Well, here’s a very different proposition: the leader and party who gets out ahead of the crises we face – who articulates an understanding of their severity, matched by a willingness to meet these challenges with bold solutions and rally us to action – will be politically rewarded.

Take for example the case of climate change and the false debate during the last provincial election over BC’s carbon tax. Both major parties, in effect, told the public, “You won’t have to pay for the changes we need to make.” The Liberals said, “Yes, we will have a carbon tax, but we will return all the money to you in recycled tax cuts in other areas.” The NDP said, “We will go after industry, not you.” No one was speaking the truth, namely, “This challenge is great, and in the near term, we’re all going to have to help pay for climate action, and make some major changes to how we live, work, move around and play.” Ideally, coupled with an inspiring vision: “But done right, the result will be a better quality of life, more inclusive communities, new green jobs, and a more equitable society.”

Who among those vying for leadership today will say, “I firmly accept the overwhelming scientific evidence that climate change is a pressing reality; the defining issue of our time. Its effects are already being profoundly felt in British Columbia. Meeting this challenge will entail fundamental changes, and time is of the essence. If you don’t want a leader who will be guided by this reality, then vote for someone else.”

In the face of the widening gap between the rich and the rest of us, who will say, “I believe public policy should be guided not by the demands and anxieties of the wealthiest among us, but by the needs and wellbeing of the poorest and economically insecure, and I will make policy decisions through that lens.”

Who is willing to say, “I think there is no excuse for poverty and homelessness in a society as wealthy as ours, and their elimination will be a core priority of my government.” Indeed, who might say, “Judge my government by this measure, not by the increasingly less relevant measure of GDP growth.”

And perhaps most daring but honest of all: who will admit that to successfully accomplish these tasks –– confronting climate change, doing so in a manner that provides economic security for modest and middle income families, and eradicating poverty –– will require substantial increases in government spending and investments, which in turn will require an overall increase in taxes. (Now there’s a reality precious few politicians want to admit to, even though most business leaders quietly share this view.)

I could name many more environmental and economic truths that politicians dare not speak, coupled with bold policy ideas they may privately support but which advisors convince them are not realistic. Beneath them all is a simple question: Who will articulate a vision for a province that is truly ecologically sustainable and socially just? (CCPA senior economist Marc Lee offers some of his ideas for what might constitute such a vision here.)

Perhaps one of the reasons that voter turnout is so poor is that a sizable chunk of the electorate is simply uninspired and disaffected, having come reasonably to the conclusion that none of those vying for power is truly speaking to the severity of the challenges we face.

In contrast, one of the reasons behind the recent election of someone like Rob Ford in Toronto, or the historic successes of people like Mike Harris, is not that what they espouse corresponds to the values of the majority of voters (and their “solutions” are simplistic in the extreme), but rather, people like that these leaders brashly say what they think and do what they say.

Or for a more “progressive” example, take the case of recently departed premier Danny Williams (paradoxically a millionaire conservative). He led a bold poverty reduction plan, and asked that his political future be tied to its success. And he brashly stood up to resource corporations (oil companies and AbitibiBowater), demanding that Newfoundlanders receive a fair social contract from these firms. Newfoundlanders hugely rewarded such leadership, making Williams the most popular politician in Canada.

Political boldness such as this comes as a blast of fresh air into the otherwise stale re-circulated air that characterizes politics-as-usual, in which caution is the watchword (and in which progressives vying for leadership fail to offer up a competing vision with as much clarity).

And so a plea to the leadership contenders: trust the public. Trust that we can handle an honest conversation about the challenges we face.

A risky political proposition? Perhaps. But then again, perhaps winning without a mandate to lead us through major change – rooted in fairness and security – isn’t worth the victory.

But having said that, my home province of BC and Canada as a whole have become a lot meaner in recent years. Sure, the good life is still attainable if you have a good job and bought real estate before prices took off, whether due to that good job or through an early inheritance from the folks (itself a growing source in inequality as the boomers hit retirement). But as the song (and a CCPA report) goes, it’s a bad time to be poor.

As we show our Olympic pride at having a crew of multi-million-dollar-a-year hockey players come to Vancouver to play for the home team, let it be known that BC has the lowest minimum wage in Canada at $8, and that has not changed since 2001. In case you were wondering, for a minimum wage earner to pull in what Sidney Crosby earns in just one year, they would have to work 40 hours a week for 541 years (and I’m not even counting Crosby’s signing bonus and endorsement contracts).

You know the rest of the story: social assistance rates that are preposterously low and a system that is punitive; a lack of supports for child care; the end of new social housing construction; an over-crowded public transit system; cutbacks at schools and libraries; and so on.

In my work on climate action, it seems inevitable that the price of food, transportation and energy are going up if we are to be successful at reducing emissions. How we go about designing climate actions matters a lot, and this is the focus of my recent work. But most of the affluent people who go to policy meetings are not thinking about how higher prices affect low income people. Across all of these areas, the problem low income people face is, well, their low income, even though they have done the least to contribute to the climate crisis.

So in the absence of “first-best” solutions like raising the earning power of low income workers and setting a floor (basic or guaranteed) income for all, we are left with “second-best” solutions that try to fix regressive impacts on an issue by issue basis. A credit here, a subsidy there and an ugly patchwork everywhere. Which is already a huge problem: after about $20-25,000 per year low-income credits and subsidies phase out for the low-but-not-lowest-income workers, meaning they face marginal tax rates of 60-70% on new income earned. With the carbon tax and now the HST, the same dynamic has been exacerbated with low-income credits that phase out early and quickly.

