Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 21 - Evidence
OTTAWA, Thursday, November 24, 2005
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C- 66, to authorize payments to provide assistance in relation to energy costs, housing energy consumption and public transit infrastructure, and to make consequential amendments to certain acts, met this day at 8:35 a.m. to give consideration to the bill.
Senator Tommy Banks (Chairman) in the chair.
[English]
The Chairman: Good morning, I call the meeting to order.
This is a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources, which will consider Bill C-66. We are pleased to have with us this morning the Honourable Ralph Goodale, Minister of Finance, as well as department officials and others who can answer our questions.
Thank you very much for being with us, minister. You have the floor.
Hon. Ralph Goodale, Minister of Finance: Thank you very much, Mr. Chairman. It is a pleasure to be back with you once again.
Bill C-66 is the government's policy on helping the most vulnerable Canadians to deal with the sudden spike in energy prices that developed in the late summer and early fall. There was obvious concern among Canadians about the impact of that spike, and the Government of Canada shared those concerns, especially in relation to our most vulnerable low-income citizens and those for whom we at the federal level carry some direct responsibility through the Guaranteed Income Supplement for low-income senior citizens and the National Child Benefit for low-income families.
While this year's spike in energy costs is a worldwide event arising from global causes with global consequences, and against which no complete shield is possible, the Prime Minister asked me and a number of my cabinet and caucus colleagues to develop some practical, effective and responsible options for government action in the circumstances.
There are a number of automatic shock absorbers already built into federal programs and policies to help deal with circumstances like these. For example, there is a full GST rebate to businesses and to municipalities and here are partial rebates to schools, hospitals and universities. The sharing of the federal excise tax on gasoline with cities and communities will also help with at municipal level, and there is, of course, full indexation of our tax system and our key social programs to protect against the effects of inflation. All of those things will help. They will provide several hundreds of millions of dollars in cost offsets that will flow to individuals, enterprises and local governments over the next 12-15 months.
In addition to that, we were pleased to announce and then to embody in this legislation a $2.4-billion package of measures designed to provide some additional help against unusual energy costs. We have been focused on three basic questions. First, building on the solid work of certain caucus committees that have been looking at this subject for a long time, how can we provide Canadians with more reliable and understandable information about energy pricing and price fluctuations in the marketplace, and how we can make the marketplace more transparent?
Second, what can we all do to ward off the consequences of an energy price spike and actually cut our costs in terms of energy consumption, not only this year but every year, through greater energy efficiency, conservation and innovation?
Third, how can we deliver some short-term tangible assistance to our most vulnerable citizens and do so in an efficient and timely manner?
To deal with market transparency and accountability, the Minister of Natural Resources is creating a new office, to monitor energy prices and provide clear, current information to Canadians, and the Minster of Industry is taking a number of steps to deter anticompetitive behaviour in energy markets. We will give more powers to the Competition Bureau and we will strengthen the Competition Act.
To achieve permanent energy savings, the Ministers of Natural Resources, Environment, Housing and Infrastructure are establishing certain new programs and strengthening existing ones to encourage Canadians to use less energy thereby reducing their fuel bills day by day, particularly in their homes and through better use of urban transit.
It is significant that the cost savings of the energy efficiency measures could amount, on average, to as much as $400 or $500 per family, per year, every year ongoing. That is perhaps where the most significant and lasting benefit of the measures that we have announced will take place.
To provide one-time help for those on low disposable incomes, the Minister of Human Resources and Skills Development and others are utilising existing program delivery systems — that is, the National Child Benefit system and the Guaranteed Income Supplement system — to target assistance to vulnerable families and to the elderly. We will provide $125 to single, low-income seniors, $250 to low-income senior couples and $250 to low-income families, all federally tax free. We expect more than 3 million payments to be delivered in respect of the energy price spike through these measures that I have announced and that are embodied in Bill C-66.
Let me make three final points. Responsibilities for energy matters and for income support systems are not just federal, as all of us around this table understand. Those responsibilities are fully shared with provincial governments. Therefore, we have invited the provinces to build on our federal initiatives to further benefit their own residents in their respective provinces. We know that at least some of the provinces have already or are now planning to do so and we welcome that.
We would also encourage all provinces to ensure that any clawbacks that are built into their social support systems do not apply to diminish the value of these federal energy payments embodied in Bill C-66. I think the provinces would want to ensure that the benefit flows through to the people for whom it is intended.
Second, we are calling upon all players in Canada's energy markets to adhere to the highest principles of competition and transparency. Canadians were sceptical in the summer and the early part of the fall. They suspected they were being gouged. They have questions about why prices seem to rise so fast but then come down so slowly. They deserve complete and respectful answers about how the market is functioning.
Finally, beyond energy issues, the Government of Canada is anxious to improve the disposable incomes of all Canadians, especially those of middle and modest means but, indeed, all Canadians through the policies that the government has and is about to implement. Our energy plan was a first step in that direction toward improving disposable incomes in the context of a global energy price spike.
