Finance Committee on May 26th, 2026

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you, Madam Chair.

Gentlemen, thank you very much for being here. I only have five minutes.

One common element in your presentations is the need for the government to review, improve and simplify the ITCs, the clean energy investment tax credits. I think the message is loud and clear, and that's the purpose of pre-budget consultations. That message will definitely be passed along, and I will certainly be doing that follow-up.

I have a couple of things to say—and again, thank you all of you for your presentations. We don't have much time, but Mr. Kabbara, you seem to be the person on the spot, so I'd like to pursue this with you because what you presented is actually quite interesting. You talked very briefly about the pragmatic climate reset. Could you perhaps expand a bit on that? I ask because I don't think you had much time to talk to us about it.

[Moe Kabbara]

It's the reality that when the world adopted the targets.... Actually, this is why I was a bit confused when I was asked earlier about the green agenda. We're trying to push for a pragmatic agenda focused on economics, instead of trying to chase, for example, short-term emission reductions that can actually hurt our competitiveness. The pragmatic climate reset is about truly acknowledging that when the world said it was going to reduce emissions by 45% by 2030, it meant we had to accept that we were going to erase trillions of dollars in assets globally, and there was just no path for that.

Now the world is waking up to that reality. We can sign agreements. We can sign deals. I think there's actually an opportunity for Canada to be a global leader in this space—to acknowledge the challenge of net zero, carbon management and removing or reducing emissions.

It's not easy. It's not easy at all. I don't think we can just paint it as a rosy picture and pretend there aren't economic challenges that affect things like reliability and flexibility. This is why we really need to chart a path that focuses on conserving those things.

I presented why I think doubling the grid.... Right now, it's 82% clean. If we can get it to be 90% clean and it's double, I think most people would say that's a great thing. However, that would not have been permissible under the existing clean electricity regulations. The clean electricity regulations were designed for a 1.5x grid. We're talking about a 2x grid. Not only should the government revisit those regulations, as it has enunciated in its electricity strategy, but it has a duty to, given that the burden of proof for the cost to society has not been properly assessed, and given the level of ambition that was articulated in the strategy.

The pragmatic climate reset is really about trying to figure out what is going to intersect with our other priorities related to the economy and affordability, as well as, increasingly, the geopolitical priorities we have as a country.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

The geopolitical strategy is usually important.

You raised a very interesting question—and we have a bit of time left—that I think is crucial to all of this. If ratepayers have to pay a very high rate, that defeats the purpose.

You talked about restructuring legacy utility debt. You see a role for the federal government in this process. Perhaps you could expand on that a bit.

[Moe Kabbara]

I don't really have anything prescriptive, but this is something we need to be considering because there is a lot of debt sitting on the utility books, with higher interest rates than what we would get at the federal level. Canadians are the ones paying for that through their rates.

We need to think about how we potentially restructure some of these utility debts through some sort of federal program, to basically unlock balance sheets and allow companies and the utilities to borrow to build the big grid that can be reliable and affordable for Canadians.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

I have one last thing. It's not a fair question with the few seconds I have left.

What's your view on data centres? There's a great race to build data centres. AI is growing very fast. Data centres consume huge amounts of energy and electricity. How do we square this circle?

[The Chair, Liberal, Karina Gould]

Answer in 10 seconds or less, please.

[Moe Kabbara]

I don't think we can avoid them. I think we need to plan for them and basically figure out how we're going to accommodate them through our other priorities.

[The Chair, Liberal, Karina Gould]

That's excellent. Thank you very much.

To conclude this hour, I'll turn the floor over to Mr. Garon for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

Mr. Moffatt, naïvely, I'll admit I'm not very knowledgeable about hydrogen and its manufacturing processes, among other things, but I understand there's clean hydrogen, which can be used for the transition, and dirty hydrogen, which is made from oil sands hydrocarbons, in particular.

Can you explain the difference between the two? What makes hydrogen clean or dirty?

[Brandon Moffatt]

Today, grey hydrogen is produced by cracking natural gas, and then you have hydrogen and CO2. It's used in refineries.

Clean hydrogen—what we're focused on—is about taking renewable power off the grid and splitting water to make hydrogen and oxygen. Both need to be either utilized on the spot or converted into something else to be able to move that molecule to the market.

In the case of the province of Quebec, you have a natural resource, which is the power grid. To the conversation earlier, we can actually come off-line when the grid needs our power. The rest of the time, we are a consumer and are part of the consuming base of that power, making clean hydrogen and utilizing the natural resources of the province to make clean hydrogen.