Still, I think that a more coherent credit system could be the basis for a guaranteed income, but it would have to be designed more like the credits we give to the middle-class, like Old Age Security and the Canada Child Tax Benefit, which have a long tail phase out so that a very high proportion of families get something. A lot of economists agree on this type of redistribution. But they generally think only about redistributing after the fact. I also want to see the labour market do more of the heavy lifting, as it gives workers and taxpayers the sense that they have earned that income, and this makes for better social inclusion and better political sustainability. Doing that means expanding the scope and quality of public services, raising minimum wages and, perhaps more importantly, vastly expanding the unionization of the low-wage service sector.

So Canada, let’s take that generous spirit we discovered when Haiti got trampled by an earthquake and put it to work at home. A campaign of charitable giving is of course helpful and there are lots of great organizations doing the work that governments ought to be doing. But let’s also focus on electing governments that are going to make eradicating poverty a top priority, something no political party (including the NDP) has endorsed.

“I am calling on the provincial government to cancel the corporate tax cuts that are scheduled to come in over the next two years related to the carbon tax. And let’s put that money into a Provincial Green Fund for transit improvements and green initiatives across the province. By 2012 that would mean approximately $150 million in annual contributions in a Green Fund. That would go a long way toward hitting the emissions reduction targets as set out in law by the government.”

Predictably, James’s call drew the ire of business groups and some pundits. The Sun’s Vaughn Palmer took James to task, saying that, given the economic downturn and woes in the forest industry, now was not the time to deny corporations a forthcoming tax cut (BC’s corporate income tax rate is scheduled to drop over the next two years from 11% to 10%).

In my view, however, James has got it right. Structuring the carbon tax as “revenue-neutral” has always been a bad idea (as the CCPA’s Marc Lee noted in this report). Rather than returning all the carbon tax income in the form of widely dispersed tax cuts to individuals and corporations, it makes much more sense to use some of that money to help meet our climate goals, and some to offset the impact for low-income households.

The task at hand is too great to be wasting precious dollars with revenue-neutral gimmicks.

As for the corporate and forestry sectors, dollars are too scarce to be offering money for nothing. As the CCPA has long argued, across-the-board corporate tax cuts represent a foolish leap of faith –– we hope the corporate sector will reciprocate with new investment in the real BC economy, but maybe they will and maybe they won’t. It is much more advisable to direct our dollars in focused and targeted ways that reward actual investment, ideally in new technologies that see us meeting our greenhouse gas reduction goals.

But looking at the numbers, it was actually quite close: the BC Liberals got 45.7% of the popular vote, compared to 42.2% for the NDP. This slim margin validates the Angus Reid polling camp, which came closest on estimating the popular vote, compared to a handful of others that put the Liberals ahead by 9-10% (I was leaning towards the Angus Reid polls mostly because they had much larger sample sizes of over 1,000 compared to just over 600 for the others, even though according to theory the gap should not change that much).

The Greens had 8.2% of the vote, enough for them to split the vote in enough ridings to make the difference (although it is not obvious that the second choice of Green voters is the NDP). Unlike the federal election, there was no talk of strategic voting in BC, perhaps because the NDP made the carbon tax its wedge issue. That backfired on them badly, with big swaths of the BC Interior and suburbs of Vancouver (those most opposed to the carbon tax) sticking Liberal. Just as Campbell did not know that after announcing the carbon tax, gas prices would shoot up by 40 cents a litre, James and the NDP did not know that those prices would fall so much when they chose to vigorously oppose the carbon tax last summer.

The election, like all Canadian elections that produce majority governments, is a winner-take-all for the Liberals, even though more than half of British Columbians voted against his party. Within the Liberals it is a winner-take-all for Campbell, due to the overly centralized power in the Premier’s office Many of the smiling faces we saw elected will not be seen again except as a backbench backdrop for cameras in the Legislature.

All of which underlines the irony that another opportunity to change the electoral system (to the Single Transferable Vote) went down in flames. Unlike the 2005 referendum, which came close to the 60% approval required to pass, this time it was not even close with 60% supporting the existing system. As several commentators have pointed out, the new Legislature looks a whole lot like the old Legislature, BC basically went for the status quo.

Attention will now turn back to the economy, with the Liberal narrative that they were the best managers through hard economic times. It is surprising that the NDP did not pick up on the string of economic bad news that flowed out of Statscan during the lead up and the campaign. They might have felt that doing so would only reinforce the Liberals’ economic manager frame.

Instead, the NDP ran an opposition campaign that offered no vision for the province other than ridding ourselves of Campbell. They hit the Liberals effectively by playing on a “crony capitalism” theme, manifested in the scandal over BC Rail privatization, and other privatization of new run-of-the-river electricity generation and certain public services. But ultimately their anti-Campbell yang lacked a yin that offered up some concrete changes that would improve the lives of British Columbians. Hopefully, this will provoke some soul searching within the party that leads to renewal.

Both parties were guilty of not being forthcoming about the impact of economic developments on the state of the BC budget. A small deficit tabled in February is surely much much larger, and it was not clear what either party would do if elected. So we will have to wait and see if the Liberals will let the deficit grow, or if they will attempt to cut spending to keep the lid on an ostensible half-billion dollar deficit. They seemed to leaning toward the latter during the election campaign but that was, well, the election campaign. If they wait until September before tabling a budget update, much of this will be easier to spin.

