A stronger federal government makes a post-pandemic Canada stronger

Two developments have strengthened Canada by making the federal government stronger.

The first was a Supreme Court ruling that determined the fed’s carbon pricing to be constitutional.

image: OECD Development Matters

Opponents of carbon pricing like to call it a “carbon tax” but, of course, it isn’t. A tax is a levy for public services rendered. As in B.C.’s case, carbon pricing simply means that burning fossil fuels costs more and that it’s is revenue neutral: total revenues collected remain the same. To emphasize this point, P.M. Trudeau said that if provinces couldn’t come up with a carbon pricing scheme, he would collect it anyway and return it directly back into the pockets of citizens of the affected province.

Because of the Supreme Court ruling, Canada is stronger much to the chagrin of Alberta, Saskatchewan and Ontario who claimed that the feds were encroaching on their provincial rights.

A friend of mine in Alberta is very upset. He told me that Alberta should separate because the feds could now “do whatever they liked” to the provinces.

Well, not quite. The Supreme Court ruling was exceptional. The ruling was based on Canada’s obligations under 2015 Paris Agreement and the real threat of climate change.

 “Climate change is real,” Chief Justice Wagner wrote in his reason for the majority decision. “It is caused by greenhouse gas emissions resulting from human activities, and it poses a grave threat to humanity’s future. The only way to address the threat of climate change is to reduce greenhouse gas emissions.”

The feds can’t do whatever they like. Under our federation, provinces have considerable powers that cannot be arbitrarily overturned.

Canada is also stronger because of the leadership role of the federal government in saving the economy from certain collapse because of the pandemic.

In 2008, the feds bailed out the financial sector. In 2020, they bailed out the entire economy. Had leaders followed supply-side economists, the pandemic would have unravelled the economy worse than the 1930s Great Depression.

Canada’s federal government provided extraordinary leadership during the pandemic.

David Macdonald, Senior Economist for the Canadian Centre for Alternatives says:

“The global COVID-19 pandemic has required government leadership on a scale that’s unprecedented in modern Canadian times. Including liquidity and unallocated funds, federal and provincial governments have announced almost $600 billion in spending commitments across 849 measures to respond to the COVID-19 crisis.”

Of that $600 billion, only eight per cent is coming from the provinces on average. However, some provinces demonstrated greater leadership than others.

In his report for the CCPA, Macdonald found that B.C.’s contribution was the highest of the provinces -at 16 per cent of the total provincial allocation. The B.C. government stands out as providing the highest per capita individual supports, eight times higher than the next highest province, Quebec.

Albertans, on the other hand, are receiving the highest level of per capita COVID19 spending, worth $11,200 a person—93% of which is on the federal tab. Alberta receives $1,200 more support, per person, from the federal government than any other province.

It seems to me that Alberta is doing very well as a member of the Canadian federation and Alberta Premier Kenney would do well to shut up and cooperate on mitigating climate change.

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