Death by 1,000 cuts: Confront your local candidates

The federal election day is coming up fast and manufacturers should take time during the run-up to put local candidates’ feet to the fire. This is your chance to query and complain about how the federal government impedes business activity with layers of costly regulations and outright cash grabs, such as the carbon tax, and the proposed Clean Fuel Standards (CFS) regulation.

First the carbon tax. Never mind whether or not this measure actually changes consumer behaviour. Or that it has any worthwhile impact on lowering greenhouse gas emissions when Canada’s share of the global total is about 1.6%. That’s even as the Trump administration plays Darth Vader against environmental and climate stewardship by taking a light sabre to US emission reduction efforts.

The Canadian Federation of Independent Business (CFIB) rightly complains the so-called revenue-neutral tax is hitting small companies disproportionately. Companies, municipalities, universities, school boards and hospitals will get just 7% back in rebates and grants compared to families at an alleged 100%.

According to survey results released earlier this year, CFIB found 71% said the added cost of the carbon tax would make it harder to further invest in reducing emissions. The federal plan expects small businesses to pass added costs on to consumers, but 80% of the carbon taxed firms said they’ll get away with passing on maybe less than 25% of the new costs and more than half said they would have to eat the entire cost.

Incidentally, businesses in British Columbia are chaffing under a growing tax burden, exacerbated by the province’s self-inflicted carbon tax, implemented in 2008. BC is often cited as an example of how gloriously successful carbon taxing is at changing consumer behaviour and lowering emissions.
But the Business Council of British Columbia (BCBC) estimates the recent $10 per tonne increase (total $40 per tonne) will cost companies an additional $170 million in aggregate costs. It notes businesses are responsible for 40% to 50% of the carbon tax revenue, which raises concerns about the resources and export sectors. The fear is carbon and other tax burdens will impede capital investment with the BCBC noting most big resource investments are going to the US.

Which brings us to the CFS.

Canadian Manufacturers & Exporters (CME) has made peace with balancing the environment and economy, but it’s not happy with the federal government’s latest draft of the CFS regulation, which would go into effect in 2020.

Its main concern is the regulation will add costs to business that will put Canadian companies at a competitive disadvantage. The draft would require fuel suppliers to reduce carbon in their products up to 15% by 2030. That’s on top of other federal and provincial carbon levies. The CME believes the 30 mega-tonne greenhouse gas emission reduction and the timelines are unrealistic; and it warns of additional, costly duplication with the inevitable red tape generated by competing provincial and federal policies.

In a submission (see https://cme-mec.ca) to the federal government, CME draws a line directly linking declining investment since 2013 to lagging output and export growth. Dollars are fleeing the country as foreign investment continues to erode. The impact of the CFS is an additional $200 per tonne, a 50% to 110% increase in market price to already high energy costs. This could drive out high carbon producers to places where there are less stringent regulations (America, for instance). CME would like the government to reconsider the CFS or exempt manufacturing.

Federal candidates need reminding that the consequences of declining and lost investment will do little to create jobs and encourage innovation. That’s less than helpful when it comes to balancing the environment and the economy.

This editorial appeared in the September 2019 print issue of PLANT Magazine.