What does the carbon price increase actually mean for you?

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Jordan: This year marks the fifth anniversary of Canada, either taking the climate crisis at least somewhat seriously or beginning a slide towards socialism. It depends on who you ask.

CLIP: Frustrated. That’s how many protestors feel Monday following Ottawa’s increase of the carbon tax.

CLIP: We cannot afford this government and this socialism that’s coming at us.

Jordan: The carbon tax or the price on pollution, again, depends on who you ask, is not new. It predates the last election. It has increased before and it will increase again. But this week in the middle of an affordability crisis and frankly a popularity crisis for the federal government, this year’s increase became a national issue complete with opposition attacks, protests on highways around the country and the Prime Minister defending it the exact same way that he has four years,

CLIP: The price on pollution is increasing along with the Canada carbon rebate.

Jordan: We are not here today to argue the merits of carbon pricing that has been debated to death and we won’t change your mind. We are here to figure out quite simply, what does an increase in the carbon price actually mean for the wallet of the average Canadian? Why is this year’s increase so controversial and after a year in which the government carved out a small piece of this tax and a province refused to collect another part of it? Is the government’s singular climate policy in danger of disappearing or is that just political posturing? I’m Jordan Heath Rawlings. This is The Big Story. Cormac Mac Sweeney is the Parliament Hill reporter for City News and for us, he’s not quite on Parliament Hill today because he is home with sick kids, but he’s still covering everything that happens there. Hello, Cormac.

Cormac Mac Sweeney: Hello. You got to love those daycare colds.

Jordan: Hopefully the end of winter brings the end of those daycare colds, but it also brings an increase in the price of carbon. When did it go up? How much did it go up to?

Cormac Mac Sweeney: It went up April 1st, which happens to be the start of the fiscal year, but also happens to be April Fool’s Day, which of course, opponents to the carbon tax made much use of in their criticisms. But the price on carbon went up about $15 per ton of pollution to a total of now 80 bucks per ton. And just to lay it out for listeners, Canada has two different carbon pricing systems. One is for big industry where companies pay the price of their share of their actual emissions. The other one though that we’re talking about now is the consumer carbon levy, which is applied to fossil fuel purchases. I think there’s something like 20 fossil fuels that apply to this, such as gasoline to fill up your car, natural gas and diesel. So the price change on April 1st really does affect that consumer levy, and it is applied in every province and territory except for British Columbia, Quebec, and Northwest Territories. That’s because they have their own provincial systems. When this first came into being, there was a choice for provinces. Either you create your own systems that hit a specific target that the Fed set out, or you can just accept the federal carbon pricing system, which most provinces have. BC and Northwest territories have their own carbon prices. BC has had one since I believe 2008. And Quebec has a cap and trade system, so not quite a carbon tax. The way we understand it a different system altogether, but it still hits those federal targets. So that’s why Quebec has it and the rest of the country is dealing with the federal system.

Jordan: That’s a great overview of what we’re talking about today. In terms of this increase on April 1st, why did it increase? Is this the government making a choice? Is this the result of a formula? Was it pre-planned? Like what is actually behind this?

Cormac Mac Sweeney: It’s actually a little bit of all of that. The carbon tax increases were first set out back when the carbon tax was first implemented in 2019. That’s when every jurisdiction in Canada had some sort of price on pollution. Now, it started back in 2019 with $20 a ton of pollution, and the plan was to increase it at $10 per ton, but by 2023, that increase rose from $10 to $15. So anyway, it keeps adding up and we’re now at $80 a ton. By the year 2030, we’re going to be hitting $170 a ton, and that’s both based on a calculation of using this to reduce Canada’s overall emissions. By a certain point, of course, the carbon tax isn’t the only measure that we’re using to try and reduce our emissions, but our climate goal as set out in the Paris Climate Agreement, is to try and achieve 40 to 45% emissions reductions below 2005 levels. The federal government is actually now having discussions on what to do beyond 2030. And that of course, is assuming that this government is still making those decisions because the question is after 2030, do we just leave it at $170 a ton or do we increase it further to try and better achieve our goals? And the 2030 target is just one target. The next target beyond that is 2050, and that’s when Canada aims to be net zero as a country. So I think the government’s trying to see where we’re at getting closer to 2030 and then sort of readjusting and seeing what we need to do to hit that 2050 target. But of course, again, governments change. So it’s not clear that we’re going to have a liberal government in 2030, let alone 2050. So we’ll have to wait and see how this sort of plays out.

