Evidence of meeting #33 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investments.
A video is available from Parliament.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
Wow. That's a significant divestment from China over this time period.
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
We haven't significantly divested. We allowed the fund to grow around.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
That's a distinction without a difference.
You've gone from 12% to 5%. Why?
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
Largely, it's about some of the broader geopolitical concerns. When you have the two largest economies in the world in what is essentially an economic trade war, it adds a level of uncertainty and investment concern. We've paused making a lot of more significant investments in China.
As the fund continued to grow by, say, $150 billion over the last two or three years, you would have seen that percentage lower.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
Whether the allocation is done by selling in one place and buying in another, or simply by not buying somewhere—call it attrition or however you want to put it—it's still a conscious decision in the risk assessment of your global portfolio.
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
That's correct.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
It is the assessment of Canada's pension investment board to de-risk by way of....
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
I would say it's maintaining our optionality.
I will make a distinction. A number of other institution investors made a point to say they were stopping investments in China or they were divesting. We've never done that. We've continued to invest in China, in terms of maintaining.... There's buy, hold and sell. We bought and we held.
One way or the other, we have a strong investment sentiment that China will emerge as the largest economy. If we think of the best interests of contributors and beneficiaries.... Let's say I'm here—hopefully I'm not—testifying 15 years from now. If your successors were here and we had not maintained an optionality, and China became the largest economy in the world and we had held back, then they would say, “Shame on you.”
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
I don't think any of us, certainly not on this side, have questioned the wisdom of the investment decisions you're making. It's curious, given the signals from the government on a strategic partnership with China, that Canada's investment board has perceived investment risk at the same time.
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
We've maintained our optionality. It's very important.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
In response to some earlier questions, you talked about risk associated with high-emitting industries. I think you were asked about how you measure these kinds of risks. In fact, you have your own note on ESG policy. It's been noted, though, that rating these kinds of measurements is a very scattered thing, in that an ESG rating usually has less than a 50% correlation between rating agencies, whereas credit-rating agencies usually correlate at virtually 100%.
How does an investor know what they're doing if they can't even quantify these risks that they say are of concern to them?
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
It's fortunate that we're a direct investor and have sophisticated teams. When we make a specific large investment in an energy company, we engage with the board and the management team to understand the risks more directly. We're waiting for broader standards, but in the meantime, we have our own approach.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Kelly.
Thank you, Mr. Leduc.
My Liberal colleagues have been kind enough to give me a round, so I'm going to ask some questions.
Mr. Leduc, thank you so much for being here.
I want to give you the chance to expand on the uncertainty we're seeing in the global market and how the CPPIB is responding to that. Perhaps you could also talk about what is making Canada attractive at this moment.
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
Yesterday was a personal milestone for me. It was 35 years ago that I started working consistently in the intersection of public policy and global finance, so I hesitate to say that we've never seen it as bad as it's been. I've lived through the global financial crisis and a number of things. I will say, though, I've never seen it as bad as it is in terms of the global turmoil and the uncertainty.
I said in my opening remarks that we need to invest globally not only for managing the downside risk, for the resilience of the portfolio, but also for seeking the full universe for higher returns. Therefore, diversification is not an option for us.
The other side of it is that there's no place to hide. If we have to be globally diversified, with what is going on in the world today, there is no safe harbour. Everything is relative. All this to say that if you look at the different safe harbours, Canada is increasingly looking like one of those places that, although it's not free of risk, I would say, on a relative basis, it might be a friendlier place for global investors to invest.
Liberal
The Chair Liberal Karina Gould
That's great. Thank you.
I was in Washington earlier this week at the World Bank spring meetings. A comment that came out during those conversations was about how emerging markets are trying to attract Canadian pension plans to invest, because they have so much confidence in them. They kind of know that when a Canadian pension plan is investing, it's because it's a safe investment.
On that, my colleague was asking you a bit about transparency for Canadians. You didn't have a full chance to answer that. I think it's really important for Canadians, particularly in this moment of global uncertainty and worrisome outlooks, to hear about how CPPIB is managing its money and how they can have confidence in those investments. Can you talk a little more about the work you're doing in that regard?
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
Sure. Like every other commercial enterprise, we're trying to leverage social media to reach people where they're at. I mentioned that we have to hold public meetings. We're working harder to attract the highest levels of participation.
Recently, we had two sessions in Alberta. Combined, between the two meetings, we had over 500 people. That does not seem like a lot, but when I started doing them, sometimes someone literally would walk in, grab a donut and leave. Now the interest is much higher.
We're working hard through retirement groups and unions for them to hear the story, ask us questions and hold our feet to the fire. We're very judiciously using public service announcements to try to deal with some of the myths. We try to do more activities in November, because that's financial literacy month.
