THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, May 27, 2026
The Standing Senate Committee on National Finance met with videoconference this day at 6:46 p.m. [ET] to study the subject matter of Bill C-30, An Act to implement certain provisions of the spring economic update tabled in Parliament on April 28, 2026.
Senator Éric Forest (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: I wish to welcome all senators as well as the viewers across the country who are watching us on sencanada.ca.
My name is Éric Forest, a senator from Quebec, and deputy chair of the Senate Committee on National Finance. I would now like to ask my colleagues to introduce themselves.
[English]
Senator Pupatello: Sandra Pupatello, senator from Ontario.
[Translation]
Senator Gignac: Good evening. Clément Gignac from Quebec.
Senator Galvez: Rosa Galvez from Quebec.
[English]
Senator Cardozo: Andrew Cardozo from Ontario.
[Translation]
Senator Dalphond: Pierre J. Dalphond, De Lorimier division, Quebec.
[English]
Senator Robinson: Mary Robinson from Prince Edward Island.
Senator Ross: Krista Ross from New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
[Translation]
Senator Hébert: Martine Hébert from Quebec.
The Deputy Chair: Honourable senators, today we are continuing our study on the subject matter of Bill C-30, An Act to implement certain provisions of the spring economic update tabled in Parliament on April 28, 2026.
For our first panel today, we are pleased to welcome, from the Canadian Airports Council, Mr. Geoff Turner, Vice-President, Government Relations.
By video conference, from the Centre for Future Work, we also have Mr. Jim Stanford, Economist and Director.
Welcome and thank you for accepting our invitation to appear today.
We will now hear opening remarks from Mr. Turner.
Geoff Turner, Vice-President, Government Relations, Canadian Airports Council: Thank you, Mr. Chair and honourable senators, it is a privilege to join you today. If you will indulge me, I’m going to make my remarks in English, my mother tongue.
[English]
My name is Geoff Turner, and I am Vice-President of Government Relations for the Canadian Airports Council, or CAC.
The CAC represents 100 member airports in every province and territory, and our members handle virtually all of Canada’s air cargo and international passenger traffic and 90% of domestic traffic. Canadian airports host 150 million passengers a year, and demand is projected to double in the next 20 years.
Our members generate $50 billion in GDP, support 435,000 jobs coast to coast to coast and will contribute $557 million in Crown rent to the federal treasury this year alone. That represents over $8.4 billion in cumulative contributions since the devolution of airports in the 1990s.
Airports in Canada operate in a user-pay system complemented by airport business and partnership revenues. Travellers and shippers have directly paid for $30 billion in new air infrastructure in this time as well. Unlike peer countries, including the U.S., taxpayers do not subsidize the air sector. In fact, it’s the other way around.
Airports exist to enable and serve local markets.
The current approach, blending public land ownership and stakeholder governance with private-sector operating discipline, has delivered three decades of investment, a deep network of commercial partnerships and public-private partnerships — or PPPs — and synergies with local economic priorities.
Many airports are also strong partners to the Canadian Armed Forces, security agencies and the aerospace and defence contractor ecosystem.
On Bill C-30 and the spring economic update, the CAC orientation is constructive. We welcome the commitments to advance the modernization of Canada’s air transportation system, including ground lease extensions, Crown rent reform, digitization of the traveller journey and updated airport zoning regulations to manage the increasing problem of incompatible development encroaching on essential airspace. These have been established CAC recommendations, and we appreciate the opportunity to advance them with officials this year.
Our House Finance pre-budget submission sets out two further priorities: a new small and medium airport growth and resilience program that recognizes these airports have little to no access to infrastructure or economic development strategies and a stronger federal posture on air connectivity as a central pillar for high-value trade.
Mr. Chair, I want to use the balance of my time to set out the sector’s position in a short series of points on the proposed powers in section 50.2, as is our purpose this evening.
First is the principle: Canada’s airports have a long record of providing information to government in support of sound policy, including through confidential channels where commercial sensitivity requires. The principle of information access is not in dispute for Canadian airports.
Second is the drafting: Officials have emphatically characterized this as a backstop, and we accept that intent, but the broad text of the legislation does not reflect it. As you know, statutes are read literally, and assurances do not constrain future use. These authorities hinge only on a minister’s opinion and could extend to any aspect of the air transportation system, well beyond the ownership review for however long that may go on. Compounding this, the bill puts the form, manner and time of every request on a case-by-case basis. There is no standard procedure, no regulation-making authority and no statutory framework around how requests are made or answered.
Where Parliament confers broad ministerial discretion, drafting convention typically pairs that breadth with proportionate constraints. In this case, those should be a more clearly defined purpose, a proportionality requirement, protection for commercially sensitive information, a definition of “value” and a review mechanism or sunset clause following the conclusion of the broader policy agenda under way.
Third and most novel is the reach to third parties. Airport authorities already have significant information-sharing frameworks with Transport Canada and their communities, but paragraph 50.2(2)(b) extends this authority to any individual or entity “. . . whose activities, in the Minister’s opinion, may affect the value of an airport . . .” This is a category that, on its face, could be read to include any private business in the air ecosystem: airlines, ground handlers, lenders, NAV CANADA, unions, host municipalities, retailers, vendors and more.
Fourth is onward sharing. Clause 46 expressly authorizes the minister to share compelled information with Crown corporations and non-government advisers. Access to Information Act exemptions protect against the public release of commercial confidential information but do not govern what happens to information once it is inside government or with external advisers. This bill is largely silent on the protections normally expected, such as non-disclosure, conflict of interest, use restrictions and notice periods, which are standard policy, contract and legislative tools.
Fifth is the commercial impact. Airports operate in a private, highly dynamic market environment with bilateral agreements that require strong confidentiality to protect deeply sensitive proprietary data for our partners. A regime that compels disclosure of commercially sensitive material without proportionate protections can shape, over time, the commercial market on which airport investment depends.
To conclude, the CAC is not asking a committee here or in the House for amendments to vote against or delay the bill. We recognize that Bill C-30 is a confidence measure and that these provisions are consistent with the spring economic update’s direction. We are only here to request further improvement. We welcome engagement with the government on these various clauses, potentially targeted to amendments at the next reasonable legislative opportunity, which we believe could come in the near future, given the amount of activity in the transportation space.
Thank you.
The Deputy Chair: Thank you.
Jim Stanford, Economist and Director, Centre for Future Work: Good evening, senators. Thank you for the opportunity to meet and share my views on Canada’s economic and fiscal situation as you discuss issues related to this bill.
There are, of course, a wide range of macroeconomic fiscal trade policy issues and challenges that set the context for the federal budget and some of the changes arising from the spring update. Today, I will offer some short comments on three of those broader topics, but I’m willing to consider any other economic or labour market issues that you are interested in during questions.
First is trade diversification. Donald Trump’s tariff policies and other trade measures have posed a historic threat to Canada’s export industries. Most vulnerable are the higher-tech value-added industries that have been targeted by his section 232 sectoral tariffs, including auto, steel, aluminum, forestry and several others that could be affected in the future. Therefore, diversifying our exports away from the United States to other markets is a logical response to this challenge, and the federal government has pursued several opportunities in this regard. We’re seeing a decline in the share of our exports going to the U.S.
However, at the same time, there is another risk of overspecialization in our trade patterns that we need to consider: Canada’s dependence on exports of unprocessed or barely processed resource products, or staples, as they are often known in Canadian economic literature. That dependence on staple exports has been growing.
Basic resources accounted for half of Canada’s merchandise exports last year, up from one fifth at the turn of the century. So, we are reverting to the role of a resource supplier in world trade. We are a “hewer of wood and a drawer of water,” as the classic phrase says, and that will not protect our sovereignty, even if we shift the end destinations for those staple products. We must preserve the capability to produce the full range of goods and services, including higher-tech value-added products, and that goal should be front and centre in the trade and industrial policies the government is pursuing.
Second is sovereign wealth. Concurrent with the spring economic update, the Prime Minister announced his government’s intention to create a new sovereign wealth fund that would invest in various projects with the intent of stimulating new economic activity and strengthening Canada’s economic structure. This is an interesting proposal, with both opportunities and risks. There are several examples of sovereign wealth funds from around the world. Most have a mandate to wield public capital in the interest of diversification or qualitative development. In my view, it will be important to correctly specify the mandate and governance structure of a new sovereign wealth fund in Canada. In my judgment, the goal should be to foster investment and growth in strategic value-added industries that add to the breadth of capabilities in our economy and is complementary to a previous issue I raised, which was the need to diversify the composition of Canada’s exports.
