Sunday, July 06, 2008

People Need to Read Dion's Green Shift Plan BEFORE They Comment

I wasn’t going to post today given other priorities. However, I am so frustrated with what it going on I had to comment on the superficial reaction I have been noticing for the Dion Green Shift Plan. Dion sure has his work cut out for him but with no need for an election until November 2009, there is enough time to get his plan understood.

I have just listened to most of Cross Country Checkup on CBC Radio One. Listening to a variety of callers to only talk about the Green Shift to gasoline and the inflationary costs it would cause make me wonder if any of those callers actually read the Green Shift Plan. Most notably fixated in this way was Gwyn Morgan, former CEO of EnCana. He said he would have agreed to a carbon tax to support Kyoto ten years ago but was silent on how vociferous the energy lobby was absolutely against Kyoto back then.

He also said the Dion $10 per tonne charge on CO2 would be inflationary but said nothing about the offsetting income tax cuts and allowances to help northerners, framers and low/fixed income earners in the Green Shift Plan. There was no comment on the use of the carbon levy to stimulate new technologies for cleaner fossil fuel extraction and refining processes and enable alternatives.

Morgan’s comments totally ignored the enormous windfall profits the energy sector is now making with $140 oil and the inflationary impact that is having on virtually everything in our lives. I found it not at all curious that he did not offer a cut in energy sector profits by suggestion a windfall tax to be used to reduce inflation, help the little guy.

Then I scanned Garth Turner’s recent and oft reviled blog post. Garth is very thorough and thoughtful in his posts on the energy issues. He is apparently placing the blame for the regionalization resentments on a certain kind of person apparently a “…self-aggrandizing, hostile, me-first, greedy, macho, selfish and balkanizing separatist….” As an Albertan I did not find anything in his recent posts objectionable or inaccurate.

I smiled when he noted in his Blog he was “chewed out by Dion” for his comments. Good for him and good for Dion. Can you imagine any of the Harper Con-Trolls actually having an independent thought, then having the courage to express it openly and then publicly admitting his leader called him up and “chewed him out?” At least the Liberal Party is prepared to accept there is a representative democracy in the land AND with free speech rights, even for its MPs.

I am thankful for the fact Turner and Dion let us know that there is a range of thought in their caucus and even disagreement within the ranks. That is health for democracy and good for politics and even better for our confidence in their suitability to govern. It shows respect differences of opinion and gives some credit to the intelligence of citizens to consider the differences and to make more informed judgments about complex public policy issues. We Canadians can not only handle disagreement within a political party, we can appreciate and respect the fact not everyone in the Liberal Caucus has to genuflect to the absolute power of the Leader on all matters and all the time - like in the case of the Harper Cons.

I actually started out the day reading Lorne Gunter's column. I occasionally agree with Lorne but I find he mostly lives in a yesteryear time warp. I understand that it seems that he just can’t help himself. His facts are often wrong in this column, for example like claiming Dion is saying Alberta and Saskatchewan is “…deserving of a big hit from his new carbon tax.” That is not the Dion position and Gunter offers no authority for this accusation. Gunter’s commentary is definitely reflective of a hostile, macho, selfish and balkanizing political position as noted by Garth Turner. His framing of the issues on climate change is so passé and tired. This positioning and issue framing is typical of the old-style hard-core Conservative ideology that has no shame in being inaccurate, dated and misleading, so long as it speaks to the base, in their Party and otherwise.

He then has the cheek to write there is no separatist movement in Alberta while admitting “Yes, there are websites for parties claiming to be separatist.” He notes that there are “odd farmers” who may paint a separatist message on his barn and “occasionally a caller to a radio talk show” may make a separatist comment. But he notes Alberta has never elected a separatist government or held a sovereign association referendum, as if the acid test to say there is "NO SEPARATIST MOVEMENT IN ALBERTA.”

