It’s a terrible deal for Ontario.
He compared two approaches to financing infrastructure. In the first, the government would borrow money, an approach that Justin Trudeau advocated during his successful election campaign. In the second, the government would sell public assets.
LeClair found that the first approach was cheaper. By a lot.
By selling the profitable Hydro One, LeClair found that the government would eventually lose nearly $500 million a year — forever — as compared to borrowing money.
But it gets worse.
LeClair also found that about half of the $4 billion in Hydro One proceeds that the government promised for infrastructure was not actual, spendable cash.
Turns out, an estimated $2.2 billion in so-called Hydro One proceeds will come in the form of a “non-cash gain.”
This will be accomplished through some complicated financial engineering too tedious to describe here. The point is, you can’t pay for subways with these particular proceeds.
The actual cash made available for infrastructure could be as low as $1.4 billion, according to LeClair — nowhere close to the $4 billion that Premier Kathleen Wynne has repeatedly promised.
In addition, instead of lowering Ontario’s debt by $5 billion, LeClair found that the Hydro One sale could actually increase Ontario’s net debt by nearly $300 million by 2025.
And for Ontario businesses, the Hydro One sale means that they will be stuck paying $600 million in debt retirement charges on their electricity bills, years after the debt should have been retired.
None of this is really news. As far back as May, former TD Chief Economist Doug Peters came to basically the same conclusion as LeClair.
That same month, convicted fraudster Keith Summers shared his expert opinion in the Toronto Star, describing the Hydro One sale as the “biggest con job I’ve ever seen.”
And Ontarians have suspected for months that this is a bad deal. Polls consistently show that over 80 per cent of the public opposes this sale.
Ontarians hungry for infrastructure are rightly confused about why a premier who ran on building infrastructure would defy public opinion and choose a financing approach that will actually mean less money for infrastructure, not more.
It’s not their fault they don’t understand the Hydro One sale. The government has obfuscated and spun this bad deal so much that I am not sure if even the Premier understands what is real or not anymore.
But we have seen this movie before. The government was warned in advance about looming privatization disasters like eHealth, ORNGE and winter road maintenance. But the government rushed ahead anyway.
And in a 2013 report that eerily foreshadowed the Hydro One misadventure, the Auditor-General of Ontario warned that the sale of the Ontario Northland Transportation Commission would not save $266 million as the government had promised, but would actually cost as much as $820 million.
In that case, the Wynne government backed off full privatization, but went ahead with the sale of the ONTC’s telecommunications division, Ontera.
In September, we learned that the government lost $61 million on the Ontera sale, and actually spent more money on consultants to advise on the sale than the government actually received from the sale itself.
I can only imagine what the inevitable Auditor-General’s report will reveal about the Hydro One privatization.
With the announcement last week that 15 per cent of Hydro One is now in private hands, some people are already mourning the end of Adam Beck’s century-old legacy of public power in Ontario.
But I still believe it is not too late for Premier Wynne to change course, and cancel her plans to sell off another 45 per cent of Ontario’s oldest and most important public asset.
It is not too late for her to reclaim what has been lost, and restore public oversight over what Ed Clark himself described as “an asset that, if retained in public ownership, can play a positive role in many aspects of electricity policy.”
For the sake of the province, I hope Premier Wynne will extract herself from whatever force has clouded her judgment, and return Hydro One to public hands.
Original Article
Source: thestar.com/
Author: Rosario Marchese
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