Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Thursday, October 27, 2011

10% of an excellent idea: selling 10% of Toronto Hydro

You want to expose pure-blind dogma in American politics? Just ask a campaigning Republican to accept any increase in taxes, for any reason. In Canada, you ask a self-identified progressive or a social democrat to support privatizing a public asset.

Mayor Rob Ford of Toronto—probably the most timid backlash politician on the continent—is reported to be thinking hard about asking Toronto’s Council to agree to sell 10% of its electricity utility, Toronto Hydro. The proceeds could reduce the city’s future debt charges for new capital projects or temporarily relieve financial pressures on core services.

So far, the mayor’s critics are only squirming. Councillor Mike Layton called the proposal a “Band-Aid to stop the bleeding.”

Since the city is definitely bleeding financially, that tired Band-Aid allusion isn’t really that damning.

For those who favor new investments in needed public transit, who also want to keep public libraries open and read books, the strategy of selling assets that needn’t be public ought to be embraced, not tolerated in puny bits.

Selling Toronto Hydro at a good price is 100% a good idea, and should be pursued as such. Rather than raise possibly $150 million for temporary relief, why not raise $1.5 billion by selling the entire company—and do some real good?

If the province of Ontario’s transfer tax regime still stands in the way of selling more than 10%, then the mayor, with a majority of Council, ought to lobby Premier McGuinty. After all, a democratic government would be finding a solution to its own problems, and providing a precedent that the debt-ridden province of Ontario may end up having to consider as well.

The old arguments against wholesale privatization are unpersuasive.

Public ownership doesn’t protect customers. Toronto Hydro’s customers are jealously protected now, and will continue to be, by the Ontario Energy Board. That regulatory body also regulates Toronto’s other—private—utility, Enbridge Gas. The private gas company and the public electricity company have, over decades, received comparable customer satisfaction reports.

Dividend payments from publicly owned Toronto Hydro are nothing more than hidden taxes on Torontonians and can be replaced by more equitable and transparent sources of revenue.

Furthermore, a mayor and 44 councillors who are elected independently and answer separately to their separate wards cannot provide rigorous accountable share-holder oversight. It is wasteful vanity for 45 politicians to imagine that they can stop being professional politicians and run a billion dollar business strictly according to business principles. 

The left has had a lot of fun ridiculing Rob Ford’s elusive “gravy train.” Fair enough. Reducing waste in government will not be enough to restore Toronto’s financial capacity to keep up with changing times. So, other things will have to be tried: rather than only raising taxes, why not get out of businesses that no longer need to be the business of government?

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