Thank you, Mr. Speaker. Your committee would like to report on its consideration of Bill 92, An Act to Amend the Petroleum Products and Carbon Tax Act, No. 3.
Bill 92 received second reading in the Legislative Assembly on June 1st, 2023, and was referred to the Standing Committee on Government Operations for review. The committee held a public hearing with the Minister of Finance on June 27th, 2023. On July 28th, 2023, committee held a clausebyclause review.
Mr. Speaker, the committee reports that Bill 92, An Act to Amend the Petroleum Products and Carbon Tax Act, No. 3, is ready for consideration in Committee of the Whole as amended and reprinted. Thank you, Mr. Speaker.
Mr. Speaker, your Standing Committee on Government Operations is pleased to provide its report on the review of Bill 92: An Act to Amend the petroleum Products and Carbon Tax Act, No. 3.
Mr. Speaker, I move, seconded by the Member for Thebacha, that the Committee Report 6619(2): Standing Committee on Government Operations Report on the Review of Bill 92: An Act to Amend the Petroleum Products and Carbon Tax Act, No. 3, be deemed read and printed in Hansard in its entirety. Thank you, Mr. Speaker.
Question has been called. All those in favour? All those opposed? Any abstentions? The motion is carried. The report is deemed read.
Carried
Bill 92: An Act to Amend the Petroleum Products and Carbon Tax Act, No. 3 (Bill 92)1 received second reading on June 1, 2023, and was referred to the Standing Committee on Government Operations (Committee) for review.
On June 27, 2023, the Minister of Finance and departmental officials provided a public briefing on the Bill. Bill 92 requires the government to set up an unconditional carbon tax revenue sharing grant with community governments. Bill 92 also requires the government to prepare and release an annual report on the carbon tax. Bill 92 ultimately fulfills commitments from the Minister of Finance to improve the government’s carbon tax approach, in response to Members’ concerns during the third reading of Bill 60: An Act to Amend the Petroleum Products and Carbon Tax Act (Bill 60).
This report summarizes Committee’s review of Bill 92, focusing on our amendments to improve the Bill. As originally drafted, Bill 92 fell short of the improvements many Regular Members wanted to see to the government’s carbon tax approach – so much so that the Member for Frame Lake introduced a parallel private member’s bill. Committee worked with departmental officials and the Member for Frame Lake to develop amendments to strengthen Bill 92 that everyone could support.
Ultimately, Committee put forward four amendments, which are included in Appendix B of this report. The Minister concurred with all four amendments, which were then adopted at the clause-by-clause review on July 28, 2023. Committee is satisfied that the changes to Bill 92 represent a reasonable compromise between the views of the Government of the Northwest Territories (GNWT) and of Regular Members.
The Legislation Division initiated two minor changes to re-arrange the definitions in the Bill and make several resulting grammatical changes. These changes were minor and non-substantive. Committee agreed to both changes.
Bill 92 sets the amount of the community revenue sharing grant at 10 percent of net carbon tax revenues. While this amount is consistent with the Minister’s commitment in the House, Committee was concerned that this may not be consistent with Committee’s vision for the grant’s purpose – to compensate community governments for the fiscal impacts of the carbon tax.
Using data from the Department of Finance, Committee projected communities’ grant revenues with their tax burden. The projections included two scenarios: one in which communities’ fuel use stays the same from 2021 through 2030, and another in which fuel use in 2030 is 15 percent lower than 2021 levels. A 15 percent reduction is consistent with a target in the 2030 Energy Strategy. Committee found that, in both scenarios, communities’ total tax burden overtakes the total grant amount in 2025. The gap widens to between $1 million and $2 million after 2028.
When the Minister committed to the 10 percent grant amount, Regular Members assumed that meant the carbon tax would be revenue-neutral for community governments. Our analysis suggested that would not be the case.
Committee sought to confirm whether the government also projects that the carbon tax would not be revenue-neutral for community governments. The government did not confirm or deny this point and emphasized that the community grants were not intended to reduce communities’ carbon tax burden to zero. The department characterized the 10 percent as a “minimum” revenue sharing rate.
However, as Bill 92 was originally drafted, the revenue sharing grants had to be “equal to” 10 percent of net carbon tax revenues. With this wording, the 10 percent was not really a minimum revenue sharing rate, but rather an exact revenue sharing rate.
Committee wanted to ensure that a future Minister would have legislative discretion to provide a bigger grant, above 10 percent of net carbon tax revenues. We would have preferred that the legislation require the carbon tax to be revenue-neutral for community governments, but this proposal was unlikely to receive support from the department. Instead, Committee developed a motion to tweak the wording for the revenue sharing rate from “equal to 10 percent” to “at least 10 percent.” The government accepted this compromise.
Committee therefore recommends:
Mr. Speaker, I move, seconded by the Member for Thebacha, that Committee Report 6619(2), Standing Committee on Government Operations Report on the Review of Bill 92: An Act to Amend the Petroleum Products and Carbon Tax Act, No. 3, be received and adopted by the Assembly. Thank you, Mr. Speaker.
