For months now, Pierre Poilievre has hammered the Liberal government with his familiar pledge to “axe” its carbon tax. But for all his talk, he probably never expected Justin Trudeau to actually listen. That’s effectively what happened Thursday when the prime minister announced a three-year carbon tax exemption on home heating oil, a move clearly designed to placate restless voters in Atlantic Canada. In the process, it undercut arguments the government has been making for years and made the defence of an already difficult political position nearly impossible.
This is, as I’ve written many times, largely a mess of the government’s own making. Its communications around the carbon tax and rebate have been abysmal from the beginning, and this has allowed the merchants of doubt and disinformation to run riot around an already confusing subject. Its decision to latch onto the Parliamentary Budget Officer’s initial analysis, which showed the rebate exceeded the carbon taxes paid by eight out of 10 households, also seemed like a dangerous limb to step out on. The PBO duly chopped it off with a subsequent report that included modelled economic impacts of the tax swinging the balance decisively in the other direction.
But those are mere foot faults compared to this move, which might be the biggest unforced political error we’ve seen in a long time. “Our government is delivering relief to Atlantic Canadians, rural Canadians, and people across the country who use home heating oil,” Finance Minister Chrystia Freeland tweeted. Said relief, though, was from a policy her own government implemented — one that just came into effect in Atlantic Canada earlier this year.
It’s difficult to accurately describe just how bad this looks for Freeland and the Liberals. “To blow up your own signature policy is a very different thing,” strategist Corey Hogan said during an appearance on the Ryan Jespersen show, “because your entire government brand is tied to this particular policy, and you’re effectively admitting major policy challenges with it here.” Any counter-arguments the Trudeau Liberals might want to make to criticisms about the cost of the policy or its impact on Canadian households — ones the Conservatives have been making for a while — have been effectively neutered as a result.
They’ve even managed the herculean task of making me agree with Alberta Premier Danielle Smith. “The federal government has decided that one part of Canada with one type of home heating is worthy of a carbon tax break, while those living elsewhere using another type of home heating do not,” she tweeted on Friday. “Further, after telling Canadians for years that rebates covered the costs of the carbon tax for everyday consumers, the feds now admit with this one-region-one-fuel-type-only tax break, this claim is not true.”
She’s right. This decision is obviously motivated by the declining political fortunes of the Trudeau Liberals in Atlantic Canada, where they stand to lose most of their 23 seats if current polling holds. But while it might stop some of the bleeding there, it invites Canadians in other provinces to get their own pound of political flesh from the federal government. Now that they’ve lit the fuse on the demise of the carbon tax in Canada, they might as well blow it up themselves.
For starters, that almost certainly means eliminating the tax on natural gas for home heating. How, after all, could they possibly justify waiving it on a higher-emitting source (fuel oil) and yet leave it in place for a lower-emitting one? Instead, they should focus on expanding the incentives they announced for heat pumps in Atlantic Canada to the rest of the country, especially in light of recent research showing they work, even in Canada’s cold winter climate.
The Trudeau Liberals might want to consider withdrawing the carbon tax on gasoline as well, or at least plowing its proceeds more visibly into incentives for the adoption of electric vehicles. The rebate, while well-meaning, has been communicated so poorly that many Canadians still don’t know it exists. Transferring some of that revenue into a bigger electric vehicle subsidy, on the other hand, might get their attention.
There would be an inevitable pushback from Alberta, where the oil and gas industry and a government so clearly beholden to it won’t want to lose the market share and economic opportunity associated with home heating and vehicle-related consumption. Unlike the fight over the carbon tax, that’s one Ottawa could actually win. Things like electric vehicles and lower home heating and cooling bills are a much easier political sale to make than a carbon tax whose impact is inescapably nebulous.
After four years of defending the carbon tax, Justin Trudeau's government crashed into the political reality unfolding in Atlantic Canada. Now, can any of the Liberal government's signature climate policy be salvaged from the wreckage?
As I wrote earlier this week, they might also want to expand the front in this fight with Alberta’s oil and gas industry. By putting the onus of Canada’s climate targets more squarely on those companies, they would effectively be daring conservative politicians to ride to the defence of these mighty corporations — which the Conservatives rarely, if ever, turn down. That’s a look that doesn’t play nearly as well in B.C., Ontario, Quebec or Atlantic Canada as it does in Alberta, and it could help the Liberals shore up their increasingly vulnerable position here.
Either way, the carbon tax and rebate — which so many environmental economists have spent much time and effort defending — is effectively dead. The Trudeau Liberals now need to decide if they want to die on the same hill with it or retreat to higher ground where they might stand a fighting chance.