Why conservative politicians across Canada think they can beat Trudeau in fight over federal carbon tax

By the time Prime Minister Justin Trudeau arrived at a Toronto college last month to announce the details of the federal carbon tax, the battle lines on both sides of the issue had already been drawn. Depending on whom you asked, the Liberal government’s plan to price carbon in provinces whose own plans don’t meet its standards was either a much-needed effort to start addressing climate change or a blatant tax-grab in sheep’s clothing.

Canadians have a “moral and economic imperative to act,” Trudeau told the assembled media and students, assuring taxpayers in those provinces his plan would actually leave them better off thanks to rebates the government will begin issuing in April.

Those rebates will likely be the key component of the federal effort to sell the tax to Canadians. But in a growing number of provincial capitals across the country, the pushback against the Liberal plan is just beginning to take shape.

Though the governments of Saskatchewan and Ontario have both launched legal challenges against the federal government’s plan, even they acknowledge the real fight won’t play out in the courtroom. It will instead be a battle of rhetoric and salesmanship more than policy and facts, and it will unfold in the public arena at least until the 2019 election. Conservative politicians are betting that Trudeau’s pitch to Canadians to “vote with their hearts, not their wallets,” in the words of one federal Conservative strategist, is too risky to succeed. And as the roster of provinces lined up against the federal carbon pricing plan grows, they believe their informal political alliance can doom one of Trudeau’s signature policies — and maybe even the prime minister himself.

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The Liberals are trying to sell Canadians on a carbon tax without getting bogged down too deep in the details. Environment minister Catherine McKenna has for months been touting the line that “polluting isn’t free.” When Trudeau announced the details of the federal tax in October, he assured Canadians that “every nickel will be invested in Canadians in the province or territory where it was raised.”

The tax will kick in at $20 per tonne of carbon emitted in April 2019, increasing by $10 per tonne annually until it hits $50 per tonne in 2022. It’s expected to increase gasoline prices by 4.4 cents per litre in 2019 in the provinces where it’s applied, increasing to 11 cents per litre in 2022. However, 90 per cent of the tax revenue will be returned to households as rebates, with the remaining 10 per cent used to support small businesses, schools, hospitals, and other institutions that stand to be affected.

The government estimates that 70 per cent of households will make back more than they pay. The idea is that an incentive will still exist to reduce fuel use, because a household’s rebate isn’t dependent on how much it pollutes, meaning a family will save more money as it cuts emissions.

“It’s a pretty simple, straightforward system, that all the revenue in one province stays in a province, and we have a price across Canada in all provinces and territories,” said Dale Beugin, executive director of Canada’s Ecofiscal Commission. “And so it’s kind of a step in the right direction, very clearly.”

As it turns out, it’s not so clear to everyone.

“We’ve been against this being imposed on us by the federal government from day one,” Scott Moe told the National Post in a recent interview. Two years ago Moe was the Saskatchewan environment minister who walked out of federal-provincial climate talks. Even as most other provinces signed on to the federal climate-change plan, with Ottawa warning it would impose a tax on any province that didn’t offer its own solution, Saskatchewan remained the lone holdout refusing to come up with some kind of plan to price carbon.

At the time, Moe promised his government would “use everything in (their) disposal” to resist. “Many westerners will see this as National Energy Program 2.0,” he said, accusing Trudeau of a “betrayal.” In April of this year, the province of Saskatchewan — which Moe now serves as premier — launched the first constitutional challenge of the federal plan.

“The fact of the matter is,” he told the Post, “there are a number of provinces that now do agree with Saskatchewan’s stance.”

In October 2017, Jason Kenney won the leadership of the new United Conservative Party in Alberta. Seen as the heavy favourite to unseat NDP premier Rachel Notley in a spring 2019 election, he has vowed if elected to scrap the carbon tax her government introduced and launch a legal challenge of his own against Ottawa’s. In June, the Progressive Conservatives swept to power in Ontario under Doug Ford, who moved immediately to scrap that province’s cap-and-trade system and launch a court battle of his own against the federal government. Then, a few weeks before Trudeau’s announcement, Manitoba PC premier Brian Pallister, reportedly upset at Trudeau for using him as an example to other conservatives, announced he was abandoning his own carbon tax plan. And after New Brunswick’s Liberal government lost a post-election confidence vote last Friday, Conservative leader Blaine Higgs is set to become the province’s next premier and plans to band together with the other dissenting provinces.

