Finance Committee on Jan. 31st, 2022

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

Thank you, Mr. Chair.

First, I would like to raise a point of order.

In previous Parliaments, the committee was in the habit of inviting the Parliamentary Budget Officer, not with other witnesses who had come to present their budget requests, but in a separate block in which all members of the committee could focus on the nature of his analyses together. I believe that is a better formula than the present one and I would very much appreciate you considering my suggestion.

My regards to all the witnesses and my thanks for their presentations.

My questions are for the representatives of the Fédération des chambres de commerce du Québec.

Good afternoon, Mr. Milliard and Mr. Lavigne. Thank you for joining us today.

Mr. Milliard, you gave us a good summary. The document that contains your requests, however, is more detailed and casts a wider net. I am going to try to obtain more details about your requests; perhaps I could ask you to illustrate them with examples.

As you said, the greatest problem for companies is the labour shortage. You proposed some solutions, involving seniors, early retirees, immigrants and temporary foreign workers.

Can you give us more details about those possible solutions?

[Charles Milliard]

Thank you for the question, Mr. Ste-Marie.

I will start and I will let my colleague complete my answer.

In terms of the labour shortage, it's important to understand that a number of levers must be moved at the same time. Often, it can be more helpful to refer to just one lever when speaking to the public. But it would be a mistake not to use all the levers at our disposal.

One of those levers, of course, is immigration. We are of the same mind as the federal government on the issue, but a little less so with the Quebec government. Actually, we feel that immigration thresholds are artificially low in Quebec.

Another issue is retraining the workforce. Some people want to go from one industry to another in order to help with certain areas of activity. We have to find a quick way to provide the training.

We also need to keep experienced workers in the workforce. People often say to me that they want to retire and do not necessarily want to work five days a week. My answer is that, if decent tax measures were in place, a 66 year-old could decide to keep working in a business for one day a week, per example. That day is the one that the business owner needs to rest, to take care of his family and to maintain a level of mental health.

The issue of innovation also needs to be addressed. How can we create conditions in Canada to encourage investment in innovation? Clearly, not every business is going to buy new machinery tomorrow morning in order to increase its productivity. However, if proper measures were in place, businesses could have access to outside markets if they wanted and acquire tools that would increase their productivity.

If we work on all those issues at the same time either at provincial, federal or even municipal level, we can change things. I hear a lot of people saying that the labour shortage problem will last from 10 to 12 years. I really want to tell them that we have to stop talking and do something about it, so that it only lasts seven or eight years instead of ten.

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

Mr. Lavigne, would you like to add any comments?

[Mathieu Lavigne, Director, Public and Economic Affairs, Fédération des chambres de commerce du Québec]

Yes, I would like to add one point about immigration. The threshold is one issue, but there is also something for which the federal government is directly responsible. This is the delay in processing; it is much too long for people who want to settle in Quebec.

The problems stem from the way files are handled or from the lack of human resources. Timely processing must be a priority for the federal government in the next budget. People have already been selected and, given the current labour shortage, they will have no difficulty finding jobs. So the problem of processing delays has to be fixed quickly.

One of our proposals is to establish a voluntary savings plan for continuing education. At the moment, tax credits are provided for that, but we know that, for various reasons, that system is so‑so in effectiveness and in use.

So we are proposing a voluntary contribution scheme. It would encourage workers in whatever field to take training all through their careers. As a result, they could keep their skills updated and acquire new ones. Sooner or later, they would be able to move to new positions more easily.

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

Mr. Milliard, would you like to add anything?

[Charles Milliard]

The retraining issue leads me to the reform of the employment insurance program. This is not a criticism, but I feel that the employment insurance account, as a concept, has been used very broadly during the pandemic. However, right from when we start to reform the system, we have to decide the extent to which we are using it as a tool for social redistribution. We also have to ask ourselves who is going to pay for it.

Employers' premiums are currently frozen for this year and next. It is reasonable for us to ask questions about funding employment insurance and making it less political. In our opinion, the less political the account, the better. So we have made some suggestions with a view to improving the governance of the account and ensuring that it properly fulfills its role. The employment insurance account provides temporary help so that people can become requalified and return to the workforce quickly.

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

Thank you.

Mr. Milliard, you alluded to early retirees, and I would like more details about that.

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Peter Fonseca]

That is six minutes, Monsieur Ste-Marie.

