Evidence of meeting #43 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.
A video is available from Parliament.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
I see that the chair is about to cut you off, but we'll come back to this on my next turn.
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
Perfect.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Garon.
We'll continue now with Mr. Genuis for five minutes, please.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Professor Pineault, you've advocated an excess profits tax, as you called it, targeted at a specific industry. I wonder if you believe Canada should have an excess profits tax or windfall profits tax in general applying to all industries, or if you advocate it only in this particular case.
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
From a general point of view, I think that an excess profits tax might be interesting, but it might create distortions in the economy whereby firms will try to work a way around it and not declare these profits. That's the hard part.
Conservative
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
Right now we have an opportunity—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
—that an excess profits tax on industries important in Ontario and Quebec might have distortionary effects, but you're less concerned about an excess or windfall profits tax applied to an industry in Alberta. Is that correct?
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
No, it's not correct. I'm looking at a sector, not a province, and I'm looking at a very specific conjuncture.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Right, but it's hard to miss the implications, isn't it? There are global shocks and events that can affect other industries. We saw with the COVID pandemic, of course, a significant impact on the pharmaceutical industry and on various technology companies. Some people did very well and some others much less well as a result of dramatic changes in response to an event that was not generally predicted.
Did you advocate a windfall profits tax on certain technology platforms or pharmaceutical companies at that time, sir?
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
There are two things. First of all, the Canadian government did have a windfall profits tax aimed at the insurance sector and the banking sector during that period. Second of all, it's the size of the windfall here that's significant. It's about 4% of the GDP. If something comes up at 4% of GDP, I will advocate a windfall tax—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Sir, you've come before this committee, and you have advocated a specific tax targeting an industry. You haven't advocated a general policy on windfall profits. You have advocated one for a specific industry. We didn't hear from you about technology platforms or about pharmaceutical companies. You've used an example that relates to some fairly unique circumstances involving the financial sector within federal jurisdiction. Regardless, I'm talking about your positions. You chose to come here today targeting one specific sector instead of advocating a general economic principle. Why is that?
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
It's because of the size—4% of GDP—and because of the refusal to invest that windfall into innovation, jobs or expanding production, which are things that the pharmaceutical and tech sectors do.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
You are advocating a windfall profits tax that you see as responsive to specific decisions around investment.
Do you think decisions around investment in this sector have something to do with federal policies, including the kinds of policies that you're advocating? Do you think that we would be seeing more investment if we didn't have the kind of anti-energy policies promoted by this government and advocated by you that deter investment?
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
The decision to invest in the oil sands is tied to the structure of the sector, to the price of getting that oil out, to the specific physical aspect of this oil and to general market conditions. This is not something—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
The general market conditions are that the price goes up and the price goes down. The problem is that investors take a risk on the price sometimes being up and sometimes being down. In cases when the price is up, if you have advocacy for targeted taxes on specific industries, that obviously impacts investment decisions.
Sir, let me ask you another question. If you support windfall taxes, then can I assume you would support a windfall subsidy for the same sector? Suppose that some global shock caused a significant drop in the price of oil. Say new supplies suddenly opened up because of changes in technology or geopolitical events. Would you, in response to those events, advocate a windfall subsidy to the same sector that you want to see a windfall tax on?
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
Given the productivity and competition issues of our oil sector, we already are subsidizing it quite a lot—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
The bottom line is that you just don't like the sector.
Professor of Sociology and Environmental sciences, Université du Québec à Montréal, As an Individual
No, not at all. It's a specific part of our economy—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
You oppose a subsidy, and you support a windfall tax. If you would justify one, you would have to justify the other, if you're justifying it on the basis of windfall events, but you're not justifying it based on windfall events, because windfall events impact every other sector.
Frankly, this is why Albertans are generally frustrated with the federal government. It's this kind of discourse. It's the singling out of one industry that's so important to our economy in Alberta. It's the arbitrariness with which you find an excuse to justify these kinds of attacks on our industry and our economy.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Genuis. That concludes your time.
We'll continue now with Mr. MacDonald for five minutes.
Liberal
Kent MacDonald Liberal Cardigan, PE
I'm going to go back to Mr. Gleeson.
This is on your argument on developing a phosphate fertilizer processing facility in British Columbia. I come from the agriculture sector, and I do agree with you. It's high time that we had a domestic supply. As you alluded to, we have a supply of nitrogen, and we have a supply of potash, but this is an opportunity for Canadian agriculture to really be self-sufficient in fertilizer production. It's high time we got there.
Can you just summarize what you would ask of the government in relation to the development of this fertilizer production?
Chief Executive Officer, Canadian Phosphate Limited
Yes, the simple request is that the Income Tax Act recognize sedimentary phosphate as an exception to the bedded deposit. We've made the same for potash, gypsum and coal, but we haven't made it for sedimentary rock phosphate. It's one change to the Income Tax Act.
Liberal
Kent MacDonald Liberal Cardigan, PE
Is your company involved in the production of batteries with phosphate?
Chief Executive Officer, Canadian Phosphate Limited
No. Fundamentally, we're rooted in fertilizer. That is our focus for three reasons. One, the technology exists today. Two, the market demand is very clear and obvious. Three, we have the right form of phosphate to produce fertilizer.
There is the potential, based on a new technology we are looking at in Florida, that we could indirectly produce battery-grade phosphate. It's not our primary focus for the reasons I've stated and, in particular, because the technology is not proven at scale. If it is proven at scale, the biggest thing it does make is liquid phosphate fertilizer and battery-grade phosphoric acid. We are a fertilizer company first and foremost.