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DECIPHERING ONTARIO'S JOB-KILLING CARBON TAX

This column was previously published in theNational Post.

On Nov. 13, Ontario Premier Kathleen Wynne and Environment Minister Glen Murray circulated a discussion paper to industry and business groups outlining some of their proposals for a cap-and-trade scheme.  Unfortunately, the people who will ultimately bear the cost of the program — the public, which will face higher prices on everything from fuel to manufactured goods — are not part of this “discussion.” In fact, the so-called “discussion paper” is not even available on the Ministry of the Environment website

The 66-page document might as well have been written in another language for all the clarity of terms it provides. But a careful review of the paper provides some insight into what Wynne and Murray are actually planning in regards to cap-and-trade, and what it will mean for your pocketbook.

One cute euphemism in the discussion paper is “border carbon adjustment.” This is bureaucratese for a tariff — a tax paid on goods when they cross the border. The government is proposing throwing up trade barriers by applying tariffs to imported goods based on the greenhouse gases emitted during their production. The minister identified fuel and electricity as key sectors where such tariffs could be applied. The cost of the tariffs will be passed on to consumers. Apparently the minister thinks Ontarians aren’t paying enough for gas and electricity.

But the taxes won’t end there — the discussion paper states that other sectors are actively being considered for carbon tariffs. Throwing up trade barriers and charging Ontarians more for electricity could have economically devastating effects.

Another term used throughout the discussion paper is “free allocation.” The premier’s cap-and-trade scheme proposes giving away free carbon credits to certain industries. This would allow these select industries to either be able to continue to emit with veritable impunity, or sell these free credits to less-favoured industries (likely those that don’t make up the government’s voting base). When you read “free allocation,” think cynical government favouritism.  

And of course there is the promise of “reinvesting” the proceeds from selling carbon credits into “complementary” measures. “Reinvesting” is politician-speak for spending. The discussion paper has no detail about how the revenue will be spent, or if the revenue will simply go into a general pool that the government can access for spending on its own pet projects.

Will Premier Wynne consider broadly designed infrastructure a “complementary” measure? After all, she has a plan to spend $130 billion on infrastructure over the next 10 years. The money for all of that needs to come from somewhere and the $1 billion to $2 billion the premier expects to raise selling carbon credits may prove irresistible. When asked at a Nov. 17 news conference specifically how the money would be spent, Wynne evaded the question, stating simply the money would be “reinvested.”

The best euphemism in the government’s cap-and-trade discussion paper is “carbon leakage.” Perhaps this sounds like some kind of accidental carbon emission. In fact, it is a sanitized term for job losses. “Carbon leakage” is when a company relocates out of Ontario and into another jurisdiction where production is more affordable. Try telling the people of southwestern Ontario, one of the regions hardest hit by manufacturing job losses, that their unemployment is “carbon leakage.”

But the biggest trick of all is in the title of the discussion paper itself — “cap and trade program.” Cap and trade is a carbon tax, one that applies to all goods and products (not just gasoline and coal like in some other jurisdictions), and which will require the establishment of an enormous new bureaucracy. Calling it “cap and trade” doesn’t make it less of a tax, or make it hurt the people paying it any less. It simply sounds more politically appealing. And while the premier may not be looking for the input of the taxpaying public on her carbon tax discussion paper, these are the people her policy will ultimately hurt.