Canada Markets close in 5 hrs 29 mins

Surging energy prices harmful to families, should drive green transition: Freeland

·4 min read

OTTAWA — Deputy Prime Minister Chrystia Freeland said the federal government is absolutely concerned about inflation, but dismissed critics who called her callous and out of touch for suggesting the high cost of gas is a reminder of why we need to transition to greener energy solutions.

Calls for the government to provide more immediate relief to Canadians struggling to fill their cars and feed their families have piled up even as clean energy experts agree the incentive for Canadians to go greener is stronger than ever before.

Freeland was touring southern Ontario this week promoting the government's response to inflation, such as increased federal benefits, and cuts to child-care costs under new agreements signed with every province.

She said those increases will help Canadian families right now. She also said they were long accounted for in government budgets and won't risk increasing inflation further by dousing the economy with more money, driving up demand at a time when supply crunches are a major factor behind rising prices.

"I know that inflation is making life more expensive," she said at a trucking company in Brampton, Ont., Tuesday.

Statistics Canada reported that inflation hit 7.7 per cent in May, the fastest pace since January 1983. Soaring gas prices — which were 48 per cent higher in May compared to a year earlier — were a major factor.

Freeland said inflation is largely caused by forces outside of Canada's control: the Russian war in Ukraine and supply chain hits from COVID-19.

She then added that "from my perspective this price increase in fuel costs is a reminder of why climate action is so important, and why as a country we have to work even harder and move even faster towards a green economy. It's an insurance policy against higher energy prices."

Interim Conservative leader Candice Bergen scoffed at the comment as proof that "the Liberals have always wanted high gas prices."

"They have no respect for struggling families and working Canadians," she said on Twitter.

Asked about what she said on Wednesday, Freeland said it is "completely false" to say she isn't concerned that Canadian families are hurting.

"Of course I am concerned," she said.

But she said it is also true that "the energy crisis that the world is going through right now, absolutely does mean that we need to focus on the green transition."

Dan Woynillowicz, principal at the climate and energy consulting firm Polaris Strategy, said domestic electricity prices are not subject to the same global price volatility as oil. An economy run on clean electricity, he said, should be insulated from these kind of price shocks in the future.

Greg MacEachern, a liberal strategist and senior vice-president at Proof Strategies, said the issue for Freeland isn't necessarily what she said, but how she said it.

"This summer might be a good opportunity to do a communications audit, a test to see how their message is landing with average Canadians," he said.

MacEachern said Conservative leadership front-runner Pierre Poilievre is relentlessly going after the government over inflation and tapping into the anger and fatigue many Canadians are feeling after two years of upheaval. People are looking to their elected leaders to see who really seems to understand their pain, he said.

He noted that Ontario Premier Doug Ford did that to great success in the recent election, where he cruised to an easy victory with an even bigger majority.

"The government cannot underestimate the crankiness of the public right now," MacEachern said.

To date the Liberals have rejected calls to cut gas taxes. Three provinces have cut them — Alberta by 13 cents a litre in April, Newfoundland and Labrador by seven cents in June and Ontario by 5.7 cents on July 1.

Canada is the only G7 country not providing some form of relief at the pumps at the national level.

The average pump price Wednesday was $1.94, 60 cents higher than a year ago. That price includes the 10 cents per litre federal gas tax, and 11 cents a litre in carbon price. The latter is up 2.2 cents compared to a year ago.

Woynillowicz said cutting the gas tax may be a politically popular move, but it will likely just drive demand back up, along with prices.

"So the benefit is kind of illusory," he said. "It's there temporarily, but then it disappears pretty quickly. And those people who are most impacted are right back into the same situation they were, in terms of facing these financial challenges."

Woynillowicz said lowering or eliminating transit fares might be more direct relief, without harming climate policies.

Michael Bernstein, executive director at Clean Prosperity, which looks for market-based solutions to the climate crisis, also said the government should find a way to give Canadians some relief without changing climate policies and action on gas prices.

He said a recent Leger survey for Clean Prosperity suggested more than half of Canadians are facing hardship because of increased energy costs, and two-thirds are responding by driving less and reducing their heating and cooling use at home.

This report by The Canadian Press was first published July 6, 2022.

Mia Rabson, The Canadian Press