Connecting The Dots

Were we abundantly blessed with critical-thinking skills, we would have no problem asking some serious questions about the direction in which Ontario is headed with Doug Ford at the helm. As well, we would be able to discern a pattern that suggests the premier is leading us nowhere good.

I am hardly the first to note that this Progressive Conservative government has been progressively and relentlessly paring down the revenues we need to fund our healthcare, our education system, our infrastructure and our social safety net; to be fair, this process long predates Ford's ascension. But since the time of Mike Harris and his Common Sense Revolution, it has only gotten worse.

• In the guise of helping 'the little guy',  Ford has kept extending a popular gas-tax cut that, while saving the average household about $130 per year, has thus far cost the treasury, since its inception in 2022, a total of  $3.2 billion. 
• Then, of course, there is the ending of licence plate renewal fees, again costing the treasure about $1.1 billion per year.
• Additionally, as I pointed out in a recent blog post, there is the war against the LCBO, a public institution that on average contributes about $2.5 billion to the provincial coffers.
• And on the expenditure side, it has been estimated that the early cancellation of the Beer Store agreement in order to get more product into private hands could cost upwards of $1 billion.

So where does all of this lead? To an impoverished public purse and a turn to the private sector to fill the void. 

Jordan Roberts writes of the move to put more alcohol into stores, now that the way has been paved for beer and premixed cocktails:

Having won this major battle for beer and wine revenue, Ontario’s big box stores and grocery stores will put additional energy into lobbying to sell spirits like gin, vodka and whiskey. “Hard liquor” is currently only sold at the LCBO or LCBO-licensed outlets. The inclusion of ready-to-drink products (like hard seltzer) in the announcement will help support industry’s argument that they should be allowed to sell all kinds of alcohol, because they are already selling products which include spirits.

The chains have also been lobbying for the right to be wholesalers and distributors of alcohol, taking advantage of their own integrated distribution systems and subsidiaries. Currently, only the LCBO and the Beer Store can run alcohol distribution in the province.

The fate of the LCBO becomes increasingly precarious, as the prospects of grocery and big-box store  profits soar, especially if one considers  the following:

Claudia Hepburn, who was appointed to the board of the LCBO in 2021, is Galen Weston’s first cousin. Galen Weston, of course, is the chairman of Loblaws’, and stands to benefit enormously from these changes. 

The there is the chair of the LCBO, Carmine Nigro,

a developer (CEO of Craft Development) who was hosted at the premier’s table at Kayla Ford’s wedding reception. Nigro’s company benefited from a number of MZOs (or Ministerial Zoning Orders, which are fast tracked zoning approvals) from Ford’s government. Prior to MZOs being issued to his company, Nigro was also vice president of the PC Ontario Fund, a fundraising arm of the Ontario PC party. Nigro is also part of the controversial scheme at Ontario Place, as chair of the Ontario Place Corporation. 

Thanks to available public sources, all of these facts are fairly accessible to the public. But it is up to all of us to connect the dots to see the larger picture, one that Jordan Roberts concludes is pretty grim:

Within this strategy, a key tactic is making sure government coffers are empty, so that government cannot provide services to its constituents, ensuring the only options for services are private ones. In that regard, the Ford government’s moves on alcohol sales are not only a gift to friends and donors in the private sector, and a way to reduce the influence of labour unions, but another nail in the coffin for Ontario’s government revenues.

Just A Couple Of Questions

Given that I have no background in economics, I will leave it to more finely-tuned minds to debate the merits of yesterday's federal budget. However, there are a couple of things that, from my perspective, need to be answered, and they both relate to the Infrastructure Bank the Liberal government is touting.

Introduced in last fall's economic update, the goal of the Bank, according to Finance Minister Bill Morneau, is

to attract private sector dollars at a ratio of $4 to $5 in private funding for every $1 of federal money.

While that sounds fine on the surface, the question about the returns that will prompt private investors, including institutional ones, to invest in infrastructure projects the bank will help fund needs to be answered. And it is here that things becoming a tad murky.

In yesterday's budget, Morneau had no real details to provide about it, other than a motherhood statement:

Ottawa has said it wants to leverage every dollar it puts in its infrastructure bank into $4 of investment, the balance kicked in by private-sector investors. The government thus hopes to fund $140 billion in infrastructure projects with an upfront Ottawa investment of just $35 billion.

Sound too good to be true? Perhaps it is:

The catch here is that only infrastructure projects with revenue streams will attract private investment. To be sure, that includes a lot of infrastructure, including toll roads and bridges; alternative-energy suppliers that reap revenues from power consumers; and water and transit systems that earn back their cost of capital through mill rates and Metropasses.