Another big question is where the Liberals now go on climate policy. They have received much praise for the first steps on climate action, including the carbon tax, but there was nothing in the platform that spoke of making the next steps. I seem to have been the only one in the campaign to have pointed out that the Liberals do not have a plan to meet their legislated 33% reduction in GHG emissions by 2020. So getting that done would be a good start, but I’m doubtful that we will see much, although more oil and gas extraction is definitely in the works and that will be a huge hurdle to meeting the legislated target.

Most of the attention on climate policy is likely to turn to the international stage in the lead up to Copenhagen in December, which will attempt to carve out a new global deal on climate change (with a helpful US government, we can only hope). And BC will not want to move ahead too much with a North American cap-and-trade system in the works.

So looking foward to the next four years, it is not obvious at all what we are going to get from the third Campbell administration.

It’s time to put the planet before politics

May 9, 2009

In April, scientists reported that another piece of the Antarctic ice shelf, this one six times the size of Vancouver, collapsed. According to David Vaughan of the British Antarctic Survey, “There is little doubt that these changes are the result of atmospheric warming.”

We know that global warming is caused largely by a build-up of heat-trapping fossil-fuel emissions in the Earth’s atmosphere, but the emissions continue to increase. This past week, our nation received dubious international recognition for having the worst record among G8 countries when it comes to reducing global warming emissions. The costs of climate change are being felt worldwide and are mounting in terms of damage from extreme weather events.

In British Columbia, we are in the midst of an election that pundits predicted would be all about the economy. But climate change and the environment have dominated the debate. As is clear from news headlines, the issue has become incredibly polarized. We implore all parties to refrain from the divisive and polarized politics of the past and help us restore the planet to its natural function.

Scientists alone can’t solve global warming. We need political will and we need action from all citizens. For the sake of the environment and the economy, it’s time to come together on this issue with clear solutions.

Climate change affects us all and is one of the most pressing problems of our time. That’s why we, as leaders from diverse sectors of B.C. society, are joining to call on all B.C. political parties to adopt a fast-track climate action plan for British Columbia.

We believe B.C. already has a model that shows promise and that can set an example for the rest of the country. The latter point is crucial, as measures to combat climate change must be national in scope to be truly effective. But we must keep moving forward.

We pledge to all political parties that we are willing to work together to make B.C. a leader in climate change solutions — including new green jobs and investment — in a way that’s fair, cooperative and positive. Specifically, we’re calling on the next B.C. government, regardless of party stripe, to implement a number of key solutions.

We know we can build healthy communities through investing in green infrastructure. This investment can create thousands of new jobs today and improve our quality of life by reducing traffic, establishing more green spaces and parks, and creating more pedestrian-, bicycle- and transit-friendly communities.

Today, transportation accounts for 36 per cent of B.C.’s greenhouse gas emissions. Most B.C. communities rely on cars for transportation. This leads to more congestion and air pollution and negatively affects our health.

We need a sustainable transportation network, including faster, more frequent and more efficient transit service across the province.

We’d like to see the B.C. government invest on average $650-million a year between now and 2020 in new provincial funding for public transit to improve service with more energy-efficient buses and rapid bus and rail lines across the province.

Give us a B.C. government that will provide B.C.’s cash-strapped municipalities with the money or tools to deal with their transit-funding shortfalls. For example, B.C.’s 21 Metro Vancouver municipalities need to address the existing funding gap of $150-million now and to ramp up quickly to $450-million per year by 2011.

B.C. should also provide funds to complement U.S. President Barack Obama’s $8-billion high-speed passenger rail plan, which includes a Pacific Northwest section joining B.C. to the U.S. The funds would be used to build the Canadian portion of the network.

B.C. should invest at least $100-million a year in bicycle infrastructure such as bike paths, bike lanes and traffic calming to improve cyclist safety, and increase funding for pedestrian infrastructure.

Give us a government that will offer zero-interest-rate loans to B.C. communities through the Municipal Finance Authority so that municipalities can invest in green infrastructure, such as community energy systems that will reduce emissions and improve the quality of life in our communities.

We want to see more new and affordable clean-energy solutions available to B.C. households, including energy-efficiency retrofits and innovative measures such as solar roofs and more fuel-efficient vehicles. At the same time, we want our businesses and industries to be competitive in the economy of the future by being more clean and energy-efficient. In B.C., industry accounts for about 35 per cent of our greenhouse gas emissions.

We’d like to see an increase in funding for home and business energy-efficiency retrofits to $100-million yearly. This level of provincial funding, combined with an increased investment from the federal government, will green more than 400,000 homes in B.C. by 2020 — half of all B.C.’s homes.

Let us improve B.C.’s climate plan by using both the carbon tax and the cap-and-trade system to spur innovation and development of clean-energy solutions. The carbon tax and cap-and-trade system should cover all of B.C.’s greenhouse gas emissions and should be enhanced over time to enable B.C. to achieve or surpass its legislated emissions target.

We urge the government to increase the existing low-income carbon tax credit at the same rate as price increases on greenhouse gas emissions. We also believe a portion of carbon tax revenues should fund public transit, energy-efficiency and renewable-energy projects.