“One of the founding principles for me is that we’re not accepting any new cost to the province of New Brunswick through taxation, because we are one of the highest-taxed provinces in the country, and we are taxed out,” Higgs told the Post. “And that’s why I’m fighting this.”

Andrew Scheer, meanwhile, now into his second year at the head of the federal Conservative Party, is making opposition to the carbon tax a prominent part of his party’s messaging, and is expected to continue to do so through the 2019 election.

While there is no formal alliance among the provinces that oppose carbon pricing, or between them and the federal Conservatives, they have begun working together on a couple of fronts. “People talk — we keep each other informed on what’s going on,” said a source with Alberta’s UCP. “When this first started out, it was a much looser, ad hoc coalition, but it actually is firing up into something more substantive. It’s obviously easier to pull those coalitions off when you’re actually sitting in the premier’s office.

“Since the Ontario election this summer, you’ve seen an increasingly close relationship between Premier Moe and Premier Ford,” the UCP source said. “I think as it grows, it will become more coordinated and more — not centralized, but a more coordinated effort.

“Just showing that united front can pay big political dividends.”

By Kenney’s account, the collaboration was born of the West. In Ottawa for the Manning Conference shortly after Moe became premier, the two had dinner at the Westin Hotel and “discussed the need to develop a coalition of provincial parties and governments opposing a federal carbon tax.” The two agreed that Ontario was the prize. “If we could get Ontario on side, we would start to see the dominoes fall with the other provinces coming on board,” Kenney told the Post.

Patrick Brown’s resignation had triggered an Ontario PC leadership race, and, Kenney said, he lobbied all the leadership candidates on the issue. “Doug Ford had called me just a few days before that to discuss the carbon tax and how to fight it and I gave him my views,” Kenney said. Ford was thinking through what his options would be if as premier he repealed Ontario’s cap-and-trade system and refused to implement a provincial carbon tax. Kenney said he advocated for Moe’s decision to fight the federal government in the courts. “I outlined some of the legal reasons why we believed it was a plausible legal challenge, and talked about the politics of the issue, and Doug immediately came out very strongly opposed to Patrick Brown’s carbon tax platform and to the federal platform and basically adopted Saskatchewan’s approach.”

“We also realized it was important to get the other leadership candidates onside in those early days of the PC leadership in Ontario,” Kenney said. “It wasn’t at all clear who was going to be win, and it ended up being very close. We had other conversations and not long thereafter both Christine Elliot and Caroline Mulroney (Ford’s leadership-race competitors and now members of his cabinet) came out against the carbon tax. That was really a critical inflection point in the fight.”

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The legal effort is the first front in that fight, the question being whether Ottawa has the power to unilaterally impose a carbon tax on the provinces. The Saskatchewan Court of Appeal will hear that province’s constitutional reference case in February 2019. On July 23rd, Ford’s new Ontario government filed an application for intervener status in that case, which would let its lawyers raise other questions or evidence for judges to consider in making their decisions. In April, the Ontario Court of Appeal will hear the Ford government’s own reference, in which Saskatchewan has applied to intervene. Though not yet sworn in as premier, Higgs told the Post New Brunswick will seek intervener status in both cases, and Kenney, champing at the bit, has said a UCP government in Alberta would do the same. A Manitoba government spokeswoman told the Post it will not intervene.

What’s more, Moe told the Post Saskatchewan will appeal any loss to the Supreme Court of Canada, and Ford’s environment minister Rod Phillips has said Ontario will do the same.

That’s a lot of lawyers — and yet even the dissenters acknowledge their legal challenges are something of a sideshow. One former Ford campaign strategist told the Post that while there’s a chance the provinces could win this fight, it’s “a long shot.”

