Debt might be more effective than a carbon tax in the near term...
PUBLICATION: GLOBE AND MAIL
IDN: 082520125
DATE: 2008.09.08
PAGE: A17
BYLINE: TOM KENT
SECTION: Comment
EDITION: Metro
DATELINE:
WORDS: 752
WORD COUNT: 787
--------------------------------------------------------------------------------
SUSTAINING INCOMES AND JOBS Let's think modern infrastructure, not carbon tax
--------------------------------------------------------------------------------
TOM KENT Served as principal assistant to prime minister Lester Pearson Campaigning politicians are already promising Band-Aids for some voters, but no national policy on offer in this election will safeguard most people's incomes and jobs. A carbon tax will be hotly debated; within a few years, it'll be unavoidable. To dismiss it is to ignore humanity's sharpest problem. But to make it the centrepiece of an election platform is to ignore the troubles of Canadians.
A true "green shift" is as essential when oil is dear as when it was cheap. Nevertheless, how to make it has to be fitted to circumstances.
A decade ago, a carbon tax would have been a far-sighted measure; it will be again, in an improved economy. Today, we have to hope that the U.S. recession will not cut as deep, or last as long, as tumbling banks and declining employment indicate. Even so, from Winnipeg eastward, there will be fewer of the current jobs. This is not the occasion for a new tax to further cramp the economy.
Our peril is that politicians are ill-prepared with measures to sustain income and employment. The deficits of the 1980s have frightened them. Politicians in office proclaim that a "fundamentally sound" economy is not for interfering. Politicians in opposition cry havoc at the threat of any budget deficit but dare not champion expansionary policies.
All this inhibits the kind of sensible action that is effective if promptly taken. The need is for public investment. It is to undertake infrastructure projects that green the economy, that strengthen it, and that employ people now. They are not current budget expenditures but investments to be amortized over a conservatively projected useful life.
Ottawa's role in infrastructure is complicated because the loudest calls for federal money come from big cities demanding help for transit and much else. This is capital in federal accounting only if loans are made to, or guaranteed by, provincial governments, and we should be wary of adding more complications to federal-provincial finances. But there is no need to. There is all too much neglected infrastructure that comes within Ottawa's own jurisdiction. It includes work that should be at the forefront of action to lessen our emissions.
One major need is to create a power grid linking Canada's energy resources from sea to sea. Quebec's and Manitoba's hydro could quickly relieve Ontario's energy shortage. More could then be done to free the country as a whole from reliance on polluting fuels, and the scope for developing wind and solar power would be broadened. Government partnership in the investments could accelerate private innovation.
In any event, this greening of the economy would call for substantial employment of the kind needed to replace lost manufacturing jobs.
So would another greening development. Federal politicians long ago saw the building of the railway as building the nation. Perversely, public funding has since provided highways for long-distance trucking, while railways have to carry their own infrastructure costs. Consequently, freight is being increasingly concentrated in mile-long trains carrying heavy, bulk materials for which trucks can't compete. For businesses requiring more frequent service, public policy has long been causing a shift to polluting transport. To undo that mistake is the green shift that fits our economy's condition.
We'll probably follow Europe and East Asia in having electrified lines for high-speed trains in our more congested areas. Meantime, much can be done to shift freight traffic and, incidentally, improve passenger service. There are many sections of line across Canada where an additional track could be laid on the existing right of way. More traffic could be moved faster to and from ports and between major centres. Better handling facilities could then make quick transfers of loads for short-distance truck haulage.
The ultimate size of the whole investment is all the more reason to begin it when extra employment and income are needed. Its financial forms can be flexible. Ottawa might directly own some of the new assets. For most, loans to provincial utilities, and to CN and CPR, would be appropriate. Some could be equity, giving the federal government a share in enhanced railway profits.
Modernizing our national infrastructures will powerfully supplement improvements in education and research and in much else that promotes skill and enterprise. But those are expenditures requiring current financing. This is the time for capital investments. The sooner they're made, the sooner a carbon tax will be appropriate in a stronger economy.