So, according to Gunter, there is no separatist movement here because we Albertan’s don’t share the same cultural difficulties in Confederation as Quebec does and we have not yet had our Quiet Revolution? Well Lorne we have our Firewall guys. They are public intellectuals largely from the University of Calgary Poli-Sci Department, the so-called Calgary School. The Firewall guys included Prime Minister Stephen Harper, but that was back in the day when he cared about Alberta. They could be the seeds of a Quiet Revolution, Alberta style, don't ya think?.

There is a separatist movement in Alberta and while it is small and fragmented they have received as much at 8% of the popular vote. They elected a guy named Kesler as an MLA under the Western Canada Concept banner in the early 1980’s. Less than two years ago, one of the popular Alberta Progressive Conservative Party leadership candidates made comments that if Alberta did not get its way with Ottawa we should perhaps look at our future in Confederation.

Fomenting separatist aspirations and regional resentments in Alberta has resulted form past policies like the NEP, that was ironically agreed to by Alberta and the Lougheed government of the day. That same reality is not happening today with Dion. Like so many hard-core Conservative political myths, the facts are rarely considered nor actually talked about openly and accurately in a public discourse. They just presume that they can govern us based on creating fears and excluding and dividing us based on perceived differences.


  1. There are numerous inaccuracies in this point. However, given your history of not posting opposing viewpoints and making personal attacks, I will refrain from making any comments.

    It has been nice reading this blog when you were so disturbed about Dion's failures but you seem to be very negative and angry of the fact that the Liberals simply cannot bring down the Conservatives. I feel sorry for you but you should not make personal attacks on conservatives for your party's failure.

  2. Hi eric. I post most of your stuff but sometimes you are just too much. Especially when you get way too over-the-top angry and shrill that you insult gratuitously and don't add much to the conversation.

    Criticism - even harsh and pointed criticism supported by evidence is always welcome - and civility and decency is always expected. Not too much to ask eh?

    As for personal attacks the Harper Cons have often had more items and TV ads attaching Dion posted on their website than thay have posted items telling us about Harper's achievements. Silly, boring and bullying stuff that shows they don't seem to have the qualities needed to govern a modern society.

    As for defeating the Cons - too early for Dion now and not possible nor preferrable for him up to now. Dion, like Canadians, does not want an unnecessary election. They want Parliament to work and not with the phony tactics of declaring a confidence votes on every piece of legislation Harper tables.

  3. Clarence4:46 am

    First off regarding Gunther or actual most other columnists they have an objective to create columns to create reaction, acurate information is seldom heard through mainstream newspapers.

    It was not until the Alberta Election that I discovered the "blogging world". While I may diagree or agree with some of the posts it is refreshing to see a medium where people can debate issues and most of the time actually inform readers.

    I do not remember a federal election where the seats in Alberta actually were required to be fought over in order to form a government. They almost always were blue or reform. Thus Dion's plan or the Cons reaction doesn't really matter to me as an individual. I will have to adjust my way of life to whatever the government of the day does to appease the vote they really are trying to garner to form a government.

    Since the riding I am in will produce a result that is basically a foregone conclusion my one vote is really about which party will get the $1.87 or whatever it is that Chretian set up as a party funding formula.

    Have I become cynical? Yes, I took the time to follow the Alberta Elcetion and what has resulted? I do not remember anything in the PC campaign liture that said the most critical issues were to reform the labour act or immediately review their compensation.

    Does it really matter how informed I become or how much interest I show since the agendas change so quickly.

  4. Thank-you for casting light on the extreme misrepresentation of Green tax shifts. It is not a “tax increase” and, in fact, lowers business and individual income taxes. That tax reduction is offset by increasing taxes on pollution.

    Instead of taxing productivity, Green taxes target things that cost society (in this case, environmental damage).

    Instead of subsidizing the clean-up and other costs of polluting industries as our governments currently do, a Green tax set-up makes the polluters pay the true cost of their activities — ending (or at least reducing) corporate welfare for polluters.

    While I’m certainly not a Liberal Party supporter — having always voted for other parties, and expecting to continue to do so — I am very glad to see them pushing the much needed Green tax shift.

