Top 5 Reasons the PC Government Cancelled Ontario’s Cap-and-Trade System

The Progressive Conservative government tabled legislation Wednesday to scrap Ontario’s cap-and-trade system – a commitment the Ford campaign made to Ontario voters during the recent provincial election.

If you don’t understand Ontario’s complicated cap-and-trade system, you aren’t alone. It’s regularly characterized as a carbon tax by a different name.

The Ford government’s simple message of “your money belongs in your pocket” resonated. His proof points were effective: Cancelling the cap-and-trade carbon tax will result in lower prices at the gas pump, on your home heating bills, and on virtually every other product that you buy.

But the question remains why did the tide turn so quickly?

Ford effectively changed the conversation about the environment. It was no longer about green energy retrofits, clean technology or reducing greenhouse gases. It was a conversation about taxes and that’s how he tapped into an anger in the electorate no one quite else understood.

And while there are a multitude of ways to protect the environment, and much room for negotiation on the most effective ways to do so – Ontario’s cap-and-trade program won’t be one of them. The Ford government’s immediate challenge will be an orderly and transparent wind down of the cap and trade scheme in a way that minimizes the risk to taxpayers while offering some support for the participants in the previous program.

Here are five reasons the Ontario government acted so quickly on their commitment and why.

  1. Ford positioned Ontario’s system as a tax on transportation fuel and just about every form of electricity. This means the price of gas is higher. In fact 4.3 cents higher per litre and in turn making affordable energy more expensive. The election was won in the Greater Toronto Area, specifically the 905 suburban ridings around Toronto proper. These are people who commute and drive to work every single day. They were and continue to be the audience for this commitment.
  2. The public came to believe that Ontario’s complicated system increased the cost of goods and services – because more expensive energy means more expensive everything. Costs associated with higher energy prices are always passed on to  consumers through higher prices right across every part of our economy. Eliminating the cap and trade system is said to save the average family $260 per year – that’s a significant savings for many families. Particularly those who spend long hours in their cars driving their kids to soccer and dance – a key audience for this government.
  3. At a time when NAFTA is at the forefront of our national conversation, Ford positioned the system as one that damages our economic competitiveness. More expensive energy undermines our economic output and as a result our overall competitiveness. It costs more to make less. When our neighbours and trading partners don’t have the same tax regimes as we do, it simply makes it disadvantageous to locate, do business and thrive here in Ontario. In the current environment of ongoing trade disputes with the U.S., Ford’s promise that Ontario is open for business by making sure Canadian companies can compete here resonates with tens of thousands of workers across the province.
  4. The campaign promise touched the affordability narrative on multiple fronts, but Ford made it clear that Ontario’s cap-and-trade system disproportionally hurts those who are the most vulnerable. When we think about taxes, this one is regressive: it raises the prices of gas, heating, milk, and many of the other household items you need. When these items are a bigger portion of the money a household spends, it unduly affects low-income people more than anyone else. Ford’s key audience and voter coalition are middle-to-low income families and seniors whose household incomes fall below the provincial average.
  5. And finally, the carbon tax is seen by many as a tool for politicians to continue spending increases for the programs they want to fund – and those aren’t necessarily ones that will save this earth from the effects of climate change. In the case of Ontario, Ford positioned the cap-and-trade revenue as being a slush fund for the pet projects and deficiencies of a government who had money to burn. Ford’s laser focus on reigning in spending has been at the forefront of the mandate and you can expect that future decisions will be made through this lens.

Every government wants to be able to say this: promise made, promise kept. But with every promise there is not only a how, but a why.