Industry Committee on Nov. 2nd, 2016

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

I have given a preamble previously so I'm not going to go on and on. Certainly we have a guest here from whom we would like to hear, but this is my earliest convenience to be able to move this motion since it was originally presented.

It is incredibly important to me that we know the effects of a carbon tax on jobs in Canada. How many jobs will be lost? What prices will be put on products that are created in this country? How much higher will they go? And the effects.... Right now we know that it's a $3.8-billion tax on manufacturing in this country. Over 50% of those jobs are in Ontario. Over 25% of the jobs are in Quebec. It's very important that we understand what the effects are going forward.

I hope that all of my colleagues around the table—it doesn't matter what colour of party we belong to—understand that good data makes for good decision-making. Unfortunately, there is no data right now, but I'll tell you this: the reason I wasn't here on Monday was I spent it going through different manufacturers in the GTA. They are doing their own data research, and it will be ready within a couple of weeks. I would hope that the Government of Canada is one step ahead of industry since they are the ones who moved it in the first place.

With all of that said, I will cede the floor to any questions or comments there might be.

[The Chair, Liberal, Dan Ruimy]

Mr. Hoback, you are next. Are you speaking to the motion or something else?

[Randy Hoback, Conservative, Prince Albert, SK]

I will speak to the motion, for sure. Thank you, Chair.

Mr. Arora, I do apologize, but this is such an important issue for Saskatchewan, for people in rural Canada, and for our manufacturing sector right across Canada. I think it's very important that we look at industry, science, and technology, that we deal with this motion, and that they take part in this motion to move it forward and see the impact.

Premier Wall asked the Prime Minister what the impact of a carbon tax would be in Saskatchewan or across Canada. He asked him that more than once. His reply was basically that there was no impact study done. There's really been no assessment done to analyze what this means for our manufacturers, our industries, and our farmers, and what it means for rural Canadians who are required to use fossil fuels to drive to and from work, to buy groceries, and to go about their day-to-day business.

Look at the agriculture sector. We compete in a global marketplace. We sell the products we produce, the products we grow, on the world market. When you have a carbon tax on inputs such as fuel and fertilizer, it puts us at such a disadvantage compared to jurisdictions such as the U.S., Australia, or Europe, which don't have these types of carbon taxes in place. When you ask our farmers to be even more efficient and to bear more costs to produce the grain and the foods that we require to survive, they feel threatened, because now you've taken the playing field and you've made it unlevel.

We've done a lot of things in the trade committee and in trade to level the playing field so that they have market access and a chance equal to the chance of anybody else around the world in markets that are very important to us. Then a carbon tax comes in, and what does it do? It basically disjoints it again.

All of a sudden they're saying, “You know what? It is really tough for us to figure out how it's going to work.” Everybody says that it's only going to be 10¢ a litre or 11¢ a litre, depending on what you price carbon at and how you go about implementing the policy, but you also see studies out there saying that $50 a tonne won't curb the actions and reduce the carbon output. What you're going to do at $50 a tonne, though, is move businesses out of Canada into jurisdictions that don't have a carbon tax.

When you look at that scenario, you can look at a situation like the one in Sarnia, for example, where there was a $1.5-billion fertilizer plant proposed. All of a sudden they have the huge power costs that have happened here in Ontario, and a carbon tax, and then they look at places like Louisville or Louisiana, where they don't have any of those expenses in their inputs. You can see exactly that it becomes a no-brainer in terms of where they're going to locate their facility.

I was talking to some Calgary businesses last weekend when I was attending Mr. Prentice's funeral. They were telling me that people from American cities are coming up into Canada and poaching businesses because of the carbon tax in Alberta. Look at our science and industry, and our science and technology. We have great research going on in universities right across Canada, and we're going to continue having great researchers, but when it comes to commercialization, they're going to commercialize in areas outside of Canada. Why? It's because the playing field isn't level, because other jurisdictions don't have a carbon tax, and because they compete in a world market. It's a shame.

When you're competing in a world market and you're looking at your costs of production, you'll say, “Well, because of the carbon tax in Saskatchewan now, it's cheaper to produce it in Montana.” What are you going to do? You're going to produce it in Montana.

We've talked to investment bankers and people in that area who deal in billions and billions of dollars. Look at the oil and gas sector. They're saying that right now, with the uncertainty in Canada with what's going on with carbon taxes and big debt.... Look at the economic update, where they talk about attracting this foreign investment to build Canada and make it stronger. People are saying that they have projects that they can do in Texas, Montana, or North Dakota, or they can do them in Alberta, but they know that their costs down there are substantially less, so why would they go to Alberta? Why would they come to Canada? What is the incentive? They might say, “You're great guys and I love ya, but when I look at my balance sheet and I have to make a decision on where I'm going to spend this amount of money on behalf of my investors and shareholders and you've made it so unattractive to go there, why should I?”

