Finance Committee on Oct. 26th, 2022

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Thank you, witnesses, for all of your testimony.

I think I'll have time for one or two questions that I'd like to address to the Green Budget Coalition.

We, in the NDP, believe that restructuring the Canadian economy to address the climate crisis is not only an imperative from a planetary point of view, but also, I think, key to positioning our economy to take advantage of the necessary transition to sustainable energy sources, which we think will position Canada well for the 21st century.

As you know, part of the confidence and supply agreement that we have entered into with the Liberal government is moving forward with addressing the climate crisis, and creating good-paying jobs is an important part of that.

I'd like to focus on your first recommendation, for advancing a zero-emissions electricity grid based on renewables. I'm wondering if you can speak a bit about the dollar amount required for this, as well as how the kinds of investments you're suggesting will not only advance the goal of net zero but also lead to job creation.

[Andrew Van Iterson]

I'm going to turn to Tom Green, with the David Suzuki Foundation, to answer that.

[Tom L. Green, Senior Climate Policy Adviser, David Suzuki Foundation, Green Budget Coalition]

I think it's an excellent way to look at this. These are investments that help position Canada to be a zero-emissions economy of the future or to take advantage of opportunities and whatnot.

There have been various assessments of what it will cost to transition Canada's grid and to build out more renewables. They include those done by us and also by the Canadian Renewable Energy Association.

The figures we're talking about here don't complete the transition, but they put us in a very good position by helping set us up for more transmission across the country, more sharing between regions, which really helps with the deployment of renewables, and more deployment of renewables.

Also, it helps by balancing the field between the very generous tax credits now being given to the oil and gas industry for carbon capture and storage and the much less generous tax credits available for investments in renewable generation.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Davies. Your time will continue once we come back.

Members, we are going to suspend at this time to go and vote. Hopefully everybody will be back 10 minutes after the vote so that we can continue.

Thank you. We're suspended.

[The Chair, Liberal, Peter Fonseca]

I call the meeting back to order. Welcome back, everybody.

We had left off with the NDP. They were in their questions. They had four-plus minutes still left.

MP Davies, the floor is yours.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Green, if you could perhaps send to the committee the figure for the zero-emissions electricity grid, that would be helpful to the committee.

I will carry on with the Green Budget Coalition. In the more detailed overview, you mentioned creating a pan-Canadian grid council.

My colleague from Elmwood-Transcona, who can't be here today, has certainly been a strong advocate for an east-to-west power grid. In his consultations on that, one of the things that stand out as a gap in the discussions is that there seems to be no table to convene in order for the necessary conversations to generate co-operation.

Could you elaborate on how much you've allocated in your proposal to create this table, who you think would be at the table, and the types of projects you'd expect to see come out of such a council?

[Tom L. Green]

Yes. Thank you for the question.

We've allocated $50 million over five years to support that. We have a second bucket of $5 million for a consultation process among provinces, territories, municipalities, utilities, indigenous nations and interested community neighbours. Between those two investments, the idea is to try to get much more collaboration across the country and unlock some of the gains that are possible by better coordination and improving the grid from east to west—that kind of thing.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Continuing on that subject, the finance committee is also undertaking a study on fiscal federalism. As part of that study, they heard from Seth Klein, who wrote the book A Good War. In that book, Mr. Klein put forward the idea of climate transfer from the federal government to provinces that are being disproportionately affected by climate change. When I think of my province of British Columbia, we've had record heatwaves, untold damage from the forest fires, and flooding. The Coquihalla Highway, a major highway going into the Lower Mainland, collapsed, which required a substantial investment of capital from government. We've just seen a similar debacle on the east coast.

I'm wondering if you think government should consider a federal climate transfer to provinces, looking both to mitigate the impacts of the climate change we're already experiencing and to invest in projects and training for workers that would ensure a more sustainable, resilient economy tomorrow?

[Tom L. Green]

First of all, I think I'm in your riding. I'm in Vancouver. We've certainly experienced all of these costs.

We have to recognize that, as a country, climate is impacting different areas of the country differently. We've also put in some recommendations for an adaptation strategy. There's the excellent research of the Canadian Climate Institute, showing all of the damages that are going to happen with climate change if we don't mitigate emissions. I think those kinds of proposals are certainly worthy of study.

