Why Con­ser­va­tive politi­cians think they can beat the Lib­eral car­bon tax.

National Post (National Edition) - - FRONT PAGE - TYLER DAW­SON AND MAURA FOR­REST

By the time Prime Min­is­ter Justin Trudeau ar­rived at a Toronto col­lege last month to an­nounce the de­tails of the fed­eral car­bon tax, the bat­tle lines on both sides of the is­sue had al­ready been drawn. De­pend­ing on whom you asked, the Lib­eral gov­ern­ment’s plan to price car­bon in provinces whose own plans don’t meet its stan­dards was ei­ther a much-needed ef­fort to start ad­dress­ing cli­mate change or a bla­tant tax-grab in sheep’s cloth­ing.

Cana­di­ans have a “mo­ral and eco­nomic im­per­a­tive to act,” Trudeau told the as­sem­bled me­dia and stu­dents, as­sur­ing tax­pay­ers in those provinces his plan would ac­tu­ally leave them bet­ter off thanks to re­bates the gov­ern­ment will be­gin is­su­ing in April.

Those re­bates will likely be the key com­po­nent of the fed­eral ef­fort to sell the tax to Cana­di­ans. But in a grow­ing num­ber of pro­vin­cial cap­i­tals across the coun­try, the push­back against the Lib­eral plan is just be­gin­ning to take shape.

Though the gov­ern­ments of Saskatchewan and On­tario have both launched le­gal chal­lenges against the fed­eral gov­ern­ment’s plan, even they ac­knowl­edge the real fight won’t play out in the court­room. It will in­stead be a bat­tle of rhetoric and sales­man­ship more than pol­icy and facts, and it will un­fold in the pub­lic arena at least un­til the 2019 elec­tion. Con­ser­va­tive politi­cians are bet­ting that Trudeau’s pitch to Cana­di­ans to “vote with their hearts, not their wal­lets,” in the words of one fed­eral Con­ser­va­tive strate­gist, is too risky to suc­ceed. And as the ros­ter of provinces lined up against the fed­eral car­bon pric­ing plan grows, they be­lieve their in­for­mal po­lit­i­cal al­liance can doom one of Trudeau’s sig­na­ture poli­cies — and maybe even the prime min­is­ter him­self.

The Lib­er­als are try­ing to sell Cana­di­ans on a car­bon tax with­out get­ting bogged down too deep in the de­tails. En­vi­ron­ment Min­is­ter Cather­ine McKenna has for months been tout­ing the line that “pol­lut­ing isn’t free.” When Trudeau an­nounced the de­tails of the fed­eral tax in Oc­to­ber, he as­sured Cana­di­ans that “ev­ery nickel will be in­vested in Cana­di­ans in the prov­ince or ter­ri­tory where it was raised.”

The tax will kick in at $20 per tonne of car­bon emit­ted in April 2019, in­creas­ing by $10 per tonne an­nu­ally un­til it hits $50 per tonne in 2022. It’s ex­pected to in­crease gaso­line prices by 4.4 cents per litre in 2019 in the provinces where it’s ap­plied, in­creas­ing to 11 cents per litre in 2022. How­ever, 90 per cent of the tax rev­enue will be re­turned to house­holds as re­bates, with the re­main­ing 10 per cent used to sup­port small busi­nesses, schools, hos­pi­tals, and other in­sti­tu­tions that stand to be af­fected.

The gov­ern­ment es­ti­mates that 70 per cent of house­holds will make back more than they pay. The idea is that an in­cen­tive will still ex­ist to re­duce fuel use, be­cause a house­hold’s re­bate isn’t de­pen­dent on how much it pol­lutes, mean­ing a fam­ily will save more money as it cuts emis­sions.

“It’s a pretty sim­ple, straight­for­ward sys­tem, that all the rev­enue in one prov­ince stays in a prov­ince, and we have a price across Canada in all provinces and ter­ri­to­ries,” said Dale Beu­gin, ex­ec­u­tive di­rec­tor of Canada’s Ecofis­cal Com­mis­sion. “And so it’s kind of a step in the right di­rec­tion, very clearly.”

