I am compelled to comment on young Mr. Trudeau’s plan to create a national infrastructure bank.
With respect to the PM, this is a bad idea, and likely more driven by consideration of electoral politics than good policy or even good intentions.
At its most boiled down level, Mr. Trudeau is looking for a complex and extremely expensive solution to a simple and only very expensive problem.
Private ownership of what should be public infrastructure is a bad idea on several levels, only one of which is that when government becomes a close partner of business its actual important function as capital-R regulator becomes confused. (Reading list: see BC Liberals – Mount Polley.)
Worse though, business wants returns on specific investments, the operative concept being specific.
Publicly funded infrastructure projects do produce returns for the state that funded them, but it’s in indirect, but measurable, ways. It facilitates economic activity that would otherwise be less significant, or altogether impossible.
However, if you ask a Belgian pension fund to build you a bridge, they couldn’t give a rat’s posterior about resulting economic activity. They will want cash, and lots of it.
And they will want it to keep coming long after the initial investment has been recouped. If you were a Belgian pension fund wouldn’t you want that? I would.
That’s what business is for. Capitalism is almost as great as “socialism with Chinese characteristics”. That’s actually a thing, look it up, it’s fun.
Don’t forget, the Belgians (don’t get me wrong, I love Belgians) will not pay for the whole project by themselves. We’ll be paying for a portion of it too up front.
Then we’ll be paying and paying and paying. This kind of math may appeal to those of us who believe Christy Clark when she tells us about B.C.’s low, low taxes while the MSP keeps going up, as if that isn’t a regressive tax. But I digress.
Fortunately, Mr. Trudeau’s problem is not a complicated one. There is a simple solution. The options are: (1) We can pay for it now, and not own it, and keep on paying for it, and then pay some more for it? (you get the idea), or (2) we can pay for it ourselves and own it.
How do we manage option 2? Simple. Put the GST back up to seven per cent, and don’t take a further increase off the table. Consumption taxes are efficient, and easily molded to requirements in terms of exempting certain goods and services and persons of certain income levels. Unlike the MSP non-tax.
When Harper cut the GST to five per cent he cut $13 billion a year out of federal revenues, then stopped funding all kinds of wasteful government programs like the Coast Guard, etc.
We had seven per cent before and it didn’t kill us. We’re more than capable of doing it again. If option 2 is chosen I guarantee two things: Canada will have more of the capacity it needs, and it will cost us a whole hockey sock less in the long run than paying Belgians.