Finance Committee on May 18th, 2023

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you. It's been many years since I've had the chance to sit at the finance committee so I'm glad to be here.

I just wanted to touch on something that my colleague, Ms. Chatel, said. It's in regard to debt, net debt versus gross debt. I always believed that the government should list its gross debt. I think for net debt, when you get fooling around with CPP and the Quebec pension plan it's no different from a publicly traded corporation that has pensions within their corporation. Any way you look at it, it's not really their money. It is the workers' money and it is for their pension.

When you look at the numbers we're at, closely approaching $2 trillion, can you just put that into context as to how catastrophic and how much it's going to handcuff the country going forward?

[Philip Cross]

I'm glad you raised that matter. It goes back to how—if I learned anything in 36 years at Statistics Canada it is this—you cannot understand the world through statistics. They are a very limited way of understanding the world.

For example, you talked about gross versus net. I'm not going to bore people with that. I agree with your statement about CPP and QPP, but there's another unfunded liability out there: the civil service pensions. The C.D. Howe Institute has published a gazillion studies on how that is not accounted for at all or it is not properly accounted for in the government books. There's a large unfunded liability out there that the government has never acknowledged. That's an example of how you can look at gross debt, but even that's missing some important things in the real world out there.

[Ben Lobb, Conservative, Huron—Bruce, ON]

The other thing is regulation. I had a meeting this week with Picton Terminals, which is in eastern Ontario. It's quite a success story. It's a small business with owners who developed this old Bethlehem Steel port. It has the ability to take containers all the way to the Netherlands. It's a great story, except for the fact that the Minister of Public Safety will not grant the terminals the ability for a customs officer to clear some of the containers.

Picton Terminals is prepared to pay all of the costs, the cost of the office, the cost of having the officer there—everything. That would create a tremendous amount of opportunity, even for people in my riding who ship edible beans all over Europe and Asia. These would be specifically for Europe, obviously.

Can you speak to regulation? Because it seems to me—again, I don't want to simplify it, but if I were theMinister of Public Safety, who I know has a big job, obviously, with lots of issues—at least somebody could be there to get this done and make this happen. This happens every day.

Could you talk about regulation and how it negatively impacts our GDP?

[Philip Cross]

Yes, very much so.

I hate to remind myself that I spent 36 years in government but one thing, now that I have been outside of government for 11 years, is that I can see the difference in the mentality. The mentality of government is to find barriers, to think of problems that don't exist and then to base regulations on them, rather than thinking how it is we can help move this project forward, which is very much the private sector's perspective on things.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Yes.

[Philip Cross]

It's increasing.... It's not government tax rates. It's not government spending, and it's not government deficits. It's this increasing intrusion of this mentality into our society that, to me, is increasing what I'm talking about. I'm looking for reasons. Why has growth stalled over the last 10 years?

[Ben Lobb, Conservative, Huron—Bruce, ON]

I read a book, and I am sure there are many people around the table—and maybe you—who have read it themselves. It's one of Galbraith's books on the crash in 1929 through to the early part of the thirties.

[Philip Cross]

I've read it multiple times.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I read it, and I think to myself, wow, we are really.... You hear economists say that we're really in the first or second innings of what is going to actually happen to the Canadian economy. I read this book, and I think that it's not exactly the same, but there are a lot of similarities.

I just wonder if you have any thoughts on that.

[Philip Cross]

Thank you for asking because I wanted to get back to Monsieur Ste-Marie about the culpability of economists in the current situation. I think it's much greater than you indicated. I think economists are not honest enough about our shortcomings.

I just touched, for example, on how the Bank for International Settlements has for years stressed that emphasizing short-term demand stabilization policies created problems for long-term growth. We're now seeing that come to fruition. We've seen the Federal Reserve Board openly acknowledge that they do not have a working model of inflation. That's one reason they....