B.C. should adopt world-leading energy-efficiency standards on an on-going basis for cars, light and heavy trucks, appliances and buildings.

B.C. can provide a model for an effective nation-wide climate change plan that can show the rest of the world we’re serious about this problem. This would be good for both our economy and our environment — and for our children.

As citizens of this planet, it is our responsibility to put the planet before politics and urge the next B.C. government and federal politicians to do the same.

* Dawson Creek Mayor Mike Bernier
* Castlegar Mayor Lawrence Chernoff
* Whistler Mayor Ken Melamed
* North Vancouver Mayor Darrell Mussatto
* Prince George Mayor Dan Rogers
* Kelowna Mayor Sharon Shepherd
* Dr. Warren Bell, Canadian Association of Physicians for the Environment
* David Boyd, Co-chair of Vancouver’s Greenest City Action Team
* Ian Bruce, David Suzuki Foundation
* Naomi Devine, Common Energy co-founder, UVic.
* David Dranchuk, Coordinator for Societal Ministry, Diocese of New Westminster
* Guujaaw, President of the Haida Nation
* Mike Harcourt, former B.C. premier
* Marc Lee, Senior Economist, Canadian Centre for Policy Alternatives
* David Suzuki
* Milton Wong, Chancellor Emeritus, Simon Fraser University and non-executive board chair, HSBC Investments (Canada) Ltd.

Towards an effective and fair carbon reduction strategy

By George Heyman and Dr. Colin Campbell, May 7, 2009

The latest science on global warming shows we must rapidly slash carbon emissions, or face catastrophic impacts on our civilization by the end of the century. We are already seeing the precursors with a 10-year drought in Australia, repeated flood events and the loss of interior forests here in B.C. Initiating the shift to a low-carbon economy and lifestyles is the responsibility of our generation. Eventually we will have to find a way to remove carbon from the atmosphere to ensure climatic stability ­ but first we must stop making the problem worse. A hard cap on carbon emissions, within an equitable and motivational framework, is required if British Columbia is to do our part to avoid global climate disaster.

How can we effectively eliminate all greenhouse gas emissions both fairly and effectively? ‘Cap and Dividend’ is a relatively simple and transparent model that uses existing mechanisms rather than inventing new administrative bodies. It is already in the works in the United States, where it is before Congress as the Cap and Dividend Act of 2009.

Clearly, we must have a cap on carbon emissions or we will not be able to limit global warming to the average two degrees Celsius that scientists say is necessary to avoid a climate calamity. A cap will cover 100 per cent of emissions, either directly or by flow-through pricing, unlike BC’s current carbon tax which covers about 70 per cent. Once the cap is applied, carbon permits are sold at the four points of entry of carbon into the economy: oil wells, gas wells, coal mines and the border ­ protecting our industries from unfair, uncapped competition. The collected revenue is then distributed fairly to all citizens.

The ‘Cap and Dividend’ model protects low-income earners from price increases and rewards the carbon-thrifty with additional income. It takes money from carbon polluters and users, and redistributes it equitably for climate-friendly initiatives such as home retrofits, consumption of locally-produced food and low-impact and public transportation choices. The structure also brings certainty to emission levels in a way we could never count on taxes to accomplish.

British Columbia has chosen taxing carbon as its method to stimulate behavioural changes necessary to slice greenhouse gas emissions. The tax is modest, such that recent price fluctuations in gasoline have exceeded its value by a factor of 20. Even at the projected maximum of $30/tonne we cannot expect the kind of results that are needed to meet legislated goals of a 33 per cent emissions reduction by 2020 and an 80 per cent cut by 2050 — much less the critical goal of reaching zero emissions by the end of the century. Taxes beyond the $30 mark would be politically thorny, increasingly inequitable and therefore unlikely.

While the very presence of the carbon tax raises consumer awareness and promotes some positive change in energy usage, a speedy transformation to a low-carbon economy must be multi-pronged and include infrastructure renewal, a comprehensive transportation policy and personal financial ability (or available assistance) to invest in green options. Relying solely on an imprecise and unpredictable market mechanism like the carbon tax to reach critical targets within distinct time-frames runs the risk of falling short–at a time when the planetary stakes have never been higher.

B.C.’s carbon tax has been examined closely by the Canadian Centre for Policy Alternatives (CCPA) The CCPA concludes that the tax in its current form is inequitable and discriminates against people who want to make the right choices both for themselves and for the planet but are struggling financially. British Columbians could turn against the essential transition to low-carbon lifestyles simply because they cannot afford to shrink their carbon footprints. The CCPA found that by year three of the carbon tax, BC’s highest 20 per cent of income earners will incur a net benefit from corresponding income tax cuts whether or not they reduce their carbon consumption, while everyone else has a net loss.

The irony is that higher income earners often have a hefty carbon footprint through lifestyles that include frequent and far-flung travel, larger vehicles like gas-slurping SUVs, bigger houses, and multiple dwellings. They have little incentive to forego what they can easily afford. Without fundamental change, the present carbon tax regime makes it harder for the majority of British Columbians to contribute to inspired solutions such as retrofitting their homes, buying locally-produced organic food or leaving their car at home in favour of improved public transportation.

