Finance Committee on Feb. 17th, 2022

[Mark Agnew]

One of the things that we've heard is the need for coordination between the federal and provincial governments in a way that hasn't really been there to date.

Businesses don't want to be in the awkward spot of having to be on the front line of the frustration of their customers, if I can put it that way. Having good messaging coming down from governments is quite important so that customers and businesses alike know what the rules are and they know what the businesses can and can't do.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald.

We are moving to the Bloc and Monsieur Ste-Marie for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Taillon, you are concerned that the tax could be considered a regulatory measure in the area of housing, the domain of the provinces. In your view, that's what is likely to happen, and the courts will ultimately have to decide. Quite clearly, this measure has legal vulnerabilities.

I understood from your remarks that it's better if we do something now, before the measure is passed, than if we wait for the courts to decide.

Why would parliamentarians be well-advised to do something now to clarify the issue or find a solution?

[Patrick Taillon]

It's a lot easier to do something beforehand. It bears repeating that, although federal tax authorities collect various types of taxes, they don't collect property tax. To do so, they would need to set up a new system, a new mechanism, one that will probably be here to stay once implemented. That is why it's better to think ahead.

Just as the federal government has no authority to regulate housing, it has total authority to levy whatever taxes it likes. This is a situation where the federal government has levied a tax in an area it has never chosen previously. There will be a price tag to setting up a system to administer and collect property tax, and it will all be for naught if the tax is ultimately deemed, not a true tax, but a hidden tax whose real intent is to interfere in housing matters.

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

That's quite clear. Thank you.

Mr. Chair, we have the Parliamentary Budget Officer here today, and every year, he submits a fiscal sustainability report. In it, he pointed out that Ottawa has fiscal capacity and room, but that longer-term problems tend to arise at the provincial level.

Mr. Giroux, would you care to comment on that, briefly?

[Yves Giroux]

Yes, very quickly, I can confirm what you just said.

In our most recent fiscal sustainability report, which came out in June, we established that the federal government still had fiscal room, but that the provinces, when taken together, did not. In fact, on an aggregate basis, the provinces will have problems with fiscal sustainability over the long term.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

We will now move to the NDP.

MP Blaikie, you have two and a half minutes.

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

Thank you.

My apologies, Mr. Giroux, for not being here earlier. I was taking part in the emergency measures debate in the House of Commons.

In the past, you have said that the timing of public accounts poses a problem. Bill C-8 earmarks a few billion dollars for pandemic-related measures.

In the NDP, we feel the government should have to report regularly on that spending.

In your view, what information should appear in those reports so that parliamentarians and Canadians have a good understanding of how the money is being spent?

[Yves Giroux]

That's a good question.

First, I would say that, in order to ensure parliamentarians are well informed, the government should specify who received funding. In the case of provincial and territorial transfers, that would mean specifying how much each received and how the money was, or will be, used. For instance, the report could indicate how many tests or supplies were purchased with the funding.

Second, when it comes to transfers to persons, the report should specify how many individuals received the federal funding by province or territory. That would provide a picture of the situation over time so that you, as lawmakers, could better understand how effective the measures were and determine whether the funding was being well spent. In other words, is the money being spent as intended?

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

We will move to the Conservatives.

MP Lawrence, you have five minutes.

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

Thank you very much.

Mr. Agnew, I'd like to discuss Bill C-8's rebate on propane and natural gas and the carbon tax. If we compare and contrast, of course, Bill C-8 provides a rebate on a carbon tax charge on propane and natural gas, whereas Bill S-234 provides an exemption.

Your job is to speak for your members. Could you convey whether or not your members would prefer a rebate? Depending on, as you said earlier, regional differences or differences in their agricultural practices, they might get anywhere from 30% back to maybe 100%, depending. Would they rather have an exemption where they get 100% of that back?

[Mark Agnew]

They would rather have an exemption.

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

With respect to equity, on a related issue, do you think it would be fairer that all members would get 100% back, or different members would get different amounts of their exemption back, depending on where they live and the type of farming they have?

[Mark Agnew]

Ours is a multisector association, so that's a bit of a pickle for me to answer, as you can imagine.

The answer, I think, from our standpoint, is that it does need to take into account the uniqueness that is in the sector. A lot of competing tensions have to be balanced. I recognize that this is a bit of a non-answer in some way, but it is a difficult balance to strike a new program that fits the most number of circumstances but is not overly administratively complex.

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

The other issue with this, of course, is that the carbon tax is there to change behaviour. We heard substantial testimony in the agriculture committee that many farmers in the grain-drying industry, in particular, just don't have other options. They would love to explore them, but they just don't exist, not on a financial level. Have you heard comments similar to that?

[Mark Agnew]

Yes, I have. Another example I'll give you is switching to alternative fuel sources and electrification. Again, the folks who are out there, they can electrify and use lower-carbon fuel sources, which is great, but the infrastructure to make that transition, as the member would appreciate, is just not there in a lot of these rural and remote communities.

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

Thank you.

Would your stakeholders, your members, prefer to ship their money to Ottawa, let it sit there for anywhere from a couple of months to 14 or 16 or 18 months, and then get a percentage of it back, or would they rather just keep it in their jeans?

[Mark Agnew]

Keep it in their jeans. Folks need to have working capital in the bank account, so money that is going out of the bank account is working capital that they're not able to draw upon.

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

If we just sum up the difference between Bill C-234 and Bill C-8 for farmers with respect to the exemption of the carbon tax for natural gas and propane, Bill C-234 will provide a higher recovery percentage and will provide complete equity, because 100% will get 100% back. They will also receive that money...in fact it will never leave, so they effectively receive it immediately, as opposed to waiting for up to two years for that money.

When I compare those two, my assumption would be that Bill C-234 would be a much better option for your members.

[Mark Agnew]

We'll take what we can get in the meantime, but certainly, working towards Bill C-234 is what we hope can happen.

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

Perfect.

Just getting back to that, as well, because there aren't options for many of your farmers.... I live in a rural area, and in my opinion—and I'm open to your comments—the rebate will not provide any greater behavioural modifications, because in terms of the cost of making those behaviour modifications, like for grain dryers, there just isn't the technology to do it any other way but with carbon.

Could I have your comments on that, Mr. Agnew?

[Mark Agnew]

Yes. Again, this goes back to the infrastructure piece of just not having it there to get a high degree of savings from electrification. The other thing I would say, to go back to your earlier point about working capital, is that these are capital investments that people have to make to get the infrastructure on location. If they don't have the capital “in their jeans”, to pick up on the honourable member's expression, they're not going to be able to deploy it.