This is page numbers 5517 - 5566 of the Hansard for the 19th Assembly, 2nd Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was know.

Topics

Shane Thompson

Shane Thompson Nahendeh

Thank you, Mr. Speaker. Mr. Speaker, on February 28th, the NAG council stated it was continuing with its mandatory COVID vaccination policy. The NAG council stated the priority is the safety and well-being of all 5,000 athletes, participants, coaches, and chaperones participating from 756 nations. This includes elders of the Mi'kmaq host territory who have shared that they are not comfortable with unvaccinated groups coming into their territory. NAG council indicated they respect the territories of the nations and wishes of the elders. So, Mr. Speaker, I also respect the wishes of the NAG council and the host territory but can commit to reaching out to the NWT Aboriginal Sports Circle to understand their perspective and talk about sending a letter to the host society. Thank you, Mr. Speaker.

The Speaker

The Speaker Frederick Blake Jr.

Thank you, Minister. Oral questions. Member for Monfwi.

Jane Weyallon Armstrong

Jane Weyallon Armstrong Monfwi

Thank you, Mr. Speaker. Mr. Speaker, people in my region are concerned about ice roads given the changing climate. My question for the Minister, has Infrastructure been tracking the impact of climate change on the life of our winter roads? Thank you.

The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Monfwi. Minister responsible for Infrastructure.

Diane Archie

Diane Archie Inuvik Boot Lake

Thank you very much, Mr. Speaker. Mr. Speaker, the short answer is yes. And I'm so excited to deliver a Minister's statement tomorrow that talks about some of the examples that we're doing in terms of how climate change is impacting our infrastructure, including our roads. So, yes, Mr. Speaker.

Jane Weyallon Armstrong

Jane Weyallon Armstrong Monfwi

Thank you, Mr. Speaker. Mr. Speaker, we know to mitigate the impacts of climate change we need resilient infrastructure that is done in collaboration with communities. What planning has occurred to begin to develop an all-season road to the community of Gameti by the Department of Infrastructure, and also to Wekweeti as well? Thank you.

Diane Archie

Diane Archie Inuvik Boot Lake

Thank you, Mr. Speaker. Mr. Speaker, building a Whati-Gameti all-season road would cost about one-third of a billion dollars. That's a lot of money, Mr. Speaker. But I do want to say that, you know, the Gameti ice road, over the five-year average, the opening date has been around February 16th. In 2019, the opening date was March 4th. So I mean, we do have some of the stats in terms of -- and we track a lot of our roads, all-season, our -- any of the roads that we do through Infrastructure. We track them. We kind of get a sense of when they open/when they close. I'd be quite happy, Mr. Speaker, to share that information with the Member in terms of some of the roads in the Tlicho region. Thank you.

Jane Weyallon Armstrong

Jane Weyallon Armstrong Monfwi

Thank you, Mr. Speaker. I live in the area. A couple years ago I know, due to climate change, the road to the communities, to Gameti was closed early, and to Wekweeti as well. So, yeah, I think she doesn't need to tell me, but we do know because we live there.

So, Mr. Speaker, we see a lot of benefits for energy and food security with all-season roads to our communities. What future planning is being doing to connect all the Tlicho communities to clean and renewable energy? When can the communities of Gameti and Whati expect a transmission line? Thank you.

Diane Archie

Diane Archie Inuvik Boot Lake

You thank you, Mr. Speaker. Mr. Speaker, the Department of Infrastructure continuously engages with Indigenous groups. You know, that is one of the things this government has been mandated to do, is to work with the Indigenous groups. In terms of the transmission line -- so we are proposing to build -- it's a 60-kilometre transmission line that's going to connect the Whati to the Snare system. You know, one of the options that was looked at in the past was the mini hydro project. So we are going to proceed engaging with the Tlicho government. They are in full support of this 60-kilometre transmission line. So those discussions are underway. You know, we talked about, you know, how we can partner and how, you know -- just recently some of the announcements that the Tlicho, as an Indigenous government, is doing to look for some funding. So, I mean, we look forward to these partnerships to continue that collaboration. Thank you, Mr. Speaker.

The Speaker

The Speaker Frederick Blake Jr.

Thank you, Minister. Oral questions. Written questions. Returns to written questions. Replies to the Commissioner's address. Petitions. Reports of committees on the review of bills. Member for Yellowknife North.

Rylund Johnson

Rylund Johnson Yellowknife North

Thank you, Mr. Speaker. Your committee has reviewed Bill 60, An Act to Amend the Petroleum Products and Carbon Tax Act, and reports that Bill 60 is not ready for consideration in Committee of the Whole and not be further proceeded with in its current form. Thank you, Mr. Speaker.

