Front Burner - Is it the beginning of the end for Canada’s carbon tax?

Episode Date: September 18, 2024

Not long ago it seemed like the carbon tax was a fait accompli in Canada. Two elections were fought where this was a major issue, and the Liberals came out on top in both of them.But now, things are suddenly looking very different. It’s not just Pierre Poilievre and the Conservatives hammering the Liberals about “axing the tax,” a growing number of Canadians have negative views of it too. And last week, NDP Leader Jagmeet Singh — who has previously voted with the Liberals on their carbon pricing scheme — seemed to cast doubt on it too.So how did Canadians turn against the carbon tax, a scheme where most people actually get more money back than what they put in?Today we’re speaking to climate journalist Arno Kopecky about the life, and possible death, of Canada’s carbon tax.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. Not long ago, it seemed like the carbon tax was a fait accompli in Canada. Two elections were fought where this was a major issue,

and the Liberals came out on top in both of them. But now, things are suddenly looking very different. It's not just Pierre Polyev and the Conservatives hammering the Liberals about axing the tax. A growing number of Canadians have negative views of it. And last week, NDP leader Jagmeet Singh, who has previously voted with the Liberals on their carbon pricing scheme, seemed to cast doubt on it too. When he was asked by reporters whether he would support the tax, Singh said this. We want to see an approach to fighting the climate crisis where it doesn't put the burden on the backs of working people, where big polluters have to pay their fair

share. That same day, BC NDP leader David Eby, who's in a tight race to remain premier, also said that BC would scrap its long-time carbon tax on consumers while continuing to tax big polluters if Ottawa allowed it. So how did Canadians turn against the carbon pricing scheme, one where most people actually get more money back from it than what they put in? Today I'm speaking to climate journalist Arno Kopecky about the life and possible death of Canada's carbon tax. Arno, hey, it's so great to have you. Hey, Jamie, it is great to be with you.

So there was a time not that long ago when it was the Conservatives who were promoting and introducing carbon pricing schemes in this country. conservatives who were promoting and introducing carbon pricing schemes in this country. And who were some of the federal and provincial conservatives introducing these kinds of measures? Indeed, the idea of a carbon tax and a carbon price started out as a conservative idea because it's a way to avoid regulations and let the market take care of problems on its own. So this started out, Alberta was the very first jurisdiction in North America to have a carbon price under Ed Stelmack in 2007. They introduced the price on large industry. We're the first province to legislate emission targets, and our plan will also conserve water and energy. And I commit to energy efficiency legislation. B.C. followed a year later. In 2008, we had the first actual, you know, including consumer carbon tax.

That was under what was then called the B.C. Liberals, but they were and are a conservative government. For us, if there was a next step and we're not there yet, that's where we would go. Increase the carbon tax. Well, it's worked. It's worked. That's the thing about it. It's a pure carbon tax that is revenue neutral. I can't leave that part out. That really makes the difference. The current leader of the B.C. Conservatives is John Rustad,

and he was a member of that B.C. Liberal Party back in 2008 that brought in the first carbon tax. Federally, Preston Manning was in support of the carbon tax in 2014. So I say if your primary concern is to move that petroleum to international markets and the American market, then let's deal more effectively and positively with these negative environmental impacts, which are the biggest obstacle to that objective. these negative environmental impacts, which are the biggest obstacle to that objective. And there's a lot of... Michael Chong, who is a prominent MP today and was a leadership contender for the Conservative

Party, he had a carbon tax proposal. So yes, this started out and for a long time was a Conservative notion and no longer is. And when you say that, you know, at the time, at least they liked it because it was a way for, you know, the market to kind of do its thing. Just elaborate for me a little bit on what you mean by that. Sure. So if you recognize that carbon emissions are a problem, the question is, what do you do about them? Conservatives have historically been a party that favors letting markets and businessmen deal with these issues on their own and to incentivize markets to find solutions, as opposed to imposing regulations like a cap on emissions

or production of oil and gas. Those kinds of policies conservatives have been against. And so they, back in the days when conservatives could still acknowledge the severity of climate change to some extent, they said, okay, our solution, let's tackle this issue by empowering the market to deal with this. And how will we do that? We will put a price on carbon and then the people will find the most efficient way on their own of burning less fossil fuels without us having to be a nanny state and tell them you may not burn more than this. Here's the price, you guys figure out the rest. That's the idea.

