The Doug Ford government’s decision to cancel Ontario’s successful carbon cap and trade program will drive the province’s deficit up by C$3 billion, including $841 million in the first fiscal year, according to a report released yesterday by Financial Accountability Officer Peter Weltman.
“This deterioration in the province’s budget balance occurs because the loss of cap and trade revenues will exceed the savings from cancelling the related spending programs,” Weltman told media at Queen’s Park. Losses will include $600 million in wind-down costs and another $5 million for compensation to businesses.
The net result of the rollback will make it tougher to balance the province’s $15-billion deficit, Weltman added. “If it’s something that hits the deficit and hits the province’s budget deficit, then the province needs to borrow money to fund that and the taxpayers ultimately pay those debts,” he said.
“The auditor’s report, which was prompted by a request from Opposition Leader Andrea Horwath, projected that Ontario families will pay $264 in 2019—$4 more than the premier said they’d save when the legislation was first announced in July,” National Observer reports.
The program was originally set to raise $1.9 billion per year. The previous government of Premier Kathleen Wynne had earmarked much of that money for energy retrofits in social housing and schools, and for electric vehicle subsidies.
Now, “the report notes that less than 1% of the credits bought by companies are being reimbursed by the government,” Observer notes. “It also found that most of the companies that are not being compensated have already passed on these costs to consumers.”
Weltman told media his report had not addressed the economic costs or benefits of carbon pricing, or the environmental or public health benefits of reducing greenhouse gas emissions. He pointed to various “unknowns” that would shape the final cost of the rollback, including plans for distributing the $420 million available to Ontario under the federal Low Carbon Economy Fund.