Tag Archives: Trevor Tombe

Premier Rachel Notley and Environment Minister Shannon Phillips release Alberta's climate change plan.

The Winter of Discontent over the Carbon Tax

Alberta’s carbon tax, lauded by economists and experts and derided by opposition conservatives, came into force on January 1, 2017.

From photo-ops at gas pumps to outright climate change denial, opposition to the carbon tax has been nothing short of hysterical over the past week.

Don MacIntyre MLA

Don MacIntyre

Don MacIntyre, Wildrose MLA for Innisfail-Sylvan Lake, sidelined his party’s attack on the carbon tax as a ‘tax on everything’ when he dove into climate change denying rhetoric during a January 2, 2017 press conference at the Legislature. “The science isn’t settled,” MacIntyre is reported to have said, despite the existence of overwhelming scientific evidence claiming otherwise.

Wildrose MLA Derek Fildebrandt marked New Year’s Eve by posting photos of himself filling up his truck and jerrycans to avoid any increase to gas prices caused by the carbon tax on January 1. It is estimated that he may have saved a few dollars, but in many locations across Alberta the price of gas actually dropped after the weekend (gas at the local station in my neighbourhood in northeast Edmonton is six cents cheaper per litre today than it was on Dec. 31).

Jason Kenney

Jason Kenney

Progressive Conservative leadership candidate Jason Kenney probably levelled the silliest criticism of the carbon tax when he tweeted on January 4 a photo of Tesla charging station in Fort Macleod, which was empty. This was apparently meant to be an argument that the four day old carbon tax was a failure.

Despite claims by opposition Wildrose and PC politicians that they would repeal the tax if elected in 2019, a federal carbon tax dictated by Ottawa would likely be imposed in its absence.

But arguments in favour of the made-in-Alberta carbon tax have been, well, confusing and technical.

Shannon Phillips

Shannon Phillips

Environment and Parks Minister Shannon Phillips’ statement that the province is “still standing” the day after the carbon tax was implemented was factually correct but probably not the statement most Albertans were waiting to hear. Phillips is one of the government’s smartest cabinet ministers, and has done a good job promoting the flagship Climate Leadership Plan, but the NDP have fallen short when it comes to easing Albertans worries about the cost of implementing the carbon tax during an economic downturn.

Economists like Trevor Tombe and Andrew Leach have penned or compiled intelligent arguments defending the carbon tax. Even executives of Canada’s largest oil and gas companies have come out in support of the carbon tax. Many of those executives stood on stage with Phillips and Premier Rachel Notley, along with environmental leaders, when the climate change plan was released in November 2015.

Justin Trudeau

Justin Trudeau

In November 2016, Prime Minister Justin Trudeau heaped praise on Notley for Alberta’s climate change plan, which includes the carbon tax, as a key reason for the approval of the Kinder Morgan Trans-Mountain pipeline expansion and the Enbridge Line 3 pipeline replacement.

But as anyone involved in politics knows, emotion and anger can sometimes trump facts, science and research. The recent presidential election south of the border confirms this.

Advertisements recently released by the Ontario government are, in my opinion, a good example of an emotional argument in favour of a climate change plan.

One of the arguments that I continue to hear is that Alberta and Canada should not implement a carbon tax because Donald Trump does not support a carbon tax. Trump also tweeted that he believes climate change is a conspiracy created by the Chinese government, so I am not confident that he is someone we should be looking to for leadership on this issue.

Donald Trump

Donald Trump

Overall public opposition to the carbon tax might start to fade in the coming months as many Albertans begin receiving their rebate cheques – around sixty percent of Alberta households will get a rebate, with full rebates for single Albertans earning $47,500 or less, and couples and families who earn $95,000 or less – but the NDP government will need to work overtime to provide clear evidence of how the carbon tax will benefit Albertans.

Of the funds collected by the carbon tax, the government says $2.3 billion will go towards rebate programs, $3.4 billion will help businesses adjust to the carbon levy, $6.2 billion will go toward energy industry diversification and job creation, $3.4 billion for large scale renewable energy and technology, and $2.2 billion for green infrastructure. As well as $645 million will be directed towards the new provincial agency Energy Efficiency Alberta and $195 million to assist coal communities, which will be impacted by the phase out of coal-fired power plants by 2030.

The NDP also cut the small business tax from three percent to two percent, a change that came into effect as the carbon tax was implemented.

Taxes in Alberta remain low, some of the lowest in Canada. Investing in measures that could create a cleaner environment for the next generations is not a burden, it is a responsibility. The carbon tax is a sensible policy, but it could be an uphill battle to convince Albertans to embrace it.

Finance Minister Joe Ceci presents the Alberta NDP's first budget.

