Finance Committee on Sept. 21st, 2022

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

Thank you, Mr. Chair.

I want to begin by greeting all my colleagues.

It is a pleasure to see you, including Ms. May. Since this is our first committee meeting of the fall, I want to greet and thank all the employees who help our meetings run so smoothly. I am thinking in particular of our beloved interpreters, but also of Mr. Clerk, of course, the analyst team and everyone else. It is truly a pleasure to see you again, and I want to thank you for all that you do.

I'm sorry, Mr. Klein, but I will start with a point of order. I have briefly consulted my colleagues, and I believe we could agree that next Monday's meeting would be a subcommittee meeting to discuss the planning of work for the upcoming meetings.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

I am looking around. I do see some hands that have gone up. I see a thumbs-up, but I also saw a hand go up.

MP Blaikie, go ahead.

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

Thank you, Mr. Chair.

I'm very happy to do that. I think it makes sense to try to initiate a formal conversation about committee business as soon as possible. I'm also wondering about the Wednesday, because if we are going to have a study day, I'm sure the clerk might appreciate having some idea. I know the inflation study is a standing study here. There's been some recent discussion in the media around grocery prices, and I think some good articles, so I might throw into the proposition, if it doesn't delay us too much, the idea that we could take up a study of food prices on the Wednesday as part of the standing inflation study.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

Mr. Klein, it might feel to you like this is the first day of school here for all of us. We're seeing each other again, and we want to thank the clerk and the analysts and the interpreters and everybody here who does just a tremendous job.

There are Monsieur Ste-Marie and Mr. Blaikie, and I see Mr. Albas's hand up now on the screen. I will bring in Mr. Albas. He has put forward a proposal.

What I want to say is that because we've worked so well as a committee, that does help, I'm sure, with the work the clerk and others need to do when it comes to getting witnesses. It's not easy, especially when it comes down to the last minute, so thank you, gentlemen, for that.

We're now going to hear from MP Albas, from the west coast.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Hello, colleagues.

I'll be very brief in this. I just want to congratulate MP Blaikie for trying to swing the direction of next Wednesday to his cause. I would just remind everyone that we do have private members' business, and those members will probably be available for Wednesday, as probably will the bureaucrats who, I'm sure, will want to give their view on those bills.

However, I do want to support the suggestion of my colleague from Quebec regarding a business meeting. I don't want to leave it to you alone, Mr. Chair, to have to make these lonely decisions.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Albas. I never feel lonely. It's great. As I said, we are a team and we want to set our path, and that's what we will be doing, but it's good to hear all the suggestions.

I see another hand up.

MP Beech, go ahead.

[Terry Beech, Liberal, Burnaby North—Seymour, BC]

I will also be quick. A subcommittee sounds great. I think we had discussions last session about inflation, and I think specifically all of us talked at one point about groceries. I'm sure we'll talk about private members' business in the associated subcommittee meeting, but based on what you just said about getting witnesses in, I'm very happy to support getting groceries on the table and talking a little bit more about inflation.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Beech.

I'm looking to see if we have consensus among members on this in terms of the Monday and Wednesday. I just want to see where everybody's at. I think we do have some planning to do. Of course, we have pre-budget consultations and many other things coming before us. As well, we still have a date left for that inflation study, and I know there is also the discussion on groceries. A lot of discussion has been around inflation.

Now we're going to move back to Mr. Klein.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

I'm sorry, Mr. Albas. Go ahead.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I just want to comment that there is one witness on the inflation study we have not heard from yet, so you might wish to inquire regarding the Honourable Chrystia Freeland. She was asked to attend for three hours on Wednesday. I'm ready to meet next week. It would be great if you were to check with her as well.

[The Chair, Liberal, Peter Fonseca]

Thank you for that, MP Albas. I'll pass that on through the PS, who is MP Beech.

Mr. Klein, you're back on.

I did stop the time, MP Ste-Marie. You have six minutes.

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

I am very happy to hear that the Minister of Finance will come answer our questions on inflation, next Wednesday, if she is available, of course.

Mr. Klein, I am really sorry we have gotten away from the topic you are here to discuss today. I am very happy you managed to find the time to come talk to us about this very important issue.

I would like to better understand your proposal, which is very interesting. Of course, the issue of climate change is inescapable, and we must do much more to change things. If I understand correctly, the new transfer to the provinces you are proposing would not be on a per capita basis, but rather on the basis of needs and efforts. Is that right?

[Seth Klein]

That's correct.

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

Okay.

I am listening to you.

[Seth Klein]

Just to elaborate, I want to acknowledge that in such a scenario as I've proposed, where the funding is linked to greenhouse gas emissions, your province and my province would get less than our share of the population. That's the nature of this. It's in recognition of where the greatest challenge is faced, because of the GHG profiles in this place.

