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Trudeau gambles Canadians will take the long view on climate: Don Pittis

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When Prime Minister Justin Trudeau threw down the gauntlet with his national carbon plan in Ontario Premier Doug Ford’s riding yesterday, the word “tax” did not pass his lips.

With talk of “incentives” and euphemisms such as “a regulatory charge on fuel” Trudeau began what is widely seen as a plan to make fighting climate change a key issue in fighting the next federal election.

But whatever it’s called, the Liberals could face an uphill battle against the economic and political forces of short-termism that behavioural economists say guide the decisions of most Canadians.

Don’t say tar — or tax

As someone old enough, and nerdy enough, to have used the term “tarsands” before it picked up its negative baggage and been forced to change, I fear I may soon find myself in the same position on carbon taxes.

But for many of us who have been steeped in resource economics for decades, in pollution pricing, “tax” is not a bad word. To most economic thinkers, carbon taxes forces us to take account of something that will come back and bite us in the end.

Just a few years ago, before the recent conservative backlash against carbon pricing, the carbon tax was celebrated by politicians who understood it as a clever economic tool that would smoothly and painlessly aid in the transformation to a low-carbon economy.

As this Wall Street protest banner by environmentalists shows, you only use the term ‘tarsands’ if you’re against it. Can we expect the same for carbon ‘tax’? (Amr Alfiky/Reuters)  

But as Ford and other conservative-leaning premiers weigh in against carbon taxes — just as President Donald Trump has done south of the border — it is not at all clear that putting a price on carbon will be an easy political win.

In trying to convince Canadians to think decades into the future, and accept short-term pain for long-term gain, Trudeau’s Liberals will come up against the twin obstacles of behavioural economics and the principal of laissez-faire, both of which stand in opposition to planning for the very long term.

‘I’ll be dead soon’

“It is known from behavioural economics research that people are often driven by short-term gratification — that is, people tend to choose the immediate, albeit smaller reward,” says a scientific article on the psychology of economic decision-making.

In behavioural economics, based on experiments that show we fail to follow the “rules” of standard economics, it’s hard to trace the evolutionary logic that has led us to accept a small reward now rather than a larger reward later.

Perhaps it is because when humans were evolving the complex set of internal rules that now govern our impulses, people who waited too long died before getting their reward.

“Climate change? That’s a you problem,” says a women addressing potential voters in a humorous video that tries to convince young Americans to take voting seriously, “I’ll be dead soon.”

Those who think climate change is fake news are welcome to add their comments below. But if you trust the view of the vast majority of scientists who insist that climate change will eventually bring economic ruin to vast swaths of humanity, then an Ontario government news release promising the financial benefits of doing nothing certainly proves the behaviourialists’ point. 

“Eliminating carbon taxes will save the average family $260 per year and help reduce gas prices by 10 cents per litre,” says the release from the Ontario Ministry of the Environment, Conservation and Parks. 

The fact is, humans, as well as wanting our rewards now, are in general very poor at planning for future crises. While almost everyone would certainly escape from the path of a flooding river, people commonly build in low areas known to flood every few decades despite the inevitable future cost.

Most people fail to save for retirement unless forced. even when the alternative is an old age of misery. Even on a shorter time scale, people commonly refuse to evacuate homes in front of a hurricane, having to be rescued after the fact.

Have it all now

But in their latest campaign the Trudeau Liberals appear to have enlisted the help of their own behavioural economists.

“We will send a climate change action incentive directly to Canadians to help them adjust to an economy in which pollution is no longer free,” said Trudeau yesterday.

Short-term thinkers afraid of losing Ford’s $260 will get a cheque for $307 to cover the cost of the carbon tax in advance, rising to $718 by 2022. The long-term benefits of saving the planet from destruction are tossed in for free.

While such a strategy could bring some voters onside, business groups opposed to the carbon tax may be harder to convince.

The principle of laissez-faire — the free-market idea that business does best without government interference — has proved itself to be a winner in the past. Of course, that argument is ignored when the government interference involves things like bailing out a pipeline with taxpayer cash.

But if the voters can be convinced, economists insist that businesses, by necessity, will learn how to be just as successful within the new carbon tax regime. Oops — I mean carbon pricing system.

Follow Don on Twitter @don_pittis

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Ontario’s new automated speed enforcement explained

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(NC) To wage the war against speeding, many municipalities across Ontario have turned to automated speed enforcement. Most recently introduced in Toronto, speed cameras are a high-tech solution to reduce speeding and are considered one of the most effective ways to create safer roads and save lives.  

