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Results: 1 - 15 of 2238
View Kim Rudd Profile
Lib. (ON)
Oh, I got my three minutes back. Thank you, Mr. Chair.
I want to continue in the vein of pricing pollution. I read your report, and you state that putting a price on pollution is one of the most effective and efficient ways to reduce greenhouse gas emissions. What's curious to me is that the Leader of the Opposition yesterday said that in fact your report said the exact opposite—that it doesn't work.
I don't want to suggest that the Leader of the Opposition is misleading people, but I wonder if you could clarify what your report said.
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Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-06-20 11:27
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The report alluded to the fact that putting a price on pollution, a price that is widespread and that's paid by most if not the totality of economic actors, has a cost, but it allows sectors to make the necessary trade-offs among themselves so that for those actors for whom it is the easiest to reduce emissions, they will do so. The report also says that there are other instruments available to economic actors—individuals, corporations, governments—to reduce emissions, regulations and subsidies being the two other broad categories of instruments, but these also have a cost, albeit the cost is often not as transparent as a carbon tax or a price on carbon.
That's what the report says. It also says that technological improvements can be a significant contributor to reducing greenhouse gases, but technological improvements are inherently hard to predict. If they were easy to predict, then some people would be very, very rich by investing in advance in these companies; some of them are indeed very rich and have that insight.
In a nutshell, that's essentially what the report says.
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Darlene Bess
View Darlene Bess Profile
Darlene Bess
2019-06-18 11:03
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Good morning, Mr. Chair, and members of the committee.
Thank you for the opportunity to present the main estimates for the 2019-20 fiscal year on behalf of the Department of Finance.
With me today, as you mentioned, are departmental officials to assist in providing you with a more in-depth perspective on the rationale and policy supporting the numbers within our estimates.
As you know, the Department of Finance's mandate is to assist the government in developing and implementing strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs with the goal of creating a healthy economy for all Canadians.
This year's main estimates reflect a departmental budgetary spending of $99 billion, which is composed of $99.4 million in voted expenditures, $1.4 million in budget implementation vote items, and $98.9 billion in statutory expenditures. These main estimates reflect a net increase of $5 billion in departmental budgetary expenditures, stemming from forecasted increases of $4.2 million in vote 1 program expenditures and an increase in statutory spending of $5 billion.
The increase of $4.2 million in vote 1 program expenditures in this year's main estimates is due to increased activity under the following initiatives: $1.6 million for a carbon pollution pricing system, $1.5 million for tax competitiveness monitoring, $1.2 million to enhance capacity for indigenous policy, $0.8 million for an open banking review, and $0.6 million to increase trade dispute resources. This increase is partially offset by sunsetter funding that the department received for the G7 summit.
The 2019-20 main estimates also include $1.4 million of new budget implementation votes for each spending measure announced in budget 2019. Funding for these initiatives will be allocated to the department through Treasury Board submissions.
The 2019 budget implementation vote items are made up of $0.8 million to strengthen Canada's anti-money laundering and anti-terrorist financing regime, $0.4 million to introduce a Financial Consumer Agency of Canada governance council, and $0.2 million to protect Canadians' pensions.
The 2019-20 anticipated statutory spending is based on the most recent official estimates from budget 2019, released by the Department of Finance on March 19, 2019. Statutory expenditures are not included in the appropriation bill, as they have already been approved by Parliament through enabling legislation. They are included for information in the estimates documents.
As identified in the statutory forecast, the main contributing factors to the $5-billion increase are an accumulation of the following: $2.1 billion due to increased interest on unmatured debt, $1.8 billion due to an increase in the Canada health transfer, and $0.9 billion due to an increase in fiscal equalization payments.
Mr. Chair, this concludes my overview of the main estimates for the department.
We would be pleased to answer any questions the committee members may have.
Thank you.
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View Michael McLeod Profile
Lib. (NT)
Well, that explains the small number, then. I think we're now, in the NWT alone, up to 14 tables of negotiation.
I do have one more question on the carbon pollution pricing system. It's under consideration in the Northwest Territories. The Northwest Territories has its own carbon pricing plan. We're probably the only jurisdiction where members of the government are pushing back, because they don't feel the plan put forward by the cabinet of the government of the Northwest Territories is strong enough. They want to bolster it. I don't know of anybody else who's doing that.
I was curious about the $1.6 million, because throughout our discussions, I assumed everything was supposed to be cost-neutral, yet we have a cost. Maybe somebody could explain it.
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Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2019-06-18 12:13
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Perhaps I can speak to that.
It is funding for the department for the function we perform with respect to the pan-Canadian climate framework.