Jordan: There has been, especially in this particular instance, a lot of controversy, a lot of political fighting over the price on carbon. And its increase, and we’ll discuss that in a second because it’s interesting to try to figure out why this year’s increase has been so much more of a hot button topic than in years past. But just first because this is how it actually impacts our lives. Can you explain what the increase means for the average Canadian?

Cormac Mac Sweeney: Well, in terms of this increase, what it actually means for Canadians is going to be an additional 3.30 cents per liter. Basically, that’s it. You’ll mostly notice it at the pump, at the gas station, but that 3.30 cents is on top of the other increases that we’ve had since 2019. So in total, if you’re stopping at a gas station and you see, let’s say unleaded is a dollar 50 per liter, roughly 17 cents of that buck 50 is thanks to the carbon tax. And of course there are provincial taxes. There’s the federal excise tax as well. That’s all on top of that. There’s a lot that goes into the price of gasoline. Diesel’s a little bit more because it’s, I believe, a more carbon intensive fuel. But on average, when it comes to heating your home, it’s going to be adding, I think $65 to heating your home throughout the whole year. So in total, a carbon tax has added about 380 bucks for the whole year for heating your home. But the one thing we haven’t discussed yet, we’ve talked a lot about what the tax is. There’s also the carbon rebate, the money, the federal government back to Canadians to try and make sure that the tax is not hurting your pocketbook, and that is also going up along with attacks.

Jordan: Okay. I want you to explain this because this is something that I played a couple of clips in the intro. One is a whole bunch of protesters that showed up at highways this weekend to protest the increase. The other was Prime Minister Trudeau explaining as he often has that as the price of carbon goes up, so does the carbon rebate, how is it applied and how is the average person experiencing that?

Cormac Mac Sweeney: So we’re getting these checks quarterly, and this is made to make sure that most Canadians are not paying much and it’s kind of tied to your income, but also the province. You’re living in different factors that are taken into account with all of this, and it’s gone up now. So the first checks of this new year with the increased amount are going to be sent out April 15th. And basically the feds say, we’re going to collect all the money that comes in from the federal carbon tax, and there’s a whole system in place to require provinces to report their emissions. And then also there’s a mathematical breakdown of how that trickles down to the people and what they’re in line for a rebate. So just to give people an idea, so for this year, this coming fiscal year, the checks will be anywhere from $880 in PEI, which I believe are the lowest checks across Canada to as much as $1,800 in Alberta. And that comes in four payments three months apart throughout the year. 80% of Canadian families, according to the parliamentary budget officer, are getting more money back through this rebate than they’re actually paying in the carbon tax. So people who make a lot more money are not going to be getting as much back, but most other Canadians are getting more money back as a result of this. Now, there is a dispute about that, and you’ll hear true statements from both the leader of the opposition and the Prime Minister to argue their points. Walk us through that. Yeah, the parliamentary budget officer released an updated report, I believe at the end of March last year, talking about the carbon tax and sort of readjusting his figures and looking forward to the way things are going to impact Canadians. And he did say that most households will see a net gain from this carbon tax. The eight out of 10 families are going to see a net gain from the carbon tax and rebate combined that they’re getting more money back than they actually pay in the tax. However, he also said when both fiscal and economic impacts of the fuel charge are considered, and I’ll quote here, we estimate that most households will see a net loss based on our analysis. Most households will pay more in fuel charges in GST, he lumps in GST with that as well, as well as receiving slightly lower incomes than they will receive in the climate action incentive payments. Now, that’s the old name for the carbon rebate, which has a new name because of political issues. But we can get to that in a moment. You’ll hear both the official opposition and the government argue from the same parliamentary budget officer report, and they’re both quoting the same report that says, when you take a lot of different things into account, it’s a net loss. However, when you look at the straight money that people are paying in the carbon tax and the money that they’re getting back from these rebates, they are better off. So pick your poison. Yeah, everyone’s picking from this report to prove their own arguments.

Jordan: I mentioned there were protests across highways in Canada this weekend. Opposition leaders have been hammering the government for this increase. This isn’t the first increase. It won’t be the last increase. Whether or not you believe it puts a little more or a little less money in Canadian’s pockets. Why has this year been so controversial in terms of the political fight over this relatively scheduled increase?