I am worried that Mr. Carney’s reference to “asset recycling” in his initial discussion of this idea — through which the government would potentially sell off existing public assets, notably including airports and ports, in order to fund investments or subsidies for other projects. In my view, that would be a dangerous model that risks undermining the public interest in continued ownership of those assets. The goal here is not to recycle public wealth but accumulate it over time and wield that wealth in strategic ways to foster a stronger and more diverse economy.
Third and finally in these initial remarks is the latest oil price shock. Our economic environment was already uncertain, of course, and then, with Donald Trump’s attacks on Iran, the closure of the Strait of Hormuz and another shock in oil prices, the uncertainty is intense, which will have negative effects on Canada.
Our centre recently published research estimating the impact of this shock on consumer costs and future inflation in Canada, informed by the documented experience of the 2022 oil price shock. We considered three broad scenarios: one where the Strait of Hormuz immediately reopens, one where it is closed for another three months and one where it is closed for another six months. Even in the best-case scenario of an immediate reopening, Canadian consumers would pay an additional $50 billion in direct and indirect costs over a 12-month period, and the inflation rate would rise to over 4%. If the strait remains closed for longer, then that will lead to higher interest rates.
Among measures to adapt to this shock, I would support redistributing some of the record revenues that will flow to the petroleum industry this year as a result of the price shock. An excess profit tax, modelled on the one that was implemented in Canada during the pandemic on banks and insurance companies, could recapture some of that revenue windfall and offset the fiscal cost of the temporary elimination of the federal excise tax on gasoline and diesel, which you are considering in this bill.
Thank you again for your attention. I am glad to discuss these three and any other issues in the economic or labour market milieu in the discussion.
The Deputy Chair: Thank you, Dr. Stanford.
We will now proceed to the questions.
[Translation]
I would like to inform senators that we have a maximum of four minutes. For the first round, please ask your question, and I would ask the witnesses to respond concisely, if possible.
[English]
Senator Cardozo: My questions will be to Mr. Stanford, and, if we have time, Mr. Turner as well.
I would like to pick up on a few things you mentioned. Actually, you mentioned so many things that I’m not sure which few I will pick, but here we go.
In terms of not exporting raw materials and producing more in Canada, can you give us some specific examples — essentially low-hanging fruit? Where should we start? Which sectors, which industries, should we start with? Also, can you say more in terms of the sale of ports? I understand that for airports, we already have private sector ownership. Is that right?
Mr. Stanford: I don’t believe so. Mr. Turner could answer that. I think it is a kind of non-profit, public ownership, arm’s-length structure through the Airports Council.
Mr. Turner: It’s a non-share capital corporation with a local governance board.
Senator Cardozo: So would something like that, something like the way we have airports, the ownership structure there, be workable for ports and for other airports that don’t have that? If you could, please speak a bit more about those two issues.
Mr. Stanford: Thank you, senator. In terms of how we defend and expand value-added or higher-tech production in Canada, the obvious places to start are the ones we have today. This is where, of course, the necessity of making ambitious efforts to protect the auto, steel and aluminum sectors against the slow decline that will occur if the U.S. sectoral tariffs remain in place, and we don’t have a very ambitious industrial strategy to support those industries.
The same would go for the other industries that are next in line for Mr. Trump’s sectoral tariffs. He has launched investigations on aerospace, industrial machinery, semiconductors and pharmaceuticals. It is almost a who’s who list of Canada’s industrial success stories, so he clearly has a deliberate strategy to try to punish any of those higher-value industries and push companies to shift production to the United States.
So it is about supporting them and finding new ways to do so, and Canada’s Defence Industrial Strategy that the government is looking at is a good example. We would need similarly powerful and well-funded measures in the auto sector to support that industry.
Then, of course, there is a whole set of new industries that are emerging around technology, semiconductors, AI and high-tech services.
Canada has some strengths already. Preserving our successes and then expanding those would be the way forward.
On the ownership of ports, I don’t think there would be any gain to shifting the ownership of ports from direct public ownership to the kind of arm’s length but still non-profit model because the airports were not sold off when they shifted to that new governance model. I don’t see the point of doing that unless there was a genuine improvement in governance as a result of that structural change.
What I am mostly concerned about, either with airports or ports, is selling them outright to private investors, which would sacrifice the public’s interest in the operation of those assets.
Senator Cardozo: When you’re calling for a more ambitious industrial strategy, are you just calling for more government spending or what?
Mr. Stanford: No. The industrial strategy would use a whole toolbox of different measures, some of which have spending implications around direct production or investment subsidies or support for R&D, but most of which can use other levers. Public procurement, for example, is one reason why the defence industrial strategy has so much potential. We have seen success through the Canadian Shipbuilding Strategy that the federal government has had in place for 10 years. They are going to buy the ships, but what they have done is attach those purchases to Canadian content measures, and a similar approach could help on the defence side.
On the auto side, it is trickier because consumers are private rather than the government. Government procurement can play an incremental role but will need other measures, such as tariff remission measures and other measures to try and compel global automakers to maintain a production footprint in Canada if they want to sell vehicles in Canada. That’s the sort of measure. It’s very hands on but not necessarily involving government expenditure that would be required to support the industry in the face of Donald Trump.
Senator Ross: Mr. Turner, I was interested in the part of your remarks where you addressed paragraph 50.2(2)(b). You talked about how organizations that are perhaps tenants of airports might be required to provide their financial information to Transport Canada, the government and what have you. I am also interested in the fact that the airport authorities currently already provide financials and all of that information to government.
What is the airport authority’s position on this? Has there been consultation with the government on providing these types of levels of their clients’ or tenants’ documentation to the government?
Mr. Turner: Thank you, senator, for the question. I would be happy to respond.
First, the measure announced in the spring economic update, this component of legislation, was not consulted on. There was no notification in advance. It was something that was announced in the spring economic update fresh to the sector, and so we are reacting to it in real time, and we are still beginning to understand the true reach of it.
We have not received any detailed indication or information from the government as to their intentions for its use. I think the spring economic update and the purpose of the tool is quite clear to support the current asset and ownership review process and ensure the government has access to the information. As I said in my remarks, we agree with the intent to ensure the government has the ability to get the information it needs to support that policy process, in particular, obviously, from parties who are involved in that process, whether that is public or private airport operators or others.
In the scenario where you look at the legislative text, as I indicated, where the operative statements of this are the minister’s opinion and what “value” means, there is some concern on our part. Looking into a tool that could be on the books in perpetuity for any future minister to use for a purpose consistent with transportation policy is the only other limitation there. That, absolutely, we think could reach into, or be an argument to reach into, anybody who has any kind of commercial or fiduciary relationship with an airport. That could go to the level of tenants, business partners, suppliers, airlines, NAV CANADA and others, as I said in my opening remarks.
That is where we see the possible scope expansion beyond, perhaps, the exercise that is under way right now. We’re not saying that that is the intent of the government. We’re just saying that the legislation seems to allow for that if you read it on its face.
Senator Ross: You mentioned the spring economic update. In that, they talk about alternative models of ownership, and they also mention updating the framework for airport rents. Can you tell me what you think that means?
Mr. Turner: Absolutely. What we saw in both the budget last fall and the spring economic update a little over a month ago is a package of reforms that the government wants to advance. One of those tied in more broadly to the government’s agenda and fiscal capacity is the ownership review, and the minister and Prime Minister have spoken clearly on that.
The remainder of that package is a number of items that have been on the table for some time. These are mature policy issues that the CSE has been representing for some time. To take a quick moment to answer Senator Cardozo’s inquiry as well, airports, for the record, are structured as non-share capital corporations. This means they have a corporate structure and operate as a private sector business. They have a profit motive. They do not have a shareholder to distribute those profits to. On top of that layer, the leases and the federal government structure require them to have a public interest mandate that serves the needs of the traveller, the good practices of the industry and local needs.
