On the Climate Action Dividend
Posted in Commentary on July 3rd, 2008 by Sacha Peter
I wonder how much a person was paid to come up with that marketing slogan – they just couldn’t call it a “cheque from the BC government” or something more mundane. The government likely lost a few brownie points by giving it such an obviously spun up name.
I find it extremely amusing how all sorts of groups are asking for donations of $100 to fight their pet cause. How come these groups don’t advertise around the end of April saying “Donate your income tax refund to us!” since the $100 cheque is exactly that. Probably the NDP are the most crass with respect to this solicitation. While I will take the money, the only problem is that it will represent a future debt to be paid with tax dollars – plus interest.
However, there is one minor fringe benefit – if I walked into the bank and asked for a $100 loan, I’d probably be able to get 8% for an unsecured loan. With the provincial government’s AAA rating, they would have to pay around 3.5% for the same money (medium term). So if we can invest the $100 capital into something that will yield better than 3.5% (after-tax), then it’s a win-win for the province and ourselves. If most people use it to pay off debt (presumably costing more than 3.5%), essentially it amounts to the government taking on the debt of people.
I’d be really curious to see as an evil economic experiment what would happen if the government spontaneously gave everybody $1,000 or even $10,000 “Climate Action Dividend” cheques. How much money would be too much before people actually complained about it?
None of this reasoning is at all concerned with whether somebody goes out there and spends $100 on “environmental choices” but inevitably out of my yearly budget, some of that will (maybe I’ll buy some locally grown organic food one day).
One thing is certain, however – the rationale for the $100 (“making it easier for British Columbians to choose a lower carbon lifestyle”) is hogwash. It’s a politically motivated gift – one which is likely not be remembered May 12, 2009 (the next provincial election date).
Several good posts …
The provincial government giving us money is quite a bit different from the federal government, right? (Because the federal government is able to print money, so in theory they could give every Canadian $1,000,000 … something like what the government in the states has just done with its cheques.)
Interesting point about the government-individual loan rate difference …
The BC government cannot print its cash, correct. For the federal government, they can’t directly do it – they have to get the Bank of Canada to do the same for them.
It’s more likely Canada would issue bonds to raise the capital than print money if they wanted to give a ridiculously large amount of money to people (e.g. $10,000 would result in a $330 billion bond issue – compare this to the estimated expenditures of $240 billion in fiscal 2008-2009).