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

In that case, I will come back to the subject in the next round of questions.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Monsieur Ste-Marie, I did want to address your point of order. We do have an unusual timeline. As you know, it's pretty curtailed. We have a short runway. That is the reason we're trying to get in as many witnesses as possible through these meetings for our pre-budget consultation. I'll even apologize to Monsieur Giroux and the PBO, but that is the reason that we've done it this way.

Now we'll move to the NDP and Mr. Blaikie for six minutes.

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

Thank you very much.

Well, hopefully next season an unnecessary election won't interrupt the pre-budget period and we can revert to our normal practice of having the Parliamentary Budget Officer here for a meeting, so that members of the committee can spend more time asking him questions about his analysis.

To the Green Budget Coalition, my impression from your opening statement is that one of the really important priorities is to establish a program that can get retrofits of our buildings going in order to lower our emissions. We know that buildings are a significant source of our current greenhouse gas emissions.

I'd raised this in the House in or around December. I think it was in the debate on the fall economic statement. I was told by the member for Winnipeg North, who's a parliamentary secretary in the government, that they were already doing a bunch of retrofits, that my exhortation to do more, and to do more quickly, was simply unreasonable and that the government had already checked that off their list by having a program to do retrofits.

Are you satisfied with the current government's program for retrofits? Do you think it's ambitious enough? If not, what more needs to be done? How do you see that being done in order to achieve the success that we have to as a country to fight the climate crisis?

[Andrew Van Iterson]

Mr. Blaikie, I appreciate the question and your concern about retrofits and climate change.

I'm going to turn to Vanessa Corkal, our expert on climate change, to respond to that.

[Vanessa Corkal, Policy Advisor, International Institute for Sustainable Development, Green Budget Coalition]

Hi, everyone.

First off, I do want to acknowledge that there has been a lot of progress on this file and that we welcomed the investment last year, both on the greener homes grant and on investments through the Canada Infrastructure Bank. They are unprecedented investments, but the reality is that the scale of the climate crisis demands a much higher rate of action.

To give you some numbers, our retrofit industry in Canada needs to be able to decarbonize 600,000 homes each year to 2040, in addition to 30 million square metres of commercial space per year to 2040. This is an incredibly high number, but it's achievable; however, it is not achievable with the current programming, despite the positive aspects of that programming. Homeowners and business owners are going to have to invest $20 billion a year on top of their normal maintenance costs in order to achieve these goals.

The good news is that if we do this, it's also going to generate an additional $48 billion in GDP per year, create 200,000 long-lasting, well-paid jobs in Canada and significantly reduce our scope 1 and scope 2 emissions from buildings by 90% to 2050. This is a win-win file if we invest the right money into buildings. We've proposed investing $10 billion to $15 billion per year for 10 years. It sounds like a lot, but as I mentioned, when you're looking at the high payback in terms of both jobs and GDP, this investment is more than worth it.

In particular, what we're looking at right now is that often homeowners are able to apply to these types of programs only if they already have a relatively high income. Often, the program does not necessarily allow a home dweller—just because of how much is available and how much individual homeowners can put in—to deep-retrofit their home. In order to meet our 2050 targets, we need to reach deep retrofits of all homes and buildings, not incremental retrofits. More funding will also help to make sure that this is accessible for low-income and racialized communities.

I'll leave it there in case the member has any questions.

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

Thank you very much.

Yes, I would like to follow up on the question of fossil fuel subsidies. We hear sometimes from those who oppose ending the fossil fuel subsidies altogether. They'll zero in on certain kinds of payments that the federal government makes to indigenous communities, for instance, who are in a position at the moment where they can only provide electricity to their community through diesel, either as a reason not to end fossil fuel subsidies at all—and they lump a lot of other stuff in with that—or, in the case of the current government, those same subsidies, I would say, are used as an excuse for delay on ending a number of other ones.

I wonder if you could highlight for the committee what the Green Budget Coalition takes to be the most pernicious of those fossil fuel subsidies and what you think a strategy could look like to be able to ultimately end all fossil fuel industry subsidies.

[Vanessa Corkal]

Thank you.

First, I would identify that we have made two recommendations regarding subsidies.

