Debates of Jan. 31st, 2022

Question No.65—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

With regard to the rate of inflation in 2021 exceeding the Bank of Canada's annual target, according to the Department of Finance's projections, and Statistics Canada's census metropolitan areas: (a) how high must the benchmark interest rate rise to restore inflation to the Bank of Canada's target for each year between 2022 and 2027 inclusively; (b) by how much will the interest rate increases in (a) directly or indirectly increase the cost of servicing Canada's national debt; (c) for each of Statistics Canada's census metropolitan area, how many potential first time homebuyers will the increase in (a) exclude from Canada's real estate markets between 2022 and 2027 inclusively; and (d) for each of Statistics Canada's census metropolitan area, how much will the increase in (a) increase consumer debt?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, maintaining a stable environment for the prices Canadians pay is the paramount objective in Canada’s monetary policy. The Bank of Canada’s renewed framework will keep it focused on delivering low, stable and predictable inflation in Canada.

To do so, the Bank raises or lowers its key policy rate to bring economic activity in line with the productive capacity of the economy and to achieve its inflation target. Upon reaching the inflation target and the balance between aggregate demand and the economy’s productive capacity, the interest rate usually eventually settles around what central bankers call the “neutral rate of interest”. This neutral rate is changing over time and has declined over the past 2 decades as a result of low inflation. For Canada, the Bank of Canada estimates currently that this neutral rate lies between 1.75 and 2.75 percent, with a midpoint of 2.25 per cent.

The Department of Finance surveys private sector economists for their views on the outlook for the Canadian economy when preparing its economic and fiscal projections. The average of private sector economic forecasts has been used as the basis for fiscal planning since budget 1994. This practice introduces an element of independence into the fiscal forecast, and has been supported by international organizations such as the IMF.

According to the latest average economic forecast presented in the December 2021 “Economic and Fiscal Update”, inflation is expected to return within the 1 to 3 percent inflation control range of the Bank of Canada by 2023 and to have essentially returned to the 2 percent inflation target by 2024. The interest rate on 3-month treasury bills is also expected to return to 2 percent, a level consistent with the Bank of Canada’s policy interest rate having returned to the neutral interest rate. As a result, our public debt charges are projected to increase from about 1 percent of GDP in fiscal year 2021-22 to 1.3 percent of GDP in fiscal year 2026-27. This remains a historically low level, and well below the pre-financial crisis level of 2.1 per cent in 2007-08, despite extraordinary spending due to the pandemic.

Question No.66—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

With regard to the rate of inflation in 2021 exceeding the Bank of Canada's annual target, according to the Department of Finance's projections, and to Statistics Canada's census metropolitan areas: (a) how high must the benchmark interest rate rise to bring annual inflation rates below the Bank of Canada's target to achieve an annual average rate of the Bank of Canada's target over the next five years; (b) by how much will the interest rate increase in (a) directly or indirectly increase the cost of servicing Canada's national debt; (c) for each of Statistics Canada's census metropolitan area, how many potential first time homebuyers will the increase in (a) exclude from Canada's real estate markets over the next five years; and (d) for each of Statistics Canada's census metropolitan area, how much will the increase in (a) increase consumer debt?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, maintaining a stable environment for the prices Canadians pay is the paramount objective in Canada’s monetary policy. The Bank of Canada’s renewed framework will keep it focused on delivering low, stable, and predictable inflation in Canada.

To do so, the bank raises or lowers its key policy rate to bring economic activity in line with the productive capacity of the economy and achieve its inflation target. Upon reaching the inflation target and the balance between aggregate demand and the economy’s productive capacity, the interest rate usually settles around what central bankers call the “neutral rate of interest”. This neutral rate is changing over time and has declined over the past two decades as a result of low inflation. For Canada, the Bank of Canada estimates currently that this neutral rate lies between 1.75% and 2.75%, with a midpoint of 2.25%.