That's why our recommendations in this budget proposal, together, are intended to put Canada on a track for lower emissions, better resilience to climate change and better impacts on nature, thereby ensuring that natural capital in nature isn't eroded but is in fact maintained, so it can secure the well-being of Canadians over time.

[Don Davies, NDP, Vancouver Kingsway, BC]

The second recommendation is around a renovation wave. We know that modifying and upgrading buildings and homes that we already have is going to be crucial in addressing the climate crisis. We also know that upgrades usually lead to savings, as things like new windows and new heating and cooling systems are more efficient. It also generates a lot of small business activity in a positive sense.

In the detailed overview, you've put aside some money for no-cost, deep retrofits for low-income Canadians. Can you expand on that recommendation, and also touch on the concept of equity and why it's important to make sure that solutions to the climate crisis aren't being gate-kept from those who can't afford them?

[Andrew Van Iterson]

Should we turn to Theresa on that one?

[Theresa McClenaghan]

In addition to the recommendation we make for $10 billion per year for residential buildings to cover expenditures that are beyond what households would normally do for regular maintenance, we talk about $2 billion per year for no-cost, deep retrofits for low-income households of all types of tenure, householder-owned low-income as well as tenant low-income.

The reason we talk about no-cost is that we know from previous work, such as that done by the Low-Income Energy Network here in Ontario, that those households cannot afford to put money up front to undertake these expenditures, even if they were on some type of a loan or repayment program, so it leaves them out of the program entirely, and many of these households are the most in need of this kind of assistance.

In terms of equity generally, we have seen that climate is impacting vulnerable, under-resourced communities, low-income communities, inequitably because many other households can take steps to offset some of the impacts—not all of them; it depends where people are. Often they're in locations that are more prone to flooding, for example. After flooding, if they don't have remediation, they end up with mould or with asthma resulting from mould. They don't have access to cooling, for example, and there's a big issue around heat deaths going on in Canada with some untoward impacts there.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Davies.

Members, taking into account the time we were suspended for, we will be concluding today at 7:08. That will be our two hours.

We're moving into round two, our second round of questions. We'll start with the Conservatives.

I have MP Hallan up for five minutes, please.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thank you, Mr. Chair.

Thank you to all the witnesses for being here and contributing to this very important conversation.

I want to start off by apologizing to Mr. Terrazzano for Mr. Baker's very unprofessional behaviour today. I know that you, Mr. Terrazzano, and the CTF do great work and represent Canadians who have been hit by this cost-of-living crisis caused by a lot of what Mr. Baker and his government have been doing with out-of-control inflationary spending.

I want to give you, Mr. Terrazzano, ample time to respond to Mr. Baker without being cut off.

[Franco Terrazzano]

Thank you, Member, with respect.

I heard something about seniors, and you know who's really getting hammered by the inflation tax? It's the seniors who are living on fixed income. What we've seen is out-of-control spending for years. Before the pandemic, the feds were spending all-time highs, even after accounting for inflation and population growth. Then, during the pandemic, the Bank of Canada printed $300 billion out of thin air. Then, the cherry on top for hard-working Canadians who are already struggling is the tax hikes. Carbon taxes are up, payroll taxes are up and alcohol taxes are up.

Just around the corner, next year, is going to be the second carbon tax coming through fuel regulations. Right in the government's own analysis of those regulations, it shows exactly who's going to be made worse off: low- and middle-class Canadians, people who are already suffering from energy poverty, single mothers and seniors living on fixed incomes. Again, that's right from the government's own analysis.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thank you, Mr. Terrazzano.

I think you've raised some really important points, that people on fixed incomes are getting hit the worst. You pointed out—and it is important to note—that the government spent $100 billion even before COVID. During COVID, close to half a trillion dollars was spent, and almost a quarter of a trillion dollars had nothing to do with COVID at all. Like you said, the tripling of the carbon tax is coming up.

There's also the point that, over the last seven years, many good energy projects were cancelled by the Liberal government, and now we see a 50% to 100% increase in home heating costs because of that. Do you think it's the right time to be increasing the carbon tax or even having a carbon tax when we see emissions going up?

[Franco Terrazzano]

I think it's the worst possible time. I think it should have been a no-brainer, at the very least, for the government not to raise taxes when so many people lost their jobs and when so many small businesses were worried that their savings wouldn't keep the lights on.

Now we have people who are trying to drive from Port Hope to Richmond Hill for work and can't afford to fuel up their cars. Right around the corner is going to be wintertime and, of course, the carbon tax drives up the cost to heat our homes during those cold winter months.

