Front Burner - Election panel: The promises and limits of ‘affordability’

Episode Date: September 26, 2019

Affordability policy pledges are front and centre in the Canadian federal election campaign. We’ve seen Conservatives and Liberals promise tax cuts. The Liberals and NDP promise to lower your cellphone bill. There are national pharmacare pledges from the NDP, the Liberals and the Greens. The Greens even propose a guaranteed annual income. And these are just a few of the policies on offer from the major parties. Today on Front Burner, Power and Politics host Vassy Kapelos and national business correspondent Peter Armstrong on what these affordability promises accomplish, what they don’t, and the tradeoffs they may require.

I'm Dan Pierce, and this is Pressure Cooker. I said I will never wear the e-job or give up my mini skirts. Never. It's the outrageous story of two misfits living on the fringes, and how they became the central players in a sprawling terror investigation. We just hung out and played video games and smoked weed and did what we do, you know. Pressure Cooker is available on the CBC Listen app or wherever you get your favourite podcasts. This is a CBC Podcast.

Hello, I'm Jamie Poisson. The average price of a home in Toronto is now more than $806,000. In Vancouver, someone in their 20s or 30s needs to make more than $200,000 a year to afford the average home. In Calgary, it'll cost you about a grand a month per kid for childcare. And across this country, the stuff you can't live without, food, fuel, rent, are all climate. So it's no surprise that during this election campaign, affordability has been a big theme. Tax cuts for the middle class,

more money for parents under the Canada Child Benefit. The universal tax cut will save a typical two-income family with average salaries $850 a year. What we're going to do is not just have universal pharma care, but we're going to have universal pharma care by 2020. We call for universal child care. It's another aspect of what makes life more livable for families. Today on our weekly election panel, will all these promises really make a difference? To talk this through, I've got national business correspondent Peter Armstrong, and of course, Vashi Kapelos, host of Power and Politics.

This is FrontBurner. Vashi, Peter, hello. Hello. Hi, Jamie. Two pod favorites here today. I'm very lucky. This is like a dream team. I know. I've been looking forward to this conversation all day. So let's get into it. Let's talk affordability. Peter, so I think I get this on an intuitive level, but why has affordability become the central policy message of this election?

Well, we knew going in that this was like affordability and cost of living issues were at or near the top of every single poll that came out there. And to me, the interesting thing is it depends on who you are and it depends on where you live, the things that you're concerned about, but everybody feels squeezed. When you dig into the data and you really look at like, what do we actually do in this country? What are the various jobs that we do? How much money do we make? 66% of Canadians make less than $46,000 a year.

Wow. That tells you, right? Like if you go through what are the top jobs, the most common jobs among men is transport truck driver. Most common job among women is retail salesperson. So if those are sort of, you know, there is no typical voter, but those are the most common income and the most common jobs, what are they worried about? Well, they feel incredibly squeezed. Inflation's been holding at like 2%, but aggregate wages are at like kind of 2.5%. So the people down in those bottom echelons of that haven't seen a lot of that benefit. So their wages haven't been rising, their costs have been going up, their debt is out of control. I mean, that's where the voters are,

that's what the concerns are. So of course, that's where the voters are, that's what the concerns are, so of course that's where the parties are going to go. Honestly, it's getting worse and worse, and that's not just in Brampton, that's everywhere. It's very, very difficult for someone like myself on disability. I've got no complaints, really. Who would listen? I'm renting and I'm hoping to buy, right? You know what I mean? But it's still getting expensive more and more every year, right? I don't see it for the kids. It's too bad. It's sad. You know, they don't have a chance. Everything's just really difficult for people who don't have high incomes,

who don't have really steady paychecks coming in, or even people who are new to the country. And you mentioned this lower income bracket, 66% at $46,000 a year. I also understand that 25% are just in the bracket above that, right? So like 91% of Canadians are in the bottom two brackets, tax brackets. And it just like, I think it's an important exercise for people to think about who do you know that works as a truck driver or retail sales? And do you recognize yourself in those income figures?

Because I think people live in their bubbles and they think everybody looks like them and talks like them and votes like them and makes the same amount of money as them. It's not the case. Vashi, you know, every election I can remember, I have seen promises that are some version of this, right? Like, I'm going to make your life more affordable. And why do you think politicians always run on this? But also, like, is there something different happening this time around? I think there are a few things to consider.