Sky does not fall as Alberta NDP presents its first budget

When Finance Minister Joe Ceci stood in the Legislature on Oct. 27 to deliver the Alberta NDP’s first budget, it marked the first time since 1972 that the budget was not tabled by a Progressive Conservative finance minister.

Rachel Notley Alberta NDP leader

Rachel Notley

The first budget of Premier Rachel Notley‘s NDP government includes a 15 percent increase in capital spending over the next five years, with a goal to create jobs and tackle the province’s aging and neglected hospitals, schools, roads and other public infrastructure.

The NDP budget includes modest increases and projected stable funding for health care, education, advanced education and human services – core services that Albertans depend on. This was a key component of the election platform that helped propel the NDP into government on May 5. The job creation and economic stimulus elements of the budget followed last week’s creation of an Economic Development and Trade portfolio, led by Edmonton MLA Deron Bilous.

Deron Bilous Edmonton Alberta MLA Minister

Deron Bilous Edmonton Alberta MLA Minister

A projected $6.1 billion deficit in the NDP budget is larger than the $5 billion deficit presented in the Tory spring budget, which was tabled but never passed. But the Alberta government’s eighth consecutive deficit budget is “…hardly sky is falling territory,” wrote University of Calgary economist Trevor Tombe in Maclean’s Magazine this week.

While not trivial, obviously, it is completely manageable. Alberta is fully able to handle it and no one need panic. It represents 1.8 per cent of the province’s GDP, which is fairly small, as far as some deficits go,” Dr. Tombe wrote.

The NDP government will borrow to pay for parts of its operations budget starting next year, which will hopefully be a short-term move. Decades of bad financial management and poor long-term planning by the previous conservative government has exacerbated the provincial government’s current fiscal situation. The PCs simply became too comfortable and dependent on unreliable revenue from natural resource royalties to fund the province’s operations budget.

Jim Prentice Alberta Premier

Jim Prentice

Mr. Ceci also announced that the government would legislate a debt ceiling of 15 percent debt-to-GDP in order to hold off a risk of credit downgrades and higher debt service costs.

Former premier Jim Prentice was correct last year when he warned about getting “off the royalty roller coaster.” The Alberta government faces serious revenue problems and moving Alberta away from its over dependence on resource revenue will be a significant test of Ms. Notley’s first term in government.

Any plan to deal with the revenue problem will likely come after the government receives a much anticipated report from the royalty review panel chaired by ATB President and CEO Dave Mowat. The panel is expected to finalize its recommendations by the end of the year. But it will not be enough to simply wait for the international price of oil to rise again. Albertans need to have a serious conversation about revenue and taxation, including the potential introduction of a provincial sales tax.

Derek Fildebrandt Alberta Taxpayers

Derek Fildebrandt

To no ones surprise, Wildrose Party leader Brian Jean and finance critic Derek Fildebrandt responded to the NDP budget with outrage and a message filled with apocalyptic rhetoric.

Mr. Jean’s post-budget press conference was somewhat overshadowed by Mr. Fildebrandt’s bizarre decision to refuse to answer a question from Globe & Mail reporter Carrie Tait (see the ~8:50 mark in this video). Mr. Fildebrandt is sour from a recent interview Ms. Tait published in which she quotes him as claiming the NDP duped Alberta voters by actually implementing promises made during the election (and he later referred to Ms. Tait as a b-list reporter and accused her of auditioning for a job in the Premier’s Office – a comment he later retracted).

Brian Jean Wildrose

Brian Jean

A joint opinion-editorial written by Wildrose MLAs Rick Strankman (Drumheller-Stettler), Grant Hunter (Cardston-Taber-Warner), and Don MacIntyre (Innisfail-Sylvan Lake) and Dave Schneider (Little Bow) and circulated to rural weekly newspapers in September 2015 provides some sense of how that party would approach provincial budgeting if elected to government:

“When governments borrow and spend, there’s no marketable asset. There’s only debt. It’s like using a credit card to buy pizza. Even when governments borrow to spend on bridges and highways rather than programs, the debt is still not connected to a marketable asset. It’s a liability. Mortgages can be liquidated. Houses can be sold. Who buys used government bridges and worn-out highways?”

This is a crude ideological approach to public governance. Using capital financing to pay for the construction and maintenance of public infrastructure like hospitals, schools, bridges and roads is nothing like using a credit card to buy a pizza.

The Alberta NDP’s first provincial budget is sensible and reflects the thoughtful approach that has defined the first six months of Ms. Notley’s tenure as Alberta’s Premier. Rather than follow a disastrous road taken by some of her predecessors, and slash funding to government services while the price of oil is low, the NDP government is taking an opportunity to invest in much needed public infrastructure when the economy is slow and the price is right. It’s not a brand new approach in Alberta politics, but it is refreshing to see a government focus on building rather than tearing down.