Canadians aren’t crazy to think that carbon pricing is hurting their pocketbooks

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The Prime Minister told The Canadian Press that the Conservatives have unfairly but successfully scapegoated carbon pricing for why everything costs so much. But Justin Trudeau is better to look in the mirror as he examines Pierre Poilievre’s persuasiveness.

Why is the Conservative Leader’s “Axe the Tax” mantra so potent? First, because people stretched by mortgage payments and grocery costs are looking for clear and simple solutions – even though Mr. Poilievre’s answer might be far from complete.

But also, pointedly, because there are actual costs of the carbon price, and because the Liberals ignored regional and sectoral concerns about their signature policy until it was politically expedient to do otherwise. This undermines the Liberals’ moral arguments in favour of carbon pricing.

You might have heard recently, a few times, that there are many individual Canadian households that benefit from the carbon prices rebate. About 80 per cent of residents in eight provinces receive an annual climate action incentive credit that largely exceeds what they pay in carbon taxes. Industrial levies are invested in clean technology.

When it comes to the increased costs of living that Canadians are struggling with, the Bank of Canada says carbon pricing contributes only a small amount to inflation. If the current price of $65 per tonne of GHG emissions were eliminated altogether, it would only lower inflation by 0.6 percentage points – for just one year. Other inflationary pressures would remain.

And there is a cost to Canada doing nothing on climate change. Where the Conservatives should have their own policies, there’s only a gaping hole.

But Canadians aren’t crazy to think carbon pricing costs something. The government doesn’t talk about the fact the Parliamentary Budget Officer (PBO) found last year that carbon pricing leaves a majority of households financially worse off once its impact on the economy is considered. There will be reduced growth in employment earnings and investment income resulting from higher carbon costs, the report said. The PBO said the highest-earning 60 per cent of households in Ontario, Manitoba, Saskatchewan and Alberta are worse off under carbon pricing than if the policy did not exist, while the bottom 40 per cent are somewhat better off.

The idea that carbon pricing is required equally across the country has long been in question. No one in Ottawa appears to have taken any umbrage with the fact the price on pollution in Quebec is lower than what is demanded in other provinces, including emissions-heavy Alberta and Saskatchewan.

But this October, the Liberals cynically demonstrated that carbon pricing does sometimes pinch, even with rebates, and they are willing to provide some selective relief. This of course was the message contained in Mr. Trudeau’s announcement of a three-year carbon tax pause for home heating oil. The decision skewed heavily in favour of households struggling with costs in Atlantic Canada – pointedly also where the Liberals were watching their once-strong approval numbers run into the ditch.

There is also no such quarter for farmers, a voting group the Liberals have little chance of wooing any time, any place. Early this month, a vote in the Senate left in limbo a private member’s push, Bill C-234, that sought to remove the carbon price from natural gas and propane used by farmers for heating or cooling their barns, or running their grain dryers. This is despite the fact many farmers argue they have no option but to use fossil fuels in their operations.

In the CP interview published this week, the Prime Minister repeated there will be no additional carve-outs, no more exemptions on carbon pricing – but something would be done to help the northern territories and First Nations. Recently, Ontario First Nations announced they would seek judicial review of the policy, saying carbon pricing unjustly and disproportionately burdens their communities.

A carbon levy might be the purest form of pricing GHG pollution. But it’s tricky politically, because it’s transparent – it’s not hidden away in regulations. As the price moves toward $170 per tonne by 2030, it’s going to be an increasingly tough sell. Our primary trading partner, the U.S., is taking climate action with no carbon tax (and no cap on oil and gas emissions, either).

For too long, this government has treated knock-on effects or disparities as figments of their political enemies’ imaginations. To state the obvious, the governing party would do better to not grant precious exemptions based on nakedly political calculations. And it should be frank with Canadians that yes, many will get rebates, and we will have coherent climate policy. But a price on carbon will sting – for some more than others.

The resentment has grown to the point where Mr. Poilievre can provide only his version of the carbon price story and win, because Canadians are so incensed with the Liberals doing the same.