I think you're being very naive when you think that you can start doing things unilaterally. In fact, I think you should learn from the Ontario experience on power. It's not a bad thing to go to renewable power. That's not a bad thing, but it's tough, though, when you make your businesses pay a higher rate for power and then tell them to go out in the world and compete, and by the way, you're going to dump the excess power into another jurisdiction outside of Canada that they're going to compete against. It doesn't make sense. It doesn't work.

If you're going to do a carbon tax and if you're going to look at an environment policy, you have to look at it in a North American picture. You have to make sure that you don't disadvantage your industries, your small and medium-sized enterprises here in Canada, or your farmers. You haven't done that. You haven't done the study.

That's where I get really concerned. I think that's where this committee could show great responsibility and do the work the committees are supposed to do. Do the study. Look at it. Look for suggestions. Look for other alternatives. We all want to reduce our carbon footprint. We all want to make the environment greener and safer, and we want to see booms there. Nobody's denying that, but how we go about doing it is so important. Thousands of jobs across Canada are at stake, so I would encourage you to support this motion.

Chair, I don't think there's going to be much more debate on this motion. I think it makes a lot of sense. I move that we vote on this motion now.

[The Chair, Liberal, Dan Ruimy]

We have some names on the list here, so we're going to keep going with the debate until there is no debate to have.

Mr. Masse, will you be speaking to the motion or to something else?

[Brian Masse, NDP, Windsor West, ON]

I'll be speaking to the motion.

[The Chair, Liberal, Dan Ruimy]

Okay, go ahead.

[Brian Masse, NDP, Windsor West, ON]

I'd obviously be interested in the studies in order to have more input on manufacturing. I think what we've done over these years is helpful. One of the concerns I have is that this is for a pre-budget study. I'd like to know from our perspective what that will do to our manufacturing study, and whether it's going to delay it and the recommendations we can make before the budget. That's a serious consequence of the suggestions here, and I hope there's a plan as to whether we exhaust our current availability slots or whether or not we meet more or longer. If it is going to be done, the reality is it should not be done at the expense of the manufacturing study. We've got a light time-wise, and also monetarily, to do these things.

Unfortunately, this issue has come up at this time, but it's not a mystery, in a sense, because the Harper administration originally broached this topic. When we look at the analysis, I'm hoping to see some things that should be there already. The impact of this topic on industry and so forth is not new. It's happening not only to those corporations that are here domestically, but also internationally. They perhaps have some arrangements in Europe and from other nation-states that could be good examples for Canada. It would also be interesting to find out what their plan is here versus what they've done in other jurisdictions that have applied this kind of tax, whether provincial ones in Canada or states in Europe or other places.

I'm open to it as long as it doesn't negate our current efforts. That would be my big concern.

I'll leave it at that, because a serious issue has been brought here. If we want to resolve it, let's make sure that it doesn't come at a cost to anything else we've done.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Longfield is next.

[Lloyd Longfield, Liberal, Guelph, ON]

I think the motion is a good motion, in terms of the theory of looking into something that will impact industry. It's the timing of the motion that I'm concerned with. We're currently working with the provinces and territories to come up with a national strategy that will take effect in 2018, moving forward to 2022. We don't know how the different provinces are going to deal with this, so the impact on industry is going to be different across the country.

We're working on a tremendous economic upside, and that's the green economy. We've seen that in Guelph, with Canadian Solar moving to Guelph, and businesses that are focused on reducing the carbon footprint for the planet. It's a tremendous opportunity for business and for manufacturing businesses that might want to transition into making parts for that industry as well.

I think there are a lot of variables, but it's so early in the game to know how we are going to be trading carbon credits with California, for instance, with New Zealand, with the EU. In the EU agreement that's just coming in, this price on pollution that's just coming in has a tremendous upside in terms of economic opportunity for Canada, but until we know what we're doing with the provinces, I think it's really early for us to try to pick up a study until we have lots of stuff to study.

I wouldn't be supporting the motion at this time. I think we need to bring it forward when it's the right time. I just don't think it's the right time now, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Go ahead, Mr. Nuttall.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you.

I appreciate the feedback from Mr. Masse regarding the timing. Obviously I view this, as I said before, as supplemental to what we have been working on to date in terms of manufacturing. I don't think any one part is more important than the other. These are things we need to have discourse on and provide opinion and support to the government on.

