Selling ‘Hydro One’ a bad decision

This is a guest column; ‘Mihael Willman’ is the pseudonym for a concerned Canadian – JG.

by Mihael Willman

Call me cynical, jaded or whatever, but Canadian politicians in recent decades have shown a total disregard for what is in the best interests of Canadians. Ontario Premier Kathleen Wynne is proudly walking in those footsteps with her recent decisions. Following the incredibly wasteful spending of her predecessor Dalton McGuinty, whose government wasted billions on eHealth, ORNGE, and the cancelled power plants, she is going one step further and preparing to sell off parts of Ontario’s Hydro system to get much needed funds for infrastructure projects. If McGuinty had shown greater fiscal responsibility while in government, there would not be this desperate need for more funds.

While the Wynne government has only pointed out the so-called “positive” (in their eyes) aspects of selling a large portion of Hydro One, Ontario’s financial accountability officer has pointed out that the sale will only have a short term cash infusion, after which the loss of annual revenues amounting to hundreds of millions of dollars will put Ontario in a worse financial position. It doesn’t take a Rhodes scholar or math wizard to understand this simple fact. So you get about $1.5 to $4 billion for the sale of up to 60% of this resource, with another $5 billion going to pay off its debt. If we calculate that the lost future revenues will eventually amount to $450 million annually, at the present cost of hydro services, within about fifteen years all benefits from the sale will be lost. It is no different than selling the goose that laid the golden eggs.

And this is just the beginning of the problem. Once Hydro One is no longer owned by the province, one can only imagine what the corporation will start paying its CEOs and board members. If we only look at how the eHealth and ORNGE CEOs took advantage of the system and paid themselves exorbitant salaries, (not to mention some of the extravagant salaries of previous Hydro executives), one can only imagine what will happen when the corporation is no longer accountable to the province. And, once majority ownership is in private hands, the public will probably find it hard to obtain information as to salaries, since the company will no longer be subject to providing information for the “Sunshine List.” And to pay for these future generous salaries and subsequent pensions, the public will be hit with ever growing hydro costs. Anyone who believes otherwise is simply deluding themselves.

Privatizing an important public asset may be a good way to generate funds in the short term, but we have all seen what happens in the long run. When the Harris government proposed selling off Hydro, the Liberals were adamently opposed to the suggestion. Now that the Liberals have decided to sell, their only reply to criticism from Conservative MPPs are snide references to the sale of the 407 Highway system. That was one of the biggest mistakes that the Harris government made, and is another reason why selling Hydro One should not go through. But there’s a fundamental difference between the two entities. One does not have to use the 407, and if people decided to stop driving on it, revenues would quickly evaporate. Hydro, on the other hand, is a resource that everyone needs to survive in this day and age, unless they have their own magical source of private energy they can tap into. And down the road, what happens if a private equity firm or possibly even an unfriendly foreign government managed to buy a majority stake in the company, the results would be devastating for residents of Ontario.

While Finance Minister Charles Sousa refers to the sale as: “broadening of ownership of Hydro One”, just what guarantees are there that ownership of the corporation one day will not come into the hands of a single majority owner? All it takes is for someone with enough money to buy up shares. Then, instead of the province being the owner, providing an important resource to residents, while earning revenues for its coffers, an entity only interested in the bottom line, namely their own profit, will be calling the shots. Short-sighted policy, to the say the least.

It’s totally baffling to me how a party in opposition can criticize the government for actions it then takes itself, when in power. Clearly it’s nothing more than theatrics and playing politics, rather than a case of firm beliefs and strongly-held principles. Here is a clear indication that the voting public can’t trust anything any political party says or promises to do. Wonder just how many of the people who voted for the Liberals approve of the decision to sell Hydro One, a subject that never even came up during the election campaign?