NDP Seeks to Strike Down O&G Subsidies that Don't Exist

On May 17, the House debated an NDP opposition day motion that claimed to be about ending subsidies to a profitable oil and gas industry, but which relied entirely on statistics that are simply wrong.

The motion also completely ignored the value of contributions the sector makes to our economy. Even if one accepts a definition of "subsidy" that arguably includes some government investment (typically in strategies to reduce carbon emissions), the tax and employment contribution of the sector far exceeds those investments. Indeed, the investments typically return more to government coffers than the cost of the initial investment. That's called a return on investment, not a subsidy. A subsidy is when the return is LESS than the investment.

The Canadian oil & gas sector employs directly and indirectly 522,000 hard working Canadians. The sector currently contributes ‘economic rent’ to Canadian governments of $20 billion per year just in 2021 - a not particularly prosperous year - to all orders of government in Canada: municipal, provincial, and federal.

Canada’s oil and gas industry has made more reductions in its greenhouse gas intensity than any other industry in Canada, and leads the world in its emissions reduction intensity. These cleantech investments and advances have led the world, and will continue to contribute to lowering greenhouse gas emissions – here and around the world.

The NDP motion reads as follows:

That, given that,
(i) Canadians are paying almost $2 per litre of gas at the pump,
(ii) oil and gas companies are making record profits,
(iii) Canada spends 14 times more on financial support to the fossil fuel sector than it does for renewable energy,

the House call on the government to:
a) stop using Canadian taxpayers’ money to subsidize and finance the oil and gas sector, including by eliminating financing provided through Crown corporations such as Export Development Canada, and excluding oil and gas companies from the $2.6 billion Carbon Capture Tax Credit, by the end of 2022; and
b) re-invest savings from both these measures in renewable energy and in help for Canadians struggling with the high cost of living.

Here is my speech, including questions from colleagues. The written transcript follows the video.

Here is the text of my amendment (also found in the speech):

  1. c) The Government of Canada identifies and eliminate inefficient energy industry subsidies by 2023, it should clearly identify, quantify, and phase out programs for the Canadian energy sector that subsidize compliance with existing regulations.
  • ‘Inefficient subsidies’ shall be defined as those government grants or payments, below-market provisions of capital, contracts for difference, social financing, unequal capital cost allowance allocation differentials, trade-access program funding, expenditures to reduce / delay taxation (such as ‘flow-through’ financing mechanisms, as provided by all levels of government.
  • Further, ‘inefficient’ shall be interpreted to mean that the incentives granted under such programming shall result in less funds being provided to all levels of government as a result of the programming. That is, the ‘economic rent’ received by the various levels of government must be less than that received had the subsidy (ies) not been implemented.
  • In addition, as energy is an essential input to society and human development, and the source of the energy is fungible with respect to its social utility, that common measurements be applied across all energy sources that receive any government subsidies or programming, from all levels of government.  Common comparison elements must include full cycle costing (including purchase and disposition of capital equipment), and common depreciation schedules / capital cost allowance rates and accredited capital costs.  A level comparison of costs and benefits is essential to determining relative inefficiency of subsidization. 
  • Such ‘inefficient’ allocation of government resources shall not be applied to programming that aims to attain societal objectives beyond the aim of sourcing safe, secure, affordable energy for Canadians.  Specifically, programming applied for scientific advancements in environmental technologies to better the outcomes of energy sources are, by design, inefficient, particularly at early stages of development, which is when government action, through programming, is most importantly applied to derive better societal outcomes.’


 

TRANSCRIPT FROM HANSARD

 

