Unshackle the market! And other budget surprises
Bait and Switch Budget v.6.0
Once again Ms. Freeland set us up with lofty talk about keeping powder dry and worries about inflation and the resulting recession.
The bold and fine print of the budget shows us that lessons are not being learned and that the huge deficits and accumulated debt is going to be someone else’s mess to deal with.
The nagging undertow to all this largesse and tax credits is the roll of the dice nature of the green shift in the economy. Where did this Liberal Government acquire the bonafides to completely restructure the economy in its own image? It certainly isn’t from strong fiscal management or building investor confidence to diversify the economy.
There is huge risk to Canadians for this obsession with green technology and the sunk costs going forward that will be underwritten by taxpayers. We aren’t talking about the risk/reward ratio at all, and we should because this could end up badly.
A JOY to read.. as an aside a friend who owns a new electric SUV had to power his car from home in January.
His bill ended up at $700.00 in electricity...because it was very very cold and not enough (I do not know what to call them) gas station. Where we live they are not around.
"...the new credit applies to “both new projects and the refurbishment of existing facilities.” And crucially, “Crown corporations and publicly owned utilities, corporations owned by Indigenous communities, and pension funds” would be eligible. Including provincial energy utilities."
Cynical? Moi? The only province where all its electrical power is generated by comps without an extension cord plugged into His Majesty's treasury? Alberta of course. Will Atco, TransAlta et al qualify? Oops. We forgot about those knuckle draggers out there.
Looks like at budget for Jagmeet!
Paul. Here’s my point. The only province where all its electrical power is generated by private or publicly traded for-profit companies—without being plugged into His Majesty's treasury? Alberta of course. Will Atco, TransAlta et al qualify? The verbiage says the for-profit generators are excluded. Therefore AB is excluded from these credits.
Nothing on Moses’ tablets saying that Canadians need to rely on the Crown to generate electricity.
Freeland hails the arrival of ‘the most significant economic transformation since the Industrial Revolution’. And, as was the case then, indigenous Canadians are left out. Only token amounts for ‘talks’.
Their former allies in the anti-oilsands campaigns - civil society, environmental and climate leaders - cheer the Budget nonetheless.
Having more recently familiarized themselves with the inconveniences of consumer price shock meeting the ‘price signal’ call to action under the National Climate Change Plan (welcome to reality), they made the case for ‘electric federalism’. A federalism curiously absent any substantive role for indigenous Canadians. Friends like that...
Electric federalism boils down to wealth transfer patching over the true cost of meeting apparently immovable target. (I should say ‘further’ patching since Ontario, for example, already subsidizes the price of electricity to the tune of $7B annually.)
As for the ‘matching Biden’ positioning advanced by the same bunch, it conveniently omits the growth part. Here too, at the expense of indigenous Canadians. In the US, under climate leader Joe Biden, growth is rooted in expanding oil and gas production and exports to help pay for the energy transition. The policy also reflects well established facts on global demand for both for decades to come.
But having lulled the core of their modest base of support into thinking Canada is getting out of the grubby business of oil and gas, the last thing they want to do is draw attention to their fictional account of our future. They favour the pursuit of targets well out of reach, under a plan that add costs for the purpose of sending a price signal but provides subsidies to avoid a price signal becoming an electoral distress call.
The proximity of indigenous Canadians - who are now finally positioned to take advantage of Canada’s resource bounty (mostly no thanks to anything any government has done, quite the opposite) - seems to be of far lesser importance than anything $80B needs to be concerned about. ‘We have a moment to meet. You’ll need to wait over there while it unfolds.’
A topic (unlike most Ottawa finagling and Museums) that I know something about, and this is really excellent commentary.
Whenever the phrase "winners and losers" comes up, I want to re-tell the story Peter Tertzakian told in "A Thousand Barrels a Second" (2006) about energy transitions, their history, and how the next will go.
He tells that Winston Churchill, as "First Sea Lord of the Admiralty" (damn, you have to love those British titles) , saw WW1 coming and worked to move the whole British Navy to oil-fired ships instead of coal: a more energy-dense fuel, faster ships.
But that didn't just mean converting or rebuilding all those ships; you had to put in oil terminals at every port, which were also civilian ports that now had oil-delivery infrastructure. The oil had to be delivered by train, and the trains also converted to oil, since there was oil at both ends of their journey.
The infrastructure zoomed oil over the "transition hump" where it was better than coal, but coal had all the existing extraction, delivery, and consumption infrastructure, so that oil was never cheaper for any one project. After the infrastructure went in, oil usage in everything expanded, and coal went into declining use. It declined for 110 years (so far) and will be gone in a few more. (12GW of coal plants will be shuttered by the IRA this year.)
Anyway, conservatism's most-revered political hero picked oil as a winner, and coal as a loser. Today's transition-pushers can fairly call themselves "Churchillian".
I fear this Liberal plan will turn out as well as the Gerald Butts plan in Ontario in the 2000's. We should focus our money on R&D and resource development. The industrial implementation will happen as energy (hydro/nuclear with support in this budget) gets cheaper relative to fossil fuels (which have escalating carbon taxes).
Government programs are always the target of scams (at which corporate lawyers excel) that are usually successful since nobody in the bureaucracy wants to admit they were duped.
We need to find a way to permit hydro, nuclear and rare-earth mining without the typical barriers being erected. We should also finish the XL and find a way to get our resources to our allies so we can pay for all this.
BTW "inflation-fighting benefits" is an oxymoron.
Texas indeed. AB & SK not sitting on their fossilized asses. Oops assets. “Western Canada accounted for 98% of Canada’s total growth in 2022, with Alberta adding 1,391 MW and Saskatchewan adding 387 MW of installed capacity this year. Quebec contributed 24 MW to the total growth for 2022, Ontario 10 MW, and Nova Scotia 2 MW.” ON’s & QC’s meagre numbers are not misprints.
Three comments from my small corner of the universe: 1) Barely days after Joe Biden visited and the U.S. signalled pretty strongly they expected more from Canada on security, defence and Arctic, there is virtually nothing in the Budget. The world is getting much more dangerous and we’re not as isolated or protected as we think... Still Sleepwalking; 2) Cutting travel across the Board in federal government departments? Great. That’s what the government needs - to stay even more inside the Ottawa bubble and not get out and talk to Canadians or other countries.... 3) Anyone who quotes Nigel Tufnel deserves our unmitigated respect.
I just listened to you on Radio Canada..I was expecting a bit more than what you did. You seem very happy with it all. For westerners it's all Québec and Ontario..West not so much because before they give a Go to resources is not a given. They want green but the BAPE (french) is always here.
So Manitoba Hydro pays taxes and can use credits ?
3 % reduction in spending in all government departments. Oh, Ok? Ordered your book Paul. Can't wait to read it.
Pre-ordered the book as hard cover (my preferred variation).
Very smart ‘take’ on use of tax credits and how it has come as a last resort. What’s your view Paul on allocating Growth Fund to a pension plan? That says a lot too, no?