From the Fraser Institute

By Kenneth P. Green

According to a new report from the Parliamentary Budget Officer (PBO), the federal government’s proposed oil and gas emissions cap will curtail production, cost a not-so-small fortune and kill a lot of jobs. This news will surprise absolutely no one who’s been paying attention to Ottawa’s regulatory crusade against greenhouse gases over the past few years.

To be precise, according to the PBO’s report of March 2025, under the proposed cap, production for upstream industry oil and gas subsectors must be reduced by 4.9 per cent relative to their projected baseline levels out to 2030/32. Further, required reduction in upstream oil and gas sector production levels will lower GDP (inflation-adjusted) in Canada by an estimated 0.39 per cent in 2032 and reduce nominal GDP by $20.5 billion. And achieving the legal upper bound will reduce economy-wide employment in Canada by an estimated 40,300 jobs and fulltime equivalents by 54,400 in 2032.

The federal government is contesting the PBO’s estimates, with Jonathan Wilkinson, federal minister of Energy and Natural Resources of Canada, claiming that the “PBO wasted their time and taxpayer dollars by analyzing a made up scenario.” Of course, one might observe that using “made up scenarios” is what making forecasts of regulatory costs is all about. No one, including the government, has a crystal ball that can show the future.

But the PBO’s projected costs are only the latest analysis. A 2024 report by Deloitte (and commissioned by the federal Treasury Board) found that the proposed “cap results in a significant decline in GDP in Alberta and the Rest of Canada.” The main impacts of the cap are lower oil and gas activity and output, reduced employment, reduce income, lower returns on investment and a higher price of oil.

Consequently, according to the report, by 2040 Alberta’s GDP will be lower by 4.5 per cent and Canada’s GDP will be lower by 1 per cent compared to a no-cap baseline. Cumulatively over the 2030 to 2040 timeline, Deloitte estimated that real GDP in Alberta will be $191 billion lower, and real GDP in the Rest of Canada will be $91 billion lower compared to the no-cap (business as usual) baseline (in 2017 dollars). Employment also took a hit in the Deloitte report, which found the level of employment in 2040 will be lower by 2 per cent in Alberta and 0.5 per cent in the Rest of Canada compared to a no-cap baseline. Alberta will lose an estimated 55,000 jobs on average (35,000 in the Rest of Canada) between 2030 and 2040 under the cap.

Another 2024 report by the Conference Board of Canada estimated that the “oil and gas productions cuts forecasted lead to a one-time, permanent decline in total Canadian real GDP of between 0.9 per cent (most likely outcome) to 1.6 per cent (least likely outcome) relative to the baseline in 2030. This is equivalent to a loss of $22.8 to $40.4 billion (in 2012 dollars)… In Alberta, real GDP would fall by between $16.3 and $28.5 billion—or by 3.8 per cent and 6.7 per cent, respectively.”

Finally, a report by S&P Global Commodity Insights (and commissioned by the Canadian Association of Petroleum Producers) estimated that a “production cut driven by a stringent 40% emission cap could cause $75 billion lower upstream spend and $247 billion lower GDP contribution (vs. a no cap reference case).”

All of these estimates, by respected economic analysis firms, raise serious questions about the government’s own 2024 Regulatory Impact Analysis, which suggested that the proposed regulations will only have incremental impacts on the economy—namely, $3.3 billion (plus administrative costs to industry and the government, estimated to be $219 million). According to the analysis, the “proposed Regulations are expected to result in a net decrease in labour expenditure in the oil and gas sector of about 1.6% relative to the baseline estimate of employment income over the 2030 to 2032 time frame.”

But according to the new PBO report, the costs of the government’s proposed cap on greenhouse gas emission from Canada’s oil and gas sector will be costly and destructive to the sector, it’s primary province (Alberta), and its employees in Alberta and across Canada. All this in the face of likely-resurgent U.S. oil and gas production.

Now that policymakers in Ottawa have seemingly recognized the unpopularity of the consumer carbon tax, a good next step would be to scrap the cap.

From the Fraser Institute

By Nadeem Esmail

Back in 1984, the Canada Health Act (CHA) received royal assent and has since reached near iconic status. At the same time, under its purview, the Canadian health-care system has become one of the least accessible—and most expensive—universal health-care systems in the developed world.

Clearly, policymakers should reform the CHA to reflect a more contemporary understanding of how to structure a truly world-class universal health-care system.

Consider for a moment the remarkably poor state of access to health care in Canada today. According to international comparisons of universal health-care systems, we endure some of the lowest access to physicians, medical technologies and hospital beds in the developed world. Wait times for health care in Canada also routinely rank among the longest in the developed world.

None of this is new. Canada’s poor ranking in the availability of services reaches back at least two decades. And wait times for health care have nearly tripled since the early 1990s. Back then, in 1993, Canadians could expect to wait 9.3 weeks for medical treatment after GP referral compared to 30 weeks in 2024.

This is all happening despite Canadians paying for one of the world’s most expensive universal-access health-care systems. And this brings us back to the CHA, which contains the federal government’s requirements for provincial policymaking. To receive their full federal cash transfers for health care from Ottawa, provinces must abide by CHA rules and regulations. And therein lies the rub.

We can find the solutions to our health-care woes in other countries such as Germany, Switzerland, the Netherlands and Australia, which all provide more timely access to quality care. Every one of these countries requires patient cost-sharing for physician and hospital services, and private competition in the delivery of universally accessible services with money following patients to hospitals and surgical clinics. And all these countries allow private purchases of health care, as this reduces the burden on the publicly-funded system and creates a valuable pressure valve for it.

Unfortunately for Canadians, the CHA expressly disallows requiring patients to share the cost of treatment while the CHA’s often vaguely defined terms and conditions have been used by federal governments to discourage a larger role for the private sector in the delivery of health-care services. At the same time, every new federal commitment to fix health care means increased provincial reliance on Ottawa. In 2024-25, federal cash transfers for health care are expected to total $52 billion, which means there’s $52 billion on the line for perceived non-compliance with the CHA. In short, this is why the provinces beholden to a policy approach that’s clearly failing Canadians.

So, what to do?

For starters, Ottawa should learn from its own welfare reforms in the 1990s, which reduced federal transfers and allowed provinces more flexibility with policymaking. The resulting period of provincial policy innovation reduced welfare dependency and government spending on social assistance (i.e. savings for taxpayers). When Ottawa stepped back and allowed the provinces to vary policy to their unique circumstances, Canadians got improved outcomes for fewer dollars.

We need that same approach for health care today, and it begins with the federal government reforming the CHA to expressly allow provinces the ability to explore alternate policy approaches, while maintaining the foundational principles of universality.

Next, the federal government should either hold cash transfers for health care constant (in nominal terms), reduce them or eliminate them entirely with a concordant reduction in federal taxes. By reducing (or eliminating) the pool of cash tied to the strings of the CHA, provinces would have greater freedom to pursue reform policies they consider to be in the best interests of their residents without federal intervention.

After 40 years, it’s high time to remove ambiguity and minimize uncertainty—and the potential for politically motivated interpretations—of the CHA. If federal policymakers want Canadians to finally have access to world-class health care, they should allow the provinces to choose their own set of universal health-care policies. The first step is to fix the 40-year-old legislation that has held the provinces back.

Nadeem Esmail

Senior Fellow, Fraser Institute