Canadian environmentalists bet against trade and innovation

There something funny and false about the logic of arguing for the environment while dismissing the benefits of freer markets and technological innovation. Environmentalists too often use science, including economic analysis, selectively, invoking it’s authority to protect wildlife while ignoring its value to human beings.

The Pembina Institute, a go-to Calgary-based environmental think tank, defends the Ontario Government’s renewable energy program of promoting wind and solar power by offering developers long term power contracts at 2 to 5 times prevailing market prices. Pembina's defense rests on one grim assumption: all other future sources of power will be vastly more expensive as well. The Feed in Tariff (FIT) program won’t hurt too much because eventually everything else will hurt a lot more as well. Click on: https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20110706/RBBIGTICKER0607ATL

Their reasoning will give comfort to governments that think they know where technology is going and don’t trust markets to sort out what’s most efficient. However, it flies in the face of historic experience and the global and promising search for new technologies to generate and distribute power.

By all means, include environmental costs in energy prices, but please let’s not defend arbitrary and extravagant  public procurement policies by saying everything will get more expensive anyway. That kind of Luddite thinking was disapproved by coal, crude oil and natural gas innovations over the last 150 years. Only monopoly public nuclear power has steadily become more costly over the decades.

At the same time, Dan McDermott, director, Sierra Club Ontario dismisses the future economic value of the proposed new Detroit-Windsor Bridge:

“Tighter border security, passport requirements and the lingering recession are just some of the reasons identified in the January, 2011, Sierra Club report authored by a team of traffic-flow experts which concluded that this 12-year drop is the new normal.”

Click on: http://m.theglobeandmail.com/news/opinions/letters-to-the-editor/july-6-letters-to-the-editor/article2087561/?service=mobile

McDermott concludes:

“The Detroit river crossing is an unneeded $5.3-billion boondoggle that would involve substantial environmental damage. The Michigan legislature’s caution is merited and worthy of praise.”

Surely, there are better ways to protect eight species of birds and a garter snake without dismissing the potential for greater Canada-US trade and the importance of that trade to the well-being of North America. The barriers at the Canada-US border were erected by choice. And can be undone by better choices. People can, Mr McDermott, reform their relations with one another as well as with the environment.

Finally, what’s this about using traffic flow experts to determine the need for a hundred year investment project? Why not use this year’s lousy spring to shut down the climate change debate?

Mulroney’s prescription for Canadian healthcare is not reform

Retired politicians often get their best press when they’re showing up their successors.

Former Progressive Conservative Prime Minister Brian Mulroney recently prodded current Prime Minister Stephen Harper to concentrate on the “big ticket items” and set up a   “blue ribbon panel of distinguished Canadians” to fix the financing of Canada’s burgeoning healthcare budgets. Click on: http://www.theglobeandmail.com/news/politics/ottawa-notebook/mulroneys-advice-to-harper-do-something-big/article1879648/

“We are facing a genuine, genuine problem of quite enormous dimensions,” Mr. Mulroney says. “We have a pretty good system here, but obviously the financing is completely out of whack.

“Someone has to provide some unbiased, thoughtful but effective leadership in the thinking on this,” he says. “Without some new thinking and some visionary approaches, health care is going to consume 70 to 75 per cent of provincial budgets.”

Classic Brian Mulroney.

Before teeing up for another favorable reference to his big ticket accomplishments, however, Mulroney could have acknowledged Harper’s radically different political circumstance. Mulroney himself went big on free trade with the US and introduced the Goods and Services tax in a majority parliament, after winning an electoral majority without reference to either issue. Indeed, in the election Mulroney was either silent on these latent issues or postured as a red-Tory nationalist.

While not always first to those issues that call for boldness, Mulroney has every right to offer bold advice and to be listened to carefully. Once committed to act, great projects did bring out in Mulroney great talent and resolve. Unfortunately, his advice on this occasion is not bold and, indeed, could lead to less change, not more.

Red Tories, like Mulroney, reflexively send big problems to Ottawa. They are the same as liberal Democrats in the US.  Once they see that a significant problem growing in every province in the country, they look for a federal response. However, in the case of healthcare costs Ottawa may, in fact, be the worst place to turn for effective solutions.

Fundamentally, the principal national challenge—universal access across Canada--has been long resolved. The federal government—through equalization payments and per capita health grants to the provinces—provides incentives and support to ensure each province maintains universal and portable healthcare services.

That federal contribution has grown with the growth of provincial costs and there is broad agreement that Ottawa maintain is share.

The provinces are almost entirely responsible for the delivery of those services and, as important, have the competence and political responsibility to manage the individual provincial systems.

In Ontario, for instance, the Ontario government operates a $47 billion health system and pays for approximately 80 % of the costs. A new national vision might end up simply increasing the federal share to above 20 % and, thereby, relieve the province of a fraction of the political and managerial challenge of keeping the system affordable and up to date.

