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Fraser Institute

Powerful players count on corruption of ideal carbon tax

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From the Fraser Institute

By Kenneth P. Green

Prime Minister Trudeau recently whipped out the big guns of rhetoric and said the premiers of Alberta, Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, Prince Edward Island and Saskatchewan are “misleading” Canadians and “not telling the truth” about the carbon tax. Also recently, a group of economists circulated a one-sided open letter extolling the virtues of carbon pricing.

Not to be left out, a few of us at the Fraser Institute recently debated whether the carbon tax should or could be reformed. Ross McKitrick and Elmira Aliakbari argued that while the existing carbon tax regime is badly marred by numerous greenhouse gas (GHG) regulations and mandates, is incompletely revenue-neutral, lacks uniformity across the economy and society, is set at an arbitrary price and so on, it remains repairable. “Of all the options,” they write, “it is widely acknowledged that a carbon tax allows the most flexibility and cost-effectiveness in the pursuit of society’s climate goals. The federal government has an opportunity to fix the shortcomings of its carbon tax plan and mitigate some of its associated economic costs.”

I argued, by contrast, that due to various incentives, Canada’s relevant decision-makers (politicians, regulators and big business) would all resist any reforms to the carbon tax that might bring it into the “ideal form” taught in schools of economics. To these groups, corruption of the “ideal carbon tax” is not a bug, it’s a feature.

Thus, governments face the constant allure of diverting tax revenues to favour one constituency over another. In the case of the carbon tax, Quebec is the big winner here. Atlantic Canada was also recently won by having its home heating oil exempted from carbon pricing (while out in the frosty plains, those using natural gas heating will feel the tax’s pinch).

Regulators, well, they live or die by the maintenance and growth of regulation. And when it comes to climate change, as McKitrick recently observed in a separate commentary, we’re not talking about only a few regulations. Canada has “clean fuel regulations, the oil-and-gas-sector emissions cap, the electricity sector coal phase-out, strict energy efficiency rules for new and existing buildings, new performance mandates for natural gas-fired generation plants, the regulatory blockade against liquified natural gas export facilities” and many more. All of these, he noted, are “boulders” blocking the implementation of an ideal carbon tax.

Finally, big business (such as Stellantis-LG, Volkswagen, Ford, Northvolt and others), which have been the recipients of subsidies for GHG-reducing activities, don’t want to see the driver of those subsidies (GHG regulations) repealed. And that’s only in the electric vehicle space. Governments also heavily subsidize wind and solar power businesses who get a 30 per cent investment tax credit though 2034. They also don’t want to see the underlying regulatory structures that justify the tax credit go away.

Clearly, all governments that tax GHG emissions divert some or all of the revenues raised into their general budgets, and none have removed regulations (or even reduced the rate of regulation) after implementing carbon-pricing. Yet many economists cling to the idea that carbon taxes are either fine as they are or can be reformed with modest tweaks. This is the great carbon-pricing will o’ the wisp, leading Canadian climate policy into a perilous swamp.

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Alberta

A Christmas wish list for health-care reform

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From the Fraser Institute

By Nadeem Esmail and Mackenzie Moir

It’s an exciting time in Canadian health-care policy. But even the slew of new reforms in Alberta only go part of the way to using all the policy tools employed by high performing universal health-care systems.

For 2026, for the sake of Canadian patients, let’s hope Alberta stays the path on changes to how hospitals are paid and allowing some private purchases of health care, and that other provinces start to catch up.

While Alberta’s new reforms were welcome news this year, it’s clear Canada’s health-care system continued to struggle. Canadians were reminded by our annual comparison of health care systems that they pay for one of the developed world’s most expensive universal health-care systems, yet have some of the fewest physicians and hospital beds, while waiting in some of the longest queues.

And speaking of queues, wait times across Canada for non-emergency care reached the second-highest level ever measured at 28.6 weeks from general practitioner referral to actual treatment. That’s more than triple the wait of the early 1990s despite decades of government promises and spending commitments. Other work found that at least 23,746 patients died while waiting for care, and nearly 1.3 million Canadians left our overcrowded emergency rooms without being treated.

At least one province has shown a genuine willingness to do something about these problems.

The Smith government in Alberta announced early in the year that it would move towards paying hospitals per-patient treated as opposed to a fixed annual budget, a policy approach that Quebec has been working on for years. Albertans will also soon be able purchase, at least in a limited way, some diagnostic and surgical services for themselves, which is again already possible in Quebec. Alberta has also gone a step further by allowing physicians to work in both public and private settings.

While controversial in Canada, these approaches simply mirror what is being done in all of the developed world’s top-performing universal health-care systems. Australia, the Netherlands, Germany and Switzerland all pay their hospitals per patient treated, and allow patients the opportunity to purchase care privately if they wish. They all also have better and faster universally accessible health care than Canada’s provinces provide, while spending a little more (Switzerland) or less (Australia, Germany, the Netherlands) than we do.

While these reforms are clearly a step in the right direction, there’s more to be done.

Even if we include Alberta’s reforms, these countries still do some very important things differently.

Critically, all of these countries expect patients to pay a small amount for their universally accessible services. The reasoning is straightforward: we all spend our own money more carefully than we spend someone else’s, and patients will make more informed decisions about when and where it’s best to access the health-care system when they have to pay a little out of pocket.

