Support journalism that lights the way through the climate crisis by June 3

Goal: $100k

Prime Minister Justin Trudeau faced a second day of criticism over the carbon tax carveout but resolved there will be no similar breaks for other provinces.

The Liberal government has faced non-stop blowback over its recently announced three-year exemption for the carbon price on home heating oil, a costly fuel widely used in Atlantic Canada.

Even Bank of Canada governor Tiff Macklem was drawn into the debate when he appeared Monday at the House finance committee and acknowledged eliminating the carbon tax could create a one-time drop in inflation of 0.6 percentage points: theoretically, bringing the inflation rate from 3.8 per cent to 3.2 per cent.

Philip Lawrence, the Conservative MP questioning Macklem, later posted a video clip of the exchange on X, formerly known as Twitter, saying: “There you have it. #AxeTheTax and you get immediate relief for all Canadians.”

That admission was seized Tuesday by Conservative House Leader Andrew Scheer who used it to bolster the Conservatives’ rallying cry to “axe the tax.”

In question period, Scheer said the Bank of Canada confirmed the carbon tax is responsible for 16 per cent of total inflation.

Hadrian Mertins-Kirkwood, a senior researcher at the Canadian Centre for Policy Alternatives, described Scheer’s framing of Macklem’s comments as “misleading” because Scheer’s math suggests the carbon price increased inflation by 0.6 percentage points this year alone, however Macklem said the average year-over-year increase is 0.15.

Macklem made that point clear to the House committee as well. The 0.6 percentage point decrease would only last one year “and because you can only eliminate it once, the next year it would have no effect on inflation,” Macklem told the committee. On an annual basis, the carbon price adds about 0.15 percentage points to inflation, 0.6 is the estimated impact over the carbon price’s lifetime, he added.

Lawrence asked Macklem if eliminating the carbon tax — and thus bringing inflation from 3.8 per cent to 3.2 per cent — would be “helpful” and Macklem refused to offer an opinion and just repeated it would only affect inflation for one year.

Prime Minister Justin Trudeau faced a second day of criticism over the carbon tax carveout but resolved there will be no similar breaks for other provinces. 

A 0.6 percentage point decrease in inflation for one year doesn't structurally solve the inflation problem, said Mertins-Kirkwood. “It wouldn't really be a meaningful contribution to dealing with inflation.”

The roughly 0.15 percentage point increase to the inflation rate is “not nothing,” Mertins-Kirkwood noted, but said it's also “not a main driver.”

Other factors such as increasing energy prices, supply chain issues, corporate profits and higher rent and mortgage payments and wage increases can all cause inflation.

“You kind of have to come at this problem from all angles,” said Mertins-Kirkwood. “It's corporate profits, it's wages, its resource issues. It's all sorts of things. Carbon pricing is way, way down that list.”

On Oct. 26, Trudeau announced a three-year exemption on carbon pricing for fuel oil used to heat homes after a group of concerned Atlantic Liberal MPs advocated for changes. The three-year exemption applies across Canada but about 30 per cent of households in Atlantic Canada now use home heating oil, compared to just eight per cent in the rest of Canada, according to the federal government. During the three-year exemption, the federal government is pushing out more funding to help Atlantic Canadians make the switch from costly fuel oil to heat pumps.

Scheer and Ontario MP Adam Chambers both tied the Bank of Canada governor’s comments about the carbon price to affordability and repeated calls for the government to cancel its pollution pricing policy.

In response to Chambers, Liberal MP Taleeb Noormohamed said it's “wonderful to hear the Conservatives quoting the governor of the Bank of Canada,” noting their leader, Pierre Poilievre, previously said he would fire the Bank of Canada governor if elected.

“But it's surprising and it's wonderful because if we actually listened to what the governor of the Bank of Canada said, he said the carbon pricing was contributing 0.15 per cent to inflation, and that cutting carbon tax would have … no long-term effect on inflation and no effect past that one year,” said Noormohamed.

While the Liberals are taking heat from both the Conservatives and NDP, University of British Columbia political science professor Kathryn Harrison says Poilievre is getting a “free pass.”

“Mr. Poilievre's credibility on the carbon tax is not very good, either,” said Harrison in a phone interview with Canada’s National Observer, noting the federal party’s persistent lack of a clear or credible climate plan.