Cormac Mac Sweeney: Well, there are actually several different factors, and we can go back a little while to give some context to this in case people have forgotten or just weren’t paying attention since 2015, even beyond then the carbon tax debate has been going on for quite a long time. But the Trudeau government has fought three elections on this. Basically, they’ve been talking about it since 2015 when they won their majority. They brought this in, they fought an election in 2019. They fought another election in 2021. They probably thought that this would be the end of this debate because they fought so many elections on the carbon tax and they’ve won. However, after the pandemic, the country and the world was faced with a cost of living crisis. Inflation kept going up. That led to a ton of frustration from Canadians. Many people, conservative leader Pierre Poilievre saw an opportunity and he is not changing the language that the conservatives have had on the carbon tax because way back in the Harper days, I think back to 2008, Stephen Harper as Prime Minister was calling it attacks on everything. And that’s a quote that you’ll hear from Pierre Poilievre quite a bit as well. So the party’s long been opposed to a carbon tax and Poilievre has basically tied the carbon tax to any affordability challenge that Canadians are facing. The cost of homes is too high. Well, he says the carbon tax is a reason why the supply is for building. Homes are getting higher, grocery prices are up. Well, he’s blaming the carbon tax for the transport of food. So poll is seized on the opportunity. And politically, it’s been a huge winner for him. His party’s been riding high in the polls for many, many months while the liberals have been suffering. Not only that, but he’s got some more support than he’s had in the past. More provincial premiers are adding their names to the list of opponents. And it’s not a surprise that there are a lot of conservative premiers who have been speaking out against this. But we even had at least one liberal premier and a liberal leader provincially as well, who are not as supportive of this. And then came along last year, the exemption for home heating oil that the liberal government made right now, as much as it’s a national exemption for home heating oil, I mean, we have to be clear, this is largely helping Atlantic Canadians who make up a bulk of the Canadians who use home heating oil still. And there were exemptions given a new program to try and get these new heating systems into the homes. But that gave critics an in a big in to say, this is proof. The government’s admitting their carbon tax is too costly. And basically that really reignited this debate. And it also upset a lot of environmentalists, people who believe in the carbon tax, were not happy with the Trudeau government at the time saying, look, you could have done this through more incentives rather than sacrificing your key environmental policy. And so this has led to a lot of reignited debate and it’s basically gotten us to this point where every April 1st when we’re going to see another increase to the carbon tax, there’s going to be a lot of talk about it, a lot of buzz from the official opposition. I think we’re going to be talking about this next year at this time as well as they try to hammer the government. And it’s been a losing issue for the Trudeau liberals as they’ve tried to navigate this and a new conservative leader who has taken the opportunity to really hammer them on it.

Jordan: So it’s one thing to say that this strategy is really working for the conservatives in the polls. It’s another to turn to policy and ask what beyond acts the tax do they propose? Does Poilievre have something he’s going to replace the tax with? Is there another way to put a price on pollution or what are they offering in return?

Cormac Mac Sweeney: Well, we actually don’t really have a full plan from the conservatives. There’s no serious national alternative that’s actually on the table at this moment. Of course, the slogans that Poilievre is using when he opposes the carbon tax are quite effective politically. What he’s promised in a vague way is to invest in green technologies instead of taxing consumers. The federal government’s doing that, but he wants to ramp it up. He says he wants to invest more in green technologies. He wants to cut regulations to get the green tech built quicker. Carbon capture and storage is a big part of that as well. But he also wants to look to the global stage and say that he wants to help move other countries away from dirty fuel sources like coal by exporting LNG liquid, natural gas out to them, which is cleaner burning fuel. And so through all of that, he says they’re going to reduce emissions not just in Canada, but around the globe. However, the issue is we don’t actually have a full plan from Poilievre and his team. We don’t see exactly what it is that they want to do, how much it’s going to reduce our emissions, what the cost will be for the economy, how much they’re willing to spend and put into this green tech, what the effect is going to be. There’s no fully costed plan out there aside from what we have from the government of the day. So I think we will get that eventually because election campaigns have to be won on policies with detailed expenses, and those campaign platforms are going to be key in this next election. We’re just not at that point yet anyway. And even though there isn’t a lot of policy from the conservatives right now, and I should say solid policy, there are ideas that they’re putting out there still. They’re winning the political battle in this. And all the while the Prime Minister has actually turned his sights onto premiers, and he’s been calling out premiers who are growing in numbers. Seven of the premiers right now are speaking out against the carbon tax. They’re calling for pauses, they’re calling for alternatives. And he said, I think his exact wording was Premiers would rather complain and make political hay out of the carbon tax than actually propose viable alternatives. And I’ve been seeing the headlines as well saying the Prime Minister challenges premiers to come up with their own alternatives, but that’s actually been in place since 2019,

Jordan: Right? Some of them have them.

