YK mayor says NWT carbon tax isn’t ready as deadline nears

The Mayor of Yellowknife believes plans to introduce a carbon tax in the NWT should be postponed unless last-minute changes are made before it becomes law.

The territorial government still expects the NWT’s version of the tax to kick in at the start of September. For that to happen, it must be approved by MLAs in the legislature in the next two weeks.

A committee of regular MLAs scrutinizing the planned tax advanced it to the legislature without amendments last week, but warned ministers to “expect more debate about whether this is the right plan for the NWT.”

At the heart of uncertainty about the tax are several key concerns:

• Communities feel they will be unfairly penalized by the tax and forced to pass on the resulting costs to residents;
• A change in federal government, for example to a Conservative Party already committed to scrapping Ottawa’s carbon tax, could leave the NWT implementing a similar tax at a politically inconvenient moment;
• Regular MLAs feel they have had little concrete input on the territory’s legislation, questioning the transparency of both the drafting process and the planned annual reporting on how the tax is working; and
• Some observers suggest the tax, with its system of rebates designed to minimize the impact of carbon pricing on NWT residents, will ultimately do little to help reduce emissions – while potentially hurting small businesses.

Rebecca Alty, Yellowknife’s mayor, on Monday told Cabin Radio the territory should pause and re-examine its proposed legislation after election season, unless immediate changes can be made.

“From the residents’ perspective we think it’s good,” said Alty, referring to rebates on heating fuel, an exemption for aviation fuel, and a cost-of-living offset all designed to ensure NWT households do not suffer financially. (The NWT government maintains that, in many instances, households will enjoy a net financial benefit from the tax’s introduction.)

“But we believe there’s a missing part – there’s nothing for community governments,” Alty continued, echoing a sentiment expressed by the NWT Association of Communities last week.

“That means we are going to have to pay carbon taxes which then get passed on to residents. If our budget has to grow to take into account the carbon tax, either taxes have to increase or we have to reduce services somewhere.”

In addition, Alty expressed disappointment that the draft legislation does not pool revenue from the tax in a fund from which communities could draw to help pay for their own energy projects.

“I don’t think it should be rushed,” Alty said, as the territory prepares to finalize its carbon tax legislation among more than a dozen bills set for consideration this month.

“If it’s not ready, it should go over to the next government,” she said. “[And] if they can’t make any changes to include something around community governments and how we will get a rebate, just like businesses and residents, I don’t think it’s ready.”

‘A southern decision’

Throughout the process of developing a northern take on the federal carbon tax, the territorial government has said its “made-in-the-NWT’ approach will give residents a better deal than the federal backstop.

Routinely, Robert C McLeod – the finance minister – has suggested the territory probably would not be taking this course of action if Ottawa hadn’t made it mandatory.

For example, last week, McLeod said: “This was a southern decision. We all know that. What we’re trying to do is come up with a northern solution for a southern decision … and mitigate the impact that is going to have.”

However, if implementation of the NWT’s tax is primarily to obey the Liberal government as McLeod says, the timing of the legislation could be questioned: polls suggest the identity of the next federal government is in the balance, and an election is set to take place within weeks of the NWT’s carbon tax becoming law.

During a clause-by-clause review of the bills associated with NWT carbon pricing last week, Kam Lake MLA Kieron Testart said his committee endured difficulty getting answers out of both the territorial and federal governments.

“Committee does not feel that its input was given due consideration,” Testart told the finance minister as the review began.

“To put it bluntly, committee has not had an easy time getting a straight answer to its questions. In response to very specific questions to the federal Ministry of Environment and Climate Change, committee was directed to public information on the Government of Canada’s website, not specific to the NWT.”

Testart said the finance minister had shared additional information in confidence – including changes to how the tax would apply to “large emitters” like diamond mines – making it hard for the committee to explain things to the public.

Lastly, Testart said much of the tax’s implementation was being left to regulations and policies (to appear once the bills become law) rather than the legislation itself, making it more difficult for the committee to apply scrutiny.

Frame Lake MLA Kevin O’Reilly, who had warned the finance minister to expect more debate, also questioned why the draft legislation contains no commitment to annual reporting on the carbon tax, its revenues, and how those revenues are spent.

“We’ll frame up the exact content of the annual report and consult with members in terms of anything else they might want to see,” David Stewart, the deputy minister of finance, said in response.

O’Reilly, though, said the lack of a legislated commitment meant MLAs and the public were relying on the finance minister of the day to feel like delivering such a report, rather than being compelled to do so.

Mandate commitments

Cabinet and regular MLAs worked into the evening on Monday, spending hours preparing five bills for third reading as time runs out ahead of the October 1 NWT election. The two bills related to carbon tax were not among those considered on Monday.

Just nine operational days of the 18th Legislative Assembly remain for this territorial government to push through remaining legislation, the carbon tax included.

On Monday, Premier Bob McLeod said the 18th Assembly was on course to complete 212 of the 230 commitments contained in its mandate drawn up by territorial politicians following the 2015 election.

McLeod did not make clear which 18 commitments were set to be missed by the territory, and that information was not immediately available from the Office of the Executive.

Embarking on a greatest-hits tour of diplomatic achievements in recent years – listing his “red alert” over the oil and gas moratorium among them – the premier said he had “seen great success since taking a more deliberate approach to relationships with the federal government.”

McLeod added: “It’s too early to say what the priorities of a new federal government might be. No matter who it is, we must not let up in our efforts.”