Business
Ottawa’s proposed ‘food packaging’ ban will harm Canadians without helping the environment
From the Fraser Institute
The Trudeau government, which recently banned plastic bags nationwide, is now considering a ban on plastic “food packaging” in support of its ambitious “Zero Plastic Waste by 2030” goal. However, if the government bans plastic food packaging, it will impose real economic costs on Canadians and jeopardize their health, for virtually no discernible environmental benefit.
First, let’s put plastic pollution in perspective. Canada contributes an estimated 0.4 per cent of all plastic waste in the world, including just 0.02 per cent of all plastic waste in the world’s oceans. Five countries—China, the United States, Germany, Brazil and Japan—generate nearly 50 per cent of global plastic waste. And 90 per cent of the world’s ocean plastic waste comes from Asia and Africa. Even if the government achieved “Zero Plastic Waste by 2030,” the effect on global plastic waste would be undetectable.
Before these bans, Canada’s track record on managing plastic waste was outstanding, ranking 49th out of 158 countries for minimizing mismanaged plastic waste (measured on a per-person basis). The federal government acknowledges this fact in its own report where it also states that 99 per cent of the country’s plastic waste is already disposed off safely through recycling, incinerating and environmentally-friendly landfills.
And plastic bans pose real risks to human health and the environment. For example, according to a recent study in the Journal of Food Additives and Contaminants, like plastic straws, straws made from plant-based materials such as paper, wood and glass (common substitutes for plastic straws) also contain a class of chemicals known as per- and polyfluoroalkyl substances (PFAS), which can persist for thousands of years and migrate through the soil, potentially contaminating sources of drinking water. This contamination exposes both wildlife and humans to potential negative effects on the immune system, thyroid function, liver and other adverse effects that are yet to be fully understood.
In other words, we don’t fully know how plastic alternatives will affect our health and the environment.
There are other costs. For example, plastic wrapping, which could soon be banned, is instrumental in food preservation, food transit and the reduction of food waste by protecting against contamination and spoilage throughout the food supply chain. And any type of plastic packaging can increase the time food lasts from days to weeks, allowing families to cut their grocery spending. In addition, plastic is the most cost-effective among common packaging materials, so forcing the food industry to transition to pricier alternatives will raise the cost of food packaging and these added expenses will be passed on to consumers through higher food prices.
To make matters worse, eliminating plastic food packaging could also negatively impact the environment from an emission standpoint. Why? Because food production emits greenhouse gases (GHG) and the process of replacing spoiled food requires additional production, transportation and refrigeration, resulting in higher overall emissions.
Plastic substitutes such as paper are also heavier, require more energy to transport, present higher smog formation and ozone depletion potential, demand more water and energy to be produced, and ultimately result in higher greenhouse gas emissions. Researchers in Switzerland found that opting for plastic packaging for baby food, instead of glass, could reduce emissions by up to 33 per cent, mainly due to reduced weight when being transported. So, the ban on plastics can have a detrimental, rather than a beneficial impact on the environment.
Overall, the pursuit of a “zero plastic” waste goal by banning more plastic products will jeopardize the health of Canadians, negatively impact the environment, and burden the already strained finances of Canadians.
Authors:
From the Fraser Institute
By Tegan Hill
According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.
The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.
For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).
And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.
In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.
This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.
Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.
Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.
Of course, if the government falls back into deficit there are implications for everyday Albertans.
When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.
According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.
Author:
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
- $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
- $125 million to address enrollment growth pressures in Alberta schools.
- $847 million for disaster and emergency assistance, including:
- $647 million to fight the Jasper wildfires
- $163 million for the Wildfire Disaster Recovery Program
- $5 million to support the municipality of Jasper (half to help with tourism recovery)
- $12 million to match donations to the Canadian Red Cross
- $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
- $240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
- $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
- $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
- $1.4 billion or half will pay debt coming due.
- The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
- The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
- Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
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