The Department of Finance surveys private sector economists on their views on the outlook for the Canadian economy when preparing economic and fiscal projections. The average of private sector economic forecasts has been used as the basis for fiscal planning since budget 1994. This practice introduces an element of independence into the fiscal forecast and has been supported by international organizations such as the IMF.

According to the latest average economic forecast presented in the December 2021 economic and fiscal update, inflation is expected to return within the 1% to 3% inflation control range of the Bank of Canada by 2023 and to have essentially returned to the 2% inflation target by 2024. The interest rate on the three-month treasury bill is also expected to return to 2%, a level consistent with the Bank of Canada’s policy interest rate having returned to the neutral interest rate. As a result, our public debt charges are projected to increase from about 1% of GDP, in financial year 2021-22, to 1.3% of GDP in financial year 2026-27. This remains a historically low level, and well below the pre-financial crisis level of 2.1% in 2007-08, despite extraordinary spending due to the pandemic.

Question No.67—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

With regard to the hard cap on greenhouse gas emissions produced by operations in Canada's oilsands which the Prime Minister announced at the COP26 Summit in Glasgow: (a) how many jobs does the government forecast will be lost or not created for each year between 2021 and 2050, inclusively, due to (i) planned investments in the oil sands which will be cancelled as a result of the announcement, (ii) capital flight as existing producers in the oil sands relocate to other jurisdictions, (iii) reduction in production and investment by existing producers; (b) if the government doesn't have projections or forecasts for (a), why has it not studied these factors; (c) by how much will economic activity decline for each year between 2021 and 2050 in oil and gas producing provinces, as measured by dollar value and percentage of gross domestic product, further to the announcement; and (d) how high of a border adjustment levy must be imposed on imports of foreign-produced energy sources to match the standards to be imposed on Canadian producers further to the announcement?

[Steven Guilbeault, Liberal, Minister of Environment and Climate Change]

Mr. Speaker, the Government of Canada recognized that climate change is one of the great challenges of our times and that to thrive in a net-zero world, Canada must do its part to reduce emissions and ensure that the transition to clean growth is just and equitable.

As these are still early days, the government is seeking the input of the net-zero advisory body on key principles for implementing the emissions targets for oil and gas, and is engaging key stakeholders, including provinces and territories, representatives from the oil and gas industry, non-governmental organizations and our indigenous partners.

The recently published Alberta Energy Transition study, conducted for Calgary Economic Development and Global Edmonton, notes that the global energy transition could create 170,000 jobs in Alberta alone and contribute $61 billion to the province's gross domestic product, GDP, by 2050.

The government is also aware of studies such as the one released by TD Economics, including their conclusion that the transition to net zero will create new job opportunities, and their recommended framework for transitioning to clean energy employment.

The Clean Resource Innovation Network commissioned the Global Advantage Consulting Group Inc. to conduct a study on the level of research and development expenditures in the industry. The study found that the domestic oil patch is the largest spender on clean technology in Canada, accounting for 75 per cent of the $1.4 billion spent annually. The Government of Canada believes that there is enormous opportunity for the industry to help lead Canada’s clean-tech transformation, and will be mindful of that as it works to develop the way forward.

The government has every expectation that its discussions with key partners such as provinces and territories and other stakeholders will allow it to forge a path to decarbonization in the oil and gas sector to meet Canada’s net-zero-by-2050 target, and not only protect Canadian jobs but grow them in a new era of sustainable prosperity.

