For Sale: Ontario Crown Corporations

(My apologies if the translation software butchered "la langue de Shakespeare")
(Original French version here)

Selling the LCBO, OLG and Hydro One could yield billions of dollars to the Ontario government. The LCBO alone is worth over $10 billion dollars.

It's tempting, especially with a budget deficit near $25 billion.
Premier McGuinty asked two private firms to address the issues and make recommendations. It would be a way to ensure that "we get the biggest bang for our bucks, to invest in education and health care." said the Premier.

Promises?

During the last two elections (2003 and 2007), Dalton McGuinty has campaigned against the privatization of Crown Corporations. Then in 2004, facing a deficit of 6 billion left by the previous Conservative gouvernement, he briefly juggled with the idea of selling the LCBO.

Back in 2009, a new idea is under consideration. Creating a “super-corporation” that would hold a number of provincially controlled companies, then selling a stake in that to public investors. It offers a way out for Dalton McGuinty, that would allow him to say he did not "privatize" Crown corporations.

Really for Sale?

Ontario Power Generet (OPG) For Sale? Perhaps, but at what cost? As a Crown corporation OPG does not pay federal taxes. OPG makes a payment to the Ontario government that
is the same as the corporate income tax on its net income that it would
otherwise owe to Ottawa. So, sell OPG is losing income to Ottawa.

LCBO: Could Bring $10 billion in one shot to the provincial coffers. But it contributes 1.7 billion dollars a year in revenue . It would sell the goose that lays golden eggs for a pittance.

Hydro One : who would want to buy a network of pylons and power lines that needs repair, maintenance, upgrade? Besides the existing debt of Hydro One that comes with the network ...

OLG ? Maybe. Premier Dalton McGuinty has often wondered aloud in public if the State was not a bit too addicted to revenues from the game and it would enable his government to divest itself of a problem. OLG has been a mared by scandals in recent years.

Who would buy?

Hydro Quebec buys Hydro One?
Loto-Quebec buys Lotto-Ontario?
The SAQ buys the LCBO?

Perhaps not as crazy as you might think.

When the Harris government sold the 407 toll highway north of Toronto, a consortium including SNC-Lavalin bought it.

The province sold the Savings Office of Ontario, Desjardins Credit Union purchased it.

À Vendre : Société d'États Ontariennes

Vendre la Régie des Alcools, Loto-Ontario ou Hydro One pourrait rapporter des milliards de dollars au gouvernement ontarien. La Régie des Alcools à elle seule vaut plus de 10 Milliards de dollars.

C'est tentant, surtout devant un déficit budgétaire de 25 milliards de dollars.
Le Premier ministre reconnaît avoir demandé à deux firmes privés de se pencher sur le dossiers et de lui faire des recommandations. Ce serait une façon de s'assurer que "nous retirons les revenus qui devraient être là pour l'Éducation, les soins de santé, les choses comme ça", dit le Premier ministre.

Promesses?

Lors des deux dernières élections (2003 et 2007), Dalton McGuinty a fait campagne contre la privatisation des Sociétés de la couronne. Puis en 2004, face à un déficit de 6 milliards laissé par le gouvernemetn conservateur précédent, il a brièvement jongler avec l'idée de vendre la Régie des alcools.

Retour en 2009, une nouvelle idée à l'étude, c'est de rassembler les sociétés d'État sous une grande corporation publique. Le gouvernement en garderait le contrôle tout en vendant des parts au secteur privé. Ça offre une porte de sortie à Dalton McGuinty, une porte de sortie qui lui permettrait de dire qu'il n'a pas "privatiser" de Société de la Couronne.

Vraiment à vendre?

Ontario Power Generetion (OPG) est le producteur d'électricité de l'Ontario. À Vendre? Peut-être mais à quel prix? OPG, en tant que société de la Couronne, ne paie pas d'impôts au fédéral. Mais elle verse en retour un paiement à l'Ontario équivalent à l'impôt qu'elle aurait à payer. Donc, vendre OPG, c'est perdre des revenus au profit d'Ottawa.

Régie des Alcools de l'Ontario (RAO): rapporterait 10 Milliards d'un seul coup à l'Ontario. Mais elle contribue 1.25 Milliards de dollars PAR ANNÉE en revenu à la province. Ce serait vendre la poule aux oeufs d'or pour une bouchée de pain.

Hydro One (transport d'électricité): qui voudrait acheter un réseau de pylones et de lignes à haute tension qu'il vaut rénover, réparer, entretenir, moderniser? Sans compter le dette existante d'Hydro One qui vient avec le réseau...

Loto-Ontario ? Peut-être. Le Premier ministre Dalton McGuinty s'est souvent demandé à voix haute, en public, si l'État n'était pas un peu trop accroc aux revenus provenant du jeu. et ça permettrait à son gouvernement de se départir d'un problème. Loto-Ontario a été un moulin à scandales depuis plusieurs années.

Qui achèterait?

Hydro Québec achète Hydro One?
Loto-Québec achète Loto-Ontario?
La SAQ achète la Régie des Alcools?

Peut-être pas aussi farfelue qu'on pourrait le croire.

Quand le gouvernement Harris a vendu l'autoroute à péage 407 au nord de Toronto, c'est un consortium auquel participe SNC-Lavallin qui s'est porté acquéreur.

Quand la province a vendu ses Caisse d'épargnes de l'Ontario, c'est Desjardins Credit Union qui s'est porté acquéreur.

Harmonised Sales Tax

The Harmonized sales tax is now a sure thing in Ontario.

Consummers will start noticing it on almost every bills they pay, starting in July.

At the pump, on the hydro bill, on gym membership, bicycles, vitamins, summer camps for kids and vet bills, to name only a few.

The GST and PST line at the bottom of the bills will be gone.
But a new one will appear just above the Total line: HST 13%.

It will be a reminder that the cost of living in Ontario is going up, and that monthly budgets for familly are getting a little bit tighter.

The Liberal governement is saying: "Don't worry! The new HST comes with tax cuts for business and low-income famillies, starting this January. So the negative effects will be mitigated."
The Libs seem to forget that a tax cut at the end of the year is almost invisible, compared to the daily reminder of cost increase every time people open their wallets.

As such, any fiscal advantage the liberal governement thinks its giving back to the taxpayer, becomes almost null and void in the arena of public perception.

The liberal government recognises the threat. Thats why they moved to make sure the new HST would not apply on your morning coffee, your fast food meal or your newspapers. Will it be enough to damper the criticism? Likely not. Will it be sufficient to avoid being punished for it at the polls in 2011? That remains to be seen... Liberal MPP's certainly fear so.

Often times, governements that brought a new tax or harmonized their sales tax were punished in the ballot box.

- In 1991 - Saskatchewan conservative Premier Grant Devine dared to harmonized; a few month later he lost 28 seats and the government, to NPD leader Roy Romanow (who had promised to scrap the tax).

- In 1996 The Atlantic provinces harmonized; In Nova-Scotia, 2 years later, the Liberals lost 21 seats.

- In 1958 in Ontario Conservative Premier Leslie Frost introduces the province's first sales tax (3%).People hated it so much they called it the Frost Bite.A few months later, in the general election of 1959, the Conservative lost 12 seats but retained their majority.