Harrison Ruess: Did the Liberals actually think this carbon tax thing through?
In one fell swoop the federal government has blown-up one of — perhaps the only — remaining core, signature policy items it has fought for over the past decade.
By: Harrison Ruess
Worms, thy can is opened.
Like a lot of rural and semi-rural Canadians I was left scratching my head last week. And I was scratching both as an ordinary citizen who is (or should be) impacted from a policy perspective, as well as from a political strategy perspective.
First, from the Main Street Canadian perspective, I was left to ponder why the new carbon tax exemption recently announced by the federal Liberals only effectively applies to Atlantic Canadians? The exemption on oil does, technically, apply nationally, but oil is rarely used outside of Atlantic Canada, and the exemption doesn’t apply in the provinces where the carbon tax is provincially run, like Quebec and B.C. Further, the extra money to help homeowners pay for a switch from oil to an air heat pump is limited to Atlantic Canada.
So why the special focus on the Atlantic?
Atlantic Canadians are certainly struggling with the cost of living, but so are the rest of us. Polling by Abacus Data just a couple months ago highlighted this — the rising cost of living was identified as one of the top-three issues by three out of four Canadians, right across the country.
Indeed, in looking deeper at the regional numbers, the concern about the rising cost of living and housing affordability isn’t particularly acute in Atlantic Canada versus other parts of the country. The chart below, provided to me by David Coletto at Abacus Data, and published here at The Line first, reveals just how difficult a position the PM has now staked out for his government. While Atlantic Canadians are somewhat more concerned about housing affordability than average, they are very slightly less concerned than the average Canadian about the overall rising cost of living. In Saskatchewan and Manitoba, for example, the opposite is true: they’re less concerned than average about housing affordability, but more concerned than average about the rising cost of living.
The takeaway to me in looking at this is that all Canadians are worried about costs and affordability.
The other question that jumped to mind is: why only heating oil? Heating oil is useful in places without good access to natural gas pipelines, and that does include much of Atlantic Canada, but also to rural areas everywhere, where other fuels, such as propane or wood pellets, are also used. According to the propane association, there are about 200,000 Canadian homes using propane — of which about 30,000 are in Atlantic Canada.
I can speak to this with some personal experience. When my wife and I purchased our home in semi-rural Ottawa, it had a Frankenstein heating system that used heating oil for part of our home and propane for another. Just this summer we completed a (somewhat expensive) rationalization of our system to combine the two into one larger, though more efficient, propane system.
Having one system will hopefully save us money on maintenance and hydro costs — powering and maintaining one system should cost less than two. It will also save us a couple hundred bucks a year on our home insurance (did you know there’s an extra premium if you have a heating oil tank? Welcome to rural life, dear readers.) Ditching the oil and expanding the propane is also good environmentally, since the carbon impact of propane is considerably less.
But we didn’t get a break from the federal government. We’d only have gotten it if we’d gone the other way, and used the more polluting fuel. Why punish my family for heating our home using the cleaner fuel?
And why not provide an exemption for natural gas? It’s cleaner still. And why not people in cities? They don’t want to freeze either, and we’re all broke. The carbon tax isn’t helping, no matter which fuel you’re using or which part of the country you call home. The ultimate challenge the government will face is that they cannot talking-point their way out of a reality.
(Oh, one more note from the personal front: despite living rurally with rural fuel sources, as far as the federal government cares — because I live within the legal boundaries of the “City of Ottawa” — the Climate Action Incentive payments I receive are at the lower urban levels … because, well, reasons, I guess.)
Look, my point here isn’t to try to create some regional divide where Ontarians or Saskatchewanians are angry with Atlantic Canadians for their sweet deal. It’s the opposite, actually: we are all in the same mess, and we all need help. Wherever you plan to keep warm this winter in Canada, and whichever fuel you use, odds are that you’re concerned about how much it will cost. And you’re aware the carbon tax ain’t gonna help. It sure would be nice if government policy was designed to help Canadians, rather than manage regional caucus issues.
Which brings me to political strategy. And the worms. Oh the worms.
In one fell swoop the federal government has blown-up one of — perhaps the only — remaining core, signature policy items it has fought for over the past decade. I mean, seriously. Some conservatives had even accepted that the carbon pricing ship had sailed.
But now, it’s open season.
The government here is tacitly (or, for that matter, overtly) admitting their carbon tax doesn’t save you money. It’s also clearly no longer of the view that the tax ought to apply equally to all Canadians (I recall that point ending up in court?). Then there’s the whole region-versus-region problem (Premier Moe took his stand here, for example). What about the climate crisis being “the greatest threat of our time,” (pish-posh — there’s votes up for grabs in the Maritimes!).
I’m no great Liberal insider (obviously…), but it must have been one hell of a caucus meeting or revolt-threat to get the government to open itself up to attacks on these fronts. In the government’s panic to staunch poll bleed, or reverse a caucus mutiny, it will probably do more harm to itself than good.
For people in Atlantic Canada, where the big win should be, I suspect this flip-flop isn’t even going to change too many minds. It might be nice right now if you have an oil furnace, but Atlantic Canadians know the current exemption will offer only a short respite, and that the tax is going to start going up again in a few years — surely by coincidence, just after the next election. And this change will only address this one cost. It won’t help with the underlying affordability issues and inflationary pressures on groceries, mortgages, and so on. Said another way, it is such an ultra-narrow cost relief — only oil, only rural — that the government probably hasn’t won itself much credibility that it is now super-duper concerned about the cost-of-living crisis, and that the Liberal party is the best party to address it.
Meanwhile, outside of Atlantic Canada, this reversal is only going to create headaches. It already has. For rural folks, who probably didn’t vote Liberal anyway, it is going to agitate existing grievances.
But for urban Canadians, the people who this government needs to win another election, this policy has shows the government doesn’t actually care about the climate crisis as much as they’ve proclaimed — and urbanites don’t get the financial benefit of the carve-out, to soften the environmental commitment blow.
The government would have been better sticking to its guns on the carbon tax, even if that meant sticking it to Canadians.
It could have found other ways to show a commitment to affordability. Say, by expanding the climate “incentive” payments, for example? Or making rebates more generous still for lower-income Canadians? Or taking some GST off all home heating fuels? Or go old-school to help lower-income people, by reducing the tax rate on the lowest income tax bracket?
In grasping for paper policy straws, this government is creating more problems than solutions for itself.
The can opener has spun. The worms are out. They aren’t coming back.
Harrison Ruess is Senior Account Director at spark*advocacy in Ottawa. He’s also a former senior political staffer in Ottawa. This article does not impact his clients.
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