In terms of hydro, because that's where we just started to go with Mr. Longfield, I find it interesting that the only time I've actually heard “green energy” in Ontario is related to hydro. I wish that 10 years ago there had been a committee somewhere in the legislature of Ontario that had said that this is what the effect of the Green Energy Act would be.

[A voice]

It's been awesome.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

The Green Energy Act has been awesome. It has pushed hundreds of thousands of people into poverty and it has created an environment where business is fleeing. The only businesses that are surviving are those that are in solar and wind and are making big donations to your provincial counterparts. This is the reality.

If we want to influence the process as a committee—and I believe that's our job—we can either do studies on what happened in the past or we can do a study and propose solutions and opportunities to the government, which they can then institute and speak to the provinces about. Then we can hopefully come up with a system that is better tomorrow than what we've seen happen in the past. That's the opportunity we have. We have the opportunity to influence, through good policies and the use of good data, what the government will actually do. We can do that or we can wait for this thing to blow up again, just as the Green Energy Act did in Ontario, and for the next 15 years talk about how we wish we had thought this through.

There are places and jurisdictions in Canada that have done it well. Let's study what they are doing. There are jurisdictions that will come online and provinces like Ontario that will come online next year.

If we have the opportunity to help provide feedback and ideas, let's do that. I don't think it's a good process to put ourselves on the sidelines until after someone somewhere has made the decision without any data backing up what they're doing. You wouldn't see that in the private sector; that's for darned sure.

[The Chair, Liberal, Dan Ruimy]

Go ahead, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

I see Mr. Masse's point about timing and stuff like that, but I really would stress to the committee that this is such an important issue.

You talk about timing, but I'll tell you what: I'd rather have these answers now. I'd actually rather have the information now, with regard to the implementation of this carbon tax or cap and trade that you're forcing on the provinces in two years, than wait until it's put in place and then realize two years after that date, or four years from now, why our unemployment rate is sitting at 10%, why we don't have jobs for our youth and our young people, why the science industry and all the research and development and our great scientists are leaving Canada, and why the manufacturers are leaving Canada.

It's just like when Ontario went down this path on green energy. It's a great path, and it's an honourable path, but what happened? You raised your power rates to such a point that you drove everybody away or into poverty. Now, if you'd known that before you started down that path, do you not think you would have said, “Whoa; maybe we have to look at this a little differently and go about it in a different fashion. Maybe we should be concerned.”?

The last time we had a 75-cent dollar, do you know what Ontario was like? It was bangin'. It was boomin'. It was moving stuff into the States and around the world. When our dollar was at par, it was still doing well. We did a trade study on TPP. We were down in Windsor and we were talking to the unions down there. They are not for TPP, no question about it, but when we asked them about the biggest problem they have in Ontario, to see growth in Ontario, to see more expansion of auto plants in Ontario, they said it was the cost of power. They had just had a meeting the night before in Windsor, and they identified the cost of power as chasing their jobs outside of Canada.

Why wouldn't we learn from that experience? Let's take a step back. Let's look at it. Let's do a study.

I was in a public works committee, and they were talking about military procurement last week. I asked them what they were doing about the fact that Canadian companies now will have to pay some sort of carbon tax. I wanted to know if they were taking that into consideration in the tender, if they were going to allow them some credit or some grace period there, because their costs will definitely be higher than those competing against them who don't have a carbon tax. I asked them how they were going to account for that. The guy said, yes, we're going to have to account for that, figure out a formula, and put that in place so that Canadian manufacturers aren't actually discriminated against because they're forced to have this carbon price. When I asked him what it was going to cost him to do that, his response was that he didn't think it would be anything. He didn't really know.

Again, you talk about it being revenue-neutral, but if government gets bigger because we have to start doing things in procurement like analyze the cost of carbon in the process of deciding which types of pens and pencils we're going to buy here, or in the military which types of military hardware we're going to buy, it will cost us more money, which means higher taxes.

To go back to rural Saskatchewan, I lived on a farm. I don't anymore, but I did. I had to drive 12 miles to get to the closest grocery store and usually 40 miles to get to a supermarket. That's just the way of life. Now throw in a carbon tax of 11¢ a litre. That 11¢ a litre won't change the activity. I'm still going to have to drive; I'm just going to pay 7¢ a litre more than I did before. How are you going to help me out? Now I'm going to pay a lot more—for what? So that we can chase jobs to the U.S. or somewhere else that doesn't have a carbon tax?

There's Innovation Place at the University of Saskatchewan, with all these great researchers. If they all disappear, we'll ask what happened, and the answer will be that the companies that were going to implement their research had to locate outside of Canada because their costs were too high due to the carbon tax.

