Message from Warren (Smokey) Thomas to Denyse Mouck, President, Prince Edward-Hastings Provincial Liberal Association
June 9, 2015
President, Prince Edward – Hastings Provincial Liberal Association
Thank you for your e-mail about the financial choices facing the provincial government.
Based on news reports, Premier Kathleen Wynne sees the problem like this: If we don’t sell public assets like Hydro One, we can’t build new infrastructure.
This is an odd way to frame the problem, to say the least. In the past, Ontario financed new transit, hospitals, and schools with low-interest government bonds. We repaid the interest and principal on these bonds by taxing the economic growth that the infrastructure helped generate.
We have never had to sell infrastructure to build infrastructure. So why do it now? What has changed?
What has changed is the influence of Canada’s biggest corporations on provincial government policy.
Ontario changed its approach to building infrastructure shortly after the 2003 election. After creating Infrastructure Ontario, the province began to use “alternative financing and procurement” – better known as public-private partnerships, or P3s – for new infrastructure projects. With P3s, private companies not only build new infrastructure, as in the past; they also manage and finance it. The result? According to the Auditor General, Ontarians are paying too much. In December, Bonnie Lysyk reported that for 74 infrastructure projects that used P3s,
…tangible costs (such as construction, financing, legal services, engineering services and project management services) were estimated to be nearly $8 billion higher than they were estimated to be if the projects were contracted out and managed by the public sector.
For the 74 projects, P3s cost Ontarians 28 per cent more than traditional public sector procurement would have.
Premier Wynne plans to spend $130 billion on infrastructure over the next 10 years. Based on the Auditor General’s report, we will pay nearly $29 billion too much for it by using P3s.
So there’s the first way to raise money for infrastructure: Don’t use P3s.
The second way is even simpler.
During the 2008-09 recession, corporations claimed that lower taxes on business would spur investment and create jobs. As a result of their lobbying, the Liberal government cut corporate income tax rates, a move that now costs the treasury $2.3 billion a year. Sadly, the government’s plan didn’t work. According to the 2015 Budget, business investment in Ontario is lower today than it was before the recession.
As government policy, corporate income tax cuts have been a total failure.
Which brings me to the second way to raise money for infrastructure: Restore corporate income tax rates to their 2009 levels.
The two simple measures I’ve mentioned above would raise $52 billion for Ontario over 10 years:
- Building infrastructure using traditional procurement methods, not P3s, would save $29 billion;
- Restoring corporate income tax rates to 2009 levels would raise $23 billion.
In stark contrast, Kathleen Wynne’s plan to raise money by selling shares in Hydro One would raise a mere $4 billion.
So how do we finance infrastructure? Do we give away an asset that belongs to us all in return for a one-time payment that will barely raise three per cent of the money we need? Or do we bring in responsible policies to protect public dollars and raise revenues?
Honestly, which would you choose? To raise $4 billion? Or $52 billion? Which comes closer to meeting our needs?
Kathleen Wynne says Liberals will need “courage” to get through the next few years. I agree. But it shouldn’t be the courage to do the wrong thing. When it comes to infrastructure, the Premier is taking her marching orders from bankers, Bay Street lawyers, and big construction companies – the very people who are growing richer from corporate tax cuts and P3s. She should be following the wishes of the people of Ontario. And when it comes to Hydro One, opponents of privatization outnumber supporters by a three-to-one margin.
Thanks again for e-mailing me. Feel free to do so any time.
Warren (Smokey) Thomas
President, Ontario Public Service Employees Union
cc: Ontario Liberal Party executive council members; all Provincial Liberal Association riding presidents; all MPPs; all member organizations, Keep Hydro Public
 Auditor General of Ontario (2014). Annual Report 2014. Toronto: Queen’s Printer for Ontario, p. 197.
 Sousa, Charles (2015). Ontario Budget 2015. Toronto: Queen’s Printer for Ontario, p. 89.
 Sousa, p. 235.
 StratCom Communications Strategies (2015). Opinions and Attitudes on Privatization of Public Services in Ontario. May 1.
Message from Denyse Mouck to Warren (Smokey) Thomas
From: J W MOUCK [mailto:email@example.com]
Sent: June-07-15 5:24 PM
To: Thomas, Warren (Smokey)
Subject: RE: Letters to Liberal Riding Association Presidents
Was at AGM and after hearing Minister Chirelli's response to the many questions put forward, I as we're the majority understood the reality of the situation not media slant.
In my opinion, we cannot demand gov't supply all our needs, services, infrastructure without a plan to do it.if you can think of a way to do all that needs to be done to get the economy moving and fix the decades of failures that have gone before….do it. If you have no solutions, someone with the power to do so needs to make those hard decisions.
The sale of PART of hydro one was not made in a vacuum. It was a difficult decision. It would have been much easier to do nothing, but would not have been what we need to move forward.
Thanks to Harpercons, taxation is poison in concept or execution. Selling LCBO is foolish, selling OLG is foolish. The Premier knows that.If you have any brainstorms to complete the tasks that need to occur then state them. You can't get something for nothing. I applaud the Premier for taking action and thinking long term instead of short term election to election thinking that gets nothing done.
Message from Warren (Smokey) Thomas to all presidents, Provincial Liberal Associations
Subject: Letters to Liberal Riding Association Presidents
Date: Fri, 5 Jun 2015 02:09:33 +0000
June 4, 2015
To: All Liberal Riding Association Presidents
Re: Take action at your AGM this weekend to Keep Hydro Public
The Ontario Liberal government is proposing to sell 60 per cent of Hydro One, the provincial transmission utility, to the private sector.
I strongly urge you to exercise your democratic right this weekend and bring an emergency resolution to the floor of your general meeting that moves to immediately stop the sale of Hydro One.
Is this why we joined the Liberal party? To sell off assets that belong to all Ontarians without their consent?
Or did we join the Liberal party because we believe in a fair society? A society in which government plays a positive role in making life better for everyone?
Let’s be clear: Ontarians oppose the sale of Hydro One by a margin of 3 to 1. As the months roll on, this opposition will only grow as the decision to privatize our electricity grid will have serious implications for all Ontarians.
Let’s look at the facts:
- Since Ontario Hydro’s inception in 1906, Ontario has managed to build all its roads, subway tracks, schools, colleges, universities, and hospitals without selling its public electricity system.
- The government expects to net $9 billion from the proposed sale. From these proceeds, $5 billion will be applied to debt and $4 billion will be invested in infrastructure. That $4 billion represents only 3 per cent of the government’s planned ten-year, $130 billion infrastructure spending initiative.
- Every year the government receives close to a billion dollars in revenues from Hydro One operations which are re-invested into health care, education and other vital public services. In fact, Hydro One and Ontario Power Generation made a whopping $371 million more than the government projected a year ago in its 2014-15 Budget.
The plan to sell Hydro One is bad policy and does not make economic sense.
When we sell Hydro One, we lose control of it. Investors, including foreign investors, will have a majority interest in its operations – and a majority say in how it is operated. Do we really want investors on the other side of the world controlling our electricity?
Private investors want to own Hydro One for one reason only: to make as much money as they can. The profit motive can only work to put upward pressure on already high electricity prices.
This weekend, take a good, hard look at what your party is doing. There will be consequences to choosing a course of action that Ontarians do not support (such as years of observing power from the political wilderness…just ask your federal cousins).
Please listen to what Ontarians are saying.
Say NO to privatization and stop the sale of Hydro One.
Warren (Smokey) Thomas