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Written submission re: Bill 60: An Act to Amend the  Petroleum Products and Carbon Tax Act – Proposed Changes

Submitted Friday January 14, 2023

The NWT Chamber of Commerce has significant concerns proposed changes to the carbon tax regime, expected to be implemented this spring, will gravely impact the private business sector and the overall territorial economy.

These tax increases, on top of already rising costs of doing business due to existing significant hikes in shipping, transportation, labour, property taxes, sourcing of goods and overall inflation, will cause a major burden to businesses of all sizes across the NWT — business that are still trying to recover from a two-year global pandemic.

The NWT Chamber of Commerce and its members don’t understand why both the federal and territorial governments are looking to implement Bill 60 as presented at a time that is very much in economic recovery mode. In the Chamber’s opinion, especially when factoring the government’s own opinion, will have zero economic benefit to both residents and businesses of the North, who are already exposed to one of the highest costs of living and of doing business in Canada with no short, medium or long-term alternative solution really being presented to businesses to offset these costs, other than passing them to clients.

The reality is, in our current make-up, we are all dependent in the North on fuel consumption. We don’t have alternatives currently ready to go to that are reasonable to implement. Electricity in the NWT is already more than double, or triple, the cost found in southern Canada. There is no infrastructure in place for 100% of electric vehicles — even if they were available, which they are not — to commute across the NWT successfully. Heating is still primarily via fossil fuel due to logistics and costs. The GNWT’s response to this is to “renovate, lower your thermostats and drive less.” How is this acceptable?

With this in mind, aren’t we supposed to be trying to diversify our economy? Are we not trying to attract more people to the North? Are we not trying to compete with other jurisdictions to remain competitive? What kind of message is this sending to national and international investors, new residents or even existing businesses and residents? How is this helping us with any kind of competitive advantage?

This is not to say the NWT Chamber and its members aren’t concerned over climate change. Businesses and people of the North are the most affected. Greenhouse gas emissions (GHGs) are dropping thanks to anti-pollution initiatives and in 2020, we contributed 1.4 megatonnes of carbon dioxide equivalent towards Canada’s total of 672 megatonnes. Our impact is extremely minimal, especially when you consider we are an area the size of Texas and California combined. It is also important to note, Canada is in the minor leagues of global polluters when compared to China, the United States and India. The reality still is, our per-capita consumption will not reduce because of this tax because we do not have alternative options in the short and medium terms in place.

It is also important to note, due to our already significant cost of living and of doing business in the North, there is already a natural desire for businesses and residents to conserve fuel and minimize consumption. We do not need further price shocks to closely monitor fuel use and reduce GHG emissions.
In 2018, the federal government passed the Greenhouse Gas Pollution Pricing Act to act as a backstop in jurisdictions if their carbon pricing did not meet the federal benchmarks aligned with international accords. The GNWT boasted in 2019 its Cost of Living (COLO) rebate program could see some residents receiving more than they spent on increased energy prices. However, the feds have now moved the goalposts, hiking national carbon pricing targets for 2023 to 2030. And Ottawa has closed the loophole and will prohibit carbon tax rebates that directly offset, reduce, or negate the impact of the carbon tax.

With operating costs for NWT businesses increasing after the carbon tax rebate on heating fuel is removed, logic dictates some or all of those costs will be passed to consumers. Yellowknife’s Consumer Price Index rose 7.8% from November 2021 to the same period in 2022. While not seasonally adjusted, that was still a full percentage point above the Canadian average. It is also important to remember, since our base cost is already higher than the Canadian average, this is actually more of an impact in the North. A business/homeowner in Vancouver that spends $100 a month in heating and one in Yellowknife that spends $400 a month and both went up 8%, the increase is $8 vs $32. Although they are the same percentage, one is four times higher than the other.

The NWT Chamber appreciates the GNWT is not in an enviable position as it looks to amend the Petroleum Products and Carbon Tax Act to accommodate the new federal policy. The NWT Chamber, though, believes this is a key opportunity for it to provide leadership and protection from the senseless and ideologically driven policy decision from the federal government.

The GNWT’s 2030 Energy Strategy sets out its long-term approach, “of supporting secure, affordable and sustainable energy supply and use in the NWT.” Linked to the Pan-Canadian Framework on Clean Growth and Climate Change, the GNWT has already made strides towards reducing air pollution in the North as we transition to a lower carbon economy. Federal funding is a crucial requirement for that transition, but even if an unlimited amount of money was available, it would take years and years to develop and implement the technology to replace all of the carbon-based fuel usage in the territory.

Does the federal government not understand there are no economically viable energy alternatives currently available here? Does it not understand the damage that will be caused to the private business sector and the overall economy if the NWT can’t be exempt from the proposed changes from the bill? The NWT Chamber of commerce is therefore questioning what has the GNWT done to help ensure it understands these impacts? The NWT Chamber asks the Standing Committee on Government Operations not to support Bill 60 and for the GNWT to consider other options. The NWT is asking for the GNWT to push back against the Federal government and ask it to give the GNWT time and assistance in creating alternative solutions then those that are being presented.

In 2017, then-Premier Bob McLeod had reached his boiling point with the federal government and garnered international notice with declaration of a “red alert” for the NWT’s future and that, “decisions about the North should be made in the North."

“For too long now policies have been imposed on us from Ottawa and southern Canada that, despite good intentions sometimes, and ignorance other times, are threatening our economic potential and the decades long work that we as a government have taken on Indigenous reconciliation. Whether it be ill-conceived ways of funding social programs, or new and perplexing restrictions on our economic development, our spirit and energy are being sapped. Everything we have built is in jeopardy.”

It is obvious, in our opinion, decisions for the North are again being made for us. The NWT Chamber of Commerce is calling on Premier Caroline Cochrane, Cabinet, the Legislative Assembly and the rest of the GNWT to reject the federal government’s plan and demand the federal government to let the GNWT and its Indigenous government partners to have the power to determine the fate of this great territory.

As Premier McLeod stated in 2017: “The practice of decisions being made by bureaucrats and governments in Ottawa must come to an end.”

The 19th Legislative Assembly should seize this opportunity to leave a lasting legacy of defending the NWT private sector businesses, their employees and the territory’s economy in its entirety.

Signed: President Yanik D'Aigle, Executive Director James O'Connor

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