The rate of inflation is hurting all of us in the pocketbook.
If that 8.1 per cent inflation of July continued, prices would double in about 12 years - what a gruesome thought.
Almost one-quarter of the 8.1 per cent came from increased gasoline prices. These prices have since fallen some.
Governments struggle to find measures that reduce inflation, with some just handing out cash to voters.
One method would cut deeply into gas price inflation: develop a two-price system. The market price would apply to crude oil exports with a lower price for crude oil used in Canada.
The precedent was set in 1971 when the federal government set up a two-price system on wheat for years.
A two-price system has advantages of reducing prices for all consumers, saving farmers and industry considerable cost. With a reduced price the need for extra fuel surcharges in the freight business would be eliminated thus cutting inflation across the board.
To stop wasteful use of fuel, the system would need rationing based on previous year’s use by individuals.
The two-price system would eat into oil company profits but would likely be less than a surtax on excess profits.
Such a pricing mechanism would be diametrically opposed by Conservative leader Pierre Poilievre as it cuts into the freedom of enterprise and poses an obstacle to his oil industry supporters.
Unless some action like a two-price system is taken Canada will be at the mercy of oil price inflation caused by the war in Ukraine and the sanctions on Russia. It could take years to wind these down.
Some people like the NDP want rent controls to stop sharp increases in some cities
Rent controls aren’t a viable alternative.
Controlling rent increases takes away the incentive for developers to build new units.
Once rent controls are imposed landlords skirt the rules by evicting tenants then jacking up the rent after renovations.
The main issue with housing inflation comes from a shortage of land for building.
The situation is so critical that developers are lobbying hard to build on green spaces — parks, trails and on the sides of ravines.
Allowing those locations to develop threatens the quality of life in cities, most of which have too little green space now.
One way to alleviate the housing shortage is the announced return of the MURB program from the 1970s. It offered depreciation incentives for building apartments.
The program was dovetailed with grants for down payments on new houses. Then the down payments were around $1,000 — far from the $20,000 to $50,000 of today.
Ron Walter can be reached at [email protected].
The views expressed in this column are solely those of the author and do not necessarily reflect those of Moose Jaw Today, the Moose Jaw Express, its management, or its subsidiaries.