As it turns out, it’s not so clear to ev­ery­one.

“We’ve been against this be­ing im­posed on us by the fed­eral gov­ern­ment from Day 1,” Scott Moe said in an in­ter­view. Two years ago Moe was the Saskatchewan en­vi­ron­ment min­is­ter who walked out of fed­eral-pro­vin­cial cli­mate talks. Even as most other provinces signed on to the fed­eral cli­mat­e­change plan, with Ot­tawa warn­ing it would im­pose a tax on any prov­ince that didn’t of­fer its own so­lu­tion, Saskatchewan re­mained the lone hold­out re­fus­ing to come up with some kind of plan to price car­bon.

At the time, Moe promised his gov­ern­ment would “use ev­ery­thing in (their) dis­posal” to re­sist. “Many Western­ers will see this as ‘na­tional en­ergy pro­gram 2.0,’” he said, ac­cus­ing Trudeau of a “be­trayal.” In April of this year, the prov­ince of Saskatchewan — which Moe now serves as premier — launched the first con­sti­tu­tional chal­lenge of the fed­eral plan.

“The fact of the mat­ter is,” he said, “there are a num­ber of provinces that now do agree with Saskatchewan’s stance.”

In Oc­to­ber 2017, Ja­son Ken­ney won the lead­er­ship of the new United Con­ser­va­tive Party in Al­berta. Seen as the heavy favourite to un­seat NDP premier Rachel Not­ley in a spring 2019 elec­tion, he has vowed if elected to scrap the car­bon tax her gov­ern­ment in­tro­duced and launch a le­gal chal­lenge of his own against Ot­tawa’s. In June, the Pro­gres­sive Con­ser­va­tives swept to power in On­tario un­der Doug Ford, who moved im­me­di­ately to scrap that prov­ince’s cap-and-trade sys­tem and launch a court bat­tle of his own against the fed­eral gov­ern­ment. Then, a few weeks be­fore Trudeau’s an­nounce­ment, Man­i­toba PC premier Brian Pal­lis­ter, re­port­edly up­set at Trudeau for us­ing him as an ex­am­ple to other con­ser­va­tives, an­nounced he was aban­don­ing his own car­bon tax plan. And now that Pro­gres­sive Con­ser­va­tive Blaine Higgs has be­come premier of New Brunswick, he plans to band to­gether with the other dis­sent­ing provinces.

“One of the found­ing prin­ci­ples for me is that we’re not ac­cept­ing any new cost to the prov­ince of New Brunswick through tax­a­tion, be­cause we are one of the high­est-taxed provinces in the coun­try, and we are taxed out,” Higgs said in an in­ter­view. “And that’s why I’m fight­ing this.”

An­drew Scheer, mean­while, now into his sec­ond year at the head of the fed­eral Con­ser­va­tive Party, is mak­ing op­po­si­tion to the car­bon tax a prom­i­nent part of his party’s mes­sag­ing, and is ex­pected to con­tinue to do so through the 2019 elec­tion.

While there is no for­mal al­liance among the provinces that op­pose car­bon pric­ing, or be­tween them and the fed­eral Con­ser­va­tives, they have be­gun work­ing to­gether on a cou­ple of fronts. “Peo­ple talk — we keep each other in­formed on what’s go­ing on,” said a source with Al­berta’s UCP. “When this first started out, it was a much looser, ad hoc coali­tion, but it ac­tu­ally is fir­ing up into some­thing more sub­stan­tive. It’s ob­vi­ously eas­ier to pull those coali­tions off when you’re ac­tu­ally sit­ting in the premier’s of­fice.

“Since the On­tario elec­tion this sum­mer, you’ve seen an in­creas­ingly close re­la­tion­ship be­tween Premier Moe and Premier Ford,” the UCP source said. “I think as it grows, it will be­come more co-or­di­nated and more — not cen­tral­ized, but a more co-or­di­nated ef­fort.

“Just show­ing that united front can pay big po­lit­i­cal div­i­dends.”

