going the way of Argentina.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Dr. Dehejia.

Now we're going to go to the BC Diabetes Foundation and Dr. Elliott.

[Dr. Tom Elliott, Doctor, BC Diabetes Foundation]

Good afternoon, committee members. I'm Dr. Tom Elliott, Vancouver-based diabetes specialist, UBC associate professor, and, today, chair of the BC Diabetes Foundation.

Four million Canadians live with diabetes and the dread of death or of disability from heart attack, stroke, blindness or amputation or of passing out with low sugar at meetings like this. Together, we have the means to change those four million lives. Doctors and diabetes educators have the knowledge but lack the tools.

Committee members, give us the tools, and we'll finish the job.

National pharmacare as it stands will cover most diabetes medicines, and this will be a big win, but there is one omission and two “might be” covered items that I'd like to bring to your attention today.

The Ozempic class of diabetic weight-loss drugs has been omitted. Two-thirds of the 7% of Canadians who live with type 2 diabetes are overweight. Overweight is not the cause of diabetes, but it is a contributor. Lifestyle therapy always comes first. Indeed, all overweight type 2 people living with diabetes try to lose weight and keep it off, but most fail.

Ozempic is a difference maker. My clients think of Ozempic as a miraculous therapy, and so do I, yet it has been specifically blacklisted from national pharmacare. I consider this to be driven by a fat-shaming lobby and to be discriminatory and un-Canadian. My obese clients do not choose to be obese. They deserve access to Ozempic, but fewer than half of them can afford it.

Drug costs are a major consideration. In March 2023, the canada.ca website had the following post: “[Canadian] drug prices are now the third highest among the Organisation for Economic Co-operation and Development (OECD) countries—that is about 25% above the OECD median.” Yesterday, I calculated the cost for a month's supply of Ozempic: In Canada, it's $218, while in Germany it is only $82, or almost one-third.

Now let's talk about type 1 diabetes. Three hundred thousand Canadians live with it. Onset is at ages less than 30, and there's no cure yet. It carries a colossal burden, demanding four to five shots of insulin and 10 finger pokes per day, as well as tight regulation of food and exercise.

This brings me to the two devices that might be covered by national pharmacare. These are CGMs, or continuous glucose meters, $8 a day, and an insulin pump, $10 a day. When these two are combined with a smart phone app, they provide for automated insulin delivery, or AID. Both of these devices need pharmacare inclusion. AID is a technological cure for type 1 diabetes. Put simply, AID keeps the sugar steady, just like cruise control keeps the speed steady while driving a car.

I'd now like to invite Ramya Hosak, who lives with type 1 diabetes and sits on the foundation's board with me, to relate her first-hand experience.

Ramya, over to you.

[Ramya Hosak, BC Diabetes Foundation]

Thank you, Tom.

I've lived with type 1 diabetes for 17 years, and, as the founder of Young and T1, I also represent a group of 750 young people living with type 1 diabetes in B.C.

Despite this network, I've struggled physically over the years. In 2016, my husband came home from work to find me unconscious and non-responsive after a night of extreme illness, vomiting, dehydration and progressively increasing blood sugars. I was shocked to wake up in the hospital the next morning and learn that I had almost died.

Before automated insulin delivery, or AID, diabetes was my 24-7 second job. The mental health impact and burden of balancing high and low blood sugars was consuming. I'd become afraid to sleep when I was sick for fear of a repeat incident of 2016.

When my husband started a job with an extended health care plan covering an AID system last year, I got one right away. I couldn't believe the instantaneous difference in my quality of life. For the first time in 17 years I was able to sleep through the night, and I woke up each day with my blood sugar in range. With an A1C now deemed perfect by my endocrinologist, I've stopped worrying about diabetes complications.

My family physician, amazed at my blood work and overall physical health, gave me the go-ahead recently to start trying for my own children. I'm now able to live almost like someone has found a cure for diabetes. To think of having to go off this system should our employment status change is terrifying, and to know that there are others out there who could benefit from this but can't afford it is heartbreaking.

Thank you for your time.

[The Chair, Liberal, Peter Fonseca]

Thank you for sharing your story. We really appreciate that.

Now we're going to go to Dow Canada and W. Scott Thurlow, please, for some opening remarks.

[W. Scott Thurlow, Senior Advisor, Government Affairs, Dow Canada]

Thank you very much, Mr. Chair, and good afternoon.

Through you, I extend my warmest regards to the committee members.

I'm proud to speak to the committee today about Dow Canada. Dow operates two manufacturing facilities, in Fort Saskatchewan and Lacombe County, Alberta. The Alberta sites convert natural gas feedstock into ethane, ethylene and, finally, polyethylene. Our main product in Alberta, polyethylene, is sold to customers across Canada and worldwide to make durable industrial goods, as well as packaging and consumer products. We also supply industry in the region with other petrochemical derivatives.