Mervyn King, Larry Summers and some other economists just looked at this overall stimulus monitoring fiscal policy—they didn't have a specific model linking unemployment to inflation—and just said, “Come on. With all this stimulus, there is going to be inflation.” They were right.

Economists notoriously never forecast recessions. That's probably too much to ask. They can't forecast shocks, but they've shown that they don't have a good grasp of a lot of things. I think people turn too much to economists for specific answers. Economists are not honest enough about saying, “We don't know everything. We don't know much, actually.”

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks.

I think it's customary that new members get eight minutes for their first round.

[The Chair, Liberal, Peter Fonseca]

It's good to have you here, MP Lobb.

Now we're off to MP MacDonald for five minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I will go back to Équiterre and to Andréanne Brazeau, please.

I want to talk to you a little bit about the government funding to help reduce GHGs in the form of nitrogen fertilizer. It's important to clarify that we're not seeking to reduce the amount of fertilizer farmers can utilize to produce their quality products, but rather to explore ways to reduce GHGs that are produced in the application of fertilizer.

We currently have a sustainable agriculture strategy, co-chaired by the Canadian Federation of Agriculture, which represents over 20 agriculture groups. Farmers are at the leading edge of climate adaptation efforts and know more than anyone the impacts of a warming climate.

How can we continue to support farmers in their efforts to promote sustainability without hampering them in their efforts to remain competitive in producing world-class products?

[Andréanne Brazeau]

Thank you for the question.

I do think that was done in relation to nitrogen fertilizer. In the last budget, it was a very good advancement.

Unfortunately, since we were notified very late about this meeting today and since I am not our agriculture expert, I wouldn't be able to fully answer your question. However, I will get back to you with my colleague's answer on another day.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I know you were speaking previously about carbon storage. I know there are ways, obviously, that farms are leaving grasslands, mainly in places like Alberta, where we have the Canadian Cattlemen's Association.

Obviously, there is a lot of emphasis being put on farms and how they are actually reducing their GHG emissions.

Would you agree that leaving land untouched, basically for roaming livestock to some extent, is actually a form of carbon storage that should be captured for farmers across the country in regard to how they are reducing their GHG emissions?

[Andréanne Brazeau]

If I understand your question correctly, I would say that untouched land is definitely a form of carbon capture and storage. It's a natural one. That's why we think that any kinds of policies and measures that support soil health are beneficial for the future of Canada, whether in terms of affordability for food or for climate action and other social benefits like that.

Once again, I will stop here because my colleagues are more informed than I am on this topic. I will simply repeat that nature-based solutions, which also include agriculture, are really key and are a good form of carbon capture to reach net zero eventually.

[Heath MacDonald, Liberal, Malpeque, PE]

I'm going to change the pace a little bit for you. I'll get off agriculture.

We've heard several times about investments in corporations. I want to get your opinion on this: If a specific industry or sector aligns with government challenges—let's say, climate change—should governments be prepared to invest alongside private corporations?

[Andréanne Brazeau]

Absolutely. I think that government needs to show leadership when it comes to climate action. For sure, it needs to set the pace and it needs to set the right targets and the right price signals to ensure that the entire economy will follow.

However, I do think that the industries that are responsible for the climate crisis and contributed to it a lot historically, or still do today, need to do their fair share. The government, which also means every single Canadian, doesn't have to pay for the entire transformation of these industries if they are to transform in a way that's sustainable.

There is a balance to find there. I do think that regulation from the federal government is a strong tool. That's why we are waiting for regulations on the just transition, on the emissions cap and on the zero-emission vehicles mandate. Those are the ways that I think that our government should take the lead when it comes to decarbonizing.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I want to go to Mr. Cross for a moment.

Mr. Cross, I want to read something by.... I'm trying to figure out who the author was. I'll get it to you before we're done. It's Daniel Workman. He talks about—and I think it's extremely important, personally, and we may disagree on this—gauging exports on how the economy is doing.

