Special to The Globe and Mail
Published Friday, Jan. 30 2015

Talking with Peter Mansbridge on Dec. 17, Prime Minister Stephen Harper struggled not to use the word “tax” to describe Alberta’s carbon-pricing scheme. He stated that: “This is the tech fund … ahh price, carbon levy; it is not a levy, it is a price, and there’s a tech fund, in which [the] private sector makes investments.”

As Canadians debate carbon pricing, we should, like the Prime Minister, avoid using the word “tax” and instead use a more accurate three letter word: fee. It’s more than just nit-picking or semantics. It’s about being accurate concerning what we are debating. In a well-designed carbon-pricing system, such as British Columbia’s, “carbon fee” is a more accurate description than “carbon tax.”

Most Canadians think of tax as a giant government hand that takes their money, no matter how they got it or plan to spend it. If you have enough income, you pay an income tax whether you made it teaching, playing hockey, or day-trading Asian currencies. And after you’ve paid your income tax, you pay a consumption tax for almost anything you consume whether it is gas, beer, or art classes.

However, a carbon fee is more like a “fee for service” than a tax. In a well-implemented system (like B.C.’s $30 a tonne), the fee is automatically embedded into the price of every product depending on that product’s carbon content.

If you choose products with high carbon content (for example: gasoline, natural gas, or helicopter rides), then you should pay a fee to use that carbon. If you choose to spend instead on products with low carbon content (art classes or insulation for your drafty windows), then you end up paying a lower carbon fee.

So, where is the service in the “fee for service” you ask? Much like what you get when you park your car, the carbon fee offers you an exclusive use of a public asset. In B.C., for every $30 of carbon fee paid, a consumer gets the exclusive benefits of emitting a tonne of carbon.

There has to be some sort of limit on how much carbon is emitted. If left unchecked, people would likely emit more than the desired limit. Therefore, we can think of all the emissions, up to the limit, as a “public good.”

If I personally want to benefit from emitting a tonne (thus taking that tonne away from everyone else who might want to emit it), then I should pay a fee for that personal benefit. Over time, the fee should be dialled in to a price that steers overall emissions to an acceptable level.

In this way, a carbon fee is very similar to a parking fee or other user fees that Canadians have come to accept. If you use it, you should pay for it. A parking space on a public street is a public asset that belongs equally to everyone. When you are occupying the space, you get exclusive use of it for which you pay a fee. The fees go into general government revenues, and without it the local government would have to raise taxes or reduce services.

Municipal parking fees are a system of fair exchange between consumers who want to park and the public. The driver gets exclusive use of a public asset, and in return the public benefits from increased revenue for city hall to spend on other things such as library books, road repair, or lower property taxes.

Similarly, British Columbians are treated fairly by their carbon fee because every dollar collected is used to lower taxes (if not, the Minister of Finance will, by law, be fined). Last year, B.C. collected $1.2-billion from the carbon fee and lowered taxes by the same amount. Lower taxes benefits everyone in B.C. The end result: Giving citizens more money to spend and stimulating the economy.

Canada is overdue for having a serious discussion about carbon pricing. But before we get caught up in labelling it a tax grab, let’s call it what it is: a user fee.

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline. Greg Kiessling is chairman of Canadians for Clean Prosperity.

Special to The Globe and Mail
Published Friday, Jan. 16 2015

It usually ends up on the back of the theatre program, somewhere in the soupy mess of logos and names of various banks or energy companies. In exchange for a financial donation – tiredly given the “silver, gold and platinum” ranking – corporate largesse is recognized with the company logo slapped alongside those of the other funders.

In a vision statement, does any company say: “We strive to have our logo appear at every art house film event” or “We will have free jazzfest tickets to give to our best clients”?

What companies often do claim is that they will be creative. They will be innovative. They will exceed at coming up with great ideas – ideas, in fact, that can change the course of the world. Those are vision statements.

Corporate sponsorship of the arts has the potential to be something much more powerful than the feel-good recognition on opening night. Companies all want creative employees and innovative products. But the necessary bridge between creativity and innovation is collaboration – the act of allowing someone else’s experience to change the way you see the world.

