Premier Doug Ford has already broken a key promise.
Instead of putting money back into the pockets of Ontarians, the new Progressive Conservative premier of Ontario is apparently hiking expenses.
We know this because that great bastion of sound fiscal logic and clear economic thinking – the Toronto Star editorial board – says so.
The Green Ontario Fund, which Ford plans to cut, “is putting money in people’s pockets for installing smart thermostats, insulation, windows and other energy-efficient items,” says the Star’s editorial. “And still more money in the pockets of the business owners and workers who provide them.”
There’s just one gaping issue that the Star appears to have overlooked. When the Ontario government takes money from Smith and Jones to subsidize Brown’s energy-saving windows, that only makes life more affordable for Brown. Smith and Jones are made poorer.
But the Green Ontario Fund introduced by the former Liberal government might make Brown worse off, too, even though the government is forcing Smith and Jones to pay for his new windows. That’s because Brown and Smith are paying for Jones’s insulation, and Brown and Jones are paying for new equipment for Smith’s business.
If Smith, Jones and Brown are paying for each other’s windows, insulation and business equipment, is it all a wash then?
Maybe Brown didn’t need a new window – he only bought it because Smith and Jones are footing a chunk of the bill. And maybe Jones didn’t need new insulation. And maybe Smith should pay for his own equipment.
Smith, Jones and Brown may have just bought a bunch of expensive new stuff with higher costs than benefits, only because the government was using somebody else’s money to pay part of the cost.
There’s no better way to ensure a misuse of resources in an economy than to have government programs like the Green Ontario Fund, where everyone is spending everyone else’s money – with the government taking a healthy slice of the pie for bureaucracy and administration, of course.
The Star suggests such programs are needed to save the climate from dangerous warming.
But the Green Ontario Fund and similar programs are a horrible way to do it.
A recent essay by University of Calgary economist Trevor Tombe shows just how inefficient such programs are. The hundreds of millions of dollars the Ontario government had slated for “support to household adoption of low-carbon technology,” according to Tombe, would cost about $225 per tonne of greenhouse gas emissions reduced.
That’s 16 times the cost to reduce one tonne of emissions through cap-and-trade. Electric vehicle incentives that have cost taxpayers more than $175 million since 2010 are also on Ford’s chopping block. These subsidies were even more expensive relative to any environmental benefit achieved.
Even assuming – completely unrealistically – that people only buy electric vehicles because they’re encouraged to do so by the subsidies, the cost would still be a whopping $523 per tonne of emissions reduced in Ontario, according to an analysis last year published by the Montreal Economic Institute.
Eliminating these electric vehicle subsidies is a smart move by Ford. So is cutting the Green Ontario Fund. To make life even more affordable for Ontarians, Ford should dismantle the rest of the former Liberal government’s green tax, spend and regulatory web.
That wouldn’t be breaking a promise. It would be Ford doing exactly what he said he would.
Matthew Lau is a contributing writer to Canadians for Affordable Energy.