So let's fast forward a bit then. Justin Trudeau's liberals, they win in 2015. And not long after, he says he's going to be putting in this carbon pricing scheme, a consumer carbon pricing scheme. And we very quickly see a huge amount of backlash from conservatives. A lot of people might remember in 2018, McLean's had this really kind of infamous title, The Resistance, right? And it was a photo of four conservative premiers and then federal conservative leader, Andrew Scheer. They're on the cover and they're looking real serious. And the thing that they're resisting was the federal carbon tax. And so how do you think that things got to that point, right, where this was such a galvanizing thing that so many

conservatives were against it? Yeah, by the mid 2000s, conservatives had completely turned around through a number of coinciding factors, I would say it really kind of started with the financial crisis of 2007 and eight, that really put Canada in a tough, like muster the world in a tough fiscal position. And conservatives were in charge, and they have always been friendly to oil and gas. And this really made them feel okay, well, oil and gas is our ticket out of the financial dangers of this financial crash. At the same time, on the other side, climate issues and climate crises were starting to mount up. And so climate activists and Indigenous groups together were really mounting a new force of pipeline activism, anti-pipeline activism here in Canada with Northern Gateway. The hell-sucked First Nation of Bella Bella had planned quite the welcome for the committee evaluating the merits of the Northern Gateway. Most of the town came out to protest and then there were the high schoolers who began a hunger strike. Nothing to eat for 48 hours, just water. As well as in the U.S., shutting down the Keystone Pipeline. Hey, Obama, we don't want no pipeline drama.

And so that created this sort of a perfect storm of environmentalists and progressives on one side and conservatives and pro-oil folks on the other side. So Trudeau actually campaigned in 2015 with a promise to institute a carbon price. And then he followed through with that promise when he won. And it, I think, is also partly a sign of our times that as things have gotten more polarized, there are these all carbon taxation and environmental issues are not the only example, but they are a prominent example of what one side is for, I must be against. And I think the carbon tax is actually one of the most striking examples of that dynamic in our politics today. So even when it came in, I think it was 2019 when it

finally came in, right? And there's been a backlash against it the whole time. But ultimately, there were a couple of elections where this was a major campaign issue. And the Liberals won both of those elections. I was just looking back at a story from the day after the 2019 federal election where my colleague Kyle Bax wrote, quote, We learned that a majority of Canadians support political parties that promote a carbon tax in one form or another. Roughly two thirds of voters marked an X by the name of a Liberal, NDP, Green, or Bloc Quebecois candidate. Right. So, you know, these are all parties that supported the carbon tax. So for a lot of people, I think it felt like it was done, right? And now absolutely, it does not feel like that. We're

seeing huge amounts of public backlash against it. An Abacus poll released in January found that 44% of respondents viewed a carbon tax negatively. And so what happened? What changed? Well, there was yet another perfect storm starting in 2020, first of all, with the pandemic. And then in 2022, the war in Ukraine and combined with the supply chain crisis and the affordability crisis that we're still grappling with today. And I think that is what really brought this issue back from the dead, that Canadians, like everyone in the world, were suddenly grappling with this insane inflation. And it rose to about 8% was inflation at its peak in June of 22. In June of 22, inflation was at 8%. The price of gasoline at that point was over $2 a liter as a national average. And it was two or three months after that peak that Pierre Polyev became leader of the Conservative Party.

And the scapegoat that Pierre Polyev so masterfully chose to base really his campaigning on both to become leader of the Conservative Party and ever since to become the prime minister of Canada, he identified the carbon tax as the scapegoat, as the cause of all of our inflationary woes. This is a prime minister whose double housing costs, he sent 2 million people lining up at food banks, 8,000 joining a Facebook group, learning how they can eat a meal out of a dumpster. And now his best solution is to hike the tax on their heats, on their homes, on their fuel, on their food. If he really believes in it, why doesn't he call a carbon tax election now? Credit where it's due. He has been a dog with a bone, just hammering home that message. It is a very easy message to hammer home

because nobody likes a tax even at the best of times. And so I think that's really what changed is that this really massive burst of inflation became a really great opportunity for conservatives to say, oh, look, you know what's causing all of this expensive groceries and gas and housing and everything in between? It's the carbon tax. In the Dragon's Den, a simple pitch can lead to a life-changing connection.

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and just do a very quick recap of how this whole carbon pricing scheme actually works because it's so central to this conversation. of how this whole carbon pricing scheme actually works because it's so central to this conversation. So basically, the idea is that the government puts this extra charge on oil and gas for consumers and businesses and industry. And so for consumers like you and me, we pay more when we fill up our cars or heat our homes. And the idea is that the tax increases over time,

which incentivizes people to use less oil and gas. But there's this rebate, which the government pays out to consumers four times a year. And so talk to me more about that rebate. Like, what do we know about on the whole, how many Canadians are getting more money back than they're putting in? The average family of four in Canada gets $1,800 a year in rebate at the current price. That goes up as the carbon price goes up. 80% of Canadians get more back from the rebate than they pay in to the carbon tax. Now, of course, these numbers vary wildly