Here’s where artists can offer some practical assistance. Artists are not unlike the rest of us in that what they strive to do is design solutions to problems. Corporations have problems to solve as well. But rather than trying to think up new products or ways to cut costs, artists grapple with other design issues – and in many ways, more complex ones. How can I use these paints to express joy? What words can I string together that will make the reader weep at their beauty? How can I sing this note to convey pain and grief?

To the cynic, art is a self-indulgent waste of time and money. These people will never be convinced of its merit anyway (so they can stop reading now if they wish). But more insightful corporate leaders will not only value the arts for their own sake, they’ll also spot an opportunity to improve their companies’ creative capacity.

Artists live in a silo away from the corporate world and sometimes they have themselves to blame. Sadly, many artists regard companies as sell-outs driven only by greed. Some even foolishly believe that profit motivation itself is unethical. They don’t recognize that they may also benefit by seeing the world through the eyes of a chief financial officer, a human resource vice-president or a district sales manager.

If they think of the corporate world at all, some artists only think of them as a source of funding. Filling out endless grant applications and hoping for the best eats up valuable energy that could be spent on other more useful pursuits.

It’s time to entirely rethink corporate sponsorship of the arts. Forget the silly logo on the back of the program or the complimentary tickets to the play. What artists can offer is much more valuable: a chance to peer into the mind of a choreographer, a singer, a set designer, a writer. How do they solve complex problems? And what insights can this bring to corporate leaders who are trying to solve problems of their own?

In the end it comes down to something neurologists know very well. If you want to become a creative person, you have to force your brain to see new patterns, unfamiliar terrain and uncomfortable situations. Sitting in a boardroom full of people with the same university degree and the same clothes (think dull blue suits and boring shoes) will do nothing to foster creative, innovative visionaries.

Why don’t artists offer those corporate suits something really valuable? The pitch should be: “Give us $100,000 and we’ll show you how we solve problems and design solutions. You’ll think we’re crazy – and quite possibly we are – but if you allow yourselves the chance, you’ll start to change the way your brain operates. Creativity can’t be taught, but it can be developed.”

Companies can transform the way their leaders think. But another two-day retreat with Post-it Notes and drumming circles won’t do it. That’s only the tip of the iceberg. Actually changing the way their brain works takes months, and indeed requires a lifestyle choice. And artists have much to contribute to the journey.

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.

Capturing five primary economic indicators, The Economic Outlook's highlights include:

• Alberta’s economy is set to slow significantly in 2015 with growth at half the rate seen last year.
• Labour markets are currently balanced, but a slightly higher level of unemployment is anticipated.
• Weak oil and natural gas prices will curtail investment in the energy sector.
• Housing starts are stable, but will likely show some modest decrease this year.
• In-migration will continue to be positive but will slow significantly from 2014.

“The economic picture painted by our research certainly shows a slowdown,” said Hirsch, “but it’s not doom and gloom here. We’re still on track with Canadian averages, we’re just not full-steam ahead as we have been in recent years."

So how exactly will Alberta’s future look like considering recent oil costs? That’s hard to predict. But The Economic Outlook does look at where the oil price pendulum could swing and outlines three different scenarios. Each scenario includes commentary on how the unemployment rate would be impacted, what investment looks like and other important impacts.

“Anything could happen, but we feel the most probable scenario is one that returns oil prices to a reasonable range by the end of 2015,” said Hirsch, “That scenario, number two in The Economic Outlook, would put the average oil price between $C 55 and $C 70 per barrel.”

The Economic Outlook also provides commentary on the retail, housing and agriculture sectors in the province. And there is some good news.

“The agriculture, forestry and tourism industries all benefit from low oil prices and a soft Canadian dollar. They’ll do well in 2015, with tractors, trucks and tourists fuelling up and spending their money in Canada,” said Hirsch.

The full report can be accessed here on atb.com. 

Watch Todd sharing Alberta's economic story with Amanda Lang on The Exchange.