By Ken­ney’s ac­count, the col­lab­o­ra­tion was born of the West. In Ot­tawa for the Man­ning Con­fer­ence shortly af­ter Moe be­came premier, the two had din­ner at the Westin Ho­tel and “dis­cussed the need to de­velop a coali­tion of pro­vin­cial par­ties and gov­ern­ments op­pos­ing a fed­eral car­bon tax.” The two agreed that On­tario was the prize. “If we could get On­tario on side, we would start to see the domi­noes fall with the other provinces com­ing on board,” Ken­ney said.

Patrick Brown’s res­ig­na­tion had trig­gered an On­tario PC lead­er­ship race, and, Ken­ney said, he lob­bied all the lead­er­ship can­di­dates on the is­sue. “Doug Ford had called me just a few days be­fore that to dis­cuss the car­bon tax and how to fight it and I gave him my views,” Ken­ney said. Ford was think­ing through what his op­tions would be if as premier he re­pealed On­tario’s cap-and­trade sys­tem and re­fused to im­ple­ment a pro­vin­cial car­bon tax. Ken­ney said he ad­vo­cated for Moe’s de­ci­sion to fight the fed­eral gov­ern­ment in the courts. “I out­lined some of the le­gal rea­sons why we be­lieved it was a plau­si­ble le­gal chal­lenge, and talked about the pol­i­tics of the is­sue, and Doug im­me­di­ately came out very strongly op­posed to Patrick Brown’s car­bon tax plat­form and to the fed­eral plat­form and ba­si­cally adopted Saskatchewan’s ap­proach.”

“We also re­al­ized it was im­por­tant to get the other lead­er­ship can­di­dates on­side in those early days of the PC lead­er­ship in On­tario,” Ken­ney said. “It wasn’t at all clear who was go­ing to win, and it ended up be­ing very close. We had other con­ver­sa­tions and not long there­after both Chris­tine El­liot and Caro­line Mul­roney (Ford’s lead­er­ship-race com­peti­tors and now mem­bers of his cab­i­net) came out against the car­bon tax. That was re­ally a crit­i­cal in­flec­tion point in the fight.”

The le­gal ef­fort is the first front in that fight, the ques­tion be­ing whether Ot­tawa has the power to uni­lat­er­ally im­pose a car­bon tax on the provinces. The Saskatchewan Court of Ap­peal will hear that prov­ince’s con­sti­tu­tional ref­er­ence case in Fe­bru­ary 2019. On July 23, Ford’s new On­tario gov­ern­ment filed an ap­pli­ca­tion for in­ter­vener sta­tus in that case, which would let its lawyers raise other ques­tions or ev­i­dence for judges to con­sider in mak­ing their de­ci­sions. In April, the On­tario Court of Ap­peal will hear the Ford gov­ern­ment’s own ref­er­ence, in which Saskatchewan has ap­plied to in­ter­vene. Higgs said New Brunswick will seek in­ter­vener sta­tus in both cases, and Ken­ney, champ­ing at the bit, has said a UCP gov­ern­ment in Al­berta would do the same. A Man­i­toba gov­ern­ment spokes­woman told the Post it will not in­ter­vene.

What’s more, Moe said Saskatchewan will ap­peal any loss to the Supreme Court of Canada, and Ford’s en­vi­ron­ment min­is­ter Rod Phillips has said On­tario will do the same.

That’s a lot of lawyers — and yet even the dis­senters ac­knowl­edge their le­gal chal­lenges are some­thing of a sideshow. One for­mer Ford cam­paign strate­gist said that while there’s a chance the provinces could win this fight, it’s “a long shot.”

More im­por­tant, said the source close to Ford, are the pol­i­tics.

The le­gal fights, he said, “serve to high­light the is­sue and to act as a de­lay­ing ac­tion to al­low a more ful­some po­lit­i­cal de­bate in the next fed­eral elec­tion to oc­cur, but also to gal­va­nize pub­lic op­po­si­tion to this pol­icy.”

There have been a grow­ing num­ber of pub­lic dis­plays of unity be­tween the pre­miers: Ford, for ex­am­ple, be­gan the month of Oc­to­ber in Cal­gary for an anti-car­bon-tax rally with the UCP faith­ful and ended it with a Toronto meet­ing with Moe and an Ot­tawa meet­ing with Scheer. His Twit­ter ac­count has also been quick to em­brace Higgs as the lat­est ally to join their fight.

