Mr. Speaker, it is my pleasure to rise to speak to Bill C-63. I intend to focus on commitments made by the government of the day, and the previous government, on the phasing out of inefficient or perverse subsidies for fossil fuels.
This commitment was made repeatedly since 2009 to the G20, including by the Liberal government in 2016. Canada, Mexico, and the United States committed to remove these perverse incentives by 2025. The government has voiced a commitment to phase them out in the medium term. The question then arises, as we move at a snail's pace, what exactly is the medium term?
The government also committed to take action to reduce greenhouse gases. They made that commitment in Paris, and we are now hearing from world leaders that this appears to be a sliding commitment on behalf of the Government of Canada, leading into the climate meeting in Bonn.
I would like to start off reminding those in this place of what the Prime Minister's mandate letter said about the phase-out of these perverse subsidies. The mandate letter for the finance minister is very clear.
First, his mandate was to work with the President of the Treasury Board and his colleagues in the cabinet to review tax expenditures and other spending to “reduce poorly targeted and inefficient measures, wasteful spending”, and ineffective initiatives.
Second, his mandate was to work with the Minister of Natural Resources to “enhance existing tax measures to generate more clean technology investments and work with the provinces and territories to make Canada’s tax system highly competitive for investments in the research, development, and manufacturing of clean technology.”
Third, the Minister of Finance was mandated to work with the Minister of Environment to fulfill the government's “G20 commitment and phase out subsidies for the fossil fuel industry over the medium-term.”
It does not end there. The mandate letter for the finance minister also says that if the government is to tackle climate change, the work must be “informed by performance measurement” and “evidence”. Then the mandate letter says that the government has committed to a “higher bar for openness and transparency”, and that the Prime Minister expects the minister to deliver on these commitments during this mandate in the first four years. However, two of those years are gone and we are now sliding into the third year.
What has a leading international entity said about Canada's sliding commitment to addressing greenhouse gases, including our commitment to remove the perverse incentives?
Jose Angel Gurría, the Secretary-General of the OECD, has expressed great pain at the sliding commitment. He says it is “a bit of a paradox” that Canada seems to be espousing the political will to reduce greenhouse gases, but does not seem to be going down that road. However, in the United States where the political will is gone, they have moved far ahead of Canada in taking action. He also stated that, “While at the same time, the local situation is showing that speed of reduction is not as fast as one would have wanted”, that emissions in Canada should have fallen 17% from 2005 levels, and instead the drop has been more like 2%. He also stated that Canada is “on a path where, by 2030, you may not be able to get to the target.”
It is very concerning. Therefore, it is not only Canadians expressing concern about the lack of commitment of the government to deliver on its commitments to reduce greenhouse gases. There will be growing concern about the failure to deliver the commitments to the G20 and their commitments in Paris.
This is reiterated by Canada's Auditor General in a letter sent by him on June 2 to the chair of the Standing Committee on Environment and Sustainable Development. It states:
This audit focused on whether the Department of Finance Canada and Environment and Climate Change Canada, in a manner consistent with their respective roles and responsibilities, supported Canada’s 2009 G20 commitment to phase out and rationalize inefficient fossil fuel subsidies while providing targeted support for the poorest.
It continues:
Overall, we found that [these departments] did not define what the 2009 G20 commitment to phase out and rationalize inefficient fossil fuel subsidies means in the context of Canada’s national circumstances.
The Auditor General then continues, and states:
We found that since 2009, six subsidies to the fossil fuel sector were reformed by legislation. Other tax measures for this sector were not reformed. We also found that the Department of Finance Canada did not consider all tax measures to determine whether they were inefficient fossil fuel subsidies under the commitment. The Department also did not develop an implementation plan with timelines to support the phase-out and rationalization by 2025 of remaining tax measures that are inefficient fossil fuel subsidies.
The Auditor General closes with this, which states:
...without a clear understanding of the fossil fuel subsidies covered by the G20 commitment and without an implementation plan with timelines, the departments cannot ensure that they are providing the support needed for Canada to meet the commitment by 2025.
Clearly serious concerns are being raised, in all quarters, about the failure of the current government to deliver on its commitments both to reduce greenhouse gases and to take more expedited action to remove the perverse subsidies. In this budget, the government appears to be partially addressing Canadian development and Canadian exploration expense deductions. With respect to the removal of these subsidies, it may be noted that the Canadian exploration expense deduction used to be 100%, but is now being slid into the Canadian development expense deduction, which is 30%. It is hard to tell from what is in the budget document how much further the government is going, but clearly it is not rapid enough to meet the demands of the Auditor General.
It is important to consider that these corporations can continue to defer the deductions. Therefore, while the budget document appears to suggest that by a certain date, which I think is 2021, they can no longer claim them, the corporations can hold those off and claim them at an end date. Therefore, we may have hundreds of millions of dollars being claimed in the near future, at a time when we need to be spending that money on supporting renewable energy.
Why is this of deep concern? I have gone through the reports where people have been adding up the subsidies and grants for the fossil fuel industry. It adds up to an astounding $5.8 billion a year, so the government has a long way to go, given the meagre measures it has in this budget document.
Therefore, the obvious question for the government is this. When will it step up to the plate, move this forward, and respond to the call by the Auditor General to provide a plan of action and a timeline? Further, is it going to begin to become transparent, instead of holding discussions on these perverse subsidies behind closed doors?