So the first is exactly what Peter just laid out. The idea that if that is your messaging, it targets a wide swath of people in this country and therefore a wide swath of potential voters. Second, and this is I think the reason that you hear it in multiple elections, is it's a very, and this is kind of a crass analysis, but it's an easy to communicate message, right? Like, yes, this is about real life issues for people, but it's easy to say, I'm going to make your life more affordable. It's easily communicated and it's easily absorbed by voters. So it's a message that you can put in an ad and people get it right away. The third thing that I think distinguishes this, perhaps this election from others, is sort of a wider, the wider context. from others is sort of the wider context. We have seen in multiple elections playing out in many parts of the world, the anxiety that stems from all the things that Peter just laid out and the

feeling that you actually can't afford things, that your wages are not keeping up, that you don't make enough to have the things that you want or that you're feeling strangled by the debt you have. That is not endemic just to Canada or not unique just to Canada. There are many different parts of the world where that feeling has been seized on by politicians and almost like fueled into something else. So again, it becomes about messaging. And I'm not sure of the degree to which that will be reflected in this election, but I think it's associated, the anxiety is associated with the status quo politically. So if you're trying to convince people that change is needed, you kind of play on that anxiety and that anger, and you try and capitalize on it. And I think that

that is starting to become more common, but wasn't the case necessarily like two or three elections ago. You know, Vashti, you were talking about how these are like very clear things that politicians could talk about. They also come with like very tangible policy promises, some of which that we've seen over the last several weeks. So let's go through some of them briefly without kind of getting into a laundry list here. But Peter, can we start with taxes? So both the Liberals and Conservatives are offering income tax cuts. And that's probably the most obvious way to make your life more affordable, right? Like here's just some money back into your pocket. And the Conservatives are saying their income tax cut would give us $440 a year, the average Canadian back in your pocket. Every Canadian taxpayer will see their income tax cut would give us $440 a year, the average Canadian back in your pocket. Every Canadian taxpayer will see their income taxes go down.

And those in the lowest tax bracket see the biggest proportional benefit of all. The Liberals, $292 a year. Middle class Canadians won't pay taxes on the first $15,000 of income they earn. And what will these kind of tax cuts actually do? Well, I mean, as you say, it's going to put real money back into real pockets. It's not a ton of money. It's, you know, it's like thirty seven bucks a month or something. But when you're making forty six or less than forty six thousand dollars a year, that that can mean the difference between going to the payday loan place to try to get through to cover your next bill or not. And it's empowering. It makes people feel like government is doing something for them.

And it does sort of move the dial a little bit. And the more you can put money in people's pockets, the better off they're going to be, period. But does it address some of the bigger issues at the core of affordability? Not really. And I do, I want to get to that with both of you in a minute, because, you know, these are the issues that I've been struggling with, too, like watching this debate around affordability unfold. Vashi, what about some of the other affordability policies that we've been seeing proposed? There's been so many. So many. I'll just focus on a couple that I think will have a big impact and that you see a lot of crossover between. So, yeah, let's do like the biggest hits. Yeah. So there's like promises to, for example, cut your cell phone bills. And that's coming from

more than a few parties. A reelected liberal government will cut cell phone bills by 25 percent. Which are paying the highest in the world. We can take on the big telecom. Right. Peter and I did a whole show on this. I just complained about my cell phone bill. Mat leave and pat leave, so paternal benefits, getting rid of the taxes in different ways, but eliminating the taxes. So a new conservative government will provide

a non-refundable tax credit. No taxes will be taken off the EI check when new parents receive it. First-time homebuyers changing the rules or making it easier to get a loan from the government, the tax credits as well. We'll increase maximum amortization periods on insured mortgages to 30 years. Longer amortization periods mean lower mortgage payments.

A boost to the Canada Child Benefit. So that's just like money that you get for having a kid. If you have a kid under one, you get extra money. That means getting up to $1,000 more on top of what you're already receiving. Those are literally just like a handful of them. There's a lot of them every day. And they, as I said, there's a lot of similarities between the parties too. And Vashi, you know, I'm interested to know who you think a lot of these promises are targeted at. So, I mean, obviously these tax cuts are targeted at a very broad group of people,

but some of these promises that you're talking about feel like they're directed at a very specific group. Yeah, I think they're directed at me if I was going to have a kid. That's basically how I, every time I read these, I'm like, oh. Or maybe Peter, who has. I have so many kids already.

Well, he already has kids. And I would argue me only because I'm at the very, very, I mean, barely hanging on end of quote unquote millennials. You're like the top echelon of millennials. Yeah, I'm basically the dying breed of millennials. I just can claim it, although nobody believes it. I like being at the top of the millennials. Well, I mean, the parties really like us, too. And I'll tell you why for a few reasons.

