Pierre Poilievre has raised his refrain across the country, 含羞草研究社淎xe the Tax!含羞草研究社� He is referring to the carbon tax, of course. But he has been mute about how he will replace it, and how he will fight climate change. His only suggestion has been 含羞草研究社渢echnology.含羞草研究社� That含羞草研究社檚 a non-answer. How will he convince the private sector to make the massive investment required in technology?
Experts suggest carbon pricing is the right choice. Canada含羞草研究社檚 Ecofiscal Commission, a panel of economists, in a 2019 report recommended it. 含羞草研究社淎 stringent, rising carbon tax can get Canada to its 2030 target at the lowest possible price to the economy.含羞草研究社� The commission affirmed this finding is 含羞草研究社渃onsistent with numerous other studies.含羞草研究社�
In addition to the carbon tax, there are two other broad climate policy options: regulation and subsidies. The Trudeau government has rashly chosen all of the above. They have revealed a series of climate regulations applying to broad sectors of the economy to supplement the carbon tax. The government now seeks to regulate electrical generation, oil and gas production, home and commercial construction, automobile production and no doubt more sectors.
Their goal is to impose emissions limits upon a wide swath of manufacturing and resource industries, while incentivizing company and consumer actions it wants where it can含羞草研究社檛 regulate, and where it can as well. This effort is ill-advised for three reasons:
First, the constitutionality of the regulations is suspect. Alberta and Saskatchewan will object to federal intrusion in their jurisdiction over resources. The Supreme Court, in a comparable case, ruled the Impact Assessment Act is largely unconstitutional. The court asserted that the federal government must respect the 含羞草研究社渄ivision of powers framework laid out in the constitution.含羞草研究社�
Grant Bishop argues in a C.D. Howe Institute memo that the court has precluded, 含羞草研究社渂road federal jurisdiction for regulating each and every GHG-emitting activity.含羞草研究社� Bishop states the IMA ruling puts the government含羞草研究社檚 net-zero electricity regulation and industry-specific cap on emissions of the oil and gas industry on 含羞草研究社渟haky constitutional ground.含羞草研究社� These matters could remain before the courts for years to come, creating uncertainty and impeding private sector investment.
Second, companies will find themselves subject to heavy costs related to climate regulation in all targeted industries. The costs will further weigh on the competitiveness of Canadian goods and on the economy more broadly. Canada含羞草研究社檚 present economic and income growth is arguably amongst the worst in the developed world. Under the Liberals, that is destined to continue.
Third, to continue to follow the lead of the Biden Administration in the United States 含羞草研究社� providing subsidies for clean industries and clean incentives for consumers 含羞草研究社� is prohibitively expensive. It will further erode the government含羞草研究社檚 fiscal position and Canada含羞草研究社檚 competitive position.
The Ecofiscal Commission report examined three approaches to reduce emissions to Canada含羞草研究社檚 2030 target. A significantly higher economy-wide carbon tax results in GDP per capita about $1200 higher in 2030 than does subsidies and economy-wide regulations, and $3300 higher than does subsidies and industry-specific regulations. In fact, under the last approach, GDP per capita falls. A version of this approach is the one the Liberals have inappropriately adopted.
Bishop correctly concludes, 含羞草研究社淥ttawa含羞草研究社檚 climate policy risks spiraling into an economic and constitutional mess. 含羞草研究社� With industry exasperated by policy uncertainty in Canada and diverting investment elsewhere, Ottawa should spend less effort on expanding federal power and instead bolster its capabilities for competently administering carbon pricing nationally.含羞草研究社�
It is not hyperbolic to suggest that Liberal climate policies may threaten Canadians含羞草研究社� livelihood and Canada含羞草研究社檚 national unity.
Back to Poilievre. To vilify the carbon tax was an astute political move. He saw the affordability crisis coming, and he shrewdly and consistently focused on it before his political opponents did. 含羞草研究社淎xe the tax含羞草研究社� is a major piece of this strategy, and has aided the Conservatives含羞草研究社� rise in the polls.
But it is unfortunate the CPC have successfully turned public opinion against the tax. If the Conservatives assume power, they will have effectively taken Canada含羞草研究社檚 least costly option for addressing climate change off the table. And they will have rejected the best policy option for a free-enterprise, Conservative government 含羞草研究社� a market-based approach to reduce GHG emissions.
Finally, if a prospective Conservative government is to cut emissions, they will be forced to adopt the more intrusive and costly regulatory and subsidization policies championed by the Liberals. That is an adverse outcome for any government and for the country!
bruce
Bruce W Uzelman, based in Kelowna, holds interests in economics and political science.
