Finance Committee on May 2nd, 2022

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker and Minister.

We're moving to the Bloc and MP Ste-Marie for two and half minutes.

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

Thank you, Mr. Chair.

First, I have a comment I want to make. I was really moved by the exchange we just witnessed between the Deputy Prime Minister and Mr. Baker. We obviously support the Ukrainian people too. I can't imagine, even today, that this conflict can last. I'm obviously talking about the Russian invasion of Ukraine and its impact on those millions of people. Our hearts go out to them.

Getting back to the luxury tax on aircraft, the 90% business use criterion is a problem. I briefly mentioned that. There's also the fact that, even if the tax doesn't apply to aircraft that are exported, it's first paid by the manufacturer before being reimbursed on a quarterly basis. The industry reminds us that the delays are often longer. For example, an aircraft must often be modified to the client's satisfaction and must therefore remain in Canada for six more months before being exported. Since most products are exported, the manufacturers wind up with very significant cash flow and liquidity problems.

Does the minister think she can provide the industry and us with specific and satisfactory answers before the vote on Bill C‑19?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for your question.

Briefly with regard to Ukraine, I've explained to my Ukrainian counterparts that they have the support of the Bloc Québécois and the Quebec nation. The Ukrainians were moved to learn that, and I was moved too. I believe we have a clear mutual understanding on that issue. I very much appreciate that.

I want to emphasize that you and I are in philosophical agreement on the luxury tax and the aerospace sector. We understand the importance of both the aerospace sector and a fair and equitable tax system. The luxury tax is part of that kind of system. Direct exports by registered vendors are subject to the luxury tax. I want to emphasize that. We're aware of the technical points you've raised. We're discussing them at the department, and the analysis is ongoing. We're obviously in talks with the industry and are prepared to continue this discussion with you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister and Mr. Ste-Marie.

We're moving to the NDP, with MP Blaikie, for two and a half minutes.

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

Thank you very much.

Madam Minister, the budget set aside billions of dollars in funding for climate projects. It was somewhat vague on what projects in particular were meant to be funded, but it was very specific about how the money was meant to flow. It's meant to flow through the Canada Infrastructure Bank, except that the Infrastructure Bank has a pretty terrible record on project delivery.

The PBO, from time to time, has commented that it's not even close to being on track to spending its budgeted amount over the 10- to 11-year life cycle of its initial funding. Where it has had some success, to the extent that it has, it has been partnering with municipalities for the purchase of electric buses. However, that has been outside of its public-private mandate. In that area, which is also what the budget talks about—trying to attract private capital—the bank has simply not been a success.

I'm wondering why your government chose to use an unsuccessful investment vehicle as its principal way to deliver funding for projects that are meant to reduce our greenhouse gas emissions.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Let me underscore the extent to which this budget truly is a green budget with a very strong emphasis on investing in the green transition. I'm glad that you're posing the question from an economic standpoint. I think it's important for us as a country to understand the green transition, of course, as a moral obligation to fight climate change, but I think we also need to understand that this is an economic imperative. The world is going green. Canada is a trading nation. We need to be sure we're in the vanguard, not left behind.

Our government has invested heavily in the green transition. We've invested nearly $100 billion in clean growth in many different ways. Some of those investments go through the SIF directly in supporting industries that are making the green transition.

I think the area you are focused on with this question is our Canada growth fund and our view that it's going to be very important to attract more private capital in the green transition. That is absolutely what the Canada growth fund will do. Our intention is that we should bring in, crowd in, $3 of private money for every $1 of public money that is invested. The reality is that the magnitude of the green economic transition is such that government funding alone will not be able to accomplish the scale of change we need, and so it is absolutely appropriate for us as a country to find ways to bring in that investment.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister. I know we have a lot to talk about on green.

Next up is MP Chambers for the Conservatives.

MP Chambers, you have five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Deputy Prime Minister, thank you for coming. Since it's the first time you've been at the committee since the start of the war, I want to commend the government for its actions in pushing back on the Russian Federation. I know you've done a lot of work on that. It's a cause that's personal to you. I want you to know that you'll have support to go even further. I think we can go further to be much harsher on the regime, and I hope we do.

