Bill to change N.W.T. carbon tax rebates would hurt remote communities the most, say MLAs

A bill to change the N.W.T. carbon tax system is making its way through the Legislature. 

If passed, the bill discontinues carbon tax rebates for heating and instead increases the territory's cost of living offset — a flat tax-free benefit for N.W.T. residents.

The offset would rise by $135 per person, amounting to $473 per adult and $525 for residents under 18, and would come into effect April 1, 2023.

The change comes in order to comply with new federal regulations that, in addition to increasing carbon prices, prohibit carbon tax rebates that directly reduce the impact of the carbon tax.  

The changes are part of Canada's commitment to reducing national greenhouse gas emissions by 40 to 45 per cent below 2005 levels by 2030. 

Finance Minister Caroline Wawzonek gave notice of the bill in the Legislative Assembly last week and members passed it through second reading Tuesday, but not without criticism. 

Several members said the increased offset does not compensate for the rising costs.

Members said the fact that the offset is standard across the territory is unfair to residents in the northernmost communities who pay the highest heating bills. 

Questioning the minister, Jackie Jacobson, MLA for Nunakput, said he understands "the federal government is forcing our government's hand," but argued "there has to be a way that the GNWT can draw a line to stop rising costs for the residents in Nunakput."

Jacobson proposed a tiered system to support his constituents, who Wawzonek agreed "unfortunately" would face "some of the highest impacts from the change."

Bill goes to committee for further scrutiny

Kevin O'Reilly, MLA for Frame Lake, said while he supports the federal effort to reduce greenhouse gases, the bill lacks transparency.

He said MLAs have been in briefings with cabinet since July "receiving some rather confusing information." As the briefings have been confidential, O'Reilly said he was frustrated to not be able to share the information with the public.  

If the bill doesn't pass, the N.W.T. will be forced to adopt the federal plan — an option adapted by both Yukon and Nunavut — but O'Reilly said cabinet hasn't provided enough information to MLAs and the public on how the federal backstop could be adjusted to the N.W.T. or on other alternatives to the proposed changes.

He said since the bill has been introduced, there has been "very little public information available on what it actually means." 

The new legislation states that large emitters (like mines) would still receive a rebate under the new bill "tied to a facility-specific baseline." 

O'Reilly said that baseline is a mystery and that meanwhile, those in remote communities will be hardest hit and there are only vague commitments of possible programs for businesses. 

O'Reilly said he would support the bill passing through second reading, but only so it could go to a standing committee for further questioning. 

"Cabinet in no way should take my vote as support for this approach," he said.

Caitlin Cleveland, MLA for Kam Lake, said the change is adding to a growing list of rising costs.  

Between the added cost of inflation, energy, food, housing, the removal of supplementary health benefits and increases to municipal taxes, she said it's "as if every decision that impacts the cost of living is happening in a vacuum rather than considering the increasing cost elsewhere in the system." 

"Quite clearly," she said, "residents cannot afford increased costs."

She said while the federal government's message is to encourage more environmental decision-making, residents of the Northwest Territories don't have a choice but to use fossil fuels.

Minister defends 'made-in-the-North' approach

Because of the federal legislation, Wawzonek said there was limited flexibility in how the proposed bill could be adjusted. 

In response to her colleagues, Wawzonek said she would go back to Ottawa to discuss the possibility of creating a system of regional offsets as opposed to the standard across-the-board approach she initially proposed. 

She said the bill is a "made-in-the-North" solution that allows the territory to provide some rebates. She also said that, under the federal system, the large emitters would pay even less. 

Wawzonek said the proposed bill allows the territory to adapt for "future development," whereas under the federal system, she said "there's no guarantee."

As the bill moves to committee, she said she hopes to look at ways to stay within federal regulations while having the "flexibility" from a made-in-the-North approach.