Government Operations Committee on March 27th, 2024

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

It's a pleasure to pose questions to you today, Mr. Giroux.

Earlier this week, I was speaking with a single mother working full-time along with having a side hustle from home, and a hundred per cent of her income is covering her mortgage. She relies solely on food banks and her credit card, which is maxed out. It's getting extremely difficult. A StatsCan report on food insecurity, released in November of last year, referred to female lone-parent families, or single mothers, as one of the highest groups—at 48%—experiencing food insecurity.

Food insecurity means more than just a child going hungry each week if their parents cannot afford groceries. Kids experiencing food insecurity are less likely to get the nutrition they need to grow healthy and develop, and they're more likely to develop mental health problems. When food prices go up and there's less money in the household budget, there really are significant impacts on health and wellness.

Here is my question to you: Is the intersection of food inflation and the carbon tax impacting the household budget?

[Yves Giroux]

The question is quite valid, but it is something we have not looked at specifically. We have done work on the carbon fuel charge, the carbon tax, but we have not looked in detail at the impact of the fuel charge on food inflation. However, as referred to a couple of times in this committee, the Bank of Canada has looked at the impact of the fuel charge on general inflation and it's 0.15%, if I remember correctly.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Just to be more specific, are the details premised on two people under a roof carrying the load or on one individual?

[Yves Giroux]

Inflation as defined by Statistics Canada refers to the price evolution of a basket of goods and services that is representative of what a typical household will buy.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

The typical household is changing.

[Yves Giroux]

It is changing, as is the basket of goods and services they need or purchase, on average. That's based on surveys and consumption patterns, so Statistics Canada is probably better placed to answer how they design their basket of goods and services.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Perhaps I'll switch gears and speak specifically about Bill C-234.

You've previously reported that Bill C-234 would save farmers nearly $1 billion by 2030. A more recent costing note by your office estimates that the Senate amendments to the bill would cut carbon tax relief to farmers by $910 billion. Is that accurate?

[Yves Giroux]

It is probably millions. I don't have that note in front of me. The Senate proposed several amendments to this bill and it has been referred to a couple of times, so forgive me if I don't know all the details and can't remember them off the top of my head. What I remember is that we were talking about less than $1 billion in the latest version.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Speaking more specifically to the report, it indicated Canadians will pay $486 million in GST on the carbon tax this year and over $1 billion per year in GST by 2030. Do farmers receive any rebates on the GST they pay on the carbon tax?

[Yves Giroux]

My understanding is that farmers are eligible to get back the GST they paid as input tax credits. Also, our analysis for households includes the carbon tax they pay directly and indirectly as well as the GST that's applied to the carbon tax directly and indirectly.

[Shelby Kramp-Neuman, Conservative, Hastings—Lennox and Addington, ON]

Thank you.

I'll pass it over to my colleague.

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

Thank you.

I rarely correct you, Mr. Giroux, but on this occasion I am going to correct you.

The Governor of the Bank of Canada said at the finance committee that 0.6% of inflation is directly a result of the carbon tax. It's the increase that's 0.15%. It would be 0.6% this year if it were removed and an ongoing 0.15%. After the April 1 increase, if we don't cancel the hike, it will be nearly 0.8% of inflation.

I understand you haven't studied food specifically, but if it's reducing the overall basket of goods by 0.8%, it almost certainly has to increase the cost of food. Is that not correct?

[Yves Giroux]

Yes, but I would assume that the impact of the carbon tax on the price of food is probably not significant, even though there have been increases in the price of food. Not all of it—only a fraction of it—can be attributed to the carbon tax.

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

I think we could split hairs regarding what that fraction is. What I want Canadians to take away from this meeting—and I think we can agree but you can certainly say differently—is that the carbon tax increases the price of food.

[Yves Giroux]

Yes, I would be inclined to say that, to some extent.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Sousa, please go ahead for five minutes.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

I appreciate the discussion we've been having today.

I recognize that pricing carbon is being proposed as a great disincentive to our economic growth and activity when, in fact, it's the very incentive that's enabling us to invest in other initiatives in the green economy. It's enabling us to have that drive to do something now to protect each generation as we go forward.

Oftentimes, when I hear some of these discussions.... I heard this one on the provincial side in Ontario when we were deliberating over the price of carbon back in 2015 and 2016 to offer an alternative, which we brought forward by way of cap and trade. We were part of the Western Climate Initiative, alongside Quebec and California. Ontario was netting about $1.5 billion, or thereabouts, annually to reinvest dollar for dollar in the green economy—retrofits, home renovations—enabling us to get a head start on the green economy and opportunities to support families as we went forward and grew the economy.

It was the alternative. It exempted Ontario from going through a federal carbon pricing system because we had already initiated one. The Conservative government that came in afterwards then dismantled that initiative and brought forward a fight with the federal government over something that it lost through a constitutional debate.

In the end, we're faced with this alternative, but many economists are still saying that a much better and cheaper way to move forward is pricing carbon. I appreciate some of the discussions we've had today because of that, because it's not free. Pricing carbon is not something that we can make available to everyone. The greater polluters should be paying their fair share to enable most families—especially the single moms who were just referred to earlier—to net out a greater benefit for themselves.

I know and appreciate your reference to the fact that four out of five or eight out of 10 average families in Canada will benefit through rebates with respect to this. At the same time, it will enable us to cause the higher polluters to pay their share and will provide the incentive now to bring forward a new economy, as we have in Saskatchewan with the alternative sources of trade. That will enable us to provide for cleaner alternatives. That wouldn't exist had we not put these incentives in place in the first place.

To this point, I would like to ask a question. Keeping in mind that many economists have also noted that this is a very cost-effective way to reduce emissions, which is ultimately what we're trying to do, do you believe that those causing pollution should pay for it?

[Yves Giroux]

Mr. Sousa, that's a question for policy-makers and legislators.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

I'm asking you for your personal interpretation. I'm not asking you as a policy man. I'm asking you personally.

For future generations, do you believe that those polluting rivers should be stopping that or paying for it?

[Yves Giroux]

As an economist, I believe that externalities should be internalized, so those who cause negative consequences for society should be the ones who assume these costs, as opposed to pricing—

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Is carbon pricing an effective way to reduce emissions?

[Yves Giroux]

As I said to this committee last week, there is a wide consensus among economists—and I am an economist—that carbon pricing is an effective way of reducing carbon emissions. Any other way of doing it will also have costs. I've been clear about that, and my office has been clear about that.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

We just heard about a single mom with kids. She now benefits from a lot of non-taxable benefits and a number of initiatives that the federal government has brought forward to support her in this affordability crisis, all of which were opposed by the Conservative Party. All of these initiatives to try to support that family were actually opposed by the other side.

I'd like to add a nuance to some of the recent narrative around the impacts on the price of pollution and affordability. We've talked about the Bank of Canada, and the governor has been quoted as saying that other climate effects and events are also placing a cost on food, that there's a cost with respect to this and volatility. We can't just ignore it, put our heads in the sand and pretend it's going to go away.

I'm wondering if you agree with the governor on this issue.

[Yves Giroux]

On what issue? Could you be clear before I agree with something?

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

The issue is that—