Will miss you Mr. Layton, but why on earth did you so vigorously oppose a carbon tax?
My Clean Break column today addresses a grudge I and many others have held against federal NDP leader Jack Layton, who passed away in August. Layton, as terrific a political leader he was, got it wrong when he adamantly opposed the suggestion during the 2008 election that Canada implement a national carbon tax. Layton favoured a cap-and-trade system, and as a result assisted Prime Minister Stephen Harper in attacking then Liberal leader Stephane Dion and his visionary (and controversial) Green Shift plan.
Fact is, Layton and Dion supported a price on carbon — that should have been more important than the details on how that price was created. By making it an election issue, Layton helped sabotage any momentum to price carbon in Canada, making it a toxic issue that to this day no federal politician without suicidal tendencies will touch.
My argument is that we need to get over this fear of a carbon tax (or carbon pricing in general), create a discussion about it — both nationally and in Ontario — and recognize how putting a price on carbon can help get our fiscal house in order and strengthen an otherwise weak climate strategy.
See column below:
It’s hard to hold a grudge against Jack Layton.
Passionate. Likeable. Well-intentioned. Caring. These are all words to describe the former federal NDP leader.
He had a lot of things right, but many still don’t forgive Layton for helping to sabotage a proposal in 2008 that called for the creation of a national tax on carbon emissions.
The idea came from then Liberal leader Stéphane Dion, who called his plan “the Green Shift.” Money collected from a carbon tax would be used to lower personal income taxes and invest in social and environmental programs, ultimately reducing Canada’s dependency on fossil fuels and assisting the shift to a low-carbon economy.
Layton aggressively attacked the plan, contributing to a Liberal implosion at the polls and a Conservative re-election that gave us our current do-little climate strategy.
It’s not that Layton opposed putting a price on carbon; he just favoured a different approach — a complex cap-and-trade system that would let the market set the price and let the government set and adjust the emissions cap.
And it’s not like Dion did himself any favours. He had a decent policy in his hands but he did a horrible job of selling it to the public and failed miserably in defending it against Prime Minister Stephen Harper’s campaign of smear and fear.
The bitter pill is that Dion and Layton both had the goal of putting a price on carbon. Both saw it as necessary for making our industries more resource-productive while achieving meaningful emissions reductions and fulfilling international climate obligations.
But many blame Layton for playing the spoiler, and as a result, for taking talk of a serious carbon-pricing plan off the table, where it rests toxic to this day.
“You basically can’t speak of it in political company,” says Alex Wood, senior director of policy and markets at Sustainable Prosperity, a green economy think tank in Ottawa. “There’s no political home for it.”
Not federally, at least. British Columbia took the big step in 2008 with the same kind of revenue-neutral carbon tax proposed by Dion. As controversial as it was and continues to be in many circles, it hasn’t plunged the B.C. economy into an abyss.
Quite the opposite. The province now has the lowest per-capita consumption of gasoline in the country and the lowest income tax rates. Its GDP has grown over the past three years at a time when the global economy is struggling, and the expectation is that B.C. will outperform the Canadian provincial average in 2012.
Carbon emissions, meanwhile, appear to be heading in the right direction. Next year the tax will rise to $30 per tonne of CO2 equivalent emissions, pulling in nearly $1 billion for the province, which will redistribute that revenue mostly through income tax cuts.
Each year that passes makes it harder to kill the B.C. carbon tax, says Wood. “No government will be able to come in and say we’re cutting this but we’ve got to raise your taxes. Politically it’s achieved an almost untouchable status.”
So when Harper insisted Dion’s plan would “screw everybody,” as The Economist magazine recently reminded us, it’s instructive to look at B.C. as we head into climate talks next week in Durban, South Africa, and ask: are we collectively getting screwed by not having a national carbon-pricing scheme?
We have a sense of the economic costs of not acting. The independent National Round Table on the Environment and the Economy estimated in September that climate impact costs for Canada would reach $5 billion annually by 2020 and as high as $43 billion a year by 2050.
Australia, a kindred spirit to Canada with similar resource-dependent industries, has seen that writing on the wall. It decided after years of Canadian-style foot-dragging that a carbon price is good for the country’s long-term economic health.
It is now poised to introduce a national carbon tax in July 2012 that will morph into a cap-and-trade system after a few years. The policy is part of a larger economic reform initiative aimed at making the transition to a clean energy economy.
An optimist might hope that Australia’s move will rub off on Canada, which could use the revenues from a carbon tax (or cap-and-trade system) to help get its fiscal house in order. It could generate tens of billions of dollars annually by 2020 that could go toward lowering income taxes, reducing the deficit, or boosting investment in climate-friendly public infrastructure projects.
If not federally, maybe it will rub off on Ontario. Saddled with what’s expected to be a $16-billion deficit this year, the province could benefit by slapping a price on carbon.
That was the plan in 2008 when Ontario joined the Western Climate Initiative, a group of Canadian provinces and U.S. states (including California) trying to set up a regional carbon cap-and-trade system. But six U.S. states recently pulled out and Ontario, which was supposed to launch on Jan. 1, is now waffling.
Maybe former TD Bank economist Don Drummond can talk some sense into Premier Dalton McGuinty. Drummond is expected to issue a report in January that will advise the McGuinty government on how to proceed with economic reforms.
Drummond is a fan of carbon pricing, particularly the idea of a carbon tax, having endorsed Dion’s Green Shift plan for the benefits it could bring to the Canadian economy.
It’s not entirely impossible that Drummond might try to stimulate talk of an Ontario carbon tax for Ontario, as toxic as the two words might be.
No thanks to Jack.
But seriously, isn’t it time we had an honest and adult discussion about it?
Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies. Contact him at email@example.com.