Debates of Jan. 31st, 2018

The Environment

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, I rise tonight at adjournment proceedings to review a question and a response I received on October 4, 2017. It relates to the challenge of climate change. My question was for the Prime Minister. The Prime Minister did rise and provide a response, but it was not entirely to the point of the question. It was certainly positive, and he was very generous in praising my long-time personal work on the file.

I quoted from our colleague, the late Arnold Chan, who in his last words to the House in a speech that was read by the hon. member for Ajax, who said to all of us:

It is imperative that we stop treating climate change as solely an environmental issue, but recognize it as an all-encompassing priority that we as a society and a government must confront with the utmost urgency.

When I stood to ask that question October 4, the day before we had had the release of the report of the commissioner of the environment and sustainable development, within the office of the Auditor General, Julie Gelfand, the commissioner, happened to have said this about how we were doing as a country and as a government to meet our climate change targets. She said:

Climate change is one of the defining issues of the 21st century. These audits show that when it comes to climate change action, Canada has a lot of work to do in order to reach the targets it has set.

As my colleague, the parliamentary secretary to minister of environment, will know, because I have made this point in the House in debate before, Canada showed leadership in 2015 in Paris. In the negotiations of the Paris accord, Canada was the first industrialized country to step up and agree with the developing world that we had to aim to hold global average temperature increase to no more than 1.5^o C above what it was before the industrial revolution. These sound like trivial numbers, but in the context of survival for the low-lying island states, survival for people in the African content, and survival for the Arctic ice to be present over our north pole, seasonally, year round, and into the future, we have to hold global average temperature to 1.5^o.

However, the target that Canada chose domestically was the very one that our Minister of Environment and Climate Change criticized in Paris, pointing out that the target of the previous prime minister, Stephen Harper, was really, as the minister said at the time, the floor, that we had to do better and aim higher. Certainly, the target of 30% below 2005 levels by 2030, put in place by the previous government in May of 2015, is entirely insufficient to meet the goals of the Paris accord.

This inconsistency is troubling, but even more troubling is the observation that we do not yet have a plan. We have the promise of a global carbon price across all of Canada, and that is a step in the right direction. However, in the context of what needs to be done, as Arnold Chan said, we need to make this an all-encompassing priority. That means we do not approve one project that increases greenhouse gas emissions, like approving pipelines full of bitumen and diluent, and then claim we can somehow meet the targets even though we have not yet put in place energy efficiency measures, gotten rid of fossil fuel subsidies, nor delivered on a comprehensive plan to avoid going above 1.5^o. We need more. We need action.

[Jonathan Wilkinson, Liberal, Parliamentary Secretary to the Minister of Environment and Climate Change]

Madam Speaker, the government very much agrees, and I personally agree, with the hon. member that this is an urgent and pressing issue that needs to be addressed in an all-encompassing way.

The Government of Canada has made taking action on climate change a very high priority. One of the first things the Minister of Environment and Climate Change did, once appointed, was to lead the Canadian delegation to the successful achievement of the Paris Agreement. Our government committed to an ambitious greenhouse gas emissions target. We then worked actively with our partners in the provinces, territories, and with indigenous leaders to develop the pan-Canadian framework on clean growth and climate change. This is a detailed plan that provides a well-defined path through which we will achieve the target.

The previous Harper government set greenhouse gas reduction targets, but never developed a plan nor did the work required to meet them. That hurt Canada's credibility at home and around the world and was unhelpful in the context of developing an international consensus. Step one for us is to show that when we set a target, we mean it. Two years after Paris, we have a lot to show for our efforts. We are introducing new legislation and regulations to ensure that a price on carbon pollution will apply across the country. The government is accelerating the phase-out of traditional coal-fired electricity units. We are establishing a clean fuel standard to reduce our emissions by incentivizing the use of lower carbon fuels, energy sources, and technologies. We are developing increasingly stringent model building codes so that all new homes will be built to a standard that will allow them to generate as much energy as they use.

