Debates of May 22nd, 2018

Department of Finance—Main Estimates, 2018-19

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, as the member opposite might know, 85% of Canadians live in a jurisdiction in which carbon pricing already exists. Of course, Ontario would be one of those jurisdictions.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, if the price of the carbon tax were implemented at a $50-per-tonne level, as the government's current budget legislation would have it, what then would be the price of gas in Ottawa today?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, as was stated, 85% of Canadians live in a jurisdiction in which there is already carbon pricing. What I can say is that Ontario is one of those jurisdictions. We know pricing carbon is appropriate to deal with the long-term impacts of climate change. We also know that in those jurisdictions, in examples like B.C., Ontario, and Quebec, which have introduced carbon pricing, the economy is doing very well.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, how much would the average Canadian family pay in taxes once the current proposal for a carbon tax in the minister's budget is fully implemented?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, we proposed in our budget a backstop to carbon pricing in areas of the country that do not choose to have their own carbon pricing regime. What we can say as the federal government is that we expect that we would return those revenues to those provinces, so the amount of the potential tax reduction for citizens in those provinces will be determined by the provinces themselves.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, does that mean the average Canadian family will get back as much in other tax relief as they will have to pay in new carbon taxes, yes or no?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, again, it is important to know that about 85% of Canadians live in a jurisdiction where carbon pricing already exists. What I can say is that the provinces or territories that choose the federal backstop will have their own decision as to how to deal with that revenue. While we cannot say specifically yet how a given household might be affected, provinces with carbon pricing plans in place have produced household impact estimates. For example, in Alberta, a family of four with income up to $95,000 would receive a rebate of $540, which exceeds the direct cost of the carbon levy in 2018.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, the carbon tax that the government wishes to impose on all provinces that do not have their own is $50 per tonne. When fully implemented, what would be the direct cost for the average Canadian family?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, we can only hope that the member for Carleton might understand what we mean when we say that we intend on having an approach to pricing carbon, but we intend on doing it in a revenue-neutral way. By sending those revenues back to the provinces, the provinces will have in their ability to reduce taxes for their citizens. Therefore, the level of those tax reductions, the potential that exists, will be determined by the provinces as they come up with their approach.

[Pierre Poilievre, Conservative, Carleton, ON]

Therefore, Madam Chair, there is a real cost but only a potential refund to the individual taxpayer. Let us break those into the two respective parts. What will be the real original cost that an average Canadian family would pay in carbon taxes when the minister's proposal is fully implemented?

[Bill Morneau, Liberal, Toronto Centre, ON]

Again, Madam Chair, the member asked the question a different way. I am obliged to answer with the facts. The facts are that 85% of Canadians already live in a jurisdiction with carbon pricing. For those other Canadians, should the provinces or territories in which they live decide to use the federal backstop, the provinces or territories will send revenue to the federal government and we have committed to sending that revenue back to the provinces. To the extent the provinces decide to give that revenue back to citizens, they will be able to reduce taxes.

For the member opposite to understand the amount of potential tax reduction, he would need to go to those provinces or territories that seek to use the federal backstop. It is a simple approach and we will keep repeating it.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, Canadians will keep repeating the question. It is the current government that is implementing this tax. The tax is found in the minister's bill. It is a failure to take responsibility for the minister imposing the tax to say to go and ask some provincial politicians to tell us what the cost is. He is asking this chamber for the power to impose a tax. What will that tax cost the average Canadian family?

[Bill Morneau, Liberal, Toronto Centre, ON]

Again, Madam Chair, as I have mentioned before, we recognize that we have seen 85% of Canadians already living in jurisdictions with carbon pricing. We have seen in those jurisdictions significant economic success. In British Columbia, in Ontario, and in Quebec, regions that have a significant lion's share of Canadians, there is a carbon pricing approach in place. Those provinces are experiencing strong economic fundamentals right now.

What we can say is that when we get to a more granular level and we look at what is going on in Alberta, for example, we can see that the rebate an average family of four with $95,000 in Alberta is getting is in excess of what the cost might be. Therefore, our approach of returning those revenues has the potential to produce tax reductions for people in those jurisdictions using the backstop.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, not a single jurisdiction in the country has a carbon tax that has returned more in tax relief than it has collected in new taxes. In each of those jurisdictions, governments have more and taxpayers have less.

The minister can understand why taxpayers would be suspicious when he says he will simply collect this money from them in higher gasoline and home heating taxes, and then give that money to a bunch of provincial politicians to manage. The Canadian Taxpayers Federation says that the minister's new tax will cost $2,500 per family. Trevor Tombe, a professor at the University of Calgary, says it will be $1,100. Which of those two numbers is closest to the finance department's estimates?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, I am happy to say that we believe the approach we have taken to pricing carbon, the approach that 85% of Canadians currently live under, is the appropriate way for us to deal with the long-term impacts of climate change. Climate change is real. We believe that dealing with this so we do not pass costs on to the next generations is critically important.

