2019-04-01 - We Need a Made In NB Carbon Solution

The federal government’s rejection of a Made in New Brunswick carbon program means that on April 1, 2019, the cost of living and working in New Brunswick went up. As the only province in Atlantic Canada in the position of having the federal backstop, this makes local businesses less competitive and squeezes already-tight margins; the only option will be to pass costs through to consumers.

A rebate will help citizens, but business will be directly hurt by added costs – not only their own fuel costs, but within their supply chain essentially every item NB item they use to produce their product or service will cost more to manufacture and deliver to them. This will then effectively act as a disincentive to purchase and procure locally. More broadly – it is yet another signal to outside investors that New Brunswick is closed for business.

Last week, fuel costs increased by more than four cents per litre in New Brunswick, which is expected to reach an extra 11 cents per litre by 2022 (in carbon pricing costs alone). Compare these figures to the rest of Atlantic Canada, which are expecting an increase of less than one cent in 2019 and less than 3 cents by 2022 – meaning New Brunswick businesses will be in an immediate competitive disadvantage, which will only grow over time.

How did we get here?

In October 2016, the federal government announced plans to implement in 2019 a $10-per ton carbon tax on provinces that did not have their own carbon pricing system that was acceptable to the federal government, rising to $50/ton by 2022 (a platform commitment). Provinces were given until 1 September 2018 to submit their plans.

In December 2017, New Brunswick submitted its proposed plan to the federal government, which would have seen existing gasoline and diesel taxes repurposed for a climate−change fund, rather than adding a new carbon tax.

That same week, Federal Environment Minister Catherine McKenna wrote in a Facebook post that New Brunswick’s plan “does not create a new incentive to cut carbon pollution. Investing in climate action is great – but a carbon price does more than that. It also changes economic decisions by sending a price signal that wasn’t there before. That price signal makes pollution more expensive and rewards clean innovation.”

For the better part of the next year, the former provincial government insisted that they were ‘confident’ in the plan submitted and that it would be approved. Then-provincial Environment Minister Serge Rousselle stated a month after Minister McKenna’s post that “I’ve said a number of times that we’re confident when the moment comes to look at the New Brunswick plan, the federal government will see we’re meeting their requirements.”

New Brunswick’s plan was formally rejected 23 October 2018 – less than a month after the provincial election.

This means that a litre of gasoline in New Brunswick became 4.4 cents more expensive last week. Prince Edward Island’s plan that was approved by the feds? A 1.0 cent increase. Nova Scotia? 0.94 cents. Newfoundland and Labrador? 0.42 cents. New Brunswick’s carbon tax is 10 times higher.

So, what’s the impact? It’s true that citizens in New Brunswick are getting a rebate through their tax returns beginning this year. It’s also true that large emitters are on a different system through the federal carbon plan. Small business? We have no idea – there is a small amount to be redistributed to SMEs through a rebate program – however – the program has not been developed, despite the tax being implemented on April 1st. According to CFIB, small business can expect to pay about 50% of the carbon tax costs and receive 7% of the rebates.

The small business community is continuing to ask the federal government to allow the new provincial government to submit a new “Made in New Brunswick” carbon plan. It is unclear why the previous government chose not to act on a revised plan when they had nearly a year after Minister McKenna made it clear New Brunswick’s plan would be rejected, but the new government made it one of their first priorities to create and submit a new carbon plan if the federal government will accept it. Presumably the federal government should prefer approved provincial plans over the federal backstop.

Our chamber wrote to MP Matt DeCourcey in December 2018 with this request. A larger alliance – including Conseil économique du Nouveau-Brunswick, the Greater Moncton Chamber of Commerce, the Saint John Region Chamber of Commerce, the New Brunswick Business Council and the Atlantic Chamber of Commerce – wrote to all ten New Brunswick Liberal MPs in February 2019 urging them to advocate on our behalf with the same request.

The news last weekend that MP Karen Ludwig wants to talk to Premier Higgs about a Made in NB solution is the first indication I’ve seen that the federal government – including the province’s representatives – are willing to discuss the topic. It’s a positive step forward and hopefully the beginning of a larger push to get rid of the federal backstop in New Brunswick.

This isn’t about whether climate change is real (it is) or whether we should act to combat its effects (we should) – it’s about creating policy that helps change behaviour without causing economic harm to one region or province over another. Right now, New Brunswick is at a competitive disadvantage relative to the other Atlantic provinces. Surely even the most ardent of carbon tax champions can agree that this situation is unfair and to our collective detriment.

Krista Ross is CEO of the Fredericton Chamber of Commerce, a nationally accredited organization with nearly 1,000 members, is an active business organization engaged in policy development and advocacy that affects the  competitiveness of our members and the Canadian business enviro nment. The Chamber’s vision is ‘Stronger Community Through Business Prosperity’.