Government Operations Committee on March 27th, 2024

[The Chair, Conservative, Kelly McCauley]

I'm sorry. Let me interrupt.

We're out of time, Mr. Sousa, but if you can just repeat that, we'll allow time for an answer.

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

The governor suggested that there are consequences for not putting a price on pollution. Wildfires, floods and extreme weather conditions all place a price on food.

[Yves Giroux]

Climate scientists are almost unanimous in saying that climate change will have impacts on our lives. I'm willing to believe the science on this one, as on many things.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Sousa.

Mrs. Vignola, you have two and a half minutes, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

In a recent report, you mentioned that the impact of the carbon tax on inflation was about 0.15%. Let's assume that inflation is 3%. We know that inflation has been higher, but that it tends to return to something more reasonable. Let's suppose that inflation is at 3%. Does that mean it's 0.15% of 3%, or is it 2.85% inflation plus 0.15%?

[Yves Giroux]

If we assume that the impact is 0.15%, this means that inflation is a little higher because of the carbon tax. For example, inflation without the carbon tax will be 2.85%, and with the carbon tax, it will be 3%.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

In other words, the carbon tax means that goods and services that cost $100 before inflation cost about $103 with inflation at 3%. In that cost, there's a 15¢ increase caused by the carbon tax. That's 100 times less than the GST and QST paid on $100 in Quebec.

[Yves Giroux]

Yes. There are two effects to consider. Inflation is an annual phenomenon. We're comparing today's prices to those of a year ago. Prices went up during that year.

However, there is also the cumulative effect. For example, if we completely eliminate a tax, we'll also eliminate the effects of previous years. There will be a sudden drop, but not a recurring drop. In fact, it will be recurring, but it will have an impact on inflation only once.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

I was looking at your figure 2‑2 on the Canada health transfer, which is based on the number of people. It's a per capita amount. The question that came to me is this: When the number of people in Quebec or in a Canadian province is calculated, does the calculation take refugee claimants into account?

[Yves Giroux]

I don't have the answer to that question. I'll admit, it's an interesting one, given what we're hearing these days, but I don't have that answer. I know it's based on census data, but I don't know whether non‑permanent residents are included in the Canada health transfer calculation.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Boulerice, go ahead, please. You have two and a half minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses once again for being with us today.

Mr. Giroux, we've talked a lot today about pollution pricing and inflation, but also about climate change. Climate change has an impact on our communities, be it in terms of public health, floods, drought, forest fires, and so on.

Is it possible to have an overall assessment of the economic impact, of the financial cost to the federal government of the acceleration of natural disasters and climate change that we've been experiencing more and more over the years?

[Yves Giroux]

That's a question that's probably worth thinking about, but it's not one that my office has considered, particularly in terms of the costs of climate change that the federal government must assume. I know it's an issue for many institutions in the country and around the world. At this point, I wouldn't say that the work is still in its infancy, because it's more than that, but we're still in the early stages of estimating those costs. It's subject to a lot of interpretation and a lot of questions.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

My political party and I see a benefit in this. We often talk about the cost of a measure, an investment, or the cost to a company, an industry or the consumer, but inaction also has a cost. We tend to forget that sometimes.

As an economist, you said earlier that market mechanisms such as pollution pricing, also known as the carbon tax, have an incentive effect on consumers to change their behaviour. Based on your assessment in recent years, does this measure alone enable the federal government to meet our targets and reduce our greenhouse gas emissions?

[Yves Giroux]

We did a report on this in November 2022, if memory serves; I have several documents in front of me.

We did an analysis of that and realized, as most observers have, that the fuel tax or the greenhouse gas emissions tax isn't enough to meet or exceed the Paris Agreement targets, as the government committed to in the 2021 budget.

Other measures, which the government has announced, are needed to achieve the targets the government has set for itself. It's often said that the carbon tax will make it possible to achieve one‑third of the greenhouse gas reduction targets. From memory, those are the conclusions we reached.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Chambers, welcome to OGGO. Go ahead, please, for five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you to the Parliamentary Budget Officer. I appreciate you being here with your colleagues Ms. Giswold and Ms. Vanderwees.

I'd like to talk about everybody's favourite tax—the underused housing tax. Mr. Giroux, I'm not sure you are able to follow all of the inquiries of ministry, but just last week the government tabled documents showing that since 2022, the federal government has spent upwards of $59 million on administering the underused housing tax—

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Mr. Chambers, but I have to interrupt for a second. We're being told your microphone is not properly connected to your computer.

[Adam Chambers, Conservative, Simcoe North, ON]

I apologize, Mr. Chair. I believe this is a bit better.

[The Chair, Conservative, Kelly McCauley]

Yes, we're fine now. Go ahead, sir.

[Adam Chambers, Conservative, Simcoe North, ON]

My apologies to the interpreters.

Mr. Giroux, we were told by CRA that they've spent upwards of $59 million administering the tax but have assessed only 49 million dollars' worth of amounts owing. That's not collections, by the way. That's amounts owing.

I'm just curious whether you recall from your previous work what the government expected to collect from that tax in the first couple of years.

[Yves Giroux]

You're right, Mr. Chambers, that with a team of 38 we cannot follow every single government initiative. I don't remember off the top of my head how much the government expected to collect on the underused housing tax. I'm looking at my colleagues and they're avoiding eye contact—