Question No.74—

[Doug Shipley, Conservative, Barrie—Springwater—Oro-Medonte, ON]

With regard to government analysis on the impact of the Bank of Canada's low inflation target on the Ontario economy: (a) has the government done any projections on the impact of maintaining the low inflation target on Ontario's economy, and, if so, what are the results of such projections, broken down by economic indicator; and (b) has the government done any projections on the impact of abandoning the low inflation target on Ontario's economy, and, if so, what are the results of such projections, broken down by economic indicator?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, policy-makers and the general public readily acknowledge that the best contribution of the Bank of Canada to the well-being of the country is to achieve a low and stable rate of inflation. The government re-iterated the importance of price stability in its recent renewal of the monetary policy framework with the Bank of Canada, as it is clear that abandoning the low-inflation regime would be detrimental to the economy of Ontario, just as it would be detrimental to the economy of all Canadian provinces and territories.

Partly as a result of COVID-related supply disruptions, inflation is currently higher than the roughly 2% average that has prevailed in recent decades. This is true in Canada and in many other countries around the globe. This is a matter of concern to the Bank of Canada and the government. However, most market observers around the world expect that the factors keeping inflation elevated will dissipate after a period of time. As a result, the Bank of Canada expects inflation to ease back and to reach its 2% target by late 2022. The Bank and the government remain committed to low and stable inflation and the 2% inflation target.

Question No.77—

[Larry Maguire, Conservative, Brandon—Souris, MB]

With regard to government analysis on the impact of the Bank of Canada's low inflation target on the Manitoba economy: (a) has the government done any projections on the impact of maintaining the low inflation target on Manitoba's economy, and, if so, what are the results of such projections, broken down by economic indicator; and (b) has the government done any projections on the impact of abandoning the low inflation target on Manitoba's economy, and, if so, what are the results of such projections, broken down by economic indicator?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, policy-makers and the general public readily acknowledge that the best contribution of the Bank of Canada to the well-being of the country is to achieve a low and stable rate of inflation. The government reiterated the importance of price stability in its recent renewal of the monetary policy framework with the Bank of Canada, as it is clear that abandoning the low inflation regime would be detrimental to the economy of Manitoba, just as it would be detrimental to the economy of any other Canadian province or territory.

Admittedly, as a result of COVID-related supply disruptions, inflation is currently higher than what we were accustomed to over the last decade. This is true in Canada and in many other countries around the globe. This is a matter of concern to the Bank of Canada and the government. However, most market observers around the world view the factors keeping inflation elevated to be temporary. As a result, the Bank of Canada expects inflation to ease back and to reach its 2% target by late 2022. The bank and the government remain committed to low and stable inflation and are taking actions to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.

Question No.78—

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

With regard to government analysis on the impact of the Bank of Canada's low inflation target on the Alberta economy: (a) has the government done any projections on the impact of maintaining the low inflation target on Alberta's economy, and, if so, what are the results of such projections, broken down by economic indicator; and (b) has the government done any projections on the impact of abandoning the low inflation target on Alberta's economy, and, if so, what are the results of such projections, broken down by economic indicator?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, policy-makers and the general public readily acknowledge that the best contribution of the Bank of Canada to the well-being of the country is to achieve a low and stable rate of inflation. The government reiterated the importance of price stability in its recent renewal of the monetary policy framework with the Bank of Canada, as it is clear that abandoning the low-inflation regime would be detrimental to the Alberta economy, just as it would be detrimental to the economy of any other Canadian province or territory.

Admittedly, as a result of COVID-related supply disruptions, inflation is currently higher than what we were accustomed to over the last decade. This is true in Canada and in many other countries around the globe. This is a matter of concern to the Bank of Canada and the government. However, most market observers around the world view the factors keeping inflation elevated to be temporary. As a result, the Bank of Canada expects inflation to ease back and to reach its 2% target by late 2022. The bank and the government remain committed to low and stable inflation and are taking actions to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.