Further action to generate better disposable incomes more generally has also flowed since the announcement of our energy package earlier in the fall. The evidence of that is in Bill C-67, which is now being debated in the House of Commons with respect to unanticipated surplus legislation, which will provide future tax reductions for Canadians. That will also help to improve disposable incomes.
I would also draw your attention to the economic and fiscal update of a couple weeks ago, which included $28 billion-worth of tax reductions, the vast majority of it directed toward individuals and families and, most especially, those with middle and low incomes.
The Chairman: Thank you, minister. Members, I point out, as you can clearly see, that the minister is accompanied by senior officials from Environment Canada, Department of Finance and from Social Development Canada having to do with the housing aspects of this bill, and from Natural Resources Canada.
I invite your questions of the minister, and of any of the other folks accompanying him, having to do with Bill C-66.
Senator Bryden: Mr. Minister, thank you for coming. This is a very busy time.
One of the questions that has arisen in relation to this legislation is not really relating to the people who are touched but to people who are missed. The payments that will be coming forward under both the provisions of the rebates are to households receiving GIS or the child tax benefit. Those households will be next door to other households with similar heating costs and the same levels of income, yet they will not benefit from this measure.
Could you address why this is so and if it can, or should, be corrected? It is of concern to a good number of people with whom I have discussed this matter. It is the top-of-mind issue that comes out for a lot of us.
Mr. Goodale: Let me correct a couple of technical points.
This is not intended to be a rebate directed exclusively at home heating fuel costs. We were careful in designing this initiative. Thinking back to previous experience, we did this largely on the advice of the Auditor General. The focus is on energy costs generally, not just home heating fuel.
You will see from some of the statistics on inflation during the fall, that while core inflation remained fairly steady, the headline inflation rates went way up, largely driven by energy costs. It was not just home heating fuel, because home heating fuel would not have been factored into the equation at that time. It was largely gasoline, and that will ricochet through the economy in food prices for anything that has to be moved any distance by truck transport and so forth.
Our conclusion was there is an issue around higher costs to heat homes in the winter, but the impact was more broadly based than that. It was an energy spike, not a home heating spike exclusively. In the design of the program, it is intended to be broad and not exclusively related to home heating costs.
Second, in program design, we thought the thing that we needed to do was to focus on our most vulnerable citizens, and focus on a delivery mechanism that would get to them accurately without imposing some burdensome administrative system. We focused our considerations on where we had delivery systems already in place. The two systems that were obvious were the Guaranteed Income Supplement and the National Child Benefit. Those are income-tested programs. The benefits flow to those two categories of people because they are the lowest income citizens in the country. That is where we have tried to put the emphasis.
Realizing that whenever you design a program, establish eligibility criteria, and draw those difficult lines, wherever you draw the line there will be people on one side and people on the other side and there will always be an argument about the line.
We concluded that the best approach was to stay with the definitions of need and income already established in federal programs. However, we also recognized that others could be of assistance here, which is why we have invited provinces to participate because they have broader responsibilities in terms of income support than we do.
I am pleased to say that some provinces, including some in Atlantic Canada, are participating, and I applaud them for doing so. I believe the provinces also intend to avoid any inadvertent clawback of benefit. I do not think the provinces intend to try to scoop this. I think they are operating in good faith and goodwill on that point.
We have now moved on broad-based tax relief for Canadians and we are starting with middle- and lower-income Canadians, the very ones about whom you are concerned as being just across the line in respect of Bill C-66. We will be increasing the basic personal amount and, with the goodwill of Parliament — and I admit that is rather hard to find these days — it appears that we will be able to implement the increase in the basic personal amount effective for the year 2005. That was our intention. That was in the ways and means motion and in the economic update. I am hopeful this measure will succeed. That will increase the basic personal amount right across the board for all Canadians by $500. That will be most helpful to low-income people.
We also intend, in the first year — that is for 2005 — to reduce the tax rate in the lowest bracket up to $36,000, by one percentage point. Those two things, added together, will save taxpayers this year over $5 billion.
I encourage an analysis of our approach based on the full package. Yes, the energy measures are targeted, but the tax changes are broadly based and will benefit the people to whom you refer. I would also point out that the energy conservation measures, which are the biggest part of the package at $1.8 billion, are generally available to everybody. We have particularly designed the home energy efficiency upgrade component to be particularly accessible to low- income families.
Senator Cochrane: In order to receive the energy cost benefit, seniors must be in receipt of the Guaranteed Income Supplement; is that not the case?
Mr. Goodale: That is correct.
Senator Cochrane: Reports have indicated that a substantial number of eligible seniors have not applied for this benefit or have not renewed their application. Am I right in understanding that these people will receive no heating relief through this program? What steps is your government taking to ensure that all Canadians who are rightly entitled to this Guaranteed Income Supplement, by age or by circumstance, and the energy cost benefit, will get their cheque this winter? I am mostly interested in not the ones above the line; I am interested in the ones that are just below the line.
Mr. Goodale: I appreciate the concern, senator. It is one that we paid attention to in dealing with the design of this program.
