Connect with us
[the_ad id="89560"]

Economy

Fixing the Trudeau – Guilbeault Policy Mess May Take Longer Than We’d Like – Here’s Why

Published

8 minute read

From EnergyNow.ca

By Jim Warren

By spring 2024 it was pretty clear the Liberal government was headed for palliative care. A Leger poll on May 25 and an Abacus poll June 10 showed the Conservatives with a 20 point lead over the Liberals.

As the likelihood of their imminent defeat increased, the Trudeau Liberals stepped up the implementation of legislation and regulations inimical to the gas and petroleum industries. Their efforts in 2024 included legislation limiting freedom of speech for companies and individuals who publicize environmental progress in the oil and gas sector (aka Bill C-59). The speech-muzzling measure became law on June 21.

Around the same time, Environment and Climate Change Minister, Steven Guilbeault was busy shepherding two particularly ominous regulatory packages through to finalization. One set of regulations supported Canada’s Clean Electricity Regulations—intended to eliminate the use of coal and natural gas in the production of electricity with staged decommissioning deadlines between 2035 and 2050. The second package finalized the rules for the natural gas and oil industries emissions cap intended to restrict production and growth in those industries, to take effect in 2026.

The regulations weren’t finalized until the month before the House shut down for the holidays, just weeks before Justin Trudeau’s political career was put on life support.

The green policy stampede extended to the international stage. Never mind deficits and debt, the Liberals found plenty of cash to enhance their status as world class environmental luminaries.

At November’s COP29* conference at Baku, Azerbaijan, Guilbeault and Canada’s Ambassador for Climate Change (who knew we had one?), Catherine Stewart signed us on to 15 pledges to take action on fighting climate change. Around half of the promises were merely motherhood and apple pie statements, concessions to the environmentally woke who attend these sorts of international conferences.

But several of the commitments made on our behalf came with price tags. I’m still unclear on exactly which line item in a federal budget, legislative authority or policy statement authorized the spending.

Canada’s COP29 delegation launched the $2 billion GAIA project. Apparently we are cost sharing the project with Mitsubishi. The official government report on the conference doesn’t indicate how much of the $2 billion Canada is kicking in.

Canada also showcased its green bona fides by contributing to the effort to finance the green transition and climate change adaptation in poor countries—a task expected to require developed countries to collectively spend $110 billion to $300 billion per year by 2035. Our delegation announced Canada would lead by example, making a $1billion donation to the effort.

Guilbeault and Stewart gave $10 million to Conservation International’s “Limpopo Transfrontier Conservation Area” project. They “invested” another $2.5 million in the World Wildlife Fund’s “Building Resilient Communities through Marine Conservation in Madagascar” project.

Guilbeault may indeed be angling for that UN job I mentioned in my last EnergyNow column. Read it Here Canada made a $1.25 million payment directly to the office of UN Secretary General, António Guterres. The donation is supposed to assist Guterres in his efforts to encourage countries to get their “Nationally Determined Contributions” handed in on time.

In a podcast conversation with Jordan Peterson several months ago, Danielle Smith noted the accelerated pace of the Liberal government’s announcement and implementation of new environmental policies detrimental to Alberta’s oil and gas sectors and the economies of both Alberta and Canada.

Smith said one of the effects of enacting so many new environmental measures would be to make it extremely difficult for the next government to reverse them all in its first term. This probably was one of the reasons behind the rush to get so much done this past year.

Peterson added a psychological dimension to the discussion. He suggested Guilbeault and Trudeau were behaving like wounded narcissists. They were acting like egomaniacs who recognized their time in office was coming to an end and wanted to do as much as possible in the time they had left to pad their reputations as “do or die” climate warriors. They were striving to guarantee their legacies as planet-saving heroes.

They are probably both right. But Smith’s assessment speaks more directly to the practical challenges a new Conservative government will confront while trying to unwind the morass of legislation and regulations needlessly hampering the growth of environmentally responsible resource development in the west. It is an effort by the outgoing government to make their anti-oil legacy tamper proof.

Simply wading through the legislative quagmire and assessing where reform is most urgent and readily achievable will take time and effort. The wheels of parliament can turn slowly. No doubt some of the bureaucrats employed by the Liberals are true believers—frightened of the “impending climate apocalypse” and unlikely to expedite changes to environmental legislation and regulations. And, there could be multi-year contracts with consultants and other suppliers and long-term funding arrangements with companies and NGOs that will be difficult to unwind.

Let’s not forget the inevitable legal challenges that will threaten to hold up the reform process. Environmental groups and other special interests can be expected to use the courts to block efforts to reverse Liberal government policy. Ideally, the new government will cut off funding support for anti-oil environmental groups. Then at least supporters of the gas and petroleum sectors won’t be sued by activists funded with our tax dollars.

Then there are all the other important things governments are required to do and a limited amount of time to do them—drafting fiscally responsible budgets and dealing with the possibility of US tariffs on our exports come to mind as things near the top of the to-do list.

The highly anticipated Poilievre government may not be able to move as far and fast in reversing the Trudeau-Guilbeault legacy as we might like. They will face immense challenges and should be given a fair bit of slack if they can’t fix everything early in their first term.

*COP stands for Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). The framework was adopted by the countries attending the UN sponsored Rio Earth Summit held at Rio de Janeiro, Brazil in 1992. The number in COP29 indicates it is the 29th annual post-Rio conference of the parties.

Business

Mark Carney’s carbon tax plan hurts farmers

Published on

From the Canadian Taxpayers Federation

By Gage Haubrich

Liberal leadership front-runner Mark Carney recently announced his carbon tax plan and here are some key points.

It’s expensive for Canadians.

It’s even more expensive for farmers.

Carney announced he would immediately remove the consumer carbon tax if he became prime minister.

That sounds like good news, but it’s important to read the fine print.

Carney went on and announced that he would be “integrating a new consumer carbon credit market into the industrial pricing system.” Carney also said he would “improve and tighten” the industrial carbon tax and impose carbon tax tariffs on imports into Canada.

If that sounds like Carney isn’t getting rid of the carbon tax, that’s because he isn’t. He’s trying to hide the costs from Canadians by imposing higher carbon taxes on businesses.

What that means is that Carney’s plan would tax businesses and then businesses will pass those costs onto consumers.

That also means farmers.

Under the current carbon tax, farmers have an exemption from the carbon tax on the gas and diesel they use on their farm. The hidden industrial carbon tax is applied directly to industry. Businesses are forced to pay the carbon tax if they emit above the government’s prescribed limit.

But businesses don’t just swallow those costs. They pass them on. The trucking industry is a great example.

“Due to razor thin margins in the trucking industry, these added costs cannot be absorbed and must be passed on to customers,” said the Canadian Trucking Alliance when analyzing the current Trudeau carbon tax.

The same concept applies to the Carney scheme.

If Carney removes the consumer carbon tax and replaces it with a higher tax on businesses under the hidden industrial carbon tax, that means more costs for farmers.

There isn’t any exemption for farmers under the industrial carbon tax. Oil and gas refineries will be paying a higher carbon tax and they will be forced to pass that cost onto their consumers. Farmers use a lot of fuel.

The pain doesn’t stop there. Farmers also use a lot of fertilizer and Carney’s carbon tax means higher costs for fertilizer plants. Then farmers will be stuck paying more for fertilizer.

Some businesses, like those fertilizer plants, could pack up and move production south. But farmers are still going to need fertilizer. Carney’s plan compounds the pain with carbon tax tariffs.

Fertilizer is only one example. If Canadian farmers need to buy a part to fix equipment that can only come from the U.S., it could be more expensive because of Carney’s carbon tax tariffs.

This will hurt Canadian farmers when they’re buying supplies. But it’ll also hurt when farmers when they go to market. Canadian farmers compete with farmers around the world and majority of them aren’t paying carbon taxes.

Farmers wouldn’t be at a disadvantage because American farmers are smarter or farm better, but because, under Carney’s carbon tax, they would be stuck paying costs competitors don’t have to pay. And farmers know this all too well.

“My competitors to the south of me in the United States do not pay that [carbon] tax, so now my cost goes up and I have no alternative,” said Jeff Barlow, a corn, wheat and soybean farmer in Ontario. “By penalizing me there’s nothing else that I can do but just be penalized.”

And if farmers won’t be the only ones hurt.

Families across Canada are struggling with grocery prices and increasing the cost of production for farmers certainly won’t lower those prices.

