NWT’s new carbon tax bill is on a knife-edge

In one of the biggest splits this NWT government has seen, a vote on a bill that tries to keep the territory’s carbon tax in line with new federal requirements could go either way.

During deliberations over Bill 60 on Tuesday, two regular MLAs said they would back cabinet’s seven members and support the bill. Seven regular MLAs said they would oppose the bill.

Two MLAs’ positions are not clear.

If nine MLAs oppose the bill, the House will be evenly split and Speaker of the House Frederick Blake Jr would be expected to provide a casting vote.

By convention, the speaker votes to preserve the status quo – but in this instance, the status quo isn’t obvious. Is it supporting the bill, ensuring that an NWT government-designed carbon tax continues and heading off the possibility of a federal replacement, or rejecting the bill, ensuring that the tax isn’t amended but almost certainly leading to that federal replacement?

The bill is expected to head to third reading and a final vote on Wednesday.

No matter what happens, the federal government has decreed that a new approach to carbon tax must kick in from April 1. That approach bans the use of some tools – like a 100-percent rebate for the carbon tax on heating fuel – that the NWT government previously used to shield residents from some of the tax’s most significant impacts.

Robbed of those measures, the GNWT has tried to come up with a new version of its carbon tax that does its best to replicate the same protections using tools that Ottawa will still allow, like giving cost-of-living offset payments to families.

But regular MLAs have spent weeks saying the protections in the bill are not enough, northern residents will suffer, and cabinet failed to properly consult with either the public or MLAs.

Highlighting the plight the territory finds itself in, finance minister Caroline Wawzonek – who is responsible for the bill – and Frame Lake MLA Kevin O’Reilly, one of its fiercest critics, both called the situation “tragic” in the NWT legislature on Tuesday.

The possible outcomes

Bill 60’s final vote will have significant ramifications.

If the bill passes, the NWT’s amended carbon tax will take effect from April 1. Wawzonek says it will include measures like a three-tiered system of payments to residents (you get more money back if the tax’s impact is higher where you live, like high-Arctic diesel-powered communities), plus 10 percent of revenue from the tax will be given to community governments to help ease the burden they will face.

If the bill fails, the federal government’s backstop is almost certain to apply instead. Nobody quite knows what that backstop will look like – the federal government has declined to meaningfully answer questions from Cabin Radio on the subject, and Wawzonek herself has repeatedly stated that she has found it hard to get full answers out of federal officials.

Versions of the backstop already apply in Yukon and Nunavut, with specially negotiated approaches to rebates and offsets in each territory. It’s possible the NWT could arrive at something similar, but both of those territories have had their “backstop-plus” arrangements since the tax’s introduction in 2019, whereas the NWT would be arriving to the backstop party both late and under duress. How Ottawa will deal with that is not clear.

Wawzonek has maintained for months that the NWT’s approach will do a better job of protecting residents than the federal government will, but not all regular MLAs are so sure.

Some regular MLAs feel bruised by what they say was cabinet’s refusal to meaningfully discuss the changes with them as the bill was being developed. While the latest proposal includes several suggestions that originated from regular MLAs – like the tiered offset payment system and money back for community governments – there is real resentment in some quarters that the bill brought forward was, in critics’ view, inadequate and ignored some concerns.

That ill-feeling is so profound that, highly unusually, cabinet member RJ Simpson had to call the bill to be discussed by MLAs in the legislature on Tuesday. The regular MLAs that ordinarily call each bill for consideration declined to do so.

“I firmly reject cabinet’s inflexible and unfair approach with this bill,” O’Reilly said once that discussion began.

“The large emitters are treated favourably and the rest of the businesses are not. Who did they talk to in developing this carbon tax? Only the large emitters. They didn’t bother to talk to the public, other businesses, NGOs.”

The phrase “large emitters” in discussion of the NWT’s carbon tax is essentially code for diamond mines. Wawzonek has been accused of paying far too much attention to creating terms that will not heavily penalize the mines on which the territory’s economy relies, and not enough attention to the fate of smaller businesses and non-profits.

Even Katrina Nokleby – the Great Slave MLA and an engineer by trade, whose support for the mining industry is normally diametrically opposed to O’Reilly’s intense scrutiny of same – agreed with her colleague on Tuesday. “When I look at the benefits to industry … I don’t know how much that offsets the cost to everybody else in the territory,” she said.

Nokleby and O’Reilly are joined in declaring opposition to the bill by Tu Nedhé-Wiilideh’s Richard Edjericon, Nunakput’s Jackie Jacobson, Deh Cho’s Ron Bonnetrouge, Thebacha’s Frieda Martselos and Monfwi’s Jane Weyallon Armstrong.

The bill will be supported by cabinet and has the backing of both Hay River South regular MLA Rocky Simpson and Yellowknife North regular MLA Rylund Johnson.

“Is the carbon tax just? The simple answer is no,” Simpson said on Tuesday. “For some reason, the feds don’t see it … but it’s there. And it’s law. Whether or not the bill gets voted down or not, the tax stays.

“I’m going to support the bill because I have faith in this government more than I have in the federal government.”

Johnson said he was “ultimately supportive” of the bill after Wawzonek took the step of including $1.8 million for community governments in promised supports that will result from the legislation, though the mechanism by which laws are created in the NWT doesn’t allow for that promise to be included in the bill itself at this late stage.

The voting intentions of Lesa Semmler, the Inuvik Twin Lakes MLA who chaired Tuesday’s discussion, and Kam Lake MLA Caitlin Cleveland are not clear. Neither could be reached on Tuesday night to clarify how they expect to vote.

More: 2023 brings a new-look NWT carbon tax. It may not be pretty.

More: NWT’s revised carbon tax ‘still better than any alternative’

Speaking in the legislature, Cleveland criticized the federal government for its lack of transparency regarding how the backstop might be applied, but also declared herself “very disappointed” in the bill Wawzonek had brought forward.

“To have a government turn around and table a bill that has blatantly ignored previous recommendations is incredibly frustrating,” Cleveland said, before praising the inclusion of measures like the tiered offset system, ensuring that Ulukhaktok families, for example, receive higher compensatory payments than their Yellowknife equivalent.

‘I have to think about my people’

Tuesday’s debate played out in a chamber that otherwise spends much of its time dealing with major problems that are linked to climate change – threatened infrastructure, intense flooding, severe wildfires and endangered species being just a few examples.

The federal government says its carbon tax helps Canada address the root cause of shifts northerners are witnessing in the warming environment around them.

But MLAs also have a responsibility to ensure their constituents can afford to live, even as the world around them threatens to become slowly unliveable. Some politicians openly wrestled with that conflict on Tuesday.

“Climate change has a major impact on our traditional way of living,” Monfwi MLA Weyallon Armstrong declared. “With the restrictions placed on caribou, our residents have to travel long distances to go hunting. Climate change is going to have an impact because Gamètì and Wekweètì rely on the winter road, and this year it’s a short operation, even for Wekweètì.”

Despite that, she concluded of the bill: “If we have to vote, I think I’m voting against it, because I have to think about my people.”

Wawzonek, addressing colleagues, said: “Frankly, I’m sorry that we are where we are. I’m live to the role of accountability of a minister and I’m live to the fact that folks are very frustrated.”

Acknowledging she may have “underestimated” some of the concerns expressed earlier in the process, she said the division evident on Tuesday was “not the way we normally do get along here.”

“I’m regretful,” she said, “that we are at the point we’re at.”