Finance Committee on Oct. 26th, 2022

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you very much, Mr. Tougas.

Now I'd like to turn to the representatives of the Green Budget Coalition. People are talking a lot about water scarcity, which extends well beyond Canada's borders. Water scarcity is causing drought, disease and many problems for farmers on a global scale.

Should we be doing more for farmers who provide ecological services? How can we support them to ensure agricultural resilience?

[Shaughn McArthur, Associate Director, Nature United, Government Relations, Green Budget Coalition]

Thank you for your question, Mrs. Chatel. It's been a long time since I've had the opportunity to have a discussion with you in French, but I'm still going to answer your question in English.

In spring 2021, Nature United released a peer-reviewed study on 24 natural climate solutions that can bring down Canada's greenhouse gas emissions by the equivalent of 11% of our overall emissions by 2030. Lo and behold, we found that 11 agricultural pathways were among the most effective and can bring down approximately 50% of the total emissions reductions through natural pathways that we calculated. What's really interesting about these pathways is that they're available now. Farmers across Canada are starting to use them, but the uptake is nowhere near where it needs to be.

The other thing we went on to build on—and we did a study in partnership with Bain & Company—was that while farmers adopting some of these practices would see declines in yields and revenues in the first couple of years, by the time they got to the third and fourth year, after a little bit of support from the government, they were seeing up to 30% increase in their revenues. At the same time, some of these are practices like cover cropping, which reduces the amount of water that they require, and nutrient management, which reduces the cost, as many of these products, like fertilizer, are seeing inflationary pressures as well. You have a double benefit happening through these practices, where you're reducing the cost while seeing benefits to farmers' bottom lines as well as emissions reductions.

What we see that farmers really need right now is really three-fold. The first is that they need incentives to make the switch. Farmers really look to the people around them to adopt new practices, so we really need to get projects off the ground and on the ground, so to speak. The second is that they need financial support to bridge that gap, as I was describing previously, and the third is that they need information and extension services. We've seen the provinces—

[The Chair, Liberal, Peter Fonseca]

I'm sorry to interrupt you.

MP Chatel, that is the time.

Now we'll move to the Bloc.

We have MP Lemire.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Mr. Tougas, I find two recommendations you made related to organic farming particularly interesting. The first one is about a government cost-share program for organic certification, and the second has to do with providing ongoing funding to review and maintain organic standards in Canada.

I represent a farming region, Abitibi—Témiscamingue. In its strategic planning, Témiscamingue aims to become a leader in organic farming, and it's perhaps one of the last places in the world with massive amounts of land suitable for organic production.

How can your recommendations help us achieve our sustainable organic farming objective, particularly in a regional setting?

[David Tougas]

As you say, there are two things.

First, you need to support accreditation costs. This is already being done in United States and elsewhere. It helps limit conversion expenses for producers who want to make the transition to organic.

Second, you need to make sure that Quebec maintains adequate organic standards comparable to those of our competitors. That will level the playing field. It's about not letting our competitors eat us alive.

I believe that those two measures will promote an increase in the number of farms and will grow the land area devoted to organic production in Quebec and Canada.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

How hungry are producers to get into organic farming? How smooth is the supply chain in particular? Are there ways to make it even smoother, especially with regard to grains?

[David Tougas]

Some producers certainly have concerns related to organic inputs. You mentioned grains for dairy and livestock production. I know there are also concerns about animal feed some years, especially in times of drought. So, all of that sits in the background.

The higher the organic production, whether it's for inputs like grains, animal feed or others, the easier it's going to be to get inputs for our livestock production.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

So we expect a strong message from the government.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Lemire.

Now we'll hear from the NDP.

MP Davies, you have two and a half minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Once again, the question is for the Green Budget Coalition.

Your third recommendation is delivering on Canada's land and ocean protection commitments. I live in Vancouver, which of course is very close to the ocean, so I'm acutely aware of not only the environmental impacts but the economic importance of tourism, fishing, shipping and having clean oceans and waterways.

I'm wondering if you could tell us the dollar amount you would like the government to put towards this initiative. Maybe you could give one or two examples of policy that you would like to see accompany that money.

[Shaughn McArthur]

Yes, certainly, we see a lot of economic benefits from nature protection. I can tell you a little story from the Great Bear Rainforest agreement, where we saw the Government of Canada contribute $30 million, the province contribute a match to that, and philanthropic organizations come forward with a $60-million match. What do we see? We see 45 new first nations-led businesses and over 1,100 permanent jobs created. It has become the most successful driver of job creation in the region.

Canada has a target of reaching 25% of conserved lands and waters by 2025. We still have a long way to go. While we do have budgetary recommendations—I can give you those numbers—what we really see is that a lot of that money is coming in the form of establishment funding, project funding to get projects off the ground. But in order to have the confidence to engage in these projects, partners really need to see the long-term funding for stewardship over time so it doesn't land flat on them.

One of our key recommendations here is $1.4 billion per year in A-base funding, increasing to $2.8 billion per year by 2030-31, to support that long-term management and monitoring of terrestrial and marine protected areas. We have that divided on the marine and the terrestrial front.

[Don Davies, NDP, Vancouver Kingsway, BC]

I don't know how much time I have left, but I will try to get a quick one in on your recommendation about advancing sustainable agriculture.

I would like to hone in on the idea of Canada being a sustainable food producer and ask you a two-pronged question. Essentially, could you outline your recommendations for how Canada can be a sustainable food supplier and how we can also be improving our risk management?

[The Chair, Liberal, Peter Fonseca]

Give a very concise answer, please.

[Shaughn McArthur]

One of the most powerful tools for risk management is the business risk management programs, which have actually been oriented more towards income stabilization. We have recently seen a commitment to a pilot to try to build in climate risk. We really need to build out those incentives for farmers to actually change behaviour but in a way that's additional. We recognize that the existing programming and funding are very critical for those farmers.

[The Chair, Liberal, Peter Fonseca]

Great. Thank you.

Thank you, MP Davies.

Now we go to the Conservatives.

MP Morantz, you have five minutes, please.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Mr. Terrazzano, my recollection is that back in 2019 a story came out that one of the Liberal MPs at the time had submitted to their campaign platform this idea of taxing home equity. It became an issue in that election. Of course, the Liberals denied that they had any intention of taxing home equity. But then we found out that CMHC had actually retained an organization called Generation Squeeze. They had paid them over $200,000 to study this very thing.

The reason I'm asking you about it is that in your brief you make note of removing the requirement to report the sale of your home to CRA. I don't know of any other non-capital asset that a Canadian citizen might sell that they would have to report to CRA, other than their home. I'm wondering if you could comment on why you think that requirement is there.

[Franco Terrazzano]

That's a great question.

If the CRA isn't going to tax it, then why do they want to know how much you sell your home for? Are they just curious? I've never known the CRA to just be curious.

What's so frustrating is that the Liberal Party in the last election—Mr. Trudeau, during the leaders' debate—said that they wouldn't bring in a home equity tax. Then why are taxpayers paying hundreds of thousands of dollars through a Crown corporation funding research into this home equity tax? Not just that, we dug up documents that show that staff in the Prime Minister's Office met twice with the group that has been pushing the home equity tax.

Not just that, we've also seen the Crown corporation, the Canada Mortgage and Housing Corporation, whose number one objective, according to its own website, is housing affordability for all.... In 2020 and 2021, Canadians couldn't afford to buy homes. Why would that Crown corporation then turn around and hand out nearly $60 million in pay raises and bonuses?

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

Tax competitiveness has been on my mind. I'm wondering if you have any information on where Canada stands. When major corporations look at where they're going to open their factories and do business, they look at countries like a product, in a way. One thing they'll look at is how expensive it is going to be for their corporation, executives and employees. How much are they going to have to pay to live in a country like Canada?

Where do we compare in the world to other countries on that front?

[Franco Terrazzano]

Unfortunately, among our peer nations, it's not good.

I have the results from the 2021 international tax competitive index in front of me. Canada ranked 20th out of 37 OECD countries on tax competitiveness, which is two spots worse than Canada's 2020 ranking. It also puts us in the bottom half of the pack among our peers.

Canada ranked 23rd on business tax competitiveness, 27th on individual tax competitiveness, and 24th on property tax competitiveness. The report notes “some strengths of the Canadian tax system”, which include the fact that Canada “does not levy wealth, estate, or inheritance taxes.”

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

On the issue of interest rates, one thing that I think is important for us to understand is that the government racked up more debt in the last seven years than in all of the history of our country since Confederation. They did it while essentially bragging about it, saying that it would be irresponsible not to borrow when interest rates are so low. But now the chickens are coming home to roost, aren't they? Interest rates are going up. Government is going to have to refinance each tranche of debt as it becomes due.

What impact do you think that's going to have on our debt servicing costs? Do you think it might force the government to make some drastic decisions around further tax increases in order to continue to service our debt?

[Franco Terrazzano]

Interest charges next year, according to the PBO, are going to be about $42 billion. That's $42 billion that can't improve health care and can't stay in Canadians' pockets through lower taxes because that money is going to the bond fund managers on Bay Street.

Look, the Bank of Canada has one job, and it failed to do its one job. If you've been to a grocery store or a gas station in the last year, you know that. Even the Bank of Canada has admitted they did not hit their inflation target. Even the Bank of Canada has admitted they should be held accountable.

Well, it's a funny way to hold your organization accountable—by turning around and handing out $45 million in bonuses and pay raises in 2020 and 2021.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

If I have time, Mr. Chair, for one last quick one, I want to ask about the pay-as-you-go law.

I was fascinated last week to hear the Minister of Finance all of a sudden see the light and listen to what our leader has been saying now for months, which is that Canada should bring in a pay-as-you-go law.

From your perspective at the Canadian Taxpayers Federation, how can we trust the arsonist to put out the fire when they make a promise like this?

[Franco Terrazzano]

It's not sustainable to spend more money on everything forever. That's not a good way to try to run the finances of a nation.

In our budget, we're showing that you could actually balance the books with modest spending restraint. Just bring program spending back to the prepandemic and all-time-high levels of 2018-19, even adjusted upward for inflation and population growth.

The government could balance the budget. It could find room to provide much-needed tax relief. Really, it only takes modest spending restraint.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Those are my questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

Now we're going to hear from MP MacDonald for the Liberals, for five minutes, to close off this round, please.