The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Yellowknife North. Reports of committees on the review of bills. Reports of standing and special committees. Member for Yellowknife North.

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Rylund Johnson

Rylund Johnson Yellowknife North

We've got 10 pages today, Mr. Speaker. Mr. Speaker, your Standing Committee on Government Operations is pleased to provide its report on Bill 60, An Act to Amend the Petroleum Products and Carbon Tax Act, and commends it to the House.

Introduction

Bill 60, An Act to Amend the Petroleum Products and Carbon Tax Act, received second reading on November 1, 2022 and was referred to the Standing Committee on Government Operations for review.

The current carbon tax law sets a tax on six fuel types that, together, cause 75 percent of the
territory's greenhouse gas emissions. The tax rate depends on the emissions content of each fuel type.

The GNWT introduced a made-in-the-NWT carbon tax in 2019 in response to Canada's Pan-Canadian Framework on Clean Growth and Climate Change. This framework sets a base tax on carbon emissions across Canada. Provinces and territories could create their own legislation to meet federal requirements. They could also voluntarily opt into the federal system, receive all the net revenues, and then decide how to spend them, as Yukon and Nunavut have done. If not, or if their plans weren't acceptable to the federal
government, the federal government could impose its own carbon tax, known as the federal backstop, and return the proceeds directly to households.

In 2021, the federal government announced new, tougher requirements for the carbon tax including:

  1. Increasing the carbon tax rate by $15 per ton of emissions each year, from $50 per ton in 2022 to $170 per ton in 2030; and
  2. Eliminating at-source rebates on heating fuel and large emitters.

Bill 60 is the GNWT's attempt to match Canada's new requirements while keeping the made-in-the-GNWT approach. Separately, the GNWT has proposed several budget measures and regulations to return some of the money it collects from the carbon tax. It plans to increase cost of living offset payments to households, adjust the 72 percent rebate for large emitters, and phase out the large emitter grant program within five years.

Department Unable to Answer Certain Key Questions

Committee's goal in reviewing Bill 60 was to decide whether to recommend that the bill
become law. If so, committee wanted to identify what changes could help mitigate the economic impacts of the tax, advance progress on emissions reduction goals, and ensure a high standard of accountability and transparency. If not, committee wanted to understand the implications of reverting to the federal backstop.

Our task was made difficult because of the lack of public information from the Department of Finance. When the Minister announced Bill 60 on October 31, 2022, the department did not appear to release even basic information like how the new tax would impact heating costs, the cost of living, the cost of doing business, or the economy. Committee had to ask for that to be made public. Committee also held a public technical briefing from the Minister and departmental officials on November 25, 2022.

Committee asked for more detailed information and analysis on the advantages and disadvantages of the made-in-the-NWT approach compared with the federal backstop. The department provided a lot of good information, most of which committee can share with the public in an appendix to the report. However, the department was unable to provide satisfactory responses to certain key questions including:

1. Impact on emissions.

Committee wanted to understand how the NWT's greenhouse gas emissions profile has changed since the carbon tax's introduction in 2019. The 2030 Energy Strategy estimated that a $50 per ton carbon tax would reduce emissions by 66 kilotons, or 3 to 5 percent. However, the department said it was "not possible" to draw conclusions due to data limitations and that the required data "will not be available for many years." Modelling work appears to have only begun in 2021-2022. Committee is troubled that, after more than three years with a carbon tax, the government cannot assess whether the carbon tax has met its primary goal of reducing emissions.

2. Economic impact on different groups

Committee wanted to understand
how different groups of people would be affected depending on factors like their community, household size, and energy consumption. Committee also wanted to know the impacts on businesses, NGOs, community governments, and Indigenous governments. The department provided good data on impacts based on community. But besides that, the department did not provide much information for other groups.

3. Comparison with the federal backstop

Committee repeatedly asked for more information to compare the made-in-the-NWT approach with the federal backstop, including their differences for tax burdens and the cost-of-living.

The department provided some good information - they clarified that the tax burden may be better under the NWT's system for small mines and those in the closure phase but no different from the federal system for everyone else. However, the department did not provide any cost-of-living comparisons because it does not know how the federal government would return revenues to Northerners under the federal system.

This missing information from the department made it hard for the committee to assess
which approach is better for the NWT and to identify ways to improve either approach.

I will now pass it over to the MLA for Inuvik Twin Lakes.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Yellowknife North. Member for Inuvik Twin Lakes.

