Photo Credit: CBC

Desperate times call for desperate measures. Première Dalton Mcguinty seems to feel that during this recession- the biggest global economic recession in 80 years – it is necessary to review Canadian assets and look at the possibility of selling off certain properties such as Hydro One, the OLG and Racetracks, and the Liquor Control Board. Two banks, CIBC World Markets and Goldman Sachs Group, are reviewing these assets in addition to others, to determine whether selling these off would indeed be beneficial in slimming down the $24.7 billion deficit which Tory MPP Peter Shurman explains was of the Premiers own making. A final decision has yet to be made but the proposal is on the table.

Critics point out that the government would be able to book revenue only to the extent that the sale price exceeds the book value of the asset, making this option less attractive when viewed in the proper context. NDP leader Andrea Horwath said: “It’s quick cash but you wind up paying through the nose everyday. This government is reaching into the past for a tired old idea that doesn’t work.” She explained that selling off public assets is a disastrous idea that will cost Ontario in the long run. “It’s very clear that when these public assets are sold off, the public gets a bad deal,” she said. Ironically, it was just the other week when Finance Minister Dwight Duncan stood up in the Legislature and reamed the PCs for having sold off Highway 407 to a private company that can now raise its toll rates at will.

It is also interesting to note that the possibilities of such actions were exactly what McGuinty argued against in the past. Now if they choose to go ahead with this sale, it will likely manifest in one of two ways. One proposal is to place all of these assets under an umbrella corporation and then sell a 20 percent stake in this conglomerate to the public. This would allow the government to raise cash while not relinquishing control, which could minimize backlash. The other option is to sell the assets outright. In any case, the return on these taxpayer purchased assets, should they be sold, will need to reflect substantial benefits to the taxpayers in both the short and long term and not be simply a quick cash fix which will cost us more in the future.

Rod Sheppard, president of the Society of Energy Professionals, says “Selling off our electricity utilities was a bad idea under Mike Harris, and it’s a worse idea now.” These companies are very important tools in the government’s plans for green electricity and green jobs. They’re vital to bringing Ontario’s economy back from the brink.”

Government owned slot machines at racetracks generated $1.1 billion of revenue over the first six months of 2009, the most recent period for which financial information is available. Provincially owned casinos generated another $719 million. The most recent financial results on lottery sales show OLG sold $2.7-billion of tickets in fiscal 2007. Hydro One was almost sold in a $5 billion initial public offering in 2002 by Ontario’s former Progressive Conservative government. The short term gains of selling such assets may not exceed the long term revenues these businesses generate. With all of the evident resistance to the selling of provincial assets, it is clear an alternative solution to the record deficit must be found. It is important to try and keep businesses made in Ontario in Ontario.

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Tags: Dalton McGuinty, deficit, ontario assets

This entry was posted on Tuesday, December 22nd, 2009 at 3:53 pm and is filed under Provincial Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.