Sound and fury

By Dian Cohen
Sound and fury
(Photo : Dian Cohen)

With the alternating overcast and sunny skies of autumn in Canada comes the constant sound and fury of politicians in a reconvened Parliament. A similar scenario is playing out in Quebec and is particularly jarring amid the background question of how to deal with inflation.
Case in point: the first Question Period interchange between Conservative leader Pierre Poilievre and Finance Minister Chrystia Freeland was about the government’s plans to raise Employment Insurance and Canada Pension Plan premiums starting January 2023. Poilievre accused the government of taking even more money out of Canadians’ pockets at a time when inflation is reducing the purchasing power of every dollar. He said the government should cancel all of the increases.
M. Poilievre knows better than to believe his own rhetoric but he’s hoping you don’t. He knows, for example, that when he was Minister of Employment and Social Development back in 2015, EI premiums were much higher than they are today or even after the premium hike in January. He knows that the EI account has a deficit of almost $30 billion, so if premiums are not raised, that deficit has to be covered by other taxes. He knows that the CPP premium increases have been in the works since 2019 and are part of a larger plan to increase our retirement benefits from about $15,000 today to $20,000 a few years from now. Before 2019, the CPP retirement pension replaced one quarter of our average work earnings. (This average is based on your work earnings, up to a maximum earnings limit each year.) The plan put in place in 2019 was to increase premiums so that the CPP will grow to replace one third of the average work earnings you receive after 2019. Quebec legislated an identical increase in premiums and enhancement of retirement income for the Quebec Pension Plan.
M. Poilievre also wants the Trudeau government to cancel the increase in carbon taxes that have taken effect every April Fool’s Day for the last several years and will continue to be imposed until 2030. Their purpose is to make us think about using less fossil fuel or using more alternatives. It is the government’s core policy for reducing and eventually eliminating the use of fossil fuels whose combustion is destabilizing our climate.
This is a highly complicated issue that lends itself quite easily to political sound and fury. Let’s start with the fact that only four provinces (Ontario, Alberta, Manitoba, and Saskatchewan) and two territories (Yukon and Nunavut) operate under the federal carbon tax as it applies to the price at the pumps. These jurisdictions are eligible for a tax rebate on their income taxes. Everyone else — Quebec, Nova Scotia, Newfoundland and Labrador, the Northwest Territories, British Columbia and New Brunswick – has its own carbon pollution pricing system each of which has been okayed by Ottawa. But they don’t get the tax rebate because their systems are so different and generally much less pricey than Ottawa’s. That fact alone is enough for some politicians to use it drive a wedge.
A further complication comes from Climate Action Tracker – an independent scientific consortium that tracks government climate action and measures it against the globally agreed Paris Agreement. . Here’s its latest summary for Canada:
Recent climate policy developments, while positive, are insufficient to address the climate crisis. The country’s new and stronger 2030 target is not quite Paris compatible. Its revised climate plan and additional measures announced in the 2021 federal budget are insufficient to meet that target. Canada continues to face challenges in implementing policies.
Ottawa says it will release its plan to reach the 2030 target by the end of March 2022.
At the end of Shakespeare’s Macbeth, the disillusioned king says his life was “a tale told by an idiot, full of sound and fury, signifying nothing.” Ours will be much more productive if we don’t pay much attention to modern day idiots.
Dian Cohen, C.M., O.M., economist
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