THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Tuesday, October 3, 2023
The Standing Senate Committee on Agriculture and Forestry met with videoconference this day at 6:30 p.m. [ET] to examine Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act.
Senator Robert Black (Chair) in the chair.
[English]
The Chair: Good evening, everyone. It’s good to have you here. Thank you for joining us. I would like to begin by welcoming members of the committee and our witnesses — one here in the room and one online — and those watching on the World Wide Web.
My name is Robert Black. I am the chair of this committee, and I am a senator from Ontario. I would like to start by asking senators to introduce themselves around the table.
Senator Simons: I am Senator Paula Simons from Alberta, from Treaty 6 territory.
Senator Cotter: Brent Cotter, a senator from Saskatchewan.
Senator Burey: Sharon Burey, a senator from Ontario.
[Translation]
Senator Dalphond: Senator Pierre Dalphond, from the senate division of De Lorimier in Quebec.
[English]
Senator Klyne: Good evening and welcome. Marty Klyne, a senator from Saskatchewan, Treaty 4 territory.
[Translation]
Senator Petitclerc: Good evening. Senator Chantal Petitclerc from Quebec.
Senator Woo: Yuen Pau Woo from British Columbia.
[English]
Senator Oh: Victor Oh, a senator from Ontario.
The Chair: Today, the committee is meeting on Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act.
Our witnesses today are, from the Canadian Federation of Independent Business, Jasmin Guénette, Vice-President, National Affairs; and online, from the Saskatchewan Association of Rural Municipalities, we have Mr. Ray Orb, President. Thank you for joining us today, folks.
We’ll begin with opening remarks from Mr. Guénette, to be followed by Mr. Orb. You will have five minutes for your opening remarks. I will signal when we are down to one minute by raising my hand. When you see two hands, it is time to wrap it up. The floor is yours, Mr. Guénette.
[Translation]
Jasmin Guénette, Vice-President, Canadian Federation of Independent Business: Good afternoon, everyone.
My name is Jasmin Guénette. I’m the Vice-President of National Affairs for the Canadian Federation of Independent Business. I’d like to thank the committee for its kind invitation.
I’ll give my presentation in my mother tongue, French.
The Canadian Federation of Independent Business represents 97,000 members across the country in all sectors of the economy. Almost 5,000 of our members are farmers, and we all know the tremendous value farmers bring to our country. They work tirelessly to provide us with the best food there is.
The CFIB supports Bill C-234.
Skyrocketing operating costs are hitting farmers hard. They have to cover high input costs, high fuel and energy costs, high insurance costs, high taxes and the high cost of regulations.
Bill C-234 is an opportunity for parliamentarians to help our farmers cope with those rising costs and invest in the future of their farms.
Optimism among farmers is very low. According to our Business Barometer survey, a 30-year-strong monthly snapshot of small business leaders’ optimism, agriculture is currently the least optimistic sector. Because of rising costs, supply chain issues, the regulatory burden, the labour shortage and many other factors, agricultural business leaders’ confidence is very low.
Our farmers want to protect the environment. The land is their livelihood: 90% of farmers protect the environment for personal reasons and nearly two-thirds for economic reasons as well.
We recently surveyed our farmer members, and 82% of the respondents said the federal carbon tax negatively impacted their business. The carbon tax hamstrings their financial ability to invest in technology to reduce emissions and improve their farm’s environmental performance. Applying the carbon tax to propane and natural gas punishes farmers for using essential products for which there is no widely available and affordable alternative.
CFIB members support Bill C-234.
We want the Senate to pass the bill without amendment.
Even though the current federal carbon tax includes exemptions that apply to fuels used for agricultural purposes, farmers still have to contend with significant price hikes for propane and natural gas.
This bill creates federal tax exemptions for propane and natural gas used for things like drying grain on the farm and heating barns. The exemptions in the bill are crucial.
Your support of Bill C-234 will send a clear signal to the agricultural sector that you recognize the challenges they’re facing in terms of costs and the key role it plays.
Thank you. I would be happy to answer your questions.
[English]
The Chair: Thank you very much. Now we’ll hear from Mr. Orb.
Ray Orb, President, Saskatchewan Association of Rural Municipalities: Thanks for the invitation. I am president of the Saskatchewan Association of Rural Municipalities, known as SARM. I was born, raised and live in the small farming community of Cupar, which is northeast of Regina, and it has a population of about 625 people.
I would like to thank the Standing Senate Committee on Agriculture and Forestry for the opportunity to share our association’s thoughts as it studies Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act.
Our membership is made up of Saskatchewan’s rural municipal governments, and SARM has been the voice of rural Saskatchewan for over 100 years. Today, I’ll share the perspective of those that we represent by sharing our thoughts on how the bill being proposed would impact our livelihood in Saskatchewan in a positive way.
Bill C-234 picks up where Bill C-206 left off in the last Parliament before the federal election. Bill C-206 was passed by the House of Commons but was not fully approved by the Senate. As we were supportive of the previous bill, we are also supportive of Bill C-234, and the bill will provide much-needed economic relief for our members, freeing up the working capital they need to implement innovation on farms.
Grain dryers are used to help dry wet grain so it can be properly stored. In recent years, Canada has had particularly wet falls, creating a need to use grain dryers. In 2020, for example, grain dryers were running for a record amount of time, and farmers paid more than the federal government carbon tax estimate.
