The pundits appear unanimous. The Trudeau government has managed to achieve a trifecta of boneheadedness with its decision to provide a three-year carbon levy exemption for home heating fuel. The move is bad for the environment, bad for national unity and brings the country one step closer to a Pierre Poilievre government.
Beginning with the environment, the carbon tax is far from being the whole solution to cutting fossil fuel omissions to mitigate the impact of climate change. But to have any benefit, it needs to be comprehensive and predictable so that businesses and households will have an incentive to move to low carbon options like heat pumps and electric vehicles. Tampering with the tax for political reasons undermines that.
As for unity, the carbon tax has always been divisive along regional and partisan lines. But until now, proponents could at least attempt to claim the high ground, arguing that they were putting the environment ahead of political considerations. But that ground gave way when Trudeau announced the exemption, accompanied by a backup group consisting of most of the Atlantic Liberal caucus.
The exemption applies nation-wide, but it will be of greatest benefit in Atlantic Canada, where about 22 per cent of households – about 230,000 – heat with oil.More oil-heating households in Ontario will benefit from the exemption than in the four Atlantic provinces combined. This nugget – along with the fact that beyond Atlantic Canada some 800,000 homes heat with oil – was easily overlooked. And why not, given both the visual evidence of the Prime Minister surrounded by MPs from this part of the world?
And lest anyone try to suggest that relief for those other 800,000 households drove the decision, cabinet minister Gudie Hutchings from Newfoundland and Labrador was there to put her foot in her mouth and that notion to rest. In a TV interview the minister for rural economic development said Liberal MPs from this region pushed for the exemption and if the Prairie provinces wanted something similar they should elect more Liberals.
The Hutchings blunder just added more fuel to the inevitable political fire that immediately followed the announcement. With the exception of Quebec and British Columbia, all provinces have at one time or another opposed the carbon tax. Those opposed included the Atlantic provinces, which were allowed by the Liberal government to avoid the federal tax for four years by concocting less stringent provincial pricing schemes. Further undermining the integrity of the tax with a move that disproportionally benefitted the Atlantic region was like catnip to some provincial premiers.
Scott Moe demanded a similar exemption for natural gas, the heating source for 80 per cent of Saskatchewan households. If that’s not forthcoming, he says he’ll order the provincial crown corporation that distributes natural gas not to collect the carbon tax. Later in the week, Ontario’s Doug Ford seized on the issue as a welcome distraction from the greenbelt scandal, calling on Liberal MPs from Ontario to “do the same as your Atlantic colleagues” and push for an exemption for natural gas, heat source for 65 per cent of Ontario homes. And of course, Pierre Poilievre had a field day, amplifying the demands of his provincial allies for a natural gas exemption and taking credit for the capitulation on oil, arguing that it’s a panic response to rising Conservative popularity in Atlantic Canada
Which brings us to the third point – the political fallout. It’s not that the affair makes the possibility of a Poilievre-led government any more palatable. What it does is add further evidence that the Trudeau-led Liberals have lost their way. Their capitulation on the carbon tax was not only politically brain-dead, it was a craven acceptance of their opponents’ exaggerations and half-truths.
An op-ed piece in Friday’s Globe and Mail by Rachel Doran and Trevor Melanson of Clean Energy Canada puts it well.
“…Whether last week’s announcement was a single stumble or a slippery slope, accepting their opponents’ premise – that this was about affordability – represents another kind of misstep: unleashing a political domino effect that’s likely to end with Canadians thinking that carbon pricing, as opposed to fossil fuel inflation, has been the culprit for skyrocketing heating oil prices and surging household costs. In short, the government failed to communicate.
“A quick reality check: From 2020 to today, the carbon price on heating oil increased by 12 cents a litre as the average price for heating oil shot up 75 cents. The real drivers of rising home heating oil prices are wars and the Organization of the Petroleum Exporting Countries, not a climate policy that leaves 80 per cent of Canadians under the federal policy better off financially, thanks to quarterly rebates.”
Poilievre was right, the Liberals panicked. Instead of looking at poll numbers they should have been checking oil prices and provincial government policies, and doing some math. As the op-ed notes, oil prices are higher today than they were in 2020. But in Nova Scotia, location of 60 per cent of the region’s oil heating households, average monthly prices to the end of September were 10 per cent lower than last year, according to Statistics Canada figures. In addition, Nova Scotia is offering assistance of $600 for families earning up to $75,000 or single-person households up to $55,000.
And then there are the rebates. Background information released with the exemption announcement says the carbon tax on heating fuel, if allowed to stand, would have cost the average homeowner $261 a year. If that average homeowner was part of a family of four, a single quarterly federal carbon tax rebate – $264 – would more than cover the carbon levy. One and a half rebate cheques would be needed to offset the tax for a couple, but they would still have almost $500 in rebates remaining to offset the impact of carbon pricing at the gas pumps, the grocery store or wherever else the carbon tax is blamed for price increases.
In addition to their failure to explain that the impact of oil bills on family budgets is likely to be less this winter than last, Rachel Doran and Trevor Melanson point to another aspect of the Liberals’ botched communication.
“Now more than ever, the federal government must show Canadians that climate action and affordability are two sides of the same coin. Instead, Ottawa allowed itself to be consumed by political theatre, which painted this as an admission that Mr. Trudeau’s signature climate policy was making life more expensive for Canadians, just as his Conservative opponents had claimed for years.
“The truth is quite the opposite…Earlier this fall, a Clean Energy Canada study found that Toronto households that ditch fossil fuels in favour of electric vehicles and heat pumps can shave $800 off their monthly energy costs; in Nova Scotia, the savings add up to $940. Those numbers include equipment costs: They assume you buy an electric vehicle instead of a gas car, and a heat pump instead of natural-gas heating and air conditioning…But that is not the story spinning out of Mr. Trudeau’s announcement. The federal government is now defending a story when it should be telling one.“
The past failure of the Liberals and their large experienced contingent of Atlantic region MPs to tell that story is even more devastating when you consider the gift their panic-stricken pork-barrel response has handed the Conservatives. Until now, Poilievre’s campaign has been based mainly on falsehoods. The Liberal move has not only endorsed those distortions, it has provided the opposition with some legitimate questions. For example, how can the Liberals justify giving a tax break on home heating oil to a wealthy mansion dweller in southend Halifax while denying it to a low-income family heating with natural gas in northend Winnipeg or downtown Regina?