Mr. Speaker, there has been some confusion about the report of the Parliamentary Budget Officer, or PBO, and the details are important.

The PBO report broadly consists of two main parts. The first part looks at direct costs like increased fuel prices, and the revenue that is returned to households. This first part is straightforward and underscores how carbon pricing works. By gradually increasing the cost of fossil fuels and returning proceeds to Canadians, carbon pricing delivers an incentive to choose greener options while keeping the policy affordable. Importantly, the PBO’s report confirms that, under the federal carbon pricing system, the average household receives more in climate action incentive, or CAI, payments than they face in direct costs due to carbon pricing. Most households come out ahead, and low-income households, in particular, do much better. This is because CAI payments are based on the average amount paid in the province, and high-income households tend to use more energy for larger and more vehicles and larger houses, but everyone gets the same amount of money back.

The second part of the PBO report is where the confusion arises. The report claims that, in addition to paying the carbon price, each household also “pays” in the form of slower gross domestic product, or GDP, growth. The problem with this conclusion is that the PBO report compares GDP growth in a scenario with carbon pricing to GDP growth in a scenario in which there is no action of any kind to address climate change. This approach highlights the costs of one policy without considering real alternatives. This is not a valid comparison. Inaction on climate change is not an option. It would lead to massive costs in the future.

An appropriate comparison would include a scenario with carbon pricing and a scenario in which climate change is addressed by measures other than carbon pricing. Compared to alternatives, such as more regulations or bigger spending, experts agree that carbon pricing is the least expensive of all the policies to address climate change. In that comparison, the carbon pricing scenario comes out ahead.

The PBO report also acknowledges that its assessment of the impacts of carbon pricing does not account for the benefits of carbon pricing. Further, the study does not quantify the avoided climate damages associated with the greenhouse gas emissions reduced by carbon pricing. Without accounting for these, and other complementary policies and investments, including the numerous expected economic benefits of pricing, the report’s GDP projections likely overestimate the impact of carbon pricing on GDP growth. Finally, by presenting the difference between scenarios as a cost, a scenario where we put a price on pollution and one where we do nothing, the analysis contributes to a misconception that carbon pricing causes GDP to decline, when in fact, according to the PBO’s analysis, GDP and incomes rise in both scenarios, only at different rates. Carbon pricing drives innovation and new technologies, and this creates jobs and economic growth. When you compare carbon pricing with other options, study after study confirms the benefits of carbon pricing.

Although the Government of Canada does not currently have any policies that specifically mention misinformation or disinformation, the policy on communications and federal identity requires all government communications to be “objective, factual, non-partisan, clear, and written in plain language.”

Steven Guilbeault

$491,029.00