I think it's because, A, we make up for the first time as millennials the biggest voting block, like the biggest demographic of potential voters. So they have an area to mine there. When you narrow it down to people in their, you know, early, mid, late 30s, what are they thinking about? They're thinking about having kids or they have young kids. They're thinking about buying their home. They want to take mat leave. They're worried about buying their home. They want to take mat leave. They're worried about child care. Like it's a very distinct set of concerns that don't necessarily carry on throughout the rest of your life. They're investing for their kids education, that kind of thing. Right. So it's like you can target that group pretty specifically. And you know that there's a many there are many available voters for you in there. And I think if you look through the various parties and their policies, most especially the two who are in sort of lockstep at the front, that underscores that assumption. Do you think this group is getting the most out of all these

promises because they need it the most or because they show up and they vote? Well, Jamie, I feel like there's cynic in me would answer in the affirmative for the latter part of your question. I mean, look, as Peter laid out, there are a lot of people that need help who are feeling the pinch. I don't think it's particular to only 35-year-olds who want to have kids. I think there is a political calculation baked into it. I don't think it's 100% crass. I think they see a need there and they're trying to address that need. But they're also not blind to the fact that the people at that age vote in

that sort of place in their life, or at least are available voters for them. It's also worth pointing out, though, that the economic benefits are not limited to just that group of millennial voters, right? Their parents, who would be boomers or like late cycle boomers, that have these kids potentially living at home, that know they're going to have to help their kids with the child care costs when they have kids or education costs or help with the down payment on a house. Anything you can do to make the economic or tax burden on their kids better or less means a little bit less demand on them too, right?

Oh, that's interesting. I hadn't thought of it like that. There's a lot of cross-pollination in the way they look at those policies. their kids better or less means a little bit less demand on them too, right? Oh, that's interesting. I hadn't thought of it like that. There's a lot of cross-pollination in the way they look at those policies. Okay. In 2017, it felt like drugs were everywhere in the news. So I started a podcast called On Drugs. We covered a lot of ground over two seasons, but there are still so many more stories to tell.

I'm Jeff Turner, and I'm back with season three of On Drugs. And this time, it's going to get personal. I don't know who Sober Jeff is. I don't even know if I like that guy. On Drugs is available now wherever you get your podcasts. Here's what I'm trying to figure out here is that a lot of these promises don't sound all that new, right? Like governments have been promising some version of tax cuts. They've been promising to lower our cell phone bills for a very long time.

And yet we've been seeing this increasing inequality, this increasing anxiety. So do these kind of promises actually tackle the root causes of what's really making life so unaffordable? I'm thinking like stable employment and stagnating wages. So, Peter, to you. No, no, no, no, they don't. And it's frustrating. No, no, no, they don't. And it's frustrating. But it's also, you know, Kim Campbell got in so much trouble for saying election campaigns are not the time to have big, complex policy debates. And it is now the time to really get into why did over the course of the last 10 years and the recovery from the Great Recession and the financial crisis of 2008, why is it that stock market returns are really good, but wage growth is really low? And what can governments do about that? Because man, that's hard. Yes, it's the meaty stuff of this conversation, but it is an incredibly difficult

policy question. And why is it that housing affordability is such an ongoing problem? And how much of that is speculation? And how much of that is speculation and how much of that is foreign money and how like all of these different things. And on the one hand, you want to make policies so that younger generation can afford to buy a house. But at the same time, you want to take the heat out of the market so it will slow down. And that means pricing people out of the market and adding new stress tests. And now we're sort of undoing some of those. These are complicated things. And at the end of the day, I mean, how do you address a big issue like housing? Well, one of the big ways of doing that is by

adding in, say, transit to outlying areas so people can live out there where the rent and cost of living goes down, but they can still get into the city center or wherever to do their work. But that means building a train line where a federal government can't do that on its own. You need cities, you need provinces, you need private sector, you need all this stuff. And as we've seen in Toronto, it takes forever to build something like that. Ontario's government laid out a $28 billion plan to fix transit. The first of the big ticket items, a long-awaited downtown relief line, wouldn't be completed until at least 2027. And that's assuming all the political players

can get along. Yeah, you have to be working on much longer timelines. We're going to give you 400 bucks back in your pocket this year. Exactly. And that's why the political expediency of sound good policy. And for the most part, you know, we've been looking at the tax policy, this targeting of the lower income tax bracket is good policy. It's broad based, fair approach to tax. And it moves away from years of sort of boutique tax credits, which had become very de rigueur in the last bunch of campaigns. And I wrote a piece this week about how that isn't that great.

And then the conservatives came out with their small business stuff this week that blows a lot of that out of the water and adds to income sprinkling and dividends you can spread around your family and tax shelters for small businesses with more than a million dollars in the bank. We'll start by repealing Trudeau's tax increases and restoring small business deductions on passive investments. To acknowledge the important role that spouses play, we'll exempt them from Justin Trudeau's tax hikes. You know, it is a campaign after all, and it is a political beast. It's not an exercise in economic expediency.