Then I hear you say that we don't have the information, that we don't want to do it now. Don't put your head in the sand here, guys. Be very alert. Be very concerned. I'd encourage you to take this study on. If there are some great stories, as Lloyd said, such as the solar company moving to Ontario, shine a light on them. Maybe there are some good examples to be found that we can actually use in the implementation as we look at putting a price on carbon.

But to do nothing, to say that you don't want to touch this one because they're dealing with provinces—well, that's garbage. What did the provinces do in the last set of meetings? They walked out. Where was the goodwill of the provinces then? Now you're saying that you have all this goodwill with the provinces. No, you don't. You never do when you force things onto the provinces, and you did on this one.

Premier Wall last week was at a Fraser Institute supper. It was a record fundraising supper, and do you know what he talked about? Carbon tax. Do you know how upset people are about this in Alberta, in Saskatchewan, in rural Canada? They're very upset, and if you don't see that, and if you're an MP in rural Saskatchewan, whether you're Liberal, NDP, or Conservative, if you don't hear that, then you're not doing your job, because it's out there, and they are talking about it.

I haven't talked about the forestry industry and softwood lumber and the implications there from the carbon tax, or the trucking industry and the implications there of the carbon tax, or the cost of food and the implications of the carbon tax.

You need to do the research. You need to do the study. You need to understand exactly what you're doing. This blind idea of putting your head in the sand, going to do a carbon tax, and going to compete in this day and age and in this world doesn't work.

I would move that we vote on this now, and then we can get on to Mr. Arora's presentation. I apologize, Mr. Arora. I know what you're doing is very important, too, but this committee needs to take this seriously and move this motion forward and get to work on it.

You know what? It might be a tough study. You're going to get lots of controversy in it, but I would rather deal with the controversy now than be trying to figure out why we have an unemployment of 10% four years from now, and why our researchers have all left Canada, and why our industries have all left Canada, because then it's too late.

[The Chair, Liberal, Dan Ruimy]

I have nobody left on the speaker's list. Is there any more debate on this?

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

I would like a recorded vote, please, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

As soon as there is no debate, we will call for the vote.

Is there any further debate on this motion? No. Then we shall go to a recorded vote.

Are you going to do it? You do it. You get the glory.

[The Clerk of the Committee, Mr. Michael MacPherson]

The question is on the motion submitted by Alex Nuttall.

(Motion negatived: nays 5; yeas 4 [See Minutes of Proceedings])

[The Chair, Liberal, Dan Ruimy]

The motion is defeated 5 to 4.

We'll go on to Mr. Arora. You have 10 minutes.

[Anil Arora, Chief Statistician of Canada, Statistics Canada]

Thank you very much.

I want to thank the committee for inviting me to appear today.

I'll give my remarks in English, but

of course, if you have questions in French, don't hesitate to ask them after my presentation.

Thank you for this opportunity to present myself to you. I thought I would tell you a little bit about myself, my background, and what brings me to this stage in my career.

I immigrated to Canada with my parents when I was 11 years old, on a freezing cold winter day in Edmonton. My father, also having worked as a public servant most of his life, taught me early on that hard work in this country significantly increases the chances of success, and that the more you give back, the more you savour that success. I've tried to live by those principles throughout my life.

I obtained my Bachelor of Science from the University of Alberta, and right after that started working in the oil and gas sector. The mid-1980s weren't that kind to that industry, and I decided to retool and return to school, and studied computing science. After computing stints in both provincial and municipal governments, I applied and started my career in the federal public service with Statistics Canada, in the regional office in Edmonton, almost exactly 28 years ago this month.

Having introduced the first computers to field interviewers and after overseeing survey processing operations, I managed the administration and internal operations for the 1991 census for the prairie region and the Northwest Territories, and then subsequently managed all business and social surveys in the region, followed by overseeing all aspects of the 1996 census, along with the post-censual surveys.

I had the opportunity to conduct surveys with Canadians first-hand, myself, in numerous parts of this vast country, including the north and aboriginal communities. I introduced a number of automated systems and redesigned processes in the region, which got the attention of the chief statistician of the day, Ivan Fellegi, and I was asked to compete for a senior position in Ottawa.

I moved to Ottawa in early 1997 and started my work in the dissemination division, in dissemination functions. There I was responsible for transforming publications from essentially paper-based formats, at that point, to the web, redesigning Statistics Canada's database to disseminate its socio-economic time-series data and to dynamically generate tables and publications. This significantly increased access to the enormous amount of information from Statistics Canada to all Canadians through the web. I also oversaw a number of other initiatives, such as the data liberation initiative to get more public microdata into the hands of researchers, as well as the inclusion of Canadian statistics in our school curricula.