[Jean-Denis Garon, Bloc, Mirabel, QC]

In your brief's conclusion, you say the changes you're asking for regarding the investment tax credit would cost $94 million over 10 years, but that this would be offset by $145 million in tax revenue for the federal government.

How did you get those numbers? Would the new way of calculating the investment tax credit increase tax revenues?

What ratio of those tax revenues would go to the Quebec Government, for example?

[Brandon Moffatt]

In the case of the tax credit, it's a construction credit in the investment. We put the infrastructure to work. We're actually paying tax during the construction phase and during the operation phase. This helps us to pull down the cost of capital and our cost to contract for the offtake of the product. What we're doing is using the credit now but paying it back over time.

From our calculations with an independent economist, it is very accretive to the overall economics. All this money is already in the budget right now. We're just trying to retool the policy to allow us to unlock more and more investment both in the province and in other parts of Canada.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Garon.

On behalf of the committee, I would like to thank our witnesses.

We will briefly suspend while we turn over for our next panel.

[The Chair, Liberal, Karina Gould]

Good evening, everyone. We're going to get started on our final hour this evening.

Before I take a moment to welcome the witnesses, I want to let committee members know that next week we will be beginning the study on Bill C-30. The witness lists are due by 5 p.m. tomorrow, so please make sure you get those to the clerk. The clerks will send out an email reminder as well tomorrow for Bill C-30.

I would like to take a moment to welcome our witnesses.

We have, from the Canadian Craft Brewers Association, Brad Goddard, chair of the policy committee.

From the Conseil québécois du commerce du détail, we have Mr. Damien Silès, chief executive officer.

We have Mr. Tim Tierney, first vice-president, from the Federation of Canadian Municipalities.

From the Union des producteurs agricoles, we welcome Mr. Charles-Félix Ross, general manager, and Mr. David Tougas, coordinator, business economics.

Before we start, I will give you some background information and remind participants of the following points.

Please wait until I recognize you by name before speaking.

For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen you can select the appropriate channel for interpretation: floor, English or French. For those in the room, you can use your earpiece and select the desired channel.

I would like to remind witnesses that committee members may ask questions in either English or French. If you will need interpretation, please take a moment now to prepare your earpiece and select the listening channel you need in advance in order to take full advantage of the time allotted for questions and answers.

That said, we will start with Mr. Brad Goddard from the Canadian Craft Brewers Association.

You will have five minutes.

[Brad Goddard, Chair, Policy Committee, Canadian Craft Brewers Association]

Thank you, Madam Chair, honourable members of the committee and Canadians watching at home.

I want to start with a simple truth that anyone who has ever stepped foot in a taproom already knows: Craft beer isn't just a beverage. It's a community engine. It's a small-town employer. It's a tourism magnet. Occasionally, it's the reason a group of strangers end up debating the merits of socks and sandals at 11 p.m. on a Tuesday night. However, behind that easygoing “pull up a stool” charm is a sector that works incredibly hard—and right now, harder than it should have to.

Across Canada, 1,200 independent craft breweries are facing a challenge that isn't about creativity, quality or consumer demand. It's about a tax framework that hasn't kept pace with the industry it's meant to support. The Excise Tax Act, the backbone of how beer is taxed in this country, still treats craft breweries as though it's 2006, back when flip phones were cool, Western Union was still sending telegrams and the idea of a 500,000-hectolitre independent craft brewery in Canada felt like science fiction. I should add here that a “hectolitre” is just a metric measurement of 100 litres, or two kegs of beer.

Today, the federal definition of “craft” tops out at 75,000 hectolitres. Provinces and the Canadian Craft Brewers Association recognize craft up to 500,000 hectolitres. This gap isn't just a rounding error. It's a steep climb.

Too many breweries hit the top before they hit their stride. To be fair, the federal government has taken meaningful steps. In April 2024 and again in April 2026, craft breweries received a significant excise reduction on their first 15,000 hectolitres of production. That was welcome news. We applauded it then as we applaud it now.

However, here's the catch: More than 60% of all the craft beer in Canada is brewed by breweries producing more than 15,000 hectolitres. These are the regional anchors—the ones hiring dozens of people, investing in equipment, building destination taprooms and drawing tourists into communities that don't always have a lot of tourists. Under that current framework, these breweries receive limited benefit. Their ability to grow is constrained not by ambition or demand but by a tax schedule that punishes success.

Let me put it into perspective. A craft brewery producing 25,000 hectolitres in the United States pays about $200,000 in excise. In Canada it's $445,000. That's more than double and more than half of a brewery's net profits. If you scale that up, at 100,000 hectolitres a U.S. craft brewery would pay $850,000 and a Canadian craft brewery would pay $2.8 million. As a brewery grows, so does the disparity and so does the disadvantage.