What we can say is that we find it astonishing that the members opposite would decide to attack this idea. We would like to understand if they actually have an approach to dealing with climate change or if this is entirely an approach to attacking those jurisdictions in which 85% of Canadians already live and the other jurisdictions as they decide how best to deal with those long-term challenges.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, the only jurisdiction in question is the federal jurisdiction. It is a federal budget bill that is imposing a federal tax in provinces that do not have their own. I am not aware of any finance minister in history who has imposed a tax like this without telling Canadians what it will cost beforehand.

I will ask one more time. Will the finance minister tell Canadians how much it will cost the average Canadian family to pay his fully implemented carbon tax?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, I do not know how best to enable the member for Carleton to understand that in fact the approach we are taking is to return revenue to those jurisdictions that do not already have an approach to carbon pricing. If he is seeking a specific example, we are happy to provide one.

A specific example would be in Alberta. A family of four with income up to $95,000 would receive a rebate of $540. This exceeds the direct cost of the carbon levy in 2018, which is estimated, in their estimation, at $500 for that family of four. That would be a net benefit. I am happy to do the math: $540 minus $500—

[The Deputy Chair, NDP, Carol Hughes]

The hon. member for Carleton.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, the finance minister is now commenting on the provincial policies in the various jurisdictions. That is just fine. In Ontario, using the policies of the Wynne government, as he is proposing to send the Ontario government the revenues from his federally imposed tax if it does not collect its own, what would be the net cost to an Ontario family of this new carbon tax?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, simply put, Ontario has put in place an approach to carbon pricing, and that already exists. The approach we are proposing, the federal backstop, would not be applicable in the province of Ontario since it currently has an approach to pricing carbon. That would only apply to those jurisdictions that do not currently have a price on carbon, and that of course is the small minority of Canadians not already in that jurisdiction.

[Pierre Poilievre, Conservative, Carleton, ON]

Madam Chair, he was able to comment on Alberta, but the cannot comment on Ontario. That is because the carbon tax, which he will mandate federally and which the Wynne government has already implemented provincially, is funding things like rebates for millionaires who can afford Teslas and also to buy carbon credits from California and other foreign jurisdictions. That is what provinces like Ontario, under the existing government, would do with this federally mandated carbon tax.

My final question for the minister is this. The distribution of the cost of the carbon tax is known to him. What would be the percentage cost of the carbon tax to a family living below the poverty line, and would that family living in poverty pay a higher percentage of its income in carbon taxes than would, say, a millionaire like the finance minister?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, as I have said, the reality is that 85% of Canadians already live in a jurisdiction in which there is a carbon pricing approach. What we are doing is creating a backstop and returning that revenue back to those provinces so they can decide what to do with it. It is entirely within their jurisdiction to decide to give that money back to reduce taxes. The distribution of those tax reductions really will be up to them.

[Bill Morneau, Liberal, Minister of Finance]

Madam Chair, since coming into office, our government has been focused on the things that matter most to Canadians: growing the economy, creating jobs, strengthening the middle class, and helping everyone working hard to join it. This in turn builds confidence and success. Our most recent budget is the clearest evidence yet in support of this commitment.

This budget is good for business and good for middle-class jobs. It will ensure sustainable economic growth, set us on the path toward greater equality, and better support Canadians so they will have the confidence they need to succeed now and in the future. When people feel confident about their future and their children's future, they invest in themselves and their communities in ways that promote economic growth.

With budget 2018, we are putting more money into the pockets of those who need it most through initiatives like the new Canada workers benefit, which will take effect next year.

We are taking real, proactive steps to encourage gender equality and help more women and girls succeed so they can benefit from and contribute to a growing economy. We are unleashing the power of Canadian ingenuity by making the single largest investment in fundamental research in Canadian history. We are advancing reconciliation with indigenous peoples for the benefit of their families, their communities, and all of Canada. We are safeguarding the natural heritage that means so much to us as Canadians. We are protecting Canadians, their companies, and our economy from cyber-threats. We are making it easier for businesses to do business with the government.

Budget 2018 is about investing in our greatest resource: our people. We are helping Canadian workers get the skills they need to get jobs in the new economy. We are helping middle-class families cover the higher costs of raising their children. We are giving people who are working hard to join the middle class more opportunities to succeed.

We are focused on these long-term challenges. At the same time, we know there is more work to do. We hear those in the business community who are concerned about Canada's competitiveness in the immediate term, especially at a time of uncertainty around the North American Free Trade Agreement, global trade, and the recent U.S. tax reform.