I have a couple of simple questions that I hope we can get to. Do you believe that consumption taxes like the carbon tax are inflationary?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Let me just quickly acknowledge the point on Ukraine and recognize, as I did in speaking to Mr. Baker, that this is action that has cross-party support. I do also want to particularly recognize Mr. Fast's strong personal commitment to acting on Ukraine.

When it comes to a price on pollution, this is the most economically effective way to drive the changes we need in our economy. I do want to point out that the proceeds of this price on pollution are returned directly to Canadians.

[Adam Chambers, Conservative, Simcoe North, ON]

I didn't hear an answer there. There are a number of officials who could give the technical answer to that question. Do you believe it's inflationary, yes or no?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

As I said, the important elements of the price on pollution are two: one, that it is the most economically effective driver of change—

[Adam Chambers, Conservative, Simcoe North, ON]

Okay, I'm going to continue because there's no answer there, Mr. Chair. I'm going to continue.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

—and, two, that the price on pollution is very important. It's very important to note that this is revenue neutral and that the money is returned directly to Canadian families.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Chair, I'm not sure how you would like me to proceed here. It's true that—

[The Chair, Liberal, Peter Fonseca]

You have three minutes left.

[Adam Chambers, Conservative, Simcoe North, ON]

—not all Canadians and businesses get a rebate. Businesses don't. Farmers don't get a full deduction on the carbon tax. It is inflationary. That's the correct answer to the question. The carbon tax is inflationary. It's been confirmed by the Bank of Canada. Not everybody gets a rebate.

In fact, the Parliamentary Budget Officer has said that a number of people, particularly in Ontario—over half—don't actually get back more than what they pay. I guess the next question then is why, when we're in an affordability crisis, does the government not take the single easiest measure it can take to reduce the costs to the economy, which is to reduce the carbon tax or reduce any kinds of taxes, especially when the government's awash in all new revenue?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Let me point out that our government believes in economic literate policy. It is a truth, widely acknowledged among economists, that a price on pollution is the most economically effective way to promote the green transition.

Second, let me point out that it is the Conservatives who have been obstructing, at every turn, the passage of Bill C-8. This is a bill that would support farmers on precisely these issues that you have raised when it comes to the rebate. That is a direct answer to the problems that Canadian farmers are facing.

[Adam Chambers, Conservative, Simcoe North, ON]

With respect, Minister—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

It's astonishing to me that the Conservatives are blocking it.

[Adam Chambers, Conservative, Simcoe North, ON]

Minister—

[The Chair, Liberal, Peter Fonseca]

Minister, it is difficult with the crosstalk.

MP Chambers, do you have a question?

[Adam Chambers, Conservative, Simcoe North, ON]

Let's talk for a second about the rebate for farmers in Bill C-8. Farmers will get about 20¢ on the dollar for the carbon tax through the rebate in Bill C-8. The Conservatives have called for a full deduction, which is already provided for diesel and regular fuel. For farmers, including one in my riding, Larry, whose carbon tax bill on natural gas just for the month of October was $13,000, where do we think that money is coming from?

Further, we talk about prices going up and up. Do we not think that the carbon tax is leading to increases in transportation costs, in food costs?

Again, how is it possible...? This government has ignored, and you in particular have ignored, the warnings of inflation for the last year, despite hearing a number of people, including your mentor Larry Summers, who have been warning about inflation for 12 months or more. “It's global. It's transitory.” It is clearly not any of those things.

There are some simple things that the government can do to make life more affordable, yet Canadians woke up the day after the budget with no immediate relief.

I find it hard to believe that this government is going to continue down that path.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

We need a very short answer, Minister.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Let me just say that S&P reaffirmed our AAA credit rating. There are a number of measures on affordability in this budget, and the price on pollution is economically the most effective way to act on climate change.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

We're going to the Liberals.

MP Dzerowicz, you are up.