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Opinion

Pallister must act soon on carbon-pricing strategy

Hey there, time traveller!
This article was published 19/6/2017 (1148 days ago), so information in it may no longer be current.

The time has come for Premier Brian Pallister to sign or get off the pot.

Manitoba remains one of two provinces that have not signed on to the federal Liberal government’s climate-change framework, which requires all provinces to develop carbon-pricing plans by 2018, or have one imposed on them.

According to the terms of the federal government’s "backstop" plan, all provincial carbon tax or cap-and-trade programs must be set a minimum of $10 a tonne (estimated 2.33 cents a litre on gasoline), rising to $50 a tonne (11.63 cents a litre) by 2022. If a province does not have a plan in place that meets the minimum threshold, Ottawa will levy a carbon tax and remit the revenue either to the holdout province or perhaps to taxpayers directly.

Why is Pallister being so stubborn? At first blush, it’s not because he doesn’t think there is a problem.

Pallister has been very clear that he thinks climate change is real and that some form of carbon pricing is appropriate.

He has also been firm in his pledge that his government will deliver a made-in-Manitoba tax scheme rather than just allow Ottawa to impose and collect its $10-per-tonne levy. Moreover, Pallister and his climate-change guru, David McLaughlin, have been working diligently to flesh out that homegrown strategy.

At the moment, however, Pallister seems stuck in neutral when it comes to delivering on a Manitoba carbon-pricing framework. It’s certainly a complicated initiative, requiring some nuanced tailoring to soften the blow to certain politically sensitive constituencies.

The big outstanding issue is Pallister’s insistence that Ottawa give Manitoba some leeway when it comes to the backstop price to be applied on carbon because of its heavy reliance on clean, renewable hydroelectricity. Pallister hasn’t been entirely clear on what he means by leeway, but we can probably extrapolate that Manitoba’s costly investment in hydro should be recognized by allowing Manitoba to impose a lower carbon tax than other provinces that emit more greenhouse gases.

The federal government has shown little interest in the Manitoba argument, choosing instead to warn the province that continuing to hold out could be a costly decision.

Ottawa is dangling a $2-billion carrot in front of all provinces in the form of the low carbon economy fund, which will ensure those that don’t have a carbon-tax scheme in place will have one by next year. Money from that fund will flow over the next five years to spur innovation in the reduction of greenhouse gasses. Manitoba’s share has been estimated at $66 million.

All Manitobans, but particularly farmers and businesses that generate greenhouse gases and consume large quantities of fossil fuels, need time to plan for the impact of a carbon tax. Pallister’s deliberations on this file have reduced the preparation time to about six months. There is an argument to be made that for some of those most affected by the new carbon tax, Pallister already has waited too long.

Increasingly, Pallister has begun to look like a man who simply can’t make a decision. That could be due to the fact the only thing Pallister fears more than rising global temperatures is rising taxes. The longer he waits to unveil a true, made-in-Manitoba plan, the more it will appear his lack of co-operation has little to do with greenhouse gases, and more to do with his inability to pull the trigger on a tax hike.

Pallister truly has a deep and visceral dislike of all forms of taxation. At times, he has suggested higher taxes are the biggest scourge facing Manitoba — a remarkable claim in a province that has profound challenges in areas such as poverty, health care and education. No matter, the takeaway point is that Pallister thinks taxes are evil and he wants to lower them.

That makes the introduction of any new tax a tough pill to swallow, even a tax that achieves the noble goal of discouraging consumption of climate-altering fossil fuels. Pallister could introduce offsetting tax cuts to soften the blow, as other provinces have done. It’s important to remember he also must keep an election pledge to reduce the PST to seven per cent from its current eight per cent, a decision that will translate into a $300-million loss of revenue. Could the carbon tax be used in part to pay for that tax cut?

Provincial officials have dismissed that idea as nonsense. However, there have been some recent signs Pallister is getting more and more anxious about keeping his PST promise, and is looking desperately for any fiscal windfall that might help him cut the tax rate without plunging the treasury deeper into deficit.

It could very well be Manitoba is poorly served by the one-size-fits-all approach the federal Liberals are imposing on the provinces. It could also be that Manitoba’s request to receive some sort of credit to reflect it’s investment in renewable hydroelectricity is reasonable.

However, in the absence of any details of what constitutes a made-in-Manitoba approach, it is very difficult to assess the impact or the integrity of Pallister’s plan. If there is a better, fairer way to introduce carbon pricing in Manitoba, then let’s have the plan and the debate that is sure to follow.

Pallister could still sign the federal plan as is, and then work to mitigate future carbon tax increases based on the province’s relatively small carbon footprint. Or, he could continue holding out but take his homegrown carbon pricing plan directly to Manitobans, so they can see that there is a better way.

What the premier cannot do is continue to do nothing — or be seen to be doing nothing.

dan.lett@freepress.mb.ca

Dan Lett

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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