27 Comments

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.

Expand full comment

Totally agree, I wonder if ''obsession'' is a strong enough word. I still remember JT's reply when he was first elected on why he had a cabinet composed of 50 % females :'' because its 2015''. Catchy but empty.

The same reply could be used about this green tech obsession : ''because its 2023''. Team Trudeau's so called vision is use a catchy phrase and put off real decisions for at least three election cycles. Sad.

What is even sadder is that Skippy is a long way from being ready for prime time.

Expand full comment

The real tragedy is the refusal to see Canada’s role in providing other nations with clean energy solutions that can replace coal with natural gas. Removing our oil/gas from the marketplace as a moral statement is foolish when the needs will be met by other countries with dubious environmental and human rights records.

Nobody in their right mind leaves assets stranded that could help our dire fiscal situation. Whether the alternatives are better or worse, I’ve come to believe that they can’t be worse than what we have now.

Expand full comment

"...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.

Expand full comment

Looks like at budget for Jagmeet!

Expand full comment

Most Canadians probably don’t spend much time thinking about those without access to dental care but this is a win that goes way beyond Jagmeet.

Universal pharmacare should be next.

Expand full comment

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.

Expand full comment

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.’

Expand full comment

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".

Expand full comment
Mar 29, 2023·edited Mar 29, 2023

A coal plant has an operating lifetime of at least 60 years. China is permitting two a week since 2022. What are the odds that China will strand those assets in 2030 or even 2050? And then there's India. So I wouldn't write off coal as a fuel quite just yet. (source: https://www.cnn.com/2023/02/27/energy/china-new-coal-plants-climate-report-intl-hnk/index.html#:~:text=Throughout%202022%2C%20China%20granted%20permits%20for%20106%20gigawatts,coal%20power%20plants%20each%20week%2C%20said%20the%20report.)

Expand full comment

Can't predict. But, hypothetically, if a coal plant is selling power at $40/MWh and windfarms at selling it at $20/MWh (neither number is wild), then the coal plant will lose customers and be shuttered whether it has 50 years left or not. Asking whether they will throw good money after bad is like asking if we'll just decide to keep the tar sands open when oil falls below the profitable price.

Yes, a stupid government can throw good money after bad, like Trudeau's $30B pipeline - but will anybody do THAT twice? China's rulers are utterly corrupt and profit-driven, I bet they'll follow the money.

If the "transition" were being driven by ideology and fiat, I wouldn't dare make ANY predictions. But it is now being driven by money. Renewables are just cheaper now, and all else will fall out from that.

Expand full comment

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.

Expand full comment

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.

Expand full comment

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.

Expand full comment
author

On important parts of this story I'm not sure you and I are disagreeing, Jim.

Expand full comment

So Manitoba Hydro pays taxes and can use credits ?

Expand full comment
author

My understanding is that none of these is to subsidize steady-state activity. It's for investments in several classes of lower-carbon activity. But if Manitoba Hydro does that investment it would qualify.

Expand full comment

3 % reduction in spending in all government departments. Oh, Ok? Ordered your book Paul. Can't wait to read it.

Expand full comment

Pre-ordered the book as hard cover (my preferred variation).

Expand full comment
founding

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?

Expand full comment
author

They've been swearing for 18 months that they would put this where ministers couldn't get their paws on it. This seems to accomplish that goal? I think?

Expand full comment
founding

Maybe; but might it risk muddling mandates or possibly distracting PSP from its core purpose? Always comes back to the machinery of government question. Perhaps we just don’t have tools in our current govt toolkit for these new 21st century challenges?

Expand full comment

I noticed that as well

Expand full comment

Is it time to purchase shares in Ontario’s Hydro One?

Expand full comment
Comment deleted
Expand full comment

What she said.

Expand full comment