Yes, climate change is important. So is the Constitution

OPINION: The carbon-tax arguments made before the Court of Appeal last week demonstrate that climate-change policy has to be smart as well as aggressive
By John Michael McGrath - Published on April 23, 2019
Harry S. Truman speaks at a desk equipped with several microphones.
U.S. vice-president Harry Truman made his name as a senator chairing a committee that scrutinized the country’s spending on the war effort.

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Before he became Franklin Delano Roosevelt’s vice-president in 1945, Harry Truman was a senator who made his name chairing a committee that scrutinized the massive spending involved in the United States’ war effort — and found billions of dollars in waste. When Democratic Party leaders, worried about FDR’s failing health, went looking for a new vice-president in 1944, Truman’s name rose to the top of the list in large part because of that committee work.

The lesson is that it’s not enough, in a democratic country, simply to yell “Don’t you understand? This is an emergency!” and charge onward without answering your critics. Some grumbled about the danger of bogging down the war effort in hearings, but, in the end, Truman’s committee probably saved lives and helped maintain public support for the war. When the consequences of failure are catastrophic, rigorous criticism becomes more important, not less.

That’s true whether the emergency is the Second World War in 1941 or climate change in 2019. As I watched the federal and provincial governments present their arguments about Ottawa’s carbon tax at Osgoode Hall last week, I found myself thinking of the Truman Committee: I support aggressive climate policy to reduce Canada’s greenhouse-gas emissions, but I also want to ensure it’s done right — and that means answering serious questions about Ottawa’s powers.

The literal question Ontario’s Progressive Conservative government is posing to the Court of Appeal is whether the law passed by Justin Trudeau’s government to implement a national carbon price is constitutionally valid. But the more fundamental argument — addressed in the courtroom not just by Ontario and Canada, but also by numerous third parties, including other provinces — is, how does the broad challenge of combating climate change fit within Canada’s constitutional order? Which level of government should address this crisis, and using what powers?

The federal government is arguing for the validity of its carbon tax on the grounds that it fits within Parliament’s “national concern” power, which allows the feds to make laws and regulate in areas that would otherwise fall under the jurisdiction of the provinces. (In 1958, for example, the federal government created the National Capital Commission to improve the Ottawa region, although municipal planning is a provincial matter — and the Supreme Court ruled that this did constitute an issue of national concern.)

Ottawa’s problem is that courts have been pushing back against expansive new claims under the national-concern doctrine. At the Court of Appeal last week, the justices repeatedly asked whether and how the federal government was proposing to limit its powers to address greenhouse-gas emissions. From the cheap seats, at least, the federal lawyer’s answers came off as unsatisfying; the concerns Ontario, Manitoba and Saskatchewan raised about preserving provincial jurisdiction, on the other hand, seemed mostly reasonable.

The lawyer for British Columbia — the lone province supporting Ottawa in court — may have done the best job of clearly defining what the federal role for climate policy should be, drawing an analogy to dairy-supply management (of all things). In order to increase milk prices, the government sets a national total for milk production and then divides that up among the provinces; B.C.’s lawyer argued that carbon pricing works according to the same principle, but in reverse, such that Ottawa controls the supply of GHG emissions by increasing the price. Just as Canada sets a national total for dairy production and has the powers to enforce it, Ottawa has the power to set a national “carbon budget” and then allocate it to the provinces — and to enforce it through a carbon price, if need be.

Indeed, the argument about Parliament’s national-concern powers might have been a totally unnecessary fight for the federal Liberals to pick: the Constitution gives the national government extremely broad powers for the “raising of Money by any Mode or System of Taxation,” but, for reasons that aren’t entirely clear, the feds chose not to use Parliament’s clear taxation powers, instead structuring the carbon price as a “regulatory charge.”

This is an arcane point, but the long and short of it is that governments can have taxes or they can have regulatory charges, but there are constitutional rules governing which are which — and the Trudeau government might have built something that’s neither and thus unconstitutional. An outright tax would certainly have raised other arguments, but it wouldn’t have given rise to a national-concern debate.

I don’t know how the Court of Appeal is going to rule. (I also don’t know whether its ruling will arrive before the next federal election, in October.) In any event, the Supreme Court will almost certainly get the final word, and that likely won’t come until 2020 or later. 

The courts could uphold the carbon tax, meaning there would be legal certainty about Ottawa’s power to fight climate change. Or the feds could lose, and the courts could strike down the national carbon tax on the “regulatory charge” issue or say that Ottawa’s claimed national-concern powers are too broad. If the carbon tax does get invalidated by the courts, environmentalists will be understandably angry that conservative provincial governments have managed to obstruct serious climate policy at the national level.

But the provinces will always fight any new federal claim to power (several provinces, including Ontario, fought the GST back in the day and lost), so it was always going to be incumbent on Ottawa to find a policy that could survive a court battle. The questions asked by the justices at Osgoode Hall last week were inevitable, and they need better answers than “Don’t you understand? This is an emergency!”

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