Recent federal silence on changing the status quo, however, hasn’t necessarily been a bad thing. It’s now clearer in people’s minds that the provinces are actually responsible. And governments in Quebec, Ontario, Alberta and elsewhere are implementing and testing new ideas.

Other than re-opening demands for $billions more from Ottawa, Mr. Mulroney’s blue ribbon panel could actually distract the provinces and only confuse the public about who is accountable.

Quebec’s left wing and the survival of hyperbole in Canada

Last month, the geeks of Quebec’s conservative remnant met in public in a suburban hotel—and talked about changing Quebec.

 The next week, Quebec’s left mobilized: a new Social Alliance was formed to stop the neo-cons from spreading crazy ideas about lower taxes and privatization.

At stake, allegedly, are the principles of solidarity and sharing. The Alliance spokesman, Michel Arsenault, president of the Quebec Federation of Labour, found words to dramatize the situation:

The issue: “It’s the difference between being human beings and animals….With animals, when one of them gets old, they let it die, they eat it. We want to take care of our people, our youths, our students our elderly.”

The alternative: “We are the most egalitarian society in North America and we want to keep it that way. Our social services cost $7-billion a year. When you compare with Ontario, it is costing Ontarians, through the private sector, $17.5-billion for the same services. We are getting more for our money with the public sector than Ontarians are getting with the private sector.”

http://www.theglobeandmail.com/news/national/quebec/quebec-labour-student-groups-unite-to-fight-the-right/article1788183/

You start to worry that Canada’s political discourse is killing our sense of humour, and Quebec comes to the rescue.

Imagine Ontario as a case study of right-wing, heartless incompetence.

Even assuming that Ontario’s larger population (13 million Ontarians compared nearly 8 million Quebecers) has the same percentage of families and individuals that need social services to avoid living like animals, is it possible that the Ontario government has to spend approximately fifty percent more per capita on social services than the Government of Quebec?

Is Quebec egalitarian? Spectacularly efficient or outrageously cheap?

Electricity consumers could have choices too

One of the tics of governments in trouble in Canada: our long-term plan is tough but it’s honest. Indeed, it’s the only responsible plan on the table, if only because I’m telling you it will cost you more.

Canadian politics defer generously to domestic planners, systems analysts, and engineers. (Americans, of course, are thought to be more skeptical when government calls for sacrifice; only their generals seem exempt.) The Ontario government of Dalton McGuinty has made a high art of limiting Ontario’s options by presuming to know the future and by not behaving like the heedless hedonists of the past. The most recent and most expensive example of this style of government has been electricity policy.

Last week, Minister of Finance Dwight Duncan announced that electricity rates will go up 46% over the next five years. Period. The only matter to debate and satirize was his plan to add one $billions to its structural deficit in order to provide some cushion for electricity consumers. Click on: http://news.ontario.ca/mof/en/2010/11/ontario-introduces-electricity-cost-relief.html

The prospect of nearly doubling the price of electricity since the turn of the century is shrugged off with three bald assertions: (1) we have to be honest with ourselves and pay the “true cost of power,” (2) the system we inherited was “virtually crumbling,” and (3) our plan will cost billions but it will generate green power, 50,000 jobs, and—besides—hundreds of experts have been consulted. (Generals pretty well use the same arguments in Washington.)

The staying power of these arguments is a tribute to political fashion, not the absence of alternatives.

Fifteen years ago, Ontario’s electricity system was working through a substantial surplus of base and interruptible electricity supply, but it knew that new investment would eventually be required. (Ontario is one of the biggest and fastest growing industrial jurisdictions in North America.) Two broad approaches were available to ensure affordable long-term supply: progressively devolve responsibility and decision-making to the marketplace or further politicize the provision and pricing of electricity. With a majority government and all the regulatory and institutional apparatus in place to move to competition and private-sector risk-taking, the McGuinty government—decision after decision—decided to make the decisions in government.

The “true cost of power” today effectively represents the outcome of government policies and government notions about how to invest in the future.

However, the government didn’t have to produce detailed “policy directives” to tell others how to do their jobs. Necessary, defensible capital improvements could have been approved by independent regulation and standard good practices in licensed electricity distributors, transmitters, and generators. And, rather than micromanaging the electricity system, the government also had credible alternatives to fight climate change. A carbon tax, for instance, and a renewable energy set aside provision for power purchases by utilities would also generate new green supply and vigorous competitive pressure to do it efficiently.

The market-based approach that was only legislated in 1998 collapsed when the Progressive Conservative government abandoned privatization and froze rates. It would have taken sustained political will to get that approach back on track. However, markets do work all around us and generate goods every bit as vital as electricity—natural gas home heating, shelter itself, air and rail transportation, for example.

The decision to replace the discipline of the market with the insights of ministers of energy was freely taken. Let’s not bow down to the idea that the government is only being honest about what it had to do. It had choices, and future governments may well look at those choices again.

If Ontario is to keep its brand as an open, innovative society, its political system ought to be able to think about more than one big idea at a time.