Question No.82—

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

With regard to the government's commitments on the completion of the Okanagan Rail Trail project and the federal Addition to Reserve (ATR) process for the Duck Lake Indian Reserve No. 7 (IR#7): (a) what is the status of the ATR to Duck Lake IR#7 of former CN Rail land; (b) what are the exact areas of negotiation which have and have not been resolved to complete the ATR; (c) how many meetings or briefings has the Minister of Crown-Indigenous Relations or the Minister of Indigenous Services had regarding the Okanagan Rail Trail project or the ATR to Duck Lake IR#7 since November 20, 2019, and what are the details of each meeting or briefing, including dates; (d) when was the last communication by the government to Duck Lake IR#7 or the Okanagan Indian Band regarding the ATR; and (e) what is the estimated timeline for the completion of the ATR?

[Vance Badawey, Liberal, Parliamentary Secretary to the Minister of Indigenous Services]

Mr. Speaker, insofar as Indigenous Services Canada, ISC, and its Special Operating Agency of Indian Oil and Gas Canada are concerned, the response is as follows. With regard to part (a), ISC continues to support the Okanagan Indian Band with the addition to the reserve of the former CN Rail corridor lands bisecting Duck Lake Indian Reserve 7. CN Rail is currently the registered owner of the lands in fee simple, and Canada has provided CN with a draft agreement of purchase and sale to support the transfer of lands to Canada for the use and benefit of the band.

With regard to part (b), the Okanagan Indian Band continues to work to resolve third party interests, including property rights required by telecommunications providers, electrical transmission and distribution services, sewer utility interests and access agreements for on-reserve developments. Canada has offered to support the band with their negotiations; however, assistance has not been requested. The band has the support of legal and technical experts working to satisfy addition-to-reserve, or ATR, requirements.

With regard to part (c), government officials engage with the Okanagan Indian Band on a biweekly basis in an effort to satisfy remaining ATR requirements for resolution of third-party interests. There have been no meetings or briefings on this project with the Minister of Crown-Indigenous Relations or the Minister of ISC.

ISC does not attend meetings and does not receive briefings of the Okanagan Indian Band’s participation on the Okanagan rail trail project. Once the ATR is completed, it will be up to the band to determine the intended use of the lands.

With regard to part (d), the last communication between ISC and the Okanagan Indian Band regarding the ATR was November 19, 2021.

With regard to part (e), it is difficult to estimate timelines for completion, as completion of the ATR is subject to the readiness and willingness of third party interest holders to negotiate federal replacement interests.

Question No.85—

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

With regard to government analysis of the impact of the Bank of Canada's low inflation target on the British Columbia economy: (a) has the government done any projections on the impact of maintaining the low inflation target on British Columbia's economy, and, if so, what are the results of such projections, broken down by economic indicator; and (b) has the government done any projections on the impact of abandoning the low inflation target on British Columbia's economy, and, if so, what are the results of such projections, broken down by economic indicator?

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, policy-makers and the general public readily acknowledge that the best contribution of the Bank of Canada to the well-being of the country is to achieve a low and stable rate of inflation. The government reiterated the importance of price stability in its recent renewal of the monetary policy framework with the Bank of Canada, as it is clear that abandoning the low inflation regime would be detrimental to the economy of British Columbia, just as it would be detrimental to the economy of any other Canadian province or territory.

Admittedly, as a result of COVID-related supply disruptions, inflation is currently higher than what we were accustomed to over the last decade. This is true in Canada and in many other countries around the globe. This is a matter of concern to the Bank of Canada and the government. However, most market observers around the world view the factors keeping inflation elevated to be temporary. As a result, the Bank of Canada expects inflation to ease back and to reach its 2% target by late 2022. The bank and the government remain committed to low and stable inflation and are taking actions to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.

Question No.88—

[Michael Kram, Conservative, Regina—Wascana, SK]

With regard to the “A Healthy Environment and a Healthy Economy" plan from Environment and Climate Change Canada, specifically where it states that “the government will also set a national emission reduction target of 30% below 2020 levels from fertilizers”: how was the 30% target decided upon, and when did the department make its final decision?