Meanwhile, craft breweries here at home are doing everything right. They invest locally. They hire locally. They buy Canadian ingredients. Their cost inputs are three times higher than those of large foreign-owned breweries, yet they still produce 17% of all the beer we enjoy as Canadians while generating 75% of the jobs.

We have 30,000 people working in our sector, 9,000 of them in tourism alone. This sector punches far above its weight. It contributes $1.7 billion to Canada's GDP. It anchors rural communities. It keeps money circulating in Canada rather than flowing out of it. It does all this while navigating U.S. tariffs and global trade pressures that don't exactly make life easier.

What are we asking for? We're asking for something simple, something fair and something modern. We're asking that the Government of Canada adopt a progressive, growth-oriented excise rate schedule that allows breweries to grow to 500,000 hectolitres to help smooth out the climb towards the top excise rate. We're asking for the temporary relief on the first 15,000 hectolitres to be made permanent. We're also asking for a modernization of the rates between 15,000 and 500,000 hectolitres so that scaling breweries—the ones creating jobs, building communities and strengthening domestic manufacturing—can continue to do exactly that.

This isn't a handout; it's a hand-up. It has the potential to be revenue-neutral for the government. An economic impact study that we developed with MNP has shown that every dollar saved goes straight back into equipment, growth and the people of Canada. More importantly, it aligns federal policy with provincial definitions, industry realities and the economic priorities of a government that has said clearly that it wants a stronger, more resilient Canadian economy that works for everyone. Craft breweries are ready to help that economy. We just need a tax framework that helps us grow.

Thank you very much.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Goddard.

We'll now go to Mr. Silès from the Conseil québécois du commerce du détail .

You have the floor for five minutes.

[Damien Silès, Chief Executive Officer, Conseil québécois du commerce de détail]

Thank you, Madam Chair.

Members of the committee, thank you for inviting me.

My name is Damien Silès and I'm the chief executive officer of the Conseil québécois du commerce de détail, or CQCD.

The CQCD represents most Quebec retailers of all sizes and in all sectors. We're here today to draw your attention to a now-major issue for the future of Canadian retail: the rapid rise of ultra-fast fashion and foreign platforms, such as Temu and Shein, offering merchandise at very low prices.

Let me be very clear: The CQCD is not asking for protectionism. We're just asking for a level playing field. Canadian retailers are okay with competition. They innovate, invest and adapt, but they're asking that businesses that sell massively to Canadian consumers be subject to the same rules, obligations and standards, and that's not the case.

Ultra-fast fashion is no longer a marginal phenomenon. For a while, many thought Temu and Shein were just a fad, but our data shows the exact opposite. By April 2026, 30% of those contacted in Quebec said they'd purchased on Temu in the last six months, and 19% had purchased on Shein. Moreover, the frequency with which people make purchases on these platforms is sharply increasing. It's no longer occasional impulsive purchases; we're talking about recurring purchases, sometimes weekly.

There's a significant competitive inequity. Canadian retailers have to comply with an important set of obligations. They pay taxes, meet safety standards, enforce labelling requirements, bear environmental costs and manage returns, product recalls, regulatory compliance and traceability. The problem is when foreign platforms can access the Canadian market without the same level of constraints or controls. This creates a concerning situation where compliance becomes a competitive disadvantage.

Consumer safety is also at stake. Trade is based on a key element: trust. When a consumer buys a product in Canada, they must be able to assume it's safe, compliant, traceable and properly labelled. However, many investigations have raised concerns about certain products sold on foreign platforms, including potential presence of prohibited substances, non-compliant children's products, recall issues, poor traceability, and so on.

Again, the rules aren't the issue; it's their uneven application. No matter where a platform is, if they're selling to Canadians, they have to meet Canadian standards.

We're also facing a major environmental issue. Ultra-fast fashion is based on a simple model: high volume, very low price and quick renewal. As a result, there's more waste, more packaging, more deliveries and more unsustainable products that are naturally more difficult to recycle. The environmental costs of ultra-fast fashion are still largely passed on to people.

Now, allow me to explain why federal intervention is necessary. This issue goes beyond provincial boundaries, as it concerns international trade, customs, taxation, product safety, competition and consumer protection. In short, this is a federal responsibility.

We have three recommendations to make. First, ultra-fast fashion must be legally defined. There's no clear definition at the moment. Without a definition, it's difficult to target practices, carry out inspections, provide oversight and apply appropriate measures. We are therefore asking for a legal definition that clearly identifies this business model. We want a targeted definition, not a measure against the entire fashion industry.