A logical application of at least some of the province¹s carbon tax revenue, whether through low interest loans or grants, would be to assist many British Columbians to make those climate-friendly changes. In this vein, Metro Vancouver mayors have asked the province to free up to $300 million in annual carbon tax revenue to help pay for regional transportation. The enormous technical challenge of reconfiguring B.C.’s infrastructure will not be cheap and will not all be financed privately or by industry. The money stream generated by the current ‘revenue-neutral’ carbon tax cannot be applied, as it logically should, to low-interest retrofit loans, grants or public transit investment (including fare reductions which would encourage greater use). Taxes from gasoline are already used to build roads and bridges. It is also both sensible and necessary to use public money to finance measures and infrastructure changes which encourage climatic stabilization.

‘Cap and Dividend’ clearly has a place in Canada, and what better province than B.C. to guide the way? B.C. has already led by recognizing the need to manage our carbon. Now we can become a global leader in promoting a ‘Cap and Dividend’ solution that acknowledges the need for urgent action based on the most recent science, ensures BC¹s carbon reduction targets will be met and equitably helps all B.C. residents erase our collective carbon footprint.

George Heyman is Executive Director of Sierra Club BC. Dr. Colin Campbell is Sierra Club BC’s Science Advisor.

BC’s Economic Challenges and the Liberal Platform

By Marc Lee

The BC Liberal platform features many feel-good photos and proud statements taking credit for the province’s recent boom. But read between the lines, and one realizes that after eight years in power, the Liberals have effectively run out of ideas.

The platform fails to offer any vision for the future. The Campbell Liberals made some progress on climate change actions over the past couple years, but the platform offers nothing new. Meanwhile, the Climate Action Secretariat, once residing in the Premier’s office, has been relegated to the Ministry of the Environment, which recently had its budget cut.

Premier Campbell deserves credit for bringing in the carbon tax, plus a variety of other climate measures that represent the low-hanging fruit of greenhouse gas emission reductions. While the carbon tax has its shortcomings, in my view it is a positive first step, and one that carries enormous symbolic value for environmentalists.

Still, the government enters the election without a plan in place to get BC to its legislated 33 per cent reduction in greenhouse gas emissions by 2020. And there are some glaring contradictions between the climate plan and other parts of the Liberals’ platform.

One of those contradictions is the oil and gas industry. Between 2001 and 2006, oil and gas industry emissions surged by far more than the carbon tax will ever reduce come 2020. Recently, Premier Campbell was in the Northeast, promising more new investment in oil and gas extraction, which may make it virtually impossible to reach our targets. And it is not like the oil and gas patch is a huge employer – about 2,200 direct jobs in 2008 – for all that pollution.

Highway expansion and the $3-4 billion Port Mann Super-Bridge also go against the climate-action grain. This expensive mega-project will only push more unsustainable, car-oriented development further up the Fraser Valley. This threatens valuable farmland, and means that congestion will be back within a few years. No jurisdiction in the world has ever built its way out of congestion problems.

The Liberal platform offers no real vision for the economy either, now that the great boom is over. Unemployment rose rapidly through early 2009, and with housing starts down 70%, the worst is yet to come, as construction workers finish their current projects and head straight to the back of the unemployment line.

The current economic collapse is not the fault of the Liberals, but then neither was the boom their creation. BC’s economic fortunes rest on what happens outside our borders, in particular in the export markets of the US and Asia, and in Ottawa, through the Bank of Canada and the federal government.

As cheerleader-in-chief, Premier Campbell may have pumped up the home team’s confidence, but let’s face it, the cheerleaders did not win this game. Like other parts of the world, low interest rates drove a bubble in real estate, leading to a massive expansion of construction activity. And high commodity prices driven by export markets made BC’s resource industries take off.

In February’s budget, the Liberals offered little in the way of stimulus, mostly re-announcing projects already underway or relying on federal stimulus dollars. There is much more that should be done to retrofit our infrastructure to be green – like public transit and energy efficiency upgrades – and to meet long-neglected social needs, like affordable housing, addiction and mental health facilities, or residential health care.

Bad economic times mean that the small deficit projected in the budget will inevitably turn out to be much larger. The Liberal platform promises that BC will “live within its means”, but faced with a $1-2 billion deficit, will a new Liberal government pile on more spending cuts and risk making the economic picture worse, or will it accommodate a larger deficit? What does that mean for the few new promises in the platform, like all-day kindergarten or U-passes for all Vancouver post-secondary students?

In politics, as in business, marketing is everything. The BC Liberals have branded themselves as the party of good economic times, but also the party with the long-term vision to tackle climate change. At a time when families in BC are concerned about the future on both fronts, the Liberals have put forward an unambitious “devil you know” strategy to win re-election.

Even during the good times, not all British Columbians were part of the boom. Poverty rates did not drop in any meaningful way, homelessness doubled, and inequality worsened with each passing year. BC needs a plan, with targets and timelines (just like climate change) to address poverty, especially as the recession deepens its grip.

With a lack of vision and too many contradictions, the platform does not provide any sense of how Campbell the Third will govern.

But there is no reason to believe that the only thing the NDP would do is cap and trade. There are other ways to reduce GHG emissions besides implementing cap and trade, even without a carbon tax. There are, for example, additional investments that could be made in transit and energy efficient technologies, reversals of policies that subsidize the development of new mines and other energy intensive industry, additional regulations governing energy use. The NDP would undoubtedly pursue at least some of those alternatives to help offset whatever impacts the elimination of the carbon tax would have. They may not be as economically efficient as a carbon tax, but nor would they be so devastating as Jaccard would have us believe.

