Elections after elections, the political parties break our ears with the economy. Now, sorry to disappoint you, but what the majority of them offer us is not economy, but denial.
Posted at 12:00 p.m.
The main problems at hand — climate change and the housing crisis — have their roots in government action and inaction.
Climate changes
Economists are unanimous: a robust carbon tax is needed to tackle the climate crisis. However, the price on carbon applied on Canadian soil is too low and it is even worse for major polluters in Quebec; the average price of pollution will be only $9 per ton of carbon (from 2024 to 2030), about forty times lower than what is socially optimal.
Moreover, the failure of the federal government to apply carbon adjustments at the border gives rise to carbon leakage; these are damaging our businesses and exacerbating the climate crisis. Indeed, coal is particularly cheap, so several countries use this source of energy and export goods to us — affordable, of course, but highly polluting. Without border carbon adjustment, the price does not signal pollution and economic efficiency is not achieved; to do without it is an absurdity.
A robust carbon tax combined with border adjustments is no longer a debate, it’s a necessity.
The housing crisis
The urban economy is particularly clear: density is desirable. The more citizens there are living in a square kilometre, the more jobs and quality services there will be — all of which will only be more profitable for the public purse and the planet. However, countless laws prohibit plexes, complicate bigenerations and force more asphalt with compulsory parking. In the era of climate change where urban sprawl is a driver of GHGs, it is particularly absurd to see that the solutions that could emerge from the stakeholders – and therefore at minimal cost to the State – are hitting barriers legislative.
In addition to reviewing these laws—something that the Union of Quebec Municipalities promotes—it is essential to review the property tax.
Cities derive their revenue primarily from building taxes, so it is beneficial for them to change agricultural zoning and create single-family residential neighborhoods.
Conversely, the property tax should be centered on the land rather than the building, so that individuals living in condos would pay significantly lower taxes than those residing in houses.
Effectively, the rare resource is the earth, it is this which must be signaled through the price.
With such a revision, it would be economically more advantageous for families to settle in plexes. This density would allow for the establishment of more services — including public transit — and would make active modes of transportation enviable.
That said, we still need to fundamentally review our development policies as well as the place of the car in our cities. Indeed, highway exits are funded by the provincial government, while only 50% of public transportation is covered by the latter.
This incentive system stimulates urban sprawl, to the detriment of our agricultural land.
A reform of these policies would reduce dependence on the car, which would save families countless dollars, reduce heat islands and facilitate urban density – and here we are not even talking about improving the quality air or the benefits of active transportation in a society where obesity is rampant.
Unfamiliar with the concept of land tax and the benefits of density? This is exactly the problem; our governments don’t talk about the economy — a term they obviously don’t understand — they are in denial.
The invisible hand…
In short, whatever they say, our governments work more for their re-election than for the economy. According to economics, it is optimal for governments to intervene to address market failures such as pollution. However, in view of the misalignment of the policies in place and what is socially optimal, our governments offer us nothing less than economic voodoo – as if, without public policy, the climate crisis and the housing crisis would be solved by themselves. The invisible hand, the other would say.