The evidence around this policy is clear—with appropriate safeguards to protect the very ill and exemptions for lower-income and other vulnerable populations, the demand for outpatient healthcare services falls, reducing delays and freeing up resources for others.

Charging patients even small amounts for care would of course violate the Canada Health Act, but it would also emulate the approach of 100 per cent of the developed world’s top-performing health-care systems. In this case, violating outdated federal policy means better universal health care for Canadians.

These top-performing countries also see the private sector and innovative entrepreneurs as partners in delivering universal health care. A relationship that is far different from the limited individual contracts some provinces have with private clinics and surgical centres to provide care in Canada. In these other countries, even full-service hospitals are operated by private providers. Importantly, partnering with innovative private providers, even hospitals, to deliver universal health care does not violate the Canada Health Act.

So, while Alberta has made strides this past year moving towards the well-established higher performance policy approach followed elsewhere, the Smith government remains at least a couple steps short of truly adopting a more Australian or European approach for health care. And other provinces have yet to even get to where Alberta will soon be.

Let’s hope in 2026 that Alberta keeps moving towards a truly world class universal health-care experience for patients, and that the other provinces catch up.

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Environment

Canada’s river water quality strong overall although some localized issues persist

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From the Fraser Institute

By Annika Segelhorst and Elmira Aliakbari

Canada’s rivers are vital to our environment and economy. Clean freshwater is essential to support recreation, agriculture and industry, an to sustain suitable habitat for wildlife. Conversely, degraded freshwater can make it harder to maintain safe drinking water and can harm aquatic life. So, how healthy are Canada’s rivers today?

To answer that question, Environment Canada uses an index of water quality to assess freshwater quality at monitoring stations across the country. In total, scores are available for 165 monitoring stations, jointly maintained by Environment Canada and provincial authorities, from 17 in Newfoundland and Labrador, to 8 in Saskatchewan and 20 in British Columbia.

This index works like a report card for rivers, converting water test results into scores from 0 to 100. Scientists sample river water three or more times per year at fixed locations, testing indicators such as oxygen levels, nutrients and chemical levels. These measurements are then compared against national and provincial guidelines that determine the ability of a waterway to support aquatic life.

Scores are calculated based on three factors: how many guidelines are exceeded, how often they are exceeded, and by how much they are exceeded. A score of 95-100 is “excellent,” 80-94 is “good,” 65-79 is “fair,” 45-64 is “marginal” and a score below 45 is “poor.” The most recent scores are based on data from 2021 to 2023.

Among 165 river monitoring sites across the country, the average score was 76.7. Sites along four major rivers earned a perfect score: the Northeast Magaree River (Nova Scotia), the Restigouche River (New Brunswick), the South Saskatchewan River (Saskatchewan) and the Bow River (Alberta). The Bayonne River, a tributary of the St. Lawrence River near Berthierville, Quebec, scored the lowest (33.0).

Overall, between 2021 and 2023, 83.0 per cent of monitoring sites across the country recorded fair to excellent water quality. This is a strong positive signal that most of Canada’s rivers are in generally healthy environmental condition.

A total of 13.3 per cent of stations were deemed to be marginal, that is, they received a score of 45-64 on the index. Only 3.6 per cent of monitoring sites fell into the poor category, meaning that severe degradation was limited to only a few sites (6 of 165).

Monitoring sites along waterways with relatively less development in the river’s headwaters and those with lower population density tended to earn higher scores than sites with developed land uses. However, among the 11 river monitoring sites that rated “excellent,” 8 were situated in areas facing a combination of pressures from nearby human activities that can influence water quality. This indicates the resilience of Canada’s river ecosystems, even in areas facing a combination of multiple stressors from urban runoff, agriculture, and industrial activities where waterways would otherwise be expected to be the most polluted.

Poor or marginal water quality was relatively more common in monitoring sites located along the St. Lawrence River and its major tributaries and near the Great Lakes compared to other regions. Among all sites in the marginal or poor category, 50 per cent were in this area. The Great Lakes-St. Lawrence region is one of the most population-dense and extensively developed parts of Canada, supporting a mix of urban, agricultural, and industrial land uses. These pressures can introduce harmful chemical contaminants and alter nutrient balances in waterways, impairing ecosystem health.

In general, monitoring sites categorized as marginal or poor tended to be located near intensive agriculture and industrial activities. However, it’s important to reiterate that only 28 stations representing 17.0 per cent of all monitoring stations were deemed to be marginal or poor.

Provincial results vary, as shown in the figure below. Water quality scores in Newfoundland and Labrador, Prince Edward Island, New Brunswick, Saskatchewan and Alberta were, on average, 80 points or higher during the period from 2021 to 2023, indicating that water quality rarely departed from natural or desirable levels.

Rivers sites in Nova Scotia, Ontario, Manitoba and B.C. each had average scores between 74 and 78 points, suggesting occasional departures from natural or desirable levels.

Finally, Quebec’s average river water quality score was 64.5 during the 2021 to 2023 period. This score indicates that water quality departed from ideal conditions more frequently in Quebec than in other provinces, especially compared to provinces like Alberta, Saskatchewan and P.E.I. where no sites rated below “fair.”

Overall, these results highlight Canada’s success in maintaining a generally high quality of water in our rivers. Most waterways are in good shape, though some regions—especially near the Great Lakes and along the St. Lawrence River Valley—continue to face pressures from the combined effects of population growth and intensive land use.

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