Finance Committee on Oct. 3rd, 2022

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

I absolutely believe that a price on pollution is the right thing for Canada and for our economy.

As we heard in question period, putting a price on pollution actually was the position of the Conservative Party in the 2021 election. Preston Manning, actually, was one of the early advocates of a price on pollution, so I don't see it as a partisan issue. I see it as the economically right thing to do.

For us, one of the key elements of putting a price on pollution is ensuring that money goes back to Canadian families. You and I are both MPs in the GTA. Ontario families are getting $745 back, and families in Alberta, Saskatchewan are getting more than $1,000. That makes it fair for the most vulnerable and also a really effective market-based mechanism that is going to help our whole country with the green transition.

[Melissa Lantsman, Conservative, Thornhill, ON]

Thanks, Minister.

I think the Parliamentary Budget Officer would agree with me, because he says that families in Ontario, in Manitoba, in Alberta and in Saskatchewan actually pay more than they get back. Families in Ontario will actually pay $360 more in carbon taxes than they'll get back. You talked about the $234 that families would get back from measures in this bill. That eviscerates every single dollar, and then some.

Again, do you think that tripling the carbon tax at a time when we have the highest interest rates in the G7 and 40-year record-high inflation—unlike deflation, which you talked about as one of the measures—is fair to Canadians at this time?

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

Well, just to set the record straight, the GST tax credit will give a family of four close to $500. That's meaningful inflation relief.

Look, when it comes to a price on pollution, it looks like our government and this iteration of the Conservative Party are going to have to agree to differ. We believe that climate action today is absolutely essential. It's a moral imperative for sure.

Speaking as finance minister, though, I really can't emphasize too much the extent to which it is an economic imperative. Canada is a trading nation. We are a small, trade-exposed economy. The EU and the United States are moving aggressively with climate action. Our country needs to go there too; otherwise, we will not have the markets for the products that we want to sell.

A price on pollution is by far the most economically effective way to achieve climate action. Our government knows it's the right thing to do.

[Melissa Lantsman, Conservative, Thornhill, ON]

Thanks.

Of all of the countries you speak about in terms of trade relationships, in the G7 we are the only one that has raised fuel taxes since this period of inflation started.

The Governor of the Bank of Canada told this committee what, frankly, I think the minister couldn't: that carbon tax drives inflation.

I want to know—just a yes or no—if you think it's fair to triple the carbon tax at a time of record inflation. Families are struggling. They are struggling for groceries and gas to heat their homes. There are 51% of Canadians who have reported using a food bank. Students are sleeping in shelters in this country. Is tripling the carbon tax fair to them right now?

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

What I think is fair and what I know is fair is to act clearly and decisively on the climate and on the green transition that Canadian workers need.

We are both members of Parliament for Ontario. Canadian auto workers urgently need our government to act on climate. That is what our government is doing.

We're doing it in an equitable way by returning money to Canadian families. That cheque for $745 that Ontario families are receiving is meaningful. The $1,000 that Alberta families are receiving is meaningful. The more than $1,000 that Saskatchewan families are receiving is meaningful and fair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister. Thank you, MP Lantsman.

Now we'll hear from the Liberals for five minutes of questions. MP Baker, go ahead.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Mr. Chair.

Thank you, Minister, for being here with us today.

I'd like to start by echoing the words of our chair, Mr. Fonseca, by thanking you for your work and leadership in supporting the people of Ukraine as they fight Russia's genocidal war. I'd also like to take this opportunity to thank my colleagues on both sides of the aisle for their support, advocacy and unity. I think that's been incredibly important. I thank you all.

Minister, I've spoken on a number of occasions in this committee, in Parliament and in other settings to advocate that Canada should do everything possible to support the Ukrainian people as they defend themselves from this invasion.

Some people may attribute that to my Ukrainian heritage; the reality is that I've always argued that Canada should do those things, that we should support the Ukrainian people, because I've always believed that it's in the interest of people around the world and in the interest of Canadians.

I say that because the war is hurting all of us. Obviously it's an existential crisis for Ukrainians, but it's a humanitarian disaster, with 12 million refugees leaving Ukraine. We have hundreds of millions of people facing food insecurity or starvation because Vladimir Putin has cut off food exports from Ukraine. It's a threat to our security and global security. It is also, in my view, a key reason that the cost of living for Canadians is so high—why fuel prices, food prices and energy prices are so high.

Ukrainians are not just fighting for themselves but are also fighting for us, and I believe we need to be fighting for them. I think we can be very proud of what we've done to support the Ukrainian people.

However, in my view, Minister, it won't be enough until Ukraine wins this war and wins a decisive victory in this war, which includes Crimea and the Donbass, the territories that Russia invaded in 2014. I say that because not doing so would be a victory for Russia. It would condone the genocide that we've seen in Ukraine. It would invite others to do this again. That would mean security risks that would cause inflation in the years to come. In my view, if we want to stop inflation, Ukraine needs to win the war decisively.

Minister, in your view, what is the impact on inflation of Russia's war on Ukraine and its impact on the cost of living that Canadians are struggling with today?

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

Thank you very much, Yvan.

I think that is a very relevant question. I think we all appreciate that, even absent Vladimir Putin's illegal and barbaric invasion of Ukraine, the recovery from the COVID recession was going to be challenging. We did the unprecedented thing of shutting down the economy, and the large industrialized economies did the same thing. We all also did the unprecedented thing of providing an economic backstop. Unwinding that was never going to be smooth.