Effectively, there are a number of aspects to that. One aspect is that in jurisdictions where the federal backstop applies, we have to account for those funds, because as you mentioned, it's done on a cost-neutral basis for the federal government. Those funds are returned to households in the four provinces where that applies at the moment, so those amounts are paid to households through the climate action incentive. Other amounts are paid to small and medium-sized enterprises, and so on. However, at the end of the day, all amounts go back to the province, so we have a function to perform in relation to the management of that system.
That's part of it. Part of it is the overall work that the department does in respect to pollution pricing, in terms of modelling, and so on. It's to build the capacity within the department to manage that work.
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View John Aldag Profile
Lib. (BC)
I call the meeting to order.
I have been reminded that we can receive testimony with reduced quorum. We have four members, including two members of the opposition, so we will get started.
Welcome to our guests today. We have, from the Office of the Parliamentary Budget Officer, Yves Giroux, Parliamentary Budget Officer, and Jason Jacques, senior director, costing and budgetary analysis. Welcome to the committee today.
We'll get into your opening statement. We'll give you up to 10 minutes. Then we'll get into our rounds of questions and answers for an hour. In one hour, we'll end and go into closed session. That's how the day will go today.
Just so everybody is reminded, we had a motion brought forward that the committee schedule one meeting with the Parliamentary Budget Officer to discuss the recent report, “Fiscal and Distributional Analysis of the Federal Carbon Pricing System”. That's the intent of the meeting today, and we'll spend one hour having that discussion.
With that, Mr. Giroux, I'll turn it over to you for your opening statement.
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Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-06-12 15:36
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Thank you very much, Mr. Chair and members of the committee. It's a pleasure to be here.
It's my first appearance before the environment committee. I have to admit that I'm a bit nervous seeing unknown faces and not knowing what to expect yet, but so far I have a very good impression, so I'm becoming less and less nervous.
Thank you for the invitation. I'm pleased to be here, as I said, for my first appearance to discuss the analysis of our report on the federal carbon pricing system, which was published at the end of April.
I'm joined by Jason Jacques, who is the director general in my office. Together we'll try to respond to your questions to the best of our capacity.
As you know, the Parliamentary Budget Officer provides parliamentarians with independent and non-partisan economic and financial analyses. As the legislation indicates, we provide those analyses to raise the quality of parliamentary debate and promote greater financial transparency and accountability.
In accordance with the mandate I have been given, my office has produced a fiscal and distributional analysis of the federal carbon pricing as implemented in Ontario, New Brunswick, Manitoba and Saskatchewan.
Our report provides an independent estimate of the revenues generated under the federal carbon pricing system. It also estimates the net fiscal impact on households in different income groups in the four provinces that do not have carbon pricing plans that meet federal standards.
Based on our analysis, we estimate that the federal government will generate $2.6 billion in carbon pricing revenues in 2019-20. The vast majority of these revenues, $2.4 billion, will be generated through the fuel charge, and the balance, roughly $200 million, will be generated by output-based pricing. In addition, we estimate that by 2023-24, carbon pricing revenues will increase to $6.2 billion, with fuel charge proceeds accounting for $5.77 billion, and OBPS—which I much prefer to “output-based pricing”, which I have a hard time pronouncing—accounting for the rest.
Our report also studied the impact of the carbon price on households, based on annual income level and region. Regions currently using carbon-intensive energy, such as Saskatchewan, can expect higher costs.
The federal government has stated that all proceeds from the fuel charge will be returned directly to households and to particularly affected sectors in Ontario, New Brunswick, Saskatchewan and Manitoba. Our findings indicate that under the government's proposed climate action incentive payments plan, most households will receive more than what they paid in fuel charges.
Before proceeding to your questions, I'd like to take a moment to inform the committee of our next publication. Tomorrow morning, we will be releasing our latest carbon pricing analysis report. This report will provide an independent estimate of the additional carbon price that would be needed to achieve Canada's greenhouse gas emissions target in 2030 under the Paris Agreement, as well as an estimate of the corresponding impact on the Canadian economy.
I don't typically use the full 10 minutes and I don't plan to deviate from that, as I would like to let you ask as many questions as you want. Jason and I would be pleased to respond to any questions you may have regarding our fiscal and distributional analysis of the federal carbon pricing system report or other PBO analysis, but I should state that I will probably be very reluctant to take questions from Mr. Fisher, given the jersey that he wears today.
Some hon. members: Oh, oh!
Mr. Yves Giroux: Thank you.
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View Mike Bossio Profile
Lib. (ON)
Thank you, Chair.
Thank you so much for being here today. We've been waiting with anticipation to look at your report and hear what you have to say today. I look forward to hearing the answers to the questions.
This is such an important issue. As we've seen, there is much misinformation out there around the impact of the price of pollution that our government has implemented, with many trying to say that we have it wrong, that it's actually going to destroy our economy and kill jobs and bring an inordinate amount of devastation to the most vulnerable in our society. I'm happy to see in your report that you actually have confirmed what we have been saying all along: that most Canadians will be better off with a price on pollution. They will receive more in the rebate than they will pay out.