There's another element as well, which is part of why your province and my province, and to a lesser extent MP Daniel Blaikie's province, tend to have lower greenhouse gas emissions per capita. It has to do with the dumb luck of our geography. We have mountains and rivers, and that's been a big help to us. The formula in some ways recognizes that too.

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

Thank you very much. It makes perfect sense.

Let's take the western provinces, for example, which are currently dependent on hydrocarbon development. In order to meet climate targets, you suggest that this production should cease and be replaced by another economic activity. If I understood you correctly, it would be up to the people and the provincial government to choose the projects. Can you explain to us what the economic diversification of those provinces could be? What could replace that economic activity, with the support of the transfer payment that you are proposing?

[Seth Klein]

First of all, just to clarify, I'm not saying that the oil and gas activity would cease. I'm saying that it would phase out over a couple of decades.

I also want to clarify that I'm not saying that the work of the transfer agencies would be governed by the provincial government in each of those places. I'm saying that it would be governed by a joint governance body, one that includes the federal government, the provincial government, municipal governments, indigenous governments and so on, but mostly that those local governance groups could determine an investment package that speaks to the reality of the GHG profiles in that province and the labour market realities in that province.

In Alberta and Saskatchewan, it's obviously going to focus in particular around transition from oil and gas. In Ontario, it may be investments in retooling auto lines to get them fully electrified. In other places, it may be about driving the transformation of the agricultural sector. It depends what the realities are. You would want to have a body that is making investments aligned with the fastest, most ambitious path to drive down emissions in that province.

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

Thank you. That's interesting.

What are your thoughts on small modular nuclear reactors, which some groups say could reduce greenhouse gases and carbon capture by sinks? Is this the kind of project that could be supported with the new transfer payment you are proposing?

[Seth Klein]

It's a very good and important question.

To become your strange uncle again, I'll say that in the war, Mackenzie King famously had this line in the conscription referendum: “Not necessarily conscription, but conscription if necessary.” That's kind of how I feel about nuclear: Nuclear if necessary, but not necessarily nuclear.

I will make the observation that we've seen a fixation, I think, on tech solutions like small nuclear, carbon capture and storage, and hydrogen. There's a small role to be played by hydrogen and carbon capture and storage in sectors that cannot be easily electrified. There is this odd tendency too often on display these days to fixate on these unproven technologies, when the non-sexy, yet cheaper and effective solutions are already there, sitting on the shelf and waiting for us to invest in them big time. I'm talking about solar, wind and geothermal. We know how to do these things.

The next few years are all about speed and scale, and these alternatives lend themselves to that.

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

Mr. Klein, I must unfortunately interrupt you. My time is up. Thank you very much for your answers.

Mr. Chair, you can give my next turn to my colleague and friend Elizabeth May, who will also have questions for Mr. Klein.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Okay.

Thank you, Mr. Ste-Marie.

We are moving to the NDP and MP Blaikie for six minutes.

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

Thank you very much.

As some colleagues have mentioned already, it's nice to see everybody.

I say a big thank you to the staff who have reassembled here.

Thank you to Mr. Klein for appearing today and getting grilled by the committee for an hour, which, I'm sure, is a peculiar kind of pleasure.

I want to come back to some of the discussion that Mr. Lawrence started around the economy. He said that wealth is generated by real production and the production of real things in the economy, which I would agree with. He might find some disagreement, particularly by proponents of Bitcoin and other cryptocurrency, who are big on value that is not rooted in the real economy or real production, but purely speculative. He may want to check in if he knows anyone who's big on that and how they feel about his statement.

Of course, the other thing that is critical to the economy is demand. You've talked already about some of the progress the other G7 countries have made in reducing their emissions. They're projecting further emissions reductions, which means a reduction in demand over time from the folks we hear some in the House say we should be selling our oil and gas to, particularly in this time.

Do you want to speak a bit about what it means for Canada in this moment to be structuring its economy to meet what may be transitory demand and ultimately going to where our allies are moving away from? What kinds of real production and value can Canada use to produce wealth for all of us by going where the puck is heading in terms of the global energy economy?

[Seth Klein]

That's a great metaphor, and it's exactly right. I think we have to offer real hope, not false hope.

People, understandably, are feeling anxious if their current livelihoods are tied to these industries. It is a source of frustration to me—and related to my presentation—that the federal government has yet to make that compelling counter-offer to those folks, but we must. Global demand for oil and gas has to steeply drop off in the next years. It must. If it doesn't, our grandkids and children are fried, so we should dearly hope that it will.

However, if it is, we have to offer some hope to those people who are currently employed there that they're not going to be left behind. If we simply let the market determine that demand without preparation, we are consigning them, as I said earlier, to a great deal of upheaval and disruption.