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Canada Doug Ford warns of recession with carbon tax, economists disagree

Ontario Premier Doug Ford speaks to the media during a press conference in downtown Toronto on Dec. 18, 2018.

Nathan Denette/The Canadian Press

Ontario Premier Doug Ford has fired another salvo at Ottawa’s climate-change plan by warning of a “carbon-tax recession,” a claim dismissed by both the federal government and economists.

At a business luncheon in Toronto on Monday, Mr. Ford said Ontario doesn’t need a carbon tax to reduce greenhouse gas emissions, instead predicting that the levy “will be a total economic disaster, not only for our province but for our entire country.

“I’m here today to ring the warning bell, that the risk of a carbon-tax recession is very, very real,” he told the Economic Club of Canada. “That’s why when I say I am prepared to fight the federal carbon tax with every tool at my disposal, I mean it.”

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Mr. Ford went on to say that “you can be for a carbon tax or you can be for manufacturing jobs … But you can’t be for both.”

A spokeswoman for federal Environment Minister Catherine McKenna disputed Mr. Ford’s statement, saying a price on pollution is the most effective and least expensive way to cut emissions.

“Doug Ford’s only plan is to make it free to pollute and hope for the best,” Sabrina Kim said. “It’s disappointing, but shouldn’t be surprising – conservative politicians have no plan to protect the environment, no plan to grow the economy and no plan for the future of our country. We have a different approach that is working for Canadians.”

This is the latest turn in a continuing battle between Prime Minister Justin Trudeau’s government and several provinces over the federal carbon tax. The tax will be imposed on consumers in April in New Brunswick, Saskatchewan, Manitoba and Ontario – the provinces that have not signed on to the federal plan or come up with their own plan to curb greenhouse gas emissions. Saskatchewan and Ontario have launched court challenges of the federal plan.

Economists say Mr. Ford’s claims that a carbon tax would cause a recession are unfounded.

“There could well be a recession, but the carbon tax would have nothing to do with it,” said Nancy Olewiler, an economics professor and director of the school of public policy at Simon Fraser University in British Columbia. Prof. Olewiler said B.C.’s carbon tax, implemented in 2008, has never been associated with lower economic activity. She said Mr. Ford is “creating a crisis and scare-mongering.”

Trever Tombe, an associate economics professor at the University of Calgary, said all climate action imposes a cost on households – but carbon taxes, on average, have the lowest.

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“It’s completely baseless to say that the carbon tax would cause a recession,” he said. “That’s not to say a carbon tax doesn’t have economic cost. All policies to address emissions will subtract from overall economic growth.”

Dale Beugin, executive director of Canada’s Ecofiscal Commission, a panel of economists that provides advice on environmental policies, said Mr. Ford should explain why he chose to use the term “recession.”

“The evidence is pretty clear that we shouldn’t be expecting a carbon price to cause a recession, we should be expecting very small, modest impacts on the economy," he said.

When asked if Mr. Ford has any experts to back up his claim, his office pointed to a 2018 report from the Conference Board of Canada that said a federal carbon tax could shrink Canada’s GDP by as much as $3-billion.

The Progressive Conservative government scrapped Ontario’s cap-and-trade system after it was elected last spring, calling it a “cash grab” that did not help the environment.

Under its new plan, released in November, Ontario will spend $400-million over four years on a fund called the Ontario Carbon Trust, designed to spur private investment in clean technologies and create performance standards for large emitters.

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With a report from the Canadian Press

Editor’s note: An earlier version of this article misspelled the name of Dr. Nancy Olewiler. This version has been corrected.
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