A number of organizations, one of them being CARP, the Canadian Association of Retired Persons, pointed out some of the studies that, while they are anecdotal and the evidence is not statistically comprehensive, have indicated that there may be as many as 300,000 seniors who could be entitled to benefits that, perhaps, do not know about it or have allowed it to expire, or whatever.
I raised this matter very early in the program design with both Minister Stronach and Minister Ianno. They indicated they would be working very hard to reach those 300,000 to ensure that they knew they were potentially eligible. Certainly, we asked many of the organizations that might have specific names, specific examples of people who had somehow been missed or had fallen through the cracks, to come forward and give us that data so that we could ensure that every Canadian entitled to a benefit has the opportunity to receive it.
Senator Cochrane: Do you have any idea how CARP and those organizations will do this?
Mr. Goodale: I do not, frankly. Mr. Ianno and Ms. Stronach would be better able to inform you. Are there representatives from HRSD present?
Richard A. Brunton, Program Manager, Old Age Security Program, Social Development Canada: The short answer to the honourable senator's question is that if a senior files a tax return, we will find them. If they are not already in receipt, then we will invite them to apply. If they become eligible as a result of applying for the Guaranteed Income Supplement, and if their eligibility crosses the three-month period of eligibility for the energy rebate, then they will get that rebate.
Senator Cochrane: Will they get it in time for this winter? This is a crucial time now with the prices so darn high that they cannot afford it. Do you think they will get a cheque this winter to help them out?
Mr. Brunton: It depends on when they apply. If they apply now or in January, February or March, then they will get it within a month of their application in most cases.
Senator Cochrane: But we do not file our income tax and we do not have to file it until the end of March. How will you find those people?
Mr. Brunton: The seniors who have not filed for the previous year are in a separate category. They are a minority of people and they are the ones to whom we dedicate our outreach program. This is the program that the minister mentioned whereby we use all the organizations that are out there to bring to our attention any seniors who have fallen through the cracks in this way, even through the cracks of the tax system.
To put this in perspective, of the 1.5 million seniors who currently receive the GIS, 1.3 million are tax filers. The other 200,000 are not. They are the ones who we contact every year to renew their GIS.
Mr. Goodale: Could I add, too, that I think there is a role here for members of Parliament to play, whether in the House or in the Senate, to help ensure that the appropriate information gets into the hands of people who could be eligible. Every time the government launches a communications or advertising campaign, there is always a risk of criticism. However, it is important to let Canadians know. One method of communication that is beyond criticism is when members of Parliament, whether senators or members of the House of Commons, take the initiative to communicate this information. All it takes is simply inviting senior citizens to make an inquiry with the appropriate department, which they can do nationally through 1 800-O-Canada, or through local offices spread across the country. I want every eligible Canadian to know that he or she is eligible.
Senator Cochrane: I feel the same way that you do, however, our system is not that quick in trying to pick up problems even if a senator should happen to intervene concerning names, and so on. I have had that same problem with other departments — not yours, minister. These things are way down the line. On one case I have been one year waiting for a response.
Mr. Goodale: I know the system can be frustrating, but there are many very professional, hard-working public servants trying to respond quickly. On this one, I know from talking to Ms. Stronach and Mr. Ianno that they have encouraged their respective teams to be responsive because there is a time window here that is important.
Senator Cochrane: Could I have your business card, Mr. Brunton, before you go?
Senator Milne: Minister Goodale, I am following up on what Senator Bryden said about two identical houses, side by side, with people above the line and below the line. It will be a hard sell to Canadians, because they will look on it as an energy rebate. They will look on it as a home heating rebate.
In one of those two houses, suppose you have an elderly couple living there and they get the $250. However, the man dies and, suddenly, the amount the woman gets is cut in half. She is still heating the same house. You will tell her it is because she only eats half as much food?
Mr. Goodale: It is important, Senator Milne, to be precise about the program. The Auditor General told us that the program, devised back in the year 2000, was designed to hit a target other than the delivery system that had been developed. Her advice was to make sure that the criteria and the design of the program matched the delivery mechanism that was in place.
The program was carefully and explicitly designed to focus on low-income families and low-income seniors — those in receipt of the NCB, those in receipt of the GIS — and to offset not just home heating fuel but all energy costs, to the extent that you can, realizing that there would be, unfortunately, lines. Wherever we design a program, there will be a line somewhere. In order to cushion that impact we have since implemented tax reductions that will help those very low-income tax filers by at least $500 in 2005. We are not waiting until 2006; this is retroactive to 2005, as is the increase in the basic rate.
If we take an average family of $60,000 income with two children, they will receive a tax reduction in 2005 of 20 per cent and that will rise to 33.3 per cent by the fifth year. Over that period of time they will save over $3,300 in federal taxes that they will not have to pay.
As I said right from the beginning, before we made the energy announcements and anticipated surplus announcement and before we released the update, this had to be seen as a package. When viewed as a package it all fits together and it is comprehensive. It does not leave anyone out.