We're looking at greater opportunities to reach Canadians where they're at.
Liberal
The Chair Liberal Karina Gould
That's great.
The CPP is so important for Canadians' retirement security. One of the things the Liberal government did, going back to the 2015-19 period, was, as Mr. Leitão mentioned, to create CPP2. As someone who was formerly young, I was very excited about that, because it meant greater retirement security for young Canadians moving forward. I'm wondering, recognizing that Quebec is outside of this, if you can comment on the importance of having the rest of the provinces stay within the CPP and how important that is for the retirement security of all Canadians.
Senior Managing Director and Chief Public Affairs Officer, Canada Pension Plan Investment Board
If I could use the current debate in Alberta as an example, that was a moment of truth for CPP Investments. One of our strengths and one of our inherent advantages is certainty of assets, because it's a compulsory plan. If you work in Canada in a participating province, you have to join it. Also, there are no redemptions. That means we can take on illiquidity risk, as one example.
When Alberta started this debate around maybe leaving the CPP and creating their own plan, it was a bit of a wake-up call. A province can leave and take with it millions of contributors and beneficiaries. The provinces are so critical to staying engaged and to feel part ownership, if I can use that word, in the Canada pension plan.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Leduc. I appreciate that.
We're going to continue with Ms. Cobena.
Mr. Hallan, are you taking her place? Please continue.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Chair, I'd like to take this time to move a motion that I had tabled before. I move:
That, given that Canadians are facing rising fuel costs that are increasing the cost of living for families and the cost of doing business across the country; That higher global oil prices have resulted in significant additional revenues to the federal government, including increased income tax revenues from the oil and gas sector; That every $10 increase in the price of a barrel of oil is estimated to generate approximately $2 billion in additional federal revenue; That current oil prices remain substantially above pre-war levels, resulting in billions of dollars in additional annual federal revenues; That the federal government is therefore collecting more in additional revenue from higher oil prices than it would cost to provide relief to Canadians by suspending federal fuel taxes; The committee recommend that the government immediately suspend all federal taxes on gasoline and diesel, including the federal fuel excise tax and the goods and services tax, for the remainder of 2026; The committee further recommend that the government eliminate the clean fuel standard charge and industrial carbon pricing as they apply to fuel costs; And that the chair report this to the House at the earliest opportunity.
We've seen, after 10 years of this government, that Canadians now are in a very tough spot. In fact, Canada has the highest food inflation in the entire G7. A study that we're currently doing in this committee shows that Canadians also have the highest household debt in the entire G7. We have a shrinking economy. We see this reflected in the amount of food bank usage. Food bank usage has doubled under this government. In fact, 2.2 million Canadians are going to a food bank every single month. If I talk about my riding alone, our Salvation Army's food security program usage has gone up 500% because of the cost of food. Of course, we're seeing increasing gas prices.
We announced that we would like to see all federal fuel taxes eliminated for 2026. Those three taxes include the excise tax, the GST and, of course, the Liberal fuel standard. All in all, this would be a savings of 25¢ per litre for Canadians, which roughly works out to about $1,200 in savings for a family.
Compared to the Americans, we pay about 20¢ more per litre than the Americans do, and a big part of that has to do with federal fuel taxes. Yesterday we tried to pass a motion in the House of Commons. Of course, the Liberals voted that down. This is just another chance for Canadians to get relief at the pumps, which is the ultimate goal of what we're trying to do. The Prime Minister stole our idea, of course, but as typical Liberals, they only implemented one-third of the entire ask of the Conservatives.
Only the excise tax was removed. We're asking for the GST as well as the Liberal clean fuel standard to be removed as well. Comparatively, where the Liberals are saving Canadians only 10¢ per litre, our plan would save Canadians 25¢ per litre. This should be a very straightforward, common-sense thing to do for Canadians who are struggling with the cost of living under this government, a cost of living crisis, after the last 10 years, that we haven't seen before in this country. The numbers show that Canadians are not doing well right now. This is one more chance we're giving to the Liberals, one more chance that we can show some relief to Canadians at the pumps so they can save 25¢ per litre. I hope we can get to a vote quickly. Let's get this done for Canadians.
Thank you.
Liberal
The Chair Liberal Karina Gould
Seeing as there is no one who is looking to intervene, we'll move to a vote on this motion.
(Motion negatived: nays 5; yeas 4)
Liberal
The Chair Liberal Karina Gould
We will continue with the meeting.
Mr. Hallan, you still have the floor. You'll pass it to Mr. Kelly.
Please go ahead.
Liberal
The Chair Liberal Karina Gould
We're just going down the line.
Ms. Cobena, please go for it. You have five minutes.