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.