Showing posts with label hydro one sell-off. Show all posts
Showing posts with label hydro one sell-off. Show all posts

Tuesday, February 13, 2018

A Parochial Post?

While I realize that a post about Ontario politics is likely of little interest to those living elsewhere, I believe what has happened in my province serves as a solid object lesson about the creeping privatization of public assets.

I have written in the past about Premier Kathleen Wynne's betrayal of the province. Upon winning a majority in the last election (after the holder of the balance of power, the NDP's Andrea Horwath, decided to go for the gold and triggered an unnecessary election), Wynne announced the sell-off of 60% of one of the province's crown jewels, Hydro One, despite the fact that it generated just under $1 billion in annual revenue. Her avowed purpose was to "broaden ownership" (how much broader can public ownership be?) and use revenues from the sale to finance transportation and other infrastructure projects.

Now, a report by the Financial Accountability Office (FAO) confirms the folly of that sale:



To sum up, as Rob Ferguson reports,
It would have been $1.8 billion cheaper for Premier Kathleen Wynne’s government to borrow money for transit and infrastructure projects than sell a 53-per-cent stake in Hydro One.
Even more distressing,
...the provincial treasury will lose $1.1 billion in dividends from Hydro One this year and an average of $264 million annually until the 2024-25 fiscal year.
So one has to ask, why didn't Wynne simply borrow the money for these infrastructure projects? My belief is that, despite some progressive policies, hers is essentially a neoliberal regime, committed to the notion that government should play only a supporting role so that the depredations of the corporate agenda can prevail. That, and, as New Democrat MPP Peter Tabuns observed,
“It was all about making the books look good [i.e., a balanced budget] for the election".
What can the rest of Canada learn from this debacle? If nothing else, it teaches all of us to remain vigilant about our public assets, and to keep a steady eye, for example, on the Trudeau government, which is currently studying privatization of our major airports.

In the latter case, my prediction is we will hear nothing more about it until after the next federal election. Should the Liberals secure another majority, be ready for the next round of corporate nest-feathering at the expense of our federal treasures.

Sunday, October 1, 2017

The Art Of Misdirection



While it is difficult in some ways to attribute anything resembling a method to the madness of the American Moron-in-Chief, it would be wrong to think he is totally unmoored and rudderless. Trump's tax-reform plan attests to this. As does the furor that was stoked over U.S. Health Secretary Tom Price's obscene and very expensive use of charter flights on the American public's dime, for which he has now walked the plank. Both serve, I believe, as a misdirection to obscure a much more sinister long-term goal, one that all citizens of so-called liberal democracies, including Canada, should be concerned about.

The first misdirection comes in the preamble to the tax plan:
It is now time for all members of Congress — Democrat, Republican and Independent — to support pro-American tax reform. It’s time for Congress to provide a level playing field for our workers, to bring American companies back home, to attract new companies and businesses to our country, and to put more money into the pockets of everyday hardworking people.
- President Donald J. Trump
I won't belabor the obvious here about the risible and false association drawn above between tax cuts and economic growth, but let's just say the fact that corporate Canada was sitting on about $700 billion in 2014 is a sterling example of how ineffective a low tax regime is in creating jobs.

And there is no doubt that corporations and the wealthy will disproportionately benefit from the proposed changes, which aims to:
- Cut the corporate tax rate to 20 per cent, down from 35 per cent. Conservatives are framing the lower corporate tax rate as something that will increase investment and help businesses create jobs.

- Lower the top tax rate for so-called "pass-through" businesses to 25 per cent. These businesses, such as partnerships, S corporations or limited liability companies (LLCs), are only taxed on individual income.

- Eliminate the state and local tax deduction for individuals, thus taking away a break for taxpayers in highly taxed states such as New York, New Jersey and California.

- Scrap the alternative minimum tax (AMT), which was designed to prevent high-income earners from using loopholes to pay zero tax.

- And repeal the estate tax, a provision that affects very wealthy people who leave money to their heirs. The tax is currently set at 40 per cent.
Then there is the Trump claim that he will not benefit from the tax cuts, something that is demonstrably false.

But the fiction surrounding these tax cuts conceals a far more diabolical truth, one that will become apparent, I suspect, in the not-too-distant future. But to get at that truth, one more fiction needs to be dismantled, the one that says this kind of deficit spending will burden future generations. That assertion presupposes that at some point, taxes will have to be raised, and one's children and grandchildren will be paying them.

Personally, given the neoliberal nature of democracies today, I think that is absolute rubbish.

Putting aside that politicians generally lack the fortitude or the integrity to rescind tax breaks (look, for example at the fact the Harper TFSA still exists under the Trudeau government), let alone raise taxes, the truth is that future generations will pay for these deficits, just not in the way one might expect.

Payment will be extracted, not through increased taxation, but with the gutting of American social programs, entitlements like Medicaid and Social Security, etc. This will be coupled with an increasing rate of privatization of public resources, the neoliberal wet dream. And who will feel these cuts the most? The poor and the working class, most immediately, followed by the middle class through the much higher rates they will pay for newly privatized services, utilities, etc.

Already we have seen this plan being enacted in Canada, with more just around the corner. Consider the great privatization of Hydro One that has taken place under Premier Kathleen Wynne, something about which I have posted in the past. A boon to Bay Street and a bane to Main Street, it was done under the pretense of allocating all of the profits to green infrastructure initiatives. Predictably and cynically, however, Wynne has instead used some of the money to balance the books while also serving as a willing vessel for the neoliberal agenda.

There is every indication that the federal government is watching such betrayals of public ownership with avid interest. I have previously written about Justin Trudeau's secret study to privatize Canada' major airports. Again, the argument being advanced is that it would free up billions for infrastructure projects; more accurately, as Craig Richmond, the chief executive officer of the Vancouver Airport Authority, says,
“This idea of a one-time payment, that’s like selling the family jewels and then regretting it forever..."
Except, of course, there is never any semblance of regret when it comes to the nabobs of neoliberalism and their government functionaries, all of whom view public assets as fit only for corporate plunder.

So yes, everyone should evaluate each policy and event on its own merit. People are right to be disgusted with Tom Price's profligate abuse of taxpayer money, and people should be outraged that Trump's "middle class miracle" will benefit mainly the wealthy. But they should also be acutely aware of and outraged by one other thing: the purposeful misdirection that all such things represent, and should consequently rise up in deep protest as more of the neoliberal agenda is carried out by their kleptocratic Commander-in-Chief and his assorted masters and minions.

Saturday, August 20, 2016

Pillaging The Public Purse: On Hydro One's Privatization


I have written in the past on my strong opposition to Kathleen Wynne's selloff of 60% of Hydro One. She has no mandate for this pillaging of the public purse, and no good reason for it except her politically and ideologically-driven obsession with balancing the budget before Ontario's next provincial election. She will not be getting my vote.

Recently, Linda McQuaig wrote a column that came out strongly against this sale, offering an historical perspective showing the public good that accrues from public ownership of such a utility.

In today's Star, readers offer their own insights on this issue, one that is likely a big contributing factor in the Liberals' current poor showing in the polls:
Re: The case against privatizing Hydro One, Opinion Aug. 4

What’s most disturbing about reading Linda McQuaig’s strong case against privatizing Hydro One is that it reveals clearly that Premier Wynne seems to be selling it for no worthwhile reason.

When 73 per cent of Ontarians disagree with the sale and she insists on it, then she is not serving the public will. Further, to trade off the long-term benefits of Hydro One for a short-lived infusion of cash for infrastructure is economically incomprehensible.

With this kind of foolish, arbitrary decision, which is symptomatic of the disconnect between the public will and its leadership, Wynne will certainly join the infamous ranks of other failed premiers of Ontario, such as Mike Harris and Dalton McGuinty, who also carried out their personal agenda while forsaking the common good of the electorate.

Pity the serious voters.

Tony D’Andrea, Toronto

Timing is everything. Currently, along with a several other Ontarians, I am particularly interested in the timing of the Ontario Liberals’ Climate Change Action Plan.

Last Nov. 15, the Ontario Liberals privatized Hydro One when they sold off 15 per cent of the former Crown Corporation. Sad but true.

In April, they sold off another 15 per cent. The following month, Ontario’s Minister of the Environment and Climate Change let the world know that Ontario is moving away from natural-gas home heating. Some back-peddling followed. Shortly after that, the Liberals released their official Climate Change Action Plan.

It indicated their intention to move to a more electricity-based society. Once complete, Ontario is to have far more electric vehicles, electric charging hubs, electric home initiatives, etc.

In summary, the Liberals are moving Ontario to a more electricity-based society after privatizing our province’s transmission grid and largest local distribution company! That means Hydro One will now go on to make record profits and a huge amount of potential income is being stripped away from Ontarians.

But why? To balance the current Liberal budget and dangle some shiny gifts ahead of the 2018 election. All this at the expense of Ontarians.

The whole thing reeks of corruption. Just waiting for the smoking gun to be revealed. Timing is everything.

Joel Usher, Newcastle

Thanks to Linda McQuaig for detailing the long history of support in Ontario for a public monopoly on electricity — right up to today. The public instinct is right: it is best to keep this rare and valuable asset so that profits go back to our treasury, and to avoid the risk of the monopoly control falling into the hands of those who would maximize their returns at the expense of consumers and the environment.

Ms. McQuaig could have added that selling off Hydro One is a bad deal, as concluded by Ontario’s Financial Accountability Officer. After all, investors are not stupid.

They will not pay full price for the value of the future Hydro One profits they would get as minority shareholders, due to the risk, because key decisions affecting profits are taken by government. The monopoly is worth more to the government as the decision-maker.

If you must sell an asset, this is a particularly bad one to sell.

Kim Jarvi, Toronto

Sunday, June 7, 2015

Connecting The Dots?

Here in Ontario, Premier Kathleen Wynne's decision to sell off 60% of Hydro One, the very profitable public utility that generated a pre-tax income of $803 million in 2013, is causing quite a storm of outrage. Despite her promise to put all profits from the sale toward transportation structure, the fact that the sale will yield a mere $4 billion after taxpayer money pays off Hydro's long-standing debt means the sale makes almost no sense. And, one might ask, why a sale of 60%, a proportion that will put hydro squarely in private sector's control?

Operation Maple has put up an interesting video that comes to some intriguing, although rather conspiratorial, conclusions. But surely such is preferable to the bovine passivity that government counts on when imposing its will on its citizens, isn't it?



Meanwhile, Toronto Star letter-writers do their usual excellent job in the critical-thinking department. Here are but a few examples:

Sell-off will help Ontario, Hydro One, Letter June 2

The government surely disagrees with Keith Summer’s excellent May 2 opinion piece, but Minister of Energy Bob Chiarelli’s letter fails to say why. Instead of numerical analysis, all we get is the usual political bafflegab. Boiled down, the minister asks us to trust them. Well, count me out.

Apparently, a valuation of Hydro One has been worked out. I assume this valuation is a report of some kind, with validated numerical analysis. Has it been made public? If not public, has it been made available for scrutiny by reputable independent reviewers? Ontarians deserve this. When there is such a major policy change about the ownership of this vital utility, we all should demand a full revelation of the method and results of the valuation process.

The non-sequiturs in Mr. Chiarelli’s letters confound and astound me. He speaks of a 10 per cent maximum ownership causing shares to be broadly held across Ontario in the same sentence. How does that work? How does any aspect of the sale enable Hydro One to become more innovative, competitive and effective as he claims? It’s just silly to make such claims without any proof or rationale.

This deal is bad policy and Mr. Chiarelli should be admonished for writing such a trivial letter.

Edward Kilner, Mississauga

Minister of Energy Bob Chiarelli repeated the term “much needed infrastructure” four times in his letter to the Star.

Ending his letter he left the impression that selling off 60 per cent of Hydro One “will create more than 110,000 jobs each year and help grow our economy,” without costing the taxpayers any money. But selling off part of Hydro One is not going to create one new job. These jobs for the “much needed infrastructure” are already there and have been sitting on the sidelines for years.

To suggest it will not cost the taxpayers any money reminds of the story of the investor who wanted to open a mink farm. He reasoned since mice multiplied five times faster than mink he could feed the mice to the mink and the mink carcasses to the mice and get the pelts for nothing. It sounded good on paper but as time went on he had to go to the well for more money.

Frank Feeley, Fonthill
After reading Keith M. Summers’ commentary I am more than ever convinced that the Ontario government should retain 100 per cent ownership of Hydro One, with all its healthy profits going into the public coffers rather than private pockets. But if it is in fact impossible for the government to borrow $9 billion at a reasonable rate then it should at least follow Mr. Summers’ advice and focus on raising $9 billion by offering approximately 30 per cent equity in Hydro One, retaining majority ownership and a much healthier percentage of the profits.

Gillian Marwick, Toronto