On top of that, you have the governance structure, which is the board of directors appointed by the federal government, provincial government and local government and also includes sector expertise, labour expertise and — importantly, for the current context we’re in — chambers of commerce or other business associations. Those are the folks who can bring in that local economic priority dimension as well. That is the structure that we work within today.
I want to go back because one of the things this moment allows us to do is remind people that airports and air systems are net fiscal contributors to Canada. The current discourse positions them as a cost. It’s important that we make the point that they are net fiscal contributors, and rent is the primary function of that, besides the general tax base.
[Translation]
Senator Hébert: My question is for Professor Stanford. You have touched on some very important issues that stem from Bill C-30 and the investments that the government is preparing to make. You talked about the importance of diversifying our exports, infrastructure megaprojects and upcoming investments in that area. We’re also talking about an industrial strategy that will be redeployed to certain sectors. I would like to ask you my question because your organization specializes in labour issues. Does Canada have what it needs in terms of labour to meet all these challenges and be able to deliver the goods?
[English]
Mr. Stanford: Thank you, senator. I believe we have the labour for it. In fact, right now, we have surplus labour that could be absorbed through an ambitious expansion of supports for these high-value industries.
Certainly, in specialized skills, we need to pay attention to the labour supply challenge and make sure that we’re graduating a steady pipeline of people through vocational education, colleges and apprenticeships to fulfill some of the specialized roles in industries, but Canada’s unemployment rate is 6.9%. That doesn’t tell the full story. There are other pools of unutilized or underutilized labour. The unemployment challenge is especially acute for young people, of course. Senator Cardozo has done some great work on that topic.
The key challenge is not that we don’t have the people. We absolutely have the people, and those people are aching for opportunities. The bigger challenge is ensuring that the economic and financial viability of these value-added industries in Canada is supported through the right combination of trade policy, fiscal policy, research and innovation policy and others.
[Translation]
Senator Hébert: It’s interesting, because that isn’t at all what we’re hearing from the business community. Businesses are indicating that a number of regions are facing very significant labour shortages. I understand that the unemployment rate you described is an overall rate. That’s quite an interesting perspective, because it differs considerably from what we’re hearing.
I would like to hear your opinion on the industrial strategy. You said it’s important to save the auto industry. Some experts have said that it may not be the optimal strategy, and I understand that it’s difficult, politically speaking, given that industries like that are somewhat on life support in the current circumstances and could find themselves in more and more difficulty. Some are wondering whether it would be better to try to requalify workers who lose their jobs so that they can find work in other sectors. In other words, would it be better to redirect workers from industries that are at risk of weakening toward industries that offer more of a future? I would like to hear your thoughts on that.
[English]
Mr. Stanford: Automotive production is very important, and not just for the jobs in the auto facilities themselves. It’s even more important for the supply chain that is anchored by the presence of auto assembly operations. For every direct job in an auto facility, there are another five or six jobs in the supply chain and other downstream industries that depend on the presence of that industry.
Automotive production has been a target of active industrial policy for countries around the world for that very reason, because the loss of employment, innovation and productivity if the industry disappears is considered too serious.
In that regard, I think Canada has to continue to support the auto industry and find a policy framework that will allow it to survive, depending on, obviously, where Mr. Trump goes. The punishing tariffs — including a 25% tariff on vehicle exports to the United States — are obviously blowing up the business case for Canadian production, but I don’t think that we should abandon that industry. It would be naive to think that we could just somehow move all the people and the entire supply chain over to an alternative industry if we did that.
[Translation]
Senator Galvez: My question is also for Mr. Stanford.
[English]
I couldn’t agree with you more that Canada must move away from a pure extractive industry to a high-value chain industry with an emphasis on clean energy and technology and high-tech sectors.
I’m also worried about what you said regarding the fiscal strategy increasingly moving toward monetized public assets and infrastructure to increase revenue because we are borrowing, and we need money to hold the projects that we want to conduct.
Can you please tell us what the impacts are of quickly selling these public assets and infrastructure — such as ports, highways and airports — on connectivity, on Canada’s trade competitiveness and on the credit ratings for municipalities, provinces or at the level of the federal government?
Mr. Stanford: Thank you, senator.
Well, there’s obviously been a long-standing debate in Canada and around the world in recent decades about the merits of privatizing public assets. There is a conventional economic mantra, if you like, that the private sector does it best. However, there are plenty of examples to show that cannot be assumed at all, and airports are a good one.
There are other countries in the world with private airports where they are more expensive, they are underinvested and they are less reliable than in Canada. We have a great system of airports in Canada, and they’re operating in a unique governance model but with a public interest mandate.
If the airports are sold off so they can be monetized to offset some of the investments the federal government is making elsewhere, then you’re exposing the travelling public and the businesses that depend on them to the vagaries of for-profit decisions that the private owners of the airports would make.
The same goes for other public assets. For example, the water systems that have been privatized in many countries around the world have been a disaster. It has been a disaster for health, but it has also been a financial disaster, because water systems end up being managed in a way to pay dividends to private owners rather than make investments that are effective and oriented around the public purpose of the water system, which is to supply an essential service to the public.
I don’t believe that the credit rating argument applies for privatization. In fact, I’d say it applies in reverse, because whatever the private entity is that takes over an airport or a port or some other asset, its credit rating is going to be lower than the government’s, and the interest that it pays is going to be higher than for the government. This is why I don’t accept the idea that we must sell some public assets if we’re going to invest in others.
The government has a sovereign capability to raise money at, effectively, the lowest interest rate going. As long as we can make a case — just like a homeowner does when they undertake a mortgage or a business does when they issue a bond to finance an investment — as long as we can make the case that the end investment that is financed with that new debt is important and delivers a return, then it’s quite legitimate for a government to do so, and it doesn’t add to the deficit. It’s a balance sheet operation that certainly takes on debt but also creates assets on the other side of the balance sheet.
I’m worried about the idea that this sovereign wealth fund would be used as a kind of a cover for a privatization agenda. I’m going to watch that very carefully when the government has its consultation on the sovereign wealth fund idea.
Senator Galvez: Thank you so much.
[Translation]
Senator Gignac: We will continue with our economist colleague, Mr. Stanford, on privatization. When we see our pension funds in Canada that are already owners or shareholders of airports around the world, I have a bit of trouble seeing why — especially if it were Canadian pension funds that owned our airports — we would be reluctant to take this approach. Particularly in Canada, since passengers pay a very high amount compared with other airports internationally. I’m trying to understand. Can you elaborate on Senator Galvez’s question? Thank you.
[English]
Mr. Stanford: Thank you, senator.
It is ironic, I suppose, that our own public pension funds — including the Canada Pension Plan, or CPP — have seen financial opportunity, from the investor’s perspective, in the more aggressive privatization that has occurred in other countries.
I worked in Australia for some years. There’s a lot of Canadian pension money invested in former public assets. I can also attest, having lived in Australia and experienced the airports, private toll highways and other private infrastructure, including private rail infrastructure, it doesn’t serve the consumer’s interest. It certainly serves the financial investor’s interest. That’s why the CPP is there.
I certainly see a role for Canadian pension funds in supporting the investment and major projects agenda of the government. I just think we have to find an appropriate structure through which that role could be played.
The CPP, for example, has half of its investable assets in the United States, which is very ironic considering that we face a historic challenge as a country in defending our sovereignty against the United States.
I’d like to find ways for our pension money to come back to Canada to invest in public infrastructure. We should be able to find ways that are financially appealing rather than selling off infrastructure to the private sector in general.
[Translation]
Senator Gignac: Mr. Turner, I had the opportunity to look at the leases that airports have signed with the governments. The minister already has access to a lot of information, since tenants have to provide the minister with all the documents and information. I’m trying to understand why the minister is going so far in Bill C-30. As you explained, there could potentially be risks of lawsuits if information about suppliers or third parties is shared. What collateral damage do you see if this bill passes?
[English]
Mr. Turner: The bill itself, as I said, was a new thing that came in the spring economic update, so we’re still getting our footing on it.
What we are aware of is that there does not seem to be a problem at this point in time that it is intended to solve. We have, again, been assured by Transport Canada, the minister and others that this is a stopgap measure in the event that they need to use it with any of the parties involved in the broader ownership review.
As you say, it’s true. Airports do deliver an amount of information to Transport Canada through their lease agreements. They also have filings with communities and other public forums. I would imagine that information differs in its structure and form than perhaps a private investment house may structure their financing or valuation.
