Another Crown Corporation bites the dust.  More government money being handed over to those big bad corporations.  How will the government ever make up that lost revenue?  It’s like we all forgot why any government-run organization might one day become privatized.

Yes, it’s true: Hydro One brings in some revenue for the government, and goodness me do we ever need some of that, right?  Hundreds of millions of dollars flow to government coffers and it is able to be spent on building roads and hospitals.  But wait a second? They don’t have money for roads and hospitals so selling Hydro One is supposed to be used to help fund that.  Sounds sensible.  Off load assets that the government doesn’t consider core responsibilities and use that money to build things that are its core responsibility, like moving people and goods.  I campaigned on such a platform, except when we said it, we were slashing and burning but when this government says it, it is reallocating public assets to unlock their value.  Fine.  We get that the Liberals are better at hiding what they’re actually doing!

But here’s the real reason why people are upset.  It’s not the profit, even though that’s the easy sales pitch to the voting public.  The real worry is the threat to high paying, unionized employment.  The fact that it might be possible to actually save some money and deliver the same service  – i.e. to be more efficient – seems to be lost on just about everybody.  Remarkably, the opposition who have for years railed against high energy costs are avoiding the focus on a key component.

At the risk of grossly oversimplifying the way it works, follow this scenario.  Government owns a public Crown corporation and uses the profits for general revenue.  Let’s say that profit is $1 billion.  Good money, right? Workers rightly say ‘hey you, Crown corporation, you’re making a billion per year off the backs of us, we should share in the fruits of our labour.’ To which the management team says ‘yes, of course.’ So workers get paid a little extra, more job security, better working conditions, and benefits.  But the government still needs its billion, so what does the corporation do? It hikes rates for consumers to pay for it.  Once the profit gets back up to the billion, the workers rightly say ‘hey you, Crown corporation, you’re making a billion per year off the backs of us, we should share in the fruits of our labour.’  And, of course, it ends up that management says ‘yes, of course.’  Government needs to get its billion again, and rates increase.

Of course, it’s not that harmonious and simple. Collective bargaining is a difficult and straining process, but the essential picture of our energy system is plain to see.  The result is that thousands of power workers earn over $100,000.  We can see it on the sunshine list.  The point is that you can’t be in favour of lower hydro rates without first acknowledging that the hydro bureaucracy is large and growing out of control.

The big worry with privatization to the NDP, and the alliance of labour-friendly interests that have joined their cause, is the loss of these high paying, unionized jobs.  In order for the corporation to make more money, it will have to raise rates or cut spending.  Since the government is going to use regulation to cap rate increases (or at least they say they’re going to) the only way for these corporations to keep a profit will be to cut costs.  This will result in laying off unionized workers and contracting out more of the work to non-unionized workers.  Look to what’s happening in British Columbia right now as the government told BC Hydro to cut its spending.  They are doing so by laying off BC Hydro employees and hiring firms to do the work on contract at a huge savings.  The power workers union in BC is taking BC Hydro to arbitration over it.  They are fighting “right-to-work” by stealth.

BC is doing what successive Ontario governments deemed impossible – telling its hydro bureaucracy to cut spending.  If Ontario could do the same, then the argument for public ownership would make more sense.  The NDP may well wish to keep the asset wholly public, but they will do so by continuing to see the corporation grow ever the more inefficient and large.  The net loser of this kind of policy is the consumer who will be stuck paying a higher transmission/distribution bill than they would otherwise.  Cutting spending can produce savings, which could be used to actually lower hydro bills with the right policies in place. And today, of all days, hydro bills are going up, so some discipline in the mammoth that is Ontario’s electricity sector is necessary.

So, the next time you’re being asked to sign a petition on keeping Hydro One public, make sure you know what you’re signing.  In essence, you’re signing a lifelong pledge to higher than market transmission costs via unionization in perpetuity.   If you are OK with that, sign away!

P.S. Privatizing Hydro One amounts to 6-8% of the 100,000 job cuts.