Recent studies have shown that Saskatchewan farmers can expect to lose 8% of their total net income to the carbon tax, and for a household managing a 5,000-acre grain farm in Saskatchewan, this could take the form of between $8,000 to $10,000.
Our members have been very concerned about the impact of the federal carbon pricing system on unavoidable energy inputs like fuel to dry grain or heat livestock facilities. We have argued for years that producers cannot pass these additional costs along to our customers and that they further reduce our financial viability. This additional cost of carbon taxation does not help to solve the problem of carbon emissions.
Saskatchewan has some of the greenest agricultural producers in the world. Most Saskatchewan cropland is zero till, meaning that our producers already use a low disturbance direct seeding system. Not only does zero till agriculture sink more carbon, it also reduces soil erosion and the amount of fuel required on farms.
The Saskatchewan Soil Conservation Association has been studying carbon sequestration for years, and through its research they found that Saskatchewan producers sequester about 9.64 million new tonnes of carbon dioxide every year over 28 million acres that is seeded every year in the province of Saskatchewan.
Taxation on food production is short-sighted and not a solution. If we don’t work together to find better solutions, we will see even more decreases in the number of farmers and farms in Canada, and we will lose the food security that we already have.
In closing, on behalf of Saskatchewan’s RMs in rural Saskatchewan, we thank the Standing Senate Committee on Agriculture and Forestry for the opportunity to lend our voice to this important conversation. I look forward to continued dialogue as we all work together to further the best interests of all Canadians. Thank you.
The Chair: Thank you, Mr. Orb, for your testimony.
We’ll proceed now with questions from senators. I would like to remind and ask members and witnesses to refrain from leaning too close to the mic to prevent feedback from the earpiece. This will avoid any sound feedback to our colleagues behind us that could negatively impact their health and the work that they are doing. As has been our previous practice, I would remind each senator that you have five minutes to ask the question and get the answer, so keep your questions and answers brief. We will move to a second and third round as may be necessary. We’ll start with our deputy chair, Senator Simons.
[Translation]
Senator Simons: I want to try asking my first question in French, Mr. Guénette. Sorry, but I’m not really bilingual. I need to find opportunities to practice.
The Canadian Federation of Independent Business includes a lot of members who aren’t farmers. If you decide to make an exception, my worry is that that’s just the first step. Other businesses might think the same could apply to them. How can there be an exception for this industry, but not for others?
Mr. Guénette: When the tax was created, farmers got an exemption for some products, such as gas and diesel, that they use on the farm.
Senator Simons: Yes.
Mr. Guénette: We think it makes sense to expand the exemption to propane and natural gas for farmers. We haven’t asked our members in other sectors if they want a similar exemption. We’ve only asked our farmer members. Obviously, the vast majority of our farmer members tell us that costs keep going up, especially given the current inflationary context, so there are a lot of factors involved. We support this bill for our farmer members.
Senator Simons: Nobody wants to pay taxes. That’s what worries me. Everyone would rather not pay. This is a transparent mechanism that tells everyone we have to reduce carbon emissions in the economy.
[English]
Mr. Guénette: Most of our farm members say that they cannot pass any cost on to their client. Contrary to other types of businesses that could eventually pass those costs down to their customer, our farm members say that they cannot do that, so the impact of those taxes are felt more by our members in the ag sector as opposed to maybe other businesses. But again, we have not asked our other members if they would or would not support such exemptions for their own sectors of activity.
Senator Simons: I suspect that if you ask, they will say yes.
Mr. Orb, we heard last week from the commercial grain dryers in Ontario who have commercial grain-drying operations that are not included in the terms of this bill. I was thinking about how Saskatchewan has such a strong history of cooperative farming and co-op movements for farmers. Is there any capacity, even for your organization, to facilitate the purchase of very modern, up-to-date, more energy-efficient grain dryers that farmers could use cooperatively? Or is that just not practical when you are talking about grain farms as large as they are on the Prairies?
Mr. Orb: I appreciate the question, but I don’t think it’s practical. We have many farmers who farm very large farms. As an example, one of my neighbours farms about 6,000 acres, so that would be about 2,500 hectares, I guess, and they actually dry all of the grain on their farm. They start harvest early, and they want to dry their grain not only to preserve the grain but because it does provide them with better quality grain. They are able to dry the grain during the night when they are not harvesting so the next morning their facilities are all empty. They are quite large facilities, and they are very modern grain dryers in the sense that they are using the best technology that we have available that’s affordable for farmers. I know that as time goes on we will have more innovation and find more ways to dry grain, but right now this is all we have. Those farmers are so busy that there is no way to cooperate very much with neighbours because all the neighbours are trying to do the same thing. It’s a good question, but it’s not practical right now.
Senator Simons: Thank you.
Senator Klyne: Welcome to both guests.
Mr. Orb, you have emphasized that the different weather conditions farmers face in Saskatchewan should be taken into consideration when rolling out federal policies such as the clean fuel regulations. Indeed, Saskatchewan’s farming sector experiences long and harsh winters, making it necessary to use heating systems to safeguard stored cereals and pulses, protect livestock and maintain optimal growing conditions in greenhouses and barns. I have a two-part question. Can you elaborate on how this particularly affects farms and rural municipalities? Can you share with this committee the underestimated challenges between Saskatchewan and regions with milder climates and any disadvantages this bill would create for Saskatchewan farmers?