Recognizing police officers cannot catch all speeders, these cameras fill the gap, providing monitoring in specific locations around the clock. When a car’s speed is even one kilometre over the posted amount, it will take a picture of the offending vehicle’s license plate, using the captured photo as indisputable evidence. A ticket is then served to the vehicle’s owner, regardless of who was driving. 

With a focus on high-risk areas, Ontario’s automated speed enforcement cameras are located in two specific municipal areas: school and community safety zones. School zones are designated streets close to a school, featuring reduced speed limits as dictated by local bylaws. Community safety zones are high-risk corridors and intersections, subject to increased fines and penalties.  

While the Ontario Highway Traffic Act outlines the use of automated speed enforcement, municipalities can decide when and where to use cameras to curb speeding. The act does dictate financial penalties for speed violations captured with cameras, which vary depending on the number of kilometres caught over the speed limit.  

Speed enforcement is not new, but part of a broader, integrated road safety strategy that includes infrastructure improvements, awareness campaigns and new uses of technology. City officials hope for a halo effect, inspiring better driving behaviour across entire communities, not only in areas with cameras. A controversial topic, some critics take exception to speed cameras, labelling them as sneaky cash grabs for municipalities. Governments think the opposite. 

Safety advocate and auto insurance provider Onlia is hopeful that the cameras will provide drivers with a reminder to slow down, especially in high-risk areas like school and community safety zones.  

For those who obey the speed limit, automated speed enforcement shouldn’t change anything about your driving style, says Alex Kelly, Safety Ambassador at OnliaDrivers have fair warning as they approach areas with speed cameras, as mandatory signs provide reasonable notice of upcoming automated speed enforcement. Regardless of warnings, the best speed is the posted speed. 

You can start to understand your speeding style by downloading the insurance provider’s new safe driving app that coaches and rewards for you for safe driving habits.

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Online banking: How to protect yourself from fraud

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(NC) Since the start of the COVID-19 crisis, a growing number of consumers are regularly using mobile and online banking to paybill payments, transfer money and make purchases.

Although these tools can give you easy access to your personal finances on demand, there are also some risks involved. For instance, your banking information—such as your debit or credit card number, user name, or personal identification number (PIN)—could be stolen. If criminals have access to your online banking information, they can steal your money, which is why it’s so important to be  vigilant when you bank online.

Follow these tips to help protect your personal and banking information:

  • For your online bank accounts, use a strong password that can’t be easily guessed, and never share your user name or password with anyone.
  • Check your accounts regularly to make sure there are no transactions you didn’t make or authorize.
  • When making online purchases, never authorize a website to save your credit card information, password or other personal information. Giving websites this permission will save you some time the next time you access the site, but it poses a real threat if a hacker manages to access your information.

Most financial institutions have policies to protect you from transactions that you didn’t make.

However, you are responsible for protecting your online and mobile banking information. If you give your details to anyone—including your spouse or partner, a family member or a friend—your financial institution may hold you responsible for any unauthorized transactions in your account, and even strip you of protection from unauthorized transactions in the future.

If you suspect your information may have been compromised, change your passwords immediately, and check your account and credit card statements for anomalies and report any suspicious transactions to your financial institution.

The Financial Consumer Agency of Canada has created resources to help you protect your online banking information.

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Payday loans: Not the best way to borrow money

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(NC) Payday loans are a very expensive way to borrow money. Even if you’re struggling financially, think twice—and crunch the numbers—before getting this type of loan.

Depending on the rules in your province, payday lenders can charge fees of $15 to $25 per $100 that you borrow.

As an example, let’s say you borrow $300 for home repairs. The payday lender charges you $51 in fees, or $17 for every $100 borrowed. Your loan balance is therefore $351, which amounts to an interest rate of 442 per cent.

There can be serious consequences if you don’t repay your loan by the due date. These may include the following:

  • The payday lender may charge you a fee if there isn’t enough money in your account.
  • Your financial institution may also charge you a fee if there isn’t enough money in your account.
  • The total amount that you owe, including the fees, continues to increase.

There are better options out there

Payday loans should be your last resort to borrow money. Consider cheaper ways of borrowing money, such as:

  • Cashing in vacation days or asking for a pay advance from your employer.
  • Getting a line of credit, a cash advance on a credit card or a personal loan from your financial institution.
  • Getting a loan from family or friends.

Before getting a payday loan and to avoid getting stuck in a debt trap, consider other, less expensive ways to borrow money.

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