Sask. policy paper's financial analysis not credible, economist says
Adam Hunter · CBC News · Posted: Oct 13, 2022 5:00 AM CT | Last Updated: 3 hours ago
Saskatchewan Premier Scott Moe says the analysis on the cost of climate policies done by the province's Ministry of Finance is 'bang on,' but one economist says the government is exaggerating the numbers and omitting certain factors. (Liam Richards/The Canadian Press)
A University of Calgary economist says the Saskatchewan government's claim that federal climate change policies will cost the economy $111 billion is not credible.
"I think that analysis turned out to be incredibly weak and so I think serious individuals shouldn't put a lot of weight in those numbers," Trevor Tombe said.
On Tuesday, the provincial government released a policy paper titled Drawing the Line: Defending Saskatchewan's Economic Autonomy.
Premier Scott Moe discussed the paper during an event hosted by the Battlefords and District Chamber of Commerce.
The 18-page document lists four options for the province to increase its autonomy, but the first section contains a claim that nine federal climate change policies will cost the economy $111 billion by 2035. The government said the provincial Ministry of Finance did the cost analysis.
University of Calgary economist Trevor Tombe said the government's analysis is well off the mark.
"The headline estimate here of $8.8 billion on average per year is massive, suggesting that federal climate policy will shrink Saskatchewan's economy by nearly 10 per cent, which is insane and completely un-credible."
Tombe said the government's analysis makes a lot of assumptions while also omitting several factors.
"They estimate [the federal carbon tax] will have a cost to Saskatchewan between now and 2035 of approximately $25 billion. But with that policy, they are ignoring that the revenue that it raises is not lit on fire. [It is] returned to Saskatchewan residents through these lump sum credits that people now receive quarterly," he said.
"Right there alone, the estimate put forward by the Saskatchewan government ignores the rebates and so that makes the cost of that particular policy [in the paper] way larger than it actually is."
Tombe said the government also omits factors when it comes to zero-emissions vehicles.
"This is a policy that the federal government has still not fully worked out the details of, and the white paper presumes that purchasing electric vehicles will cost everyone $19,000 more than what they would have otherwise spent, and ignores the fact that there's lower operating costs on average for electric vehicles than there is for gasoline-powered vehicles because you don't need to purchase the fuel anymore."
Tombe said there is a cost to the economy in meeting environmental policy goals, but not to the scale the Saskatchewan government is suggesting.
"There is a cost, no question. I don't take issue with the generic claim that meeting environmental goals will come with financial and economic costs," Tombe said.
He estimated that the cumulative total effect on the economy by 2030 would be closer to one per cent.
"These are real costs for sure, but it's important that we don't exaggerate them, especially in enormous amounts, like what is done in this white paper."
Adam Hunter · CBC News · Posted: Oct 13, 2022 5:00 AM CT | Last Updated: 3 hours ago
Saskatchewan Premier Scott Moe says the analysis on the cost of climate policies done by the province's Ministry of Finance is 'bang on,' but one economist says the government is exaggerating the numbers and omitting certain factors. (Liam Richards/The Canadian Press)
A University of Calgary economist says the Saskatchewan government's claim that federal climate change policies will cost the economy $111 billion is not credible.
"I think that analysis turned out to be incredibly weak and so I think serious individuals shouldn't put a lot of weight in those numbers," Trevor Tombe said.
On Tuesday, the provincial government released a policy paper titled Drawing the Line: Defending Saskatchewan's Economic Autonomy.
Premier Scott Moe discussed the paper during an event hosted by the Battlefords and District Chamber of Commerce.
The 18-page document lists four options for the province to increase its autonomy, but the first section contains a claim that nine federal climate change policies will cost the economy $111 billion by 2035. The government said the provincial Ministry of Finance did the cost analysis.
University of Calgary economist Trevor Tombe said the government's analysis is well off the mark.
"The headline estimate here of $8.8 billion on average per year is massive, suggesting that federal climate policy will shrink Saskatchewan's economy by nearly 10 per cent, which is insane and completely un-credible."
Tombe said the government's analysis makes a lot of assumptions while also omitting several factors.
"They estimate [the federal carbon tax] will have a cost to Saskatchewan between now and 2035 of approximately $25 billion. But with that policy, they are ignoring that the revenue that it raises is not lit on fire. [It is] returned to Saskatchewan residents through these lump sum credits that people now receive quarterly," he said.
"Right there alone, the estimate put forward by the Saskatchewan government ignores the rebates and so that makes the cost of that particular policy [in the paper] way larger than it actually is."
Tombe said the government also omits factors when it comes to zero-emissions vehicles.
"This is a policy that the federal government has still not fully worked out the details of, and the white paper presumes that purchasing electric vehicles will cost everyone $19,000 more than what they would have otherwise spent, and ignores the fact that there's lower operating costs on average for electric vehicles than there is for gasoline-powered vehicles because you don't need to purchase the fuel anymore."
Tombe said there is a cost to the economy in meeting environmental policy goals, but not to the scale the Saskatchewan government is suggesting.
"There is a cost, no question. I don't take issue with the generic claim that meeting environmental goals will come with financial and economic costs," Tombe said.
He estimated that the cumulative total effect on the economy by 2030 would be closer to one per cent.
"These are real costs for sure, but it's important that we don't exaggerate them, especially in enormous amounts, like what is done in this white paper."
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