Mr. Orb: To answer the last part of the question, I don’t think this bill creates any disadvantage to the farmers. It obviously helps a lot of farmers. I know there aren’t as many farmers in rural Saskatchewan who heat their barns, perhaps, as there would be in other parts of the country. We don’t have as much intensive livestock. I’m thinking of hog barns and poultry. We do have some and we have some dairy farms as well, and it would be helpful for them to have an exemption too.
Yes, we have cold winters, although the winter ahead is being forecast by Environment Canada as not being as harsh as we have had in the last few years. We’ll have to wait and see what happens. Each year is very different. I mentioned 2020 was a year where a lot of the grain was dried in this province, and it really created a hardship for farmers who are already buying the fuel to dry the grain and having to pay a carbon tax and then actually paying GST on top of the carbon tax. I think there could be relief provided to farmers that way. This year, it wasn’t quite as severe, but at the same time, we have a higher level of carbon tax now. Now we have a level of $65 a tonne, so some of the reports that were done a few years ago are actually outdated. The costs to the farmers are a lot higher.
We’re hopeful that this bill does pass. It may be too late for this year for some of the farmers. Some farmers are still drying grain, no doubt. Some farmers need to heat their livestock buildings. We’re looking forward to next year to have everything in place for next harvest season.
Senator Klyne: Thank you.
Senator Oh: Thank you, witnesses, for being here.
The Greenhouse Gas Pollution Pricing Act currently exempts both diesel fuels and gasoline for agricultural purposes, which by some estimates comprise 80% of agricultural fuel emissions, and yet we are hearing pushback on the idea that propane and natural gas should be exempted when they are cleaner fuel than diesel and gasoline and only makes up about 18% of agriculture fuels emission. Why would the rationale for exempting diesel fuels and gasoline not also apply to propane and natural gas?
[Translation]
Mr. Guénette: Thank you for the question. As I said in my presentation, what we’re hearing from our farmer members is that they’re under a lot of pressure because of the high cost of propane and natural gas. If this bill passes, it would provide a lot of relief to our farmers, who, as I said, are under considerable pressure. The CFIB supports this bill because it would help Canadian farmers cope with the rising costs they face.
[English]
The Chair: Mr. Orb, do you have a response to that?
Mr. Orb: Thanks. I would like to answer Senator Oh’s question.
I don’t think there should be pushback to asking for exemption on propane and natural gas because, you are right, they are clean fuels. We were fortunate that we were one organization that we did ask the federal government to exempt the other fuels that you mentioned that are used on farms quite regularly, namely diesel and gasoline. We were pleased there were exemptions on those fuels. In other countries around the world — I give one example, the United States, one of our biggest trading partners — their farmers don’t have a tax on carbon. Our farmers are becoming disadvantaged by this, and it’s starting to make our farmers uncompetitive with farmers in the United States. We trade every day. There’s a lot of grain that goes back and forth across the borders. In international markets as well, if we have these taxes on our farmers, it puts our farmers at that disadvantage, and I don’t think that is fair. Something needs to be considered to remove these taxes on these important things that are done on the farm every year.
Senator Oh: What percentage of your members use natural gas and propane to fuel on-farm grain dryers? Any idea?
Mr. Guénette: No. I could look into our data, but I don’t have the answer for you this evening, unfortunately. I can get back to you if I have that information.
Senator Oh: If you could get back to me, that would be great. Thanks.
Senator Woo: Thank you to the witnesses.
Mr. Guénette, what is the position of the CFIB on the Greenhouse Gas Pollution Pricing Act?
Mr. Guénette: We asked in a survey last year what our members are thinking on the carbon tax, and 52% opposed the carbon tax, 25% supported if it would be revenue neutral, 13% fully support carbon pricing and the rest of the respondents did not have a firm opinion on the question.
Senator Woo: Would it be correct to say that the CFIB opposes carbon pricing?
Mr. Guénette: We would like to see carbon pricing be fair to our members. What we have said many times is that small businesses contribute significantly to the carbon tax. When the carbon tax was introduced in 2019, rebate programs were promised to them, and those were never delivered. The ask that we make as often as possible is that what was promised to the small business community, which included rebate programs, be implemented so that they can benefit from rebates like households are benefiting at the moment.
Senator Woo: Given the current situation, there is pressure among your membership to get rid of the carbon tax, not just for the agricultural sector but for other sectors as well. How would you compare the relative difficulty of hard-to-decarbonize sectors? We’re looking at crop drying as one specific example, but there are other very hard-to-decarbonize sectors in the Canadian economy: very large industries, cement, transportation, steel making and so on. How would you compare the relatively difficulty of crop drying to these other hard-to-decarbonize sectors?
Mr. Guénette: I’m not sure I can fully answer your question, senator, unfortunately. What we are hearing from our farm members is that, at the moment, there is no affordable or available alternatives to propane and natural gas, and hence why they tell us that this bill is important for them. They are under a huge amount of financial pressure, and what we are hearing through our survey and communication with our members is that they need this bill to give a little bit of breathing room to our farm members. That’s how I would answer your question, senator.