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Lesa Semmler

Lesa Semmler Inuvik Twin Lakes

Participants Had Serious Concerns About Carbon Tax Approach

Committee sought public feedback on Bill 60 with a public notice and targeted engagement letters to those who may have had an interest in the bill. Committee received written submissions from:

  • The Northwest Territory Metis Nation;
  • The NWT Association of Communities;
  • The NWT Chamber of Commerce;
  • The NWT Senior's Society and Yellowknife Seniors' Society;
  • Pivot Strategic; and
  • One member of the public.

All written submissions are included in an appendix to this report.

Committee also held a public hearing on Bill 60 on January 16, 2023. At that meeting, committee received oral comments from the NWT Association of Communities, Pivot Strategic, the Yellowknife Seniors' Society, and a member of the public. Committee appreciates everyone who participated in the review of Bill 60.

Some participants were surprised and disappointed that the government is proposing a significant tax change with minimal consultation and public information. Indeed, the
Minister of Finance indicated that public consultations only focused on the large
emitters. Yet many other groups, like businesses and seniors, are significantly impacted by the changes.

Committee finds the government's approach problematic. It stands in stark contrast to
the Yukon's approach to carbon tax consultation, which featured a public survey, public information sessions, and targeted information sessions with local governments and First Nations.

Many participants expressed concern that the government's carbon tax approach is not
suitable for the NWT. These concerns can be summarized in three broad categories:

1. Lack of alternatives makes carbon tax ineffective

A carbon tax makes carbon-intensive fuels more expensive. This nudges users towards cleaner energy consumption. Carbon taxes can be an effective policy to reduce emissions.

However, the North has few alternatives to fossil fuels. Many communities rely on diesel
generators for electricity because there is no grid connection. The Northwest Territories Power Corporation (NTPC) only allows for 2.6 megawatts of intermittent renewable energy capacity out of an average load of 13.2 megawatts across 25 communities - essentially capping these clean sources at 20 percent of the electricity mix. For heating, most
Northerners depend on wood, heating oil, natural gas, or propane. They cannot easily or cheaply switch to another fuel. And the territory has little infrastructure in place to support zero-emission vehicles.

Without alternatives, Northerners have no choice but to pay more for the fossil fuels
they rely on. As a result, the tax has a minimal effect towards reducing emissions.

2. Northerners can't afford higher costs

Northerners face some of the highest costs in Canada. Our vast geography, sparse population, remote communities, and harsh climate create high costs for goods and services.

Members heard clearly and strongly that households, businesses, local and Indigenous
governments, and NGOs cannot afford to pay even more. Some residents already pay over $2,000 per month to heat their homes, and the higher carbon tax comes at an especially bad time: in the last year, average prices have gone up 6.3 percent, more than the Canadian average. Because things cost more in the North, the carbon tax will be more
expensive here than in other parts of Canada. Northerners will also pay more for the
goods and service tax, which is charged on top of the carbon tax. The carbon tax also makes it harder to reach their other economic goals like recovering from the pandemic, kick-starting the population growth, attracting investment, and diversifying the economy. Committee is worried that with a higher carbon tax, more people will move away from the North and businesses won't be able to stay here.

Any federal requirements around carbon tax plans should recognize the unique circumstances of the Northwest Territories. The Standing Committee on Government Operations therefore recommends:

Recommendation 1

That this Assembly call on the federal government to better recognize the specific needs and circumstances of the Northwest Territories in its climate change approach.

These specific needs include significantly more funding to make renewable energy options accessible and affordable for all Northerners.

Further, committee recommends that the Premier of the Northwest Territories convey this motion without delay to the Prime Minister of Canada with a letter requesting a reply.

Recommendation 2

That the Northwest Territories Power Corporation (NTPC) increase the cap on intermittent renewable energy generation that residents and communities can install to offset their power use, and develop a plan to support projects above the current cap.

Committee further recommends that NTPC and the Department of Infrastructure provide their response to the May 2021 Net Metering and Community Self-Generation Policy Review. For each recommendation, NTPC and the department should indicate whether they agree, its work plan for implementation, and its progress towards implementation.

I'd like to request, Mr. Speaker, to turn it over to the MLA for Kam Lake. Thank you.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Inuvik Twin Lakes. Member for Kam Lake.

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Caitlin Cleveland

Caitlin Cleveland Kam Lake

Thank you, Mr. Speaker.

3. Rebates are too little and leave out too many

Committee understands that Northerners have little choice about imposing a carbon tax:
If the GNWT does not impose the tax, the federal government will.

