Not good, but good enough?
CONSERVATIVES’ CLIMATE PLAN
Last week, Conservative Leader Erin O’toole crossed the metaphorical Rubicon: his party’s new climate plan not only recognized that “the most efficient way to reduce our emissions is to use pricing mechanisms,” it proposed to implement a carbon tax. It took me the weekend to recover.
With the initial chaos now behind us, it’s time to reflect on a few things. First, can Erin O’toole bring his caucus and his party with him? Second, how can the policy he introduced be improved? And finally, what does this mean for the governing Liberals and the other parties in the House of Commons?
O’toole isn’t new to climate change policy. I’ve been fortunate to speak with him on a couple of occasions on the subject, although I had no role in the development of his new plan. I know that he gets the challenge. He gets the policies. And I do believe that he’s serious about providing a credible, alternative policy to the one put forward by the Liberals. He’s also finding out now how hard that’s going to be.
He hasn’t done himself any favours on this file to date. In the recent Conservative party leadership race, he ran to the right, preaching the evils of the carbon tax to a captive audience in Western Canada. That was never what concerned me most about his messaging. What worried me was his overly narrow focus on large, industrial emitters.
They were the problem, you see, not everyday Canadians. The problem with that, I’m sure he quickly realized, is that large emitters account for only about 40 per cent of emissions, with more than half of those coming from facilities in Alberta.
Meeting Canada’s emissions targets by only placing restrictions on large emitters was never going to fly. And yet, neither was a carbon tax, given how hard O’toole and his party campaigned against one. He was painted into a corner with his choices. He could either address emissions from transportation, as well as from large, industrial emitters, or face the electorate with no credible climate plan at all.
He chose the former, and he needs to bring his caucus with him, which will be no small feat. At the same time, the policy he proposed needs a lot of work.
O’toole is trying to walk a tightrope to keep his party aligned, claiming that carbon pricing is the most efficient policy, while also claiming that it is not a carbon tax. Why not? Apparently because the collection and redistribution of tax dollars would be delegated to a private company.
That argument’s not going to fly. It’s a tax. Let’s just deal with that and move on. That’s the good part. The implementation on the revenue side is what needs a lot of work, starting with the so-called low-carbon savings accounts, by which money paid in carbon taxes would be set aside to be used for future spending on certain items. It’s Petro-points, but for windows, doors and Teslas.
First of all, there’s a serious privacy issue. Imagine, for a moment, that Prime Minister Justin Trudeau proposed a registry through which the government would track every Canadian household’s emissions. It would generate outrage among Conservatives. And for good reason: this thing is a privacy nightmare.
The savings account is also bad economics — it negates the efficiency of carbon pricing or, at the very least, mutes it substantially. Surely, all of us will spend some money on items that are eligible for purchase with our new accounts, regardless of whether the policy is enacted or not.
So, while we might see the higher price at the pump due to carbon taxes, we’ll know that the price isn’t real because some of the money we spend will be coming back to us. It’s like creating a swear jar, but you get to spend the money on government-approved beer come the weekend. The incentive it creates is weak.
It’s also an administrative colossus. At the gas pump, the system looks a lot like the Air Miles or Aeroplan programs with which we’re all familiar, but it would have to apply at all gas stations. Only Visa, Mastercard, or Interac could conceivably administer such a broad-based program, and they’re not going to do so for free.
Then, there’s the issue with heating fuels. For many, including farmers, paying taxes on natural gas will cost much more than what they pay at the pump, so the system would need to integrate with all of our utilities. And what about the indirect charges? Will landlords bank their savings and pass the full bills onto their tenants? There are so many questions.
Luckily, there’s a way out. Once you’ve crossed the carbon tax Rubicon, you get to the easy part: what to do with the money. O’toole’s plan proposes an economically flawed administrative nightmare with many privacy implications, all to avoid the perception that he’s proposing a carbon tax.
A combination of policies, from broad-based income tax cuts, increased basic personal exemptions or even home renovation and vehicle tax credits (call them a savings account if you like) would avoid many of the flaws with O’toole’s plan. That’s not the choice I’d make, but it would be way better than what’s on the table right now.
Yet the low-carbon savings accounts aren’t the only aspect of the plan. It would require the federal government to exert even more control over the economy, possibly intruding on some aspects of provincial jurisdiction. I am not sure that Alberta Premier Jason Kenney will be any more happy with a Conservative federal government telling Albertans how much biofuel they need to blend into their gasoline, or how many electric vehicles they need to buy. Of course, I’ve been surprised by partisan hypocrisy before.
All in all, the Conservative plan puts the Liberals in a tough spot. Like it or not, there are many voters who see a credible climate plan as a must-have, but aren’t going to delve into the details. For Conservatives, this policy will be a shield. For the Liberals, climate change policy is a sword. They need to keep voters on the right who are concerned that their plans are too stringent, as well as voters on the left who are concerned that their plans aren’t stringent enough.
The last election was made easier by then-conservative leader Andrew Scheer’s failure to put forward a credible climate plan. O’toole’s plan won’t reduce emissions by as much as the Liberal’s policies are likely to, but it might be good enough for some Canadians. We may get to see soon enough.
TRYING TO WALK A TIGHTROPE TO KEEP HIS PARTY ALIGNED.