Saskatchewan’s fight against Ottawa pits lawlessness against intransigence

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Saskatchewan is breaking the law. Ottawa is digging in. And instead of months of fireworks on carbon pricing, expect a federal-provincial stalemate of epic proportions to set in – an impasse that won’t halt a grinding decline of political support for the current Liberal version of carbon taxes in Canada.

The province announced last fall it would stop collecting the federal carbon tax on home heating bills as of 2024. The new development last week, an escalation in the battle, was that Saskatchewan stated it will not remit the home heating portion of carbon pricing to the Canada Revenue Agency.

Not sending millions of dollars owed to the CRA is the point where stuff gets real. Environment Minister Steven Guilbeault described Saskatchewan Premier Scott Moe’s government as “immoral.” The usually more staid Jonathan Wilkinson, the Natural Resources Minister, has spoken about the risk of “anarchy.”

“I don’t think we’re going to throw the Premier in jail. I mean, that’s a bit silly,” Mr. Wilkinson said in an interview.

“But I do think there are going to have to be some consequences that are financial in nature,” he added.

It’s easy to bemoan Saskatchewan’s illegal actions. But it’s also hard to take Ottawa’s side.

It’s a question of fairness. This round of fighting all started, of course, after the federal Liberals gave an inch on what they previously said was an unassailable carbon price floor on home heating fuels. The three-year pause on the tax for home heating oil was done last October in the name of affordability, as many of the households that use the costly fuel for home heating are energy-poor.

But the decision also had massive electoral overtones for a Liberal party losing its base of support in the Atlantic provinces, where about one-quarter of households heat with oil.

Prairie provinces, where natural gas furnaces are used to stave off the bitter cold, were especially attuned to this calculation. Mr. Moe, alongside the conservative Premiers of Alberta and Ontario, say their residents deserve the same consideration as Atlantic Canada, a break on carbon pricing for home heating. The Liberals talk themselves in circles in explaining how this isn’t the case.

In the realm of politics, climate policies have also taken a back seat as affordability pressures, and economic angst, have come to dominate. In this vein, the Liberals assert again and again that a large majority of households in Canada receive carbon rebates that exceed their carbon tax costs.

University of Calgary economist Trevor Tombe says this is absolutely true. “But it is also uncontroversial to note that carbon pricing, and indeed nearly all climate policies, will lower the rate of economic growth. Slower growth over long time horizons easily compounds into large amounts,” he said. This is especially true in provinces such as Alberta and Saskatchewan, where there are layers of federal climate policy aimed squarely at the provinces’ high-emitting economic drivers – oil and natural gas.

There are, of course, massive costs – economic and otherwise – of doing nothing on climate. But that gets hard to discern through all the noise, once the Liberals do their communications on the rebates, and have sullied an altruistic climate policy in with regional political calculations. Quebec still faces no carbon price floor the way other provinces do. While Rural Economic Development Minister Gudie Hutchings implored Westerners to elect more Liberals if they want their voices to be heard, Albertans have, for instance, yet to hear much of anything on this issue from its two Liberal MPs.

Even some progressive leaders are abandoning the policy as it stands. Manitoba NDP Premier Wab Kinew is making the case for his province to get a break on carbon pricing, talking about losing consensus from the working and middle classes. Alberta NDP Leadership candidates Rakhi Pancholi and Sarah Hoffman say they would ditch the consumer carbon tax. “Justin Trudeau played dirty politics with it and picked winners and losers. If you don’t have public support, you can’t carry on with something like that,” Ms. Hoffman said. They are calling for climate policies in a different form.

However, the Liberals have dug in so deep on this policy there’s no off-ramp. They don’t want one. Any further move away from their signature climate policy would look like a concession to lawless conservatives.

So we will have a federal Liberal government sticking to its message of rebates before tax cuts, and the fight with Saskatchewan moving into the realm of fines or deductions on transfer payments.

But that is unlikely to stop Mr. Moe and company, who also face a provincial election this year and would prefer for the campaign issue to be standing up to Ottawa rather than health care or education. So prepare for a continuing war that will sometimes run hot but often cold, and in the courts.