Senator Milne: Perhaps you should get the Auditor General to explain this to Canadians. She is pretty good at getting her message across.
Mr. Goodale: I am sure she will.
The Chairman: There was a glowing report from the Auditor General which found its way onto page 34 of an obscure newspaper yesterday as opposed to the unglowing reports from time to time that come from the Auditor General.
[Translation]
Senator Tardif: The Government of Canada has announced that $500 million will be allocated to the new EnerGuide for Low-Income Households Program. How will this new program be administered? Will the current EnerGuide Incentive Program rules also apply to this new program? How do the two programs differ in terms of how they are regulated and managed?
[English]
Mr. Goodale: The two programs, Senator, are certainly the same in principle and in purpose, but the newer program is explicitly designed to focus on low-income households. Perhaps I could ask Ms. McCuaig-Johnston, who is familiar with the programs of the Department of Natural Resources to describe the low-income initiative.
Margaret McCuaig-Johnston, Assistant Deputy Minister, Energy Technology and Programs Sector, Natural Resources Canada: The primary distinction between the current EnerGuide for Houses Program and the new EnerGuide for Low-Income Households is that where the EnerGuide for Houses Program, which is available to everyone in Canada, has a shared audit: a pre-audit of a house and what its energy efficiency possibilities are in terms of changes that could be made and a post-audit after the retrofits are made. The cost is shared, about 50/50, with the home owner.
In the case of the Low-Income Households program, the government will cover the entire cost of the pre-audit and post-audit of the house then, in addition, will cover the full cost of the retrofits that are done for each household up to $3, 500 in the southern band of Canada and $5,000 in northern Canada. There is another level in between those two.
In a household that might undertake $5,000 or $6,000 worth of retrofits, under the EnerGuide for Houses Program the government might only cover $750 to $1,000 of that much larger cost, however depending on the energy efficiency changes that are made for the Low-Income Household program, 100 per cent of the retrofits will be covered up to $3, 500. The Low-Income Household program is funded at a level where 133,000 households are expected to be covered.
[Translation]
Senator Tardif: Does that cover start-up costs, including capital purchases?
Ms. McGuaig-Johnston: Yes, it covers all retrofits up to $3,500.
[English]
Mr. Goodale: Sometimes the focus is on the income supplement cheques that the government sends out and they obviously have a higher profile, but it could well be, under this initiative, that the energy efficiency measures will have, by far, the bigger and longer term benefit. By making the kinds of audits and then upgrades in the quality of our housing stock, we are estimating, on average, a saving for the average Canadian family of between $400 and $500 per year, every year, ongoing, permanently, from having a more energy efficient home.
The kinds of programs that Ms. McCuaig-Johnston has talked about are exactly the kinds that will achieve that degree of saving.
The Chairman: Before we leave that, could you tell us how ``the North'' is determined?
Ms. McCuaig-Johnston: Actually, I would like to defer to my colleague Ms. Darke, who is responsible for the Residential Rehabilitation Assistance Program. That is the program which will screen the low-income households for admissibility into the program and has set the thresholds for application.
Debra Darke, Director, Community Development, Canadian Mortgage and Housing Corporation: As Ms. McCuaig- Johnston said, the intent is to deliver this energy retrofit program for low-income households through the existing delivery network that CMHC has for our renovation programs. Our renovation program has three zones across the country. The first zone covers the southern portion of the country.
The Chairman: I understand that, but how do you make that determination? Do you use a geographic parallel or a distance from the border?
Ms. Darke: We have a map. The north includes Labrador, northern Quebec, and the Territories; I believe it is approximately the 55th parallel that determines the distinction between zone 3, which is the north, and zone 2, which Ms. McCuaig-Johnston referred to as the middle. Everything below that is in the south.
The Chairman: Would you send a copy of that map to the clerk?
Ms. Darke: Yes, I will.
Senator Austin: Question, please, where is Edmonton?
Mr. Goodale: It is west of Lloydminster.
The Chairman: Exactly. It is in the centre of the world.
Senator Austin: Is Edmonton in zone 1 or in zone 2?
Ms. Darke: I am not sure.
Mr. Goodale: In the meantime, I can assure you that Lloydminster is at least half right.
The Chairman: Edmonton could only be in zone 1 as it is in every respect, including football, as we shall see next Sunday.
Senator Cochrane: Ms. McCuaig-Johnston, with regard to this retrofit program, will financial assistance be provided to cover the initial and the follow-up energy audits and to cover the up-front capital costs associated with the energy efficiency improvements?
Ms. McCuaig-Johnston: Yes, the entire costs of both audits will be covered and the full cost of capital investment for energy efficiency retrofits will be covered up to $3,500.
Senator Cochrane: Thank you.
Senator Milne: My question is also about the reduction of housing energy consumption. There will be financial assistance of $1,000 or $1,500 per unit for multiple housing units. Will that money go to the tenant or to the landlord if a tenant makes the effort to upgrade his or her unit?