The government may also be trying to find ways of ensuring that it gets the right data for its analysis. I think if they thought they could do that through existing authorities, they would have used those existing authorities, so I expect that’s the route to take.
Senator Dalphond: Thank you. My questions will follow up on what Senator Gignac asked, because those were my questions. I’m familiar with these things. I’ve worked on them.
When the Mulroney government decided to, let’s say, decentralize the administration of airports, all long-term leases were entered into and the Crown remained the owner of the land and all the property that was built on it. At Dorval, the whole thing is being torn down and rebuilt. It belongs to the Crown, not to the corporation.
I also saw in the documents that they have to provide, as you mentioned, audited financial statements. They have to provide all the information. They have to provide assessments. In some places, it is the Crown that is assessed, and they have to pay back the assessment to the Crown. In most major airports, I think, this is the way.
Here, when they ask for assessments and financial information, they have it already, don’t they?
Mr. Turner: Without knowing what the ministry or analysts are looking for in particular, I can’t answer whether they have what they’re looking for already, but we do know that’s a robust set of information.
I think it goes back to the inclusion of third parties and other entities that may have a stake in the valuation. I think that’s the largest expansion of the information-gathering powers.
Certainly, for our members, though, I want to be clear that they are engaged, cooperating and ensuring they can provide everything they can. There’s no friction here.
Our purpose in bringing this issue and in accepting your invitation to speak to the bill is that we think it could use some improvement, and our ask is simply to look at some of those constraints that may come at a future time.
Senator Dalphond: But isn’t that concern, to a certain extent, addressed by clause 46, which says that the Minister can share the communication, but only with a Crown corporation, as defined in the Financial Administration Act, or:
. . . an individual or entity that is not part of the federal public administration and that advises or is consulted by the Minister in relation to the development of transportation policies . . .
That’s in the government bubble. It’s not shared with investment funds.
Mr. Turner: Not externally, no. Those external advisers as well — like many aspects of what the government is doing in major projects these days, the government is relying on external advice from financial and banking experts. I assume that is what that authority is intended to support.
Senator Dalphond: It does not allow these advisers to share with interested investors.
Mr. Turner: I don’t believe this applies to those who might be interested in investing in an airport. As I read the text, the legislation applies only to those entities that may have a bearing on valuation.
Senator Dalphond: How many airports are privately owned in Canada?
Mr. Turner: There are no airports that are privately owned. All the national airport systems are owned by Crown or municipalities. There is one airport in Canada that has a privately owned and operated terminal, and that’s the downtown Billy Bishop Toronto City Airport.
Senator Dalphond: Okay. But they are still on Crown land?
Mr. Turner: Yes.
Senator Dalphond: In the spring economic update, the minister said reforming Canada’s airport systems is to “lower air passenger costs and better position airports to attract private investment.” Were you consulted before about this new kind of orientation of private participation in the management of airports?
Mr. Turner: Certainly. Since the budget in the fall, there have been many discussions with Transport Canada, the minister, the government, the Prime Minister’s Office and others about where this was headed.
We were awaiting the spring economic update to see where the government was going to move with respect to consultations or more formalized engagement. We’re in that moment now. We are waiting for some of those things to begin.
To answer your question, I would also —
Senator Dalphond: So it is not a complete surprise to you?
Mr. Turner: No. We’ve been aware of this since the fall.
The broader affordability and investment structure is something that airports are always interested in and are always talking to our partners about.
It’s an important message that private investment and private partnership with airports are not a strange thing. Already they are forming consortia with multiple financing parties. Obviously, there are commercial operations on-site there. So it’s not an unfamiliar place. Airports are always interested in ways to finance and invest in their assets.
Senator MacAdam: My question is for Mr. Stanford.
You referenced in your opening remarks that there was the sovereign wealth fund. You mentioned there were many risks associated with that fund or the establishment of such a fund. Can you elaborate on some of the most significant risks that you see?
Mr. Stanford: The most significant risk would include the use of the fund and its capability for purposes that are ill-defined in terms of the public interest and the long-term vision of developing Canada’s economic structure and capabilities.
If the fund were endowed with initial money, whether through borrowed funds or, perhaps if this asset recycling idea takes off, through revenues received from the sell-off of other public assets, then it could be used almost like a private capital or hedge fund, to be used for placements in different operations that seem to provide either a financial or political gain to government, then recycle the funds and move elsewhere, kind of like what private equity has done in many situations.
This is why I think it’s very important that the mandate of the fund be clarified — that, first, it is to build wealth over time, not just to give the government a capital vehicle to play with in the markets; and, second, there has to be a clear public interest mandate that guides the long-run activity of a sovereign wealth fund.
There are many examples in the world. The one I’m very fond of is in Singapore, the Temasek fund, which is a sovereign wealth fund that is a deliberate effort to invest and stimulate the economic diversification of Singapore’s economy and to take placements in very promising high-tech ventures and other operations that help to ensure that Singapore is on the cutting edge of the economy.
We are seeing huge structural changes in Singapore’s economy. The idea is not to make a quick profit and flip the asset, but to build public equity over time and use it as a lever for active industrial policy. That would be a good model for how Canada could do it.
Senator MacAdam: [Technical difficulties] — an adequate governance structure. The spring economic update talks about transferring those to a Crown corporation. I’m wondering, in terms of this Crown corporation, what is the importance of having enabling legislation for that Crown? Would you see that as very important in this instance?
Mr. Stanford: Certainly. The governance of this idea of a sovereign wealth fund will be critical, that it be arm’s-length from the day-to-day political imperatives of the government; that it be guided independently by that mandate that is presumably set in the enabling legislation; and then that it be subject to rigorous accountability and reporting requirements to ensure that Canadians are aware of what the fund is doing, what it is being used for and that the judgments of it are legitimate.
We have good experience in Canada. Many of our institutions — and, frankly, I would say the airports, for Mr. Turner’s benefit — are a good example of creative governance structures to manage public assets in an efficient and accountable way that is also consistent with a public interest mandate. There are other examples, from our pension funds to other holding companies and so on. So I think it’s possible, but it is very important to pay critical attention to the mandate, the governance and the accountability of the vehicle.
[Translation]
Senator Oudar: Thank you for being here. I have read some of the work you have published, particularly when it comes to labour and workers’ rights.
I’m specifically referring not to the bill, but to the Spring Economic Update 2026, in which the government committed to reducing certain expenditures. That included through efficiency measures, such as reducing the size of government: in fact, reducing the number of public service employees. I would like to hear your opinion on that aspect in particular.
Also, when we questioned the government, it naturally told us about the introduction of artificial intelligence measures. I know you have looked into that. In one of your writings, you discussed the introduction of technology. I agree with you that technology doesn’t replace work and generally can’t replace work, but it can still change the quality of work, for better or for worse.
I’d like to give you an opportunity to comment on that, Mr. Stanford. Thank you.
[English]
Mr. Stanford: Thank you, senator. That is a very rich question, and I’m very honoured you have done some reading of our past publications. Thank you very much.
First, on the subject of public service downsizing, this was, in a way, framed and justified as an exercise to spend less and invest more. That is the rhetoric that the government used to say that we do want to invest in major projects to support Canada at this dangerous moment, and we want to spend less on current services.
This is a false dichotomy between providing current public services and investing in long-term capital assets. This is true in the financial sense, and this relates to the earlier question from Senator Galvez. The government can borrow money to invest in assets, and if those assets are long-lived, productive and generate a social return, then they show up as assets on the balance sheet. They don’t contribute to the deficit by borrowing funds in order to invest in future assets.
So this idea that we must cut back the head count in the public service — which provides important functions, obviously, at the federal level as well as at lower levels of government — in order to fund investments, I think that is quite wrong.
I think that the staffing levels for public services should be governed by the criteria of making sure that they can deliver high-quality services that Canadians expect. We’ve seen examples of where the existing framework — whether it’s responding to inquiries from the Canada Revenue Agency or the speed of getting passports issued — where the quality of public services was jeopardized by understaffing. So, I’m worried about this focus on the downsizing of the federal public sector. Particularly at a time of high and rising unemployment, having the government downsize its own staff just adds to the misery.
