Evidence of meeting #72 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cost.
A video is available from Parliament.
5:05 p.m.
NDP
Gord Johns NDP Courtenay—Alberni, BC
I believe it was 80% in Nova Scotia.
The two out of 10 households that aren't going to get it are higher-income earners. They can afford to buy a hybrid or put in a heat pump. That's the idea, right?
5:05 p.m.
NDP
Gord Johns NDP Courtenay—Alberni, BC
I wanted to clarify, because sometimes we wonder who is fighting for the two out of 10 and who is fighting for the eight out of 10. I'd say that I'm arguing to fight for the eight out of 10 to make sure they're not picking up the tab.
I'm going to read this quote from Andrew Coyne in The Globe and Mail. He made a comment about your report, and I appreciate your report. He writes:
The alternative to the carbon tax is not nothing, but something else—subsidies and regulations. And the cost of these, as every study shows—costs that are paid not by “the economy” or “the big polluters” but by households—is multiple times that of carbon pricing. More to the point, under the alternatives, there are no rebates. Not only are the costs greater than under a carbon tax, but 100 per cent of them fall on households. The rebates are zero.
Can you comment on that?
5:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think that's probably a fair assessment. One example was also the subject of one of our reports: the clean fuel regulations, which impose obligations on producers and importers. They impose obligations, which have costs, but there is obviously no rebate provided to anybody, because the costs are borne by the producers and importers and are passed on to the final consumers.
5:10 p.m.
NDP
Gord Johns NDP Courtenay—Alberni, BC
Right, so, the eight out of 10 would have picked up the tab, really, more likely than not, in that scenario.
In terms of the costing of climate emergencies, I know you did some costing years back and you've done it again since. In terms of doing nothing, have you looked at what it would cost for every half-degree increase in global temperature in terms of climate emergencies and the cost to everyday Canadians versus the current mechanism that we have?
5:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We have not costed doing nothing. We have tried to estimate the impact of climate change on the Canadian economy in two scenarios. One is stated policies, under which everybody across the world does what they've promised to do and does it on time. Another scenario is that countries do what they have done so far and nothing more. We find that the impact on the economy is—no surprise—greater in the scenario in which we do what's currently implemented and nothing more. That estimate has big caveats, because it's one of the first attempts at estimating the cost of climate change. It does not factor in potential tipping points where exceptional climate events would become even more frequent, and the cost of these exceptional events.
It's very much a first attempt at costing climate change. It has numbers, but again, it's still something that is in its infancy.
5:10 p.m.
NDP
Gord Johns NDP Courtenay—Alberni, BC
Yes, I think there was a report in 2013 or 2014 projecting the costs of climate emergencies. We've far exceeded what even your office has projected.
Have you considered looking at offloading the subsidies and regulations, should there be no carbon tax, onto everyday people? Have you looked at what that would cost per household versus what they would get back? That way, we would have a true idea of those eight in 10 Canadians who are going to get a return and, if we remove that mechanism, what it would actually cost those eight in 10 Canadians. I think that's a fair analysis to do, right?
I'll start with that.
5:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's quite a start.
No, we have not looked at such a scenario. We tend to cost issues or items that are being considered or being implemented. There is a wide variety of alternative scenarios that we could cost, but as you can imagine, when it comes to costing the impacts of climate change or various types of regulations or taxes, it tends to become complex pretty quickly. We have to limit ourselves to either the most likely scenario or what is before Parliament.
5:10 p.m.
NDP
Gord Johns NDP Courtenay—Alberni, BC
Yes, I think there's the do-nothing fantasy land of the subsidies and regulations, which are going to be on everyday Canadians, or the current model, which is that eight in 10 Canadians get it back and the two out of 10 Canadians who can afford it are the ones who pay—and they should pay a little more, because they can afford to.
5:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
There's also a scenario in which we don't have to do that much. We just have to implement new technologies that will take off.
5:10 p.m.
Conservative
The Chair Conservative Kelly McCauley
That is our time, I'm afraid, Mr. Johns, until the next round.
Mr. Deltell, you have five minutes.
5:10 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you so much, Mr. Chair. It’s a real pleasure for me to see you back, especially at this job as the chair of this committee.
Good afternoon, Mr. Giroux.
As I told you earlier, it's a real pleasure for me to see you again. We read you and quote you often. We're very happy with the work you do, which is neutral, objective and based on facts and figures. As we often say, figures are stubborn things.
The last time you testified before this committee was a little more than a month ago, on May 8. The least we can say is that you and your team are prolific. You regularly publish reports, including the one you released on May 18 last, entitled, “A Distributional Analysis of the Clean Fuel Regulations”. Obviously, it directly concerns the problem of climate change, which we're all facing, and the steps we must take to combat it.
First, let's get one thing clear: climate change is real; it's having an impact on our everyday lives; human beings are contributing to it; and human beings must therefore help reduce the impact of climate change by reducing pollution here in Canada, of course, but also around the world. Some countries have adopted different approaches from those of our government. This one has introduced carbon pricing, which we call a carbon tax, and has adopted a new approach, that of the Clean Fuel Regulations.
I'm from Quebec. We know that the National Assembly adopted the carbon trading system. We also know that, under the act that the federal government passed a few years ago, the federal government acquired the authority to impose a carbon price on the provinces, including Quebec. Each province may have its own system, but the price is dictated exclusively by the federal government.
Considering these basic facts, according to your report, what will be the average impact of this second tax under the Clean Fuels Regulations on Quebec families?
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In Quebec, in 2030, when the Clean Fuels Regulations will be fully in force, we estimate that the average impact on every family in Quebec will be a net cost of approximately $436 a year.
5:15 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
If I understand you correctly, people have to pay $436 more than what they're paying now.
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, because that applies in addition to the carbon tax and regulations or mechanisms that the provinces, Quebec and British Columbia, in particular, have decided to implement to reduce greenhouse gases and that are different from the federal carbon pricing scheme.
5:15 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
The government could decide, as it intends to do, to tax this second tax. Have you assessed the impact that this would have on the $436? If not, will this mean a tax on the tax that will have to be added to that $436?
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Are you referring to the GST?
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think that would be added to the tax, but it's 5%. So it's not an enormous amount compared to $436. However, it also includes the economic impact that families and households will have to bear.
5:15 p.m.
Conservative
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
For example, that includes the reduction of certain economic activities which will be induced by an increase in the cost of fuels, which is hard to avoid when you significantly raise the price of inputs as important as gasoline and diesel.
5:15 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
So that would also include the food we eat, which is transported from the farm to the supermarket and from the supermarket to our homes, for example. The second carbon tax will apply to that and will thus have a direct impact on families.
5:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, exactly. We took that into account in our estimate.
5:15 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Have you assessed the impact of this second tax on the price per litre of gasoline at the pump?