It was a fossil fuel lobbyist frenzy in lead-up to federal budget

Oil and gas lobbyists kicked into high gear in the lead-up to Tuesday’s budget, the federal lobbyist registry shows.

The Canadian Association of Petroleum Producers (CAPP) met with department officials and MPs at least 30 times since January. Similarly, the Pathways Alliance, which represents the six largest oilsands companies (Suncor, Cenovus, ConocoPhillips, Canadian Natural Resources, MEG Energy, and Imperial Oil), met government officials at least 23 times this year. Only meetings initiated by lobbyists are reflected in the registry.

And while it’s not known exactly what was discussed, it is notable there was no windfall profit tax on oil and gas companies included in Tuesday’s budget.

This disappointed climate advocates, who had pushed hard for the windfall tax. By failing to bring in a windfall tax on oil and gas companies that have posted record-breaking profits since Russia’s invasion of Ukraine disrupted energy markets, a huge opportunity was missed to address affordability and the climate crisis, they say.

“Over and over again, we see [the fossil fuel] industry and its associated lobby groups deploy huge amounts of resources to delay and distract climate action that is in the best interest of people in Canada,” Climate Action Network Canada’s executive director Caroline Brouillette told Canada’s National Observer. “So when those interests are listened to more than a large group of organizations representing citizens and the public interest, I do question the impact that this has on our democracy.”

Despite record-breaking profits, some in the oil and gas industry, like Cenovus CEO Alex Pourbaix, have argued the industry shouldn’t be made to pay more tax through a windfall tax, as countries like the United Kingdom, Germany, the Netherlands, Italy and others have implemented.

The lobbyist registry shows that Pathways Alliance president Kendall Dilling met with Finance Minister Chrystia Freeland on March 15. The lobbyist registration notes the Pathways Alliance wanted to speak with government officials about Budget 2024-25.

Freeland’s office did not return a request for comment by deadline.

After being hammered day in and day out by Conservative Party of Canada Leader Pierre Poilievre on affordability issues, it’s no secret the governing Liberals want to be seen fighting for Canadians against the high cost of living.

According to the Parliamentary Budget Officer (PBO), a one-time tax of 15 per cent on oil and gas companies making over $1 billion in taxable income would raise $4.2 billion for the public purse over the next five years that could be used to fund climate action and address affordability issues. And the policy would be popular, too, with polling firm Leger finding a majority of Canadians support a windfall profit tax on fossil fuel companies, with especially strong support in seat-rich Quebec and Ontario.

For climate advocates across the country, introducing a windfall tax was one of the litmus tests for this year’s budget. Rather than a specific tax aimed at oil and gas companies, the federal government opted for tweaking the capital gains tax. Capital gains refers to the profits from selling things like stocks or real estate and represents one of the main ways the wealthiest Canadians make their money. Finance Canada estimates the changes will not increase taxes on 99.87 per cent of Canadians, illustrating the tweak is aimed at the ultra-wealthy.

Currently, capital gains are taxed at 50 per cent, meaning the richest Canadians are not paying taxes on half their income. Budget 2024 proposes applying the tax to 66 per cent of their income –– a step advocates say is in the right direction, but not far enough.

Speaking to the Liberal caucus Wednesday, Prime Minister Justin Trudeau celebrated his government’s new budget as a plan that builds an economy that’s fair for everyone, while noting the government is asking those who’ve benefited the most from Canada’s economy to pay more.

“We don’t think it's fair that a teacher or electrician pays taxes on 100 per cent of their income, while a multimillionaire pays taxes only on 50 per cent of the passive income they make on capital gains,” he said. “We’re going to make them pay a little more.”

For Brouillette, a little more is not enough.

“The reason we need a windfall tax on oil and gas profits is because this is the industry that has been holding us back … from meeting our climate objectives,” she said. “So taxing windfall oil and gas profits is not only about raising revenue for the public purse, it's about holding that industry accountable, and it's about protecting our democracy from its nefarious influence on policymaking.”

Brouillette said there is also a “vicious cycle” at play, where oil and gas record profits are reinvested into lobbying and advertising campaigns that misinform Canadians. Competition Bureau Canada is currently investigating the Pathways Alliance following complaints its “Let’s clear the air” marketing campaign is “false and misleading.”

University of Victoria associate professor James Rowe previously told Canada’s National Observer that the Liberals are looking to link their climate action with affordability concerns in an attempt to combat Poilievre’s rise in the polls. Rebranding the carbon price is part of that effort, but beyond rebrands, Rowe said the Liberals need to genuinely respond to kitchen-table concerns.

“I think they're worried about being labelled as the tax-and-spend Liberals in an inflationary environment, but I think part of that is rooted in a bit of a misdiagnosis around the inflation problem,” he said. “There's really good research showing corporate price-gouging is playing a really significant role.”