When it comes to affordability, the answer lies in basic economics. In order for things to get cheaper, supply must be increased. The difficulty lies in encouraging an increase in supply without negative impact.

What we’ve seen in the past many years is governments handing out more money, expecting things to get more affordable. This however is really only a political tactic that attempts to increase popularity, and only increases the demand for an already strained supply chain. Consider the following scenario:

Good A sells for $5. Not everyone can afford it, but people need/want it. The supply is at a level where prices won’t come down. Without solving the problem of why Good A is only supplied at the current level, the government says it will provide you with temporary relief and give you money so that you can afford Good A. What happens? People rush out and buy Good A, and thus increase demand. The price goes up because there is only so much of Good A. Now Good A costs $7. The only thing achieved at the end of the day is further inflation, which makes that good further out of reach for more people.

The irony in all of this of course is that the government caused inflation by giving you back your own money that it took in taxes. It also had to pay for tax collection, and then again paid to give it back to you. Believe it or not, that’s the best scenario.

The worst scenario is that the government already spent all of your money and had to borrow money to give to you in order to provide that “relief.” Not only does the government further cause inflation by increasing demand in this scenario, but by borrowing money it typically devalues the currency, which in turn further increases inflation.

If it’s such a bad thing, why do governments keep doing it? The answer is that it’s the easy thing to do to make it appear that they are helping. Typically, governments get a boost in popularity when they do it because most people don’t understand the consequences of such policies.

All of this is not to say that governments don’t have a role to play in affordability. It just needs to be done in a better way that actually helps you, rather than vote buying. Let’s talk about electricity generation policy as a way that the government can actually help reduce costs, rather than increase them.

Private industry is not invented to generate any more power than is currently required. If they did, the cost of electricity would go down. So, how do we increase electricity supply without nationalizing its production? I’m not going to get into the debate on whether solar panels are the right way to go. The simple reality is that people do it, and it’s an option. So let’s use this as a simple example.

Currently in Alberta, if a homeowner decides they want to install solar panels on their home, they are limited to installing only enough panels to produce what they typically use on average. That not only limits the electricity reduction on the grid, but it also limits the homeowner’s investment. Taking one home off the grid in the big picture is hardly effective at supplying more electricity.

Speaking from personal experience and in talking to others, the cost of putting solar panels on a home usually ends up being a wash in terms of cost, due to the limited amount you’re allowed to produce. The money you saved in electricity costs is eaten up by the cost of the panels. By the time you pay them off, it’s likely time to replace them.

The answer here is simple. Allow homeowners to install as many panels as they want on their roof. Why? In installation situations like this, it’s more cost-efficient to install the maximum amount of panels possible at once. The cost typically would be less per panel, and the homeowner can actually see a return on their investment in selling real excess back to the grid.

Why doesn’t the government already do this? Well, I’m afraid that answer is simple too. They are lobbied by power companies to prevent such a policy. More electricity generated means cheaper electricity on a supply basis to the rest of the grid.

With a policy change like this homeowners actually make money on their investment, and electricity supply is increased. Seems magical doesn’t it? But that’s what happens when a government is actually looking out for your interests.

Here’s the next big problem. Many people can’t afford to buy a home, let alone put solar panels on one. Let’s expand on the concept that I mentioned in my affordability video.

What happens now typically is that government might step in with a pile of cash and create co-op housing units as rentals, or homes that are sold at cost, but then end up on the open market eventually.

The co-op scenario isn’t a bad one. Many people benefit from them due to life circumstances, but they do nothing in terms of allowing the building of personal wealth.

When a government builds a home and sells it affordably to a lucky family, they typically wash their hands of it. When that family decides to sell, it ends up on the open market and could even end up as an investment property for a landlord. So, what do we do?

I was greatly impressed by the concept that Habitat for Humanity presented to Strathcona County Council not ago. They build homes, as many as they can at once to reduce costs, and then they sell them at cost to a family that qualifies. Unlike the current government concept, Habitat for Humanity maintains a first right of refusal when the house goes back up for sale. The home is then purchased back at the price that it was sold for, which protects the property from inflation, and is then again sold to another family that qualifies; once again at the original cost. Of course, the owners are responsible for maintaining the home, as any homeowner is.

If the government were to invest in something like this, most of the initial cost could be returned when the home is purchased, leaving the government and taxpayers with limited costs. Qualifying individuals/families gain equity and build wealth, homes are more affordable, and the government/taxpayers have limited costs.

What may be required is contracting an organization like Habitat for Humanity for the administration and upkeep of the program. I expect however that it would be relatively minimal. As with all policies that I might champion, final costs and arrangements would need to be calculated and made available to taxpayers for feedback. Why? Because that’s what responsible government looks like. Wouldn’t that be refreshing?

Policies like these are what I’m committed to. Common sense approaches to the problems that actually make your life better. It’s nothing less than what you deserve from your government.