Paved With Good Intentions

 

To want Canada to prosper during these tumultuous times is both noble and natural. Federal government leadership to forge that path is something we expect, given that our problems are countywide. However, this is the point at which visions on how to achieve that sought-after prosperity diverge.

For the Carney government, it seems that more privatization is the route to go. He is openly talking about 'unlocking the value' of our airports.

Canada is willing to let foreign investors buy stakes in Canadian airports, Prime Minister Mark Carney suggested Wednesday, as the federal government considers trying to raise money to fuel its economic growth agenda through the privatization of public assets. 

“We are wide open to foreign investment,” Carney said when asked whether the government would allow foreign investment into Canada’s network of publicly owned airports that could be worth billions of dollars. 

Following its spring economic update last month, Carney’s government signalled it is looking at selling off Canadian airports to private owners as part of an effort to improve operations for travellers and raise money. The prime minister said the goal is to make airports “better serve Canadians” and to raise money that is “tied up in those airports” to reinvest in “other ventures that will grow are economy.” 

While those airports' revenue streams would induce salivation in many an investor, there are reasons to be cautious.

Drawing upon Ontario's disastrous experience in the selling of cash cow Highway 407 under Mike Harris, Linda McQuaig suggests the real losers will be consumers.

[S]ince its privatization in 1999, the 407 has cost drivers an estimated $25 billion in tolls. And we’re only getting started! The privatization deal lasts for 99 years, and by the end, Ontario drivers will have paid tolls likely amounting to a gut-wrenching $150 billion. The National Bank of Canada described the 407 as “a value-generating monster.”  

A sale of our airports will not, despite Carney's claim, be good for the flying public. 

Of course, not all privatizations are as disastrous as the 407. But one feature they all seem to share is that they ultimately cost consumers more — even though this higher cost is typically denied at the outset, when the privatizers often maintain consumer costs will actually fall.  

Because Hwy 407 is a monopoly, regular market forces such as competition do not apply. 

Airports are also regulated monopolies, offering lucrative revenue streams that make them highly attractive to private owners who can raise parking rates and charge airlines higher landing fees, which are passed on in higher ticket prices. 

Passengers can’t just switch to another airport any more than Toronto commuters can just move to another highway. In both cases, travellers are captives, even though they paid to build these assets through their tax dollars. 

Sufficient privatization of assets has taken place to draw some pretty solid conclusions: 

A 2022 study published by the U.S. National Bureau of Economic Research examined more than 2,400 airports worldwide; about 20 per cent had been privatized. The study concluded that, while airport privatization can increase efficiency, it often makes flying more expensive for travellers.  

To a hammer, everything is a nail. Given Mark Carney's extensive experience in the private sector, it is not surprising that he is looking at the issue of privatization through a very narrow lens. Unfortunately, that lens means he neither sees nor really cares about the negative effects it will have on those many of us ( i.e., the majority) who live outside his very privileged circle.