Look, I don't think we should kid ourselves. The government knows that these tax increases are inflationary. That's the whole goal of the carbon tax. Sometimes I think that the government pats itself on the back every time it sees big prices at the pumps. It's the same with the second carbon tax. The government's analysis is very clear: The second carbon tax could add up to an extra 13¢ per litre to the price of gasoline by 2030, and of course there are no rebates with the second carbon tax.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

I agree with you. A province like mine, Alberta.... More Albertans have to pay more out of their pockets than what they get back from the rebate. Once the carbon tax triples, a Canadian family will pay up to $2,300 out of their pocket in carbon tax. Again, we don't see emissions coming down either, and we're seeing the money coming out of Albertans' pockets.

Going to today's tax rate increase by the Bank of Canada, what do you think this is a reaction to?

[Franco Terrazzano]

It's a reaction to out-of-control spending for years. I mean, out-of-control spending drives up the cost of living, so I think that's exactly what the reaction is to.

Let me just get back to Alberta because we've heard the government, time and again, mislead Canadians by claiming that households get more money back with their rebate, but of course, the Parliamentary Budget Officer has shown that that's magic math. My family lives in Alberta, too, and there's no wonder that Albertans just voted in the equalization referendum to stop being treated like the cash cow of Confederation. This year alone, the carbon tax will cost the average household in Alberta $671, even after the rebates, according to the Parliamentary Budget Officer.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Time and time again we hear the Liberal government say that this is not our problem, that inflation is, by some act of God, a world problem. However, recently we've heard the former Bank of Canada governor—and a possible Liberal leadership candidate—Mark Carney, come out and say that this is a domestic issue. The current Bank of Canada governor has said that this is a homegrown issue.

Do you agree with that?

[Franco Terrazzano]

Oh, I certainly agree that the government created the perfect storm for inflation, which is too many dollars chasing too few goods. We've seen tax increases here in Canada while other countries are reducing taxes. Fifty-one other national governments have cut taxes to ease the burden of inflation or during the pandemic, including many of our peers. More than half of G7 and G20 countries cut taxes; two-thirds of OECD member countries cut taxes.

While our government has been increasing gas taxes, Australia cut its gas tax in half. The Netherlands provided significant gas tax relief. South Korea cut its gas tax by 30%. India cut gas taxes to “keep inflation low, thus helping the poor and middle classes.”

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

That's a very important point.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Hallan. That's the time.

Now we'll move to the Liberals.

MP Chatel, you have five minutes, please.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you very much, Mr. Chair.

First of all, I should mention that I've been to countries with very low or no taxes. Honestly, I don't think anyone here wants to live in a country where there's no support for education, hospitals, road maintenance, safety, or whatever. In Canada, we're proud of our employment insurance system and old age security. That's important. We're not going to cut that when times are tough, and that help is needed.

As far as tax cuts are concerned, the United Kingdom recently did this experiment, and it's now clear that it's not even economically viable. So what the previous speakers proposed has been tried, but unlike the U.K., we don't want to plunge our country into an even worse inflationary crisis, nor into a monetary or political crisis.

So instead, I'm going to talk to witnesses who are providing real solutions, such as the representatives of the Union des producteurs agricoles and the Green Budget Coalition.

Mr. Tougas, your colleague Mr. Caron told us before he left that an investment in agriculture and agri-food is an investment in the food security of Canadians. Could you tell us more about exactly what the Union des producteurs agricoles is proposing?

So one of your recommendations is to provide more direct support to farmers who provide ecological goods. Under the Sustainable Canadian Agricultural Partnership, we created the resilient agricultural landscapes program. Are we on the right track? Are you proposing to go even further in that direction?

[David Tougas, Coordinator, Business Economics, Union des producteurs agricoles]

Thank you for your question.

We do recognize that there has been a significant amount of money invested over the past two years or so to support agri-environmental business support.

We hope there will be more to go even further, and that these funds will be permanent. When farm businesses implement agri-environmental practices, it isn't in the short term. We're aiming for medium- and long-term implementation so that the beneficial effects on the environment will last. So we want to make sure that those funds are sustained over time.

We gave the example of the United States, which still has much more investment in this area than Canada. So you're right: it's a step in the right direction, but we have to take the next step if we really want to have a lasting effect.