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Opinion

The right-wing roots of carbon pricing

By Martin Regg Cohn      

Welcome to the world of "carbon fee and dividend," advocated by former secretaries of state George Schultz and James Baker, promoted by Green party politicians, and blessed by skeptical right-wing columnists as the optimal solution for our political and climatic environment.

To the frustration of Ford and federal Conservative Leader Andrew Scheer, right, Prime Minister Justin Trudeau's Liberals have taken a page from the Tories’ playbook and are singing from the Republican songbook, writes Toronto Star op-ed columnist Martin Regg Cohn.
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Today’s fight over carbon pricing isn’t the ideological battle of the century.

That would be a historic misunderstanding of our future by politicians fighting the last war.

Despite Premier Doug Ford’s fulminations, this week’s embrace of pollution pricing by Prime Minister Justin Trudeau isn’t proof of a left-wing plot to pick the pockets of Canadians. To the contrary, it is evidence of a remarkable role reversal—the culmination of conservative political thought and the triumph of right-wing market forces now being adopted by mainstream politicians.

Global warming isn’t ideological, it’s empirical. The chill wind blowing from the right wing isn’t conceptual, it’s electoral.

And the federal-provincial court fight brewing over carbon pricing isn’t jurisdictional, it’s purely political.

To understand the war of words, it’s helpful to look beyond mere strategy and tactics. And consider the telltale clues over semantics and antics.

Politicians who previously promised to impose carbon taxes are now running away from them. And conservative critics who long campaigned for free market solutions are now complaining about them.

When the federal government eschews the phrase “carbon tax”—preferring to call it a price on pollution—that’s not a word game conjured up by Canada’s Liberals trying to rebrand a revenue grab. It’s a concept promoted by influential U.S. Republicans to persuade their own partisans that global warming requires economic solutions as much as political prescriptions.

Never mind cap and trade, whose complexity and opacity was exceeded only by its economic efficiency. It’s gone forever from Ontario, dismantled at great expense by Premier Doug Ford as part of his phoney war against an illusory “carbon tax.”

Having killed the carbon tax that never was, Ford has been salivating to slay the new federal carbon tax that never came to pass.

“Trudeau does not have the right to ram a carbon tax down the throats of Ontario families and job-creators,” the premier raged this week.

“This massive tax hike from the federal government will jack up the cost of living for each and every Ontario family and business.”

Never mind that Trudeau clearly does have the constitutional right, not to mention the electoral mandate.

What counts is that the federal plan is not a conventional carbon tax, and will not raise the cost of living for Ontarians, because it is actually a revenue redistribution plan.

Welcome to the world of “carbon fee and dividend,” advocated by former secretaries of state George Schultz and James Baker, promoted by Green party politicians, and blessed by skeptical right-wing columnists as the optimal solution for our political and climatic environment.

The Trudeau Liberals now understand that if you can’t beat the critics, just co-opt them.

What Ford calls a tax, the government now calls a pollution fee. And while opponents claim it’s a cash grab, the government is astutely playing the cash-back card, by promising to reimburse at least as much money to citizens.

To the frustration of Ford and federal Conservative Leader Andrew Scheer, the Trudeau Liberals have taken a page from the Tories’ playbook and are singing from the Republican songbook. Rather than relying on transformational politics, they are counting on transactional politics.

Hence the “dividend” component of the “carbon fee and dividend” equation: First, collect fees from polluters. Second, acknowledge that like any cost of doing business—from water usage charges to zoning requirements or corporate taxes—those costs will be more or less passed on to consumers. Third, rebate that “windfall” in the form of so-called dividends for consumers.

Is it a shell game, as Scheer and Ford claim? No, merely being revenue neutral does not emasculate it economically.

Even if the government gives back your (revenue neutral) cut of the windfall, you are still incentivized to lower your consumption of carbon – by getting a more fuel-efficient vehicle or insulating your home. Despite the government rebate, it’s not necessarily a wash, because the smart consumer will still try to come out ahead—maximizing his savings by minimizing his exposure to carbon fees.

Think of government employees who get a fixed “per diem” amount for meals when on the road, in lieu of submitting restaurant receipts for reimbursement. Have you ever noticed how those public servants try to minimize their meal expenses so that they come in under the per diem – and pocket the difference? Nothing wrong with that under the rules, because it’s a win-win—it discourages overconsumption, and actually saves the employer money by avoiding lavish restaurant bills.

That’s the analogy to fee and dividend. You get a fixed amount back from the government, representing your share of the overall fees collected. But it’s still in your interests to minimize your exposure to those fees in your day to day life.

It’s a free market solution that relies on price signals (just as cap and trade was, before Tories turned on it for partisan gain).

“It comes out of free-market thinking in the U.S.,” notes Mike Schreiner, leader of the Ontario Greens, whose party has long called for fee and dividend as the best way to build enduring political support for environmental action. But now, right wingers who might be expected to endorse price signals out of fidelity to their own ideology are suddenly “all opposed to it—and I find that infuriating.”

It’s not hocus-pocus, merely a way of nudging people into better environmental behaviour in a hostile political environment that Ontario’s premier is so keen to exploit.

“The people of Canada,” Ford huffed the other day (wait—isn’t he leading the people of Ontario?) “are too smart to believe that Trudeau’s phoney rebates are anything more than a temporary vote buying scheme … The carbon tax rip-off is forever.”

On current trends, global warming is forever. Carbon pricing is just beginning.

Martin Regg Cohn is a political columnist who covers Queen’s Park for the Toronto Star.

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