Trudeau government says it will give more Canadians the rural carbon rebate

There is, however, scant information as to what the rebate expansion will look like and how it may affect the overall distribution of carbon pricing proceeds — seven per cent of which are still owed to small- and medium-sized businesses and Indigenous groups. 

The change is one of several budget measures that addresses points of contention in the federal government’s carbon pricing scheme, which has come under fierce criticism from opposition Conservatives and provincial premiers who say it is a cost-of-living issue for Canadians. Some of the other moves introduced in the budget include a rebate for businesses that are owed $2.5 billion in returns, forcing banks to identify rebate payments as the government wishes — part of a government effort to raise awareness around the quarterly payouts — and changing the carbon pricing law to allow federal officials to publicly share details regarding non-compliance. The carbon levy is meant to encourage Canadians to make the switch to technologies that pollute less. 

“I don’t think it’s defence. I think it’s offence,” Natural Resources Minister Jonathan Wilkinson said Wednesday of the new measures.

Under the rules of the rebate policy, the federal government uses Statistics Canada’s census metropolitan areas (CMA) to identify rural communities. CMAs are groups of densely populated centres, like many communities in the Greater Toronto Area, that are generally urban areas. For the purposes of the rebates, the government counts all areas outside CMAs as rural.

But StatsCan acknowledges you can still be living in a rural area and within a CMA. By one measure, just over 500,000 Ontarians live in rural areas within CMAs and are denied the extra cash. For a family of four in Ontario, that adds up to an extra $224 this year.

It has frustrated some small-town mayors and some MPs, including one Tory MP who told the Star it was a politically motivated decision to benefit Liberal ridings. In the fall, when Prime Minister Justin Trudeau announced the top-up would double to 20 per cent from 10 per cent, the government also decided it would use CMAs according to the 2016 census rather than 2021, which federal officials said was a deliberate policy choice meant to expand eligibility. That meant Fredericton, Red Deer and their surrounding areas, for example, remained eligible.

Marcus Powlowski, Liberal MP for Thunder Bay, told the Star Wednesday he had pushed his party on this issue because he felt it was creating the perception that the so-called carbon tax isn’t fair, and that was hurting the government.

“I think there’s quite a few (Liberal MPs) who are in that category that have at least parts of their ridings, especially places which don’t have natural gas, don’t have public transport, but they’re still considered urban, so it doesn’t make a lot of sense,” he said.

Asked if the issue had undermined his support for the party’s carbon pricing regime, he said “possibly.”

“It’s a matter of good governance,” he told the Star. “If you’re rural, you should get the rebate. If you’re not, well, you shouldn’t.”

Finance Minister Chrystia Freeland’s office had not returned a request for comment by Wednesday evening. In the past, federal officials had defended the use of CMAs, arguing it was a “clearly defined and well-understood criterion” that treated Canadians consistently.

But according to Tuesday’s budget, that is set to change.

That news was cautiously welcomed by John Creelman, the mayor of Mono, Ont., a town of 9,000 an hour-and-a-half drive north of Toronto.

Despite having no hospital or public transit, Mono is grouped in with the Toronto CMA, making its rural residents ineligible for the top-up. In March, the town council passed a motion demanding the government reform eligibility requirements. Creelman now hopes his town’s residents would get the top-up.

“It makes me optimistic that they’ve realized the error of using an arbitrary mechanism to define ‘rural’ vs. ‘urban,’” he told the Star. “But I’m disappointed that it may take a year to change.”