New wrin­kles in Hy­dro One scheme

Lib­eral gov­ern­ment un­wisely dis­mis­sive of suit

The Hamilton Spectator - - COMMENT -

Kath­leen Wynne is try­ing to shut down a law­suit chal­leng­ing her plans to pri­va­tize Hy­dro One. The On­tario premier would be wiser to sim­ply aban­don her fool­hardy scheme al­to­gether.

Of all the mal­adroit moves Wynne has made as premier, pri­va­tiz­ing Hy­dro One is the worst. It cre­ates no eco­nomic ben­e­fit for the prov­ince. Nor does it help the gov­ern­ment’s fi­nances.

In fact, as the Fi­nan­cial Ac­count­abil­ity Of­fi­cer and oth­ers have pointed out, the loss of lu­cra­tive Hy­dro One div­i­dends will ul­ti­mately cost the pro­vin­cial trea­sury more than it gains.

Po­lit­i­cally, the sale of 60 per cent of On­tario’s pub­lic elec­tric­ity trans­mis­sion mo­nop­oly to pri­vate in­ter­ests can only re­mind vot­ers of how badly the hy­dro file has been botched. There is no up­side.

Given all of this it is puz­zling the gov­ern­ment has been so dis­mis­sive of a civil law­suit launched by the Cana­dian Union of Pub­lic Em­ploy­ees that ac­cuses the gov­ern­ment of wrong­fully ex­er­cis­ing its law­ful author­ity and calls for the grad­ual pri­va­ti­za­tion of Hy­dro One to be stopped.

In­stead of coun­ter­ing the union’s le­gal case with facts, the Wynne gov­ern­ment has asked the courts to dis­miss it out of hand.

The gov­ern­ment’s key ar­gu­ment is that the courts have no busi­ness sec­ond-guess­ing law­ful min­is­te­rial ac­tions. The gov­ern­ment also in­sists that if min­is­ters have acted con­trary to the Mem­bers’ In­tegrity Act, as the law­suit al­leges, then any rem­edy lies solely with their fel­low leg­is­la­tors — not with judges.

Whether or not that claim is valid, it is odd to see a gov­ern­ment so down in the polls trum­pet­ing the sanc­tity of par­lia­men­tary priv­i­lege.

To read the plain­tiffs’ state­ment of claim is to re­live the nut­ti­ness that sur­rounded the Wynne gov­ern­ment’s about face on Hy­dro One.

First, the Lib­er­als said they had no in­ten­tion of pri­va­tiz­ing the util­ity. A blue-ribbon ad­vi­sory panel tasked with look­ing into gov­ern­ment as­sets, agreed.

Then the Lib­er­als changed their minds and said they would sell 60 per cent of Hy­dro One, ef­fec­tively trans­form­ing it into a pri­vate mo­nop­oly. The blue ribbon panel oblig­ingly agreed to that as well.

Mean­while, a host of re­ports pointed out that the Hy­dro One sell-off was a ter­ri­ble deal for On­tario fi­nan­cially. Yes, it did free up $4 bil­lion that the Lib­er­als promised to spend on in­fra­struc­ture. But the loss of Hy­dro One div­i­dends cost them more.

In ad­di­tion to re­count­ing old his­tory, the plain­tiffs make two in­ter­est­ing al­le­ga­tions. First they say the gov­ern­ment cost tax­pay­ers an ex­tra $2.6 bil­lion when it cov­ered, on be­half of the fu­ture pri­vate own­ers of Hy­dro One, a key tax li­a­bil­ity owed by the util­ity.

The de­tails are com­pli­cated. But es­sen­tially, says the state­ment of claim, the gov­ern­ment for­gave a $2.6 bil­lion tax bill owed it by Hy­dro One’s new pri­vate own­ers.

Sec­ond, the plain­tiffs say that in al­lo­cat­ing the pro­ceeds of the sale, the gov­ern­ment cost busi­ness and in­dus­trial elec­tric­ity users an ad­di­tional $1.2 bil­lion in so-called debt re­tire­ment charges that they should not have had to pay.

The gov­ern­ment hasn’t re­sponded to any of these charges sub­stan­tively. In ef­fect it has said to both the courts and the plain­tiffs: This is none of your busi­ness.

In le­gal cir­cles such a strat­egy is prob­a­bly clever. In pol­i­tics it is not.

The Wynne gov­ern­ment might want to re­mem­ber that Hy­dro One is a huge, fes­ter­ing po­lit­i­cal sore — par­tic­u­larly in the coun­try­side.

It also might want to re­mem­ber that judges are hard to pre­dict. In April 2002, another On­tario judge ruled that another at­tempt to pri­va­tize Hy­dro One — this time by a Pro­gres­sive Con­ser­va­tive gov­ern­ment — was il­le­gal.

Oh yes. I al­most for­got. CUPE, the union back­stop­ping the cur­rent law­suit was one of the plain­tiffs in that 2002 case as well.

Thomas Walkom ap­pears in Torstar news­pa­pers.


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