Sask. policy paper's financial analysis not credible, economist says

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."

Moe calls government's financial analysis 'bang on'

On Wednesday Moe said he "disagrees" with the criticism of the government's financial analysis.

"I think they are bang on. They are done by the Ministry of Finance. You will have some economists say they should be higher, they should be lower."

Moe said the ministry was asked to do a cost analysis of nine policies. He said the government did not include the potential economic impact of Bill C-69, which he considers "unconstitutional" and expects to be argued at the Supreme Court.'

He said "indirect impact" of fewer pipeline projects were not factored in to the analysis outlined in the paper.

When asked Wednesday why the carbon tax rebates were not included in the financial analysis Moe said, "it doesn't go back to who is ultimately paying it."

"These nine policies are creating great uncertainty in the investment world."

Moe said his government is committed to working with the federal government to "address environmental concerns."

Read the province's calculations on the cost of following federal policies here:

Paper could signal more legal fights with Ottawa: professor

Jim Farney, a professor and a director with the Johnson Shoyama School of Public Policy in Regina, said he has questions about the government's financial analysis.

"The costing on the financial side is, I've got to say, at best odd," Farney said. "I think what they've done — it's hard to say in detail — is picked numbers that are the absolute worst case."

For example, Farney said the $34.9 billion that the government lists as a cost under the Clean Fuel Regulation, "doesn't include the possible upsides of increased biofuel use."

"It is not very clearly explained and almost certainly the ultimate worst case if we were to not adapt over the next 15 years."

Farney said the paper has two sides: the financial analysis and the push for increased autonomy.

He said the paper's four listed solutions for increasing autonomy are light on specifics.

"One that's very specific is greater autonomy over immigration policy. It's not clearly spelled out how the [federal government] are getting in our way there, but it is the one that's important enough for them to specify."

Moe has said the province wants control over immigration policy similar to what Quebec has.

Farney said the paper's messaging could mean further legal battles with the federal government over jurisdiction.

On Tuesday, Moe would not reveal what type of legislation the government was working on, but hinted at a focus on immigration policy.

"We're going to be looking at legislation that's going to defend and protect the opportunity we have to expand our jobs to expand the size of our communities and ultimately expand our province," Moe said.

Moe said the legislation would "reassert our provincial rights under the Constitution" and would not be in violation of the Constitution.

Opposition leader asks about equalization formula

On Wednesday, Opposition Leader Carla Beck released a statement in response to the policy paper.

Beck said her party is "not afraid to go to bat" when the federal government introduces policies that negatively impact the province, but that Moe's paper "is a distraction from his failures on health care, jobs, and affordability."

"The Sask. Party would rather talk about any other time in our province's history than defend their failed record of nearly a decade of unbalanced budgets, the tripling of our debt, and collapsing our once nation-leading health-care system," Beck said.

Beck said the report is the premier trying to "protect" his job.

"The fact that Scott Moe's Sask. Party managed to not mention equalization once shows that he is far more interested in sowing division than actually delivering results."

When asked Wednesday about equalization, Moe said the government would not "shy away" from the issue, but called it a "separate conversation" that come up during his government's focus groups this summer.

Moe said the paper deals with the province's ability to "unlock the potential" of the province. He said if that cannot be accomplished, the province "won't be a net contributor to equalization."