Madam Speaker, I appreciate being able to get up and speak to the motion the NDP has put forward. However, as I was drafting my speech, I had to ask myself where I could start here today.
    When I look at the motion, in the preamble it says, “(i) Canadians are paying almost $2 per litre of gas at the pump,” which is true. They do pay that. It then says, “(ii) oil and gas companies are making record profits,” and we will analyze what that actually means. The preamble then continues, “(iii) Canada spends 14 times more on financial support to the fossil fuel sector than it does for renewable energy,” which is complete hogwash, and I will address that item first.
    The preamble itself is a mulch of misinformation, and the NDP is very good at that. The NDP is very good at putting misinformation on the table and saying, “Here's what's going to happen here.” They then repeat a narrative that is completely false. I tried to participate last week at a forum hosted by my colleague who put this motion forward. I noticed that my party was the only party that was not invited to that forum, and that is because the other parties in the House have members who buy into this nonsense narrative about the way the transition happens.
    Now, my party and I have very good ideas about how we actually transition and decarbonize our economy, all of which are based on reason and outcomes, and none of which I have seen from the Liberals, the Bloc, the NDP nor the Green Party. Getting somewhere on the environmental equation is essential, and none of the other parties have presented anything that advances the environmental equation for the world. All they do is kneecap the Canadian industry.
    I did some research after that forum. I went to look for where this figure came from of subsidies in Canada for our oil and gas industry being 14 times more than what we fund for our alternative energy industry, and it comes from a group called Oil Change International, which is a proxy organization for Greenpeace. Its leadership comes from Friends of the Earth, and it is funded by the Tides Foundation. It is a splash of the same voices producing louder and more dissonant narratives about how we can actually decarbonize the world.
     Frankly, I will take licence on this, Madam Speaker, and you may have to slap me here, but it is a lie. It is something that this misinformation is based upon, and frankly, it needs to be called out for what it is whenever we see it here. As parliamentarians, our job here is to speak the truth and only the truth. When we foment misinformation by repeating lies from the Internet, we are going towards that confirmation bias, which we buy into and which our people buy into. We must get the real facts on the table here. We must ignore these groups, such as Oil Change International, which are just rent-seekers putting money in their own pockets at the expense of Canadians.
    I actually asked if there were—
    Madam Speaker, I rise on a point or order. I followed the member for Calgary Centre as closely as I could. He expected to have his wrist slapped, and if I understood him correctly, he called this motion from one of the hon. members of this place a “lie”, which is the same as saying that the hon. member for Victoria is a liar, unless I misheard him. Perhaps he can clarify.
 
    I believe when the hon. member is asking for clarification it is actually more of a point of debate. I want to remind members to be judicious with the words they are selecting.
    The hon. member for Calgary Rocky Ridge.
 
    Madam Speaker, I want to speak to the point of order that was raised. To be clear, I was listening as well and I do not think there is any reason why the member for Calgary Centre should have expected to have his wrist slapped at all. He did not call any member of this chamber a liar; rather, he brought attention to the fact that lies are repeated, and that is a—
 
    I actually ruled that this was not a point of order. Now it is becoming more a point of debate. The hon. member mentioned that he thought he might get his wrist slapped, which I did not do because of the way it was said, so I want to indicate that what is going on right now is more a point of debate.
    The hon. member for Calgary Centre.
 
    Madam Speaker, it is the first time I have used that word in the House. I was wondering if it was a usable word in the House or a three-letter word that disguised a four-letter word. Thank you for the clarification.
    Yes, the information being fomented by Oil Change International is a lie. I will repeat that in the House, because it is the truth.
    Let us go back to the analysis and look at the real numbers. I have been looking at the oil and gas industry and how much it has contributed to Canada over the past 21 years, which is $505 billion. That is more than half a trillion dollars it has given in economic rent to governments across Canada. That $505 billion is even a number in the real Liberal world, when it runs its deficits. Let us look at what that buys. How much health care does that buy? How much schooling and old age security does that buy? That buys the lifestyle Canadians have enjoyed for decades here, thanks to a prosperous natural resource industry led by Canada's oil and gas industry. The GDP number I have here is $128 billion, and $120 billion is our trade surplus in the oil and gas industry. That is balanced by about $30 billion of imports, so it is about a $90-billion surplus we are talking about for this industry, and 522,000 jobs.
    I know the New Democrats would like to see those 522,000 workers have their legs cut out from under them and not be able to provide for their families, but I do not think they understand the impact that has on families, because the impact it has on families—
    The hon. member for New Westminster—Burnaby is rising on a point of order.
 
    Madam Speaker, I rise on a point of order. As you know, when we speak in the House we have to have at least some connection with the truth, and the member is straying far from any semblance of relying on the truth here.
 
    Unfortunately, my focus was somewhere else at the time. I will have to review what the hon. member said and come back to decide whether or not this is an actual point of order.
    I want to remind members to make sure when they are debating that what they say is relevant and that they hopefully provide factual information.
    The hon. member for Calgary Centre.
 