Senator Woo: The breathing room that they have if this bill passes is at $65 per tonne, but it goes up by $15 a tonne every year, which means that if we have this eight-year sunset period, that is another 8 times 15, so $120, and then it’s $ per tonne. Would it be even more difficult for your membership to get on board with pollution pricing at that time eight years from now? They would not have had the benefit, if I can put it that way, of incrementally adjusting to the rising price of pollution.
Mr. Guénette: I’m not sure having your costs increase as a business owner is a benefit, but what I would say is that the sunset clause will allow businesses to implement new ways of doing business. New technology will most likely be available at a lower cost, giving that transition period for businesses to adapt. Allowing businesses to keep more of their hard-earned money will allow them to invest more in those new and greener technologies.
Senator Woo: Thank you.
Senator Burey: Thank you so much to our witnesses for coming and providing such interesting testimony.
I’m going to start with you, Mr. Guénette, because you seem to have some numbers that we can get, and I appreciate your having that availability. You presented some surveys of your members. You have 5,000 farmers. Do you have any disaggregated data on the effect of this bill for women, youth and racialized Canadians? As legislators, we have been tasked to ensure that there is equity, and we want to know the effect of various maneuvers on different populations. Do you have any of that information?
Mr. Guénette: I don’t have that information with me today, unfortunately, senator, but I can certainly look at what information we have with my colleagues at the office. We would be more than happy to provide that information by email later.
Senator Burey: Thank you. Mr. Orb?
Mr. Orb: You’re asking me about information we have on equity?
Senator Burey: Yes.
Mr. Orb: No, we don’t actually do research on that. We know there are lots of farm families, husbands and wives, that are operating as partnerships, but we don’t have the specific information that you’re asking for. Sorry.
Senator Burey: Okay.
As part of the Government of Canada’s strengthened climate plan, the 2030 Emissions Reduction Plan: Clean Air, Strong Economy, the Agriculture Clean Technology Program offers support to farmers. What percentage of your members applied to this program in recent years? Do you have information on that?
Mr. Guénette: I don’t have a specific answer for you, unfortunately.
Senator Burey: Mr. Orb, do you know if any of your members applied for and received this program or were approved?
Mr. Orb: No. Sorry, we don’t have that information either. We know our farmers have been made aware of those programs, but we don’t know how many have actually applied.
Senator Burey: Okay. Thank you.
Senator Dalphond: Thank you to both of the witnesses. It’s always interesting to benefit from their messages. I see that they are quite persistent in their messages. They read word for word what they said in October 2022 before the Standing Committee on Agriculture and Agri-Food, which I understand means that nothing they’ve heard since has changed their minds.
Mr. Orb, my first question is for you. In your presentation, you referred to recent studies showing that Saskatchewan farmers can expect to lose 8% of their total net income to the carbon tax. Could you provide to us the data that supports these studies that you have conducted in order for us to understand exactly how you came up with 8%?
Mr. Orb: Yes, we could definitely provide that to you. A study was done by a farm organization here in Saskatchewan, so we can provide that to the Senate committee members.
Senator Dalphond: It refers to a farm that has 5,000 acres of grain, I suppose. I guess you will provide some data about what type of farms we’re referring to.
Are you familiar with the new computation system that was set up by the Saskatchewan government that allows farmers to assess the cost of electricity to dry grain and how to save money?
Mr. Orb: What program was that?
Senator Dalphond: You can find it on the internet. It’s the agriculture department of Saskatchewan, and it provides farmers an opportunity to estimate the cost of energy to dry grain, depending on the type of dryers they use.
Mr. Orb: I haven’t seen that. If it’s an updated report, I haven’t actually seen that, but I will definitely search for it.
Senator Dalphond: It’s a program you can run on the internet.
Mr. Orb: Okay.
Senator Dalphond: To your knowledge, have you seen in the rural municipalities of Saskatchewan many farmers converting their old dryers to new dryers that are 30% more efficient, or is that not happening?
Mr. Orb: I think farmers are doing that naturally because they’re trying to become more efficient.
In recent years, the price of propane has risen. Propane fuel follows demand. At harvest time, propane always gets more expensive than it is offseason. The problem with that is that farmers can’t often store it on their farm ahead of time. They have to buy it during harvest. That ongoing price increase happens every year, and the more farmers dry their grain, the higher the cost of propane. The carbon tax is attached to the price of propane, so that’s an issue for farmers too.
Many farmers are using natural gas to dry their grain. Our province has done a better job in recent years, I think, of providing a better network of supply for natural gas than they have in the past. However, in some areas of the province, farmers aren’t able to get natural gas, so they have to use propane, which is a higher expense.
The other issue, of course, is electricity, which I don’t believe is part of this exemption. Everyone has to realize that when you operate a grain dryer, you’re using lots of electricity as well, and that’s something that farmers have to pay on their own.
We have been looking at other farm groups across the country. We looked at the grain farmers in Ontario. Their costs are a lot higher than ours. They’re also asking for an exemption. We’re kind of keeping in touch with that as much as we can with other farm groups.
[Translation]
Senator Dalphond: I assume some of your 6,000 members are in Quebec and British Columbia?
Mr. Guénette: Yes.
Senator Dalphond: Do those 6,000 farmers support the bill even though they don’t pay the carbon tax?
Mr. Guénette: The vast majority of our farmer members across all provinces and all regions support Bill C-234.
Senator Dalphond: They support it even though the federal law doesn’t apply in Quebec or B.C.?