Right, and they have to appeal to all these very different voting blocs. Vashi, thoughts on that? Yeah, I think I would agree. I think it sort of stems back to what I brought up earlier, which is that these are easy ideas to communicate and complicated things that underpin the root causes of a lot of these societal injustices are not easy to communicate. So the reason that this stuff ends up getting put into campaigns is because they only have a certain amount of time to get across ideas. Maybe that's cynical again, but I think that's the reality of communication

and politics in this day and age, and especially during an election campaign. I think also, there's sort of like a way that this is all being framed. And it's interesting to note that all parties subscribe to this, the idea that it is government's role to make your life more affordable. Like that's almost like a, you know, take a step back and ask yourself that question. Like every party, even those who advocate for quote unquote smaller government, have now subscribed wholeheartedly to the idea that they're the ones who are supposed to fix what's wrong in everyone's life. And I think that there are big policy things that can be done. And we've seen some evidence of that in the past. For example, it actually was promised in the last campaign,

but implemented in a more detailed fashion during the last four years, but the Canada Child Benefit. For families receiving the CCB in the first year of the benefit, that meant nearly $2,300 a year, almost $200 more a month, more than under the previous system. Right. So at its core, there is evidence that it did help lift people sort of out of poverty. Does that mean their quality of life? And I want to be fair, like, does it mean their quality of life is infinitely better or that they can all of a sudden afford everything or that they're not in the lowest income bracket? No, it doesn't. But it did sort of match its intended effect. I would only caution that it also cost the federal treasury a lot of money. And so will all of these promises, right? And that comes with a trade-off. Either the deficit will balloon and money will be added to it, or they're going to have to make decisions to not invest in

other things. So less, who knows, less cancer research, less money to provinces for healthcare, who knows what it is. But those kinds of trade-offs are part and parcel of the promises they're making. They're just not talking about that. Peter, final word to you, sir. Well, just that the economy as we know it is changing and and it's been changing go back to 2008 and march of 2009 when when the recovery really began and think about who been who's benefited in the last 10 years it's largely people that have owned homes people that have owned stocks yeah they're doing all right yeah whereas it's the people getting richer that are that are living a you know yeah paycheck to paycheck and are and are in that lower income bracket of less than $46,000.

And then I go back to the most common jobs. I think this tells us so much about not just who we are, but where we are in sort of an economic narrative. That transport truck driver, retail salesperson, cashier, these are all jobs that are imminently targeted by automation. Automation is going to come and do to those jobs what it did to manufacturing over the last 15 years. And that's troubling. And we need to get out in front of that. And what are the policies we're seeing in this campaign that are addressing those issues of inequality and those issues of where we're going in terms of labor force?

And we're not hearing a lot of that. I mean, I think we are hearing some of that from some of the parties that aren't sort of in the lead, right? Like the Green Party is proposing universal basic income. Every Canadian gets a check, enough to live on, enough to be not in poverty. And it's not needs-based. It's based on you're a Canadian, this is your guaranteed livable income. And as you make money and pay taxes, it's paid back into the system. And tuition for all university and college students. But not a ton of ways to pay for it.

No ways, barely any. I interviewed one of the candidates just on that very exact question because it's a cross-dictional issue with provinces. And they had their answer to how that would work, like how they would get the provinces to join in and to pay was basically to put money in front of them and incentivize them that way. Like that is not a fully thought out plan. Even their guaranteed basic income, the only independent analysis of the cost of that was from the PBO and it's more than $70 billion.

And again, we're still waiting to see how they would pay for that and they say balance the budget in the next five years. So yes, they are directing their announcements and their policies at that issue, but they aren't necessarily fully thought out. Guys, thanks for this conversation, which is really complicated and complex, but thanks for tackling it with me today. Glad to be here. Thanks. Thanks, Jamie. Thanks, Peter. Thanks, Vashi. So before we go today, on Wednesday, the Green Party released Canada's national budget watchdogs costing on a bunch of their policies. Among the Parliamentary Budget Office's findings, doing away with tuition will carry a price tag of about $16 billion in its full first year. Like Vashi mentioned, leader Elizabeth May says she'll balance the budget in five years, economic circumstances permitting.

Some platform promises to help with that include a boost to the federal corporate tax rate, a wealth tax, a financial transactions tax, and a new tax on sugary drinks. A very small tax on financial transactions. That will give us $18 billion by 2025. We're raising the corporate tax rate to be the equivalent of what it is in the United States. That will give us almost $16 billion. That's all for today. I'm Jamie Poisson. Thanks so much for listening to FrontBurner and see you tomorrow.