Archive for the The Chairman’s Corner Category


Today is the first day of argument in the court proceedings brought by the Ontario government challenging Ottawa’s constitutional authority to impose a carbon tax in this province.  The constitutional question is an interesting one, and it is certainly one upon which reasonable minds can differ.  Unfortunately, the same can’t be said of the public policy arguments against the concept of the carbon tax itself.

The court challenge will focus on the important but decidedly wonkish question of whether a carbon “tax” is within the taxing powers granted to the federal government under our Constitution.  On the actual substantive policy question that the federal carbon tax purports to address, the Ford government has not taken the position that climate change is a hoax, or even that it is an issue that is too intractable to merit legislative action in Ontario.  Instead, they have asserted that it is an issue that is better addressed through “smart” regulation than the creation of a market solution.

And that is fair, although, as Preston Manning has already observed, it is counterintuitive to hear a conservative (or Conservative) government espouse a preference for a prescribed regulatory solution over a solution that puts the creative problem-solving capacity of the market to work.  The problem is that regulatory solutions cannot be anything but the cloaked version of market solutions.  To be effective in reducing carbon emissions, regulations must either make low carbon alternatives less expensive, or incumbent high carbon technologies more expensive.

The Province of Ontario has already tried the former. The Green Energy initiative introduced by the Liberal government of Dalton McGuinty was just that; strategic subsidies that would quickly scale up the supply of renewable energy that would result in a costless transition of the Ontario economy to Green Energy.  The result: the creation of a network of inefficient wind and solar capacity that has added a large long-term cost component onto t a power grid that was already serviced with low carbon nuclear and hydroelectric sources.  No one can seriously propose trying that again.  And if these regulations are created to do the latter, how can they be fairer or more efficient than a revenue-neutral carbon tax?

If we are then left to choose a market solution, there are only two market mechanisms to reduce the burning of carbon: tax it or reduce supply to drive the price higher.  As the Ford government has already realized, taxes that nudge us away from ingrained and popular lifestyle practices are never popular.  Ironically, on this point, Doug Ford can find common cause with the environmental lobby.  It seems apparent that those looking to influence the public policy agenda have already conceded this reality.  Far greater noise and heat has been expended in supply side solutions (opposing pipeline approval or extraction projects) than on demand suppression (decrying consumer behaviour and habits).  Neil Young has never visited Pearson Airport at March Break to join protestors in the shaming of sun-bound airline passengers.  Vilifying corporate suppliers has long been a more marketable PR strategy than guilting consumers.

The only problem is that Canada is not Saudi Arabia.  Our oil sector is the high cost producer.  Making it more expensive to get our high cost oil to market will have no effect on the market price of oil.  At best, all it can do is defer the carbon-intensive extraction activities of producers in Western Canada to a day on which the marginal cost of extracting conventional oil rises closer to that of Oil Sands production.  No Canadian let alone American, European, Asian or African will fill his or her tank less frequently or turn down his of her gas furnace one degree because Oil Sands oil did not make it to tidewater other than those families in Alberta that must do so to stretch their EI cheque.

The Liberal government in Ottawa may have little to recommend it of late, but on this point, they are indisputably right.  Their simultaneous embrace of carbon pricing and ownership and development of the Trans Mountain Pipeline is both principled and farsighted. If Canada is to take a global leadership role in addressing climate change, let it be in addressing demand for carbon by imposing revenue-neutral taxes on consumption.  Undertaking a Quixotic and counterproductive supply-side assault on resource development has and will only unfairly victimize and alienate Western Canada without making any meaningful contribution to reducing carbon generation here or anywhere else.


A lifetime ago, in my late teens and early twenties, I was a very busy young man but somehow found time to indulge a fascination with conspiracy theories surrounding the assassination of US President John Kennedy.  That obsession provided a platform for discovering the intricacies of many arcane and sinister concepts, including the murky relationship between Organized Crime and the CIA, the anomaly of the supposed Pro-Soviet and Anti-Castro inclinations of Lee Harvey Oswald and, most fundamentally, the difference between bullet entry and exit wounds.  It is this latter expertise that I find myself reflecting upon as I consider the second of my examples of self-inflicted political damage.

You will recall that last month I described how the Trudeau Liberals had created a legislative discretion around criminal prosecutions of corporate wrongdoers that was virtually certain to create an ethical minefield for itself, independent of any opportunism or naivete that one would choose to ascribe to Jody Wilson Raybould.  The resulting wound is nasty and entirely self-inflicted, but, as a long-standing expert in such things, looks to me like an entry wound; neat and tidy.  Once the blood is cleared away it can heal and leave only a little mark reminding the party not to be so careless when handling guns.

This is in sharp contrast to the Brexit wound that the Conservative party in Britain has inflicted on itself.  That has blasted a hole in the party and sent blood and bits of skull and brain everywhere.  Healing that kind of wound is much more difficult.  Even if you can stop the bleeding, the bits and pieces that have been blown away are not easily refitted back into place let alone returned to function.  And all, again, because of careless handling of a firearm.

Back in 2015, then UK Prime Minister David Cameron (we coincidentally share two-thirds of the same name!) came up with a brilliant idea to address the minority caterwauling about the compromises that EU membership visited upon the UK: he would hold a referendum on leaving the EU to shut them up once and for all.  It was a little like when a parent packs a bag for a whining 8-year old that wants to run away rather than clean up his room and, lest we Canadians snicker too much at the foolishness of the strategy, not entirely dissimilar from the approach we have taken not just once but twice with respect to Quebec’s demands for independence.