Ms. McCuaig-Johnston: The money will go to the landlord for building retrofits. The landlord will have a letter of agreement with CMHC through the Residential Rehabilitation Assistance Program that the rents will not be adjusted for increased energy costs, that in fact these savings will continue to be reflected in rents.
Ms. Darke can give you some information on how that operates under the RRAP program.
Ms. Darke: Under our renovation programs, we currently have a rental program. It is our intent to use the same kind of delivery arrangements that we currently have. Retrofits in a multiple building will, of course, need to be done by the owner of the building, so the assistance would flow directly to the owner, or the landlord. We would have an agreement directly with them. In some cases, of course, tenants pay for their energy costs directly, and they will therefore see directly in their utility payments a reduction in those costs.
In other instances those are included within rents. We would have agreements with landlords patterned on the existing ones that we have that will require them to pass on the energy savings to tenants in those buildings.
Senator Angus: Minister, we are very happy to see you here today. I do not know whether you are aware of how often your name comes up at this committee. We are not only the energy committee; we are the Standing Senate Committee on Energy, Environment and Natural Resources Committee. I have been a member of this committee since this Parliament began and I have attended these meetings faithfully. One would think that this was the finance committee because at every meeting your name comes up. All the problems of climate change, sustainable development, Canada's approach to Kyoto and so on always seem to be directed at you and your department, but we can never get you here. Suddenly, on the eve of the election, we have you here. I asked the chair if we were confined to Bill C-66 or whether this was our chance to ask you what you think about climate change, and so on. I am not being facetious. Reference to the Minister of Finance is often made here and we have sent many messages to your department, because the Commissioner on the Environment, who gives a report every year, talks about you. Are you aware of this focus on your department and the Minister of Finance by this committee?
Mr. Goodale: The department and my office try to monitor the activities of all parliamentary committees. We know we are referred to frequently.
Senator Angus: Are you flattered?
Mr. Goodale: It depends on the reference. The Department of Finance has played a constructive role in dealing with a variety of issues in relation to the economy, energy and climate change. You may have noticed that in the recent economic update there was a conscious linkage between the well-being of the economy and the well-being of the environment. The production and use of energy is the major source of greenhouse gases in our country. We are, as is obvious today, a northern climate, a very energy-intensive economy, and, thankfully, for the last 12 years, a very rapidly growing economy, which presents a number of challenges, including safeguarding our natural environment.
Over the years, in successive budgets, the Government of Canada has allocated several billion dollars to a variety of measures that will mitigate the impact of climate change and help to adjust to that unavoidable impact.
I am pleased to say that, while Bill C-66 was generated in the context of an energy price spike, the whole energy package, including Bill C-66, had the Kyoto principles very much in mind. That is why the energy saving measures that have just been discussed here are so very important.
Senator Angus: You say you monitor the activities of all committees. That is very prudent of you. We have issued a remarkable number of reports, one of which was called The One-Tonne Challenge: Let's Get On With It ! Are you aware of that report?
Mr. Goodale: I am familiar with The One-Tonne Challenge.
Senator Angus: It occurred to me in reading this bill that this is one way to help people meet that challenge.
Mr. Goodale: I think Rick Mercer will be very pleased with this legislation.
Senator Angus: In a more recent report, we said it is time to walk the walk. The commissioner is always telling us that we have all the tools in Canada. As you say, we have a growing economy and we are fortunate, in the global context, to have this great country.
It is quite troubling that, as we hear repeatedly, we are not taking full advantage of the tools. One of the problems is that we have a multiplicity of departments and we have overlapping. It all comes down to money. We are told that there is a committee of deputy ministers. All the experts tell us that it would work better if the Minister of Finance was the chairman of that committee and dealt with these issues firsthand so that there would be coordination at the point of the one who holds the purse strings.
That goes to the organization of government, meeting our commitments under Kyoto and showing the public that we believe that we have to find renewable sources of energy and deal with the green issues. There are fancy new programs announced every time there is a new government although the previous program was never implemented. It always seems to be blamed on the Department of Finance. We are told that the finance people do not take environmental issues seriously and, therefore, it is a low priority on the spending scale.
What is your take on that?
Mr. Goodale: I appreciate the opportunity to respond. I come at this issue from a slightly unique perspective because I was previously the Minister of Agriculture. Saving money on fuel and proper stewardship of the land and water resources are very important to farmers. Those are big environmental issues. I was also Minister of Natural Resources Canada and developed a number of the energy efficiency measures that are now paying off through our energy package. I was Minister of Public Works responsible for getting the government's house in order in terms of our own federal consumption of energy. I come to this portfolio with a fairly diverse background where the issues associated with climate change, the environment and energy have all been extremely important.
As the discussion about Kyoto and climate change has occupied centre stage since about 1996-97, the Government of Canada has over that time — and we can verify this, — invested close to $8 billion or $9 billion in a variety of climate change related initiatives.