Second, federal inspection and enforcement capabilities must be strengthened. Canada already has rules. The real issue is often the capacity to enforce them. We're asking for additional resources to increase inspections, strengthen customs control, improve coordination between agencies, further verify product compliance and clarify platforms' responsibilities.

Third, we recommend launching a national awareness campaign. Consumers are attracted to low prices, but many are still unaware of the real consequences of this model, particularly regarding product safety, product lifespan, the environment, privacy and local businesses. We're not proposing to limit consumer choice, but rather to better inform the consumer.

In conclusion, I'd like to leave you with a very simple message: Canadian retailers are not asking for special treatment; they're simply asking for fairness. You can count on the support of the CQCD.

Thank you very much for giving me the floor. I'll be happy to answer questions later.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Silès.

We will continue now with Mr. Tierney for five minutes.

[Tim Tierney, First Vice-President, Federation of Canadian Municipalities]

Thank you, Madam Chair and committee members.

First of all, I'm here representing the Federation of Canadian Municipalities. We represent 2,000 communities across the country from coast to coast to coast. FCM is the national voice for Canada's municipalities across the country. We also deliver the green municipal fund, in strategic partnership with the federal government, and numerous international development programs that help advance Canada’s trade diversification and broader geopolitical objectives.

My name is Tim Tierney, and I represent the Beacon Hill-Cyrville ward.

I am a proud city councillor here in Ottawa and the incoming president of FCM.

Canada is at a defining moment, and municipalities are here to rise to the challenge. We are building and maintaining roads, water and sewer systems, transit, and community infrastructure, and we're enabling new housing and economic growth. We are also responding every day to the growing problems of the homelessness crisis that's unfolding within communities of every size from coast to coast.

We want our message here to be clear: The 2026 budget must strengthen the partnership between all orders of government, invest at pace and scale in the local infrastructure and help us power Canada. We must also work together to end the homelessness crisis.

Budget 2025 took an important step forward through the creation of the build communities strong fund. It recognizes what municipalities have long understood: that local infrastructure is the backbone of the Canadian economy and is essential to meeting national priorities. Municipalities are ready to build. Be it building housing, strengthening our trade corridors, improving productivity, supporting defence resiliency or enhancing climate resilience, success depends on local infrastructure. Municipalities own and maintain 60% of Canada's infrastructure, yet we receive 8% of the total tax revenues collected by Canada.

The winding down of the investing in Canada infrastructure program creates an urgent need to renew long-term investment. Specifically, FCM is calling for the federal government to scale up dedicated municipal infrastructure investments through the build communities strong fund and to work with the provinces and territories to maintain and expand the infrastructure previously delivered through the ICIP.

We specifically recommend the significant acceleration of the direct delivery and community streams of the BCSF, which will ensure that the partnerships from provinces and territories are dedicated to municipal allocations. Canadians know that the net of the infrastructure is offset by the existing available funding that is delivered to communities. This matters because the infrastructure delivers the results. Every dollar that's invested in municipalities generates $1.8 billion of impact to the Canadian economy and supports 9,000 jobs.

Rural and northern Canada cannot be left behind. With more than $108 billion in rural assets in poor or very poor condition, securing dedicated funding for rural and northern municipalities under the build communities strong fund is essential.

When it comes to homelessness, this conversation is not only about economic growth and job creation; it is about the quality of life and dignity of Canadians. Homelessness across Canada has increased by 20% in the last decade. In rural, northern, remote, suburban and urban communities alike, local governments are responding to the growing encampments, the rising shelter demands and the increased pressures on emergency community services.

Mayors and councillors are doing everything they can, but municipalities can't solve this on their own. Canada needs a renewal of the national housing strategy, with a much stronger focus on homelessness and homelessness prevention.

This national crisis requires an ongoing national response. Communities need stable and predictable funding. The Reaching Home program should have an additional $3.5 billion in permanent annual funding indexed to inflation.

Stopping people from falling into homelessness is the first key to success, and it's why we're calling for a renewal of investment in non-market housing, supportive housing, portable housing benefits, and prevention-focused programs. To tackle homelessness, we must recognize that housing, health care, mental health, addictions, justice, and social services are all connected. Municipalities are ready to work with the federal government, the provinces, the territories, indigenous partners and community organizations to make sure all Canadians have a place to call home.

In conclusion, budget 2026 is an opportunity to match local ambition with national leadership by investing in local infrastructure through the build communities strong fund.

I look forward to any questions you have for us today.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Tierney.

We'll now continue with Mr. Ross, from the Union des producteurs agricoles.