But as disappointing as Jaccard’s crusade against the NDP was, John Robinson and co’s op-ed in the Vancouver Sun this past weekend (excoriating the NDP and lavishing praise on the Liberal’s carbon tax) was almost too much to bear. In their unabashed effort to pick political sides, they completely missed the key policy issues that need to be addressed.

The Liberal’s tax, as currently proposed, is too modest to have a significant effort on carbon emissions. If the tax is retained and is to form a central part of the emissions reduction plan, we need to consider how high the tax proponents will demand that it go – more to the point, how high the politicians will let it go. It would be nice to discuss, and for the proponents and politicians to be transparent, on where this is going.

Also, the carbon tax is technically flawed. The objective of the tax is to achieve specified target reductions. But reductions in gasoline and other fossil fuel use will depend on their total price, not simply the tax component. The size of the tax that is needed with crude oil at $50/ barrel is a lot more than at $150. The question is: how do the proponents think this problem can or should be fixed – how are they proposing that the tax be linked to the price of crude oil and other fossil fuels.

The most troubling policy issue, and one the proponents are curiously silent on, is the notion that carbon taxes should be revenue neutral. Since the tax is levied on carbon emissions precisely because of the climate change and other costs those emissions may have, surely the revenues from the tax should be dedicated at least in part to offset and mitigation measures.

It is almost certainly the case that investing carbon tax revenues in carbon-reducing measures, like additional transit, or climate change mitigation measures, like additional flood control or crisis preparedness, would be far more significant than the behavioural effect of the tax itself. The use of gasoline and most other fossil fuels is what economists like to describe as inelastic (relatively unresponsive) to price. A modest increase in the price will not have much effect on consumption.

Of course revenue neutrality provides a nice political spin. But isn’t the point to get away from political spin. The proponents of the tax are adamant we must meet our reduction targets. We won’t get there without public investment; and we won’t get the public investment if new sources of revenue are not available for that purpose. If it isn’t revenues from a carbon tax, it would be nice to know where the new sources of revenue will come from.

The issue is not simply to tax or not to tax. The issue is how to tax if that is part of the plan, and what else must accompany it. It’s the package, not one component, and currently a small one at that, that needs to be addressed.

UPDATE: The online version has now been fixed.

Can the NDP deal with B.C.’s economic challenges?

By Marc Lee

In BC’s 2009 election, parties must respond to two fundamental challenges: first, a crashing provincial economy with rapidly rising unemployment; and second, the global climate crisis, which demands that BC dramatically reduce its greenhouse gas emissions.

Rather than pit these objectives against each other, good policy choices should instead link them together: our efforts to boost employment through stimulus packages should be strategic investments that put BC on a sustainable path, not just a return to old patterns of development.

While the NDP platform takes some important steps on both fronts, it does not offer the bold new direction and vision many might expect with global capitalism on its knees. The NDP attacks head-on some of the most egregious and controversial policies of the Liberals, like run-of-the-river power projects and the flawed P3 infrastructure model. But ultimately, the platform is cautious and lands very much in the middle of the road.

This is problematic in that the NDP platform accepts both the culture of fiscal conservatism that has come to dominate Canadian politics (manifested in an over-emphasis on tax cuts and balancing the budget), and an overly rosy view of the state of the economy. It takes as given the Liberals’ February budget, which describes an alternative universe in which unemployment averages 6.2% for 2009, and BC weathers a small storm just in time for the opening ceremonies of the Olympics.

But the provincial unemployment rate hit 7.4% in March, up from 4.3% a year before. Since last summer, 83,000 jobs have been lost. With new housing starts down 70% compared to last year, construction employment will plummet even further as current projects are completed, meaning an unemployment rate that could hit double digits by year-end.

This inevitably means the half-billion dollar budget deficit tabled by the Liberals is a work of fiction. Both parties need to come clean about how they would amend their plans given higher-than-budgeted deficits in the $1-2 billion range.

Moreover, falling consumer spending and business investment mean government must lean even harder against these adverse economic winds. In terms of stimulus, the 2009 budget package will do little to curb rapidly rising unemployment. BC is in an excellent fiscal position, and should err on the side of doing too much, not too little.

The NDP platform adds more stimulus, with a modestly larger deficit and higher capital spending. Together, these provide additional stimulus of 1 to 1.5% of GDP if we count the multiplier effects. How the stimulus is spent is also important, and the NDP’s plan is focused on green infrastructure and social investments.

The NDP platform also takes aim at the climate change file. Its program would cap emissions from large industrial sources starting in 2010, and will harmonize those efforts with a North American cap-and-trade system. They also propose major public transit investments, low-interest loans for building retrofits for energy efficiency, and a royalty on “flaring” in the oil and gas sector (the source of 13% of BC’s GHG emissions).

Unfortunately, most of the attention of climate policy has been on the BC carbon tax, which is neither as horrible as the NDP paints it, nor as potent as advocates make it out to be. Given BC’s fiscal challenges, the NDP would do better by fixing some of the problems with the tax (like ensuring it covers all GHG emissions), using the revenues to fund climate action (rather than borrowing), and shoring up a low-income credit that fails to protect low-income households as of 2010.

The incrementalist approach of the NDP platform also shows on social policy. Even during the recent boom, many British Columbians were left out. The Liberals have overseen the shredding of social assistance, the gutting of social housing construction, and the dubious distinction of BC having the lowest minimum wage in Canada.