The logic was simple:  such a disruptive proposal would meet certain defeat, and the United Kingdom Independence Party and anti-EU caucus members within the Conservative Party would thereafter see their platform evaporate as a question that had been asked and answered.  The question would also be simple: should the UK remain in the European Union, or should it leave?  However, much like asking the petulant 8-year old whether he wanted to continue to live under Mom and Dad’s rules or not, the question was a little too simple for an extremely nuanced issue.  While the resulting Yes vote was not razor thin (51.9%), it is not hard to imagine that it would have been materially different if it had included even just one of the multitudes of complexities that would obviously be part of giving effect to a Leave vote.  If the question had even just been “Do you support the UK leaving the EU even if it means breaching the Good Friday Agreement by establishing a hard border between Northern Ireland and the Republic of Ireland?”, it is not hard to imagine that the risk of a return to sectarian violence would have been enough to shift the outcome. It would not have been hard to add a couple of other equally stark provisos with respect to other foreseeable outcomes of the vote that would have been equally sobering.

There is an oft-cited axiom with respect to the cross-examination of witnesses in trials – never ask a question if you are not completely sure of the answer.  That concept should have saved this process.  After all, many if not most politicians are lawyers.  As the politicians now fruitlessly attempt to sort through the painful details and risks inherent in exiting the EU, the problem becomes clear.  There are obviously too many solicitors and not enough barristers in government.



Sometimes political scandals that evolve into full blown crises are borne of true skullduggery – Machiavellian intrigues engineered out of sight that remain forever opaque, masked by plausible deniability with respect to actions dragged into public attention only by the heroic efforts of intrepid reporters or incorruptible truth-tellers.  But other times, governments stumble into eminently foreseeable peril as a natural consequence of public policy initiatives that are proposed, debated and enacted in the full view of the public.  I would argue that it is far more often the latter than the former that is the true root of political embarrassments, and I think the reasons we think otherwise is two fold: we far prefer the good v. evil narrative of the hidden agenda and the fact that to admit that it was all done in plain sight makes the media and pundits, the theoretical watchdogs of our legislators, just a teensy bit complicit in the negligence.

A perfect example of this phenomenon is the current kerfuffle involving Jody Wilson-Raybould’s demotion and ultimate resignation from the Liberal Cabinet.  The media is framing this as a classic “he said, she said”.  Did the Prime Minister, directly or indirectly, seek to influence then Minister Wilson-Raybould in her capacity as Attorney General to enter into a Deferred Prosecution Agreement (“DPA”) with SNC Lavalin with respect to the charges relating to the allegations of a long history of bribery in Libya?  Did her refusal to yield to that pressure result in her demotion in the ensuing Cabinet shuffle?  The drama of this intrigue has been deflated a little bit because the Prime Minister has only sort of said “no” to the first question and “not entirely” to the second, but former Minister Wilson-Raybould has not yet provided her version of events beyond what can be presumed from her cryptic resignation. It sure sounds like the upshot of some nasty behind-the-scenes maneuvering.

Or is it?  Last February, the omnibus bill that was passed to implement the most recent budget included an amendment to the Criminal Code to create the possibility of DPAs as a means of resolving criminal charges brought against corporations.  No one has disputed that this provision was brought forth on the back of an extremely concerted lobbying effort by SNC Lavalin.  This provision was a last ditch effort by SNC Lavalin to avoid the automatic 10 year disqualification from bidding on government contracts that would have followed from their certain conviction on the outstanding charges.  By passing that legislation, the government knowingly inserted the ability if not the obligation upon the Attorney General to consider factors beyond the guilt or innocence of corporate wrongdoers in making decisions regarding their prosecution.

It is equally clear to all that those considerations were intended to be with respect to the economic consequences of such prosecutions.  That is evident in the known history of SNC Lavalin’s lobbying efforts, which were not at any point aimed at the Justice Minister but instead at ministers in economic portfolios.  The argument is most clearly evident in the most recent remarks of the Premier of Quebec, Legault, who even in the heat of the controversy is unapologetically demanding that a DPA with SNC Lavalin be immediately reconsidered because of the economic risk to his province should the destabilization of the revenue model of the company result in its acquisition by an entity outside of Quebec.

One does not need to find evidence of any meeting, memo, e-mail, ambiguous question or side-eye glance between then Minister Wilson-Raybould and the Prime Minister, anyone from the PMO, any Cabinet colleague or Liberal party operative to understand the position the passing of this legislation had put her in.  A loophole in the legislation governing criminal prosecutions had been urgently created by the government in which she served on the basis of very public lobbying by the corporation that was in immediate need of the exercise of the discretion that it permitted.  Then Minister Wilson-Raybould did not exercise that discretion.  Shortly thereafter, then Minister Wilson-Raybould was removed from her role as Attorney General.  When someone finally cottoned on to the conflict created by the passage of the DPA provision and raised reasonable questions about the dynamic that it created, she resigned from Cabinet and lawyered up.  I get it; I do not need to hear from Jody Wilson-Raybould on this one.

Last month, when then Ambassador Paul McCallum was musing that “it would be great for Canada” if the US dropped the extradition request with respect to Meng Wanzhou, perhaps he was just obliquely chiding the Chinese government for failing to effectively lobby for the creation of Dismissed Rendition Agreements with foreign states with respect to citizens subject to extradition proceedings.

More on another equally self-inflicted wound next month!