A Carbon Price that Reduces Poverty

By Sarah DelVillano

As the summer road-trip season is upon us, gas prices are, as usual, on the rise. The public narrative in Ontario puts the blame squarely on carbon pricing. To be sure, gas prices in Ontario rose 4.3¢ (of a total of $1.35/litre) overnight when the province’s cap and trade program came into effect in January 2017. And despite the many other factors at play, confusion about carbon pricing makes it an easy target when prices at the pump go up.

The federal Liberal government has failed to address concerns about the impact of carbon pricing on low-income Canadians. Instead, they’ve repeated (over and over) that the provinces can choose what to do with the revenue generated by the new price. In 2015, Prime Minister Trudeau called on Jean-Yves Duclos, Minister of Families, Children, and Social Development, to develop Canada’s first national poverty reduction strategy. It seemed clear that the Prime Minister intended to make poverty a national issue – something that civil society leaders had been calling on the government to do for years. Wouldn’t it follow, then, that Ottawa would have a plan to deal with the effects of carbon pricing on the most vulnerable in society?

Meanwhile, the Conservatives are suddenly raising concerns about poverty—an issue that they have historically kept at arms length. They have expressed concern for those with fixed income – who they say are being disproportionately affected by the rising gas prices. But it is no secret that they have long-favoured employment as the “most effective” tool for fighting poverty in Canada. Given this history, the party’s shift towards acting as champions for individuals on fixed income appears rather disingenuous.

In February the Dignity for All campaign released “Living in the Gap,” an insightful series of infographics that show what it’s like for many people living in Canada who struggle to make ends meet.

Jessi Patel’s story is just one of many. She is a single mother living in Toronto who has a B.A. and works full-time as an administrative assistant. Her ten-month-old son attends a downtown daycare centre. Commuting to her job outside the city would take two hours each way by transit, so Jessi drives.

Without taking into account clothes or diapers for her son, Jessi’s income is insufficient to cover her monthly costs. So, when gas prices go up, she feels it. However, that cost increase pales in comparison to the $1,750 she pays every month for childcare. Universal, low-fee childcare is the type of smart, evidence-based policy, that would help the Liberal government to address concerns about important policies like carbon pricing. Rising gas prices, energy prices, and food prices would sting a lot less if low-income Canadians did not face outrageous costs for childcare, pharmaceuticals, and housing.

Environmental action is often portrayed as an elite issue. People living in poverty don’t always have the luxury of worrying about things like climate change. And yet, they are the ones most directly impacted. They are more likely to live in precarious situations, more vulnerable to extreme temperatures, and can be exposed to higher-than-average pollution levels—all of which can be associated with increased health risks.

A carbon price adjusts overall prices to reflect the true environmental cost of goods and services. It drives sustainable innovation and encourages people to spend differently. Of course, for someone like Jessi, already struggling to make ends meet, there isn’t a lot of wiggle room.

That is why the ways in which these policies are implemented really matters. In order to prevent regressive effects on low-income households and stimulate further carbon reductions in the economy, a portion of carbon pricing revenues should be passed on to low-income families in the form of a rebate.

It may be that this is what Liberal MPs have in mind when they emphasize provincial control of carbon revenues. If so, they should say so. We know that Jessi would rest easier knowing that she has the support that she needs, not just for an affordable daily commute, but for a healthy future for her son.

Sarah DelVillano a public justice intern at Citizens for Public Justice.

 

Read the Patels’ full story at dignityforall.ca/the-patels

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