On the second question about artificial intelligence, we’re obviously monitoring this. It’s changing very quickly, but in general, I have been skeptical of the pessimistic arguments that AI will lead to large-scale job losses. It will clearly change the nature of jobs and, in some cases, undermine the quality of work. On the other hand, there are other opportunities for work that are opened up by artificial intelligence, and this is consistent with the experience of technological change and labour markets over time.
There has never been an example of mass technological unemployment, so I don’t expect it from artificial intelligence either.
I’m more concerned with what it means for the quality of work and the treatment of workers, including adequate protections for their privacy and data collection from them in the course of their work, and making sure that artificial intelligence isn’t used by employers — whether in the public sector or, more commonly, in the private sector — to degrade or devalue work. That is where my bigger concern lies, rather than around eliminating jobs in large numbers.
The Deputy Chair: Thank you.
Senator Robinson: Mr. Stanford, I was very interested in your three broader topics in your opening remarks, as you spoke about trade diversification and how we are — I should know the term — hewers of wood and drawers of water.
Mr. Stanford: It comes from the Bible, but it applies to Canada.
Senator Robinson: I must brush up on my Bible. Thank you. I could not agree with you more, and I immediately thought of the Dominic Barton report. I’m not sure if you are familiar with it.
Mr. Stanford: I’m not. I’m sorry.
Senator Robinson: Dominic Barton did an Advisory Council on Economic Growth report in 2017. Within it, he identified Canadian agriculture as an enormous global growth opportunity. He had suggested that we should be setting a stretch target to book agri-food exports in 2017 from $55 billion to $75 billion in 2025. The exciting news is we hit $150 billion in 2024 and had 2.25 million jobs in agriculture and agri-food.
In Canada in 2017, the stat was that we only processed about 50% of our own agricultural output, which coincides with what you said about hewers of water. We also had a US$3.2-million trade deficit for agri-food products, and this was driven primarily by our food processing sector being under developed.
So I was really excited when you got into the sovereign wealth fund, how it could stimulate new economic activity and how important it is to specify the mandate of the strategy.
I was wondering, when we look at agri-food exports and the opportunity to add more value domestically, if you saw food processing as an agri-food investment being a good fit for the sovereign wealth fund mandate.
Mr. Stanford: Absolutely, senator. Thank you. Those comments are bang on. Agriculture is a great example of the challenge of adding value to our resources. If we limit ourselves to just specializing in bulk production of crops and other agricultural commodities, we are going to leave most of the potential value on the table, and it will be harvested by processors and producers in other countries, often to our disadvantage. Think about the meat-processing industry, for example, and how concentrated it has become in recent years, dominated by gigantic, mostly U.S.-based manufacturers. Some of them have operations in Canada, but still, we don’t fulfill the value potential of processing. The big money in food and food products, of course, is in the specialized, high-quality, brand name, recognized, unique products, and Canada has enormous potential to do that.
If the sovereign wealth fund were used as a tool of an industrial development strategy with a strong public mandate, it could play a vital role, along with other policy levers, in developing the agri-food sector.
Senator Robinson: I had a question for Mr. Turner. We see a lot of exports of cargo. In Prince Edward Island, we have a lot of aquaculture, a high-value product that is exported through air cargo.
I was just wondering about the fuel excise suspension. Does that apply to cargo operations at regional airports like Charlottetown? Is the council seeing any of those savings flow to aquaculture exporters who rely on the air freighter, or does the benefit flow primarily to passenger carriers?
Mr. Turner: The excise tax was a welcome move from the federal government to relieve some costs on the sector. The exemption applies broadly to anybody who buys that fuel at the point of sale.
Senator Pupatello: First, I want to say hello to Jim Stanford. I’m so glad that you did come back from Australia. You might know that he did many years of work with the automotive industry in Ontario, where we had a chance to work together. It’s great to see you again.
Tonight we are talking about Bill C-30, which is an update of the legislative requirements of Bill C-15, the budget bill. So I’m going to assume that the elements in this update bill, Bill C-30, on the insurance extension of the Employment Insurance rates, of the labour mobility credits, et cetera, are ones that you support.
Then I would like you to go back for a moment and talk about the original Bill C-15, because this is an update to it, and the supports in there for assisting our automotive industry and manufacturers who have to look for new industries and new customers. You know how difficult that is when the original equipment suppliers, or OES, of automotive are — you have 10; you can count them. There are maybe 10 around the world, and we sell largely to America. So that is our reality.
Mr. Stanford: Thank you, senator. Yes, it is great to see you again.
On the question of the labour provisions in Bill C-30 itself, certainly the extension of coverage for seasonal workers in the EI system is welcome and needed, and the labour mobility provisions as well.
There is other work still to be done on the EI system to fix some of the cracks in the model, and this, in a way, is unfinished business from the pandemic. We, of course, had the experience with the CERB and the other emergency benefits that were rolled out because we knew the EI system couldn’t do it. Then when we went back to EI and discontinued the CERB, we made a commitment to fix the EI system, and we literally have not done so. So there are lots of other areas to look at, including the hour qualification requirements, the level of benefits and the interaction between Employment Insurance coverage and training.
We have an irrational situation now where people lose their EI if they actually take the initiative to get retrained after losing their job. Those are some of the things that need to be fixed, but certainly what is in Bill C-30 is a step in the right direction.
On the automotive front, you know, senator, as well as anyone in Canada, the challenges of trying to run an auto industry where 80% to 90% of the output is sold in the United States, and this is by design. We have had 60 years of free trade in automotive since the Auto Pact in 1965. So, to suddenly switch that and go to an industry that is either focused just on the Canadian market or trying to start exports to other countries from a very small place will be an enormous challenge.
I know the federal government has indicated a commitment to a national automotive strategy; that is going to be important, and it’s going to have to be big and powerful, because if the sectoral tariffs stay in place — and the rhetoric from Washington is indicating that they will — then the future of the auto industry in Canada is literally at stake. This is where we will need a whole range of measures. Public procurement, for example, specialty vehicles — think about buses and electric buses, post office trucks and military vehicles — that could play a role in stabilizing domestic vehicle production.
Think about the tariff remission policy and really supercharging the incentive for companies to be here if they are going to sell here and punishing those that aren’t here. Those are the far-reaching measures that will be required in order to sustain the industry and hopefully get through the next couple of years, to a point where the Americans realize continental free trade was as good for them as it was for anyone else and come back to a bit of rationality.
Senator Pupatello: Mr. Turner, very quickly, you started your comments about the airports supporting the U.S. It would be shocking for us to learn just how much the American government supports their airports. I don’t know if you have data that would suggest, even for pop support, how we compare in Canada. My own experience is Billy Bishop and on the board of the Toronto Port and all of the back and forth of who supports where. I learned how shockingly large the support for American airports is and why they get sustained. Even during the pandemic, they actually fared very well because they were handed billions of dollars, compared to Canadian airports. Do you have data on that?
Mr. Turner: Thank you, senator. I don’t have any data with me today. I’m happy to provide it to you in the future if I can. I would just say that it is definitely something we can try to get you.
Senator Pupatello: If you give it to our committee, they would be very impressed to learn just how supported that supposed free market in America is with respect to their airports. In fact, they support every inch of them with billions of dollars.
Mr. Turner: There is the structural subsidy there, and the air navigation system for them is a government agency; here, it’s NAV CANADA, which operates on a fee-recovery basis.
[Translation]
The Deputy Chair: Can you send us the data? Thank you.
We have exceeded our time and, unfortunately, can’t go to a second round. Thank you, Mr. Stanford and Mr. Turner, for sharing your knowledge and a lot of information.
[English]
For the next panel, we are pleased to welcome from the Office of the Parliamentary Budget Officer, Annette Ryan, Parliamentary Budget Officer; Louis Perrault, Director of Policy; Govindadeva Bernier, Director, Budgetary Analysis; and Kristina Grinshpoon, Director, Fiscal Analysis.
[Translation]
Welcome. You will have four to five minutes for your opening remarks. We will then move on to the question period.
Annette Ryan, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Honourable senators and members of the committee, thank you for inviting us to appear today as part of your study on the subject matter of Bill C-30.
As the chair mentioned, I am joined today by members of my team who contributed to the cost estimates for some of the legislative measures in the bill you are studying this evening. With me today are Louis Perrault, Director of Policy; Govindadeva Bernier, Director of Budgetary Analysis; and Kristina Grinshpoon, Director of Fiscal Analysis.
