Realignment?

Some interesting reactions to the Liberal carbon plan in the last couple of days. Here’s Don Martin, first, writing in the National Post:

The uncharacteristic blustery reaction by the Prime Minister — calling the plan “crazy” and “insane” and warning it would “screw everybody across the country” — is curious.

This economist policy wonk has a deeply analytical brain and picks words carefully for maximum impact, yet he seemed unable to muster more than elementary taunts as a response.

It could mean, as Environment Minister John Baird told me recently, he just couldn’t believe Mr. Dion would do a U-turn on the carbon tax after campaigning so vehemently against it only 18 months earlier during the leadership contest.

As such, it might have looked like gift-wrapping on a majority government for the Conservatives, leaving Mr. Harper giddily tongue-tied.

But it could also mean the Conservative war room, which thought it had a choreographed response for every conceivable Liberal action, was caught flat-footed by Mr. Dion gambling his leadership on a policy that, while seemingly suicidal, has elements of strategic brilliance.

Suddenly, Mr. Dion is not the spineless egghead confounded when confronted by too many priorities.

He’s got a defining issue to call his own and seems to have found the backbone to stand up and defend a position with conviction.

The move also forces Conservatives, who felt they could coast through the election on snoozy gas-reduction regulations and a technology fund, to ponder more aggressive carbon-reduction policies.

And, finally, a government with very little revenue room to serve up election goodies is suddenly facing off against an Official Opposition flush with tax-grab cash to finance a liberal social agenda, coupled with tax cuts well beyond anything the Conservatives could afford to match.

Second, here’s Bill Robson, president of the C. D. Howe Institute, in a meeting with the Edmonton Journal editorial board:

Liberal carbon tax proposals are no revival of the bygone 1980 National Energy Program’s infamous grab of Alberta oil wealth, the chief of a prominent economic think-tank said Tuesday.

“I’m a child of that era,” C.D. Howe Institute president Bill Robson said, recalling “stresses and strains” he saw between western and central Canada as a federal energy department employee while the NEP lasted until mid-1985.

“I’m very impressed with how good things are now by comparison,” Robson told The Journal’s editorial board…

He described Liberal opposition leader Stephane Dion’s carbon tax scheme, to prompt cuts in consumption by raising costs of all fossil fuel uses, as an essential dose of strong economic medicine.

“The inspiration really is environmental,” Robson said.

“If you seriously want to reduce greenhouse gas emissions the consumer has to feel pain,” the economist said.

“They’ll suffer,” he added.

The Liberals’ prediction that their carbon tax, offset by rebates through other federal programs, would end up costing typical households $240 a year understates its likely effects by a wide margin, Robson said.

The program’s projected total annual cost of $15.3 billion works out to as much as $640 per family, he estimated.

An improved “green shift” of the tax system would allow for unforeseeable changes in the natural environment, Robson added. The new system’s effective price penalty for carbon emissions should work like an insurance premium by reflecting their effects as they develop, he suggested.

The tax level could directly reflect climate change blamed on rising carbon-dioxide levels in the atmosphere by linking the levy to temperature trends, Robson said.

“It should be flexible over time as we learn more about the problems we’re trying to address.”

Last, and perhaps most intriguing of all, here’s Tom D’Aquino, president of the Canadian Council of Chief Executives, in a speech to the Calgary Chamber of Commerce. After noting that the Council had earlier endorsed “the use of price signals as a means of persuading businesses and consumers to reduce their emissions of greenhouse gases … either through environmentally linked taxes or through a cap-and-trade system” — the Council is indifferent between them — D’Aquino goes on to weigh the merits of the Conservative versus Liberal proposals. While he stipulates off the top that “we see positive elements in both plans — but we also have major concerns about the specifics,” here is how he actually describes them:

The Conservative governmentʹs regulatory plan for industry would set extremely ambitious targets for improvements in GHG emissions intensity… [T]he government plan imposes a heavy burden on Canadian business. And yet at the same time, the Conservative plan fails to impose any real restraints on the other 50 percent of Canadaʹs greenhouse gas emissions. For consumers, the plan mainly offers incentives and subsidies — measures that have been tried in the past without much success.

And what of the plan unveiled last week by Liberal Leader Stephane Dion? The Liberals’ “Green Shift” would rely on a broad-based carbon tax applied to virtually all fossil fuels as the principal means to address the responsibility of both industry and consumers.  But the numbers clearly show that the large majority of the revenue raised will come from Canadaʹs most carbon-intensive industries, and that the bulk of the offsetting tax deductions will flow to Canadian households.

For all D’Aquino’s professed even-handedness, you get the distinct impression that he has more problems with the Conservative plan. Its emphasis on regulation over price signals “imposes a heavy burden” on industry, yet “fails to impose any real restraints” on the consumer sector, where it relies on “measures that have been tried in the past without success.” By contrast, his only complaint with the Liberal plan is that it doesn’t offer business a fair share of the offsetting tax cuts.

So: that’s a conservative columnist from Alberta, a conservative economist, and a conservative business leader, all of whom come out, on balance, on the Liberal side of the controversy. Fascinating.