Parliament: Speech and Debate on the Impact of Carbon Taxes

On Thursday, February 23rd, 2017 in Debate, Parliament

Elizabeth May

Madam Speaker, I want to begin by thanking the preceding speaker, the member for South Okanagan—West Kootenay, and in fact, the whole NDP caucus for allowing me 10 minutes to speak in this very important debate.

I have been struggling today. I keep thinking to myself that people who live in glass houses should not keep an abundance of stones. Every time a Conservative speaks, I find myself thinking, “Do you not remember the last 10 years of cancelling all the carbon plans?” There was a very decent, workable plan in place in 2005 and 2006 that was cancelled within weeks of Stephen Harper becoming prime minister. Three different times, Canada’s carbon target was weakened. It has been referenced already that Stephen Harper put a cap and trade program into a plan that he never really intended to execute.

I do feel enormous empathy for the parade of environment ministers who suffered under that regime. I think they were all told that they would be able to deliver the plan. The current leader of the official opposition, who was the first minister of environment, said they were intending to reach Kyoto, and the rug was pulled out from under her. John Baird came along and said he had a turning-the-corner plan, that there would be regulations sector by sector. Nothing ever happened, except that we shamed ourselves in the world over and over again by obstructing global negotiations. That is something Canadians do not understand: how much, under the previous government, we did not just stand back, but we got in the way. Those are a few glass houses and stone moments that I wanted to get rid of before proceeding to a review of carbon pricing and what it means.

I did not get the chance to put this to the hon. member for Dauphin—Swan River—Neepawa in questions and comments, but he said he had not heard anything about the Great Lakes. I remember distinctly that one of the Harper government budgets spent more money on barbed wire and fencing to go around the Great Lakes to make sure that terrorists were not getting access into Canada across the Great Lakes than for water quality. I just picked up the 2016 budget, and if we go to page 162, and several pages therein, we see there is finally a return to some Great Lakes policy; not enough, I have to say. I was part of the government back in 1986 to 1988 that put together the Great Lakes water quality strategy and a St. Lawrence cleanup plan, but at least there are some millions of dollars for the Great Lakes now.

It is really a rhetorical trick to have framed today’s opposition day motion around the idea that electricity prices in Ontario are what we can expect everywhere if we adopt carbon pricing. Electricity prices in Ontario currently are very high, but they have nothing to do with carbon pricing. The only way we could replicate it across Canada is if we could somehow impose on every province the bad energy decisions made by Ontario Hydro for generations in building nuclear plants that created billions of dollars of stranded debt.

If we look at the breakdown of electricity prices for Ontario, and I urge everyone to google it and have a look, the number one price is the cost of generation, of course. Then there is the cost of distribution. The next biggest price, over $1 billion a year, is retiring the debt. This is related not to green energy but to nuclear energy.

There has also been a great deal of nonsense about the B.C. carbon prices and the carbon tax there. I want to put that to bed. The hon. member for Calgary Nose Hill did not cite a reference on this one. She was referring to the Fraser Institute report, which claims, falsely, that the B.C. carbon tax is not revenue neutral. For those listening who do not know the term “revenue neutral”, it means that for every $1 of tax taken in on carbon, $1 of tax is reduced on small business and individual British Columbians.

It is working very well, and the B.C. finance department has completely rebutted the Fraser Institute, but of course, the Fraser Institute is funded by the fossil fuel industry, the Koch brothers, ExxonMobil. We can examine the source and not be surprised. The finance ministry of B.C. says that the carbon tax has actually not been revenue neutral recently. It is giving more tax cuts than it is getting in revenue. In terms of how British Columbians receive it, it is a very positive thing.

Let me turn to what a price on carbon is and is not. It needs to be said really clearly that a price on carbon is not the magic silver bullet. We put a price on carbon in Canada and we have not reached our Paris targets magically. We have not averted the climate crisis magically. We need a whole range of measures, a whole suite of measures. What a carbon price attempts to do is correct market failure, because in that perfect world on the blackboard of economics 101, everything has an input cost.

