December 11, 2017
Martin Regg Cohn
Brown’s ‘People’s Guarantee’ promises change, but is it just change for change’s sake?
The Tories would replace Ontario’s cap and trade program with a carbon tax of their own that would end up pushing fuel prices significantly higher. But that kind of switch hasn’t been successfully attempted yet.
Change that’s not scary.
That’s the subliminal message emanating from Patrick Brown’s Progressive Conservatives as they push out a new campaign platform officially called “People’s Guarantee.” Guaranteed not to rattle you.
Underpinning the platform is a promise to deliver kinder, gentler, more reassuring regime change. And on the surface, it succeeds — by pledging to (more or less) stick with Liberal commitments on pharmacare, rent controls and minimum wages (albeit more slowly).
But there’s a catch: Change that’s not so scary — but definitely disruptive — on climate change.
It’s getting a lot less coverage than other PC commitments, but Brown would rip up Ontario’s existing cap and trade program. The Tories would replace it with a carbon tax of their own — as required by a federal “backstop” law — that would end up pushing fuel prices significantly higher (albeit rebated via income tax cuts and child care credits promised elsewhere in their platform).
Such a switch, from cap and trade to carbon tax, has never before been successfully attempted, as Ontario’s independent environmental commissioner, Dianne Saxe, pointed out to me in my weekend column. So why would Brown bother with an untried and unproven changeover at this stage of the game?
Change for change’s sake.
Environmental experts have been debating the relative benefits of rival systems for a decade, which is one reason Ontario took so long to make up its own mind. Last year, after years of foot-dragging, the province finally followed the lead of California and Quebec by linking up with their tried-and-tested cap and trade system.
No loony-left idea, it had been shepherded by the state’s then-governor, Arnold Schwarzenegger (a Republican) and Quebec’s then-premier Jean Charest (like Brown, a former federal Tory). Why do Brown’s Progressive Conservatives believe a system favoured by fellow right-wingers is so wrongheaded?
The PCs are ostensibly opposed to what the Ontario government does with money raised from carbon emitters. In their People’s Guarantee platform, the Tories cheekily dub it the “Liberal Cap-and-Trade Slush Fund,” brimming with billions of dollars paid by polluters.
Brown claims that the money is being squandered by the Liberals on patronage pals and pet projects. In fact, the spending is being scrutinized by the environmental commissioner and is allocated to mundane projects such as rapid transit, energy retrofits and bike lanes.
The PC platform document complains that “the Liberals . . . only seem to care about the growing yet still small share of the population who take public transit.” But even if Tories doubt the merits of funding bike lanes or mass transit, there is a simpler way for them to cut that “Liberal Cap-and-Trade Slush Fund” down to size.
Brown could simply rebate those cap and trade billions directly to taxpayers by making the system “revenue neutral” — just like his proposed carbon tax. In other words (and numbers), they could still take the money from polluters as the province does today, but without investing in supposedly suspect environmental measures — instead “using all the cap and trade revenues to finance tax cuts,” as Jack Gibbons, head of the Ontario Clean Air Alliance, says.
The appeal of their alternative carbon tax, according to Ontario’s PCs, is that the money will go straight back to voters through tax cuts. But there is nothing necessarily neutral about carbon tax revenues, as B.C. has just demonstrated: That province’s new NDP government has announced that proceeds from the carbon tax will now be invested in environmental projects to fight global warming — just like Ontario’s cap and trade regime.
So if the existing Ontario Liberal system can be made revenue neutral with a change in government, and the proposed PC carbon tax can be switched to a so-called slush fund on a whim, why bother switching systems at all? More to the point, given that many industries support a price on carbon as long as it is clear and certain, why create uncertainty by changing systems in mid-stream?
Comparing the rival systems this month, Dave Sawyer of EnviroEconomics noted that “on emission reductions, the cap and trade scenario outperforms the carbon tax scenario.” All this back and forth comes at a cost because “the down side is this policy lurching will erode confidence and expectations in carbon pricing, which undermines the price signal.”
It would also be costly to change midway through. Brown’s platform has budgeted $1.5 billion for “transitioning away from cap-and-trade and into a carbon pricing system,” noting that a PC government will “ensure that businesses are kept whole.”
Cap and trade is so difficult to understand that it’s hard to love, but it’s commendably flexible. A carbon tax, simple as it sounds, can be unhelpfully rigid in a mixed economy like ours, the environmental commissioner says.
Oddly, Brown’s Tories denounced a carbon tax for years, but have belatedly embraced it. Is this change for climate change’s sake, or merely for the sake of regime change?