Our 4% 5-year bonds are on sale now!

Response: Rex Murphy on Ontario's Climate Change Plan

May 31, 2016

Photo courtesy of Benson Kua

By Nicholas Shatalow, SolarShare Outreach Coordinator 

As the Ontario government unveils its climate change plan, media outlets across the province continue to publish editorials, evaluating the plan and its implications. In perhaps the boldest take on the plan so far, “Leap comes to Ontario with Wynne’s new climate change plan”, Rex Murphy condemns Ontario’s plan as bullish government overreach. Unfortunately, Murphy’s piece lacks nuance, constructing its own sensationalized drama, instead of engaging with the real issues at hand.

That’s One Small Step for Wynne, One Giant Leap for Rex Murphy

Murphy dedicates nearly half of his article to the Leap Manifesto, which he characterizes as a “wild-eyed ultra-greenist, anti-capitalist dogma-sheet”. The document in question is the brainchild of several prominent Canadian environmentalists, including activist Naomi Klein. While Murphy’s unrelenting assault on the Leap Manifesto’s radical and confrontational nature may be warranted, it is irrelevant. Simply put, the Leap is not coming to Ontario. Murphy’s talk of “command-economy politics” conjures images of Comrade Wynne and her politburo of Eco-Bolsheviks fiendishly scheming as they prepare to usher us into their “New Green World”. The truth, however, is far less exciting.


A Plan Beyond Compare?

In his attempt to spin Ontario’s climate plan as extremist, Murphy goes so far as to claim that the plan “defies all comparison”, putting even the Leap Manifesto to shame in its audacity. Upon more careful examination, however, it is clear that this is not the case. Many of the strategies present in Ontario’s plan have been used in various moderate jurisdictions throughout the world, such as California. Like Ontario’s plan, California’s has a cap and trade system (with which Ontario will eventually ‘link up’), a focus on infrastructure investment, subsidies for renewables, and programs to improve household energy efficiency. California’s climate plan includes other ambitious goals, such as increasing renewable energy production to 50% and reducing petroleum use in vehicles by 50% by 2030. Despite the state’s action on climate change, California has not “push[ed] hundreds of thousands [of people] out of work” or brought its “industrial age back to the days of horse cart and covered wagons”. In fact, California’s economy – currently the eighth largest in the worldgrows at a higher rate than the rest of the American economy. Certainly, Ontario’s plan is not identical to California’s, but the two strategies share many defining characteristics. Beyond California, Ontario's plan inspires further comparison to plans already in place in countries like Germany and South Korea. Much to Murphy’s dismay, I imagine, it’s not that difficult to find inoffensive comparisons to Ontario’s climate plan.


A Look at the Numbers

Key to Murphy’s alarmist narrative is the idea that Ontario’s climate plan represents a dramatic increase in the size of government in the province. Murphy isn’t especially precise about which parts of the plan constitute government overreach, but it's safe to assume that he isn’t particularly thrilled about the 1.9 billion dollars in government revenue Ontario’s cap and trade will produce annually. Let’s take a look at the numbers. While it’s true that Ontario’s cap and trade system will generate a lot of revenue and raise gas prices by about 4.3 cents per litre, this figure is much less dramatic than Murphy’s interpretation would suggest. Since 1992, Ontario’s gasoline tax has been fixed at 14.7 cents per litre for unleaded gas and 17.7 cents per litre for leaded gas. However, the tax is not tied to inflation, so its real value decreases over time. Adjusted for inflation, the 1992 gasoline tax is equal to 22.5 cents per litre for unleaded gas and 27.3 cents per litre for leaded gas in 2016 dollars. This means that, because of inflation, the Ontario government earned more tax revenue per litre of gasoline through the 1990s and early 2000s, without a cap and trade system, than they will earn in 2016 with cap and trade. It’s hard to envision Ontario’s climate plan as an instance of overzealous big government when we remind ourselves that Mike Harris’ government, with its ‘Common Sense Revolution’, earned more in tax revenue per litre of gasoline than Kathleen Wynne’s will even after their carbon-price.1 Murphy’s fear that Ontario’s plan will amount to a “grotesque invasion of the choices and rights of citizens” is simply unwarranted.


On the Government’s Credibility, Mandate, and Authority

Part of Murphy’s frustration stems from the fact that he thinks the Ontario government “possesses no credibility, whatsoever, on the energy file” and that the province’s climate plan “goes far beyond any reasonable interpretation of a provincial government’s mandate or authority”. While there are legitimate concerns to be had with the province’s plans for Hydro One and the gas plant cancellations in Mississauga and Oakville, it is difficult to say that the government has absolutely no credibility when it comes to energy. The province’s coal phase out has been quite effective at curbing greenhouse gas emissions and is overwhelmingly popular among Ontarians (74% agree with the decision). In terms of the government’s mandate, the fact that 81% of Ontarians support generating more power from renewable sources suggests some justification for the government’s plan. Furthermore, since the plan doesn’t imply the expansion of government or invasion of rights Murphy believes it does (as shown above), it’s not clear why it would be beyond their authority either. To be clear, the power exerted by the Ontario government in its climate plan is unique when examining neither the province’s nor the nation’s political history.


The Need for a Focused Discussion

Murphy’s fear of the so-called Leap-like nature of Ontario’s climate change plan is totally unfounded and distracts from the discussion we should be having about the plan’s actual substance: creating boogeymen helps no one. Unquestionably, it is important for us open a critical dialogue about the government’s plan, but doing so should not come at the expense of sober or rational thought. 

1Correction: While the gas tax has not increased since 1992, gasoline and diesel became subject to the 13% HST in 2010 (previously, they were subject to the 5% GST, but not the 8% PST). As such, Ontario's absolute tax revenue per litre of gas did, in fact, increase as a result of the HST. However, the HST also raised the tax revenue per unit of many other goods, such as magazine subscriptions, campsites, and internet services. Since the HST did not specifically target gas - it effected a variety of goods which were previously exempt from the PST - it is not particularly relevant to the above discussion.