Hon. Diane Bellemare: Honourable senators, today I wish to add my voice to the debate on Bill C-32.
I was a little surprised by the debate we had on the Growth Fund. I may have been a little surprised, but not entirely. I do want to share some of my concerns about the Canada Growth Fund, but I would rather put it into context.
When I first looked at Bill C-32, I saw a number of very good measures in it and I thought it was very important that they pass. Consider, for example, the measures for students and for home ownership.
The U.S. Inflation Reduction Act contains a package of measures to stimulate business investment in the context of the transition to a greener economy. It is worth nearly $400 billion, not including the leverage effects that these measures are trying to achieve.
My interest only grew after reading the Canada Growth Fund bill, because I had looked at the Inflation Reduction Act of 2022, which was introduced in the U.S. last fall. That legislation provides for a set of measures aimed at reducing the impact of inflation on Americans, but also measures to stimulate American investment, promote the green transition and increase productivity while generating growth that will help reduce the deficit. The Inflation Reduction Act seeks to address a whole range of challenges.
At the same time, the legislation provides nearly $400 billion to companies in the form of tax credits and loans. I saw more tax credits than loans, but the Department of Finance saw more loans than tax credits. It depends how you interpret the American legislation.
I understand that following the enactment of this U.S. legislation, the Government of Canada felt the need to take action, and that the bill before us includes a measure known as the Canada Growth Fund. When the minister appeared before the committee — I wasn’t there, but I read the testimony — it was obvious that she was making a case for the urgent creation of a fund of up to $15 billion, which had been announced. She put it in this bill in order to immediately start making potential investments in businesses.
It is true that this raises many questions because the bill is relatively succinct and provides for $2 billion in shares held by the government, which will look to the Canada Development Investment Corporation to potentially make investments and oversee the transition.
Many senators obviously asked questions in committee. Senator Marshall asked some very interesting questions, as did Senator Gignac, Senator Loffreda, Senator Galvez, Senator Moncion and Senator Cardozo, who were all interested in this fund and in the lack of information — let’s be honest — that was made available to us.
That said, we do learn a little more when we read the technical document for the Canada Growth Fund and the government’s objectives for this measure.
I will read some excerpts. You will see that my goal is not so much to defend this measure as to try to suggest some elements the government could use in the next version of the bill, where there will be more information on the institution being created. I think this is a good opportunity to tell the government to include these elements in the next version. That’s why I’m quoting from the fund’s objectives:
Because Canada’s economic prosperity has traditionally been built on natural resources and other emissions-intensive industries, a substantial transformation of our industrial base will be required to meet our climate targets and ensure long-term prosperity for Canadians and the Canadian economy. Canada needs to build the technology, infrastructure, and businesses to reduce our carbon reliance, but this will not occur without rapidly increasing—and then sustaining—private investment in activities and sectors that will strengthen Canada’s position as a leading low-carbon economy.
It goes on:
The CGF is designed to invest in a manner that mitigates these risks that currently limit private investment, and unlock the domestic and foreign capital that Canada needs now.
Those are the objectives the fund seeks to achieve, in terms of the transition, on a rather broad scale.
The debate also made it clear that the situation is urgent. We also see in the newspapers that there are companies that started making investments, risky investments, that may decide to go invest in the United States without too many penalties being imposed. The fund therefore helps to somewhat defend the Canadian strategy and to say to companies that the government will also help them with technology and the more at-risk sectors, or at least that is how I see it.
The argument itself is not all that convincing, but the technical backgrounder lets us see the magnitude and complexity of the issue. In the technical backgrounder, we learn what risks the fund is trying to mitigate for businesses. We’re not talking about small risks. These are big risks.
First, there’s demand risk, which is associated with the uncertainty around end market pricing. There’s also policy risk, which is related to uncertainty around climate regulations, such as a carbon price or clean fuel standards. Then there’s regulatory risk, which is a big one that has to do with what the provinces can do with respect to project assessments and permitting approvals for construction projects. Finally, there’s execution risk from building first-of-a-kind commercialized products and companies.
All of this is lingo to say that our companies are facing major risks. In this sense, the government will use this fund to find financial instruments that will allow it to receive returns on its investments and mitigate all various forms of risks at the business level.
This is what the government wants to do, but for the moment there’s not much in the legislation that describes this measure, except for the information in the technical document.
In my opinion, the government should have introduced targets in the bill. It would have been quite simple to propose concrete greenhouse gas emission reduction targets. Those targets, as well as the elements and criteria to define them, are also found in the technical document, on the last page. There are several of them, I won’t read them all, but the document could have stated that the first objective is to quickly and significantly reduce greenhouse gas emissions and to help reach Canada’s climate targets.
The bill should also include potential performance metrics, such as annual greenhouse gas emissions reductions through the fund’s investment in technology improvement projects and the fund’s investment in businesses.
That said, I think we should give it the benefit of the doubt and wait for the next government bill. We have to tell the government that we want to see three things in its bill: results-based objectives, targets to achieve concrete results, and much broader governance than what was planned and described in committee.
In committee, the department mentioned that it had provided for governance by experts, finance experts who will be able to adopt the best instruments to lower investment risks for companies. Unfortunately, I’m not sure whether this is enough.
We heard some very interesting ideas from witnesses about the fund’s governance. I’m thinking of Gil McGowan, the president of the Alberta Federation of Labour. He is a trade unionist who came to present elements of a report produced by the Alberta Federation of Labour entitled Skate to where the puck is going. In its report, the Alberta Federation of Labour provides for transition elements and an industrial strategy for Alberta. Mr. McGowan told the committee that the Canada Growth Fund lacks vision, and that the government should have one. Interestingly enough, he suggested that the Canada Growth Fund should be managed in a bicameral structure. I will read a excerpt of what he said in English, because I think it is clearer:
I’ve shared the report with the clerk, so I would encourage you to take a look at the seven pathways we identified. The one thing about the growth fund that I want to emphasize and I mentioned it in passing in my opening remarks has to do with governance. We’re suggesting that instead of simply creating an arm’s-length organization that is run by investment managers that we have a bicameral structure where we have a stakeholder board on the top that will help provide direction and then an operational board that would handle investments.
We actually have a bicameral structure like that for our big pension plans in Alberta. I acted of the chair of what we call the sponsor board to set general policy and then we had an operations board.
What we’re suggesting to the government is that, in the next version of the bill, which should be arriving soon, there should be a governance structure of this nature to ensure that the projects that are chosen will facilitate a more macroeconomic transition rather than small, specialized projects.
Something else occurred to me when I compared the present situation to the experience in Quebec. Indeed, Quebec had a green fund. There was legislation, that has since been changed, there was a somewhat bicameral structure and results-based objectives. However, it takes time before there is any clarity in all this because it is a relatively complex issue. In my opinion, there’s something missing in Canada to be able to make this highly necessary transition. We have the money, we know what we need to do, but there is no cooperation between the key economic players. Every government wants to do things in accordance with what the government in place decides.
In my opinion, the macroeconomic problem would require the creation not just of a fund, but of a Canadian prosperity council. Let’s institutionalize a council of the provinces, the federal government, as well as representatives from the economy, namely businesses and the workforce.
It is a colossal challenge. If we created this type of council, we could give it the necessary vision to spend the money we have all around. There’s money in Quebec; we’re going to get some. This is what I hope for from the government: results-based objectives, a bicameral governance and a prosperity council.
Thank you very much.