Budget Implementation Bill, 2018, No. 1

June 12, 2018

Senator Patterson: Thank you, Your Honour. I would like to thank the Chair of the Finance Committee for drawing attention to the special situation that the residents of my region face in connection with Bill C-74, and particularly with respect to the greenhouse gas emissions act.

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I would like to emphasize the report of the Standing Committee on Energy, Environment and Natural Resources which noted the concern of committee members that carbon pricing would have a disproportionate impact on many northern and remote communities, many of which have no economic or technical alternatives to diesel for heating and electricity generation.

I am quoting from the report:

On this subject, the Minister of Environment and Climate Change Canada assured members that the federal government committed under the Pan-Canadian Framework on Clean Growth and Climate Change to working with the territories to find solutions that address their unique circumstances, including high costs of living and of energy, challenges with food security and emerging economies.

Colleagues, the Premier of Nunavut signed the Pan-Canadian Framework on Clean Growth and Climate Change in good faith. Nunavut and the other territories wanted to do their part to contribute to a national strategy to deal with climate change, which, of course, impacts the northern regions perhaps more than other regions in this country.

So they entered into the climate change framework and signed it in good faith. The Premier of Nunavut, Premier Taptuna at the time, told me that he and the other territorial premiers were given assurances by the Prime Minister himself that the special, unique circumstances of the northern territories would be considered moving forward.

I would respectfully submit, colleagues, that no other region in the country has more at stake and can be impacted more than my region of Nunavut, and I’m the sole representative of Nunavut in this chamber. In Yukon, which has a large hydro dam in Whitehorse, and in the Northwest Territories, which has two hydro dams, both of them old facilities, but nonetheless producing clean, affordable power, the impact is less severe than in Nunavut.

But in Nunavut, as the Government of Nunavut said in its submission to the committee:

Each of Nunavut’s 25 communities is remote and isolated. Unlike any other jurisdiction in Canada, no community in Nunavut is connected by road or rail. Shipping by the sea is only possible during a few short months each summer. Nunavut’s reliance on aviation for cargo and travel is unavoidable.

Nunavut communities also rely almost entirely on burning diesel for heat and electricity, without the efficiency of a grid ( our communities are too far apart).

While the Government of Nunavut is taking steps to encourage energy conservation and new types of energy production, the technologies for hydro, solar, wind or tidal generation remain, in industrial useful terms, either untested or unviable in Nunavut’s Arctic.

As the report states:

The Government of Nunavut further advised that ECCC [Environment and Climate Change Canada] had recently finished . . . a study to “assess, the potential impacts of carbon pricing in Nunavut … [and to] identify, assess and propose possible solutions and opportunities to mitigate potential adverse economic effects in Nunavut.”

Honourable colleagues, that’s what I’m hoping to hear before I’m asked to vote on Bill C-74. However, as the territorial government said to the committee, the territory has yet to see how specifically the federal government proposes to recognize Nunavut’s circumstances through the backstop.

I have asked Senator Harder repeatedly about this issue. I have spoken to the Minister of Environment and Climate Change Canada about this issue, and forgive me for quoting what she told me at a private meeting that I had with her and members of the Energy Committee. It was an informal meeting in her office. She told me, “Don’t worry.”

Well, honourable colleagues, we’re on the eve of voting for this bill. It’s enabling legislation which will give the federal government and the officials in Environment and Climate Change Canada and in the Department of Finance Canada the ability to write the rules for the federal backstop in Nunavut. They’re going to determine the output-based system for putting a price on carbon consumed by our fledgling mining companies that I’m pleased to see are operating and creating much-needed jobs for Inuit in Nunavut.

However, when I questioned the officials at committee, they couldn’t tell me exactly how the output-based system will be applied on Nunavut mining companies. Frankly, honourable senators, I’m afraid that the output-based system is going to develop standards based on efficiencies of mining companies in Southern Canada that don’t have to deal with a lack of infrastructure. None of our mines in Nunavut are located anywhere remotely near a highway system. None of them are located near tidewater. They’re all handicapped by a lack of access to the energy grid that many mining companies enjoy, or a highway system that many mining companies can access in Southern Canada. So if the output-based system is based on efficient mines that operate with minimal greenhouse gas emissions for mining in Southern Canada, it’s going to be a serious threat to the mines that are in place in the Northwest Territories.

Agnico Eagle Mines, a great Canadian gold company which has invested billions of dollars in Nunavut in its Meadowbank and now Meliadine mining project, is employing 36 per cent Inuit in its workforce and working to improve that ratio. It is providing benefits to Inuit-owned businesses throughout Nunavut and has contributed enormously to the GDP of Nunavut. It has forecasted that carbon pricing could cost it up to $50 million per year in the fifth year of its operation without some special consideration for its unique circumstances.

