Ottawa’s carbon plan rigged to benefit Liberals, Manitoba’s Pallister says

Manitoba Premier Brian Pallister says the federal carbon plan is rigged in favour of regions where the Liberals hope to win seats – such as urban areas, Quebec and the Atlantic Provinces – while rural voters will end up paying more.

Calling it “hucksterism of the worst kind,” the Premier is accusing Prime Minister Justin Trudeau of deliberately picking fights with the provinces in an election year, by granting concessions to provinces such as Newfoundland and Labrador while rejecting Manitoba’s plan for a provincially run carbon tax.

“They ascertained that if they can message effectively in urban Ontario, Quebec, Eastern Canada and B.C., they have a winning coalition,” said Mr. Pallister in an interview with The Globe and Mail. “They’re clearly trying the old-fashioned trick of redistribution and vote buying.”

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Mr. Trudeau defended the fairness of his government’s plan Wednesday in Question Period, where he faced similar accusations from Conservative MPs.

“We’re actually giving a 10-per-cent top-up to [households in] small and rural communities because we know that we need to make sure that everyone has the proper support as we move forward with a price on pollution,” the Prime Minister said.

The Liberal government will impose a carbon levy in four provinces – Ontario, Saskatchewan, Manitoba and New Brunswick – whose governments opted not to put in place their own price on greenhouse gas emissions. On Tuesday, Mr. Trudeau announced the government will return all revenue from the federal levy to the province in which it is raised − with 90 per cent going directly to households and 10 per cent used to cushion the impact on small- and medium-sized business and the broader public sector.

The government says that, on average, 70 per cent of households in those four provinces will receive greater benefits than they will pay in direct and indirect costs, as revenue raised from small business is allocated to individuals.

Premiers in the four affected provinces slammed the federal approach, with Ontario Premier Doug Ford calling it a “carbon tax rip-off.”

Dominic LeBlanc, the federal Minister for Intergovernmental Affairs and Internal Trade, is trying to ease federal-provincial tensions with an informal meeting of his provincial counterparts in Vancouver on Thursday.

The federal government is hoping to shift the focus at a coming meeting of first ministers from the contentious debate over carbon taxes toward what it believes would be a more productive discussion on reducing barriers to internal trade. Thursday’s meeting would lead to a full first ministers meeting in late November or early December.

Speaking after a cabinet meeting on Wednesday, Mr. LeBlanc said the federal government is looking to scrap its own barriers to internal trade as part of efforts to help the provinces to improve the flow of goods and services across the country. Mr. LeBlanc later said in a statement that the government is “disappointed with the Manitoba government’s lack of leadership on pricing pollution.”

Mr. Pallister switched from supporter to critic of the federal carbon plan earlier this month after Ottawa would not sign off on Manitoba’s plan to maintain a $25-a-tonne carbon tax, while the federal plan increases the levy to $50 by 2022 in other provinces.

Mr. Pallister said Mr. Trudeau has launched “a two-tier carbon penalty” in which key electoral regions such as urban Ontario, Quebec, British Columbia and Atlantic Canada will be “more favourably treated or less stringently treated.” He said Quebec gets a break on the price while some provinces, notably Newfoundland and Labrador, appear to have received special treatment.

“I hate to sound cynical here, but it strikes me that [political calculus] must be the prevailing logic because it certainly isn’t about fairness,” he said. “It’s become, sadly, about the federal government fighting with provinces rather than uniting on the battle against climate change and they’ve created a climate of division that is unhelpful.”

Mr. Pallister objects to the ability of Quebec to keep its carbon price lower than what other prices will pay under the federal levy. But Quebec’s cap-and-trade system deliberately seeks to reduce the cost of emission reduction by allowing companies to buy cheaper credits in California.

The Manitoba Premier also pointed to Newfoundland, where the province is eliminating a 4-cent-a-litre excise tax on gasoline to offset increases from the carbon tax. However, the province had previously announced it would remove the 4-cent levy, the last vestige of a 33-cent temporary gasoline tax it imposed in its 2016 budget after oil prices collapsed.

In a news release on Tuesday, the government in St. John’s said its “made-in-Newfoundland” approach meets its local needs, while still covering 76 per cent of its emissions, well above the threshold of 70 per cent set by Ottawa.