But the made-in-the-NWT approach does give us a choice on how to spend revenues from the carbon tax. Unfortunately, the government's chosen approach leaves some households, most businesses, and all community governments, Indigenous governments, and NGOs worse off or at least treated very differently from the large emitters.

In November, Finance released a projection of carbon tax revenues and a breakdown of the associated offsets. Next year, for 2023-2024, the GNWT expects to collect about $63 million in carbon tax revenues. But only $47 million of those revenues are allocated as offsets. The remaining $16 million in revenues - about 25 percent - will go into general revenues. Committee is disappointed the government is not using more of these funds to soften the cost-of-living impacts of the tax.

At the same time, the government is not providing direct rebates to community governments, Indigenous governments, general businesses, and NGOs. The rationale provided by government that retail businesses can simply pass along the carbon tax to customers, that businesses will be eligible for GNWT energy savings programs, and that NGOs can adjust, is not accepted by committee.

Each of these sectors are facing financial pressures and will be forced to make tough decisions. One example of this especially alarmed committee: the NWT Association of Communities explained that facilities and recreational programs are among the easiest spending items to cut. Without proper rebates, local governments may be forced to reduce spending on programs that address mental health and community wellness. After the isolation experience of the COVID-19 pandemic and amid a mental health, addictions, and suicide crisis, committee finds this outcome unacceptable.

By contrast, of the $47 million in offsets that the government will provide, over half - $24
million - will go to the large emitters. That's more than the $20 million in combined COLO and COLO heating payments to households. Committee finds that the government's overall rebate approach allocates too much to large emitters, and to its own revenues, and not enough to other key impacted groups.

Yukon provides a good example of a carbon tax that is revenue neutral and benefits
more sectors of society. Its approach is formalized in the Yukon government Carbon Rebate Act. 100 percent of net carbon tax revenues are rebated to five groups:

  • General businesses;
  • Mining businesses;
  • Residents;
  • Municipal governments; and
  • First Nations governments.

Each group receives at least as much in rebates as it pays in overall tax. Individuals, who pay 27 percent of all carbon taxes, receive 45 percent of all rebates. Yukon's government, which pays 12 percent of the tax, does not keep any net revenues for itself.

The Government of Yukon also provides municipal governments with 3.5 percent of its carbon rebates, more than compensating the estimated 2.6 percent share of the carbon tax that local governments pay. If the GNWT provided 3.5 percent of our rebates to community governments, they would receive $2.2 million.

As committee was finalizing this report, the Minister of Finance proposed a new community offset grant. The grant would offer all community governments revenue sharing agreements equal to 5 percent of annual net carbon tax revenue, after deducting all other carbon tax offsets, like COLO and the large emitter rebate.

While committee welcomes the proposal, committee would like to see a bigger amount and a different basis for calculation. Five percent of net revenues amounts to less than $1 million for 33 communities, which is unlikely to fully offset increased costs. The amount is also significantly less than the $2.2 million communities would receive if the department applied the Yukon's approach. The offset grant should not depend on how much money is left over after providing offsets to large emitters and households but be calculated on the basis of total rebates.

Committee wants to see better supports for all groups affected by the carbon tax. These
supports should be set out in a law, regardless of whether Bill 60 passes, with the GNWT maintaining a made-in-the-NWT tax, or Bill 60 fails with the GNWT opting into the federal backstop and receiving revenues from Canada. The Standing Committee on Government Operations therefore recommends:

Recommendation 3

That the Government of the Northwest Territories provide funding to community governments to compensate for their increased carbon tax payments. Committee specifically recommends providing an additional $2.2 million in the 2023-2024 fiscal year, with subsequent funding increasing proportionally to any future increases in carbon tax rates.

And, Mr. Speaker,

Recommendation 4

That the Government of the Northwest Territories create a law
that requires all carbon tax revenues to be rebated to households, businesses, community governments, Indigenous governments, and non-governmental organizations.

In creating this law, the government should consider how rebates to each group will
work and whether the carbon tax system should be revenue neutral. This law should
also require separate accounting and annual reporting.

Mr. Speaker, I would like to pass the reading of this report over to my colleague from Tu Nedhe-Wiilideh. Thank you.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Kam Lake. Member for Tu Nedhe-Wiilideh.

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Richard Edjericon

Richard Edjericon Tu Nedhe-Wiilideh

Thank you, Mr. Speaker.

Committee Had a Hard Time Comparing Gnwt Approach To Federal Backstop

Committee's primary work for this review was to compare the GNWT's approach with the federal backstop. This work was challenging due to a lack of information from the department and overall uncertainty about what the federal system would look like if Bill 60 fails.