However, colleagues, I don’t know whether there will be any special considerations for companies operating in Nunavut and for the residents of Nunavut. So I feel it is my duty, in speaking to this bill on second reading and as the only voice for Nunavut in this chamber, to try to find out how the measures in the greenhouse gas emissions act contained in Part 5 of Bill C-74 will impact the people of Nunavut. We need to know how the federal backstop will be applied in Nunavut. Will there be exemptions to shield Nunavut residents?

Unfortunately, a very high proportion of Nunavut residents must rely on income support to live. There are people who have good-paying jobs in Nunavut, but there are also a lot of people who struggle with food security. Reports have shown that alarming numbers of Aboriginal kids are going to school hungry because of the cost of food. Food costs money because a significant proportion of it has to be flown in from Southern Canada. It’s a three-hour flight by jet to bring produce into my community of Iqaluit. I always take people into the local stores, and they are shocked at what it costs to buy food in Nunavut. That’s because we’re paying for air freight, and airplanes use fuel.

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Honourable senators, I’m anxious to know how the special circumstances recognized at the signing of the pan-Canadian framework, by the three territorial premiers in good faith, will be applied to my region of Nunavut. Will there be exemptions to shield Nunavut residents from the impacts of adding a tax to the cost of heating homes in a cold climate or adding a tax to the cost of electricity for keeping the lights on, in a region that is very dark in winter?

Honourable colleagues, as we go forward to consider this bill, I want to put you on notice that I am going to be begging for some answers on how this bill will impact my constituents. I feel it’s my duty, in representing this region, to alert you to this challenge, and by notice to Senator Harder, the Government Representative in the Senate, and to his colleagues on cabinet, that I believe the people of Nunavut have a right to know the impact of this budget before I vote on it.

Thank you for listening to my concerns, honourable colleagues. That’s my main concern. I thank the Chair of the Energy Committee and my colleagues who put these considerations of mine in our report. And I thank Senator Mockler for highlighting them in his report to you today.

Honourable senators, I’m still waiting for answers.

The Hon. the Speaker pro temporeWould you take a question, Senator Patterson?

Senator Patterson: Yes.

Hon. Yuen Pau Woo: Thank you, Senator Patterson.

I’m trying to understand specifically your reservation about the output-based carbon pricing system. You referred many times in your speech to the worry that this system will require mining industries in the North to meet the efficiency standards of the South.

My understanding of the output-based pricing system is that it has nothing to do with the efficiency of industries in other parts of the country. In fact, it is about setting a price for emissions above the output of that industry over a historical period so that industry does not pay a carbon price up to that limit that reflects its historical production.

I ask this question partly because it also affects not just industries in the North but all industries in this country that are trade exposed, which face international crisis, and therefore could be adversely affected by a carbon price. This is not unique to the North. But it’s important if you can set the record straight as to exactly how this pricing system works, that it’s not based on efficiency; it’s based on setting a ceiling below which no carbon price will be charged. Could you clarify that for us, please?

Senator Patterson: Thank you for the question, Senator Woo.

I have the same general understanding as you do, and perhaps I was unclear in suggesting that the output-based system was based on efficiency. But as I understand it, the output-based system will be different for various industries. I’m concerned about the mining industry, as I mentioned.

The Hon. the Speaker pro temporeSenator Patterson, you’ve run out of time. Do you require five minutes?

Is it agreed, honourable senators?

Hon. Senators: Agreed.

Senator Patterson: My understanding was that the output-based standards had not been developed by the department when the officials came before our committee, and therefore they’re unknown for the mining industry, at least at this time. So in passing this bill, we’re passing enabling legislation. The devil will be in the details of the regulations. My first concern was how will we scrutinize the regulations? They’re very important to me. There are no provisions for parliamentary scrutiny of the regulations in this bill.

The second concern was how will the output-based systems be designed in consultation with industry? That’s my concern. If the industry consultations are with big mining companies based in locations that don’t have the geographical and climatic barriers of the few mines that are located in remote locations north of the sixtieth parallel, then the output-based system is going to prejudice those mining companies. I couldn’t get any clear answers because the officials said, “Well, the consultations are under way. We’re consulting with industry.”

My concern, Senator Woo, is no answers now and no way for Parliament to scrutinize the regulations once they’re passed.

[Translation]

Speech – 2R, C-74 (An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures)