Selling Hydro One Is a BIG Mistake

Originally published online at http://www.huffingtonpost.ca/mike-schreiner/hydro-one-transit-funding_b_7350922.html on May 21, 2015. 

The Liberal government's sell-off of Hydro One is a failure of political leadership -- not only from the governing Liberals but also the opposition NDP and Conservatives.
 
The sorry saga of liquidating Hydro One is the direct result of not having an honest debate at Queen's Park about how to fund transportation infrastructure. This is a perfect example of how partisan political games have real world consequences.
 
The NDP and PC parties have strongly opposed every new revenue tool for funding transit. And they spent the last election promising to build transit with fairy dust and magic money trees. The NDP even threatened to bring down last year's minority government if the Liberals raised taxes or tolls for transit.
 
The Liberals have wilted in the face of this opposition. We now have a desperate government -- plagued with spending scandals -- that will do anything to avoid being accused of raising taxes, even those recommended by their own experts.
 
The public still wants and needs the transportation infrastructure promised in the last election. So, the Liberals have a new magic money tree -- sell part of Hydro One for a short-term shot of cash that will deprive Ontarians of a reliable source of revenue for years to come.
 
This is a classic case of punting the problem to a future government and people should be mad as hell for being misled.
 
Liquidating Hydro One is a bad business decision for Ontario. Selling 60 per cent of Hydro One, as the Liberals propose, could cost Ontario $338.8 million every year, according to a report from economists David Peters and Douglas Peters prepared for the Canadian Union of Public Employees (CUPE).
 
The report also questions how much money the province would make from selling Hydro One. Contrary to the Liberal's claim of netting $9 billion from a 60 per cent sale, the CUPE report estimates that after paying fees to Bay Street bankers and lawyers as well as other issuance costs, Ontario would net just $5.94 billion.
 
The Liberals have hired a Bay Street banker to propose a plan that will clearly benefit Bay Street bankers. The benefits to the people of Ontario are less clear.
 
Selling Hydro One is not only a bad business decision, it also has public policy implications for upgrading Ontario's grid for the 21st century.
 
Grids around the world are undergoing a major change as smart grid technologies transform the way electricity is produced, stored and distributed. It is unclear how privatizing Ontario's transmission and distribution system -- our electrical highway -- will affect these innovations and the jobs and prosperity they will generate.
 
Private investors make their money by maximizing the amount of electricity being transmitted through their grid. Will they really want to support technologies that help people save money by saving energy? Renewable energy entrepreneurs already face barriers to the public grid. Will these barriers increase with a private one?
 
Sadly, these important public policy questions are being ignored at Queen's Park.
 
The Liberals have capped debate in an effort to ram through the omnibus legislation to sell Hydro One. Eight provincial watchdogs have criticized the Liberals for measures in the bill that would remove Hydro One from public oversight. The Liberals have no mandate to privatize Ontario's grid, and the bill should be subject to a robust public consultation process.
 
I agree with the government that Ontario desperately needs to invest in transportation infrastructure. But I disagree with their funding plan. The government's own expert panels proposed ways to fund transportation. Liquidating Hydro One was not one of them.
 
If the NDP and PC parties truly oppose selling a majority of Hydro One and still want to build transit, then they should be honest about how they would pay for transportation upgrades -- change the political game by pushing the Liberals to compromise on better funding options. No new tax will be popular, but sharing the heat would put good public policy before bad political games.
 
Is it too much to ask for more honesty and less hot air at Queen's Park?