  5. Thx for the comment Grant - an especially for not being anonymous.

    The way I see Dion's Green Shift Plan is the polluters pay and the responsible people benefit and we don't have politicians playing poker with the planet.

  6. Anonymous12:35 pm

    I am not sure of the mechanism by which you think a 'windfall profits' tax could be used to reduce inflation.

    The price for crude oil, and increasingly, natural gas, is set on the world market. Placing another tax on domestic energy production simply raises the marginal cost of production here. More money will be spent elsewhere to find oil and gas that would be consumed here. This is not an opinion, this is economic fact.

    I'm not part of the 'anti-royalties' crowd, but the very idea of a windfall profits tax is really kinda silly. For one, who determines what constitutes a windfall profit? Is is return on investment or return on equity above some prescribed number? Accounting earnings uses historical cost numbers in calculating depreciation/depletion, numbers which are not representative of the current cost of replacing produced reserves. And why pick on oil? If lawyers, doctors, consultants, entertainers are successful in billing their clients more than the average, would we place a similar tax there?

    It is one thing to set the price by which companies compete to develop one's own resource (such as Alberta's recent royalty review or a similar royalty change made by Tony Blair in the UK North Sea several years ago). It is quite another for some body to purport to know what a windfall profit is, and have the gall to take it away. Its logical parallel would also be that if profits disappeared, the state should stand ready to support the industry... would any of us want that?

    Even if you were to determine what constituted a windfall profit, and then be successful in taxing it (without impacting the level of investment, and hence, future profits), how would you help the little guy? A cheque in every mailbox? Giving everyone more money to spend is inherently inflationary.

  7. Anon @ 12:35 - great comment - thx. I am not all that keen on taxing windfall profits either because they are so hard to define and calculate.

    I was pointing out a weakness in Mr Mrgan's assertion and that $10 per tonne carbon fee is not nearly as inflationary as $140 oil is.

    For Mr. Morgan to suggest $10 versus $140 is an inflationary hit the government ought to avoid is hardly a reasonable position for inflationary impacts.

    If he was worried about inflation, I suggested perhaps the industry would pay a tax that would see more energy industry proceeds staying in Canada and perhaps then used by government to pay a living wage to people in the not for profit and social services sectors.

    Again not a very practical suggestion if based on windfalls. But putting more money into the working poor would not be very inflationary compared to using food for ethanol.

    It is sad that many in Alberta who are working for a living can't make a living these days.

  8. Anonymous4:45 pm

    I agree with respect to your inflation comments. Oil at $140 is much more inflationary than a $10 carbon tax. Regardless of what U.S. or Canadian CPI says, we do have inflation. [Oil at $140 is also much more effective at reducing emissions than a $10 carbon tax, but that's for another day].

    Core CPI is even worse... it is only a good measure for anorexic pedestrians (I admit I borrowed that quote).

    There is growing commentary - from some serious analysts this time - that crude oil prices could roll over, at least from the levels we have seen recently due to weakening demand from China combining with the economic slowdown in the U.S. Long-term we are still headed higher, in my opinion.

  9. Anonymous10:40 am

    While I agree that some peoples reactions to Dion's Green Shift have been extreme and many have invoked standard conservative comparisions with past Liberal Policies such as the NEP, I still think the concerns in the west, particularly Alberta and Saskatchewan, are well founded.

    First and foremost by taxing carbon in the production of fossel fuels more heavily than consumption of fossel fuels the tax automatically creates unjustified regional disparities which are based upon purely political considerations. As a result provincial economies that happen to be more based on the production of fossels fuels are automatically being asked to carry the brunt of the burden when individuals in eastern Canada are contributing as much as any individual Albertan to the high demand for fossel fuels. Moreover, while the resource sector, such as oil sands production, produces a lot of CO2 it is still individual consumption such as driving and heating homes that contribute to the majority of green house gas emissions being dumped into the atmosphere. This seems lost on the Liberals because they simply don't have much popularity in the West. As such there is some truth to the notion tha this will result in the funnelling of money from the West to the East.

