MPP Jim McDonell: Cap and Trade is Here

Ontario is poised to implement a carbon pricing Cap-and-Trade scheme after the Liberals forced a vote on Bill 172 in the House on Wednesday. Earlier this week, the Globe and Mail had received a leaked version of the Government’s plans on spending the money collected from the initiative, and it made for mind-boggling reading.

 

The Cap-and-Trade scheme will force manufacturers to purchase carbon offsets from California to the tune of $3 billion every year by 2030, while also driving up the cost of all fuels. This will ripple throughout the economy as we will be caught between the hammer of rising manufacturing, labour, home-heating, and transport costs and the anvil of capital outflows at a time when we need new investment. The healthiest economies can’t handle such pressure for long and Ontario is still feeling the impact of unaffordable electricity rates and the loss of 350,000 well-paying manufacturing jobs.  This government is trying to sell the early implementation of this massive new tax, years before our neighbours and competitors, as critical in saving the planet.  Let us be clear, Ontario contributes one-tenth of one percent of the world’s greenhouse gases and we must be part of a continental solution that doesn’t force our remaining businesses to relocate to our lower cost neighbours, taking their jobs with them and bankrupting our great province.  This government has a spending problem and instead of setting priorities and targeting strategic initiatives, they are creating the largest new tax in Ontario’s history.

 

The revenue from this unaffordable initiative will be spent on subsidizing those who least need it. For instance, buyers of new electric cars will receive up to $14,000 in rebates, GTA residents will see over $300 million poured into electrifying the GO Transit system and increased service and ethanol and biofuel producers will see demand rise as consumers and distributors are forced to buy their product. These few winners will ride on the backs of many whose cost of living will increase. For instance the Liberals expect to phase out natural gas heating in favour of electric heating, costing the average household $3000 extra per year. Commuters outside major urban areas will see their disposable incomes dented by rising fuel costs.

 

This is nothing short of a massive wealth transfer disguised as environmentalism. Low to mid-income Ontarians outside major urban areas will pay for increased luxury and comfort for affluent urban and suburban dwellers. This is beyond unfair, and I am not surprised the Government pulled the parliamentary trigger when the plan was leaked. The more Bill 172 remained on the agenda, the more pressure the Premier would have faced to scrap it.

 

Two more reports cast light on the Government’s management style. The Auditor-General reported that while the Government handed school unions over $80 million as “bargaining costs”, $22 million of that payout had no documentation to back it up. There are no receipts, invoices or other evidence detailing why this money was handed over and what was done with it. This Liberal government’s priorities are clear; they can justify the unusual payment of teachers union’s negotiation costs, something they don’t do for any other public service union, while they cut programs to assist children with special needs, close demonstration schools and cancel IBI therapy for autistic children.  Tens of millions of dollars, money intended for our children, was taken out of the school budget and handed over to unions without accountability and certainly with no regard to the interest of Ontario’s children.  At the same time, the government has received tens of millions in donations and third party spending on election advertising from these same teachers unions.  This is just one reason why we are calling for a public inquiry into the tie between government grants and donations to the Liberal party and tight controls on donations and third party advertising.

 

The Financial Accountability Officer, meanwhile, issued a report into the Government’s plan to balance the budget by next year. It confirmed what the PC Caucus suspected all along – the Government doesn’t have a credible plan to balance the budget. In their communications, the Government uses a mixture of one-time initiatives (whose impact will therefore vanish after the 2018 election) and best-case scenarios that are unlikely to materialize. As the FAO put it, most of the risk “is on the downside”. Taking any of the Government’s numbers and asking any reasonable “what if” question will see those numbers drop and expose a structural deficit eating away at our economy.

 

It shouldn’t be this way.

 

Being good stewards of our environment and of the public purse are noble objectives that can be achieved while developing the economy, not throttling it. We recognize that carbon emissions are an undesirable component of our modern manufacturing and daily living, and there are solutions to make emitters pay without forcing the population to suffer. While not perfect, British Columbia’s carbon tax shows that a balance between emission pricing and preserving the public’s disposable income is possible.

 

In public finance management, the Government should be transparent about the challenges it faces because, frankly, their spin is not fooling anyone. If the Financial Accountability Officer has seen through their figures, major credit rating agencies did so months ago and will base their decisions on their own analysis rather than the Ministry of Finance’s rosy forecasts. By attempting to hide structural trouble in Ontario’s budget the Government is denting its credibility with creditors. Considering our large debt load and the increasing cost of paying interest on it, we can’t afford to continue down this path. The Government must recognize it has a spending problem, stop its unaffordable tax grabs from the population and start trimming its excesses for the benefit of productive members of the economy such as workers, businesses and consumers.

 

Governments tend to have the lowest borrowing costs because they can extract money from their economy through the force of the law. What the Liberals fail to realize is that we, just as the Province’s creditors, have neither bottomless pockets nor infinite patience. Something will have to give. For the sake of us all, it should be the Government’s resistance to changing its unaffordable ways.

 

Next week the House won’t sit as MPPs return to their ridings to celebrate Victoria Day with constituents and participate in community events. I look forward to hearing from residents, businesses and community organizations and to bringing their feedback, stories and opinions to Queen’s Park when the Legislature resumes on the 30th.

 

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