[English]
I will briefly note that the Parliamentary Budget Officer has previously costed some of the measures in Bill C-30. These include the temporary suspension of the federal excise tax on fuels, the capital gains exemption for the sale of a business to an employee ownership trust, the 2% cap on the annual alcohol excise duty inflation adjustment and the rate of reduction for beer brewed in Canada.
In accordance with the PBO legislative mandate to provide impartial, independent analysis to help parliamentarians hold government accountable, my office will continue to prepare reports and analyses of Budget 2025, Spring Economic Update 2026 and selected measures proposed in Bill C-30. We have recently published regarding the excise tax holiday and will soon publish a costing analysis on the automatic filer initiative.
[Translation]
We would be pleased to answer any questions you may have regarding our Budget 2025 analysis, the Spring Economic Update and Bill C-30. Thank you very much.
The Deputy Chair: Thank you very much for your concise remarks.
I remind you that you will have four minutes for questions and answers. During the first panel, we didn’t have time for a second round, so I’ll be stricter during the second panel.
[English]
Senator Ross: Thank you for being with us this evening. I have questions about Division 5, Part 3. It provides for a reduction in the Canada Pension Plan base contribution rate from 9.9% to 9.5% starting January 1, 2027. It’s because of the actuarial evaluation indicating the minimum contribution rate required to maintain CPP’s financial sustainability is 69 basis points lower than the rate that is currently set out in the act.
I’m interested in knowing if you think that this reduction is on target. Is it too much or is it too little? What kind of an impact will it have? What kind of an impact do you see it having on employers and employees?
Ms. Ryan: Thank you, senator, for the question.
I will make a few remarks about the measure. First, the CPP is not part of the government’s fiscal framework. To that effect, there was not a specific cost estimate provided in the spring economic update. That said, total contributions are projected to be lower by some $3 billion per year, which is substantial. Because the federal government is a large employer, that will give savings to the federal government, as well. That corresponds to roughly $130 per employee, affecting some 400,000 employees, so that could be in the order of $50 million.
In terms of the wider work to cost this measure, I would view that more as the purview of the Office of the Chief Actuary rather than the Office of the Parliamentary Budget Officer as such.
[Translation]
Senator Galvez: Thank you very much, Ms. Ryan, for being with us to answer our questions.
[English]
I am interested in the suspension of the excise tax on gas and diesel for a period of time. I know that one point is the discrepancy between your calculation and the government’s calculation. This is because of the affordability crisis and reducing the price at the pump, which is incoherent given the fact that we are an oil exporter. We are an oil exporter, but our oil and gasoline prices are high because we don’t have refining capacity. All of this is also due to this oil war in Israel.
We heard from two witnesses before that the government is looking at and studying the possibility of monetizing basic infrastructure to generate revenues because we have a large debt and want to shift our economy to other markets.
I wonder if you are, at this point, going to tell us what strategy is better — for example, we could start increasingly taxing the fossil fuel sector, to which we give billions per year while they report profits. Now we are again excising the tax. Why do we choose to privatize basic infrastructure that returns long-term revenues instead of doing what we are doing? Do you have any idea?
Ms. Ryan: Thank you, senator. I think your question has different components that I will try and answer in turn.
In terms of the fuel and excise tax, you mentioned the costing deferential that occurs between the PBO estimate and Finance Canada. In this instance, the PBO estimates that the cost will be slightly lower than the government estimate. That comes to roughly $2.1 billion that we estimate versus the $2.4 that the Government of Canada estimates.
We can talk about that in terms of the different assumptions that lead to that, but, on balance, that’s the nature of the difference that we come to.
You raised the question of it being generated as an affordability measure. I would say that the analysis that we did looked at the benefit of the measure by income of households. While gasoline purchases or fuel purchases make up a bigger share of low-income households, on balance, higher-income households spend much more on fuel because they drive more or drive bigger vehicles, et cetera. There’s a mixed view about how this measure will target affordability based on how much a family or household is driving.
In terms of the wider impact of this measure, I think it’s to stabilize against the economic shock for households, for businesses and for different levels of government for this unforeseen shock. It’s a bit of a mixed policy intent. You could look at it from different angles, and the aspect of balancing against shocks versus straight-up income buffering is in play.
In terms of the question about financing different investments in infrastructure from airport sales, I think that’s another measure that will be important to get the government’s plans on. Notably, it wasn’t included in the spring economic update but, rather, was released to the media days after the spring economic update was tabled. To that effect, we will continue to watch for the details about how that will be rolled out to ensure that, for example, there will be fair market rates of return for, essentially, public investments in that infrastructure to date. That would avoid the idea that that infrastructure would be sold at below market value for the benefit of those purchasing the infrastructure.
Senator MacAdam: Thank you for being here with us this evening.
Besides the debt-to-GDP ratio, which the International Monetary Fund emphasizes in the government’s fiscal anchors, what, in your opinion, are some of the other key financial indicators that we as parliamentarians should be paying attention to, both in terms of trends and as a collective — as a suite of indicators?
Ms. Ryan: There are a number of things that you could look at, senator. The aspect of knowing the debt per capita is a good starting point. It essentially brings Canadians and parliamentarians back into the debate about how much the government is spending now and paying later.
That also goes to the question of the forward profile of debt charges. Again, putting them on a per capita basis is a good exercise in fiscal literacy to give people a sense of how much an average Canadian or Canadian family is on the hook for going forward. That, in turn, can start to inform questions about not just whether the current plans of the government are affordable with the current tax revenues, but how much buffer there is to deal with potential future shocks.
We could think about different measures of looking at the debt-to-GDP ratio under different scenarios of interest rates, for example, to see how much room the government has to deal with unforeseen setbacks to come.
Senator MacAdam: The debt-to-GDP ratio is well known as a key indicator. In terms of measuring fiscal sustainability, at what point should we as parliamentarians become very concerned about the level of our debt in relation to the economy? I’d like to get your insights on that.
Ms. Ryan: I’ll pick up on the words “very concerned,” and for that measure, it goes to this question: Can we afford to keep paying the debts that we have accumulated?
A good, simple measure for that is the share of revenues that are being put to debt service, so that sense of how much do you have on your line of credit and how much of your income is going to pay that interest?
The acceleration in a measure like that is in that “very concerned” space because if we start to lose our ability to pay what we’ve already borrowed, that’s when you get into more serious trouble of having to sharply cut services, increase taxes or see those debt costs start to accelerate in dangerous ways.
Senator MacAdam: As you indicated in one of your reports, the Canada Strong Fund design details remain to be specified, and you highlight that a capital protection feature for retail investors could create contingent fiscal exposure, depending on the uptake and portfolio performance.
Could you comment further on that? Do you have any information on how retail investors will be assured of capital protection, like a guarantee? I see the contingent liability being a potential on the consolidated financial statements.
Ms. Ryan: There isn’t such available information yet, senator.
Senator MacAdam: Thank you.
[Translation]
Senator Gignac: Welcome to the Parliamentary Budget Officer. I worked for a number of years at an insurance company where actuaries and economists would sometimes have long discussions.
I tip my hat to the actuaries for the demographic projections. However, in terms of the assumptions that actuaries use for real investment returns, I think economists, actuaries and accountants are perhaps just as well placed as my mother-in-law is to arrive at the same conclusion.
Do you intend to look into that? We know that the Chief Actuary tabled her report, as she does every three years. I found the government a bit quick on the draw to reduce the premium rate right away. I am sharing some sensitivity indices with you.
Say that the real rate of return in the coming decades was, for example, 2.5% instead of 4%. We know that 4% is a good return, whereas we sometimes have decades when real returns are closer to 0% and 2% than 4%.
In that case, the premium rate, instead of going to 9.9%, should go to 11.4%, and we would no longer have 69 basis points available.
Here at the National Finance Committee, we consider the Parliamentary Budget Officer to have a lot of credibility. We give the Parliamentary Budget Officer the time to look at the return assumptions that the Chief Actuary uses and to give us an independent opinion. I’m talking not about demographic projections, but about return assumptions that should perhaps be compared with other countries.
In my opinion, it was reckless for the government to immediately lower the premium rate following the tabling of the Chief Actuary’s latest report.