In the current fiscal framework, $4 billion is on the table right now. Some of that is already lodged in various programs and services of the Department of the Environment and the Department of Natural Resources. Some of it has yet to be allocated, but I am pleased to see that in the last several weeks the Minister of the Environment has successfully concluded a number of agreements with provinces under a component of this funding in the climate change partnership fund. Mr. Dion is signing agreements with various provinces as to how they and the Government of Canada will work together within our respective jurisdictions to make a difference in terms of carbon emissions. Two such agreements were signed just yesterday. They both have huge potential to help us deal with climate change. One is the promotion of clean coal and the new technology that will allow us to use our coal resources in a way that will be less carbon intensive for the future. We might well be able to export that technology to the world.
One of the biggest challenges for us will be the economy of China, which is growing at a rate of 8 per cent to 10 per cent a year. One of the principal energy sources in China is brown coal. The emissions from brown coal are huge. If we can develop the technology in Canada that will mitigate our superior quality coal and export it to China it will be a big win for both of us.
The other major announcement made yesterday was on carbon capture sequestration. That is finding the means to capture carbon emissions as they go into the atmosphere, and compress and process them so they are in a usable form, and then use that carbon dioxide as an enhanced oil recovery agent in some of our aging oil wells in Western Canada that are running out of pressure, therefore producing less; some of them would probably be shutting down right now. If you use CO2 injection as an enhanced recovery technique, you can extend the life of those wells by maybe 20-25 years, which is a good economic result. At the same time, you are sequestering underground the equivalent of the emission of hundreds of thousands of automobiles per year. It is a double dividend victory. I raised this issue at the G7, the IMF and the World Bank and I will be doing so again one week from tomorrow when I meet with the IMF and G7 again in London.
Alan Greenspan, from the United States, is intrigued with this Canadian experiment in carbon capture and sequestration. It was written up a week ago by Associated Press. It is getting attention across the United States and Europe. This is part of the solution to climate change, but it is not the only thing. The One-Tonne Challenge, where we get people engaged as human beings, is a good thing, too. However, we must have the very best technology in the world and make sure it is deployed so it is not just sitting on the shelf. We must make use of the technology in our economy and in the environment. We must develop an export potential that we can sell in the global economy.
Canadians want to be the smartest producers and consumers of energy in the world. I think a fundamental part of our policy on climate change means to ensure that they have the wherewithal to be the smartest.
The Chairman: I do not ever want to constrain the field of questions in any respect, but the minister must leave us in five minutes. We are dealing today with Bill C-66. I ask you to be concise in your questions.
Senator Angus: The answer was quite long, you must admit, Chairman.
The Chairman: I do.
Senator Angus: It was a good answer. It was just to get a sense of the focus because the technology of CO2 is one of the things on which this committee is focused. We have been out at the tar sands and have seen the potential for this technology. That is very good.
My question on Bill C-66 deals with the public transit infrastructure element. As I understand it, there is a link between Bill C-66 and Bill C-48 and this $400 million. Is it the same $400 million or is this a new spending authority?
Mr. Goodale: There was a condition on the $800 million — $400 million in one year, with a total of $800 million. There was a condition imposed in Bill C-48 and by this legislation we remove the condition. It is no longer conditional once this legislation is passed.
Senator Angus: In addition to the money that will be spent for this particular public transit as contemplated in the bill, it has been put to me and I am asking you in this regard, whether this is not enhancing the government's ability to issue transit spending press releases and open the door for more announcements of spending during this coming 37-57 days?
Mr. Goodale: Not really. In the context of Bill C-48, this has already been announced. In the last number of days, however, I have received numerous phone calls from members of the Federation of Canadian Municipalities asking to ensure Bill C-66 passes before there is an election. Municipalities want this money. It is very important to them. They are planning for it in their current budget cycles. The FCM is very anxious to see this proposed legislation passed.
Senator Angus: Does infrastructure in the public transit include rolling stock, buses and the like, which is the most badly needed thing?
Mr. Goodale: Yes, it does.
Senator Angus: It does?
Mr. Goodale: Pardon me for using a parochial example, but in the case of Regina, my understanding is that the city council intends to purchase a new fleet of particularly energy-efficient buses using this money as soon as Parliament is done with it.
Senator Angus: Thank you, minister. Thank you for income trusts as well. That is another reason I am smiling.
The Chairman: That is a little far afield.
Senator Angus: That is all right. It is only a thank you.
Senator Christensen: After your presentation, I feel more comfortable with this bill. However, the problem is that it is seen as a fuel energy rebate.
We are very late in the season. Certainly in the North people are on the second fillings of their fuel tanks and the cost is double from last year. Once it is fully understood, then the guy next door will not be as concerned as he would be if it were seen as a fuel tax for low-income households.
As we go forward with this energy efficiency program in houses, with audits and such things, I hope that we follow- up on our CHIP program that we had in the 1980s, which caused in the beginning many programs because the houses became too —efficient, too tight, and created a set of other problems that cost a lot of money. I hope that we have learned from those lessons.
Mr. Goodale: The lessons of the past in home renovation, repair, and insulation programs are all amply factored into the current decision. The people at CMHC try to ensure that they are just on the cutting edge of the latest housing technology so that they are building houses that are intelligent buildings.