In Ontario, we have two manufacturing sites—one in Scarborough at West Hill and the other near Sarnia. These facilities produce emulsions and specialty plastic resins, respectively.

On November 29, 2023, Dow's board of directors approved a final investment decision for the world's first net-zero scope 1 and scope 2 emissions ethylene and derivatives complex in Fort Saskatchewan, Alberta. Economically speaking, this brownfield investment enables Dow to deliver two million metric tons per annum of product growth in attractive, high-end markets, effectively tripling our domestic production. At its peak, we expect approximately 7,000 construction jobs to be created. When completed, our site will produce and supply approximately 3.2 metric tons of certified low- to zero-carbon-emissions polyethylene and ethylene derivatives for customers and joint venture partners around the globe. Environmentally speaking, this investment will eliminate a million tonnes of CO2, even with the added growth. We'll do this by converting hydrogen from cracker off-gas as a clean fuel, while capturing and storing the remaining CO2.

To expand on this a bit, the by-product of the cracking process to produce ethylene is a methane-rich off-gas. In the circular hydrogen process, this methane-rich off-gas will be decarbonized and returned to furnaces as clean hydrogen fuel. Associated CO2 is captured, transported and sequestered in deep saline caverns. This investment paves the way for the growth of Dow's entire packaging and specialty plastics portfolio.

The first-mover advantage gives us the ability to lead in capturing the growing demand for low-carbon solutions and puts Dow out front in delivering the first world-scale, fully integrated site with net-zero scope 1 and scope 2 carbon emissions.

The Fort Saskatchewan site is strategically advantaged, because we have access to low-cost ethane; there is existing rail and export infrastructure that will be expanded to support our global sales; we have direct government support from Alberta and Canada, as well as tax credits that are offsetting a portion of our cost of investment; and it is one of the few places in the world where existing infrastructure for carbon transportation and storage exists. This is a key reason that we have a first-mover advantage in low-carbon solutions.

Certainty in the investment environment we are operating in is also a key advantage. As such, I am here today to offer Dow Canada's support for Bill C-69 and the clean hydrogen tax credits it creates. The tax credit will go specifically to underwriting the costs of the hydrogen-fuelled ethylene cracker. These tax credits were first announced in a previous budget. Natural Resources Canada released its thoughtful study on the potential of this sector in 2020. It is high time we have this adopted. Similar measures were introduced, debated, adopted, implemented and deployed under the United States Inflation Reduction Act in less than two months.

We urge parliamentarians to pass this bill expeditiously, so the certainty required to rely on these investment tax credits can be built directly into our investment models. These tax credits help support the decarbonization of our operations in Fort Saskatchewan and our return to operation by 2030.

I would like to repeat a key point. These credits will lead to absolute emissions reductions. In order for Canada to succeed in reducing our emissions and meeting our emissions reduction goals, we need to see transformative investments like the one being made by our company. It is through advances in the chemistry sector that these deep emissions reductions will occur.

I welcome any questions the committee members may have.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Thurlow.

I'm sure there will be many questions, and that's where we're going right now. We're starting with our first round of questions.

I have MP Lawrence for the first six minutes.

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

Thank you very much, and thanks to all the panellists for being here.

My question will be for the professor.

You know, the Prime Minister has had a pretty rough ride. He has faced an incredibly bad economy, mostly because of bad decisions he made. However, when someone says the right thing, I think it's important we call it out.

I would like to get your comments, Professor. He recently said this:

One of the fundamental challenges around affordability is they would love to say, well, you know what, we just need more money. Can you send us more benefits or send us an extra thousand dollars a month? As soon as you do that, inflation goes up by exactly that amount.

Clearly, what he's saying there is that the more you spend, the more inflation you get, which undermines the exact policy objectives the governments are trying to achieve.

Would you agree with the Prime Minister here, or do you think he's all wet?

[Vivek Dehejia]

No, I think the Prime Minister is correct. The larger point is that you can't fix a housing crisis that's basically a supply side problem. There are structural problems in the sector, and throwing money at it will only create more inflation, as with fiscal spending in general. I think he's right.

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

When we look at Bill C-69, which forecasts a $40-billion deficit, there are many ways that the deficit could be understated, one of which is with respect to the expectation of a fire sale on capital gains. That is going to, according to their projection, get an additional $7 billion. We haven't even seen that legislation yet, so we don't know whether the $7-billion fire sale is going to happen.

Do you think it is responsible for the government to continue to run large deficits and debts?