Ms. Ryan: Anything is possible. However, I would hesitate before diving into that. As you know, the models are very complex. It’s best for me to turn to my colleagues to find out whether that type of analysis has been done in the past.
Senator Gignac: There are many economic indicators, and the Chief Actuary ultimately tells us about the various alternative scenarios, in a fully transparent way. Hats off to her for that, but I would be curious to know your opinion, if possible, even if it means getting back to us later.
Ms. Ryan: I think a better starting point would be with the Chief Actuary for that kind of scenario. If this is a priority for the committee among the other requests, we could assess that.
Senator Gignac: Regarding Bill C-30, your analysis focuses more on the excise tax. What is your view? In the past, was it ultimately the oil companies that increased their profit margins?
Have you done a historical analysis of when governments opted for temporary cuts to excise taxes? Was that passed on to the consumer, or did half go to the consumer while half was a temporarily higher profit margin? Is that something you have done in the past or could you look into that for the committee?
Govindadeva Bernier, Director, Budgetary Analysis, Office of the Parliamentary Budget Officer: We haven’t looked into that in the past. However, I know there are some studies in the United States in which something similar has been done. If I remember correctly, the last study discussed 70% of the reduction going to the consumer, but it was in cases where there wasn’t necessarily a supply shock. In the current situation, the increased prices stem from a supply shock caused by the war in Iran. In that case, though, economic theory would suggest that less of it will be passed on to the consumer because supply can’t increase.
Senator Gignac: I see two things: When it’s temporary and there’s a supply shock, competition plays a much smaller role than when there’s a permanent decline. If you had documentation and analysis, we would be interested.
The Deputy Chair: Are you going to send them to us? Thank you.
[English]
Senator Robinson: Thank you. In your PBO report on Spring Economic Update 2026, you mentioned how geopolitical uncertainty presents a downside risk to global growth and specifically highlight the conflict in the Middle East.
Now, most of your analysis deals with oil pricing, but I’m wondering if you’ve studied the impact this conflict will have on global fertilizer supply, as the Strait of Hormuz allows for the passage of approximately a third of global fertilizer volumes. Canada remains the only G7 country to maintain tariffs on Russian fertilizer, harming Canada’s ability to be competitive in food production, doing the direct opposite of facilitating trade and commerce. Food security is tied to stable fertilizer supply, and we know food security will be defined for the purposes of Divisions 7 and 8 in Bill C-30.
Ms. Ryan: Factually, we have not done a study of that implication. I think that it’s clear that type of price increase and the type of variability that it involves for producers will certainly have a number of effects on the industry, but it’s not something that we’ve modelled so far. I appreciate the dynamics.
Senator Robinson: Certainly, what we see in Prince Edward Island is a very good fit as far as a fertilizer profile. It’s something produced in Belarus, and it’s incredibly well positioned for potato production. The fact that Canadian farmers on the East Coast cannot access this is incredibly detrimental to our competitive advantage.
In the spring economic update, one of the six bullet points under “Ensuring Food Security for Canadians” speaks to “Immediate expensing for greenhouses to supercharge food production.” I asked this of officials yesterday, but they weren’t able to give me an answer.
I’m wondering if you have looked at this in your study of the spring economic update and the provisions of Bill C-30. Have you done an analysis of the food production gap and how provisions in Bill C-30 will impact that gap?
Ms. Ryan: The short answer is we have not done a study of the food gap, but we have done past studies of the greenhouse measure. Mr. Bernier, do you want to speak to that?
Mr. Bernier: Not that one specifically. We did estimate other immediate expensing measures, but not the greenhouse specifically. Unfortunately, we don’t have anything additional.
Senator Robinson: Thank you.
[Translation]
The Deputy Chair: Thank you.
Senator Oudar: It’s my turn to welcome you; I also have questions about the Canada Pension Plan. I heard your previous answers, but I’m going to direct you to a more specific provision in the act. I don’t know if you have looked into this.
I have some concerns about an exception made under clause 44, which excludes section 114 of the Pension Act. Section 114 requires the government to conduct an actuarial study every time it amends the pension plan. This means that, to avoid doing the actuarial study, the government created a provision in the act to exempt itself from that obligation. The government is going off the 32nd actuarial report, which establishes that the plan is actuarially sound. However, if that’s the case, why did the government feel the need to exempt itself? I’ll take my question further: Isn’t this a dangerous precedent? We’re talking about a rate reduction today, but if it’s necessary to exclude an actuarial study to increase the premium next time, aren’t we setting a precedent that will affect not only the plan itself, but workers’ rights as well?
Ms. Ryan: I will also say, senator, that we have not done a study on this specific aspect. In terms of governance, I would say that it’s good practice to keep an actuarial eye on changes and forecasts that remain correct.
Senator Oudar: It may be best to take a look at the exceptions that are created in bills, because they set precedents. If the 32nd report establishes actuarial soundness today, that may not always be the case in the coming years. It’s always dangerous to set precedents.
Have you also evaluated the changes to the maximum amount for labour mobility, which is going from $4,000 to $10,000, that is, the reduction of the distance between a permanent residence and a temporary work location? This is a more specific issue in Quebec, because it is already an integral part of collective agreements in the construction sector, but do you have an opinion on that?
Louis Perrault, Director of Policy, Office of the Parliamentary Budget Officer: In 2022, a cost estimate was released for this purpose. However, at the time, it focused more on the change in distance from 150 km to 120 km, and there was no limit, so to speak, ranging from $4,000 to $10,000. It would be possible to modify the analysis to examine this in greater detail. As for whether there is an analysis specifically on this point, no, but the level of funding indicated in the Spring Economic Update seems relatively reasonable.
Senator Oudar: Thank you.
Senator Hébert: In the report you published on May 4, just before the third table, one sentence bothered me somewhat when you discussed the new sovereign wealth fund. Here it is:
The new sovereign wealth fund is expected to increase net borrowing by $25 billion in the medium term and raise interest costs on public debt by the same amount.
This means that the $25 billion in net borrowing will increase by the same amount, i.e., $25 billion. As for the interest costs on public debt, I’m trying to understand how that could happen, so I went to look at the English version of the report.
There’s something I don’t understand, or there’s a problem. In English, it says “commensurately.” That means proportionally, not “equally.” I don’t want to nitpick, but did I misunderstand, or is there another translation error here?
Ms. Ryan: There is a translation issue. There is an issue regarding how debt is handled. Can we separate the issues of translation and debt handling?
Senator Hébert: I understand that the sovereign wealth fund will increase borrowing by 25 billion?
Ms. Ryan: Yes.
Senator Hébert: It won’t increase debt service by $25 billion?
Ms. Ryan: No, no, that’s it.
Senator Hébert: So, I understand that this is a translation error. I think it would be worth doing a careful proofread. I think we all agree that we have a lot of respect for the work you do and that we just want to ensure we maintain a certain level of confidence in the French versions, not in your work.
Ms. Ryan: Of course, yes.
Senator Hébert: Thank you, Ms. Ryan. I would like to follow up on the question raised by my colleague, Senator Oudar. Witnesses told us this week that, with regard to labour mobility, the measures regarding the 4,000 to 10,000 range and the change in mileage would not make much of a difference.
Do you have a different perspective? In your opinion, what will be the impact of this measure in terms of the number of workers?
Mr. Perrault: We should take a closer look at the distribution and request data from the Canada Revenue Agency to determine whether most people are claiming the maximum $4,000 or if the amount is well below the limit.
I haven’t looked at the latest data on this. If the majority of people claim close to $4,000 or less, raising the limit to $10,000 might not make much of a difference. If most people are claiming $4,000, potentially, raising the limit from $4,000 to $10,000, we could expect . . . . Basically, we could always use a rule of thumb. Right now, I don’t know the exact line item in tax expenditures by heart, but I don’t think it’s very expensive. At worst, we could double the amount, and if that fits within the finance estimate, it would be a good assessment.
Senator Hébert: Is this effective in achieving the desired effect in terms of the workforce?
Mr. Perrault: That’s an excellent question. I don’t have access to the data.
Senator Hébert: It might be interesting to have them, eventually.
[English]
Senator Pupatello: Nice to see you here. Thanks for coming this evening. I know there’s a hockey game going on right now. Everyone probably has their eye on their Apple phone or something. Is that an Apple phone? I’m teasing.
