Monday, March 19, 2007

Federal Budget 2007: Environment Spending?

YES: I have lots to say about the federal budget. Thanks for asking. Let me start with the environment. As I blogged (yes blog is a verb) on January 29th, I was looking for a meaty plan on the environment from our federal government. I don't know how you define 'meaty' but ... let's consider a few facts.

From what I can gather, the big environment announcements were: vehicle incentives and other things I don't understand (see below).

Taxing the heavy and helping the hybrid:
The government announced that they will give discounts on hybrid cars and they will tax energy intensive vehicles (more commonly gas guzzlers). Taxing? I like the idea of taxing gas guzzling SUVs - incorporating the social cost of pollution into the price. But discounts on hybrids? A quick sampling of the most popular hybrids in Canada shows something interesting: O'boy these cars are costly!
All prices are MSRP before taxes and blah, blah, blah ...

Car Name - Price - Government Program
Civic Hybrid - $26,250 - Tory kick-back: $2000
Toyota Prius - $21,175 - Government gives: $2000
Ford Escape Hybrid - $33,799 - $2000 in your pocket
Saturn VUE Green - $28,795 - tax dollars allowed: $1000 to you

In my personal view: I think this discounting of hybrids only kicks back money to people that already have it - new cars are costly and these are really costly for the average Canadian. Secondly, this hardly counts as a plan to save the planet. Marginally, I think this is great to promote hybrids and tax big SUVs, but I don't think this an answer to our problems. It is interesting to note that "The rebate plan will cost the government about $160 million over the next two years, while Ottawa expects to collect $215 million from the levy over those years." (CBC website) Crazy, this program actually generates cash for the government.

Assisted Development:
This budget also plans to phase out the accelerated capital cost allowance for general investment in the oil sands by 2015. According to the CBC, this money will be funneled into other programs ... but the government's website says little on the matter. So I am not sure what to make of this. Although, I have read that (according to Environment Canada), total greenhouse gas emissions in Alberta have jumped from 168.17 megatons in 1990 to 234.51 megatons in 2004 (that is ... hummm carry the 7) 39.4% between 1990 and 2004. This plan does not talk about that stuff.

Finally, we return to the government ecoTrust plan that will cost an estimate $1.5 billion. Which from what I understand is a plan to have a plan. The government press release from last month says: "This [$1.5 billion] funding will be contained in the upcoming budget ... This new funding will be available as soon as Parliament approves that budget." And so, I guess we have to wait.

In the end: I still wonder what has happened, how did we get into this? What about Kyoto? I thought we were doing somethings when the Liberal Government was in power, but we then voted them out and cut the $5.6 billion they wanted to spend (on what I am not sure). So, we have to wait for when the Environment Minister John Baird's climate-change policy paper comes out later this month for more answers. Or let's wait to hear what Rick Mercer has to say ...

Love me or hate me tell me what you think ...


Appendix:
yes, there was other stuff on this issue, here are a few more things ...
As for the other environment plans
Other fuels: "The government has announced $2 billion for renewable fuel production. Again, marginally, a good idea and sounds like a lot of money but "this includes $1.5 billion over seven years ..." - translation: no big spending here - we have to wait.
Clean Water: about $110 million to clean-up Canada's water (I would like a clean Halifax Harbour) and $324 million for six new Coast Guard vessels ... with costs starting in five to seven years.

5 comments:

Matthew said...

But when you can get 200 mpg on a $20'000(us) car any discount is good.
Wired Blog

Canadian Economist said...

The details as to what cars qualify is listed here.

Yes, this plan will improve the stock of cars, which is a good idea. In addition, it will provide further incentives for suppliers to great more fuel efficient cars. But recall: Emissions are not caused by people buy cars, they're caused by people driving cars. The point is: this plan does not reach the heart of the matter. We don't pay for the social costs of driving like under then Pigou Tax explained before.

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