The Liberals’ signature climate policy to put a price on pollution is not unravelling, and it is not the main reason for inflation, Prime Minister Justin Trudeau says, despite what the Conservatives insist.
But the Tory messaging on carbon pricing has been effective, Trudeau allows, even though it leaves out that if carbon pricing goes away, so will rebate cheques that he says Canadians have come to rely on.
“Conservative politicians have successfully scapegoated the price on pollution as being the reason everything is expensive right now,” Trudeau said in a year-end interview with The Canadian Press.
Bank of Canada governor Tiff Macklem said earlier this year that carbon pricing was responsible for only about one-twentieth of inflation this year, as the inflation rate hovers around three per cent.
In 2022, when inflation was more than twice that, the impact of the policy would have amounted to about one-fiftieth.
Carbon pricing applies directly to the cost of fuels, but it can also be embedded in the cost of goods, such as food, as producers and fuel retailers pass on costs through the supply chain.
Conservative Leader Pierre Poilievre has for months been holding rallies across Canada arguing that removing the carbon price would make things such as food affordable again.
But the reality is that global factors such as supply chains and geopolitical instability have had a bigger impact, Trudeau said Monday.
Those problems wouldn’t go away if a Canadian government got rid of carbon pricing.
“The fact that the Conservatives are trying to say that the only thing that is hurting Canadians right now — the main thing that’s hurting Canadians right now — is that we have a price on pollution is not something taking us in a direction that anyone wants to go, and that the economy needs to go in,” he said.
Canada’s national carbon price is nearing its fifth anniversary.
It is more controversial than ever thanks to relentless campaigning against it by the Conservatives.
The government’s own decision to temporarily remove the price from heating oil contributed, too, which many viewed as a cynical political ploy in the face of cratering poll numbers in Atlantic Canada, where the largest percentage of households use heating oil.
The Liberals have insisted the move was about making the policy work better for heating oil users, and that it wasn’t about politics.
But that argument was undermined when Newfoundland and Labrador MP and Rural Economic Development Minister Gudie Hutchings said Prairie provinces may have more success lobbying for their constituents if they elect more Liberals.
The decision to create the exemption launched an avalanche of criticism. Liberals were accused of regional favouritism, and demands are now growing every day for the government to create more carve-outs.
A Conservative private member’s bill to exempt the carbon price from propane and natural gas used for drying grain and heating farm buildings has been making its way through the Senate.
An amended version of the bill that would apply only to grain drying could pass in the upper house this week. If the House of Commons approves Senate changes, the bill will become law. If not, it goes back to the Senate again.
Meanwhile, last week, the Chiefs of Ontario filed a request for a judicial review in Federal Court.
They are asking the court to order the government to negotiate a new plan with Ontario First Nations, arguing the rebates offered under carbon pricing leave them out. To get a rebate, people must file their income taxes. People working on First Nations reserves don’t do that.
On Dec. 10, newly sworn-in Northwest Territories Premier R.J. Simpson said he wants his territory exempted altogether.
Simpson told CBC News that if high costs really drove people to find greener alternatives, people would have chosen alternative fuels in his territory years ago. The price of fuel is high, and he said alternatives aren’t easy to access for his residents.
The Conservatives, who have campaigned against carbon pricing for years, have pounced on the recent developments and added further heat to their arguments.
Poilievre has held dozens of “axe the tax” rallies across Canada since the summer, and last week attempted to use political stall tactics to force round-the-clock voting in a bid to convince the Liberals to cave and end the carbon price.
They also unsuccessfully moved a motion calling for the carbon price to be removed for “families, farmers and First Nations.”
On Monday, Conservative MP Bob Zimmer asked for an emergency debate on the need to have the whole carbon price eliminated. He didn’t get it.
Some pundits have suggested the carbon price policy is falling apart, but Trudeau flatly denied that.
“It is absolutely not going to unravel, and there will be no more carve-outs,” he said Monday.
He did open the door to negotiating something that better fits the needs of communities that have unique circumstances, but without exempting them from the policy.
“We’re going to continue to work with (First Nations), we’re going to continue to work with the northern territories where we understand that the frame is different,” he said.
When pressed, he did not provide further clarity on what that meant.
The Liberals have long struggled to clearly explain how the carbon price works and why and how people get a rebate.
Those rebates, which range from $240 to $386 every three months in most provinces, are supposed to cover off the price on carbon but leave an incentive in place that would allow people to save more money by using less fuel.
The less fuel you buy, the less carbon price you pay, but the rebates remain in place at the same level.
The parliamentary budget officer has said that about eight in 10 households end up with more from the rebate than they pay in carbon pricing, largely because small businesses pay a significant portion of the carbon price but get less than one-tenth back.
Trudeau said he thinks people do now understand that the rebates “would disappear if we didn’t have a price on pollution.”
This report by The Canadian Press was first published Dec. 11, 2023.
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