Jesse Kline: The energy-industry-backed Liberals’ sci-fi budget they pledged to destroy

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The government could be forced to put the country on red alert if the global economy continues to deteriorate and it goes ahead with its plans to decimate the energy industry

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In a 1992 episode of “Star Trek: The Next Generation”, the Enterprise finds Scotty from the original series suspended in a transport buffer and brings him back to life after 75 years. While interacting with the crew, the ship’s chief engineer, Geordi La Forge, inform Scotty that he had told the captain that his current task would take an hour and that was an accurate estimate. “You didn’t tell him how long it would really take, did you?” asks Scotty. “Oh, man, you have a lot to learn if you want people to think you’re a miracle worker.”

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In many ways, that’s the approach the Liberals have taken to budgeting throughout the pandemic: forecast a high deficit in the fall, then portray themselves as miracle workers when it’s slightly lower. The 2020 fall economic statement, for example, estimated the deficit to be $381.6 billion, but it turned out to be “only” $327.7 billion. Similarly, the 2021 budget update pegged the 2021-22 deficit at $144.5 billion, but last Thursday’s budget reduced it to $113.8 billion.

The big question this time around is whether the liberals’ sci-fi predictions will continue to work in their favor. Although the budget forecasts the deficit and debt-to-GDP ratio to decline steadily over the next four years, an alternative scenario detailed in the document admits that “the economic outlook is clouded by a number of key uncertainties.”

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If we were to see a long, drawn-out war in Ukraine – which seems more likely by the day – we could see higher-than-expected commodity prices, inflation and interest rates, coupled with higher consumption. and reduced economic output. This would significantly disrupt future budgets, resulting in a deficit over 150% higher than forecast by 2026-27.

But over the coming year, the country’s fiscal situation would actually improve, with the deficit falling to $39.5 billion, from the $52.8 billion projected, and the debt-to- GDP falling 2.5 percentage points below initial forecast.

This would happen through higher than expected commodity prices which would provide the federal government with additional revenue. Such an eventuality would allow Trudeau to once again play the thaumaturge card, but the gains would be short-lived. Eventually, global energy prices will stabilize and Canada will find itself in a situation where “energy-related investments and exports will remain relatively weak” due to “longer-term demand uncertainty”. term fossil fuels.

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This will surely be exacerbated by the fact that the Trudeau government has made punishing the energy sector a top priority. Budget 2022 reiterates the government’s recently presented plans to cap oil and gas emissions and require industry to reduce CO2 output by 42% below 2019 levels.

The budget includes a new carbon capture and storage (CCS) tax credit, which is expected to cost the federal government $35 million this year, rising to $1.5 billion by 2026. But it doesn’t. will not be available to companies seeking to use the carbon to extract otherwise unrecoverable oil from existing wells, in a process known as “enhanced oil recoverywhich could help reduce emissions while encouraging economic growth.

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The money made available for CCS will also be dwarfed by the $8.2 billion the government expects to make from its pollution pricing framework, which includes gasoline tax and jurisdictional taxes. where the federal government collects carbon tax revenue. This does not include all the carbon taxes that industry will pay to provincial governments, most of which have their own carbon tax, cap and trade system, or output-based pricing system that allows them to circumvent the federal backstop.

To further tighten the screws on industry, the Liberals will phase out minimum-tax flow-through shares, which are used to help fund exploration. It’s a move that’s only expected to bring in $9 million over the next five years, but will have a significant impact on smaller players. This is another example of the federal government imposing additional costs on industry simply because it does not like fossil fuels.

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Instead, liberals bet big on the green transition that fuels the economy of tomorrow. Measures include the Canada Growth Fund, which the government hopes will attract $3 of private capital for every $1 of public money invested in it. The Canada Infrastructure Bank will also be responsible for finding private investment in clean energy and other emissions-reducing technologies, though it has had little success in previous efforts to attract investors. And, of course, there will be significant new spending on energy-efficient home renovations, green energy infrastructure, natural decarbonization measures and electric vehicle chargers.

The environmental left has long tried to sell us on the idea that the transition to a less carbon-intensive future will boost economic output. As we have seen over the past two decades, however, most green technologies are not economically viable and can only be achieved through massive government subsidies and tax increases designed to make fuels more expensive. once cheap fossils. Far from creating jobs and spurring growth, the green transition will continue to be a clean drain on society and will ensure that the country’s economic vitality is intertwined with continued government largesse.

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Despite huge government “investments” in green technologies across the western world, it is clear that sustainable energy will not provide the energy needed to completely replace fossil fuels anytime soon – unless we can guarantee a supply of dilithium crystals and perfect matter-antimatter reactors, that is. Instead of ensuring that the resource industry can continue to drive the economy and provide much-needed government revenue in these turbulent economic times, the Liberals will make Canada’s investment climate even less welcoming, driving businesses away energy at lightning speed.

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  1. Canada's Finance Minister Chrystia Freeland holds the 2022-23 budget alongside Prime Minister Justin Trudeau, in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada, April 7, 2022. REUTERS/Blair Gable

    Jesse Kline: Chrystia Freeland’s budget isn’t prudent – it’s just less irresponsible than expected

  2. FILE PHOTO: Pipes run through Shell's new Quest carbon capture and storage (CCS) facility in Fort Saskatchewan, Alberta, Canada, October 7, 2021. REUTERS/Todd Korol

    Jesse Kline: Environmentalists will only be satisfied if the energy industry is destroyed

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