Cormac Mac Sweeney: Some of them have them. Some of them had them before the National Carbon Tax was in place like BC Quebec has its cap and trade system. And the Prime Minister said, if you want to create your own provincial system, you just have to hit these targets however you want that to look, that’s up to you. It’s always been an option for years. It’s been an option. However, premiers are capitalizing on this battle between the federal government and themselves and calling for alternatives from the national framework without introducing their own alternatives. I will however say that we are starting to see some shift from the premiers on that. I believe Tim Houston out in Nova Scotia is presenting a plan. Wab Kinew, the new NDP Premier in Manitoba has also said that he plans on putting forward an alternative that won’t be the carbon tax. But Premier Moe said when they looked at it, it was too costly. And so this goes in this back and forth battle between the Prime Minister and Premiers now on top of the conservative leader in this battle over the framing of the federal carbon tax and the rebate.

Jordan: And in terms of the carbon tax itself, you mentioned the carveout last year. Our guest host, Melissa Duggan, spoke to you last month about Saskatchewan’s fight with Ottawa over collecting part of the tax. There are protests across the country, as you mentioned, criticism from a ton of premiers. The polls are not looking good. What’s the future of the government’s signature climate policy? Is this the beginning of, I guess, death by a thousand cuts to the carbon tax?

Cormac Mac Sweeney: Well, it’s definitely hurting the liberals politically speaking. They’re being hit left, right and center. They now have liberal leaders and premiers who are speaking out against this. So this is not going in the way that the Trudeau government would really hope that this debate would be heading, given the previous election wins that they’ve had while the carbon tax has been in place and been debated. You even had Ontario Premier Doug Ford just recently saying either the carbon tax goes or this federal government has to go Poilievre is calling the next election, the carbon tax election, even though we’ve had three elections on the carbon tax. But he wants to make this a wedge issue that he thinks will definitely help him, and it’s been helping him so far. The question is whether that anger and frustration about the affordability crisis will that last to the next election, which is not scheduled till October, 2025, will have to wait and see. But this has been a big problem for them. The liberal government has been forced to try and restructure the way it frames things. They’re facing a very skilled communicator in Pierre Poilievre. He is really hammering them on this. Their communication strategy on the carbon rebate on the carbon tax has not been up to snuff. And it kind of reminds me, and I am not the first to have said this, I know others who have been around a lot longer than I have covering politics who were probably there at this time, but it’s very similar to what Brian Mulroney was going through when the GST debate was happening in the late eighties. The GST actually wasn’t brand new tax in a way. It was actually replacing the manufacturer’s tax, which was hidden behind the scenes and charged to manufacturers. And then Brian Mulroney decided to bring it up front, put it on your receipts, say this is the GST, it’s a sales tax. And Canadians were not happy with it. And they let Brian Mulroney know, and he stepped down and his government went to defeat in the 1993 election, largely based on and axe the tax message from Jean Chrétien. There’s a lot more to it than that. I think voters were kind of done with the PC government at the time under Mulroney, but you’re looking at the situation that the liberals are in now. Oddly enough, in 1993, Jean Chrétien came to power with Acts attacks, and we still have the GST. I just want to point that out. He backed away. It was an electoral winner for, and then he kind of looked at it and said, yeah, if we want to get stuff done, if we want to slay the deficit, we need that income as a government. And so they kept it. So we’ll have to see whether Pierre Poilievre is a man of his word and will actually act this tax the way he says he wants to if he forms government, of course. But it’s posed a big challenge for the liberals. And on top of some self-inflicted wounds from the heating oil issue, it’s been a problem. And last week we had a few conservative premiers coming out to committee just to bash the carbon tax. And so this is something that is, I think Premier seed is a winner, the official opposition sees as a winner. The liberals are struggling to explain their whole system right now, even though it’s been in place for a long time. And the old saying goes, when you’re explaining, you’re losing. And that’s kind of reflected in the polls right now for the liberals.

Jordan: Cormac, thank you so much for this. I always understand policy and the partisanship that goes along with it better. After talking to you

Cormac Mac Sweeney: Anytime. I hope it wasn’t too convoluted in too many numbers For the listeners,

Jordan: Cormac Mac Sweeney on Parliament Hill, that was The Big Story. For more from us, including guess what, lots of episodes about the carbon tax. You can head to The Big Story podcast.ca. You can always send us feedback about the carbon tax or the price on pollution, or whatever you want to call it. We’d like to hear from all sides the way to get in touch with us. Email hello at The Big Story podcast.ca and via the telephone by leaving a voicemail (416) 935-5935. You’ve heard me ask you this before, and I will ask it again. If you want to show some love to this show, the easiest way to do that is by popping into your podcast player and leaving a rating or a review. If it lets you in. If it doesn’t, just sharing the show with your friends the old fashioned way. Good old word of mouth does wonders. Thanks for listening. I’m Jordan Heath Rawlings. We’ll talk tomorrow.