We have materials and labour. Pollution is free. It is an externality to the economic equation, but it is not external to real life. It piles up. Whether it is the Sydney tar ponds and toxic waste that had to be cleaned up at a cost of $400 million, or whether it is the future cost of cleaning up the oil sands tailings ponds, or whether it is overloading our global atmosphere with warming gases that threaten, and I am not using hyperbole here as this is actually what is at risk, human civilization itself, this is not a free good, so we have to put a price on it so our free market system can actually pay attention to it. It almost does not matter, in response to the member for Calgary Nose Hill, whether we have elasticity of price or not. There is such a demand for gasoline that we would have to put a huge carbon price on to affect the demand for gasoline.

That is not the point of a carbon price. A carbon price is to make sure there is a signal at almost any level that this will cost something. It is to try to create some incentive, but on its own it is not enough. We need regulations and we need other plans. We need to bring on renewable energy so that we can decarbonize all of our electricity. That is a top priority. Ontario did it first, but others need to do it.

What kind of institutions favour a carbon tax? Looney left-wing ones? No. The International Monetary Fund says that every country needs to put in place a carbon price and eliminate fossil fuel subsidies. This was a promise in the Liberal platform that we need to see executed. It has not happened yet. We still have fossil fuel subsidies for liquefied natural gas and dwindling but still in the oil sands. The World Bank also favours carbon pricing and the elimination of fossil fuel subsidies. It is the same for the International Energy Agency.

The first carbon price that was applied by any nation was by Finland in 1990, followed by Sweden in 1991. By the way, the carbon price in Sweden is now hovering at around $150 a tonne. Norway applied its carbon price as it began to develop its North Sea oil resources. It was at the point of becoming potentially a petro-state but decided not to go that route. It decided not to let its currency be linked to the money that it was taking in. Norway took in royalties. It also applied a carbon tax. It now has a sovereign wealth fund, so as North Sea oil dwindles, it will have a $900-billion sovereign wealth fund.

Guess whose advice Norway followed when it did that? That was the advice of former Alberta premier Peter Lougheed. If only Albertans had followed the advice of former premier Peter Lougheed, there would be a huge amount of money to adapt to transitions. They would not have put all of their money into the bitumen basket, all of their eggs into the bitumen basket, of shipping out raw bitumen but would have followed Peter Lougheed’s plan and had ancillary infrastructure for refining and upgrading.

Today’s debate is about the Liberals revealing numbers. Guess what, folks? I do not think there are any numbers, because no one can know yet. In the absence of any federal role on carbon pricing or carbon action under the Harper era, we have a patchwork, because provinces began to take action on their own. Frankly, I am no fan of cap and trade. It is open to fraud and it is a difficult system. But they had nothing else going on, so Ontario and Quebec decided to work with California.

British Columbia brought in the best architecture of a carbon price with returning every dollar collected to reduce taxes across the province. Gordon Campbell would not have been re-elected without having brought in a carbon tax. He fell later on because he never told anyone he was going to bring in a harmonized sales tax, but that is another issue. Carbon tax saved him. HST took him down.

Here we are in a situation where we have a patchwork. The federal government has stepped up and I think the architecture of what it is proposing is very good. It is backfill and infill. The federal government is saying it is not going to tax on top of what B.C. is already taxing, which is already at $30 a tonne, or Ontario and Quebec and California. It wants to make sure there is an even playing field for business certainty to send out that carbon signal.

We need a carbon price that is uniform across Canada, but we do not know that every province is going to design a revenue neutral tax. I wish they would. We do know that the federal government will return to every province all the money it collects from that province if by the time the carbon tax rolls around that province has not designed its own system.

