Electricity reform: Ontario conservatives return to the fight

Ontario Hydro—when all its public assets were working—rivaled the Tennessee Valley Authority, Quebec Hydro, and Electricity de France. After more than 100 years of electrifying Ontario, the Ontario government is still its principal shareholder. Dalton McGuinty, the teacher premier of a service economy, is the principal operator of a gigantic, sprawling, technically proud, and politically powerful electricity industry.

Under his enthusiastic leadership, Ontario’s electricity industry has become only more complicated and, again, more expensive. In the name of innovation, he has bought the spin of mature public corporations worldwide: government leaders can be rigorously commercial as well as businesslike; government can secure more for the taxpayer, the consumer, and the environment by running the whole show as the sole proprietor.

This embrace of inertia over experience has guided his policies and stimulated numerous initiatives.

Conservatives who nearly broke the status quo a decade ago have been silent for a long time. Their reluctance to breathe another word about the alternative—privatization, with public regulation—has not been rewarded.

Timidity can work for a government, but isn’t much use in opposition.

Despite the predictable risks of offering significant policy ideas in a minority legislature, the leader of the Ontario Progressive Conservatives, Tim Hudak, has reopened the issue. In a white paper called "Paths to Prosperity, Affordable Energy,” Hudak insists that government is too involved in the energy business and that in order to be able to be less involved, it should, in steps, sell its operating assets to the private sector.

Click on: www.ontariopc.com/paths-to-prosperity/affordable-energy/

When conservatives stop thinking intelligently about economics, they’re usually branded as bigots. However, when they do start thinking out loud, they’re as freely labeled as “ideologues.”

The reactions to Hudak’s paper by the Liberal government and the New Democrats were identical.

McGuinty's latest Minister of Energy Chris Bentley scoffed: 

“Who has brought these ideas that didn’t work in 2002 … when the Tories tried them then? Who brought them back? Are the same people in charge? I guess the answer might be yes.”

New Democrat leader Andrea Horwath complained:

“But rehashing or bringing back the same old ideas that haven’t gotten us anywhere already is really not very helpful.”

Click on: www.thestar.com/news/canada/politics/article/1178232--ontario-power-tim-hudak-s-plan-to-sell-off-parts-of-hydro-one-ontario-power-generation-panned?bn=1

If anything in this exchange could be called “ideological”—in the most pejorative sense of being a mental invention—it’s the characterization of what Hudak is proposing as a failed experiment.

Ontario came no closer to privatizing its electricity sector in 2002 than North Korea came this year to successfully launching a nuclear missile.

What is truly ideological is Ontario liberalism’s reluctance to question a proposition that is neither liberal nor progressive: that once in public hands, giant state energy enterprises must remain in public hands.

The status quo in Ontario clings to a fixed idea: public ownership can beat the market in generating innovation, economic growth, and revenues to government. And it calls those who wonder whether that’s true “ideologues.”

The Ontario government promises growth and austerity. Hudak has put his political capital behind an idea that would both reduce the burden of government and help revive business activity in Ontario.

It is controversial, but he should persist. It’s big idea and it makes his opponents look small.

A Goldilocks Dollar for a cheaper version of Canada

Leadership sometimes points backwards.

Dalton McGuinty would like to go back to the circumstances he inherited when he became Ontario premier in 2003: when Ontario dominated Canada politically, possessed first-rate infrastructure, and, most conveniently, could export its goods with a 30% export price advantage—thanks to a very cheap Canadian dollar.

Yesterday, McGuinty meticulously outlined Ontario’s worn-out case against Western Canada’s “petro-dollar”:

“That has knocked the wind out of Ontario exporters and manufacturing in particular,” Mr. McGuinty told reporters. “So if I had my preferences as to whether we had a rapidly growing oil and gas sector in the west or a lower dollar, I’ll tell you where I stand: with the lower dollar.”

Click on: www.theglobeandmail.com/news/politics/redfords-energy-vision-clashes-with-mcguintys-view-of-oil-sands-benefits/article2351145/

This is divisive bravado and defeatist economics. The man should settle for bland.

McGuinty can’t even divide the country. The office of Premier of Ontario doesn’t have that kind of weight anymore. McGuinty’s resentment toward robust Western development can only help Alberta’s Premier Alison Redford win an election. Simply, the country’s leadership can’t take his advice.

No Canadian federal government could get elected with a mandate to slow the export of provincial energy and natural resources and would have a tricky time constitutionally if it tried. Furthermore, artificially lowering the Canadian dollar without a collapse in resource exports would likely—and legitimately—invite US retaliation.

As important, McGuinty is repeating a creepily reactionary idea about how Ontario should grow and be treated in Canada. Specifically: if the dollar isn’t nicely aligned to serving the interests of Ontario’s traditional manufacturers, it surely must be out of whack—off serving those philistines in the West.

In this equation, Ontario’s interests are boiled down to be the interests of Ontario’s export manufacturers and their old ways of doing business. Other Ontarians and other Canadians—and their purchasing power in the world—are of negligible account.

There is something deceitful and illiberal about trying to talk down the value of the Canadian dollar to make Canadians in Ontario manufacturing richer by making other Canadians poorer.

Can you imagine the Governor of Michigan or the Mayor of Chicago blaming their economic woes on the US dollar and strong export sectors elsewhere in the US?

Imagine ambitious American politicians asking Ohioans to sell less food to the world or asking Californians to cut back on the $billions they earn selling films and music internationally!

The United States has been holding its own—around 20% of the world market in manufacturing for the last 20 years—without the help of a US dollar that has been thoughtfully aligned to serve the interests of its manufacturing sector.

Dalton McGuinty should accept that Canada has no better alternative: accept the benefits, along with the demands, of a Canadian dollar effectively at par with the US dollar and get on with his job.