We have made significant investments to support clean growth and innovation. In December, we invested more than $1 billion in the low-carbon economy fund, which will help the provinces in their fight against climate change.

We are also investing over $2.3 billion to support clean technology and innovation and to support the creation of good jobs in growing sectors of our economy. We are 100% committed to achieving our target and to working collaboratively with the international community. On December 9, 2017, we released the first annual progress report on the implementation of the pan-Canadian framework. This report highlights the strong progress that federal, provincial, and territorial governments have made in putting the pan-Canadian framework into action. We have made very significant progress, but we know we need to do more. That is part of the Paris Agreement. All countries will need to increase their level of ambition over time.

The pan-Canadian framework establishes a concrete plan to meet or even surpass our commitments under the Paris agreement. The measures we are taking today will have a real and lasting impact on the well-being and resilience of our communities and the environment.

This government will continue to work every day to turn Canada's clean growth and climate action into new laws, regulations, actions, investments, jobs, and economic opportunities for Canadians.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, here is the problem. The very same target that the hon. member just described as an ambitious target was the one that was put in place by the previous Harper government, which the hon. Minister of Environment described in Paris as the floor and that we could do better. The reality is that achieving our target—and there are large questions about whether we will—means achieving the weak target of 30% below 2005 levels by 2030, which does not get us to what we promised to do in Paris.

This will become glaringly apparent in October of this year when the Intergovernmental Panel on Climate Change reports, as it was asked to do in Paris, on the pathway to 1.5°C. That moment of ratcheting up that the hon. member mentioned, the fact that we all have to do better, and I mean all countries on earth, could be led by Canada by going into the next Conference of the Parties prepared to say that we are stepping up and that we are going to move that 2030 deadline to 2025, because Canada wants to be a leader in reality, not just rhetoric.

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

Madam Speaker, as the hon. member knows, Canada has a history, under governments of all political stripes, of establishing targets and not meeting those targets because no clear and comprehensive plan was developed. This government took the very firm position that we would establish a target. We would work with our provincial and territorial counterparts and with indigenous leaders across the country to develop a detailed plan that would enable Canadians to have visibility about how we will achieve our targets. We will work very hard to ensure that those are achieved and to the extent that we can make progress more quickly, we are certainly willing to ratchet up our level of ambition.

This government cares very much about climate change and ensuring a good future for our children and grandchildren. It is something we are committed to and we look forward to working with all parties in the House, including the hon. member, to ensure we actually play our part in this important international issue.

Taxation

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, similar to the member for Saanich—Gulf Islands, my question is also from October 4 of last year. It was regarding the controversial tax changes the finance minister proposed to bring in on corporations and small businesses. One might think that because that was last October, and the finance minister consulted with people and listened to people and then updated and made the final changes, this problem would have gone away and there would not be anything to talk about. However, that is not the case.

I used in my question an example of a family in my riding. Rita Felder is the CEO of a company called Field Farms Ltd. Basically, she immigrated to Canada and built up a company, with her entrepreneurial spirit, from nothing. She is in the business of selling organic grains, and she has grown that business. She sells now in multiple countries, has grown to employ 50 people, and has added buildings and equipment as time has gone on. Initially her concern was that she would not be able to pass on that farm and the company to her children, but I see that the finance minister made adjustments that would take care of that.

The other problem that has not yet been addressed is that when it comes to the money people accumulate in a corporation, the new proposal from the finance minister is going to allow the first $50,000 to be fine, but after that, the tax rate, depending on the type of use, will be between 40% and 73%. People in businesses that buy capital equipment do that with the money they have stored up in the corporation, so the unintended consequence of the tax changes that were implemented are that people who have corporations and are saving up this money every year are going to be paying a lot of it to the government and will be unable to afford to buy additional silos and pieces of equipment they need to expand their businesses.

I have a doctor in my riding who specializes in laser surgery, cataract surgery, and implants. He has done the same thing. He has built up a business. He has more than 20 employees, many of them family members, and he is doing very innovative high-technology, latest-edge procedures, and he needs expensive equipment. He uses the money he accumulates in his corporation to buy the equipment. Now he is going to expand his business. He is moving to a location that is going to take a few million dollars to set up.