    A little over a year ago Dion indicated that a tax similar to that which he is now proposing would be damaging to western provincial economies, yet today he is all for it. It is interesting how little the West matters to the supposedly national liberal party when there are seats to be gained in Ontario.

    Moreover, because the tax is a flat tax it doesn't take into account the cost of reducing CO2 emissions from one industry to another. In otherwords a company that reduces its emissions by 10% at extrodinary cost is rewarded no more than a company that reduces its emissions by the same amount at very little cost. This is a fundamentally unfair aspect of what is an overly simple tax plan.

    Finally, I don't think you fully appreciate the potential inflationary impact of this tax. Although the high price of oil is contributing to inflationary pressure, placing a tax on the use of carbon will only compound that pressure. The extra tax will raise the price or everything, from fuel, to groceries, to plane tickets, clothing, pretty much everything under the sun.

    All in all this tax is poorly timed, such that is being proposed when manufacturing jobs are disappearing and the price of oil is through the roof. It is regionally unbalanced. It will rehash old grievences in terms of western alienation and it will strain confederation. In addition, it may serve to damage the one aspect of the Canadian economy that is doing quite well. In short its bad policy.

    Also just as an aside, you point about Lougheed agreeing to the NEP is misleading. Alberta had no choice but to negotiate, that is not to say they agreed with the policy or wanted it. Lougheed simply was trying to minimize the extent of the damage that NEP was going to cause.

  10. Grant talks about "Instead of taxing productivity..."

    If you want productivity then cut capital taxes, or at least propose offsetting BROAD-BASED income tax cuts. Dion's "Green Shift" actually hurts productivity, because it raises taxes on something that isn't really productivity related (carbon consumption) and for a productive actor to realize neutrality, he or she may have to lower his or her income (and therefore output) so that he or she falls into a lower tax bracket.

    A carbon tax CAN be good policy (based on the argument that carbon consumption is a negative externality). I accordingly support it just like Jack Mintz does. But Dion's carbon tax is, in terms of its function, old fashioned tax-and-spend pursuit of a social policy instead of a productivity policy: there's no ultimate difference, for example, between a direct transfer to single mothers and a tax cut the application of which is restricted to them. Sure, the total federal budget doesn't increase, but the allocation of goods in services in the economy is distorted, and not just distorted away from carbon consumption (which is widely perceived as good) but towards a social policy (which is highly contentious).

  11. Anonymous8:48 pm

    I don't disagree with the environmental, philosophical and moral objectives of Green Shift. However, I am definitely concerned about the regional inequity of this policy. I think Hon. Dion could overcome the perceived bias of Green Shift and the actual 'fiscal punishment' of the West by investing into the West the equivalent dollars of disproportionate taxation.

    For instance, if the claim is that Green Shift will hit AB an additional 4 billion dollars a year, the Feds under Dion ought to invest 4 billion dollars into things like endowment funds for green tech and energy research at Alberta post-secondary institutions; or money to expand mass transit in Edmonton and Calgary; or funding to make Edmonton's River Valley Alliance park a reality; or another provincial park west of Calgary.

    My point is Green Shift has its heart in the right place, but it still needs to work on the details. With the proper policy design, collaborative discussion with westerners, proper messaging, and political committment to regional equity, Green Shift could be a watershed environmental policy with eclogical, social and economic benefits for all Canadians.


  12. Sean - what if Dion matched the GOA $2B from the Alberta sourced carbon tax revenues and dedicated the bucks for Carbon Capture and Sequestration efforts in Alberta. Would that help allay your concerns?

    It would really get that initiative going, add to the sense of urgency, get some serious discussion/action on enhanced oil recovery (more Alberta royalties) and and it is a way to make industry pay for CCS too.

  13. Anonymous11:54 am

    I think a matching grant of $4 billion for Green TRIP and CCS is an excellent idea - one that Dion needs to articulate, and fast. Already, his opponents are framing Green Shift for him and to the detriment of progressive federal politics in Alberta.