Finance Committee on May 18th, 2023

[Philip Cross]

—nine climate change plans since 1992. Emissions have gone up steadily. My close friends at Équiterre, I'm sure, are no happier with the outcome than I am. We have rising emissions and no economic growth. I don't know how you could have a worse outcome.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I want to try to connect. I also have tremendous respect for your writing and your intellectual abilities. I also have tremendous respect for Mr. Lester of the C.D. Howe Institute. He's talked about a disincentivization of work in Canada. When we look at the marginal effective tax rates even for low-income earners, they're often well over 50%. When you add clawbacks plus taxation, you have people who are earning $40,000 or $50,000.

It's not my contention, Mr. Cross, that the average worker looks at their tax return and says, “I'm only earning 33¢ on this dollar” although in some cases it's true, but I believe it's starting to creep into the ethos of Canada that we're disincentivizing, or that Canadians are starting to feel as though they're no longer getting ahead. Could this disincentivization of work have an impact on productivity in our country?

[Philip Cross]

Yes, but I think there's a bigger problem with taxation. I'm going to quote Paul Wells. I go back to how there is an increasing recognition in the public debate in this country that something has gone wrong. Paul Wells put it that if you run a successful business in this country, you're made to feel that you've done something wrong. That's what high taxation does. It's not the disincentives to ordinary people, although those are there. There's this broader signal that we discourage success.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I couldn't agree more.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Cross.

We're going to go to the Liberals with MP Baker. Just before I do that, I want to inform members and thank Mr. Michel Leblanc since he has to leave here. He has a cut-off in two minutes.

Thank you for coming before our committee.

Now we go over to MP Baker for five minutes.

Go ahead, please.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Mr. Chair.

Thank you to all of the witnesses for being here.

I'm going to start with the Équiterre representatives.

I would remind the members that, in response to the 2023 budget, Équiterre said that it welcomed the decarbonization of the country's electrical grids and supported federal assistance in doing so.

How will this support the growth of a clean economy? Can you talk about how important these investments are to Canadians?

[Andréanne Brazeau]

Thank you for the question.

It will help the Canadian economy in a number of ways.

First, by decarbonizing our energy system, we're making huge environmental gains and curbing climate change here at home. That prevents a whole host of repercussions we are well aware of.

If we dig a little deeper into what's been announced, the conditions put in place are extremely worthwhile. For example, we will have to ensure that the wages are competitive and workers have training opportunities. These are very interesting factors that contribute to higher quality government programs.

There's also the offer to assist provinces only if they can show that electricity decarbonization projects will reduce the bills. It's a strong social measure to combat the rising cost of living, which is still going up.

For all these reasons, this program makes a lot of sense and will certainly help transform the Canadian economy for the better.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much.

Many Conservative members have attacked the pollution pricing system that our government has put in place.

Do you want to respond to their criticism of the pollution pricing system?

[Andréanne Brazeau]

Yes, absolutely.

Any pollution should come at a cost. Pollution has a huge impact on society, so putting a price on pollution only sends the right message about the changes that need to be made in our society. Specifically, the carbon tax has been shown to be the most effective way to reduce greenhouse gas emissions. From an eco-taxation point of view, it's therefore crucial that Canada have a system like this. Quebec, on the other hand, has its carbon market.

The fact is, the United States still doesn't have a tax like this and has made investments of a more industrial nature. That's their choice, of course, but it's not powerful like something as effective as a carbon tax. It's therefore essential to keep the carbon tax, but in 2023 that's not really up for debate.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

It shouldn't be, anyway.

I have just one minute left, so I'm going to continue on the same subject.

Why is the U.S. approach less effective than a carbon tax?

[Andréanne Brazeau]

First of all, I'd like to add that Canada's carbon pricing system is also a good thing because the money goes back into Canadians' pockets. That's another very interesting point.

With respect to the United States, most of their commitments are massive and very significant. It's really great that they have finally taken this step, but they don't have many regulatory measures. These are mostly investments in incentives. They're using the carrot much more than the stick. Once again, it's far more efficient to send a price signal on emissions, like we're doing with carbon pricing.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Yes. It's important to change not only how industry behaves, but how we all behave, and to make sure that we do less damage to the environment, right?