Frankly, all the people in the Conservative caucus who are suddenly concerned that there is going to be an impact by doing something need to think about the situation. There is no hidden report. The report they want was prepared under the Harper administration. If they want transparency, they should help everyone work together to deliver a carbon price that is effective, reduces pollution, and helps us move into a 21st century green economy.

 

Garnett Genuis - Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, there are many things I could say on this topic and that the member and I might disagree on in terms of the specific issue of a carbon tax, but I do want to ask her about the transparency component of the motion, because the motion speaks to the fact that the government should release data about who would be most impacted by the carbon tax. The member and I might disagree about a carbon tax, but at the end of the day, I think we should agree that Canadians have a right to access that information. They can make an evaluation based on the information out there about the pros and cons of a carbon tax if they have all the data in front of them.

Would the member agree that Canadians should be able to see the data about who is paying more or less, vis-à-vis the carbon tax, so that they can come to an informed conclusion?

 

Elizabeth May

Madam Speaker, I do believe in transparency. The specific document that the member for Carleton has found and he wants released was redacted because, as I understand it from other media commentary, it includes confidential advice to cabinet. That is the previous cabinet of the Harper government. It was prepared before the election, and who knows what form of tax it is imagining.

Where we are right now, we would have a series of hypotheticals. One hypothetical would be what if Saskatchewan developed its own carbon tax and it decided to go with $50 a tonne and it decided to put that $50 a tonne into renewable energy? The impact on Saskatchewan residents and homeowners would be entirely different than if the Government of Saskatchewan decided to put in a tax of $20 a tonne and make it revenue neutral.

We could ask the Department of Finance to give us a string of hypotheticals, because at this point the government of the day plans to bring in a very weak carbon price at $10 a tonne in 2018, and every province gets to do its own thing first, so we simply would only be able to guess at a series of options.

Kevin Lamoureux Parliamentary Secretary to the Leader of the Government in the House of Commons

Madam Speaker, the leader of the Green Party is very much in tune with British Columbia, in particular the provincial government and the environment.

I am interested in the member’s perspective on the price on carbon and how she feels from a local point of view how British Columbia has moved forward with respect to its policy on the price on carbon.

 

Elizabeth May

Madam Speaker, I have been astonished by how popular it is. Regarding the carbon tax in British Columbia, and I do not want to make a political comment because it is only through the good graces of the NDP that I am standing here, it was a fatal mistake of the NDP provincially to run an “ax the tax” campaign against the B.C. Liberals when they first brought it in, because British Columbians actually liked it. Because it was revenue neutral, there was more money in our own pocketbooks to decide, “I know the price of gas will go up, so the next car I get will be a gas miser, not a gas guzzler.”

My local airport is the Victoria International Airport, a very well-run and friendly airport, by the way. I parked my Prius in long-term parking on Monday to come back to Ottawa, and I was thrilled to see that there are brand new plug-in electric vehicle chargers for free in the airport parking lot.

We see electric chargers all over the place. I think Salt Spring Island may have the highest per capita ownership of electric vehicles, and it is not people who can afford to buy a Tesla, by the way. They are increasingly affordable cars because people do not have to put gas in their cars at all.

 

Garnett Genuis Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, I have a brief follow-up to my previous question.

The member said the incidence, depending on income group, will depend on how a product is implemented, but I do not think that would be the case if we are talking about a tax on carbon, because a tax on carbon is a tax on carbon. Of course, the rebate could be different. What we do with the money could be different. However, if we charge a particular tax on carbon, that will have the same impact. The way it will impact will depend on what carbon we use, not on other factors. Is that not correct?

 

Elizabeth May

Madam Speaker, briefly, no, because the impact is very dependent on whether the government is actually taking that money as revenue and keeping it or redistributing it immediately in tax cuts, so the effect on every household’s income is entirely dependent. That is why I strongly favour carbon fee and dividend or, at the minimum, revenue neutral carbon pricing so people have more money in their own pocketbooks.

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