William Watson: What we need is an affordability crisis for government

Conservative Leader Pierre Poilievre says he wants to axe the hidden taxes on food, which come from industrial carbon taxes and other taxes on inputs. Photo by Adrian Wyld/The Canadian Press files

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Pierre Poilievre told the CBC’s Rosemary Barton over the weekend that “Affordability! Affordability! Affordability!”, the Conservatives’ new mantra, is what will unite the party behind his leadership. In her own version of an affordability crisis, Ms. Barton couldn’t afford him the benefit of the doubt, concluding her report on the interview by saying that if one more floor-crossing Conservative MP gives Mark Carney a majority government, then “it would be very difficult to make the case the leader should stay.” So it’s pretty much unanimous among CBC commentators: if Mr. Poilievre doesn’t soon start behaving the way CBC commentators believe opposition leaders should behave, he’s gone.

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Affordability is not a scam invented by Democrats, as Donald Trump claims, though if anyone should know a scam when he sees it, it’s Trump. But as political philosophies go, it’s a little vague. If you search “afford” on the internet — search being a technology we had before chatbots — you learn that “To afford means you have enough money or time. If you only have 10 dollars on you, you can’t afford to buy a $20 hat.”

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I got this definition at vocabulary.com. Vocabulary.com obviously hasn’t heard of government, which since the 1930s has been in the business of buying things it can’t afford. “Hats are only $10 down and the other $10 on credit? We’ll take a dozen. No, make that a hundred. And let’s hold a photo op.”

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Affordability has two sides: the inflow and the outflow. If you have enough inflow, you can afford almost anything. You can rent Venice for your wedding if you like, as Jeff Bezos, current king of inflow, did in June. But if you have to ask what renting Venice costs, you probably can’t afford it, as J.P. Morgan supposedly said. We whose inflow isn’t Bezos- or Morgan-like have to pay attention to the prices of things. If prices keep rising and our inflow doesn’t, we feel affordability-squeezed.

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Promising to increase affordability is a political winner. How many voters favour less affordability? But how you pursue affordability counts. You can make some people’s lives more affordable by giving them more money. High prices stay high but are easier to bear with more money coming in. But where does the money come from? From other people, through higher taxes on them? That just redistributes affordability. From everybody, through monetary expansion? That helps until prices catch up, but they always do. And the faster the expansion the faster they catch up. If the Conservatives’ pivot to affordability politics means they want the Bank of Canada to be tough against inflation, that would be good. Donald Trump wants easier money, which won’t help prices any.

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These days people say we should reduce food prices by taxing food less. Some say we should eliminate GST and HST on food, all food, whether bought in grocery stories or ordered in restaurants. Maybe that does lower food prices — though lots of food is traded internationally where its price is determined in world markets, so maybe it doesn’t. But if it does, it lowers prices for everybody, whether they’re affordability challenged or not. And, as exceptions always do, it raises the cost of administering the tax system. Better to tax everything at a low, uniform rate and do what we already do: give low-income people a GST tax credit. Our Swiss-cheese tax system has enough holes already.