One can't help but wonder, like the idea to sell off our airports, this is just another neoliberal ploy, thinly disguised, that will redirect revenue from the public to the private domain.

The Canadian Centre for Policy Alternatives has released a study that suggests we will all be paying more for this largess gifting the private sector:

This study finds that private financing of the proposed Canada Infrastructure Bank could double the cost of infrastructure projects—adding $150 billion or more in additional financing costs on the $140 billion of anticipated investments. It would amount to about $4,000 per Canadian, and about $5 billion more per year (assuming an average 30-year asset life). The higher costs would ultimately mean that less public funding would be available for public services or for additional public infrastructure investments in future years.

The full study, which you can obtain here, suggests there is a better way:

There’s no reason the federal government can’t make the Canada Infrastructure Bank a truly Public Infrastructure Bank, with a mandate to provide low-cost loans (or other “innovative financial tools”) for large public infrastructure projects. The federal government already has banks and lending institutions that provide low-cost loans, financing, credit, and loan guarantees for housing, for entrepreneurs and for exporters. So why not also provide low-cost loans and other financing for public infrastructure projects? This bank could be established as a crown corporation with initial capital contributions from the federal government (and perhaps other levels of government) and backed by a federal government guarantee. It could then leverage its assets and borrow directly on financial markets at low rates and then use this capital to invest in new infrastructure projects.

This approach would involve a slightly higher cost of financing than direct federal government borrowing, but it would be considerably below the cost of private finance.

And finally, is it simply a coincidence that one of the government's tools for borrowing at ultra-low rates is ending?

The federal government is phasing out the Canada Savings Bond, a popular savings vehicle introduced after The Second World War.

The Liberals’ 2017 budget stated the bond program peaked in the late 1980s and has been in a prolonged decline since.

“The program is no longer a cost-effective source of funds for the government, compared to (other) funding options,” the budget document reads.

Perhaps it is naive of me to suggest, but wouldn't paying a higher rate of return on savings bonds that average citizens can benefit from also be a source of much-needed cash for infrastructure?

Just wondering.

A Vanity Production?

Yesterday morning, I read a piece by Martin Regg Cohn on the impending sale of Ontario's Hydro One. When it is completed, 60% of our publically-owned asset will have been sold off. During a brief walk in the afternoon, I decided to write a letter to my local MPP with a copy to Premier Kathleen Wynne to protest the sale. While it may be of some interest to people residing in Ontario, my letter may be regarded by those residing elsewhere as a vanity production, perhaps, given the ultimate futility of speaking or writing to our representatives in our currently debased democracy.

Whatever its ultimate utility may be, writing this missive has at least been personally cathartic:

I am writing to express my deep disappointment over your government's decision to sell off 60% of Hydro One. It is a profound betrayal of the people of Ontario and a flagrant abuse of democracy that I fear will have far-reaching consequences.

I was one of the many who chose to cast my vote in the last election, not for the NDP but for the Liberals. Their platform seemed sound, and I was repulsed by what I saw as the political opportunism of Andrea Horwath in forcing the election. A leader's integrity is one of my paramount considerations when I vote, and I thought I saw it in Kathleen Wynne.

While I admire that Ms. Wynne has shown strength of conviction in some areas, such as the revamping of the sex-ed curriculum, despite fierce opposition from some quarters, I lament the fact that she does not have the same courage and principles to resist the neoliberal siren call of privatization of public assets. As we well know, the private sector's sole responsibility is to its shareholders and the profits they expect, and we have no reason to believe that its majority ownership of our Hydro assets will change that. The public good will always be, at best, a tangential consideration.

Not once during her bid for re-election did the premier talk about privatizing Hydro One. To say that a general review of all assets was to be undertaken as the cover for this decision is, frankly, dishonest and insulting. Also, the Hydro assets are, as you well know, generating very healthy annual profits. To suggest their sale is needed to fund infrastructure projects is disingenuous, and indicative of a very narrow vision that excludes other possibilities, such as road tolls or an increase in the income tax rate to fund such construction. I will also state the obvious: those assets belong to all Ontarians. They are not your government's to sell.

At a time when cynicism about the electoral process is widespread, and voting numbers continue to decline, the decision to sell such a prized asset can do nothing but promote more of the same. If you are so convinced that this is a good decision, then hold a provincial plebiscite. Only with the approval of the people can you make any claim to be representing them in this matter.

I am one of the electorate with a very long memory. I can assure you my support for your party and government ends the day the sale of Hydro One begins. Next election, my vote will be for the NDP.

Score Another One For Orwell

If you want a picture of the future, imagine a boot stamping on a human face — forever. - George Orwell

As always, the writer had exceptional clarity about where Western society was headed.

H/t Steve Collett