Committee asked the department why the GNWT's approach is better than the federal
system. The department provided three main reasons:

  1. Greater freedom to design the carbon rebate system;
  2. Flexibility to adjust how the tax is applied; and
  3. More certainty for new mines, small mines, and mines that are shutting down.

Committee questions how well the government is using the first advantage. While the GNWT has more freedom to design rebates as it sees fit, its proposal for 2023-2024 keeps a quarter of revenues in general revenues and leaves out several affected groups. The government has also pursued minimal consultation on how to use rebates. The Yukon, by contrast, is under the federal backstop and still designed its own rebate system.

Committee also asked the department what would happen if the Legislative Assembly does not pass Bill 60. The department expects the federal government would impose its backstop starting April 1st, 2023. The government would need to eliminate its carbon tax to avoid double taxation and would likely remove its carbon tax rebates, including COLO.

The Minister has said that if the federal backstop applies, it is uncertain how the federal
government would return revenues to the Northwest Territories. Two approaches are possible. First, the federal government says that provincial and territorial governments that "opted" for the federal backstop receive all proceeds and can decide how to spend them. This approach is like the arrangement in place in Yukon and Nunavut. Second, in "remaining provinces" where the backstop is in effect, the government uses 90 percent of the revenues to provide direct "Climate Action Incentive" payments to households. People in rural and smaller centers receive a 10 percent top-up. The GNWT has not been clear on which approach it would take if Bill 60 fails.

Though committee asked, the department was not able to provide data comparing how rebates under the federal backstop options would compare with the GNWT's approach. Committee is uncertain whether residents would be better off under the GNWT's approach or the federal backstop.

Mr. Speaker, I'd like to turn this over to my colleague, MLA Yellowknife North.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Tu Nedhe-Wiilideh. Member for Yellowknife North.

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Rylund Johnson

Rylund Johnson Yellowknife North

Committee Cannot Endorse GNWT Approach At This Time

Overall, committee does not see a benefit to passing Bill 60, compared with the alternative of the federal backstop.

The government has not provided committee or the public with enough information to show that its approach is better. While the government can't control whether or how the tax is imposed, it does control how to use those revenues. In this area, the government's proposal to address cost-of-living impacts of the tax are not enough. The government's budget holds on to 25 percent of the carbon tax revenues - equal to $16 million - in general revenues rather than providing direct rebates to businesses, community governments, Indigenous governments, and NGOs.

In recent weeks, the government has taken a couple steps that respond to committee's
concerns to address the cost impacts of the tax. The department has proposed a regional COLO to heating offsets, allowing residents in the five communities with the highest fuel use to receive higher rebates. And at the clause-by-clause review, the Minister said she was thinking about a $1 million fund for community governments to offset increased costs. While these proposals are welcome, they still do not go far enough. The $1 million amount, spread across 33 communities, is unlikely to fully compensate increased costs.

Committee is mindful that there is little time left for the GNWT to meet Canada's April
1st, 2023 deadline to update our carbon tax law. Some Members disagree with the carbon tax in principle and prefer allowing the federal government to impose its own tax. Other Members believe there is still a narrow opportunity to improve the government's made-in-the-NWT approach. For now, committee decided to report Bill 60 as not ready
for consideration in Committee of the Whole, and that Bill 60 should not proceed at this
time.

Conclusion

On February 14th, 2023, committee held a clause-by-clause review. Committee passed a motion to report Bill 60 to the Legislative Assembly as not ready for consideration in Committee of the Whole.

This concludes the Standing Committee on Government Operations' review of Bill 60.

Recommendation 5

That the Standing Committee on Government Operations recommends that the Government of the Northwest Territories provide a response to this report within 120 days.

Thank you, Mr. Speaker.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Yellowknife North. Reports of standing and special committees. Member for Yellowknife North.

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Rylund Johnson

Rylund Johnson Yellowknife North

Thank you, Mr. Speaker. Your committee has reviewed Bill 60 -- I think this is the wrong one, right? One second, Mr. Speaker.

Mr. Speaker, I move, seconded by the honourable Member for Kam Lake, that the Standing Committee on Government Operations Report on Bill 60: An Act to Amend the Petroleum Products and Carbon Tax Act, be received by the Assembly and referred to Committee of the Whole for further consideration. Thank you, Mr. Speaker.

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The Speaker

The Speaker Frederick Blake Jr.

Thank you, Member for Yellowknife North. The motion is in order. To the motion?

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Some Hon. Members

Question.