Fact Check: The NDP's cap-and-trade revenue plan
The Safety-Kleen plant, the second worst polluter in Waterloo Region, is seen in Breslau, Ont. on Tuesday, March 1, 2011.
CTV.ca News Staff
Published Monday, April 25, 2011 9:17PM EDT
With only a week before Canadians head to the polls, the Liberals have launched fresh attacks on the surging NDP, accusing Jack Layton of using "fantasy money" to pay for his campaign promises.
While both the Liberals and the Conservatives have turned attacks toward Layton's party, the NDP maintains that they are the only party with a "fully-costed" campaign plan.
The NDP message appears to be gaining steam, as recent polls have shown that the party is in a statistical tie with the Liberal party. In particular, the NDP have been enjoying rising indicators in Quebec, at the expense of the Bloc Quebecois.
But the Liberals claim that the NDP "plan is just not credible." Liberal Leader Michael Ignatieff squared off against his NDP rival on Monday, claiming that the numbers included in the NDP election platform are based on fantasy.
"When you look at this science fiction platform, $70 billion in spending, the numbers just don't add up," Ignatieff said.
In particular, the Liberals say that $21.5 billion in federal revenue outlined in the NDP platform would come from a cap-and-trade emissions plan. But such a plan doesn't exist yet.
"Jack Layton plans to spend nearly $30 billion in the next two years ($70 billion over the next four years) using fantasy money," said a Liberal press release.
Indeed, critics say a cap-and-trade system would take years to set up and would leave taxpayers with a massive bill in the interim.
But Layton shrugged off the attack, saying that he would simply adjust his plan until the system -- which would force big polluters to pay up -- was implemented.
"If the revenue doesn't come in quite as fast as projected … then we'll have to pace the various introductions of programs," he said Monday at a stop in Saint John, N.B.
He also maintains that he could get his system in place within a year.
On his party's website, Layton writes: "If revenues from pricing carbon are delayed or are lower than planned, then the investments will also be delayed or will be phased in more slowly than planned."
However, Layton has not spelled out which programs would in fact be held back.
The NDP platform states that a Layton government would "establish hard emissions limits for Canada's biggest polluters to ensure companies pay their environmental bills and to create an incentive for emissions reductions."
Layton's party has also earmarked $3.5 billion in new green initiatives that would be paid for exclusively by the cap system, which allows polluters to buy emission credits instead of cutting back on production.
Although such a system has been implemented in many European areas, the political will to bring in a North American system cooled considerably after the economic crash of 2008.
So could Layton achieve his goals? There are some hurdles he would have to clear first.
Although the province of Ontario has passed legislation that requires companies to show their yearly emissions, it has said that it needs to monitor the stats so it can better understand how a cap-and-trade system would work.
The fear is that any additional taxes on production could give companies elsewhere an edge and hold back domestic industry.
Meanwhile, the state of California has been working with four Canadian provinces (British Columbia, Ontario, Manitoba and Quebec) to implement a cross-border plan called the Western Climate Initiative by January 2012.
However, that date appears to be unrealistic as B.C. and Ontario have both asked for more time. The plan to roll back the date in B.C. comes despite the province's carbon tax plan, one that has been in place since July 1, 2008.
Provincial officials in B.C. have also mused that any new system would have to be weighed for its effect on the productivity of industry in the province.
Clearly, as with the examples above, it's not easy to implement a wide-ranging new tax system within only a year.
More importantly, given the integrated nature of the North American economy, any successful Canadian program would have to be tied to a U.S. system.
In fact, the Conservatives used this very excuse for essentially mothballing their own planned climate change action plan.
For example, for a company like General Motors, which has cross-border manufacturing and supply lines, how could a cap system be implemented in Canada but not in the U.S.?
The NDP platform states that a Layton government "will work closely with the Obama administration in Washington to ensure a co-ordinated response to climate change."
But since the economic crash in 2008, tackling climate change in the U.S. has become politically difficult, with the Republican Party holding sway in the House of Representatives in Washington.
The Conservatives ditched a similar plan proposed in 2008, and the Liberals have said that any new system would take up to two years to implement.