Blaming "Stealth Privatization" for Dalton McGuinty’s $Billion Boondoggle?

Ontario’s most successful Liberal Premier Dalton McGuinty added a $Billion to Ontario electricity bills to secure another 19 months in power. To do nothing for Ontarians with that much of their money excites the imagination as well as the spleen.

After all, punishing friends of the devil-you-know seems excessive to successor Kathleen Wynne, and intellectually lazy — at least to Martin Regg Cohn, provincial columnist for the Toronto Star.  

Twisting adventurous Premier William Davis’ sly demurral that, in politics, “bland works,” Cohn led yesterday’s column with the headline “The banality of billion-dollar boondoggles.” His intention was to coax readers to accept the fanciful notion that Dalton McGuinty’s immune system somehow let a rogue neo-conservative idea infect his government: “gradual privatization.”

(Full disclosure: in the mid-90s, as an Assistant Deputy Minister in the Energy Ministry, I helped manage the preparation of legislation and organizational options for the introduction of customer choice, commercialization, and, ultimately, the sale of those Ontario government organizations that generate, transmit, and distribute electricity.)

Cohn acknowledged that the McGuinty Government was “politically crass,” “blind to economic realities,” and replete with “incompetent negotiators.” He insists, however, that we learn an ideological lesson as well: “stealth privatization,” the purchase of electricity from a “slick” private operator rather than from its own crown corporation, “set the stage for the inevitable payouts that we now face for decades to come.”

It is not unreasonable to accept the possibility that either professionals in Ontario Power Generation or a different premier — or both — might not have been so generous with our money. Nevertheless, if this scandal must be a learning opportunity and not just grounds for a fresh election, let’s bring two truths up from the cellar.

One: Buying power from private generators or buying parts and services from commercial firms isn’t privatization.

Procuring from profit-seeking suppliers is exactly what conservatives, liberals, and social democrats — their agencies and, now and then, their cocky politicians — have been doing since electricity became an essential technology a century ago. (Does anyone think red Tory Ontario Hydro racked up some $20billion in stranded debt and surplus power without the help of "slick" suppliers from around the globe?)

Two: Privatization is a bigger and better idea than merely rebranding crown corporations as "commercial enterprises" and selling a few fixed assets to private operators.

It keeps politicians at work as rule-makers and regulators, and invites the private sector to be more "commercial": to make business decisions, eat its own mistakes, and earn commercial returns. It would free the electricity customer from incompetent suppliers and incompetent purchases by government monopolies that they can now pass along, in tiny slices, to electricity costumers to pay.

Despite unyielding talk about the ascendancy, failure, and the persistent threat of free market ideologues, Ontario’s conservative governments didn’t privatize their gigantic public power legacy and, far more important, left Ontario customers utterly captive to the whims of Dalton McGuinty and his creative Premier’s Office.