Mr. Guénette: Well, Quebec’s system isn’t like the other provinces’; nor is B.C.’s. However, when we poll our member farmers, the vast majority support this kind of exemption for the sector.
[English]
Senator Cotter: I want to ask the question about eight years from now. There are two parts to it. In some ways, this is channelling Senator Woo’s question.
First, what will be the state of affairs of farmers who would benefit from this exemption eight years from now in terms of their grain drying strategy? Mr. Orb, I think mostly about grain drying when I think about this bill.
Second — and I’d really like you to answer yes or no on this — you indicate you support the bill. I would interpret that to mean that you also support the sunset of the bill in eight years’ time. Would you each be able to confirm that for me?
Mr. Guénette: We support the bill as is, including its sunset clause. The sunset clause is a signal to farm businesses that things will change and that it’s important for them to find ways or find alternative technology and solutions for drying grains, for example. It’s an important signal that things will change. However, right now, we are hearing from our membership that farm businesses need to be supported because of the cost increases that they are facing, and this bill addresses that for them.
Mr. Orb: That’s definitely a good question. Eight years from now, I really believe that agriculture in this country will be a lot different than it looks right now. As time goes on — and farmers have proven this over the years — farmers will become much more efficient. Often that is because of adversity. They’re finding different ways to be more efficient, more ways to be productive on their farms, producing more and using less in a lot of cases. With that has gone innovation. We have companies in Saskatchewan now that make a lot of equipment that allows farmers to do that. I used the example of zero till, where farmers can buy the machines that put the seed in the ground with the fertilizer and do it very efficiently and, actually, in a very environmentally friendly way. I think as time goes on, the good part about the sunset clause is it will give farmers a chance to become more innovative and more efficient. Things naturally occur that way, I think, and I’m very confident that in eight years, many farmers will be actually drying their grain using different technology. It might not be anything close to what it is now.
We do support the bill, of course, but we definitely support the eight-year sunset clause. I think it was very wise to include that.
Senator Cotter: Thank you both.
[Translation]
Senator Petitclerc: Mr. Guénette, my question is for you. If you don’t mind, I’d like you to go through this thought process with me. Let’s set the bill aside for now and consider the best approach. What is the best approach to helping farmers while also promoting and supporting research and transition toward better practices?
I’m asking you this because people have talked to us about this proposed exemption, but they’ve said there are other options. We talked about existing measures earlier: tax credits, the technology program. Some people talked about rebates. If we set aside the bill, do you think an exemption is the best approach to achieving those goals?
Mr. Guénette: I’ll do my best to answer your question. For starters, we recently submitted a brief for the 2023-28 agriculture policy framework consultations. Before submitting our brief, we asked our members about their priorities and some of their most important issues.
Topping their list of concerns is what they feel is too heavy a tax burden. That’s one of the reasons we support Bill C-234, which is before you today.
When we ask our members what they’re doing to reduce their environmental impact, certainly this bill is one of a number of things that could be done. For example, many of them say they’ve changed their plowing technique. They’re preserving forests, trees, green spaces and wetlands. They’re reducing their electricity consumption. They’re changing the products they use to work the land.
Farmers tell us they’re already doing lots of things as they try to improve their practices and that Bill C-234, if passed, will give them more tools because they’ll have more money to spend on implementing good practices that reduce their impact.
I don’t suppose I’ve given the answer you were looking for. The CFIB’s position is informed by the comments, surveys and information it gets from its members, so our position on this bill is based on surveys of our members. What we hear from our farmer members is that the tax burden is a big problem.
As I said, many practices have improved over the years, and farmers are always looking to improve their practices. As I said in my presentation, the land is their livelihood. Many farms are family businesses inherited from their parents, and they want to pass them on to their children. Farmers are in it for the long term.
Sorry that was so long.
Senator Petitclerc: Thank you.
Senator Mockler: Thank you both. Congratulations on your consistent leadership, Mr. Guénette.
[English]
I have a question to both of you.
[Translation]
Mr. Guénette, were you consulted before the government talked about imposing this tax on your members?
[English]
Mr. Orb, no doubt all of us around the table know how important the leadership of municipalities is across not only Saskatchewan but also New Brunswick and across Canada. Have you been consulted by the government on the matter of this said tax?
Mr. Orb: Yes, we have been consulted. We did give a presentation to the House of Commons Standing Committee on Agriculture last year, if that’s what you’re talking about. We also met with the member of Parliament that presented the bill as a private member’s bill, I think it was two years ago, and we were informed by that gentleman that that bill was coming to Parliament. We were looking at it then, and we were looking at ways for our farmers to be able to save some of the taxes and not have to pay the kind of taxes that I mentioned earlier on that were making our farmers non-competitive with other countries where we were trying to sell into their markets as well.
I think there’s been a lot of consultation on this, and we’re glad that the Senate is now asking for further consultation. We’re still of the same opinion, that we would like this to be passed. We would like this benefit to come to farmers as soon as possible.
Senator Mockler: Mr. Orb, thank you for that answer, but my question to you is, before that private member’s bill, were you consulted by the government in preparing their budget in respect to the tax bill that we have before us?
Mr. Orb: I actually don’t think so, no. We didn’t hear anything from the federal government on this. We’ve been consulted on other things since 2015, of course, but as far as I know, this wasn’t one of them.
[Translation]
Senator Mockler: Mr. Guénette, did the government consult your association about this tax?
