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Trudeau's plan for escalating carbon price sparks battle over bottom line

October 05, 2016 - 6:19 AM

OTTAWA - The Liberal government's decision to impose a national floor price on carbon emissions dominated the House of Commons on Tuesday, with critics saying the plan punishes consumers while doing little to combat climate change.

All but lost in the immediate, breathless reaction was the reality that the plan announced a day earlier by Prime Minister Justin Trudeau won't have much impact, if any, on 87 per cent of Canadians — or their carbon footprint — for the next four years.

That's because the rising floor price on CO2 emissions laid out in the federal Liberal plan starts at $10 per tonne and takes until 2021 to catch up with and surpass existing carbon taxes already imposed by British Columbia and Alberta.

And the Trudeau model won't affect Ontario and Quebec's existing cap-and-trade carbon market until it can be established that carbon taxes are driving down emissions elsewhere in the country faster than their market caps are already doing. That tricky piece of equivalency has yet to be sorted out.

A group of 22 high-profile business and civil leaders endorsed the plan Tuesday, saying Canada is simply pricing emissions "as most of the world's biggest economies are doing."

The Smart Prosperity group, which includes executives from Shell Canada, Unilever Canada, Loblaw and major insurance and banking companies, said the plan allows for "regionally tailored paths."

"By starting slowly and ramping up over five years, it gives businesses and households time to adjust and plan for lowering their carbon footprints."

The plan's cautious approach, however, is being completely overshadowed by Trudeau's audacious communications gambit.

The prime minister announced the national floor price Monday in the Commons just as federal, provincial and territorial ministers were meeting in Montreal to negotiate a pan-Canadian carbon plan.

Three provincial ministers left the Montreal meeting early to protest the high-handed federal move, and opposition parties remained in high dudgeon Tuesday.

Conservative critic Denis Lebel accused Trudeau of creating more federal-provincial tension in less than a year in power than the previous Conservatives did in a decade. Tory MP Ed Fast said the prime minister had "pulled the rug out from under them by announcing a new, massive, billion-dollar carbon tax grab on Canadians." Conservative MP Lisa Raitt painted a harrowing portrait of starving grannies freezing in the dark.

NDP Leader Tom Mulcair, meanwhile, lambasted the plan's lack of ambition, asking what Trudeau will tell "the next generation when this betrayal has made climate change worse and jeopardized their future on this planet?"

Faced with such discordant assessments, the debate naturally landed on the bottom line: What's it going to cost me?

The Canadian Taxpayers Federation and Brad Wall's governing Saskatchewan Party each offered up estimates for the annual cost to an average family, starting at $1,250 a year and topping out at more than $2,500.

But such estimates are meaningless, since provincial governments have been repeatedly told by Ottawa that the carbon tax revenues are theirs to use as they see fit — including to cut income, sales or business taxes.

Federal Environment Minister Catherine McKenna said it is up to provincial premiers to decide how those revenues should be recycled.

"You determine the system that makes sense," McKenna said outside the House.

"You determine how to deal with, for example, agriculture industry, and you determine what should happen with the revenues. You can return the revenues as a tax cut to small business and consumers. You can invest in innovation. You can invest in the agriculture sector. That's not for the federal government (to decide)."

In an interview, Fast — a B.C. Conservative — lauded the way Christy Clark's B.C. Liberal government has used carbon taxes to cut income and other taxes but said he's not confident every other province will follow suit.

"The problem is that not all of the provinces are committed to acting responsibly," he said, pointing to Ontario's Liberal government and its political problems over skyrocketing electricity prices.

"What I'm saying is the announcement that Justin Trudeau made (Monday) is going to give governments across the country — the provinces and territories — more disposable income to spend on their political priorities."

— Follow @BCheadle on Twitter

News from © The Canadian Press, 2016
The Canadian Press

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