Powering down Ontario businesses

The April 27, 2015 press release from the Office of the Premier of Ontario announced a $25-million investment in “Scale Up Ventures, a new venture capital fund designed to support Ontario’s most promising start-ups through a unique combination of investment and mentorship.” Kathleen Wynne, the premier, stated: “By providing new sources of capital and pairing seasoned business leaders with ambitious entrepreneurs, our government is creating a dynamic business climate where new ventures have the opportunity to grow.”

Scale Up Ventures’ website shows several investments, including one in Bullfrog Power that offers to sign up you or your business to receive “green energy,” in the form of “electricity or natural gas going on the grid or pipeline for your home that comes from clean, renewable sources.”

Handing out tax dollars to a company like Bullfrog Power to deliver natural gas with the claim it comes from clean, renewable sources seems like a stretch. But it’s especially difficult to hear if you consider the prebudget presentation by the Canadian Federation of Independent Business (CFIB) to Ontario’s Finance and Economic Affairs Committee. Because it specifically identifies the cost of electricity as a key culprit for keeping those “independent businesses” from growing.

The CFIB represents more than 100,000 small and medium-sized businesses from all areas of the economy. Its 42,000 Ontario-based members employ about 500,000 people. CFIB’s recommendations for the 2017 Ontario budget stemmed from a major survey of its Ontario members. Following are some of its questions and the resulting responses from the 3,000 businesses completing the survey. Premier Kathleen Wynne of Ontario, where the Scale Up Ventures fund is designed to support the province’s most promising start-ups through investment and mentorship.

“How have your total business electricity costs changed during the past three years?” resulted in 87 per cent of business owners saying their costs had increased from five to 19 per cent (39 per cent of respondents) or 20 per cent or more (48 per cent of respondents).

“How have electricity costs affected your business during the past three years?” resulted in 43 per cent stating electricity costs caused “delayed investments” including “hiring new employees.” Some 56 per cent of those responding to that same question indicated electricity costs forced them to increase prices of their products or services.

Other responses to this question noted they had reduced employee hours or reduced the number of employees, and 13 per cent said they had considered actually either closing their business or relocating to another jurisdiction.

Another question asked about time-of-use (TOU) electricity pricing and whether their business had been able to change its consumption hours to “manage electricity costs.” In three years (November 2013 to November 2016), the on-peak TOU rate has increased 45 per cent. As one would expect, with most businesses operating during peak hours, it is easy to see why only four per cent of respondents said they could shift their power use.

A further question dealt with an issue the Wynne-led government has focused on. The premier’s letter of Oct. 13, 2013 promised “Our Open Government initiative will help create the transparent, accessible government that the people of Ontario deserve.” The specific question posed to the CFIB’s Ontario members was headlined, “Billing Transparency Needed” and asked “How difficult is it to understand the charges on your business’s hydro bill?” More than half, or 56 per cent, said it was somewhat or very difficult to understand the charges.

What this survey should tell the government is that its actions have neglected more than 400,000 small and medium-sized businesses employing as many as five million Ontarians. It suggests the government cannot pick winners and shouldn’t hand out grants via venture capital funds to companies like Bullfrog Power. It underscores why Ontario has become a “have not” province.

What’s happening to Ontario businesses today makes it clear the time has come to rescind the Green Energy and Green Economy Act, cancel the addition of more unreliable and intermittent renewable energy, cease spending on conservation and remove the indirect taxation and social programs embedded in the electricity sector.

Ontario’s existing businesses aren’t asking for the government’s money or mentorship; they simply want their hydro costs to be “affordable, predictable and stable!” smoke, such as education programs and interventions targeted at at-risk populations. Yet, the government continues to concede to a small but vocal group of antitobacco lobbyists who are more anti-industry than prohealth.

With products already hidden from view in stores and 75 per cent of the pack covered with health warnings, nobody starts smoking because of the packaging. Plain packaging will only make it easier for counterfeit tobacco manufacturers to copy legitimate products.

No other industry would accept this requirement, as the lobbying from marijuana producers now makes clear. However, all industries should be fearful of this abuse of government power. In the U.K., which passed tobacco plain-packaging legislation in 2015, there is a growing chorus of health groups and academics calling to subject alcohol products to the same fate. While it may be tobacco and marijuana facing plain packaging in Canada today, it will be another industry shortly thereafter.

Companies making a legal product have a right to their brands, and those brands must be protected to ensure that consumers have the confidence in the source and quality of the product.