The NDP platform would reverse some of this damage. It would raise the minimum wage to $10. It aspires to create 2,400 new social housing units this year, and 1,200 per year after that – a move aimed at a major reduction in homelessness. The NDP have said they would bring in a poverty reduction plan with targets and timelines, but do not say what those targets should be. And the new money for social assistance in their platform is inadequate given this goal and the economic situation.

Now that BC’s housing and commodity booms are over, and the recession is getting worse each week, structural weaknesses in BC’s economy have been revealed that were not cured with a tax cut. BC needs a bold new vision that combines social justice principles with a sustainable economy. By this yardstick, the NDP makes some progress, but by pandering to tax cuts falls short in its ambition.

As for run-of-river IPPs, the fact is they are not very green, at least not if you value the large amount of land and water resources they cumulatively impact in pristine wilderness areas. They are not needed in the amounts that the government is forcing BC Hydro to acquire with its incredibly ill-considered and needlessly costly self-sufficiency and insurance policies. The energy they provide is relatively low in value, delivered disproportionately in the spring when least needed. They are high price. And the private contracts under which they are purchased provide BC Hydro with no long term security of supply. At the end of the contract terms the IPP power must be repurchased at then prevailing market prices.

Liberal Energy Policy forcing the development of excessive amounts of these ‘green’ IPPs is what I like to call a strategy to buy high-sell low (because much of the IPP power will be surplus and exported at relatively low prices) and buy now-buy again later (at the end of the initial contract terms). En realidad, as my Baja friends would say, its not just godless socialists that could question its wisdom.

As for the carbon tax, the hysteric debate and forecasts of doom have nothing to do with what is being proposed. Axing the Liberals carbon tax will mean fuel prices by 2012 may be 7 cents per litre less than they would otherwise be. That is a relatively small difference in price (less than the very annoying daily swings in price that sometimes take place at your friendly service station). And that in turn will have only a marginal impact on fuel consumption and related emissions. The demand for fuel is widely recognized by economists as inelastic (relatively unresponsive) to price.

Whatever you think about the Liberals carbon tax — a token gesture to attract green votes or a bold, albeit modest, step in the right direction — it is almost irrelevant to the much larger issues that need to be addressed. How and when will a cap and trade system for large emitters be put in place? How will transit initiatives be developed and financed to reduce auto use? Will vehicle levies or system tolls be introduced? If we are going to retain a carbon tax, how high should it go, and how can it be linked to the price of crude oil, so that it isn’t too small when crude prices are low and too high when crude prices go through the roof. Shouldn’t carbon tax revenues be devoted at least in part to offsetting the emissions on which they are levied? And shouldn’t we coordinate any carbon tax policy, like cap-and-trade, with what is going on elsewhere.

There is an opportunity to have an interesting debate here. But, at least so far, passion, politics and new found religious zeal seem to rule.

In hindsight, the carbon tax was perhaps the worst-timed policy announcement ever, with prices at the pump jumping by about 40 cents per litre between the announcement in the February 2008 budget and July 1, when it was implemented. This shows both how quickly a carbon tax can be introduced (compared to years of negotiations for a cap-and-trade system) and how the intent of the tax can be subverted by market forces. The relatively puny 2.3 cent a litre carbon tax absorbed much of the public anger about rising fuel prices that were about 20 times larger in magnitude.

Thus, an important lesson is that we need more than a carbon tax, but to regulate fuel prices (so that they act like stable market prices plus a rising carbon tax). This would enable households to avoid opportunistic price increases at the pump every time a storm is headed for North American shores, and the broader problem in 2008 of a speculative bubble in energy prices. It would provide the clear market signal of rising prices that proponents of a carbon tax want. The tax would essentially become hidden and represent the difference between the wholesale and retail prices (including other federal and provincial fuel taxes, too). This mechanism could also provide a floor price for emissions under an emergent North American cap-and-trade system (price volatility is one of the downsides of cap-and-trade).

We also need more than a carbon tax in terms of complementary public investments and standards/regulations around energy efficiency, alternative power and urban and inter-city transit. The carbon tax is too small on its own to affect behaviour, and even at 7.2 cents per litre in mid-2012 (if it survives that long) it will not make a dent in BC’s greenhouse gas emissions. The tax needs to be much higher, like twenty times higher, if we are to induce shifts in people’s transportation habits (this process was underway last year but lower fuel prices have undermined those gains). However, we too often think of a driving metaphor when contemplating the efficacy of a carbon tax; large, industrial emitters will feel the pinch at lower levels of the tax.

In any event, one major problem with the NDP’s proposal to scrap the tax is that the tax could be used to finance those good things above that need a public boost. Instead, the NDP would have to borrow the money for those investments, and with the BC budget in a sea of red ink, the bias will be towards doing too little. Another problem is that any strategy to reduce greenhouse gases that is successful will lead to higher consumer prices. Even with the carbon tax, two-thirds of the tax paid by households will be indirectly embodied in the price of goods and services people buy in the marketplace. Cap-and-trade or regulatory approaches that increase costs for compliance will lead to higher prices for GHG-intensive goods and services, and overall that is a good thing. But we need to be honest about how we are going to address distributional aspects of those higher prices.

