A University of Calgary economist says the Saskatchewan government’s claim that federal climate change policies will cost the economy $111 billion is not credible.
“I think that analysis turned out to be incredibly weak and so I think serious people shouldn’t put a lot of weight on those numbers,” Trevor Tombe said.
On Tuesday, the provincial government released a policy document called Drawing the Line: Defending Saskatchewan’s Economic Autonomy.
Premier Scott Moe discussed the document at an event hosted by the Battlefords and District Chamber of Commerce.
The 18-page document lists four options for the province to increase its autonomy, but the first section contains a claim that nine federal climate change policies will cost the economy $111 billion by 2035. The government said that the provincial Department of Finance had done the cost analysis. .
University of Calgary economist Trevor Tombe said the government’s analysis was far from accurate.
“The overall estimate here of $8.8 billion on average per year is huge, suggesting that federal climate policy will shrink Saskatchewan’s economy by almost 10%, which is nonsensical and totally unbelievable. “
Tombe said the government’s analysis makes a lot of assumptions while omitting several factors.
“They estimate [the federal carbon tax] will cost Saskatchewan by 2035 approximately $25 billion. But with this policy, they ignore that the income it generates is not set on fire. [It is] Saskatchewan residents through these lump sum credits that people now receive quarterly,” he said.
“Just there, the estimate put forward by the Saskatchewan government does not take into account rebates, which makes the cost of this particular policy [in the paper] much larger than it actually is.”
Tombe said the government is also omitting factors when it comes to zero-emission vehicles.
“It’s a policy the details of which the federal government has not yet fully worked out, and the white paper assumes that buying electric vehicles will cost everyone $19,000 more than they would otherwise have spent, and ignores the fact that there are lower running costs on average for electric vehicles than there are for gas-powered vehicles, because you no longer need to buy the fuel.”
Tombe said there is a cost to the economy in meeting environmental policy goals, but not on the scale suggested by the Saskatchewan government.
“There is a cost, there is no doubt about it. I do not dispute the generic assertion that achieving environmental goals will entail financial and economic costs,” Tombe said.
He estimated that the total cumulative effect on the economy by 2030 would be closer to 1%.
“These are real costs, to be sure, but it’s important not to exaggerate them, especially in huge amounts, like what is being done in this whitepaper.”
Moe calls the government’s financial analysis a ‘punch’
On Wednesday, Moe said he “didn’t agree” with the criticism of the government’s financial analysis.
“I think they’re perfect. They’re done by the finance ministry. Some economists will say they should be higher, they should be lower.”
Moe said the department was asked to do a cost analysis of nine policies. He said the government had not included the potential economic impact of Bill C-69, which he considers “unconstitutional” and expects to be argued in the Supreme Court.
He said the “indirect impact” of fewer pipeline projects was not factored into the analysis described in the document.
When asked on Wednesday why carbon tax refunds weren’t included in the financial analysis, Moe said “it’s not up to who ultimately pays for it.”
“These nine policies create great uncertainty in the investment world.”
Moe said his government is committed to working with the federal government to “address environmental concerns.”
Read the province’s calculations on the cost of the following federal policies here:
Paper could signal more legal battles with Ottawa: professor
Jim Farney, professor and director of the Johnson Shoyama School of Public Policy in Regina, said he had questions about the government’s financial analysis.
“The financial cost is, I have to say, odd at best,” Farney said. “I think what they’ve done – it’s hard to say in detail – is pick numbers that are the worst case scenario.”
For example, Farney said the $34.9 billion the government lists as a cost under the clean fuels regulations “does not include possible benefits from increased use of biofuels.”
“It’s not very clearly spelled out and it’s almost certainly the worst case scenario if we don’t adapt over the next 15 years.”
Farney said the document had two sides: the financial analysis and the push for more autonomy.
He said the four solutions listed in the document to increase battery life are light on details.
“One of them is very specific, it is greater autonomy in immigration policy. It is not clearly specified how the [federal government] bother us, but it’s the one that’s important enough for them to point out.”
Moe said the province wants control over immigration policy similar to Quebec’s.
Farney said the newspaper’s messages could mean further legal battles with the federal government over jurisdiction.
On Tuesday, Moe did not reveal what kind of legislation the government was working on, but hinted at a focus on immigration policy.
“We will be looking at legislation that will defend and protect the opportunity we have to increase our jobs to expand the size of our communities and ultimately expand our province,” Moe said.
Moe said the legislation would “reaffirm our provincial rights under the Constitution” and would not violate the Constitution.
The Leader of the Opposition wonders about the equalization formula
On Wednesday, Opposition Leader Carla Beck released a statement in response to the guidance document.
Beck said his party “isn’t afraid to go to bat” when the federal government introduces policies that negatively impact the province, but that Moe’s paper “is a distraction from its failures in health care, jobs and affordability”.
“The Saskatchewan Party would rather talk about any other moment in our province’s history than defend its failed record of nearly a decade of unbalanced budgets, the tripling of our debt and the collapse of our once-leading healthcare system in the country,” Beck said. .
Beck said the report is that the prime minister is trying to “protect” his job.
“The fact that Scott Moe’s Sask. Party managed not to mention equalization once shows that they are far more interested in divisiveness than in delivering results.”
Asked about equalization on Wednesday, Moe said the government would not hesitate to raise the issue, but called it a “separate conversation” that came up in his government’s focus groups this summer.
Moe said the document is about the province’s ability to “unleash the potential” of the province. He said that if this cannot be accomplished, the province “will not be a net contributor to equalization”.