[Andréanne Brazeau]

Absolutely. Including people in this process also means businesses must then adapt to respond to what people are asking for. Obviously, if a carbon tax is in place and people change their behaviour, it will also encourage the use of less polluting alternatives in return. So we have to look at it from a systemic perspective.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

Now we'll go to MP Ste-Marie.

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

Thank you, Mr. Chair.

I am very sad to learn that Mr. Leblanc has left us. I had some questions for him, but I understand that the Chair and the clerks didn't know that he would have to leave now. We can certainly invite him back.

Ms. Brazeau, Bill C‑47 amends the Canadian Environmental Protection Act. Currently, the federal carbon tax, which is paid by large emitters in the provinces where it is enforced, is to be used to finance green projects in the province where it is collected. If there are no projects at the end of the year, the tax is lost and it goes back into the consolidated fund, if I understand correctly. Bill C‑47 seeks to amend the act so that this money can be put into a fund to be used for future projects. I would like to know Équiterre's analysis of this measure.

Do you think it's a good measure? Does it encourage the oil companies, for example, to take their time? We know that when Ottawa gives money to municipalities for infrastructure work, if it's not done before March 31, the money is lost.

If you don't have an answer now or if you'd like to answer us in writing, you can take note of my question and give us your opinion when you've had time to do the analysis.

[Andréanne Brazeau]

Could you just clarify why the oil companies would be inclined to behave in a particular way in relation to the amendment?

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

In the provinces where the federal tax applies, the tax is paid and it must be used for an environmentally friendly project. Right now, if the project is not completed before the end of the year, the money goes back to the government, if I understand correctly. Under Bill C‑47, that money will be put into funds that will enable these projects to be carried out later.

The question is whether this measure will encourage companies to take their time to develop green projects, or whether this is something that you support. I can ask you again in writing to get your opinion. I'm curious.

[Andréanne Brazeau]

At first glance, given that the target is a 40% to 45% reduction by 2030—it's now 2023—I think you have a good read of the issue. I also believe that we shouldn't be allowed to postpone projects, at least not too far into the future, if we want to give ourselves a chance to meet those targets.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

Now we'll go to the NDP.

MP Bachrach, please go ahead.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Dr. Lukács, we have this legislation in front of us. Based on that legislation, the government promises to craft regulations, but one of the clauses in Bill C-47 empowers the CTA to also establish guidelines setting out the manner and extent to which the regulations are applied, so now we're kind of two steps away from the legislative process.

Do you have concerns about the CTA essentially getting to write their own guidelines for the manner and extent to which these regulations are applied?

[Dr. Gábor Lukács]

Yes, we do have serious concerns about this, because this would be not just guidelines, as the name claims. When you look at the fine print, this will be legally binding, and legally binding guidelines that effectively alter the meaning, the extent and the way the regulations work.

When you look at proposed subsection 85.12(4), it also circumvents the Statutory Instruments Act, which is a system of checks and balances that ensures that regulations are made properly.

We propose and urge lawmakers to delete proposed section 85.12.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

You were quick to highlight the confidentiality clause in the legislation that prevents passengers or airlines from discussing the matters that are part of the mediation process. The government's view is that passengers may wish to discuss sensitive personal information during mediation, hence the reason for confidentiality. They also say that confidentiality is a common feature of most mediation processes.

What do you make of these arguments?

[Dr. Gábor Lukács]

The arguments are misleading, because this is not mediation. When you look at the process at proposed subsection 85.06(1), the end result is a legally binding order, just like in a court or in any tribunal that issues a regular binding decision.

Mediation is, of course, confidential. There is nothing wrong with that, but once a legally binding decision has been issued, it is subject to the open court principle that is subject to section 2(b) of the charter and, as the bill currently stands, it does, in our view, violate section 2(b) of the charter. It violates freedom of expression. It violates freedom of the press. It creates a secretive process where a binding decision is issued without the media and the public being able to scrutinize how the decision was made, what evidence it was based on and what the reasons for that decision were.

This is unprecedented in consumer disputes.