Our government is listening carefully to those voices. I am listening to those voices. This is an important conversation. Indeed, it is one I am looking forward to having with many of Canada's business leaders in the weeks and months to come. However, as I have also made clear, we cannot lose sight of the facts.

The facts clearly show that Canada and Canadians are competitive and that our plan is working. We see that in Amazon's decision to expand its Vancouver tech hub, which will create 3,000 good, well-paid jobs in that city.

We see it when businesses, from General Motors to ABB Group to Microsoft, choose Canada, knowing that Canadians have what it takes to compete and to succeed. In fact, Canada had the highest stock of foreign direct investment as a percentage of gross domestic product in the G7 countries in the year 2016. We see it with the pickup in business investment, which grew at about 8% over the last four quarters, the fastest rate of growth in five years. We see it in rising business creation. The Bank of Canada's latest business outlook survey shows that business intentions to invest in machinery and equipment remain solidly positive, pointing to further investment growth.

We see it in our communities, where hard-working Canadians have created over 600,000 jobs since our government took office. In the past two years, our country's growth has been the fastest in the G7. Our unemployment rate is currently at its lowest point since 1976.

This success is in part because we have invested directly to make our businesses more competitive. That includes a recent cut to the small business tax rate, with a further reduction to 9% set for next January, 2019.

However, attracting business investment and supporting economic growth is about more than just low corporate tax rates. It is about people. By investing in our people and the things that empower them, we hold the potential to make Canada a global powerhouse for business investment. Our future prosperity depends on our ability to make these investments.

We have to provide Canadians the skills that businesses need to succeed. We have to continue building more modern and more resilient infrastructure so that people can get to their destinations more easily and products can get to market more quickly and more safely. We must invest in innovation and science, making Canadian businesses and workers more productive and more competitive on the global market.

We must continue to successfully complete major trade deals that give Canadian businesses better access to global markets so that the benefits of growth are felt by more and more people here at home and around the world. We must continue to develop innovative, workable solutions to encourage greater investment, such as the Canada Infrastructure Bank and industry-led initiatives like the Canadian business growth fund. With these actions, we are building an internationally competitive environment for Canadian business, one that attracts investment, contributes to our economic growth, and creates jobs that support families and communities.

At the same time, budget 2018 maintains our steadfast commitment to a fair and inclusive society, one that all Canadians can contribute to and benefit from and one with a strong and growing economy. Economic growth must benefit all Canadians, not just the wealthy few.

We believe that our goals of a competitive economy and a fair and inclusive economy are complementary. They reinforce and strengthen one another.

Giving people the opportunity to succeed is not just the right thing to do, it is the smart thing to do for the economy. Budget 2018 takes us further than ever on the road to a more solid, more equitable, and more competitive Canada.

I would be pleased to take your questions.

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

Madam Chair, in his speech the minister mentioned so eloquently that budget 2018 continues on the path of budget 2016 and budget 2017 of investing in people, investing in Canadians, in order to ensure that we maintain a prosperous, fair, and equitable society, while creating the conditions to ensure the long-term success and prosperity of the Canadian economy. It is a balanced approach. We see other countries around the world taking a completely different approach, a take it or leave it approach with corporate tax cuts, sometimes to the detriment of necessary public investments.

There are those, of course, in Canada and elsewhere around the world, who seem to want to pursue a similar course of radical corporate tax cuts coupled with austerity and cuts to public services.

How does the minister intend to go about balancing tax cuts with the need for investments in the things Canadians care about, such as health care, education, and social services, and the things the minister has mentioned that can create a competitive advantage, such as investments in infrastructure, innovation, or science?

[Bill Morneau, Liberal, Toronto Centre, ON]

Madam Chair, these are the sorts of tough choices governments face every day. How we answer them is a clear reflection of our values as a country and of the vision we share of what kind of future we want for our children and grandchildren.

Fortunately, we are not alone in having to answer them. We depend on Canadians. We meet with them, and we discuss these issues both here in Parliament, and of course, in communities across the country.

With respect to creating the conditions for Canada's long-term competitiveness and success, I have already indicated that this will require a healthy dose of listening, which our government is fully committed to doing. It will require all of us to take a broad view of what competitiveness means and to make an honest assessment of all the factors that contribute to it.

There are factors other than taxation, of course, that support competitiveness. One need only look at some of the most successful countries in the world, with the highest living standards, to see that they also have very high degrees of investments in their people.

Yes, we need to take a look at our tax rules. We are doing that. We are listening to Canadians and Canadian businesses to understand the impact of the complex changes that were made in the United States. Competitiveness, as I said, rests on so much more than taxes.

When taking into account all the other factors, such as our openness to international trade, our wealth of natural resources, our low energy costs, liveable cities, and community infrastructure, the bottom line is that Canada is poised for success. We need to build on that, and we need to—