Finance Committee on Oct. 5th, 2026

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you very much.

I'll move to you next, Mr. Jarvis, if I could.

There is direct and then there is indirect taxation. Of course, the government increases tax and takes more and more of Canadians' hard-earned money.

By the way, Professor Grégoire, you're saying there's a warning that it could be permanent. I would not call it a warning. I'd call that some good news, because Canadians are overtaxed and we pay way too much.

On that, Mr. Jarvis, there's also indirect taxation. One thing that has happened is that the bond yields have increased. This is largely because governments have required more and more capital, which has driven up the cost of capital. It has made life more expensive. For example, someone who has a $500,000 mortgage who's renewing this year will pay $6,000 more for it than they did just five years ago. Don't you think we need not only to reduce taxes but also to reduce government spending?

[Noah Jarvis]

Yes, I absolutely do. In our pre-budget submission, we outlined a number of areas in which the government can reduce spending. If this government had stayed within the spending plan it had tabled in budget 2025, it wouldn't be spending $6.5 billion more than what was budgeted. We'd be able to afford this gas tax cut permanently without increasing debt on Canadians.

Absolutely, there are many places for the government to cut wasteful spending. We outline places for the government to cut wasteful spending pretty much on a daily basis.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

That's perfect.

I think one of the things we agree on, which I believe both your organization and our team released statements on, is Alto. Initially, it was supposed to be a $50-billion project. Then it went to $60 billion and then $90 billion. Now their own budgetary watchdog, if you can believe this, put the number at $110 billion. How do you think the government missed an estimate by close to 50%? Do you have any comments on that?

[Noah Jarvis]

This is what you can expect with high-speed rail projects. Around the world, we've seen high-speed rail project budgets balloon out of control. California's high-speed rail project was supposed to cost $33 billion. It has ballooned up to $126 billion and has a 19-year delay. A similar thing happened with the HS2 project in the United Kingdom.

High-speed rail projects tend to go over-budget, and Canadians just can't afford this $90-billion or $113-billion high-speed rail project when this government's debt has hit $1.4 trillion. This government needs to work on cutting wasteful spending, and one of the big areas in which it can do that is in cutting the Alto project.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

There are areas there. There are also billions of dollars that are spent by this government every year on consultants and billions of dollars wasted on corruption and padding of Liberal insiders. Don't you think that is the right direction to go in as opposed to raising the gas tax on hard-working Canadians? I would like anyone at this table to go to the single mom who's trying to get by—

[The Chair, Liberal, Karina Gould]

Mr. Lawrence, I would remind you to use parliamentary language, please.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

What did I say that was unparliamentary?

[The Chair, Liberal, Karina Gould]

You made an accusation of corruption and lying. That's not parliamentary.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

That's completely...no. This government is corrupt, and I'll say it again.

[The Chair, Liberal, Karina Gould]

Mr. Lawrence, I'd like you to use parliamentary language, please.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

This government is corrupt.

Thank you.

[The Chair, Liberal, Karina Gould]

That concludes your time. Thank you.

Mr. Turnbull, go ahead.

[Ryan Turnbull, Liberal, Whitby, ON]

It's great to be here. I really appreciate the witnesses, who have different views. We've heard one witness say that this is not the best measure, because it may not be targeted appropriately. We've heard another group suggest making it permanent. Another witness said that we should question the duration. I appreciate the variety of perspectives we're getting today.

I want to start with Mr. Au.

I want to follow up on your logic when you said it would be about 34 weeks at the earliest for the prices, the Strait of Hormuz and the supply chains to normalize. I think you had said, when you were adding the timeline up, that the mine removal process had already begun and had finished in August. You then said that it might be necessary again for another 20 weeks. Were you including an additional 20-week mine removal process in the 34 weeks? Can you clarify that?

[Shiu-Yik Au]

Yes, that's correct. I included another set of mine removals. In the event that Iran mines the Strait of Hormuz again, there would need to be another demining process, which could take 20 weeks and would add to the total, making it about 34.

[Ryan Turnbull, Liberal, Whitby, ON]

That's a hypothetical. You don't know that it's going to be necessary to do another 20 weeks of mine removal, do you?

[Shiu-Yik Au]

No, I do not.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay. At the earliest, it could be 14 weeks. If the mine removal process had already been completed in August, then in fact, it could be as little as 14 weeks if that were not necessary again. Is that true?

[Shiu-Yik Au]

It could be much earlier depending on the favourability of positioning, logistics and peace treaties.

[Ryan Turnbull, Liberal, Whitby, ON]

Who would you say knows more about what's happening in the area? Would it be you, or would it be the federal government through the Department of Foreign Affairs?

[Shiu-Yik Au]

The people who would know most would be Mr. Trump and Mr. Netanyahu. Whether they choose to engage in peace is unlikely to be known by anybody, including our Minister of Foreign Affairs. I suspect they have better knowledge than I do.

[Ryan Turnbull, Liberal, Whitby, ON]

We understand the unpredictability of certain leaders, especially the one to the south of us, and we understand that those risks and the unpredictability are real, but I think the Government of Canada sees a best-case scenario similar to yours that is closer to the 14-week timeline. This provides some rationale for offering about four more months of this temporary relief before starting to phase back in the excise tax on fuel.

Just in case it took longer to normalize in terms of prices.... We know that oil prices operate on a futures market, so even when things start to normalize, wouldn't the prices start to decrease in anticipation of things normalizing as steps are taken and stages are reached?

[Shiu-Yik Au]

There are two markets. There's the futures market, which you referred to, and then there's the spot market, which is the actual transaction price. You are correct that futures markets do predict and anticipate what will happen in the future, but spot markets can take a while to catch up to the actual situation that the futures markets are predicting.

[Ryan Turnbull, Liberal, Whitby, ON]

Basically, we're proposing to extend this measure until the end of January 2027, which would be the full pause or full suspension, and then phase it back in over the next two months at 50% of the rate. That would be the best-case scenario to me.

Based on the parliamentary debates on this topic, there hasn't been much push-back on the suspension of the fuel excise tax at this time. In fact, in the House, all parties supported the adoption of a motion that programs today's proceedings to get this done today. If we needed to extend it, there would probably be the will of all parties, judging from the past. It would be fairly easy to extend if it were necessary, wouldn't you say—judging from that?

[Shiu-Yik Au]

I'm not a political expert, but if there continues to be unity among the members of Parliament and here in Canada, then I suspect it could be a fast process.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay, that's great.

Madam Chair, do I have more time? Okay.

Maybe I'll ask Mr. Genest-Grégoire a question.

You talked about the groceries and essentials benefit as being a better targeted measure because.... I understand that you're saying the excise tax on fuel is regressive in that it gives a tax break to those who use more...who burn more fuel. Those tend to be higher-income households; I think we all know that. However, we have done both. We have enhanced the groceries and essentials benefit, which was the GST rebate previously. We've done that while suspending.... Therefore, we've done both a progressive measure and a regressive measure—