Canada sold 596.9 billion dollars' worth of exported products in 2022. That's up 18.5% from $503.9 billion the year before. Even this week, I believe we came across the fact that manufacturing exports are up almost 1% in the month of March.

Of course, we know what our five biggest export products are. We've seen large investment in Volkswagen, obviously, just recently. Those are one of the top five exports. Crude oil is another one as are gold, automobile parts and accessories. Cars are a large investment that we just made. Parts and accessories are a large investment we just made. We know that we have a $3.8-billion strategy on critical minerals in 200 mines across the country. I think there are 60 different minerals that we're dealing with.

You look at larger businesses and larger corporations. Take the Irvings, for example, in my area. They farm. They own grocery stores. They own trucking companies. It's all inclusive. You start to see a growth sector. When you look at the investments that government has made over the past year in some of these sectors, would that not fit the bill to be more self-sufficient and more challenging, including the continued growth of our exports? That, to me, is a gauge that we need to follow relatively closely.

I'll take back the deficit—

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald. We've gone well over time.

If you want to give me a very tight, short answer, Mr. Cross, you're welcome to.

[Philip Cross]

Yes, one I was talking about was the volume of exports, not the price. The price is not something we control. The fact that the crude oil price goes up is not something that reflects government policy here in Canada.

More broadly, I would just say that we tried this approach with clusters, with innovation, R and D and accelerated credits. We've been doing these government-directed attempts at innovation for 10 years, and the end result is the worst growth we've had since the 1930s, so I don't see this as working well.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald.

We're going to MP Ste-Marie, please.

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

Thank you, Mr. Chair.

First of all, Mr. Chair, I want to say that I feel you were very harsh with Mr. MacDonald interrupting him the way you did as he laid out his reasoning. You are the timekeeper, but that really shocked me.

My last questions are for you again, Ms. Brazeau. They're related to what you said at the beginning of the meeting and your recommendations for the latest budget.

You talked about the importance of the circular economy and creating a restorative fund. It was mentioned in budget 2023. This initiative is not yet in Bill C‑47, but it's coming. A Conservative colleague has also introduced a private member's bill, and that's really great.

You mentioned food, agriculture, and mobility. Our colleague Mr. MacDonald also talked about them. In Quebec, you're running a major mobility campaign to reduce the size of vehicles, as you said in your presentation.

If you would, I'd like you to remind us of the major action the government could take on mobility to reduce our carbon footprint.

[Andréanne Brazeau]

Thank you for the question.

Actually, the government can do a lot, both by looking at what the provinces are doing and what other countries are doing.

Obviously, encouraging active mobility and public transit and developing inter-regional transportation using other means than personal cars and trucks are the best ways to reduce our carbon footprint.

We also need to invest in rail transportation and developing all kinds of public transit and shared transportation initiatives to reduce the number of vehicles on our roads. That's really what's most important. Even on the freight side, we have a lot of work to do to optimize our networks and supply chains and to reduce emissions, which continue to rise in that sector.

As far as transportation is concerned, it's quite simple. As I said, we definitely need to focus on road transportation, but we also need to do it in a way that will help people. A number of reforms are already included in existing subsidy programs, such as the incentives for zero-emission vehicles, or iZEV, program, for electric vehicles. We're proposing various measures to improve it and make it fairer by including a cap on annual income to be eligible for subsidies, for example. This would direct the money to the people who really need the subsidy to buy a clean vehicle. We also feel that low-income families should get higher subsidies.

Another example of what we're recommending is a subsidy for electric-assist bicycles, which have enormous potential for getting people out of their cars and trucks. We have a pilot program called Velovolt that's been very successful. We lend electric-assist bicycles to organizations. Eighty-two per cent of people who try electric-assist bikes want one to travel between home to work.

There are truly all kinds of avenues to explore. We really need to get over this dependence on cars.

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

That was fascinating.

Thank you very much, Ms. Brazeau.