Kenney, too, has talked openly about the possibility that an Alberta court challenge could fail. “It’s by no means a slam dunk, but I think there is a credible argument on the side of the provinces in this respect,” he said at an energy conference in Calgary last month. He’s used his opposition to the plan against both Trudeau and Notley, telling reporters last month that “if we lose in the courts, that will be better for Alberta taxpayers than the NDP carbon tax,” on account of the federal rebate.

More important, said the source close to Ford, are the politics.

The legal fights, he said, “serve to highlight the issue and to act as a delaying action to allow a more fulsome political debate in the next federal election to occur, but also to galvanize public opposition to this policy.”

Ontario Premier Doug Ford and United Conservative Party Leader Jason Kenney cheer with supporters at an anti-carbon tax rally in Calgary, Oct. 5, 2018.

There have been a growing number of public displays of unity between the premiers: Ford, for example, began the month of October in Calgary for an anti-carbon-tax rally with the UCP faithful and ended it with a Toronto meeting with Moe and an Ottawa meeting with Scheer. His Twitter account has also been quick to embrace Higgs as the latest ally to join their fight.

It no doubt plays well with these leaders’ core voters at home to pick fights with a Liberal prime minister in Ottawa — a Trudeau, no less — but the real test of that galvanization will come when the country votes next year. “There’s one person who can actually stop the carbon tax,” said a federal Conservative source, “and that’s Andrew Scheer.”

The CPC are betting the federal carbon price has been permanently cast in the public’s imagination as a tax, no matter how often the Liberals try to call it a price on pollution. They surely figure the amplification of that message from a handful of powerful regional politicians will only help reinforce that idea. They’re also betting that Canadians want their government to do something about climate change, but only so long as they don’t feel they’re personally suffering for it.

“The Liberals have a lot of work to do to convince people that a carbon tax is the environmental plan,” said the Conservative source. “We’re fairly confident that we can win on this issue.”

The polling that’s publicly available isn’t as conclusive. In April 2015, the Angus Reid Institute found 56 per cent of Canadians supported a carbon tax; by July 2017, that had dropped to 45 per cent. But after Trudeau’s announcement of rebates, support climbed back up to 54 per cent, ARI’s polling found. In Alberta, support for the federal carbon plan still dropped, albeit slightly, from 35 per cent to 34 per cent. There were double-digit gains in other provinces — notably Saskatchewan, which jumped from 11 per cent to 29 per cent and Quebec, from 56 per cent to 69 per cent and Ontario, from 43 per cent to 54 per cent.

Research from Abacus Data, meanwhile, found that 59 per cent of Canadians saw the Liberal carbon plan as “a step in the right direction” before Trudeau’s announcement of the rebate. With the rebate factored in, only 24 per cent of Canadians told Abacus they would oppose or strongly oppose such a plan, compared to 39 per cent who support or strongly support the federal price on carbon, and another 36 per cent who would “accept” it.

Prime Minister Justin Trudeau speaks at Toronto’s Humber College regarding his government’s new federally-imposed carbon tax, Oct. 23, 2018.

And regarding the 2019 federal election, Abacus found that just seven per cent of respondents said carbon pricing was the most important issue to them, while 55 per cent said it would be a factor and 38 per cent said it’ll play “a small role” in how they cast their vote. Even among conservatives, only 12 per cent see it as the most important issue.

“We believe that Canadians want their government to have a serious plan to fight climate change,” McKenna spokesman Eric Campbell told the Post. “Pure and simple.”

That kind of talk sends Kenney into a rant. “There’s a certain smugness from the pro-carbon tax lobby that suggests that the Canadians who oppose this simply don’t understand it,” he told the Post. “They couldn’t be more wrong. I think the opposition comes from Canadians precisely because they do understand the inefficacy of a carbon tax at these levels to achieve environmental goals and the rest of the theoretical carbon tax is not the reality in Canada.”

Carbon pricing may not be the only issue during the 2019 election — the Conservative source said they envision trying to establish a broader campaign narrative around affordability, with the carbon tax as one of several key players — but it may be the one that sparks the loudest arguments.

Scheer, of course, has yet to unveil his own plan to tackle climate change, though he has promised it will not include a carbon price. The Conservative source shrugged it off. “People don’t vote on the environment,” he said. “They’re going to bed thinking about how much they paid for gas that day.”

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