Imagine you want to buy a $500,000 house. You have a good down payment, a steady income and bombproof job security. So you go to the bank, and the banker is happy to help. He says, “Just pay me $20,000 a year for the next 25 years. After you’ve done that, we will hand you the keys and you can move in.”

As absurd as it may seem, this is essentially the same financial model the provincial agency Metrolinx has proposed as a means to fund $50-billion worth of desperately needed public transit in the 100-mile city that clamps the western end of Lake Ontario.

After five years of study, last summer Metrolinx recommended that the provincial government implement a grab bag of so-called “revenue tools,” including a 1 per cent sales tax hike, to pay for the many new light- and heavy-rail projects it wants to build. The plan would cost every Toronto taxpayer almost $500 a year, beginning immediately and continuing for decades before the new system is operating.

It’s no wonder Premier Kathleen Wynne’s government rejected that perfect recipe for political suicide. With her transit promise imperilled, the premier appointed veteran fixer Anne Golden to come up with a better way.

Golden and her committee really only have two choices for fixing the Metrolinx arithmetic, and one is no choice at all. That would be to buy down the cost of the project — and thus forestall the need for the most noxious revenue tools — by attenuating its timelines, pushing certain projects over the horizon and quietly trimming others. In other words, to furnish the premier with the excuses she needs to deliver the usual half loaf.

The other choice would produce all the transit we could ever desire without the need for unaffordable tax hikes. It is the traditional, utterly conventional, common-sense method that ours and other governments have used for centuries to build public works, indeed the one that funded every linear foot of subway we enjoy in Toronto today. It is debt.

The biggest mystery of the so-far fruitless five-year debate over transit funding is that nobody has once mentioned the word debenture. It’s as if we are trying to invent new ways of building subways without digging tunnels — or making omelettes without breaking eggs.

The reluctance is understandable at a time when the province is borrowing $10 billion a year to pay nurses and cover other basic expenses, and is dedicated to eliminating that deficit by 2018.

But no such restrictions impair Ontario municipalities. They are not permitted to run operating deficits, and the debt they issue is almost exclusively “good debt.” It permits the acquisition of tangible assets — pipes, roads, bridges, subways — of immense long-term value. The payback is so obvious that the cost of financing most such projects is easily forgettable.

Is any Torontonian suffering today because our reckless forebears issued bonds to build the Bloor-Danforth line or the University line or the Spadina line? Of course not. Were taxes raised as a result? No. Was there ever a debate about how to finance the investments? Never.

Debt financing is also far more equitable than the pay-as-you-go models proposed by Metrolinx, the Toronto Board of Trade and others. The major beneficiaries of the proposed new transit lines will be people who have yet to be born. It is only right they should help pay for them — and it is ridiculous to impose the entire cost on taxpayers who are apt to be in wheelchairs or dead before the trains start running.

If the province is still too stretched to raise the money on its own account, despite historically low interest rates, Toronto-area municipalities are the opposite. They not only balance their budgets, they are vastly underleveraged by international standards.

Tourists often wonder why comparable European cities enjoy infrastructure that is so clearly superior to our own. The basic reason is Canadian aversion even to the most helpful, affordable public debt.

Golden’s best hope is a plan to tap currently under-exploited municipal borrowing resources. To service the debt, cities should be able to impose whatever revenue tools they wish. Or none at all: many of the outer suburbs are currently debt-free and could easily absorb the cost of building infrastructure their citizens so clearly need.

Loading... Loading... Loading... Loading... Loading... Loading...

Those who preach austerity in all public spending commonly invoke future generations as the ultimate beneficiaries of such policies. But our grandchildren will never thank us for something we haven’t passed down. Faced with Third World congestion, they are far more likely to curse us for our parsimony than to thank us for our tidy bookkeeping.

John Barber is a freelance writer. john.c.barber@gmail.com

Read more about: