Finance Committee on March 30th, 2023

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

Thank you very much for that comment.

With respect to some of the budget items, there's a new clean electricity investment tax credit, and the Kivalliq hydro-fibre link project is named specifically in the section on that. I note that there's no funding in the table for the clean electricity tax credit until the 2024-25 fiscal year.

My understanding is that this project is ready to go to the next stage but that federal funding is required. A federal mandate or endorsement of the project is required in order to help the project get to the next level. Does this mean there won't be support for the project until 2024-25, or are there other envelopes out of which that project could find a basis to keep making steady progress?

[Miodrag Jovanovic]

With respect to the clean electricity investment tax credit, the effective date will be budget 2024. Next year we're going to continue to refine the implementation and draft legislative proposal with respect to this credit.

There are still a number of design elements to work on and clarify. Also, with respect to the transition and coming into force, there will be rules such that projects that have started already, as of budget day 2023, will not be eligible. Basically, next year is a year when these projects, even if they continue, are not missing out because they will not be eligible anyway, given the fact that the credit is available only in budget 2024. A project that would start in between would still qualify, though.

This is the way this investment tax credit will be implemented.

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

Is there an existing envelope out of which a project like the Kivalliq hydro-fibre link could be funded?

[Miodrag Jovanovic]

With respect to envelopes, there's no specific funding because it's a refundable investment tax credit.

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

I mean outside of the tax credit.

[Miodrag Jovanovic]

I'm sorry. I misunderstood.

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

What I'm hearing is that the project won't be eligible for the tax credit in any event. Are there other envelopes in the meantime out of which the next stage of that project might be funded?

[Tasha Hanes, Director General, Sectoral Policy Analysis, Economic Development Branch, Department of Finance]

Yes, certainly, and I think it's really worth pointing out to you another measure in the budget that relates to the Canada Infrastructure Bank, which gives this Crown corporation an increased focus on clean electricity. The budget from two days ago indicated that the CIB's investment targets for both its clean power priority area and its green infrastructure priority area would be increased from $5 billion to $10 billion. That will provide additional focus and space for the CIB to support important clean electricity infrastructure projects. In fact, we know the CIB has been in discussions with the proponents of the particular project you mentioned.

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

How quickly do you anticipate the Infrastructure Bank will be able to operationalize those changes to its mandate?

[Tasha Hanes]

As usually happens after a budget document includes a new policy space for the bank, it takes a bit of time to work through what that means. Then the bank can bring that forward as part of its corporate planning process. We would expect to see that come forward over the course of the coming months. Its next corporate plan is due to come forward fairly soon.

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

Okay. Would you anticipate seeing that in the next corporate plan?

[Tasha Hanes]

I'm confident that the bank will be looking at all of the new spaces for it that were in the budget and will be looking at those in the context of its corporate plan.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Hanes and MP Blaikie.

Members and witnesses, we won't have time for a full second round. What I'm going to do is break up the time equally. We'll have five minutes for each of the parties, and we'll start with the Conservatives and MP Morantz.

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

Thank you, Mr. Chair. I'll be splitting my time with MP Chambers.

Four months ago, the fall economic statement was tabled. I realize it's our job to criticize as the official opposition, but one of the good things about it was that in 2027-28 it forecast a $4.5-billion surplus, which is music to the ears of most Conservatives. We like to see surpluses.

The budget that was just tabled now shows in that same year a $14-billion deficit. That's an $18.5-billion swing in the 2027-28 budgetary outlook. Why is that?

[Christopher Veilleux]

I'll hand that one over to Evelyn Dancey.

[Evelyn Dancey]

The table that I find most helpful—and you might have already seen it—is on page 20 of the English version, table 1, in which we start with the budgetary balance from the fall economic statement and work our way down through the new measures in the budget, with changes in terms of economic and fiscal developments.

Just to illustrate, there are many reasons why our forecasts change from publication to publication, but there are a couple of significant ones I would note, including the end balance for 2027-28, among others. There are economic conditions, which I've already spoken to, that have resulted in fiscal impacts, including with respect to our public debt charges. That's one element of additional costs compared to the fall economic statement. They're all the measures in the budget, many of which have net fiscal impacts in that final year of our forecast. Those would very notably include the new long-term care health care funding with provinces as well as further details about the dental plan.

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

I'll give the rest of my time to Adam Chambers, Mr. Chair.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Congratulations on the budget. That's a lot of hard work. It takes a lot of time and effort.

I just want to flip back to the savings. There is a difference between a lapse, a one-time savings and an ongoing run-rate reduction. Are we to understand that the commitment now going forward is a commitment to find annual run-rate reductions in government spending?

[Evelyn Dancey]

Yes. The budget measure includes an announced ongoing savings component.

[Adam Chambers, Conservative, Simcoe North, ON]

As a follow-up question, has the government identified, up until now, any existing program for savings? Has there been a cut to any ongoing program yet?

[Evelyn Dancey]

This ongoing savings commitment in the budget will be followed up with a Treasury Board Secretariat president-led process, so—

[Adam Chambers, Conservative, Simcoe North, ON]

I understand, but up until now there has been no program-identified cut by the government. At one point there were savings to be had, and we found the savings by lapsing spending. We actually never cut a program, but we're to believe now that we will find run-rate spending eventually.

[Evelyn Dancey]

This measure includes ongoing savings and follows up on the budget 2022 commitment to do so.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

My Liberal colleague said that you can tell a lot about your priorities by where you're spending. How much is the total interest paid on the debt for 2023-24, next year? It's $44 billion. Is that right?

[Evelyn Dancey]

Yes.