The Ontario Liberals under Kathleen Wynne’s leadership are finishing what the Tory government of Mike Harris started: the privatization of Hydro One. While the newly elected federal Liberal government remains in a honeymoon period under a facade of progressive politics, the Liberals in Ontario are revealing their real character as the sweethearts of Bay Street through this fire sale of the crown corporation.
The first phase of the Liberals’ privatization plan began in the first week of November 2015, with the sale of 15 per cent of Hydro One to the tune of $1.83 billion. Major banks like RBC and Scotiabank managed to capture large stakes. The idea is to sell off 60 per cent of Hydro One by 2019, ostensibly to fund a $130 billion infrastructure project and help balance the budget by 2017-2018. In reality, the privatization of Hydro One will not contribute in any meaningful way towards either of these goals. It is nothing but a very lucrative handout to Bay Street.
In October 2015, Ontario’s financial accountability officer, Stephen LeClair, exposed the Liberals scheme for what it is. LeClair compared two funding options for the Liberal infrastructure/deficit reduction plan: the current privatization plan versus simply borrowing the money. He found privatization will actually cost more than the interest paid on borrowed money. LeClair demonstrated that the government would eventually lose around $500 million a year from lost revenue after a Hydro One selloff. On top of this, of the $4 billion that will supposedly be raised for infrastructure, only about half of this money will be in the form of spendable cash, the rest will be in the form of a “non-cash gain”. LeClair found that at the end of the day there may only be $1.4 billion to fund infrastructure, a splash in the ocean for the needed $130 billion. It seems that neither fund raising nor deficit reduction is on Wynne’s mind, but rather the incitement of hand rubbing on the Toronto Stock Exchange.
Hydro One is notoriously known by its customers as a frustrating, bureaucratic mess. People often find that they are billed incorrectly at too expensive of a rate. But these problems will only become accentuated through privatization. Earlier this year, Ontario’s independent legislative officers came together to denounce the Liberal privatization plan, explaining that a privatized Hydro One will be very hard to regulate. In their report they noted that post privatization they will be unable to conduct performance audits, investigate public complaints and will not be able to examine planned operations, among other negative outcomes. Just this week, the Liberals announced that they would be eliminating any independence of the province’s energy regulator, the Ontario Energy Board, thus weakening oversight. Deregulation in combination with privatization can only mean higher electricity rates for Ontarians. Due to the profit seeking nature of private capital, the banks that will have major stakes in Hydro One will be looking for the highest return possible on their investment, which naturally means extortionately high rates for consumers. Even former economist for TD Bank, Douglas Peters, believes privatization will mean higher rates. He explained that investors will demand an 8 per cent return on their investment, and this return will mainly be found through higher rates. To add insult to injury, the new CEO of Hydro One is set to pull an obscene $4 million annual salary.
It is for these reasons that 194 municipalities, many trade unions and even business associations (fearing expensive hydro rates) have come together to oppose the privatization of Hydro One. As Fred Hahn, president of Cupe Ontario said “The vast majority of Ontarians agree that selling Hydro One is a bad idea. It’s time for the Wynne government to put on the brakes, hold public consultations and, really, to do what the public wants and Keep Hydro Public.” And it is in fact true that the vast majority of the public, 80 per cent according to opinion polls, oppose the Liberal plan.
Mike Harris and his Progressive Conservatives seemed to care more about public opinion in regards to the privatization of Hydro One than the Liberals do today. The privatization of Hydro One began under the misnomer “Common Sense Revolution” of Mike Harris, a revolution consisting of savage attacks on the working class and the welfare state. Harris started this process in 1998 by splitting Hydro One into multiple bureaucratic components and introducing a market in electricity, creating a lot of the inefficiencies that exist today. In 2002, Harris’ successor, Ernie Eves, moved to privatize Hydro One, but faced with mass public opposition, was forced to back down. Now it is the Liberals’ turn, with renewed resolve to disregard public opinion. Even the Progressive Conservatives now oppose privatization, along with the Ontario NDP.
In the last provincial election, the Ontario NDP capitulated to the pro-austerity agenda. Their campaign even went as far as to propose the creation of a new “Ministry of Savings and Accountability” that would cut $600 million from the budget annually. This was essentially a proposal for a Ministry of Austerity. The Ontario NDP has partially learned from the terrible failure of their right-leaning election campaign, and have launched an anti-privatization initiative in response to the Liberals. The provincial New Democrats have led the opposition to the selloff in the provincial legislature, gathered signatures for a petition and held town halls throughout Ontario to inform the public of the horrible plan and bring heat on the Liberals. Unfortunately, these actions in themselves will not be enough to stop the privatization of Hydro One.
The Liberals have not simply made a misjudgement that can be corrected. They will not be convinced through the power of a good argument. The privatization of Hydro One is part of a larger agenda of privatization, austerity and attacks on workers’ rights. Is it any wonder why the Liberals took advice on privatization from Ed Clark, former CEO of TD Bank? The Liberals’ most recent budget means the most savage austerity and attacks on workers since the Harris years, driven by the necessity to balance the budget at the behest of the financiers. Wynne is determined to maintain “zero net gain” in public sector contract negotiations, which in reality means pay cuts due to rising living costs, and cuts to social services such as healthcare, education and welfare. A particularly disgusting part of Liberal austerity was the elimination of a $100 benefit for disabled people. We can only expect more of these uncivilized attacks. The Liberals are nothing more than enemies of the working class and servants to Bay Street. Especially in this period of capitalist crisis, only a mass mobilization by the working class will be able to stop the privatization of Hydro One. Wynne fears working class opposition to her austerity, but will not concede anything without a fight.
For inspiration to fight Liberal austerity we need only look next door to the struggle in Quebec. On December 9th, there were 400,000 public sector workers on strike in Quebec against capitalist austerity measures. This is the sort of action that can halt the privatization of Hydro One and austerity generally. As the saying goes, not a light shines, not a wheel turns, without the kind permission of the working class. Workers have all the power in the world to put an end to austerity, and capitalism. The unions and the Ontario NDP must have faith in the workers to fight for their livelihoods, and give the necessary leadership to call for demonstrations and strike action. The trade unions, in collaboration with the Ontario NDP, should begin mobilization for such demonstrations and strikes against the Liberal agenda. This is the only way we can seriously fight against the privatization of Hydro One and provide a real opposition to the Liberals.
