Natural Resources Committee on Oct. 23rd, 2018

[Nick Whalen, Liberal, St. John's East, NL]

I guess I'll be sharing my time with the Chair, because there's not much left.

We did have some questions about the chart that was handed out. I thought it was pretty self-explanatory from reading the first three bullets that for every dollar invested, you're getting a $7 GDP bump. If you say you're going to get an increase of $355 billion over 14 years; that's with a $51-billion investment. Then if you're investing $51 billion over the period, and if there's a $1.4-billion-per-year benefit, then that's net. The total gross benefits are somewhere in the $57-billion magnitude. That's where you get your net numbers.

I think that if you read the document, it's pretty easy to see what that is. Is that correct?

[Corey Diamond]

Yes. Again, it is a net benefit, a net-impact assessment. The $355-billion number is net of total program costs. Those total program costs include some of the negative impacts of energy efficiency, including reduced utility sales. Those total program costs are about $48 billion. That's baked into that $355.

You're off by a couple of billion, but....

[Nick Whalen, Liberal, St. John's East, NL]

On the construction fraud issue, Mr. Lee, this is something that people talk to me about. I wonder how much construction fraud there is and whether we could fund this program you're suggesting just by making sure people provided receipts on their renovations.

Could you walk us through the math on that a bit?

[Kevin Lee]

I assume you're talking about the underground economy and cash deals and that sort of thing.

It's very extensive. Unfortunately, the more regulation and the more taxes are put on things, the more people.... I have to say that there's obviously an industry component to it, and there's a homeowner component too. People just don't want to pay for these things.

There have been recent statistics on the size of the underground economy in Canada, but when you look at cash jobs, you start thinking that if we could get 20% or 30% of those cash jobs to start becoming above board, tax revenue—GST, HST, income tax, all these other taxes that should be paid—would be coming back into the system. When you think of a retrofit program, be it a grant program or a tax incentive, and if you consider the taxes that would now be coming in, all of a sudden it's not the full price tag of close to a billion dollars, but a small percentage of that, because you're going to get it back through—

[Nick Whalen, Liberal, St. John's East, NL]

I think I'm sold on that idea.

If someone is going to do a $30,000 improvement to their home on the energy efficiency side, and they're expecting to repay that in a tighter time frame than what would happen naturally, are you talking about a 25% tax credit, a 30% tax credit?

What do you think is the magnitude that would be a sweet spot in today's market?

[Kevin Lee]

I think when we saw the home renovation tax credit, which was running in 2009 in parallel to the retrofit homes program, it was significantly less than that. It doesn't take a lot to incent Canadians to do what is actually the right thing.

The other thing I would mention is the beauty of the EnerGuide rating system, as opposed to just incenting specific products. As well, there's getting a home assessment, because it teaches homeowners what they need to invest in and it gives them a plan over time. They'll want to replace their windows because the insulating glazing is shot and it's all foggy, but they might actually spend a lot less money by insulating their attic. However, they don't know that.

They'll probably do both in the end, because that's the smart thing to do, but that assessment is really critical.

[Nick Whalen, Liberal, St. John's East, NL]

In addition to the renovation, there would be some type of an incentive to homeowners to use accredited assessors to make sure that the energy retrofit they're doing to their home is actually audited and effective.

[Kevin Lee]

That's right, and that prevents fraud as well, which occurred many years ago. In the eighties, there were other government programs that didn't have proper auditing, and there were major issues.

[Nick Whalen, Liberal, St. John's East, NL]

Mr. Schmale had earlier asked questions about whether or not we have enough people in the trades.

Do we have enough people on the audit side to assess homes, to make sure that energy retrofits are getting the benefits to homeowners that they've been promised?

[Kevin Lee]

We do not, and it comes from the ebb and flow of programming. When you start and stop a grant program, people leave the industry. It's another reason that we're advocating for a permanent tax credit, because then there would be certainty.

The nice thing, again, about building on the EnerGuide rating system is that everybody uses it. The federal government can have a tax credit, while a provincial government can provide grants based off of the same system. That is what happened in the retrofit homes program; everybody was piggybacking. Utilities used the same program.

By the way, at the end of this process, houses get labelled, and then at the time of resale there is a label on the house, and the new homeowner knows it. They should have the EnerGuide report that says, “Here are the next things you can do, and here is how good your house can be.”

Having this one national labelling system that everybody can ratchet off of has huge opportunity.

[Nick Whalen, Liberal, St. John's East, NL]

Thank you so much.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Whalen.

Mr. Lee, did you say that it cost $30,000 more to build a 2,100-square-foot net-zero home?

[Kevin Lee]

That was a net-zero-ready home.

[The Chair, Liberal, James Maloney]

It was a net-zero-ready home. Okay.

[Kevin Lee]

That is with photovoltaics.

[The Chair, Liberal, James Maloney]

Okay.

If you build a 2,100-square-foot home in downtown Toronto and you build the same home in Kingston, the construction costs are exactly the same, are they not?

[Kevin Lee]

Other than potential labour costs, potentially, but yes, the material costs tend to be about the same. Labour might be more—

[The Chair, Liberal, James Maloney]

But the house in Kingston is going to sell for considerably less, right?

[Kevin Lee]

Correct.

[The Chair, Liberal, James Maloney]

Okay, so there is more involved in the price than what you're talking about.

I have a lot of friends in Toronto who have built thousands of houses, and they tell me that they can build a net-zero home, which you're describing, at net zero increased cost. I might want to put you in touch with those guys.

[Kevin Lee]

Yes, and you might want to ask to see their books.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, James Maloney]

He suggested the same thing about you.

[Some hon. members]

Oh, oh!

[Kevin Lee]

Fair enough.