Mr. Guénette: Thank you for the question, Senator. I don’t remember participating in government consultations about this bill specifically, but the House of Commons did ask both me and my fellow witness today to present our position on the bill to the Standing Committee on Agriculture and Agri-Food.
[English]
Senator Mockler: My last question is to both of you. In earlier testimony, the Agricultural Carbon Alliance told us that farmers are already investing in solar, wind and other non-GHG-emitting energy sources where they can. That’s as late as two weeks ago. I had roundtables with some farmers in New Brunswick and, I’ll say, Atlantic Canada, because there were a couple from Nova Scotia, and they were concerned about the cost of food and the cost of inputs to produce agricultural products. However, in many instances, changes in technology and the necessary infrastructure to support new alternatives will take time. The Agricultural Carbon Alliance told us that, in their view, the exemption provided by this legislation will both help bridge the transition gap and ensure farmers have the resources to invest in new technology. Do you agree or disagree with this position and why?
[Translation]
Mr. Guénette: We agree with that position. The sunset clause sends an important signal that things are changing, but that farmers are being given time to adapt.
They need that time to change some of their practices, and the clause allows for that.
[English]
Mr. Orb: We are not aware of the position of the Agriculture Carbon Alliance, but we appreciate being asked this question nevertheless.
Our farmers in our rural municipalities in this province and SARM are supportive of our province moving ahead with green energy, and I will name solar and, to some extent, nuclear energy now, and wind power, of course. We have signed on to an agreement with the province to promote this, but many of our farmers are not able to do this unless there’s some investment from the federal government.
This idea of a rebate right now will put some money into farmers’ pockets. Hopefully, some of them, through investments in their own innovation on their farms and by cooperating with other manufacturers in the province, can make things better in that sense to become more efficient and to use alternative energy whenever they can.
The Chair: Thank you very much.
We will move on to round two. Let’s limit it to four minutes, at most. We will go over with this panel a little bit, but we do have the time.
Senator Simons: Mr. Orb, Senator Dalphond was making a point, I think, that if there were tax relief for farmers in Ontario, they would have a competitive advantage over farmers in Quebec. This made me think of something else, which is, of course, that if Saskatchewan had its own carbon tax, it could carve out all the exemptions for farmers that it wanted. Has your rural municipalities organization spoken at all to your provincial government about an option for Saskatchewan to create its own carbon tax, which it can then tailor to the needs of Saskatchewan farmers, if it wanted to?
Mr. Orb: No, actually we haven’t talked to our province about a carbon tax because we know they’re not in favour of a carbon tax. They’re certainly not in favour of a federal carbon tax. Of course, we also see now the federal opposition making statements that, if they are elected, they will get rid of the carbon tax. Our members are looking for what will happen on the federal front. We haven’t been talking to our province about this.
Our members have passed several resolutions that they oppose a tax on carbon. They have said they think farmers should be rewarded in this province for all the reasons I stated earlier and for actually sequestering carbon. There should be a carbon credit scheme or an offset scheme that rewards farmers in our province and does not punish them.
Senator Simons: I happen to agree with you. I think farmers ought to be rewarded for soil sequestration. Just so that we’re very clear, what you actually support is the elimination of a carbon tax of any kind. What would you do then? What would be your public policy suggestion? Farmers know better than anyone that our climate is changing dramatically, whether that’s droughts or floods or fires. Farmers are on the bleeding edge of climate. What would you propose, then, as a way to incent people to use less carbon?
Mr. Orb: We prefer rewarding farmers, whether it be with tax credits or business loans, low-interest loans, things like that. There should be a way for the major polluters in every province to pay into an innovation fund. That money could be used for research to make farming more efficient in the sense of lowering greenhouse gases. We believe penalizing people is not helping.
We’re actually in a food security crisis right now. If you look around the world, many countries are looking toward Canada and particularly provinces like Saskatchewan to supply the world’s food. They will be putting more taxes on carbon, and we know that’s actually going up. It will be going up again and again until it reaches the limit for the federal government. That will put a lot of producers out of business. Maybe we’ll be bringing food in from other countries, more than we are now. It’s not a good situation.
Senator Woo: If I could follow up with Mr. Orb, your theory of change, if I can extrapolate, is that producers in the farm sector will reduce their carbon out of their own self-interests, such that, in eight years, you’ve said, we’ll be in a much better situation. They will be much more energy efficient with crop drying, and things will just be a lot more hunky-dory.
I was going to ask you, if that is the case, why do we need a carbon tax in any sector, but I think you’ve answered the question now. You don’t think there should be a carbon tax in any sector because, presumably, other sectors will also act purely out of their desire to be more efficient and maybe benevolence or from self-interest, and they don’t need incentives to lower their carbon emissions. Is that a fair summation of the way you see how we should deal with the problem of climate change?
Mr. Orb: Yes, I think it is. Actually, if we go back to what the Parliamentary Budget Officer has said, the carbon tax that we have in this country is not working. It’s actually not setting out what it was supposed to do as far as what the federal government wants. It’s inefficient to tax businesspeople across this country, especially farmers, and expect them not to have to absorb the costs. Many farmers are becoming more cash-strapped, especially this year. In our province of Saskatchewan, the crops weren’t as good as they were in the past. We’ve had a big area of the province in drought. We’ve had that before, of course. I think we should have a sober look at the way the taxes are collected on the farms. As far as the carbon tax, it’s not a system that’s condoning farmers to be able to thrive.
