Revisions to PBO's carbon tax analysis will 'vindicate' government, minister predicts
Guilbeault says PBO report was 'flawed,' PBO says correction probably won't change conclusion
Environment Minister Steven Guilbeault says the Conservatives' attack on the federal carbon tax and its associated rebates is based on a "false premise" pulled from a "flawed" Parliamentary Budget Office (PBO) study.
On Wednesday — after the PBO acknowledged it had made a error in its economic analysis of carbon pricing and promised to correct the record — Guilbeault called on the Conservatives to abandon their line of attack.
"To their credit, they (the PBO) made a mistake and they recognized it," Guilbeault said, adding that he hopes the "Conservative Party will also recognize" that their "entire campaign" against the tax is based on unreliable information.
Guilbeault went further in an interview with CBC News, calling the PBO analysis "flawed" and insisting that the Conservatives have a moral responsibility to correct the record as well.
"Now that the PBO has come out and said, 'We made a mistake,' I hope that the Conservative Party of Canada will say, 'We have been using flawed analysis from the PBO. Therefore, what we have been saying about carbon pricing is not true,'" Guilbeault said.
"I know it won't happen, but it should. That's what they should do if they had any moral authority on this."
The PBO, meanwhile, says that while it intends to publish a corrected version, its original conclusion — that carbon pricing will have a net negative impact on the economy — probably won't change.
"It is not something that should or will alter the conclusions of the report because the industrial emissions are exempt at 80 per cent," Parliamentary Budget Officer Yves Giroux told CBC's Power and Politics on Wednesday. "For big emitters, it is only the 20 per cent that is subject.
"So overall, the economic impact will still be negative."
Guilbeault said he still thinks the revised report will "vindicate" the government's policy.
"I think it will show that we have been right all along," he said. "It will vindicate our analysis and the analysis of independent experts."
A Conservative spokesperson pointed out that Giroux said the bottom line of the analysis likely won't change.
"Only the deeply out-of-touch Trudeau Liberals and their NDP coalition partners think adding a perpetually-increasing tax on the essentials of everyday life somehow makes Canadians richer," said Sebastian Skamski, director of media relations in Conservative Leader Pierre Poilievre's office.
The federal carbon tax and its rebates have become a political lightning rod. Since becoming Conservative leader in 2022, Poilievre has vowed repeatedly that a government led by him would "axe the tax." It's not clear if Poilievre would also cancel the rebates some Canadians receive.
While the national carbon price applies across the country, not everyone pays the federal carbon tax and receives money back.
Carbon pricing works differently in Quebec, the three territories and British Columbia — their residents don't receive federal rebates. The remaining provinces are subject to the federal government's carbon tax or fuel levy, and families or residents receive rebates from Ottawa.
Large emitters in the oil and gas, steel and other industries also pay the carbon price through a separate industrial pricing system or output-based pricing system. As with the consumer carbon price, Canada has a mix of federal, provincial and territorial carbon pricing systems for industrial emitters.
On Wednesday, Giroux told CBC News his office made an "inadvertent error" when it modelled carbon pricing in its analyses.
The Parliamentary Budget Office or PBO is a non-partisan government office that serves both MPs and senators. It produces economic and financial analyses for Parliamentarians.
In 2022 and 2023, the independent office assessed the federal government's claim that eight out of 10 families receive more in rebates than they pay under the federal carbon tax. The PBO report showed that the government was largely correct, based on the money spent on fuel and indirect costs, and the federal rebates received.
The PBO's most recent report found that wealthy families are more likely to lose money when the carbon price reaches its highest level in 2030-31 — $170 per tonne. Lower and middle-income families are more likely to make money from the rebates, the report stated.
But when it considered the broader economic impacts of the federal carbon tax and rebates in 2030-31, the PBO concluded it would cut jobs and profits in the transport and oil and gas sectors compared to a hypothetical scenario with no federal climate change policy.
"When both fiscal and economic impacts of the federal fuel charge are considered, we estimate that most households will see a net loss," Giroux said in 2023. "Based on our analysis, most households will pay more in fuel charges and GST — as well as receiving slightly lower incomes — than they will receive in (rebates)."
Now, in an update to that report, the PBO acknowledges that its economic analysis inadvertently included the industrial pricing system that applies to heavy emitters. The PBO says it will update its analysis in the fall to correct the error.
But Giroux said that update may not significantly alter the findings because most industrial emissions are exempt from carbon pricing. Major industrial emitters are exempted because they face international competition from businesses that operate in jurisdictions without a carbon price.
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