Trudeau lauds market and other unlikely tales

Justin Trudeau’s comments last week in a Radio-canada interview that he contemplates quitting his job every day but is determined to stay drew significant attention, overshadowing remarks he had made a couple of days earlier doubling down on his April 1 carbon tax hike from $65 to $80 per tonne. In insisting that his fifth annual carbon tax increase must proceed, Trudeau attacked the Conservatives on climate: “They don’t have a plan, or they don’t talk about how they’re going to actually use the heavy hand of government through regulations or through subsidies or some other way to pick winners and losers in the economy as opposed to trusting the market,” he said.

It is true that a carbon tax, if well designed, is preferable to regulation, but has the prime minister really seen the light of market economics and decided to dispense with regulatory initiatives and climate spending? Maybe he has. Anything is possible. Of course, it’s also possible Don Cherry will be the next emperor of Japan. But it’s not very likely.

Back in the real world, Trudeau’s carbon tax is badly designed, which undermines its efficiency benefits over alternative policies. And he very clearly loves wielding “the heavy hand of government,” as evidenced by his: record levels of spending, often absurd regulatory initiatives, “hostile government takeover” of child care centres (as one entrepreneurs’ association put it), expansion of the federal public service, increases to corporate welfare, government forays into dentistry and pharmacare, and yes, his environmental policies.

In 2013, Trudeau infamously said, “there’s a level of admiration I actually have for China because their basic dictatorship is allowing them to actually turn their economy around on a dime and say, we need to go green fastest.” This admiration is reflected in his policy record, notably his mandate that from 13.3 per cent of the new vehicle market, electric and plug-in hybrids must account for 20 per cent of the market by 2026, 60 per cent by 2030, and 100 per cent by 2035, with hefty penalties for non-compliant vehicle dealers. A government that dictates that conventionally powered vehicles, which currently account for nearly 90 per cent of the market, must be drummed out of use seems much more like a “basic dictatorship” than one that “trusts the market.”

Conventionally powered vehicles’ currently dominant share of the market is despite Canadian governments having poured billions of dollars into subsidies to try to get consumers to purchase EVS. Many studies have shown that whatever environmental benefits such subsidies may generate nowhere near approach the costs to taxpayers.

TRUDEAU’S CARBON TAX IS BADLY DESIGNED, WHICH UNDERMINES ITS EFFICIENCY BENEFITS OVER ALTERNATIVE POLICIES.

There is also the matter of the combined $28 billion in federal and provincial subsidies for the Stellantis-lg and Volkswagen electric battery plants in Ontario. The Trudeau government guesstimated that taxpayers would get their money back in 3.3 years; a much more realistic calculation is that, far from quick recovery of their investment, taxpayers will lose about $15 billion, and even that is a generous estimate. What was it again the prime minister said about subsidies and picking economic winners and losers?

Beyond EV subsidies and corporate welfare, there is abundant other evidence Trudeau loves playing the subsidy game. As Finance Minister Chrystia Freeland boasted last fall, since 2015 Ottawa “has committed over $120 billion to spur clean growth and advance emissions reduction measures.” In fact, the day before Trudeau made his comments doubling down on his carbon tax and pretending to attack subsidies, Minister of Environment and Climate Change Steven Guilbeault was in Saint John to announce up to $7.4 million in subsidies “to support Indigenous-owned and Indigenous-led renewal energy, energy efficiency, or low-carbon heating projects.” And the day before that he had been in Fredericton to announce over $20 million in spending for clean energy projects and energy-efficiency home upgrades.

On top of all this add: an emissions cap on the oil and gas sector, clean fuel standards, energy efficiency mandates that will materially increase housing costs, and many other direct interventions in the economy, and Trudeau’s defence of his carbon tax on economic efficiency grounds rings hollower and hollower. It is of course possible that when Trudeau hikes his carbon tax in less than two weeks, he will simultaneously withdraw all his harmful regulatory and climate spending initiatives. Meanwhile, I will keep my eyes open for news regarding the emperor of Japan. Currently it is still Naruhito. But this spring perhaps a different Cherry will blossom.