I think the government needs to revisit what it has done on its tax changes. They are hurting small businesses, especially when it comes to businesses that are able to grow and be just the kind of businesses we want them to be. They are exporting and they are employing more people.

The Prime Minister, in his response, mentioned tax fairness and wealth. He said, “This...measure...goes after a system that encourages wealthy Canadians to use private corporations to pay lower tax rates than hard-working middle-class Canadians.”

Rita Felder said, “who are the wealthy Canadians the Prime Minister speaks of? Middle Class Canadians who run businesses need to incorporate savings for rainy days or future growth—yet the Prime Minister would seem to hold these savings for future investment over the businesses' heads—putting their future prosperity at risk.”

[Joël Lightbound, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I can assure the member opposite that growing the economy and supporting small businesses, such as those she mentioned in her speech, is a core priority of our government. It is a key part of our plan, in fact, to strengthen the middle class.

It has become clear that the investments our government has made in people, in communities, and in the economy are working. Canada has created 700,000 jobs since November 2015, and the unemployment rate is at its lowest level in over four years. In fact, since the beginning of 2016, Canada has had the fastest-growing economy in the G7. Canada has a highly competitive corporate tax system, one of the most competitive in the G7.

In last October's economic statement, our government took a major step to stimulate economic growth and specifically to help small businesses in Canada. We announced that we would be lowering the small business tax rate to 10% effective January 1, 2018, and to 9% effective January 1, 2019.

The combined average Canadian federal, provincial, and territorial tax rate for small business is already the lowest in the G7 and the fourth lowest across OECD countries. For the average small business, this tax cut will translate into savings of roughly $1,600 a year in federal taxes.

Thanks to this small business tax cut, entrepreneurs will be able to save more of their earnings, which they can then reinvest and use to further develop their businesses while creating good, well-paying jobs for Canadians.

Canadians have engaged in an important discussion on proposed measures to address tax planning using private corporations. We listened and we made revisions to the initial proposals to address the use of income sprinkling by owners of private corporations. Those revised measures are designed to ensure that they do not affect family members who make meaningful contributions to a family business.

It is important to note that the vast majority of private corporations will not be impacted by these income sprinkling measures. Under the new simplified proposals, the number of family businesses that would be affected annually is estimated to be fewer than 45,000, or less than 3% of Canada's 1.8 million Canadian-controlled private corporations.

With respect to passive investments held in private corporations, our government will be presenting a detailed plan in the 2018 budget. We need to ensure a level playing field, and we need Canadians to know that they will be compensated fairly for their hard work. That is exactly what we are going to do.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, the hon. parliamentary secretary needs to understand that the Liberals are hurting small businesses instead of helping them. They reduced the tax rate slightly, but then they increased the payroll taxes on them. Now there is a carbon tax coming on top of that.

When we talk about a competitive environment, we have to keep in mind that it is a dynamic situation. In the U.S., the government is lowering tax rates, and it does not have a carbon tax. Small businesses are really struggling.

I am encouraged to hear that in 2018 there is a possibility that the government might do more. I would encourage it to ensure it looks at corporations, especially small businesses that are investing in capital equipment, and change the tax code to allow the flexibility to grow income within the corporation, which can be used for those purposes.

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Madam Speaker, regarding the approach on the tax planning using private corporations, we consulted Canadians broadly to ensure we got it right. We heard from many Canadians, including small business owners, farmers, and fishers. We are moving forward with an approach that reflects what we have heard from Canadians.

As part of our plan to promote economic growth, create jobs, and, most importantly, help the middle class succeed, we will continue to lower the small business tax rate as we make our tax system fairer.

As the Canadian economy continues to grow, we think it is important to ensure that all Canadians working hard to join the middle class have opportunities to benefit from that growth.

[The Assistant Deputy Speaker, Carol Hughes]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 7:42 p.m.)