National Post (National Edition)
How to kill carbon tax
A Scheer victory is the only way
The federal Liberals seemed to be on to a winner with the idea that they would win social licence for a new pipeline on the West Coast by introducing a carbon pricing plan.
Polls suggested this compact had the support of majorities in every region.
But in recent days, there has been a great deal of noise about the plan unravelling, as the Alberta and B.C. governments slugged it out over the expansion of the Trans Mountain pipeline, and as the election of carbon tax opponent Doug Ford as the new leader of the Progressive Conservatives in Ontario raised questions about the participation of the largest province.
Meanwhile, Jason Kenney, the opposition leader in Alberta, has been trying to enlist provincial leaders to join in a constitutional challenge to the federal government’s pan-Canadian framework on clean growth and climate change, which imposes a carbon tax on any province that does not put a minimum price on carbon by next January.
Federal Environment Minister Catherine McKenna sounded rattled last weekend when she urged progressive voters to get behind Ottawa’s grand bargain or watch the climate change plan blow up.
But while the political consensus has evaporated, the legislative underpinnings remain firmly in place.
The government of British Columbia has no constitutional grounds to block Trans Mountain and the provinces have no constitutional case to overturn Ottawa’s “backstop” power that would see it collect a carbon tax in provinces that refuse to set their own.
“It’s a classic test of federalism. Ottawa decides on national policy and the provinces choose to go along or not,” said David McLaughlin, a former climate change adviser to the Manitoba government who worked as Brian Mulroney’s chief of staff in the 1990s.
When he was advising Brian Pallister’s government on its revenue-neutral carbon tax in Manitoba, McLaughlin said the provincial government sought a legal opinion on whether the feds were within their constitutional rights to impose a carbon tax. The answer was clearly in the affirmative, at which point Pallister decided he wanted to receive the proceeds, rather than send them to Ottawa.
Small wonder. The feds have been blunt — in essence, “if you don’t co-operate, we’ll levy the tax and send a rebate cheque back to taxpayers, with a Canadian flag on it.”
Ford has said he will get rid of Ontario’s existing capand-trade program if elected premier. But he is faced with the legal reality that he will have to come up with some kind of carbon pricing or have a regime foisted upon him.
Kenney, of course, knows this.
He is playing Potemkin politics, as is B.C. Premier John Horgan, who is making anti-pipeline noises to shore up his environmental wing, upset because the NDP government has decided to continue construction of the Site C dam hydro project.
The same game is being played by Alberta Premier Rachel Notley, who has seen a first glimmer of hope in the polls after engaging in a phoney political war with Horgan’s government.
The federal Liberals must be concerned about the growing protests at Kinder Morgan’s Burnaby, B.C., terminal, where 15 people were arrested on Monday. There is every prospect that this could become a continental cause celebre for the environmental movement.
But the feds appear to be holding their nerve, bolstered by polls suggesting that, even in B.C., support outweighs opposition. Sources suggest Ottawa has told Kinder Morgan it is 100 per cent behind the project and warned the B.C. government that it has no grounds to overturn the approval process.
The best and most realistic hope for those opposed to a carbon tax is for Andrew Scheer to win the next federal election in 2019.
Ed Fast, the Conservative environment critic, said his party is still developing its climate change plan “but one thing that will not be part of it is a carbon tax.”
Fast once flirted with the idea of a revenue-neutral tax as a market-driven tool to re- duce emissions, but said his experience in British Columbia is that the principle does not work in practise.
“Carbon taxes might work on paper but they don’t work in the real world. Even if it is initially introduced as a revenue-neutral tax, you get changes in government and it becomes a cash cow for governments to spend,” he said.
He said the amount being charged in tax is insufficient to change human behaviour enough to meet emissions targets, while the carbon surcharge risks damaging Canada’s competitiveness.
Fast pointed out that the federal government’s claim that all revenues will go back to the provinces where they were raised is misleading. The government admitted this week in a written answer to a question by Conservative MP Robert Kitchen that the GST revenue collected on a carbon tax will be sent back to Ottawa, rather than rebated locally. The Parliamentary Budget Officer estimated that carbon pricing from the four largest provinces could net the federal government more than $500 million over two years.
Still, any fool can criticize — and many do. The Conservatives have to win the election before they can tear down Trudeau’s carbon tax regime — and, to do that, it seems likely they will need to have a credible alternative to Trudeau’s carbon tax.
The Liberal case for reelection is based on the contention that they “get the big things right.”
Despite the fire and the fury surrounding the pipeline/carbon tax compact, the Trudeau government remains on course to deliver on its promise to put a price on carbon and build a pipeline to salt water.