Thank you, Mr. Chairman. Good morning.
I would like to start by thanking the Auditor General for the spring 2017 report and the recommendations provided to the department on fossil fuel subsidies. I welcome the opportunity to speak to these recommendations and the progress Environment and Climate Change Canada is making with regard to its role in supporting the phase-out of inefficient fossil fuel subsidies.
Mr. Chairman, as you just heard, Finance Canada has led on fossil fuel subsidies since 2009, when Canada and other G20 countries committed to phase out and rationalize, over the medium term, inefficient fossil fuel subsidies while providing targeted support to the poorest.
What is meant by “inefficient fossil fuel subsidies”? One of the challenges in implementing the G20 commitment, which Andrew highlighted, is the lack of definition around what is meant by “inefficient fossil fuel subsidies”. As he described, Finance Canada has a consistent approach in place to identify these subsidies that is specifically focused on federal tax measures.
When it comes to Environment and Climate Change Canada, we have been engaged on this file since late 2015—when the Minister of Environment and Climate Change and Finance Canada were jointly tasked with fulfilling Canada's G20 commitment in their mandate letters.
Like Finance Canada, we must also deal with the lack of definition around inefficient fossil fuel subsidies. We're looking at this from another angle, how to interpret the G20 commitment in terms of federal non-tax measures. These measures include budgetary expenditures on programs and services provided by the federal government.
In order to accomplish this, we are coordinating a government review of federal non-tax measures. This is a collaborative effort. We have the support of Finance Canada, and we're working with other central agencies and relevant departments.
As a first step, we worked with Treasury Board Secretariat and Finance Canada to identify programs that might support the fossil fuel sector. We started with a list of non-tax measures that had been identified by third party reports and the Commissioner of the Environment and Sustainable Development.
These measures encompassed several direct spending areas for the federal government, such as research and development programs, and we've sought feedback on these from other departments.
This spring, we established a working group with departments and central agencies.
The working group has a few objectives. One of them is to define how the G20 commitment will be interpreted in the context of Canada's national circumstances. The working group has agreed upon a framework that is consistent with Finance Canada's approach to defining inefficient fossil fuel subsidies for tax measures.
Another goal is to use this framework to assess federal non-tax measures that support fossil fuel development or consumption. This is the current focus of the working group.
In addition, the working group also aims to ensure that federal measures are in line with the G20 commitment to providing targeted support for the poorest. This commitment refers to fossil fuel subsidies that are aimed at reducing the impacts of poverty. The working group is focused on ensuring that adverse impacts on the poorest are considered when supporting decisions to phase out and rationalize inefficient fossil fuel subsidies. The work is ongoing, and we aim to have substantive work completed by the spring.
Canada, along with our G7 partners, has committed to phasing out inefficient fossil fuel subsidies by 2025, while other G20 countries have only committed to this over the medium term. We remain on track to do so.
Mr. Chairman, at this time I'd like to thank the Auditor General for his helpful recommendations. We're pleased with the progress the working group is making, and we're equally looking forward to its outcomes. Thank you for the opportunity to address you this morning, and I look forward to responding to your questions.