There’s one element in the spring economic update commentary that you provided, which I’ll read to you quickly:
Regarding housing, affordability and support for the housing supply remain central in the 2026 SEU, but no specific targets for the pace of homebuilding are provided. This is notable in the context of housing starts and population growth losing momentum since Budget 2025.
Do you also do a review of immigration? There’s been such a dramatic change in the course of one year. Even if the housing starts have slowed, the immigration pace has also virtually stopped.
If I look at my own community at home, which had such a massive number of students and non-permanent residents especially, it is like a whole cast who are now not there. How do you compare that when you are looking at population and housing starts? Shouldn’t you be commenting, too, on the change of the environment in total?
Ms. Ryan: Thanks for that, senator.
In the past, the Office of the Parliamentary Budget Officer performed a similar exercise to what you’re talking about, which was to estimate the number of housing starts that would be required to meet the demand in Canada.
That analysis was based on a demographic modelling of things like the extent to which people of certain age groups would be moving out and seeking housing, and the extent to which those groups would be growing. That took into account things like forward immigration plans and so on.
The work that we undertook found a housing gap within 10 years and, based on projections of what housing starts would be over that period, in the order of 690,000 units. That work is on record and publicly available in terms of that gap.
Senator Pupatello: That 690,000 is what would be there, not what the requirement is, correct?
Ms. Ryan: That is the requirement.
Senator Pupatello: Okay.
Ms. Ryan: So the analysis took into account how many housing starts we expect to see over that period, what family formation will look like and what the demographics look like, accounting for expected changes in immigration, and still found that sizable gap.
Senator Pupatello: I am thinking that anyone doing actuarial work wouldn’t foresee a sudden policy change that would have such a dramatic change in population literally overnight. That is continuing even today. I think that would be a very different picture in terms of need.
Our previous witness was suggesting that they have all the labour workforce required for what our country needs. Then we see something that’s going to potentially create 100,000 more just in the trades. So Canada’s issue is the people aren’t necessarily where the work is, so there’s this constant movement. The same is true with housing starts, that where the housing starts are is not necessarily where people are or where they need to be.
I wonder if you couldn’t have that kind of reflection in your reporting because there will be some areas that are not going to fall — it’s so generic that it almost isn’t real for any province if it’s at this high a level.
Ms. Ryan: For sure.
Senator Pupatello: So I don’t know if you should be more detailed almost regionally, at least maybe the four regions of Canada, because if the same is true on the workforce side, it absolutely will be true on the housing side as well.
Ms. Ryan: For sure.
Senator Pupatello: That might provide good guidance in which projects are selected, and in what priority, as opposed to writ large generally for Canada. That doesn’t really help.
Ms. Ryan: For sure. We see things fairly similar, senator.
The exercise of trying to take stock of all of the capital investment the government is going to put into the economy over the next 5 and 10 years has laudable goals to build infrastructure for Canada and make sure we’re world-class and world-leading; those are all goals that I think stand up very well.
The issue is the availability of that detailed planning information on how all these projects will play out in different regions, with what timing, with what draw for skilled labour in a context where the government is moving on an ambitious defence agenda that will have a certain demographic pull for skilled labour in a context of retirements.
Similarly, the desire to kick-start housing will draw on that same labour pool, as will the major projects initiatives. Then there are other measures being undertaken by the private sector and so on.
That’s in a context where retirements are continuing within a fixed population, as you’ve set forward. So that aspect of being able to understand what the government’s actual plans are within these higher-level objectives absolutely would benefit from that specificity by region, timing and project.
Senator Pupatello: Is that your office then who does that and reaches out to where you get that level of data, whether that is going to be Statistics Canada or workforce organizations?
Ms. Ryan: The starting point is to know what the government is specifically going to spend money on — for example, the defence strategies, the major project strategies and so on.
We can start to build the models once we have more detailed plans for how the government’s generally framed strategies will turn into actual plans and implementation and rollout. It is critical to do that work, and it’s not yet specified, either in the public domain or to the extent that we’ve been able to get it from departments.
The Deputy Chair: Thank you.
Senator Cardozo: I want to ask about the labour mobility deduction for tradespeople. What this bill does is increase the annual limit on expenses from 4,000 to 10,000. Do you think it is a warranted increase? How many people will be helped? What will be the cost of this?
Mr. Perrault: The number of people who can be helped is something we would need to look at. As for the question of whether it is warranted, that is definitely a policy question that, ideally, we don’t look at.
But it’s something that we could definitely estimate in terms of cost to the government.
Senator Cardozo: At this point you haven’t done that —
Mr. Perrault: No. The closest thing we have is a report from 2022 that looked at the change into the future without a cap.
Senator Cardozo: I’m interested in without a cap as well, because, as you will probably be aware, there was a private member’s bill that made it quite far in the last Parliament that looked at not having a cap.
Mr. Perrault: For this one, the private member’s bill, Bill C-241, the cost at the time was expected to be $9 million in 2025-26, with a large degree of uncertainty. The estimate right now, for the spring economic update for 2026, is roughly $1 million a year. So there is a delta, definitely, regarding having a cap or not.
Senator Cardozo: So it is a really small amount.
Mr. Perrault: Yes. At least the finance estimate is quite small. However, it’s something we would need to look into and brush up the model with new data.
Senator Cardozo: With regard to the part in the bill about extending the Home Buyers’ Plan, where the bill would make it easier for people to buy homes, do you look at whether that is a viable approach? Does it make it too easy for people to buy a home? And by that, I mean are people who can’t really afford it encouraged to buy a home when they can’t afford it over the long term?
Ms. Ryan: We are currently building out a fairly comprehensive modelling exercise for the Senate that will look at a number of different housing measures that have been announced, in terms of where we think there will be impact, value for money and that type of thing.
For the Home Buyers’ Plan to date, Mr. Perrault could speak to work that we’ve done in terms of modelling it, but that sense of design parameters and whether these are people that have an ability to pay back the loans and so on, I would anticipate that is outside of the scope of our past work.
Mr. Perrault: We did look at that when we introduced the First Home Savings Account, so we do have data, and also previous exercises related to the Home Buyers’ Plan. So it’s something that we could do. It would take, again, some more data that we would require to look at this.
The cost of this, of course, is the deferrals. So, potentially, people are, instead of paying back the Home Buyers’ Plan, they are putting the money in an RRSP. Technically, that is a cost. And then how many people will default? That is also something that we could definitely ask. If they are not paying back the Home Buyers’ Plan, what is the share of people and how much would they pay? That is something we can ask in terms of getting updated data to come up with an answer to your question.
Senator Cardozo: Just on the labour mobility deduction, if I can go back to that, I’m surprised at the small amount that this is going to cost. This has been a project that has been years in the making.
Is part of the reason that it’s such a small cost because maybe not enough people know about it?
Mr. Perrault: Salience of policy is always a good question. I’m not intimately familiar with the data with respect to that question. But, again, if that is of interest to the committee, it is something we could definitely look into and try to at least explain the size and cost of that policy. That is something that we can do and is in our wheelhouse to do.
Senator Cardozo: Thank you very much.
Senator Robinson: We have provisions in Bill C-30 that extend EI supports for seasonal workers until October 2028. The purpose of these provisions is to help retain highly skilled, experienced workers in regions where off-season employment opportunities are scarce by providing a financial bridge between the on- and off-seasons.
The Canadian Agricultural Human Resource Council, or CAHRC, estimated that in 2022, labour shortages resulted in $3.5 billion in lost sales or missed sales for primary production. That doesn’t even take into account the value that was lost in processing that we didn’t get to do because we didn’t get to produce those primary products.
In the same analysis, CAHRC projected both a 15% labour gap and over 85,000 retirements in the sector by 2030. Do you have any estimates for us on how these new EI measures could help shrink the labour gap or what their economic impact would be on sales?
Ms. Ryan: We haven’t done an analysis like that for this measure.
Senator Robinson: I keep asking you questions you have to say “no” to. I’m sorry. That is it for me.
[Translation]
The Deputy Chair: Thank you very much, Ms. Ryan, to you and your team. We have a very high level of confidence in your organization, but our expectations are also very high, as you have seen tonight, regarding the information you can provide us.
I would like to thank everyone for their co-operation: the clerk, the analysts. Thank you.
(The committee adjourned.)