Trudeau in a hard spot after carbon tax flip

By Althia Raj
National Affairs
November 3, 2023 Edition

If the backlash from opposition leaders and conservative premiers wasn’t enough for the prime minister to second guess himself, a public lashing from former environment minister Catherine McKenna and former Bank of Canada governor Mark Carney blew open the disappointment in Liberal circles Tuesday and raised more questions about the soundness of Justin Trudeau’s carbon levy pause.
“I would have looked for other ways to provide that support than the route chosen,” said Carney, a frequently rumoured potential Liberal leadership contender, at a Canada 2020 conference in Ottawa.
“Many Canadians are struggling (but) they’re struggling not because of the carbon tax,” he said. “They are struggling because of broad increases in energy prices and food prices, the impact on wages, the uncertainty that also is there, the lingering effects of COVID as well.”
Last Thursday, Trudeau, whose polling numbers plummeted over the summer, was flanked by his worried Atlantic caucus when he announced the government will stop applying the carbon levy on heating oil for three years. It will also double the climate action incentive payment for all rural Canadians and offer free heat pumps to lower-income Canadians in Atlantic Canada, who will also receive a $250 bribe for signing up. (Higher income Canadians can access a less-generous rebate program.)
“We heard very clearly from rural Canadians that they need more help right across the country,” said the prime minister, framing his announcement as an affordability measure. The government noted in its press release that a temporary pause in the carbon levy would save oil-heated households across the country on average $250.
Some Canadians deserve government assistance to weather the affordability crisis, said Carney, but Ottawa should have considered other options. For the climate plan to work, he suggested, people, businesses and investors need to know there is certainty in the system. “That certainty helps to incentivize change. So you can provide support over here, but keep this certainty there.”
McKenna was more blunt and clearly more frustrated.
“Hard things are hard,” she repeated from the stage, in an impassioned plea which threw shade at her former colleagues and suggested frustration Trudeau had fallen into a Conservative trap.
“Of course, we care about affordability. That’s all I thought about,” she told the audience of her tenure as environment minister developing the pan-Canadian framework on clean growth and climate change. “That is why I fought so hard … there was some fighting internally to make sure all the money went back,” she said. “And you can go look, that’s how it’s structured. The most vulnerable are better off.”
Carbon pricing is not to blame for the high costs of oil and gas, she stressed. “What’s happening with oil and gas? They were making historic record obscene profits, and are those profits going back to you folks? Are they going back to the most poor, the most vulnerable? No. They’re going back to shareholders who, by the way, most of them are not here in this country. And at the same time, these same companies are demanding that they get subsidies from taxpayers, that taxpayers actually pay to clean up the pollution they’re causing. I’m sorry, folks. That’s not a thing. That’s not where Canadians are at. We can’t be taken. So we just need to hold the course,” she said. “If we want to meet our targets, we can do it.”
She’s not wrong.
The Canadian Climate Institute’s independent modelling of the federal government’s emissions reductions plan shows that – for the very first time – Canada is on track to meeting its ambitious 2030 target if it follows through on all the policies it’s talked about. “It does put a huge pressure on implementation of those policies,” said its executive vice-president Dale Beugin.
In an interview with the Star, Beugin said Trudeau’s three-year carbon levy pause felt like a step backwards. “They are tackling that affordability question in a way that undermines the long-term credibility of their pricing policy,” he said.
Beugin and Carney have no issues with the doubling of the rural credit and praised efforts aimed at encouraging more Canadians to switch over to less polluting heat pumps. But like many who worked on or believed in the effectiveness of the government’s carbon pricing plan, they fear Trudeau’s backtrack now jeopardizes the overall climate policy.
Several also question the soundness of putting carbon pricing intentionally on the next election’s ballot – when the three-year exemption expires.
Their fears may have been confirmed last week when premiers lined up to request further carbon levy exemptions, for residents on natural gas for example, and Conservative Leader Pierre Poilievre proclaimed victory, suggesting everything the prime minister had said about the carbon levy for eight years was wrong: the plan would not make people better off.
Trudeau may have hoped he’d be seen as listening and acting on local concerns in a way that results in fewer emissions. But now that his rural economic development minister has gone on TV to suggest this was really about electoral politics, the prime minister must hold his pledge and ensure no more carve outs.
The credibility of his climate plan depends on it.