What has happened to exacerbate the challenge the world economy is facing is Vladimir Putin's illegal invasion of Ukraine. We spoke earlier with Ms. Lantsman about energy prices and the challenge that those are posing to Canadians. I think we all understand that the chief driver of those elevated energy prices is Vladimir Putin's war in Ukraine. The situation in Europe is much, much more troubling, causing real challenges with, simultaneously, inflation and economic growth.

I absolutely do believe that an important part of Canada's inflation-fighting strategy has to be to support Ukraine and to ensure that Ukraine does win in the war against Vladimir Putin.

I would conclude by saying that I also think we need to appreciate that February 24 is a watershed moment for the world. I think Olaf Scholz has described it as a zeitenwende, a world-changing moment.

I think that going forward, we, the democracies, need to understand the dangers of building our economies on relationships with dictatorships. I think we're already seeing that kind of an approach, which Janet Yellen calls “friend-shoring”. I think we need to develop that in the days to come, and there should be opportunities there for Canada.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you, Minister.

[The Chair, Liberal, Peter Fonseca]

MP Baker, thank you.

We are now going to the Bloc and MP Ste-Marie for two and a half minutes.

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

Thank you, Mr. Chair.

I echo Mr. Baker's words about our commitment to Ukrainians, and it's not about roots, but first about justice. I congratulate you on your commitment to that, Ms. Freeland. We want a just peace as soon as possible.

As my time is limited, I will ask you two questions in quick succession.

The first is about the Canada Community Revitalization Fund and the programs through which the federal government funds municipal infrastructure programs.

Given the shortage of labour and the number of companies that can carry out work under these programs, turnaround times can often be very long. In addition, municipalities may find it burdensome to enforce the deadline for completion of the work, which is usually March 31. The government shows little flexibility with respect to this date.

Can the government commit, in general, and in particular with respect to the Canada Community Revitalization Fund, to showing more flexibility in extending the date that municipalities must meet?

I'll ask my second question right away. It concerns a bill that was passed before the last election. It is Bill C‑208, on the transfer of family businesses. The bill was passed and came into force. Yet, in Quebec, tax specialists and accountants do not want to use these legislative provisions, because they are still waiting for guidance from the government or institutions on how to apply them properly.

Is the government committed to producing the guidelines or proposing a new bill that will spell out how it will be applied, as soon as your economic update, which is expected this fall?

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

Thank you very much, Mr. Ste-Marie.

To begin with, I would like to thank you for your comments regarding Ukraine. A poll shows that Quebec shows the strongest support for Ukraine. This may not be a question of roots, but, in my opinion, it is a question of the sympathy of the Quebec nation towards the Ukrainian nation. I thank you for your kind words.

I am aware of the two issues you have raised.

On the issue of municipalities, we have to find a balance between two important elements: flexibility, but also the need to get the job done. We will try to find that balance.

On the subject of intergenerational transfers, we support these legislative measures, everyone agrees on that. However, before we announce any specifics, we want to make sure that everyone agrees on that as well. We will try to do that.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister, and thank you, MP Ste-Marie.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Now we'll hear from the NDP and MP Julian.

You have two and a half minutes, plus.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

I would like to come back to the issue of dates.

It has been a few months now since Jagmeet Singh proposed the GST-HST rebate. Now the government is proposing to act. However, when I asked you earlier about when this rebate could be offered, you were unable to give me a date.

If the committee decides today to send the bill back to the House of Commons and the House of Commons decides this week to pass it, when might this rebate be available to the 12 million Canadians who desperately need it right now?

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

I am jealous of your excellent French, Mr. Julian.

I agree with you that Canadians sorely need the support. It is good that we are discussing the bill today, but there are still steps that it has to go through, in the House of Commons and in the Senate.

I can assure you of two things. First, the Department of Finance and I will do everything we can to get this done as quickly as possible. Second, Canada Revenue Agency officials are prepared to make the payments as soon as we, in our role as legislators, have done our job.

It is important not to forget the role of the Senate and our colleagues in the Senate. I will not forget them.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

My second question concerns eligibility.

Throughout the country, there are regions, including Quebec, that already have certain programs. Bill C‑31 deals with housing and dental care. These are vital issues for families, we all agree on that. Yet the programs are not necessarily compatible.

Today, can you assure us that you will do everything in your power to ensure that dental care is available across Canada and that housing allowances apply to all Canadians who need them?

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

Yes, but you know very well that it is complex and that there are particularities in the financial relationship between the federal government and the province of Quebec. However, the federal government will show good will.

I know that when it comes to housing and dental care, as Mr. Ste-Marie and our colleagues from Quebec have mentioned, Quebeckers need help just as much as Canadians in other provinces and territories. I assure you that we will do everything we can.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister and Mr. Julian.

Now we will have the Conservatives up for five minutes.

Go ahead, MP Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you, Minister. It's great to see you, as always, at this committee.

I have just a couple of questions on process. I'm curious as to whether you asked your department or if your department provided you with any briefing on whether this spending measure would lead to inflation, on whether it's inflationary.

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

It's good to see you too.

As I said in my opening remarks, I personally am very mindful of elevated inflation and very mindful of the importance of having fiscal policy not fight monetary policy, as are our government and the Department of Finance. That is a key concern. With this legislation, which I'm really glad the Conservatives now support as well, what we've tried to do is find a careful balance between providing some inflation relief targeted at the most vulnerable and ensuring that the additional sums are small.

[Adam Chambers, Conservative, Simcoe North, ON]

Minister, respectfully, the question is whether you asked your department or whether the department provided you any analysis as to whether this spending measure would add to inflation. Is there a briefing note or some analysis that determines whether this spending package will add to inflation, yes or no?

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

We have excellent economists who work in the Department of Finance—