    Madam Speaker, it is the first time that anybody in the NDP has actually challenged me on the truth because the motion they put on the table here is riddled with misinformation, so let us get to the heart of the matter. Do we realize the cost when we lose 522,000 jobs in Canada? It would be devastating for families across this country and there would no longer be any social support provided through that industry, which funds our country more than any other industry in Canada right now.
    My colleague pointed out that $20 billion was supplied by this industry as economic rent to governments across Canada last year alone, in not that prosperous a year for oil and gas companies in Canada. That $20 billion would be in addition to the $52-billion deficit, plus all of the economic dislocation that would happen if we actually tried to change this industry more than it is actually already changing itself.
    Industry has its own job to do and it is doing it very well. I am going to move to where we are actually looking at this whole notion of profitability. There is something called the reinvestment ratio. When the government came to power, the reinvestment ratio, which is the amount of money the oil and gas companies were spending to drill and develop new resources versus the amount they were actually paying back, was 1.82. That means for every dollar that they earned, they put $1.82 back in the ground to develop a future resource for Canada. It was a development industry.
    That number now, members would be surprised to learn, is actually down to 0.29, so 29% of the money that comes through the industry actually gets put into development. That is because there is no line of sight on what happens to the money in the future, and that is a result of extremely poor policies from the government. There is no line of sight. Yes, the government has had to step in and buy infrastructure that should have been built by the private sector, but its policies punished those private sector organizations by asking how we invest in a country where there is no line of sight on how we actually earn money on our investments.
    Government investment is fine. Private sector investment actually looks to make sure it gets a return on its investment. It is a concept most of my colleagues, in all four parties in the House, have almost no concept about: a return on investment. That is required around the world, not just in Canada.
    Let us talk about the environment a bit. Let us talk about carbon capture, because my colleagues here will know it is one of my premier pieces about how we actually decarbonize the world. Somebody referenced the International Energy Agency. The International Energy Agency, an international organization, of course, says that 7% of our decarbonization will come from carbon capture, utilization and storage over the next 20 years.
    However, 7% is not enough. Let us find more ways to decarbonize this industry. When we think about methane reductions in Canada, we lead the world on our environmental practices and how we are actually getting to a better environmental outcome for the world. The industry's production of hydrocarbons is down 30% in its carbon intensity over the past 15 years. That leads every Canadian industry in its decarbonization.
    That leads every country in the world, as far as oil and gas industries go. The only two countries we need to compare ourselves with in this regard are the United States and Norway. They are our only two peers. We are far better than the United States and we are on par with Norway, both of which have better carbon capture regimes than we do. We need to do better and make sure that our environmental practices match those of the most advanced countries in the world. We need to be the most advanced country in the world on these decarbonization initiatives.
    I am going to deviate now, because I think in the spirit of productivity and in actually working with my colleagues across the aisles, I am going to propose an amendment to this bill where we add at the bottom:
    (c) the Government of Canada identifies and eliminates inefficient energy industry subsidies by 2023. It should clearly identify, quantify and phase out programs for the Canadian energy sector that subsidize compliance with existing regulations.
    1. Inefficient subsidies shall be deemed as those government grants or payments below market, provisions of capital, contracts for differences, social financing, unequal capital cost allowance allocation differentials, trade access, program funding and expenditures to reduce delayed taxation, such as flow-through financing mechanisms, as provided by all levels of government;
    2. Further, “inefficient” shall be interpreted to mean the incentives granted under such programming shall result in fewer funds being provided to all levels of government as a result of the programming. That is, the economic rent received by the various levels of government must be less than that received had the subsidy not been implemented;

    3. In addition, as energy is an essential input to society and human development, and the source of the energy is fungible with respect to its social utility, the common measurements be applied across all energy sources that receive any government subsidies or programming from all levels of government. Common comparison elements must include full cycle costing, including purchase and disposition of capital equipment and common depreciation schedules, capital cost allowance rates and accredited capital costs. The level of comparison in costs and benefits is essential to determining relative efficiency of subsidization;

    4. Such inefficient allocation of government resources shall not be applied to programming that aims to obtain societal objectives beyond the aim of sourcing safe, secure, affordable energy for Canadians, specifically programming applied for scientific advancements in environmental technologies to better the outcomes—
 
    I'm sorry, I think there is probably a problem with interpretation.
    The hon. member for Shefford.

[Translation]

 
    Madam Speaker, the interpreter said that she did not receive the member's amendment, so it is harder for her to provide an interpretation of it.

[English]

    It seems that the interpretation did not get a copy of the amendment ahead of time, so I would just maybe ask the hon. member to slow down.

[Translation]

    I invite the hon. member to repeat point number four.

