Live by the Parliamentary Budget Officer, die by the Parliamentary Budget Officer. When it comes to the carbon tax and rebate, that’s a lesson the Liberal government is learning right now. It’s a lesson it personally invited, too. After using the PBO’s previous analysis, which said eight out of 10 Canadians get more back in rebates than they paid in taxes, to defend the policy from conservative attacks, it's now being force-fed those words in the wake of an updated analysis that shows the average Canadian households doesn’t actually come out ahead economically.
As Environment Minister Steven Guilbeault tried to explain to CTV’s Vassy Kapelos, that’s not exactly what the PBO’s new report says. Averages can be a funny thing, after all, and while it’s true that the wealthiest Canadians will pay far more than they get in rebates, the bottom 40 per cent of income earners still come out ahead. But expecting Canadians to parse the difference between a mathematical median and a mean is asking an awful lot, especially when they have conservative pundits and politicians screaming in their ears about the inequity of it all.
There’s also the fact that the PBO’s new report doesn’t actually dispute previous government talking points about the carbon tax and rebate. As the new report says, “Considering only the fiscal impact, we estimate most households will see a net gain, receiving more in rebates from Climate Action Incentive payments.” By 2030-31, that net gain ranges from an average of $776 in Alberta to $202 in Ontario. It’s only when the modelled economic impacts of the carbon tax are included that the math swings in the other direction.
And that modelling, for what it’s worth, has some obvious flaws. It makes no accounting for costs associated with doing nothing on climate change, ones that are already in the tens of billions of dollars every year. As the C.D. Howe Institute’s Don Drummond and the Canadian Climate Institute’s Sarah Miller noted in an op-ed last November, “Canada can expect $25 billion in losses by 2025 from the warming experienced since 2015, relative to a stable-climate scenario — an amount equal to half of projected GDP growth in 2025. By 2050, losses could rise to $100 billion and wipe out half a million jobs.”
The PBO’s analysis also fails to account for the economic upside associated with the carbon tax and other climate-friendly policies. That upside should be abundantly clear by now, given the massive investments in clean energy that are being made in the United States, Europe, and China. There are millions of jobs and trillions of dollars in capital at stake, and Canada’s carbon tax is a key part of its value proposition to companies that want to invest here — like Volkswagen, which just announced that it will build a “gigafactory” for its electric vehicles in St. Thomas, Ont. A new report from Clean Energy Canada (backed by modelling from Navius Research) shows a net gain of 700,000 energy jobs if Canada reaches net zero by 2050 — and 100,000 fewer energy jobs if it backslides on policies like the carbon tax.
As Drummond and Miller noted in their op-ed, this one-dimensional view of carbon pricing “obscures the very real costs of climate change to the Canadian economy and means that the economic benefits of reducing emissions and improving resilience are not captured; instead, only the costs of these policies are seen. The result? We underestimate the economic benefits of proactive climate policy and debate the costs of action rather than the costs of inaction.”
But these nuances are only going to be understood by people willing to hear them — and who have at least some familiarity with economics and statistical methods. And with politicians like Pierre Poilievre and Danielle Smith sensing Liberal blood in the water, and the editorial apparatus of the Postmedia chain at their disposal, we’re not going to get anything close to a nuanced discussion about this issue. Efforts to clarify or contextualize the PBO’s report, however well-meaning or fact-based they might be, will be about as successful as someone trying to piss into a gale-force wind.
To some extent, this is a trap the Liberals set for themselves. By talking up the fact that most people get more back in rebates than they pay in carbon taxes — which, again, remains true, according to the PBO — they opened the door to getting clubbed over the head with analysis to the contrary.
They probably should have told Canadians that, yes, there would be a cost upfront associated with tackling climate change, one that will fall disproportionately on the wealthiest Canadians. And rather than pretending there would be no financial pain, they should have talked far more about the various forms of gain: new programs to reduce emissions, new opportunities for jobs and economic growth, and new hope for their kids and grandkids.
The Liberals used the work of the Parliamentary Budget Officer as a shield to defend their carbon tax and rebate in the past. Now, with a new report out, it's turned into a sword for their opponents. Columnist @maxfawcett writes for @NatObserver
Instead, they took the easy way out, and are currently paying the price. Time will tell whether Canadians ultimately reject the carbon tax and rebate at the ballot box, and whether Poilievre’s inevitable promise of a bag of magic beans (a.k.a. “technology”) will be enough to get voters in the GTA and Greater Vancouver Area to trust him on climate. But if they do, it’ll be because the Liberals paired an ambitious policy with some of the worst communications strategy in political history.
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