Dalton McGuinty has run out of ideas. The proof? He’s recycling a lame proposal floated by Mike Harris and his crony Jim Flaherty: the sale of provincial assets in the name of deficit relief.
The provincial government has engaged two investment banks to study the sale of, among others, the LCBO, the Ontario Lottery and Gaming Corp. and the electrical transmission system operated by Hydro One. Along with the outright sale of public assets to private interests, the province is also looking at cobbling together a holding company, selling a 20-per-cent share in what are now major contributors to Ontario’s coffers.
The criticism came quickly. This is simply bad economics, squandering lucrative assets for a cash infusion that would have a minimal impact on long-term debt, while eliminating a steady flow of revenue year after year.
And Ontarians would have every right to expect money from the fire-sale to simply be squandered, in keeping with the track record of this and previous governments.
Ontarians will recognize this formula as the one cooked up by the Harris government to cover deficits and to advance its financial agenda. As part of that government, including a stint as finance minister, Flaherty advocated the sale of Hwy. 407, which proceeded at great cost to the taxpayer, and also pushed for the privatization of the LCBO, a foolhardy plan then as now that thankfully did not go ahead.
With the blessing of Flaherty and other Harris ministers now in PM Stephen Harper’s cabinet, Ontario saw the fire-sale deals in which government expenditures for, say, the Skydome and Hwy. 407 were traded away for pennies on the dollar. Much of the current mess in the electricity market can be tied to the Conservative dismantling of Ontario Hydro in preparation for privatization.
Anyone following the Hwy. 407 debacle will note the current government has come up empty in its halfhearted attempts to wrest back some safeguards for Ontario motorists. The Harris Conservatives sold off the highway at a bargain price, while maintaining no controls over rates – not surprisingly, rates have risen dramatically and steadily since the sale was completed.
On the LCBO specifically, the public has repeatedly opposed selling of the asset, and with good reason: doing so would cost us money, both as consumers and taxpayers, as studies have shown of the Alberta situation, where government privatized liquor sales in 1993. The results were not pretty.
Where McGuinty had previously criticized such privatization schemes, he is now embracing them, citing the recession. The argument is spurious, and reeks of the tactics Naomi Klein identifies in her book The Shock Doctrine.
His position becomes even less defensible given the recent upsurge in the economy and much more optimistic forecasts.
Dalton, leave the assets alone – they belong to the people of Ontario, not a well-connected few – and do what really needs to be done: start cutting spending. A reduction in the bureaucracy, joined to the taxes you continue to hike and an improving economy will help slay the deficit.
Revenues from those agencies you want to strip away from the people who paid for them will be helpful in that regard too.
Selling them off would eliminate the revenue stream that will continue long after the quick cash infusion has been frittered away. Now is the time for real leadership, the kind that makes the right decisions, putting the people ahead of the government, its bureaucrats and cronies.