The first is about subsidies as we've committed to under the G20. We made a commitment in 2009 to reduce and phase out inefficient fossil fuel subsidies. We also have a recommendation about public finance that's provided for fossil fuels. Currently, Export Development Canada provides about $13 billion a year in public finance for fossil fuels. The report put out last year by the International Energy Agency stresses that if we're going to meet the 1.5°C target and reach our 2050 targets, we cannot provide public finance to fossil fuels any longer past this year. A key objective is that the government build on its commitments that it made in Glasgow at the United Nations climate change conference this year in terms of phasing out international public finance, but that we also phase out domestic public finance.

On the subsidy front, the term “inefficient fossil fuel subsidy” is something that crops up a lot. The reality is that this commitment was made in 2009, and the evidence in terms of how quickly we're hurtling towards a climate cliff is even clearer today. Subsidies have become mainstream. When we talk about subsidies, we can debate about the word “inefficiency”, but the reality is that even subsidies for affordable energy distort the market against clean energy.

Our recommendation essentially asks government to look at every single situation where there's forgone revenue or money being spent on fossil fuels, no matter the situation, to identify if that's actually the best use of public money.

I'll leave it there.

Thanks.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Mr. Blaikie.

We are moving into the second round, members. We're starting with the Conservatives. I believe we have Mr. Stewart up for five minutes.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

Thank you for being here today.

Mr. Giroux, can you explain to the committee what risks there are for the Canadian people from delaying the audits of our financial statements?

[Yves Giroux]

The delay you're referring to is probably related to the tabling of the public accounts. The risk from that is that while parliamentarians such as you were being asked to approve government spending for the current fiscal year, the government had not yet indicated to Canadians and to parliamentarians what the total expenditures and revenues were and, therefore, the deficit for the year that ended in March 2021. That caused you to be forced, or to be asked, rather, to approve spending while still not having a clear idea of the picture of public finances for the year that ended in March 2021. You were in the unusual circumstance of scrutinizing proposed spending while not having a clear picture of what happened in what was an extraordinary year for many reasons, including on the public finance front.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you.

I recall a statement you made about the delay in the government's release of audited financial statements, which basically indicated that it undermined parliamentarians' ability to meaningfully scrutinize proposed government spending. I think it's important for the committee to really take stock of what we just heard from Mr. Giroux. This is why, when spending bills are being pushed through the House, we as a committee need to go through everything as much as we can.

How much new spending, Mr. Giroux, has this government taken on since the beginning of the pandemic?

[Yves Giroux]

Based on our own estimate, from looking at budgetary documents and spending bills that were made before the House and the Senate, we estimate that the government, since the start of the pandemic, has either spent or is planning to spend $541.9 billion, about one-third of which is not directly related to COVID-19. That's what we estimate as the amount of spending undertaken or to be undertaken by the government since the start of the pandemic, so close to $542 billion.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Mr. Giroux, I appreciate that statement.

This government has essentially spent over half a trillion dollars in new spending. That's like cutting every Canadian a cheque for $14,000 or sending our grandchildren a bill for $30,000, when we factor in compound interest and “Justinflation”.

Can you tell us why we have fiscal safeguards?

[Yves Giroux]

Fiscal safeguards are a generally accepted best practice, and these are in place to ensure that a government, any government, does not embark on a path that would lead its finances to be unsustainable over the long term. That's also why we regularly release a fiscal sustainability report that looks at the long-term sustainability of provincial and federal governments across the country, looking at the impact of current fiscal policies if they were to be maintained over the next 75 years. That's to ensure that the debt level, as it is, and current policies do not make the federal finances and provincial finances unsustainable over the long term, meaning a debt level that becomes significantly higher than it is now.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Giroux.

Can you tell me what happens when these safeguards are ignored?

[Yves Giroux]

When the safeguards are ignored.... For example, when any government embarks on spending or taxation patterns—and they can be both—that lead it to register significant deficits year in and year out, leading to an ever-increasing debt-to-GDP level, that makes it such that at one point it becomes much more difficult for the government to finance itself at reasonable rates. Eventually, if that continues, it makes it very difficult for such a government to finance itself, period. That can lead, ultimately, to a debt crisis, which is clearly not the case in Canada but which has been the case in some countries in recent history. For example, in Greece there were severe and very profound fiscal issues. That is one example of something that can happen if there is an uncontrolled debt-to-GDP ratio that's ever-increasing.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Mr. Stewart, that's your time. We are moving to the Liberals now.

Mr. MacDonald, you have five minutes.