“Mr. Poilievre is holding ‘axe the tax’ rallies in British Columbia [where] the federal carbon tax doesn't even apply,” Harrison noted. “He is really emphasizing that it's a cost-of-living issue and various analyses are finding the carbon tax increase is a very small fraction of the inflation that Canadians are experiencing.

“If you want to have a serious policy to address cost of living, ‘axe the tax’ is not that,” said Harrison.

At the beginning of question period on Oct. 31, Trudeau and Poilievre went head-to-head on the carbon price carveout issue. Poilievre repeated his line that last week’s move is an admission the carbon price is unaffordable and demanded to know why the federal government won’t exempt cleaner natural gas used to heat homes across the country.

“It is amazing to me that after three failed elections in a row by the Conservatives, they still want to fight another election on denying climate change, on denying the costs of climate change,” Trudeau responded near the end of the two leaders’ exchange.

For the remainder of question period, Natural Resources and Energy Minister Jonathan Wilkinson fielded many of the Conservatives’ questions about carbon pricing.

“The focus of this program is enabling affordability, getting people off of heating oil, which is more than double on average the cost of natural gas in this country,” said Wilkinson. He described the changes, including new support for heat pump adoption in Atlantic Canada, as “an enormously important affordability measure” that will save Canadians who switch off home heating oil “upwards of $2,500 a year.”

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer

Keep reading

So why are media giving Poilievre such a free pass on the carbon tax and just about everything else? Why aren't the federal government and the media putting the spotlight on the large oil companies who are reaping record profits, driving up the cost of living and destroying the environment. These companies should be drawing the ire of the public.

Sadly Dale, that would be because almost all of Canada’s main stream media outlets are owned by Americas. And not only Americans but wealthy right wing Americans who are
Ish ing the same load of right wing BS in Canada that they are in the USA.
My question is why is anyone getting bent out of shape on this? The Feds have always given various areas of the country more money or more attention based on need at the time. That’s what a Federation is all about. Making the path neat and easy fro everyone, but occaisonally having to give someone else a hand.
Hell, that’s the reason the Equalization Program even exists. With the Feds help, Ontario, Quebec and BC, created this program to help Alberta, who was an extremely poor province and need a helping hand! Funny though how they love to bite the hand that kept them alive!

Wow the irony. Good point about how a federation works and how THIS one has worked in the past and how equalization models that quintessentially Canadian sense of fairness. Because that's such a distinct feature of our identity that goes deep, I don't think I'm alone in my baffled anger at seeing the American gong show being deliberately staged here when a) NOT being American is ALSO a central feature of being a Canadian and b)many see American democracy, leader of the free world as actually being in jeopardy.
So why in hell are our conservative-led provinces so stupidly and irresponsibly heading the same direction of undercutting federal power, destabilizing the entire country and democracy itself (our premier evolutionary achievement as rational people) for no bloody reason whatsoever other than what seems to be pure boyish mischief! Seriously. In the context of Charlottesville, one of the early indicators, HBO is doing a special where someone observed that there was a weird insurgency of "juvenile truants."
I also see it as a protracted backlash against women in power generally that has increased in proportion to how many more women are starting to circle those halls of power.
I look forward to seeing what happens when Chrystia Freeland is actually a candidate for prime minister. Because it's become socially unacceptable to be openly anti-women, the word "misogynist" is widespread now, imagine the contortions conservatives will have to engage in to pretend it's something else. Fortunately, she has a couple of boys herself, is a farm girl FROM Alberta, and is Ukrainian, a very good look nowadays, and she doesn't suffer fools gladly.

Right-wing Post Media only caters to the right, rarely present the whole story. With Pierre the snake oil salesmen doing his axe the tax rallies in BC, just shows how out of touch conservatives are.

Poilievre coming all the to BC to hold Axe The Tax rallies against a federal tax that doesn't exist in BC (it has its own) is like holding Axe The Rat rallies in Alberta, a province that supposedly doesn't have rats. Well, maybe there's one or two.

I still maintain that caving in one highly localized sector with respect to the carbon tax was a stupid move. The swift reaction by opponents to cave everywhere was totally predictable. Communications 101 basics.

A much better move would be to limit action to increasing rebates for heat pumps equally across the land. Finance it by redirecting funds predesignated to subsidizing the world's most profitable industry (fossil fuels) through financially and technically infeasible carbon capture.