PM repeating central premise of National Energy Program
Support the pipeline, or risk more alienation
Three years ago, the leader of what was then Canada’s third federal political party made a major pre-election speech on the environment. The location was symbolic.
“I’m the leader of the Liberal Party of Canada, my last name is Trudeau and I’m standing here in the Petroleum Club of Calgary,” he said. “I understand how energy issues can divide the country.”
The speech was in large measure a disavowal of his father’s National Energy Program — and a pledge never to repeat the mistake.
“A federal program that harms one part of the country harms us all,” Trudeau said.
We will see Thursday if the prime minister lives up to that promise when the government unveils new environmental assessment regulations that will govern natural resource development. But the early signs are not promising.
The carbon tax regulations that came out last month are very different from the model outlined by Trudeau in his speech in Calgary three years ago. Critics such as former Saskatchewan premier Brad Wall have already warned that the cumulative effect of the tax and the new regulations could heat up a Canadian unity debate that is already bubbling because of the pipeline issue.
“How is this different from the National Energy Program, in terms of the reality of what it will do to jobs and pipelines and so on?” Wall asked.
Trudeau’s speech in Calgary was interesting because it suggested a decentralized approach to carbon pricing. “The federal government does not have all the answers,” said Trudeau. He advocated a “medicare” approach, similar to the principles in the Canada Health Act, where provinces had considerable flexibility as long as those principles were honoured.
Ottawa would establish emissions reduction targets and then allow provinces the flexibility to achieve those targets, including carbon pricing policies. The feds would even provide “targeted funding” to help provinces achieve their goals, similar to the Canada Health Transfer.
At the time, the Conservatives were vexed — it seemed like Trudeau had adopted Stephen Harper’s less centralized view of the federation, and they were loath to jump on it.
But, like so many other promises made before the election, this one has not survived the transition from party platform to government policy.
Under the government’s pricing regulations, each province has to adopt Ottawa’s rising carbon tax or be forced to accept the federal backstop.
The regulations also allow the federal government to spend any carbon tax revenues as it sees fit, as long as the revenues go back to the province in which they were raised.
The “targeted funding” transfers remain illusory.
It seems likely Western provinces will be further alienated by the new environmental assessment regulations, if they follow the principles outlined in a discussion paper made public last year.
That paper suggested the new regulations would go far beyond assessing the environmental impacts of resource projects to also consider the social, health and economic aspects, including gender-based analysis. Wall called the new impact assessment criteria “subjective” and “nebulous.”
Government officials said developers would find out what is expected of them earlier in the process, before they end up in court. But resource companies would have to recognize Indigenous rights and interests from the outset.
In his 2015 speech at the Petroleum Club, Trudeau talked about the “genius of Canadian federalism,” where provinces show regional leadership to move Canada forward.
But we are at a delicate moment in time where the federal system does not look quite so robust or inspired.
None of the recalcitrant provincial governments relish the carbon-pricing provision that sees them excluded from the distribution of its tax revenue. Few will appreciate federally imposed regulations that could hinder investment in Canada’s natural resource sector.
Yet in the one area where the federal government has clear jurisdiction — interprovincial trade and transport — it has been timid.
Though federal regulators have waved through the Trans Mountain pipeline, the Government of British Columbia is trying to block its expansion. Trudeau has said he supports the pipeline but has not asserted his authority by saying Ottawa will overrule any further delays. In some ways, this is a matter for the project’s proponent, Kinder Morgan, the B.C. government and the regulator, the National Energy Board. (If B.C. enacts regulations to delay the project, the company would likely appeal to the NEB to assert its authority.)
But the country is looking for leadership from the prime minister. Many voters in Alberta seem to believe he is merely paying lip-service in his alleged support for the project, with no intention of risking his political capital.
Beyond the prospect of losing votes in B.C.’s lower mainland, it’s not clear why he has not been more vigorous. There is certainly sufficient financial incentive. As economist Trevor Tombe pointed out Thursday, there is now a $30 discount on every barrel of Western Canadian Select crude sold to the Americans (the only market it can reach without new pipelines) — with each dollar costing Canada $300 million a year.
This hell-broth of government policy — animation on taxes and regulation, lethargy on promoting resource development — is raising hackles across the West.
Those who don’t remember history are, it’s said, condemned to repeat it. The younger Trudeau does remember the NEP, and yet he is still repeating its central premise.
The only difference this time, as Prof. Jack Mintz said in the Financial Post, is that instead of subsidizing consumers in Eastern Canada, Westerners are now subsidizing Americans.