Executive Summary

Recommendations for Budget 2006

Canada’s future prosperity will be contingent upon a vibrant economy, a healthy environment, and lifelong human health. Good governance dictates that these objectives be pursued in an integrated fashion, collectively embedded in governmental decision-making. Doing so will spur innovation and increased resource-efficiency, and thus strengthen Canada’s international competitiveness, while preserving and restoring our environmental and social health. Furthermore, it will avoid the expensive health care and environmental remediation costs we will otherwise face due to current pollution patterns.

Canada’s current environmental funding must be maintained as the basis for this future prosperity. The programs it supports play a critical role in preserving Canadians’ quality of life and our economic wealth, as well as our cherished environmental heritage. They help to preserve clean air for Canadians to breathe, clean water to drink, and rich fertile soil in which to grow our food. They nurture sustainable energy supplies to power our economy and our lives, and to reduce the risk of global climate change. Furthermore, they preserve national parks and wildlife areas that not only allow a complex diversity of plants and animals to thrive, but also provide internationally renowned recreational opportunities which stimulate numerous rural economies. In essence, these programs work to preserve our natural capital.

Conservative governments have a proud legacy of environmental achievements upon which to build. Brian Mulroney is widely credited as being Canada’s “greenest” prime minister ever. His Conservative governments introduced the comprehensive $3 billion Green Plan, achieved major progress in reducing acid rain in concert with the United States, and facilitated the Montreal Protocol to phase out CFC’s. Furthermore, they created key sustainable development institutions, such as the National Round Table on Environment and the Economy, and the International Institute for Sustainable Development, which continue to develop important strategies for enduring prosperity.

Two fundamental elements of Canada’s economic, environmental, and human health strategies should be the stewardship of our natural capital and the implementation of ecological fiscal reform.

Our natural capital includes our mineral resources, our forests, and oil and gas, our land and water resources, and the living ecosystems central to their existence. This natural capital has traditionally been the basis for our collective economic and social prosperity. However, Canada has treated its natural capital with less care than other cherished forms of capital, and continues to consume this natural capital at a much higher rate, and much less efficiently, than other peer countries.1 This over-consumption, mismanagement and inefficient use of our natural capital is already leading to significant costs to society and in the long-term will undermine Canada’s global competitiveness.

Canada needs to make rapid progress in integrating the value of environmental goods and services into its decision-making processes. The Green Budget Coalition believes a government-wide Natural Capital Framework would be an important means of achieving this goal. Such a framework could nurture a greater appreciation of the social and economic benefits of clean air, water, and soil, and prevent the market failures that continue to occur because these price signals are not accurately aligned.

Ecological Fiscal Reform (EFR) is “a strategy that redirects a government’s taxation and expenditure programs to create an integrated set of incentives to support the shift to sustainable development.”2 EFR rewards environmental leaders amongst businesses and citizens, penalizes environmental “laggards”, stimulates environmental innovation with global export potential, and expedites the development of an economy where economic success brings concurrent environmental and human health benefits. EFR can improve our long-term economic prosperity by providing financial incentives to purchase goods and services which have a lower impact on environmental and human health, and by making revenue-neutral fiscal adjustments so that prices and taxes better reflect the full societal and environmental costs of specific goods and services.

The Green Budget Coalition believes the following five recommendations are the foremost budgetary opportunities to advance environmental sustainability, concurrently with substantial economic and health benefits. One of the recommendations could save over $80 million. The other four recommendations have a modest cost, each of which could be funded through the phase-out of related tax incentives that work contrary to environmental and economic sustainability, or through the implementation of a targeted tax measure.

1. Protection from Higher Fuel Prices Through Energy Efficiency will provide Canadians with enduring protection from higher fuel prices, and reduce Canada’s long-term energy dependence, by enhancing current programs for promoting and implementing energy efficiency and conservation in homes and small businesses, and by advancing green mobility. This is a prime opportunity to create simultaneous environmental, health, and financial benefits.

2. A highly leveraged National Conservation Fund could engage Canadians across the country in local conservation initiatives. Experience suggests that a federal leadership investment of $250 million could be leveraged to create $1 billion in natural capital preservation and enhancement, through matching funding from all levels of government, non-governmental organizations, community groups, and others.

3. The Drive Clean: Company Car Tax Shift is an ideal opportunity to advance ecological fiscal reform in Canada. It is an income tax revenue-neutral proposal, modeled on a successful program introduced in the United Kingdom, which would encourage employees to drive more fuel-efficient company vehicles by shifting some of the tax burden from green cars to gas guzzlers. Modeling suggests it would reduce Canada’s greenhouse gas emissions by one Mt of CO2 per year.

4. Strengthening CEPA Implementation recommends that greater resources be invested in effectively implementing the Canadian Environmental Protection Act (CEPA). CEPA is an important policy instrument that has been ineffectively implemented. Mounting exposure to toxic substances in our air and water is linked to serious threats to human health, especially for children. A Toxics Charge is a prime option for generating consistent funding for CEPA, and deserves a commitment from Environment Canada and Health Canada to build the necessary capacity.

5. Shifting Mining Incentives to Minerals Recycling highlights the most effective next steps to shift Canada to sustainable patterns of mining and mineral resource use, which are:

In addition, this document outlines the following six ongoing budgetary opportunities to which the Coalition expects to give greater emphasis in the future:

Clean Air and Climate Change:

These priority and ongoing recommendations together represent a prime opportunity to make substantial progress towards genuine prosperity for current and future generations of Canadians.

The GREEN BUDGET COALITION brings the collective influence and knowledge of Canada’s national environmental and conservation groups to bear towards the approval and implementation of strategic budgetary measures critical to long-term environmental sustainability.

The Green Budget Coalition was founded in 1999 with the recognition that the annual federal budget is the most important Canadian environmental policy document of the year, and that the integration of environmental values into economic policy is a fundamental requirement for achieving environmental sustainability and lifelong human health. The Coalition’s primary focus is the selection, development, and submission of priority recommendations for each annual federal budget, along with the advancement of ecological fiscal reform. The Coalition also promotes its environmental concerns year-round, and works with related academic, business, and non-governmental organizations.

The Green Budget Coalition comprises 20 of Canada’s leading environmental and conservation groups. These member groups collectively represent over 500,000 Canadians, through their volunteers, members, and supporters. The Coalition operates within four caucuses: Clean Air & Climate Change, Protecting Canada’s Natural Capital, Healthy Communities & Toxics Cleanup, and Ecological Fiscal Reform, and makes its decisions on a consensus basis.

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1. The OECD ranked Canada 27th for energy consumption, 29th for water consumption, and 26th for greenhouse gas emissions, out of 30 OECD countries. OECD (2004): OECD Environmental Performance Review of Canada. back to text

2. National Round Table on the Environment and the Economy (2005): The state of the debate on the environment and the economy: economic instruments for long-term reductions in energy-based carbon emissions. back to text

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