Senator Woo: Thank you.
I will go back to a question that Senator Mockler asked the two of you. He was wondering if you had been consulted on this bill. Presumably, he was referring to this private member’s bill. Your answer was no. Could you clarify that you were answering no to consultation on the private member’s bill?
Mr. Orb: We were consulted on the bill when it came to the House of Commons, when the committee got it, but we weren’t consulted by the government before the bill came into being.
Senator Woo: Thank you for that. It would be extraordinary for the government to want to consult with stakeholders on a private member’s bill. I put that there just for the record, rather than as a question, but it’s clear to me that the question you were answering refers to this bill, which is a private member’s bill, for which the government has no responsibility.
Mr. Orb: Could I just answer that, if you don’t mind, senator?
Senator Woo: Please.
Mr. Orb: What we’re getting at is that we didn’t think there needed to be a private member’s bill. The Government of Canada could have done this on their own. They could have brought in a bill themselves for exemptions and brought that to Parliament. But, instead, there was a private member’s bill. We’re thankful that the bill has ended up in the Senate, but the Government of Canada did not do this on their own. This was a private member’s bill that came through the House of Commons.
Senator Dalphond: I stand to be corrected in my earlier reference. It’s not the Saskatchewan agriculture department. It’s SaskEnergy. It’s on their website, and you can find the equipment and farm grain estimator. The Government of Manitoba provides the same program on its website.
That being said, my question is for Mr. Guénette.
[Translation]
Mr. Guénette, you said that all your members support the bill before us. I imagine the majority of them, or close, are in Ontario. Representatives of the Grain Farmers of Ontario who testified before this committee said they do not support the bill as written because it would allow just one-third of Ontario’s grain producers to avoid paying the carbon tax. The other two-thirds will have to pay it because they use a third party to store and dry their grain.
So, are your members really happy with the bill as written? Wouldn’t they prefer an amended bill that includes the two-thirds of Ontario grain producers who won’t benefit from the exemption?
[English]
The Chair: I’d like to clarify that before you answer. It was Mr. Hurst who said that and not the Grain Farmers of Ontario.
Senator Dalphond: I thought it was the grain producers.
The Chair: No, it was not. It was Mr. Russell Hurst with OABA, Ontario Agri Business Association. I just wanted to clarify that.
Senator Dalphond: I understand my time is paused as you interject with this information.
The Chair: Russel Hurst is with the Ontario Agri Business Association.
Senator Dalphond: Thank you.
The Chair: It’s not the grain farmers.
Senator Dalphond: Thank you.
Anyway, you referred to members of this group and the data they had about grain producers. I will start again as my time was eaten up.
What’s the answer, Mr. Guénette?
[Translation]
Does the majority of your Ontario members who won’t benefit from this legislation support it as written?
Mr. Guénette: The other business associations can take whatever position they want; that’s up to them. When we asked our members if they support Bill C-234 as it stands before the committee this evening, the majority said yes.
Senator Dalphond: Did you explain the content of the bill to them and tell them who would be affected and who wouldn’t?
Mr. Guénette: When we communicate with our members, we provide them with as much information as possible.
Senator Dalphond: It was a survey and an open question.
Mr. Guénette: We give them an overview of the bill and ask them if they support it or not, and that’s what we did in this case.
Senator Dalphond: You said that input costs are going up for farmers everywhere. Do you know what percentage of input costs the carbon price represents? Is it 1%, 0.5%, 10%, 20%?
Mr. Guénette: Unfortunately, I don’t have that information for you this evening.
Senator Dalphond: If I told you it was less than 1%, would that change your position?
Mr. Guénette: When we ask our members about this, we consider their reality: getting up every morning to work on their farm. They tell us input costs are going up. Electricity, natural gas and propane costs are going up too.
Senator Dalphond: I get that.
Mr. Guénette: They say the passage of Bill C-234 would help them.
Senator Dalphond: That’s the easiest input cost. It’s low-hanging fruit.
Mr. Guénette: Well, there’s a bill on the table right now, and senators are looking at it, and people want this bill to pass without amendment so it can become law in this country and so farmers can benefit from these exemptions for the next eight years.
Senator Dalphond: Does that mean you see carbon prices as a major incentive because you’re saying that, eight years from now, everyone will have converted to other technologies because it will be so expensive they won’t have a choice? Does that mean you’re in favour of sending an even clearer message by amending the transition clause, which allows an extension after eight years, to say that this will come to an end in eight years and there will be no extension?
Mr. Guénette: I don’t know that all businesses will have changed how they operate, but regardless, this will give them time to adapt and find new technology for their operations.
Senator Dalphond: Thank you.
[English]
The Chair: Thank you.
With no further questions on the list, I would like to thank our witnesses today for their participation, Mr. Orb online and Mr. Guénette in person. Your assistance with the committee’s examination of the bill is much appreciated. I know that one or both of you have been tasked with sending some information. We would appreciate that in writing as soon as possible, like tomorrow if possible, and please send it through the clerk. That would be great.
To summarize, colleagues, we have heard both positive and negative aspects of this bill. We have no more witnesses scheduled for examination of this bill. I believe we have had 22 witnesses over four meetings, including tonight’s meeting, and many of those witnesses came from senators’ suggestions. Thank you for that; I appreciate that. Some potential witnesses said no when we approached them. A number have said no, just so senators know. We have no further witnesses scheduled for Thursday. What would your desire be?