[Marie-Claude Bibeau, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, the target was developed based on scientific literature and internal analysis that points to the potential for optimizing nitrogen fertilizer use with an accompanying reduction in greenhouse gas emissions while maintaining or increasing yield. The reduction percentage of 30% was the result of an iterative process weighing various factors and characteristics, such as whether it was ambitious in considering climate goals and international efforts, whether it was technically achievable because technologies and know-how largely exist, whether it was economically feasible as a result of potential cost savings and increased yield through efficiency gains and better management, and whether it was scientifically defensible as supported by research findings relevant to Canadian context.

The target was finalized in fall 2020 ahead of the release of the “A Healthy Environment and a Healthy Economy" plan.

Question No.89—

[Michael Kram, Conservative, Regina—Wascana, SK]

With regard to the “A Healthy Environment and a Healthy Economy” plan from Environment and Climate Change Canada, specifically where it states that “the government will also set a national emission reduction target of 30% below 2020 levels from fertilizers”: has any government department, agency, Crown corporation or government entity conducted a study on how this policy will affect either (i) Canada’s agricultural production, (ii) the food supply in Canada, (iii) Canada’s contribution to the global food supply via exports, and, if so, what were the findings of the studies?

[Marie-Claude Bibeau, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, the fertilizer target was developed based on scientific literature and internal analysis that points to the potential for optimizing nitrogen fertilizer use with an accompanying reduction in greenhouse gas emissions, while maintaining or increasing yield. The reduction percentage of 30% was the result of an iterative process weighing various factors and characteristics, such as whether it was ambitious in considering climate goals and international efforts, whether it was technically achievable because technologies and know-how largely exist, whether it was economically feasible as a result of potential cost savings and increased yield through efficiency gains and better management, and whether it was scientifically defensible as supported by research findings relevant to Canadian context.

Question No.90—

[Michael Kram, Conservative, Regina—Wascana, SK]

With regard to the “A Healthy Environment and a Healthy Economy” plan from Environment and Climate Change Canada, specifically where it states that “the government will also set a national emission reduction target of 30% below 2020 levels from fertilizers”: has any government department, agency, Crown corporation or government entity conducted a study on how this policy will affect the Saskatchewan economy regarding (i) reduced crop yields, (ii) fewer jobs in agriculture, including agri-retail, canola crushing plants, farms, and, if so, what were the findings of the studies?

[Marie-Claude Bibeau, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, the Government of Canada has not conducted a study regarding the impact of the target on Saskatchewan’s economy.

Question No.93—

[Kelly McCauley, Conservative, Edmonton West, AB]

With regard to the Prime Minister’s pledge to lower oil and gas emissions: what is the projected loss of (i) jobs, (ii) federal tax revenue from the province of Alberta and the federal government for the year 2022 as a result of the pledge?

[Steven Guilbeault, Liberal, Minister of Environment and Climate Change]

Mr. Speaker, the Department of Environment and Climate Change Canada and Natural Resources Canada have initiated engagements with provinces and territories, indigenous peoples, industry, and other Canadians. These discussions will take place over winter and spring 2022 and will help inform the design of the approach to implementing the Prime Minister’s commitment to cap and reduce total emissions from the oil and gas sector to achieve net zero emissions by 2050.

Until the measure has been designed, it is premature to estimate economic impacts.

Assuming that the measure will include regulations under the Canadian Environmental Protection Act, a regulatory impact analysis statement will be prepared and published in the Canada Gazette. A regulatory impact analysis statement provides information regarding the costs and benefits of the regulations as well as other information, such as who will be affected, who was consulted in developing the regulations, and how the government will evaluate and measure the performance of the regulations against objectives.

Question No.94—

[Kelly McCauley, Conservative, Edmonton West, AB]

With regard to the 4.7% rise in the Consumer Price Index over the last year and future inflation: (a) what are the government’s estimates on the added increase the rise has had on trucking costs; and (b) what are the government’s estimates and projections for the next 12 months on the increase in food prices as a result of the added trucking costs?