I'd like you to break down the numbers a little further. We hear it's not just those who are driving to work, but those who live in rural communities and the higher price of groceries and so on. Can you give us a sense of the different areas used in your analysis to make the determination that eight out of 10 Canadians will benefit more from the rebate than they will pay out in the price on pollution?
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Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-06-12 15:42
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Sure.
Obviously we looked at the direct costs through higher fuel prices and higher prices on energy that households directly consume, such as the gas they put in their cars and the heat they need to generate in winter. God knows it's been long this year. We also looked at the higher prices for gas and for electricity generation in provinces where electricity is generated using fuel-based sources, such as Saskatchewan. We factored in these direct costs paid by households, but we also know, obviously, that most of the goods that Canadian households buy also have a fuel component to them.
For example, if you buy something at a supermarket, it's been transported to the supermarket. The transport that's inherent in these goods that people buy has a fuel component, so we used input/output tables to figure out how much carbon-based fuel is input in each production factor in each transaction, in each good that consumers buy, and factored that into the equation, assuming that all of the increases get passed on to consumers, which is consistent with the literature. We estimated the increase in the prices or the amounts that households will have to pay for some goods, as well as their energy consumption.
That's the payment side. On the other hand, we also looked at how much the federal climate incentive plan will reimburse Canadians, assuming that 90% of the proceeds from the charge will be reimbursed to households. We did that as an average, but we also looked at consumption patterns based on income quintile, and that's why we have different net impacts by income quintile.
Lower-quintile households obviously tend to spend less. There are fewer people in lowest-quintile households. Obviously, if there are two working persons in the household, the household tends to be higher up on the income scale. As you go higher on the income scale, you tend to find that there are more people in the household, and the larger the household, the more they tend to consume fuel-based products, as well as energy in general. That's how we derived the estimates that we have.
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Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-06-12 15:45
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In summary, the conclusion is that the majority of households will receive more on a net basis than they will pay. The exception is the 20% of households with the highest income. They will be net contributors.
Of course, that's an average. It doesn't mean that every single household in the lower-income quintiles will be receiving more. It depends on the particular lifestyle and consumption patterns. That's a criticism that's been addressed to us, but obviously it's an average by income quintile and by province.
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View Mike Bossio Profile
Lib. (ON)
To recap, you've looked at both the direct and indirect costs of a price on pollution to the household. You have then looked at the average rebate that all households will receive, and based on that, the vast majority, eight out of 10 Canadians, will receive more on the rebate than they will pay out on the price on pollution.
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View Joël Godin Profile
CPC (QC)
Thank you, Mr. Chair.
Gentlemen, first of all, I want to welcome you. Thank you for being here. Your jitters are long gone, Mr. Giroux.
Mr. Fisher, unfortunately, I'm not wearing my Blues sweater now, but I'd be happy if I were. We'll talk about it tomorrow morning.
Mr. Giroux, I have a question for you. I'm trying to understand. You are showing us a fiscal analysis. I know those are projections, but could you tell me what you used to estimate the costs and revenues by quintile, by province, per capita. It's quite complex.
What data did you use to obtain those results?
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Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-06-12 15:48
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It is true that there are many figures and calculations in those data.
We first looked at household consumption by province and by income quintile. Those data are available from Statistics Canada, which regularly conducts surveys to determine household consumption patterns, in terms of energy, goods and services. Those data are important for determining household consumption by quintile and household make-up, meaning the number of adults and children, which helps to determine what carbon pricing will represent for the households. We already know the future cost of one tonne of carbon: between 2018 and 2022, it will increase from $20 to $50.
The impact of the increase on the prices of gasoline, natural gas and other carbon-based fuels can be determined with some degree of certainty. For example, we know that one litre of gasoline generates about 2.2 kilograms of carbon. So if the carbon price is $20 per tonne, it is easy to calculate that it is 4.4 cents per litre of gasoline. That's how we get the price that consumers will have to pay.
To determine the net amount, we looked at how much consumers will receive in payments or discounts. In the last budget or in the fall economic update, the government announced the amount of rebates or refunds that will be paid to households. This amount is fixed and is not based on consumption, but on the make-up of the households. It will not be influenced by income. By looking at how much households will pay and how much they will receive, we get the net amount per quintile, of course.
As I mentioned, those are averages. It is possible that a household's consumption pattern may affect what the household will pay. For example, someone who uses their car a lot and heats their home with natural gas or oil will pay much more than someone who lives downtown, uses public transit or walks to work. There are differences within quintiles. That being the case, we came up with averages to provide an overall picture.
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View Joël Godin Profile
CPC (QC)
According to your estimates, will GHGs remain stable, increase or decrease?
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