depending on where you live and what you do. Some people commute, but there are also exemptions placed. For example, farmers don't pay a carbon tax on their farm equipment for their tractors and things like that. Rural people get more because they're expected to be driving more. People have thought about all of these things very carefully, the people who designed this tax. The idea is to incentivize you to find ways to drive less and to burn less fossil fuel, because you still get the same rebate. You still get to

keep all the money in your pocket. And so if you find ways to spend less, then you come out even further ahead. Okay, so given all of that, on Thursday, the NDP leader Jagmeet Singh made some comments that some have interpreted as opposing, at least, the liberals' version of carbon pricing. So, you know, what you just explained, basically. He didn't actually say he opposed the carbon tax, which is how some people have interpreted, but he did say, quote, we want to see an approach to fighting the climate crisis where it doesn't put the burden on the backs of working people. And as you just said, according to the parliamentary budget office,

80% of Canadian households will get more money back than they pay from the carbon tax, which surely Singh does know. So what did his framing about the backs of working people say to you? framing about the backs of working people say to you? It tells me that he is kind of capitulating to the framing that conservatives have managed to establish. And he clearly feels that enough Canadians now agree that the carbon tax is the cause of inflation, which is untrue. But I think he feels the political fortune is now in joining that chorus, which is what makes it so disappointing. Singh had previously been in favor of it. The rational truth of it is that the carbon tax is not on the backs of workers. In fact, the less money you make, the more you come out ahead with the rebate. Those 20% of people who are paying more into the carbon tax than they are getting back from it are almost all, not all, but almost all the people who are flying around on vacations and have multiple cars and have a lot of money to spend and burn on fossil fuels. So I just think Singh has made, unfortunately, a calculation that, you know what,

Polyev is winning this thing. I got to distance myself from the liberals in every way, shape, and form I can. And so I'm going to jettison my support for the carbon tax. It's such a thing, though, right? I mean, we've been hearing this even from liberals. Like, I'm thinking of the premier of Newfoundland and Labrador, Fury, right? On the carbon tax in particular, the prime minister has tried to bait me at times with certain ad hominems and name calling almost. But look, we have a very different opinion on the carbon tax. It's not right for the people of the province. That's not to say that we don't believe in fighting climate change. We certainly do,

but this policy is wrong. Do you think that they're making the same calculations? Yes, I think it's all, you know, a tax is very unpopular. It's always there's a structural advantage, I think, to people who just want to simplify the issue and say, look, this tax is causing life to be more expensive. Case closed. You know, it doesn't take me a minute to say that. Ask the tax. Case closed. Whether that makes it inevitable that it has to go. I mean, maybe that's where we're at. It's hard to say. But, yeah, I think absolutely a lot of politicians from all spectrums are feeling like they're seeing some sort of writing on the wall. And, you know, we live in a democracy. If the majority of people come to believe a certain thing and say they will vote you out, if you don't follow through on that belief, then that puts you in a real tricky

position if you want to stay in office. Look, you know, you talked earlier about how, you know, people who live in rural areas get more money and how this has been thought out. But one big thing that you do hear a lot about is that this is fundamentally unfair to people who have to commute a lot, mostly around the major cities. So if we take Toronto and Vancouver as examples, these are extremely expensive cities. A ton of people increasingly cannot afford to live in them. And a lot of people commute actually like three or four hours round trip per day to work in these cities. They pay a lot of money in gas. And so what about the argument that they are being sort of unfairly saddled with too much of the burden of this, that maybe they're not all getting more money back than they're shelling out? You know, I have a lot of

sympathy for that. And I don't want to be glib for a moment. I did crunch some numbers. I think you have to be driving about 1,000 kilometers a week in order to be paying more in gas tax, in the carbon tax, than you're getting back from it. So I'm not sure that a lot of Canadians are falling into that margin. I also think it's true. Well, I know it's true. I also think it's true. Well, I know it's true. The best selling vehicle in Canada right now is SUVs and pickup trucks. 86% of new car sales tax is to encourage people to make wise decisions. And again, all of this has to be considered in light of the fact that we are dealing with a climate crisis. And the idea that you can solve this massive existential globally crunching problem without anyone

having to feel any pinch or with an absolute equality of where the pinch is delivered is kind of a fantasy. I think I don't want to be glib. I know people are suffering and absolutely that stuff has to be addressed. But again, it is a fact that 80% of Canadians are better off from the rebates than they would be without them. I want to just read you a quote from that 2018 Paul Wells piece, The Resistant. Sure. So he interviewed Ian Brody, Stephen Harper's former chief of staff. And Ian is talking about those suburban and exurban ridings in Toronto, for example, where there are a lot of commuters who, you know, whether warranted or not, feel like they're bearing the brunt of this. Right.

