From the Fraser Institute

By Jake Fuss and Grady Munro

Canadians will head to the polls on April 28 after Prime Minister Mark Carney called a snap federal election on Sunday. As the candidates make their pitch to try and convince Canadians why they’re best-suited to lead the country, Trump’s tariffs will take centre stage. But while the tariff issue is important, let’s not forget the other important issues Canadians face.

High Taxes: As many Canadians struggle to make ends meet, taxes remain the largest single expense. In 2023, the latest year of available data, the average Canadian family spent 43.0 per cent of its income on taxes compared to 35.6 per cent on food, shelter and clothing combined. High personal income tax rates also make it harder to attract and retain doctors, engineers and other high-skilled workers that contribute to the economy. Tax relief, which delivers savings for families across the income spectrum while also improving Canada’s competitiveness on the world stage, is long overdue.

Government Debt: At the end of March, Canada’s total federal debt will reach a projected $2.2 trillion or $52,094 for every man, woman and child in Canada. The federal government expects to pay $53.7 billion in debt interest costs in fiscal year 2024/25, diverting taxpayer dollars away from programs including health care and social services. The next federal government should rein in spending and stop racking up debt.

Red Tape: Smart regulation is necessary, but the Canadian economy is plagued by a costly and excessive regulatory burden imposed by governments. Regulatory compliance costs the economy approximately $12.2 billion each year, and the average business dedicates an estimated 85 days towards compliance. The next federal government should cut undue red tape and make Canada an easier place to do business.

Housing Affordability: Canadians across the country are struggling with the cost of housing. Indeed, Canada has the largest gap between home prices and incomes among G7 countries, and rents have spiked in recent years in many cities. In short, there’s not enough housing to meet demand. The next federal government should avoid policies that stoke further demand while working with the provinces and municipalities to remove impediments to homebuilding across Canada.

Collapsing Business Investment: Business investment is necessary to equip workers with the tools, technology and training they need to be more productive, yet business investment has collapsed. Specifically, from 2014 to 2021, inflation-adjusted business investment per worker fell from $18,363 to $14,687. Declining investment has helped create Canada’s productivity crisis, which has led to a decline in Canadian living standards. Clearly, Ottawa needs a new policy approach to address this crisis.

Declining Living Standards: According to Statistics Canada, inflation-adjusted per-person GDP—a broad measure of living standards—dropped  from the post-pandemic peak of $60,718 in mid-2022 to $58,951 by the end of 2024. The next government should swiftly reverse this trend by enacting meaningful policy reforms that will help promote prosperity. The status quo simply will not suffice.

Tariffs are a clear threat to the Canadian economy and should be discussed at length during this election. But we shouldn’t forget other important issues that arose long before President Trump began this trade war and will continue to hurt Canadians if not addressed.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute

From the Fraser Institute

By Bjørn Lomborg

Politicians—supported by powerful green energy interests and credulous journalists—keep gaslighting voters claiming green energy is cheaper than fossil fuels.

Global evidence is clear: Adding more solar and wind to the energy supply pushes up the price of electricity for consumers and businesses. Families in Ontario know this already from their bitter experience: from 2005, the Ontario government began phasing out coal energy and dived headlong into subsidizing wind and solar generation.

Those green policies led to a sharp hike in electricity prices. From 2005 to 2020 the average, inflation-adjusted cost of electricity doubled from 7.7 cents to 15.3 cents. Since 2019 the Ontario government has subsidized these high costs through a slew of programs like the “Renewable Cost Shift”, lowering the direct pain to ratepayers but simply moving the increasing costs onto the government coffers. Today, this policy costs Ontario more than $6 billion annually, four-times what was being spent in 2018.

A relatively small amount of wind energy costs Ontarians over a billion dollars each year. One peer-reviewed study finds that the economic costs of wind are at least three times their benefits. Only the owners of wind power make any money, whereas the “losers are primarily the electricity consumers followed by the governments.”

Yet, politicians—supported by powerful green energy interests and credulous journalists—keep gaslighting voters claiming green energy is cheaper than fossil fuels.

They argue fundamentally that the green transition is not just cheap but even that it makes money, because wind and solar are cheaper than fossil fuels.

At best, this is only true when the sun is shining and the wind is blowing. At all other times, their cost is significantly higher. Modern societies need around-the-clock power. The intermittency of solar and wind energy means backup is required, often delivered by fossil fuels. That means citizens end up paying for two power systems: renewables and their backup. Moreover, much more transmission is needed to ensure wind and solar reach users, and backup fossil fuels, as they are used less, have even fewer hours to earn back their capital costs. Both increase costs further.

This intermittency can be huge, as when solar power in the Yukon delivered a massive 150 times more electricity to the grid in May 2022 than it did in December 2022. It is also the reason that the real energy costs of solar and wind are far higher than green campaigners claim. Just look around the world to see how that plays out.

One study shows that in China, when including the cost of backup power, the real cost of solar power becomes twice as high as that of coal. Similarly, a peer-reviewed study of Germany and Texas shows that the real costs of solar and wind are many times more expensive than fossil fuels. Germany, the U.K., Spain, and Denmark, all of which increasingly rely on solar and wind power, have some of the world’s most expensive electricity.

Source: IEA.org energy prices data set

This is borne out by the actual costs paid across the world. The International Energy Agency’s latest data from nearly 70 countries from 2022 shows a clear correlation between more solar and wind and higher average household and business energy prices. In a country with little or no solar and wind, the average electricity cost is about 16 cents per kilowatt-hour. For every 10 per cent increase in solar and wind share, the electricity cost increases by nearly 8 cents per kWh. The results are substantially similar for 2019, before the impacts of Covid and the Ukraine war.

In Germany, electricity costs 43 cents per kWh—much more than twice the Canadian cost, and more than three-times the Chinese price. Germany has installed so much solar and wind that on sunny and windy days, renewable energy satisfies close to 70 per cent of Germany’s needs—a fact the press eagerly reports. But the press hardly mentions dark and still days, when these renewables deliver almost nothing. Twice in the past couple of months, when it was cloudy and nearly windless, solar and wind delivered less than 4 per cent of the daily power Germany needed.

Current battery technology is insufficient. Germany’s entire battery storage runs out in about 20 minutes. That leaves more than 23 hours of energy powered mostly by fossil fuels. Last month, with cloudy skies and nearly no wind, Germany faced the costliest power prices since the energy crisis caused by Russia’s invasion of Ukraine in 2022, with wholesale prices reaching a staggering $1.40 per kWh.

Canada is blessed with plentiful hydro, powering 58 per cent of its electricity. This means that there has been less drive to develop wind and solar, which deliver just 7 per cent. But the urge to virtue signal remains. Indeed, the federal government’s 2023 vision for the electricity system declares that shifting away from fossil fuels is a “scientific and moral imperative” and “the greatest economic opportunity of our lifetime”.

Yet the biggest take-away from the global evidence is that among all the nations in the world—many with very big, green ambitions—there is not one that gets much of its power from solar and wind and has low electricity costs. The lower-right of the chart is simply empty.

Instead, there are plenty of nations with lots of green energy and exorbitantly high costs.

Bjørn Lomborg