[Charles-Félix Ross, General Manager, Union des producteurs agricoles]

Madam Chair, members of the committee, thank you for welcoming us as part of the pre-budget consultations.

The Union des producteurs agricoles, or UPA, which represents Quebec's 28,000 agricultural businesses, has a fairly simple message today: Canada's agricultural sector is strategic, but it remains underfunded relative to its importance.

Our agricultural producers feed the population, work the land, support regional economies and must also cope with growing instability, whether it be market volatility, trade and geopolitical tensions, rising production costs, extreme weather events or ever-increasing investment needs.

In this context, our main recommendation is that the federal government significantly increase its support for the agricultural sector. This is not simply a matter of achieving a budget target, but of ensuring that Canadian producers have a level of support comparable to that provided by other countries to their own agricultural sectors. Today, Canada is lagging behind in this regard. Increased funding and a structured action plan are needed. Without such an increase, agricultural businesses across the country will continue to lack the tools needed to absorb shocks, remain competitive and invest in innovation, productivity and climate change adaptation.

Beyond this general recommendation, our brief highlights three key priorities. The first concerns risk management.

Production costs have risen sharply in recent years. Average spending on crops and livestock rose from about $202,000 in the 2015-20 period to nearly $299,000 in the 2021-24 period, an increase of almost 50%. Given the situation, cash flow has become a central issue. That's why we're asking that the interest-free portion of the advance payments program be permanently set at $350,000. This measure would give businesses the predictability they need, rather than having to renegotiate the threshold year after year.

We are also calling for a complete review of the AgriRecovery framework, which has been in place since 2008 but remains too slow, unpredictable and inconsistent in its application. In the face of a disaster, assistance for farms must be immediate and equitable, regardless of the province affected.

Finally, we would like to see the AgriStability program enhanced by raising the trigger threshold to 85% of the reference margin and making the 90% compensation rate permanent, as was offered in 2025. The program should also include a minimal support level to ensure basic assistance for businesses that have been facing difficult circumstances for a number of years.

Our second priority focuses on research, innovation, climate adaptation and organic agriculture.

The agricultural sector needs strong, independent and applied public research. Budget cuts and the closure of Agriculture and Agri-Food Canada research centres are undermining the sector's ability to find concrete solutions to address climate change, improve practices and ensure the competitiveness of Canadian farms.

Therefore, we call on the government to reconsider its decisions, strengthen research and technology transfer—particularly through initiatives such as living laboratories—and provide more support for climate change adaptation programs.

We also call for a federal cost-sharing program for organic certification, as well as permanent funding for the organic standards review process. If Canada wants to develop this sector, it must support its foundations.

Our third priority concerns the workforce, investment, succession and private forestry.

Agricultural employers who host temporary foreign workers face increasing housing requirements. The Union des producteurs agricoles supports improved housing conditions, but it calls on the federal government to provide financial support to producers. We also propose that these housing units be recognized as farm buildings for tax purposes, particularly to allow for the recovery of the goods and services tax on materials and supplies.

On the tax front, we propose a 40% tax credit for small agricultural businesses that invest in equipment. More than 43% of Canadian farms have annual gross revenues of less than $50,000. These businesses need leverage to modernize their equipment, improve their profitability and continue to expand.

We also call for the transfer of farm assets to a nephew or niece to receive tax treatment comparable to that applicable to a child. The reality of farming has changed: Many businesses are now run by more than one family, and succession doesn't always follow a direct line of descent.

We also call federal tax assistance for food donations to be harmonized with that of Quebec in order to more fairly recognize the social contribution of producers.

Finally, we support the creation of a personal silvicultural savings and investment plan for Canadian forest owners to support the sustainable management of private forests.

In conclusion, budget 2026 must recognize that agriculture is not a secondary expense. It's an investment in food security, the vitality of our regions, climate adaptation and Canada's economic resilience.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Ross. That concludes your speaking time.

We will now begin the question and answer period.

Mr. Lefebvre, you have the floor for six minutes.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Madam Chair.

I'd like to thank all the witnesses who are with us today for participating in this question and answer period.

My first question is for Mr. Goddard, from the Canadian Craft Brewers Association.

What is the impact of the automatic annual increase of the alcohol tax on producers and consumers?

[Brad Goddard]

There is an impact for the 2% annual increase. For the brewery I work at, the increase claws back all of the reduced excise I would pay earlier in the year, because excise is progressive. That 2% escalator has an impact. The impact is smaller if breweries are quite small, but as the regional craft breweries grow, the impact is a bit more profound.

Saving the 2% escalator probably wouldn't be a big enough change to the Excise Tax Act to truly help grow independent craft breweries.