Senator Christensen: This is retrofits. As we go into this problem, there will probably be a huge uptake. Getting properly trained contractors to do this work will be a major problem.
Mr. Goodale: It is an issue, senator. You are quite right. Part of what both Natural Resources Canada and CMHC try to do is ensure that the private sector contractors are fully skilled to be able to deliver the quality that the program is intended to provide.
Senator Christensen: Thank you.
Senator Cochrane: Ms. McCuaig-Johnston, I want to continue on the retrofit program. Do these people get the money before the undertaking to retrofit their homes? If not, they will not be able to do it because they do not have the money on hand.
Ms. McCuaig-Johnston: For the regular EnerGuide for houses program, they get it after the second audit, but for the CMHC-managed program through the residential rehabilitation assistance program, there will be an arrangement to facilitate them paying for the retrofits when they are being made.
Ms. Darke: We will use the same approach that we use right now for our renovation programs, and those programs are targeted to low-income households as well. The circumstances would be the same for people with not very much money who are making, in the case of our other renovation programs, health and safety repairs. We flow the assistance after the audit has been done or the inspection has been done at the end, which ensures that the work has actually been completed. However, we do work with the applicants to ensure that they set up an arrangement with their contractors such that they do not have to pay them until such time as they have the grant assistance available.
Senator Cochrane: So they do not get the money up front?
Ms. Darke: No, they do not get the money up front. They get the money after they have done the work. However, we have set the program up such that they do not have to be out of pocket.
Senator Cochrane: Contractors also do not have a lot of money to do all the jobs that are out there. What happens if a contractor does not agree to do this work unless he gets the money up front?
Ms. Darke: One of the approaches we have seen undertaken when there are some concerns is that the applicant can agree to basically sign over their amount. They will put the contractor as a co-payee for receipt of the assistance. The payment then goes from CMHC directly to the contractor. In some instances, contractors have some concerns, and they will ask for those kinds of arrangements. This is something that we have had in place for our renovation programs for some time. We have not found this to be an issue at all. The energy retrofits that will be done are relatively small. We have talked about the amount of assistance available being up to a maximum of $5,000 in the North. A lot of what we think will be done is weather proofing, potentially upgrading furnaces, upgrading insulation, those sorts of things, so not huge amounts of work.
We also can make arrangements such that we pay in instalments, so to speak. We may pay partially. Once a portion of the work is done, we will determine that has been done and make a payment. In instances where there are problems, we address them in that way.
Senator Cochrane: This is to the contractor?
Ms. Darke: We pay to the homeowner unless they and the contractor they have hired wish us to make different arrangements.
The Chairman: I must interrupt and ask that we excuse the minister. I will ask the officials to stay for another few minutes, but it will be a very few. Would everyone else please now prepare to vacate the room, because we will go in camera, and we must do it quickly.
Thank you very much, Mr. Minister. We appreciate you being here.
Senator Cochrane: My worry is with the bureaucracy. I am not knocking the bureaucracy. Do not get me wrong. However, some people out there say, ``I can never get through. There is so much paperwork. I get another questionnaire, and now I have to send that back, and wait another two to three weeks, maybe a month, before I get a response.'' I do not have to tell you the winter is upon us. That is my concern.
Ms. Darke: All I can say to reassure you is that we have had the RAPP program in place for 30 years. These are the arrangements that we have had in place when we are delivering renovation assistance under that program for that whole period of time. The RAPP program is similarly targeted to people of low income, exactly the same income requirements as for the program before you, the repairs in that instance being related to health and safety as opposed to energy. This has not been an issue in terms of our delivery of the RAPP program.
Senator Cochrane: I had other questions, but they were for the minister.
The Chairman: Sorry about that. I was mistaken when I talked about clearing the room for clause-by-clause examination, because that is public.
Notwithstanding the difficulty that is found particularly in the West but probably everywhere in finding the trades available to do these things this winter, never mind paying them, will the system allow that low-income households will be given priority among those people who are applying for retrofit?
You have described two separate programs, one for people who are not low-income earners and another for people who are low-income earners and who clearly need it more than others do. Are they given priority when processing the applications?
Ms. McCuaig-Johnston: You would be speaking of a comparison between the regular program and the low-income households program. As it stands now, the relationship with the contractor as to the initial audits would be blind as to who would be processing them. I think the priority is to get as many people in as quickly as possible so that the time turnaround is responsive. At this time, there is very little delay. In most communities, it would be a matter of a few days to get an auditor in. We want to be sure that that is the case going down the road as new funds have been provided. There may be increased demand on the time of the auditors, so we will be watching that very closely, and we will be hoping to allow for additional auditors to be coming in and be trained, et cetera, as we proceed. We would not be proposing at this time to rank between one program and the other. We hope to get as many in with a matter of a few days turn around as is possible.
The Chairman: To confirm, you have just said that at the moment the turn around with respect to the department's processing these applications is measured in terms of days.
Ms. McCuaig-Johnston: In most communities, that is correct.
The Chairman: Are there further questions?