Carney says that he wants to cancel the consumer tax because it’s too “divisive.” That statement misses the nail completely and hammers the thumb. Canadians don’t want to get rid of the carbon tax because of perception, they want to get rid of it because it makes life more expensive.

Carney needs to commit to getting rid of carbon taxes, not rebranding the failed policy into something that could end up costing Canadians and farmers even more.

Continue Reading

Business

Do Minimum Wage Laws Accomplish Anything?

Published on

The Audit

David Clinton

All the smart people tell us that, one way or another, increasing the minimum wage will change society. Proponents claim raising pay at the low end of the economy will help low-income working families survive in hyper-expensive communities. Opponents claim that artificially increasing employment costs will either drive employers towards adopting innovative automation integrations or to shut down their businesses altogether. Either way, goes the anti-intervention narrative, there will be fewer jobs available.

Well, what’ll it be? Canadian provinces have been experimenting with minimum wage laws for many years. And since 2021, the federal government has imposed its own rate for employees of all federally regulated industries. There should be plenty of good data out there by now indicating who was right.

The Audit is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Historical records on provincial rates going back decades is available from Statistics Canada. For this research, I used data starting in 2011. Since new rates often come into effect mid-year, I only applied a year’s latest rate to the start of the following year. 2022 itself, for simplicity, was measured by the new federal rate, with the exception of British Columbia who’s rate was $0.10 higher than the federal rate.

My goal was to look for evidence that increasing statutory wage rates impacted these areas:

  • Earnings among workers in full-service restaurants
  • Operating profit margins for full-service restaurants
  • Total numbers of active businesses in the accommodation and food services industries

I chose to focus on the food service industry because it’s particularly dependent on low-wage workers and particularly sensitive to labour costs. Outcomes here should tell us a lot about the impact such government policies are having.

Restaurant worker income is reported as total numbers. In other words, we can see how much all of, say, Manitoba’s workers combined took home in a given year. For those numbers to make sense, I adjusted them using overall provincial populations.

Income in British Columbia and PEI showed a strong correlation to increasing minimum wages. Interestingly, BC has consistently had the highest of all provinces’ minimum wage while PEI’s has mostly hung around the middle of the pack. Besides a weak negative correlation in Saskatchewan, there was no indication that income in other provinces either dropped or grew in sync with increases to the minimum wage.

Nation-wide, by weighting results by population numbers, we got a Pearson coefficient 0.30. That means it’s unlikely that wage rate changes had any impact on take-home income.

Did increases harm restaurants? It doesn’t look like it. I used data measuring active employer businesses in the accommodation and food services industries. No provinces showed any impact on business startups and exits that could be connected to minimum wage laws. Overall, Canada’s coefficient value was 0.29 – again a very weak positive relationship.

So restaurants haven’t been collapsing at epic, extinction-level rates. But do government minimums cause a reduction in their operating profit margins? Apparently not. If anything, they’ve become more profitable!

The nation-wide coefficient between minimum wages and restaurant profitability was 0.88 – suggesting a strong correlation. But how could that be happening? Don’t labour costs make up a major chunk of food service operating expenses? Here are a few possible explanations:

  • Perhaps many restaurants respond to rising costs by increasing their menu prices. This can work out well if market demand turns out to be relatively inelastic and people continue eating out despite higher prices.
  • Higher wages might lead to lower employee turnover, reducing hiring and training costs.
  • A higher minimum wage boosts worker incomes, leading to more disposable income in the economy. Although the flip-side is that we can’t see strong evidence of higher worker income.
  • Higher wages can force unprofitable, inefficient restaurants to close, leaving stronger businesses with higher market share.

In any case, my big-picture verdict on government intervention into private sector wage rates is: thanks but don’t bother. All that effort doesn’t seem to have improved actual incomes on a population scale. At the same time, it also hasn’t driven industries with workers at the low-end of the pay scale to devastating collapse.

But I’m sure it has taken up enormous amounts of public service time and resources that could undoubtedly have been more gainfully spent elsewhere. More important, as the economist Alex Tabarrok recently pointed out, minimum wage laws have been shown to reduce employment for the disabled and measurably increase both consumer prices and workplace injuries.

Continue Reading

Trending

X