After PBO carbon price costing error, ‘results will be different’: minister

Click to play video: 'Budget watchdog under fire over carbon price analysis error'
Budget watchdog under fire over carbon price analysis error
WATCH: Parliamentary Budget Officer (PBO) Yves Giroux is under fire over an error made in his office's analysis of the federal government's carbon rebate program, one of Canada's hottest political topics. Mackenzie Gray explains what went wrong, and what it says about the rebates Canadians are expecting. – May 29, 2024

Environment Minister Steven Guilbeault says he expects the next carbon price analysis from parliamentary budget officer (PBO) Yves Giroux will yield a different result after the PBO corrected their past analysis.

The original data has been frequently cited by the Conservatives in saying the pollution levy drives up the cost of living.

“Clearly, if you made a mistake, the natural conclusion is that the result will be different,” Guilbeault said ahead of the Liberal caucus meeting Wednesday.

Click to play video: 'Guilbeault ‘looking forward’ to carbon rebate full analysis after PBO admits analysis error'
Guilbeault ‘looking forward’ to carbon rebate full analysis after PBO admits analysis error

As first reported by The Canadian Press Tuesday, the PBO issued a correction to their March 2022 carbon price analysis that says it costs Canadians more than they receive in rebates when broader economic factors are considered, such as lost employment and investment income.

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The PBO correction on their website, updated last month, said this model included both the consumer fuel charge and the industrial carbon levy, when only the fuel charge on things like gasoline and natural gas should have been considered in this model.

Speaking with Global News, Giroux said his office discovered the error while working on the updated carbon price analysis, expected to be published this fall.

Despite the coming change, Giroux doesn’t expect the outcome to differ that much due to large portions of industrial emissions being exempt from the carbon price.

“So, we expect this to have a marginal impact on our overall numbers for the economic impact. But it shouldn’t change the overall conclusions of the report,” Giroux said.

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“The moment you impose a carbon tax or carbon pricing regime on an economy as diverse as Canada’s, and one that is as dependent on fossil fuels as Canada, it’s guaranteed that there will be negative economic consequences, at least in the short term.”

However, Guilbeault is skeptical of the PBO prediction of little change.

“You’re saying, ‘Well, despite this mistake, the results stay the same.’ That flies in the face of what more than 300 economists have said and independent analysis that have been done by the Canadian Climate Institute,” the minister said.

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Click to play video: 'Trudeau, Poilievre debate affordability, carbon tax: ‘Why are Canadians so hungry?’'
Trudeau, Poilievre debate affordability, carbon tax: ‘Why are Canadians so hungry?’

Conservative Leader Pierre Poilievre and his party have repeatedly referenced this data point in their attacks on the signature Liberal climate policy in their call to “axe the tax.”

During question period Wednesday, Poilievre once again asked when the Liberals will lift the carbon price, saying he will introduce a motion Thursday to pause it until Labour Day.

“Will the prime minister axe the taxes so Canadians can have a staycation?” Poilievre asked.

“Mr. Speaker, the Conservative Party is proposing to eliminate the Canada Carbon Rebate,” Prime Minister Justin Trudeau replied.

Trudeau then referenced the March 2022 PBO report, saying that eight out of 10 households where the federal carbon price is applied receive more in rebates than they pay on the fuel charge.

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Public opinion polls from a variety of firms give the Conservatives a sizable lead in public support over the Liberals, and Ipsos Global Affairs CEO Darrell Bricker doesn’t anticipate this correction will do much to change the Liberals’ fortunes on the issue.

“The reality today is that if people have a strong opinion or any opinion about the carbon tax today, they’re probably not going to be changing their minds any time soon. There may be a few people are sitting on the fence, but not enough to close a 20-point gap that (the Liberals) currently have with the Conservatives,” Bricker said.

In his work, Bricker says most people see the carbon price as a tax measure instead of an environmental policy to address climate change.

“They’re not feeling particularly good about taxes these days, even if those taxes come back to them in the form of carbon tax rebates,” Bricker said.

Still, Guilbeault says he is looking forward to the updated analysis from the PBO and believes there is still time to get more Canadians onside with the Liberal policy ahead of the next election – which has to happen before or on Oct. 20, 2025.

“I think that we still have time to explain to Canadians … how important this is, and the fact that climate change isn’t going away and carbon pricing remains one of the best ways to fight climate change,” Guilbeault said.

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In producing the updated analysis, the political interest in its findings is not lost on Giroux, who says they will make it clear they are only looking at the dollar value of having a consumer carbon price and not an endorsement or condemnation of government policy.

“When we have our analysis, we have an alternative scenario or the counterfactual, rather, of no carbon tax is by no means intended to be interpreted as a suggestion that doing nothing is the right approach, (it) is just for the purpose of economic analysis,” Giroux said.

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