Mr. Speaker, I am happy to rise in the House to speak to this issue of climate change. I believe it is one of the greatest environmental challenges of our time. This file has befuddled federal governments for over two decades. I am glad to see that the current government has come forward with a plan.
I note that the current government has adopted the targets established by the previous Conservative government under Prime Minister Stephen Harper at Copenhagen for a 30% reduction in greenhouse gases below 2005 levels by 2030, even though in Paris, I note that the current government said this target was a minimum target and that it would come forward with a stronger target. Clearly, that is not the case.
I would also note that the Liberals promised in their election platform that “targets must recognise the economic cost and catastrophic impact that a greater-than-two-degree increase in average global temperatures would represent”. That is on page 40 of their platform.
To be clear, the House should know that the 30% target adopted by the government does not meet that election commitment to keep global warming to a two-degree limit.
However, I commend the government for coming forward with some plan so that the House can debate it. I have long believed that the federal government needs to do better in reducing emissions. That is something I have said, not just on this side of the aisle but consistently when we were sitting on the other side of the aisle.
The way to reduce emissions is to price carbon, to take what is an externality in our economic system and internalize it by pricing it; but there is a right way to price carbon and there is a wrong way to price carbon.
The right way to price carbon is based upon three important principles. The first is to have consistent prices across all regions of the country and across all economic sectors. The second is to ensure that no backdoor equalization takes place. The third principle is revenue neutrality, not to the government collecting the revenue, but revenue neutrality to the taxpayer who is paying the revenue.
Those three principles are incredibly important.
The first principle, which is to have a consistent price across all economic sectors and across all regions of the country, is important because we would otherwise distort our national economy and do great damage both to consumers and companies.
The second principle, that there be no backdoor equalization, is also equally important because in the constitutional structure of our federation, the provinces own the resources and should enjoy the full benefits of those resources. A province like Alberta, with over 65 tonnes emitted per citizen, or Saskatchewan, with closer to 70 tonnes emitted per citizen, would have money taken out of their jurisdiction by a potential system and redistributed across the country. That cannot be allowed to happen because it would be nothing more than a backdoor equalization program and would be unfair to those provinces that have the resources they are developing.
The third and final principle, I believe, is the most important one. It is the principle of revenue neutrality for citizens and taxpayers across the country. Here is why this is such a critically important question. The government has proposed a $50-per-tonne price on carbon by 2022. In a 750-megatonne economy, that is the equivalent of close to $40 billion a year in revenues to various governments and in various schemes. That represents 2% of GDP. If we assume that after 2022, the government's plan is to continue to increase it at a rate of $10 per tonne per year, we would end up with a price of around $125 a tonne by 2030. That would be the equivalent of $66 billion a year, assuming that the $125-per-tonne target achieves a 30% reduction in emissions to 525 megatonnes. This revenue of $66 billion a year would represent over 3% of Canada's GDP.
This third principle is the most important one, because if there is no revenue neutrality for the taxpayer and families and citizens across this country, then we are about to embark on one of the largest tax grabs in Canadian history. That $66 billion a year represents over one-fifth of federal government revenue. It is a huge chunk of change.
Let us judge the Liberal plan on these three principles: the principles of consistent pricing, no backdoor equalization, and revenue neutrality.
On the first principle, the government should be given a checkmark. It has established a consistent price across the country. It has also designed it so that the price would be gradually ramped up in order to prevent a shock to the economy, from $10 a tonne in 2018 to $50 a tonne in 2022. Presumably, the price is going to reach closer to $120 to $130 a tonne by 2030. On the first principle, the test is met.
On the second principle of no backdoor equalization, the test has also been met. The federal government, by mandating that the provinces collect these revenues and that where provinces do not collect these revenues, the federal government would do it on their behalf and fully remit the transfer back to the provinces without any strings attached, means that the second principle has been met.
However, the third principle of revenue neutrality has not been met. As I said earlier, by revenue neutrality I do not mean revenue neutrality in terms of the government's use of that money for government programs or balancing its budget or other forms of government initiatives. I mean revenue neutrality so that the ordinary Canadian family, the ordinary citizen, will come out no further ahead or behind under any carbon pricing scheme.
That is not the case here, because the federal government will allow this system to be established in a way that allows governments to spend the money. As I mentioned earlier, by 2022 we are talking about 2% of GDP, some $38 billion, assuming a 750 megatonne emissions level. It will still be roughly 750 megatonnes in 2022, because every economist and every expert has told us that the reductions in emissions do not really kick in until the back half of the plan, when the price starts getting closer to $100 plus a tonne. By 2022, we are looking at $50 a tonne and 750 megatonnes and a cost of $38 billion a year. That is more than $1,000 per person in this country. For a typical family of four, we are looking at imposing about $4,000 in additional costs. By 2030, we could be looking at imposing an additional cost of $7,000 on a typical Canadian family of four.
In contrast, the much-ballyhooed Liberal middle class tax cut saved those middle class taxpayers just under $3 billion a year. Compare and contrast the much-ballyhooed middle class tax cut of just under $3 billion a year with a tax grab in the form of a non-revenue neutral carbon tax of closer to $38 billion a year in 2022 and $66 billion a year by 2030.
The federal government has missed a huge opportunity to use these revenues to reduce income taxes. It could have used constitutional power over taxation, over the regulation of interprovincial trade and commerce, and its powers with respect to the Criminal Code, with relation to toxic substances, and with respect to international trade to convince the provinces to adopt a nationwide scheme that truly would have been revenue neutral.
This plan reminds me of the plan the Ontario Liberal government introduced almost a decade ago, called the Green Energy Act, a plan that used public money to subsidize all sorts or renewable energy in Ontario and that has put a huge burden on Ontario families and cost them an enormous amount of money, with an almost doubling of their electricity bills. This plan will go down the same path, and I fear that the Liberal government has just sown the seeds of its own demise.