[English]

 
    Madam Speaker, 4. Inefficient allocation of government resources shall not be applied to programming that aims to attain societal objectives beyond the aim of sourcing safe, secure, affordable energy for Canadians; specifically, programming applied for scientific advancements in environmental technologies to better the outcomes of energy sources that are by design inefficient, particularly at the early stages of development, which is when government action through programming is most importantly applied to derive better societal outcomes.
    It is an amendment that is meant to allow the government the ability to fund these new environmental technologies that are always more expensive for industry at the front end and actually continue to kind of compare a base level about what the subsidy is in this industry versus these other industries where the government is shovelling money out the door right now, to try and say this is more important for us than others. I am hoping—
 
    The hon. member can table his amendment, but to elaborate on it is a point of debate. I want to remind the member and all members in the House that if they have something in writing, whether it is their speech or whether it is amendments or motions, it is always best to ensure that interpretation has access to that and that it is provided to interpretation in order to ensure that every member in the House is fully aware of what is being said. I just wanted to remind members again.
    It is my duty to inform hon. members that an amendment to an opposition motion may be moved only with the consent of the sponsor of the motion or, in the case that he/she is not present, consent may be given or denied by the House leader, the deputy House leader, the whip or the deputy whip of the sponsor's party. Since the sponsor is not present in the chamber, I ask the NDP House leader if he consents to this amendment being moved.
    The hon. member for New Westminster—Burnaby.
    Madam Speaker, it is another muddled mess of an amendment from the Conservatives, so no I do not.
    Questions and comments, the hon. member for New Westminster—Burnaby.
 
    Madam Speaker, I always enjoy listening to the member for Calgary Centre. This time, though, it was so unrelated to the facts that it was quite unbelievable. Here we have a situation where we know we are talking about $8.6 billion in subsidies last year alone. There were record profits in the oil and gas sector and at the same time, people were being gouged at the pumps. The Conservatives do not seem to recognize any of those realities.
    I came out of the oil industry and worked at the Shellburn Oil Refinery in Burnaby, British Columbia. I also worked in social enterprise and won a number of business awards. I understand return on investment, but when Canadians are investing $8.6 billion in subsidies, and we are seeing the increasing cost of climate change now reaching billions of dollars a year that impact Canadians right across the country, why do the Conservatives continue to deny the reality of climate change? Why do they continue to deny the reality of subsidies? Why do they deny the reality of the important issue that is before the House today?
 
    Madam Speaker, I appreciate that my colleague asked a question, although it was a bunch of hyperboles. Let me respond very adroitly: $8.6 billion is not a subsidy number provided. If he wants to understand the definition of what a subsidy is, perhaps he can look it up before he comes in this House and accuses me of an ad hominem like not believing in climate change. That was a ridiculous comment and he should stand down immediately.
 
    The hon. member for Timmins—James Bay on a point of order.
 
    Madam Speaker, I do not want to challenge the Conservatives on whether they believe in climate change, but the member should get some better acting skills if he is going to pretend he believes in climate change.
 
    Questions and comments, the hon. parliamentary secretary to the government House leader.
 
    Madam Speaker, it is worth noting that within the Conservative Party, even within the leadership of the party, there is serious concern about some members being climate change deniers. That is just a reality. It might not necessarily be the member who just spoke, but it is an issue within the Conservative Party.
    Can the member explain to the House why, when the Conservatives were in administration of the Government of Canada for 10 years, they failed in getting resources to tidewaters on either one of the coasts when it came to pipelines?
 
    Madam Speaker, I am not here to litigate what happened over 10 years ago. I do know a handful of pipelines were built in the previous administration, contrary to what the Prime Minister puts on the floor of the House of Commons, which is again complete misinformation. This seems to be allowed in this House, which surprises me and my constituents.
    If the member across who asked the question actually wants to look at what is being built in Canada right now, can he tell me why TMX is taking so long to get built? It is because of irregularity of process that his government has introduced in actually getting projects built in Canada. That is why capital is fleeing Canada and why projects do not get built here. It is why there is no investment from private capital.

[Translation]

    Madam Speaker, I hope that my colleague from Calgary Centre was not offended by my little joke earlier. I loved his speech, and I barely missed a second of it.
    The Conservative members spoke earlier about the billions of dollars the oil industry reinvests in society, and we have also heard about the extraordinary profitability of the sector. The first quarter of 2022 does show record profits for Canadian oil companies. At the same time, however, consumers are paying exorbitant taxes at the pump and then paying huge subsidies to the industry though their taxes.
    I have a very simple question that should be easy to answer. Given the situation, would it not be better to reduce or even stop the subsidies—which I think would be even better—and redistribute the money in assistance to Quebeckers and Canadians? Our fellow citizens are having a hard time with the price of gas, but also with the constantly rising inflation and the impact of the price of gas on the economy overall.

 

    Madam Speaker, I agree with my friend. It is very important to understand that the recent hike in gas prices is partly a result of the cost of the carbon tax applied by the federal government, currently in Liberal hands.
    We have often said that it was time to reduce or defer the carbon tax for Canadian consumers. This tax is now almost 12¢ a litre for Canadian consumers—
    Resuming debate, the hon. member for Jonquière.