And the quote is essentially that a lot of those places around the cities are swing ridings that are up for grabs every election. Yeah. And Brody says that this issue is, quote, therefore geographically very efficient at alienating voters in ways that are easy to take advantage of in a first-past-the-post system. How much do you think that adds to the difficulty of making this kind of policy survive in this country, in a place like Canada? Is there something very specific going on here? I think that the urban-rural divide is a really defining trait of Canadian culture and politics today. And this is probably a perfect example of that, what you said, and Ian Prody's absolutely right. And it's true. I won't sit here and say that a person who drives

200 kilometers every two days, there's no difference between him or her and somebody who does not. Absolutely, they pay more. So rather than argue that point, when I hear those kinds of things, the thing that I think of is, okay, let's figure out a different way. What's your alternative? Absolutely, let's come up with something that's more fair to those sorts of folks. And when you ask that of conservatives across the board, from Pierre Pauliev on down to Doug Ford, Danielle Smith, John Rustad in my province, provincial, federal, conservatives, not a single person has an alternative to the carbon tax. These people aren't serious. You look at John Rustad, the leader of the conservatives in BC, who simply

denies climate change is a problem. He just recently was on Jordan Peterson's podcast and he said, How is it that we've convinced carbon-based beings that carbon is a problem? And next door, Danielle Smith has slammed all renewable energy, new renewable energy projects, especially wind and solar, have just basically been cancelled. Pierre Polyev promises to build pipelines in every direction. And if he's cornered on, OK, what's your climate policy? He speaks sort of vaguely about opening up, you know, cutting red tape for clean power projects. But he's always very vague. They all deny the problem.

They don't have alternatives. And that's what is especially irksome about this conversation. What about the argument that the tax should just be on the big polluters, on the corporations, right? Not on individual consumers. Again, this consumer tax is designed to change consumer behavior. I'm all for heavy industry paying its fair share and more than its fair share. Heavy industry has a history of transferring those costs down. One thing that we haven't talked about is the impact of extremely high oil prices in 2022, back when gasoline was $2.07 average. That was because of the war in Ukraine. And that just, you know, Russia cut oil off oil and gas off, there was this huge global crunch. And the world's oil companies,

including Canada's made the biggest profits that they've ever made in history. And gasoline rose incredibly and inflation rose incredibly. And since then, gasoline, I just checked today, gasoline, the average now is $1.56 is the national average per liter. But the carbon price is up 7 cents from what it was. So gasoline went down 50 cents, while the carbon price went up. So again, my point here is if you're blaming the carbon tax for inflation and cost of living, you are being completely diluted. The carbon tax is responsible for 0.15% of inflation. The war in Ukraine added an order of magnitude more than that. Global food shortages because of extreme weather that has hammered harvests all over the world also has raised food prices by an order of magnitude more than the impact of the carbon

tax. So it is a total distraction to blame the carbon tax for the very thing. What is the carbon tax trying to do? It is trying to address our total dependence on oil and gas, which right now Canada is totally dependent on oil and gas, which right now Canada is totally dependent on oil and gas. You're making this really impassioned argument, But, you know, considering we are seeing politicians of all stripes, you know, come out essentially against this thing, considering how toxic it seems, at least at the moment,

do you think there is a way back? Or is it becoming really politically unviable here? I mean, can you kind of, can you push back on this with, you know, if you're the liberals, right? Yeah, with an attempt to, you know, explain and educate and tell people more about your side here. I mean, they have had quite a long time to do that. Absolutely.

Yes. I mean, I think probably this is a requiem for the carbon tax. It is absolutely toxic now. So what do we do next? I mean, maybe we can chat again after the next election and see where we're at. But I would point to the United States as an interesting alternative where politicians were like, no, public is never going to swallow a carbon tax. Nope, not going to work. And so they said, okay, let's screw that. Let's do something else. And they did, you know, basically a version of the Green New Deal that they called the Inflation Reduction Act, aptly named, I would say. And they focused on spending a lot of money

on manufacturing, investing in growth and businesses and tax subsidies for all of these, you know, solar, wind, grid efficiency measures. And, you know, they just spent hundreds of billions of dollars on that instead. And that has been very popular, very successful, easily the biggest, most sweeping suite of climate legislation in world history. All right. Arno, this is really interesting. Thank you so much. Always great to talk to you.

Really appreciate it. Oh, Jamie, thanks. It's so great. And thank you for bearing with my impassioned defenses of arcane tax policies. I really enjoyed it. I love listening to people defend arcane tax policies. Defend enjoyed it. Like just I love listening to people defend arcane tax policies. Defend the indefensible. Yeah. All right. That is all for today. I am Jamie Poisson. Thanks so much for listening.

Talk to you tomorrow. Thank you.