Senator Simons: At a certain point should we proceed in camera?
The Chair: We will go in camera at some point. I would like this to be public, if that’s possible. Is that okay?
Senator Woo: Sure, yes.
One thing that struck me about the testimony we have heard so far is that one of the central questions is the so-called technological frontier and how close we are to it, what we mean by the technological frontier and whether that is simply about alternative technologies, efficiencies or other ways of reducing energy costs. We haven’t really heard, I don’t think, from the producers of these types of equipment to give us a better sense of where they see the technological frontier and how much work needs to be done to push the frontier out such that farms can adopt those efficiency-improving technologies sooner than the eight years that’s written into the bill. We have some names that we can share with you. I would propose that we hear from some of these companies so that we have a better understanding of that critical, critical issue.
The Chair: What are the thoughts and wishes of our group? Do we wish to propose that or hope for that for Thursday?
Senator Simons: If it’s possible to find people who are willing to testify. I know that our clerk and analyst have worked hard to find witnesses who have not always been able to be with us. I would like to hear that because people have told us over and over again that there is no alternative technology, but without hearing from the people who make the grain dryers, or the farm heating systems, even, I don’t know if that’s the case.
I notice that Senator Mockler is back with us, which is lovely. In addition to being a member of this committee, he is also the chair of the National Finance Committee. Now that we have his handsome face back with us, I wonder if he can tell us a little bit about what the National Finance Committee is doing with this bill at some point.
The Chair: Would you like to do that now?
Senator Mockler: Yes, please.
Thank you, senator, for that important question. I had the chance to share information with some of the senators around the table about what we’re doing in the Finance Committee.
If we look at the order of reference that was given by the Senate of Canada on Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act, the Standing Senate Committee on Agriculture and Forestry was referred the entire bill. In the past, different committees have been given different orders of reference and other committees have opted to look at the order of reference. When we looked at the order of reference, it says that the Standing Senate Committee on Agriculture and Forestry was referred the entire bill, and then the Standing Senate Committee on National Finance being authorized to examine and report on the subject matter of the bill, so the subject matter of the bill versus the entire bill being referred to the committee.
Because of our responsibilities in the Finance Committee, the steering committee — and we have met twice on this matter — opted to say that the Agriculture and Forestry Committee was well equipped to do the proper report and table that report in the Senate. We have decided that we would respect what will be put forward by the Standing Senate Committee on Agriculture and Forestry.
The Chair: Thank you.
Senator Dalphond: To come back to whether we need more witnesses, I am certainly of the view, like Senator Simons and Senator Woo, that we need to hear more witnesses about the alternatives. Sometimes the word “viable” alternative is used. It’s a kind of an acknowledgement that there are alternatives but they are not necessarily viable. Where do we draw the line of what is viable? Is that what costs me nothing versus what costs me something that will take 10 years to pay on amortization? I don’t know.
In the last few days, my office has contacted a few businesses, and I will share that information with all of you. I have copies of the list of people that are in the business of selling or promoting grain drying. One company is called Flaman Agriculture. They have locations in Alberta, Saskatchewan and Manitoba. They sell grain dryers, and they describe themselves as being the most efficient grain dryers in the industry, saving up to 20% to 30% on fuel costs. Apparently, they are available — maybe it’s a good marketing tool, I don’t know — to appear before us. They would be more than willing to come and explain that to us.
I have another list of professors who have researched that technology. I would be glad to share that with the committee. I don’t know if they will be available to come here either today or tomorrow, but certainly we could do other things and come back in a week or two. I can share all these names with you. Thank you.
Also, the Library of Parliament has provided me a list today of companies and individuals who manufacture, sell or design efficient, relatively low-emission grain dryers in Canada. I’ll add that to the list.
The Chair: Thank you. Colleagues, anything else?
Senator Simons: I think these are the only “more witnesses” we should hear. I don’t think we need to hear more from people who are in favour or opposed to the general principle. I think we have had a good airing of that from a really good range of witnesses — from professors, to farmers, to everyone in between. To hear about the technology would be useful and practical. I don’t know if AGRI did that kind of thing.
The Chair: I don’t know.
Senator Simons: I think we ought to limit it to that.
The Chair: Thank you. We’ll proceed to see if we can get witnesses for Thursday, a first panel. I also wonder whether the critic of this bill would be interested in speaking as one of our witnesses.
Senator Dalphond: I think I will not. I prefer to hear from those who can contribute. I spoke for 45 minutes at second reading. I will be pleased to repeat what I have said here at second reading and at third reading because the evidence that I have shows —
The Chair: I just asked —
Senator Dalphond: — that many of the assumptions have been proven wrong. I suggest that we hear from independent parties from outside the bubble.
The Chair: All right. I just asked.
I want to say thanks to our committee members for your active participation and questions. I also want to take a moment, as I always do, to thank the folks around the room, behind us and our colleagues in our offices. Thanks to the interpreters, the debate team transcribing the meeting, the committee room attendant, the multimedia services technician, the broadcasting team, the recording centre, ISD and our page. Thanks very much for being here. I’ll suspend now and we’ll move into in camera as a full group.
(The committee continued in camera.)