Senator Cochrane: ``Most communities,'' I wonder what that means.
The Chairman: Well, let us ask that question. What does ``most communities'' mean?
Ms. McCuaig-Johnston: I would like to, with the permission of the chair, ask the director of the EnerGuide program to join us at the table. He can give a more precise flavour as to the nature of the turn around.
Louis Marmen, Director, Housing and Equipment, Office of Energy Efficiency, Natural Resources Canada: The question is about EnerGuide for house service across Canada. Right now, we have 70 companies delivering the service. That is about 450 energy evaluators. The delivery time is three to four days in most areas of Canada. That means the cities. Essentially, 80 per cent of the population of Canada can be served in three-to-five days. In some remote locations people might wait several days for an evaluator. In the very remote areas customers might wait a couple of weeks. However, for 80 per cent of the populated area of Canada, the wait time is three to five days.
As Ms. McCuaig-Johnston said, we are monitoring the situation to increase the service. We are training evaluators so that the service will be available quickly in all areas.
The Chairman: If I live in a remote area and want my house to be evaluated, it is reasonable to wait until there is a certain critical mass. What if there is not and there will be additional cost over and above the normal?
Mr. Marmen: We will cover that cost.
Senator Cochrane: A proportion of the home and building owners availing themselves of the grants offered under the EnerGuide retrofit programs and the EnerGuide for existing building programs would have undertaken retrofits regardless of the existence of the respective program. Does this in your view diminish the cost effectiveness of the programs? Are home and building owners doing more substantial energy efficiency retrofits as a result of these programs?
Mr. Marmen: The answer to the second question is yes. In all these programs you have a small amount of what we call ``free riders'' that would have done some retrofit anyway. Before the introduction of the grant portion of the program, we had only the evaluation portion, so we were only subsidizing the energy evaluation, providing advice to Canadians to do the retrofits. Three years ago, we introduced the grant so that we are providing a grant to implement the retrofit. With the implementation of the grant we noticed a huge increase in the demands for the service. People said, ``There is a grant now. I will do something.'' What we now see over time is the depth of the retrofit. We have a database of all those houses, so we know what kind of retrofits people are doing, their savings and the amount of greenhouse gas reduction they are getting. We see over time that it is increasing, so people are doing more and more. This is linked with the introduction of the grant. There is a direct impact between providing a grant and doing more.
We have that kind of database of 200,000 homes across Canada that have had retrofits.
Senator Cochrane: Is it growing?
Mr. Marmen: Yes, it is growing. The demand is increasing quickly.
Senator Cochrane: My concern is we have to get this information out. Many people still do not know that this grant is available.
Mr. Marmen: I can say that the federal program is a foundation program. We created an infrastructure back in 1997, so this program has been longstanding. We established infrastructure for home energy evaluations, so it has grown. We introduced the grant, and now we see partners coming in and adding money. In Quebec, Hydro-Québec is adding double our subsidy. Our average subsidy right now is about $700. Hydro-Québec will add $1,400, on average, for electrically heated homes. Saskatchewan announced a similar kind of additional grant based on our program, the same infrastructure. Nova Scotia did the same. New Brunswick is considering doing the same.
Senator Cochrane: My worry is about the clawback. The minister said some provinces have agreed that there will be no clawback, or did he say all provinces agreed there will be no clawback in regard to the $125 or $250?
Ms. McCuaig-Johnston: That is different from the EnerGuide program.
Katharine Rechico, Special Advisor, Personal Income Tax Division, Tax Policy Branch, Department of Finance Canada: We have not heard from any province that it is intending to claw back, and, certainly, when we did the relief for home heating expenses back in 2000, no provinces clawed backed at that time. We are hoping the same will be the case this time.
Senator Cochrane: Do you not know for sure?
Ms. Rechico: No.
Senator Cochrane: That is my concern, too. The clawback is difficult when it comes to these poor people. You have no idea, but $100 means an awful lot.
The Chairman: We cannot, unfortunately, control that, senator. It would be nice if we could, but we cannot.
Thank you very much, ladies and gentlemen. You are welcome to stay while we go into the next procedure, which, with the permission of the committee, will be clause-by-clause examination of this bill.
Is it agreed that we move now to clause-by-clause consideration of Bill C-66?
Hon. Senators: Agreed.
The Chairman: Carried.
The normal procedure is to postpone consideration of the title and the short title in clause 1. Do you wish to proceed in the normal way, honourable senators, or do you wish to do this en masse? You are saying proceed in the usual way.
Shall we stand the title, et cetera?
Hon. Senators: Agreed.
The Chairman: Shall we move now to the question of clause 2?
Shall clause 2 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 7 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 8 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 10 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 11 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 12 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Chairman: Is it agreed that this bill be now adopted without amendment?
Hon. Senators: Agreed.
The Chairman: Is it agreed that I report this bill at the next sitting of the Senate?
Hon. Senators: Agreed.
The Chairman: The bill is carried and that motion is carried.
Thank you very much, honourable senators.
The committee adjourned.