It no doubt plays well with th­ese lead­ers’ core vot­ers at home to pick fights with a Lib­eral prime min­is­ter in Ot­tawa — a Trudeau, no less — but the real test of that gal­va­niza­tion will come when the coun­try votes next year. “There’s one per­son who can ac­tu­ally stop the car­bon tax,” said a fed­eral Con­ser­va­tive source, “and that’s An­drew Scheer.”

The CPC are bet­ting the fed­eral car­bon price has been per­ma­nently cast in the pub­lic’s imag­i­na­tion as a tax, no mat­ter how of­ten the Lib­er­als try to call it a price on pol­lu­tion. They surely fig­ure the am­pli­fi­ca­tion of that mes­sage from a hand­ful of pow­er­ful re­gional politi­cians will only help re­in­force that idea. They’re also bet­ting that Cana­di­ans want their gov­ern­ment to do some­thing about cli­mate change, but only so long as they don’t feel they’re per­son­ally suf­fer­ing for it.

“The Lib­er­als have a lot of work to do to con­vince peo­ple that a car­bon tax is the en­vi­ron­men­tal plan,” said the Con­ser­va­tive source. “We’re fairly con­fi­dent that we can win on this is­sue.”

The polling that’s pub­licly avail­able isn’t as con­clu­sive. In April 2015, the An­gus Reid In­sti­tute found 56 per cent of Cana­di­ans sup­ported a car­bon tax; by July 2017, that had dropped to 45 per cent. But af­ter Trudeau’s an­nounce­ment of re­bates, sup­port climbed back up to 54 per cent, ARI’s polling found. In Al­berta, sup­port for the fed­eral car­bon plan still dropped, al­beit slightly, from 35 per cent to 34 per cent. There were dou­bledigit gains in other provinces — no­tably Saskatchewan, which jumped from 11 per cent to 29 per cent and Que­bec, from 56 per cent to 69 per cent and On­tario, from 43 per cent to 54 per cent.

Re­search from Aba­cus Data, mean­while, found that 59 per cent of Cana­di­ans saw the Lib­eral car­bon plan as “a step in the right di­rec­tion” be­fore Trudeau’s an­nounce­ment of the re­bate. With the re­bate fac­tored in, only 24 per cent of Cana­di­ans told Aba­cus they would op­pose or strongly op­pose such a plan, com­pared to 39 per cent who sup­port or strongly sup­port the fed­eral price on car­bon, and an­other 36 per cent who would “ac­cept” it.

And re­gard­ing the 2019 fed­eral elec­tion, Aba­cus found that just seven per cent of re­spon­dents said car­bon pric­ing was the most im­por­tant is­sue to them, while 55 per cent said it would be a fac­tor and 38 per cent said it’ll play “a small role” in how they cast their vote. Even among con­ser­va­tives, only 12 per cent see it as the most im­por­tant is­sue.

“We be­lieve that Cana­di­ans want their gov­ern­ment to have a se­ri­ous plan to fight cli­mate change,” said Eric Camp­bell, spokesman for En­vi­ron­ment Min­is­ter McKenna. “Pure and sim­ple.”

SINCE THE ON­TARIO ELEC­TION THIS SUM­MER, YOU’VE SEEN AN IN­CREAS­INGLY CLOSE RE­LA­TION­SHIP BE­TWEEN PREMIER MOE AND PREMIER FORD. I THINK AS IT GROWS, IT WILL BE­COME MORE CO-OR­DI­NATED AND MORE — NOT CEN­TRAL­IZED, BUT A MORE CO-OR­DI­NATED EF­FORT. — UCP SOURCE

JEFF MCIN­TOSH / THE CANA­DIAN PRESS FILES

On­tario Premier Doug Ford, left, and Al­berta United Con­ser­va­tive Party Leader Ja­son Ken­ney cheer with sup­port­ers at an anti-car­bon tax rally in Cal­gary in Oc­to­ber.

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