With carbon pricing alone, we just end up pricing out the lowest-income people. But addressing distributional issues is where the revenue from the carbon tax also comes in handy. The current “recycling regime” of the carbon tax dedicates about one-third of revenues to a low-income credit in year one (2008/09), which more than offsets the average impact of the tax for the bottom two quintiles. But this credit is not scheduled to grow in line with the carbon tax, and that progressive result at the bottom disappears this July, and becomes regressive as of July 2010 (on average, households will pay more in carbon taxes than they get back from the low-income credit). Toby Sanger and I crunched the numbers in a paper released last Fall.

Carbon pricing alone is also not enough because the households with the largest carbon footprints are those with the largest incomes (Hugh Mackenzie, Hans Messinger and Rick Smith detailed Canada’s ecological footprint by decile in a study last year for the CCPA). The richest households can buy their way out of change, so standards and regulations are needed to ensure that emissions from the largest-emitting households are reduced.

Fixing the tax also means that it should be applied to all GHG emissions, not just to burning fossil fuels. This means applying it to flaring and pipeline leakages in the oil and gas sector (the NDP propose something like this), process emissions in the cement and aluminum industries, and to landfills (although the current regulatory approach to this latter area may in fact make more sense than applying the carbon tax). And we should even consider applying it to exports of coal and natural gas, as these lead to massive GHG emissions outside BC’s borders that are not counted in our emission totals (only emissions associated with the extraction of the resource, which themselves are huge, are counted).

Most environmentalists are aware of these shortcomings but see the carbon tax as an important first step. But too much of the attention of climate policy has been on the carbon tax, rather than the host of other measures that need to accompany it. Rightly or wrongly, the carbon tax has become a litmus test for seriousness on climate change to the great detriment of the NDP. While I disagree with the NDP’s stance on the carbon tax, their budget platform essentially endorses the rest of the BC government’s climate action plan and does make some improvements: the royalty on flaring mentioned above; more public transit investment; and short-term caps on emissions from the largest industrial emitters. The NDP proposal for low-interest loans for housing efficiency retrofits is a weak link; we need to get beyond incentives and start mandating audits and retrofits, particularly for older building stock, and finance that through BC Hydro bills so households do not have to lay out any cash upfront but still see lower Hydro bills (a classic win-win).

So go the finer points of climate policy. There are many shades of grey, good things and bad things to be said about both the NDP and the Liberals. But by tossing the carbon tax, the NDP was won the eternal wrath of most of the enviro movement. So it is a shame to see the Pembina Insitute, David Suzuki Foundation and Forest Ethics hold a press conference to that effect, without giving credit for the good parts of the NDP platform. And given the shortcomings of the carbon tax, to fully endorse the Liberals seems a bit much, especially when there are some glaring contradictions in the Liberals’ approach, such as pressing forward with an astonishingly expensive ($3-5 billion) Port Mann Super-Bridge that will drive unsustainable suburban development further up the Fraser Valley, and that will clog up the new bridge within a few years of its opening (the NDP is silent on this one). The Liberals also want to increase oil and gas development in the Northeast – which creates few jobs but produces enormous greenhouse gas emissions – and have announced road expansion into the oil and gas patch, effectively a ramping up of subsidies to the industry (the flaring royalty notwithstanding, the NDP seems to think expansion is fine, too).

A painful bottom line is that, for all of the work on climate action over the past couple of years, and after much ado about legislated targets for greenhouse gas emissions, BC enters the election without a plan to get to its 2020 target of a 33% reduction (hello, balanced budget legislation?). The current climate action plan is estimated to get 60-80% of the way there. The remainder was considered by a Climate Action Team that reported last summer, but whose recommendations have not been implemented. And there is no plan to build these into a new climate action plan. And the kicker is that the safety valve in the CAT report that allows us to meet our 2020 targets: the carbon tax.

Those happy days soon came to an end, and the new carbon tax had quite a difficult time. People misunderstood her and called her nasty names. They said she hurt poor families, and that she was unfair to people who lived in the country. Some said she was just a gas tax, and wanted to kill her off. Some said she couldn’t do anything, but then she got blamed when gas prices went sky high. When the Prime Minister, a cruel man, came to town he said she was not even revenue neutral.

Beseiged by critics, the new parents were torn apart. The carbon tax’s mother left the House, and was last seen working for that mean Prime Minister, looking after his taxes with a bunch of billionaires. The father got scared of his new tax’s strange power to make him lose support in swing ridings, and stopped talking about his new baby. Later, he lost interest in his whole family of climate actions, and packed them off to live at the Ministry of the Environment, then he cut that sad ministry’s budget.

Abandoned by her mother, neglected by her father, the carbon tax soon came to live with her wicked uncle, the new Finance Minister. Uncle Colin had his own children, especially his favourite, Tilma, who everybody loved because she looked good, even though she really did not do very much at all. And now Uncle Colin had to take care of all of those other taxes, too. Poor little carbon tax was alone and scared beside all those bigger and older taxes.

And so the carbon tax turned one. Uncle Colin barely even gave her a present, and would not let her low-income credit grow. He would not let any of her revenues be used to build new transit to help people. She did not want to hurt working families, she only wanted to help clean up the planet. But now she knew that she would hurt them, and most of her revenues went to people who did not even need the help. And yet she was still too small to make them change their ways.

Happy birthday, carbon tax! A year ago, when she was born, her life was so full of promise. But now she wonders if it was all just a fairy tale.