Carbon levy pause bigger risk for PM
Justin Trudeau acknowledged this past week that he’s no longer popular. Hearkening back to similar comments by former prime minister Brian Mulroney, whose funeral will be held Saturday, Trudeau said, “My job is not to be popular. … My job is to do the right things for Canada now, and do the right things for Canadians a generation from now.”
Friends and foes suggest a solution to Trudeau’s popularity problem — one that may lead the Liberals towards an existential crisis in the next election — is a pause to the carbon price increase coming to Canadians’ wallets on April 1.
But Trudeau has much more to lose if he amends his government’s signature climate policy than if he stands his ground.
Next month, the levy will rise by 23 per cent, from $65 a tonne to $80. The renamed Canada Carbon Rebates — those quarterly payments Canadians receive to offset the carbon price — will rise to reflect the change. But everyday items will also be more expensive: gasoline for your vehicle, the cost to heat your home, food at the grocery store, airplane tickets for your summer vacation.
With Canadians feeling squeezed from inflation and higher interest rates, it’s no surprise that provincial premiers — those who, unlike their peers in Quebec and British Columbia, chose not to enact their own carbon pricing regimes and rely on the federal backstop, making price hikes Ottawa’s problems and not their own — now want Trudeau to pause the plan.
On Monday, Newfoundland and Labrador Premier Andrew Furey, a fellow Liberal, penned a letter politely requesting Trudeau pause the increase, “at least until inflation stabilizes, interest rates lower and related economic pressures on the cost of living sufficiently cool.”
On Tuesday, New Brunswick Premier Blaine Higgs called on Trudeau to “immediately cancel his punishing April 1st carbon tax hike. Even better, cancel the carbon tax altogether.”
Later that evening, Nova Scotia Premier Tim Houston wrote his own letter to the prime minister, noting the increase will add 3.3 cents per litre of gas and asking that Trudeau “cancel the carbon tax before any more financial damage is done.”
On Wednesday, Premier Doug Ford told reporters he doesn’t understand what the federal Liberals are thinking. “If they don’t start … putting money back into people’s pockets instead of filling their pockets, guess what, they’re going to get annihilated.”
On Thursday, Alberta Premier Danielle Smith noted seven premiers are now united in demanding Ottawa reverse course.
On Friday, Conservative Leader Pierre Poilievre, in New Brunswick for a “spike the hike” rally, called on the prime minister to cancel his “heartless and cruel … tax hike.”
But Trudeau and federal Environment Minister Steven Guilbeault appear unmoved.
They argue their plan is an affordability measure; that it returns more money into most people’s pockets; that without the carbon price and the carbon price rebates, more people would struggle to make ends meet.
But as Ford’s comments reflect, many Canadians — including the premier — don’t understand how the federal program works. It’s designed to make things more expensive, so you’re pushed to find alternatives and adopt new habits — things like installing a heat pump, buying a hybrid or electric vehicle, or biking to work.
The program was always designed to ensure most Canadians weren’t financially disadvantaged, with a significant portion of the levy collected returned to residents. A family of four in urban Ontario, for example, will receive $1,120 this year; in Alberta it’s $1,800. But, as Guilbeault acknowledges, too little attention was placed on the second part of the Grits’ plan.
Carbon pricing was always going to be a tough sell because it is visible. That is both its strength and its vulnerability.
It may also be the Liberals’ strength and vulnerability.
Last fall, after intense lobbying from his Atlantic MPs, Trudeau announced a nationwide pause of the carbon levy on home heating oil for three years, a federal-provincial plan to rebate the costs of installing heat pumps, and a doubling of the rural climate rebate top-up. There was little impact at the polls. It may have stopped Liberal hemorrhaging in the Atlantic region, but it did not reverse the slide. Abacus Data had the Liberals polling at 32 per cent support in September compared to 43 per cent for the Conservatives. This month, the Grits are at 33 per cent, and the Tories are at 48 per cent in Atlantic Canada (with a comparable margin of error of plus or minus 2.53 per cent, 19 times out of 20.)
Why would the Liberals think any new pause to the carbon pricing regime will lead to an uptick in support for them? It may instead lead to more bleeding as climate-conscious voters decide Trudeau is willing to sacrifice the predictability of his plan for short-term political gain. That would be the quickest path to Liberal irrelevance.
With a few percentage points shaved off of Liberal support — as Abacus CEO David Coletto notes happened in November, following the heating oil announcement — the Grits could be battling the NDP for second-place territory. And that, notes Coletto, would be a death blow to the Liberals.
It’s one more reason Poilievre and his allies may be putting so much pressure on Trudeau to “spike the hike.”