Shortly thereafter I took on the research and development portion of the census program in 2001, and with an amazing team saw the complete redesign of the program, including the mailing out and mailing back of questionnaires, the secure Internet application, and the automated conversion of written responses to electronic responses and data for the 2006 census. This redesign thrust Statistics Canada to the forefront of the world stage in taking a modern census. Thereafter the seeds of the current corporate business architecture and the integrated collection systems were sown, leading to significant cost savings, providing response options to Canadians for a number of business and household surveys, as well as increasing data quality and timeliness. I also led a number of international task forces and working groups.

In parallel, I completed a graduate certificate at the University of Ottawa in public sector governance and management. I took on the role of the assistant chief statistician of the social institutions and labour statistics field after the 2006 census, and also served as a co-chair of the government-wide policy research data gaps initiative, which saw the introduction of a number of innovative surveys. I was nominated to participate in the advanced leadership program at the Canada School of Public Service.

In 2010 I left Statistics Canada and took on the assistant deputy minister role in the minerals and metals sector at Natural Resources Canada, and for a one-year period, also at the same time, the ADM role of our corporate services area in Natural Resources Canada, followed by a senior ADM role for strategic policy functions in the department.

I was fortunate to lead a number of important policy and legislative files in close collaboration with other departments, covering the range of natural resource sectors, including coordinating a number of missions for business leaders to several countries and around the world to promote our resource sector. Working with provinces and territories and industry was critical in moving a number of key initiatives forward, and I supported ministers in federal-provincial meetings, including chairing a number of domestic and international fora. I took on a number of champion roles, including leading the assistant deputy minister learning committee for the federal government.

Two years ago I was approached to take on the role of the regulator responsible for overseeing reviews, approval or refusal, and any corrective action required to ensure the safety of food, drugs, and consumer health products that are consumed by Canadians. In addition to this role, I co-chaired the Government of Canada's Community of Federal Regulators, as well as chairing the International Coalition of Medicines Regulatory Authorities.

That's where I was until asked to return to Statistics Canada as the chief statistician as of September 19, returning back roughly seven years after I had left.

With that, I look forward to your questions.

[The Chair, Liberal, Dan Ruimy]

Thank you very much, and thank you again for your patience.

We're going to move right to questioning.

Mr. Jowhari, you have seven minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair. I'll be sharing my time with my colleague Mr. Baylis.

Mr. Arora, first of all let me congratulate you on your appointment as well as your accomplishments.

I would like to ask a specific question. Your predecessor stated that Shared Services was a key issue for him in the decision he made. He specifically stated security, location of data, timely access, control, reporting, analytics capability, and oversight as some of the issues he could not reconcile, basically, or he had challenges with.

Can you, having been in this position now for six weeks, share your initial assessments of these challenges, if they actually are challenges?

Thank you.

[Anil Arora]

Thank you very much for that question.

In six weeks, obviously in the context within which I arrived in the job, if this wasn't job one, I think it was pre-job one. I've had the opportunity to meet with my counterpart at Shared Services Canada no less than probably a couple of dozen times. I think it's fair to say that Statistics Canada, as a department that essentially deals with data that has to reside on infrastructure, was a department that really hadn't looked at or faced any kind of serious investments in infrastructure. I'm talking here about CPUs and space. The demands of a statistical agency means that as it grows, it requires additional capacity. I think that's the most pressing need.

Over the course of the six weeks, roughly, that I've been in the job, I've been able to agree on a formal arrangement with Shared Services Canada. I had meetings with their folks and our folks to come up with some very creative and innovative ways to start to increase the capacity of that infrastructure. In fact, we're starting to see that happen. We're starting to see more hardware. We're starting to see some of that capacity come in, which obviously will help us reduce some of the risk. As more data stores come into play, we want to make sure the capacity is there. There's a fairly aggressive plan to make sure that we have the kind of infrastructure we require and that it's going to be there over the course of roughly the year and a half to two years that we need, in fact, to move from our current data centre to a more modernized facility that will have even more capacity.

Just to make it very clear, in the agreement I've made it very clear to Shared Services Canada in writing that they have no say in anything to do with confidentiality or security. That remains my responsibility, because that's really the currency within which we operate with Canadians: the trust, the confidentiality and security of their information. We control that in whole. Nor do they have any say in terms of the authorities that are vested with Statistics Canada in how we go about doing our business. If that were a point of contention, it's absolutely clear in the agreement that, going forward, those domains are exclusively ours. They've agreed to it, and that's the way we're going to proceed.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.