The privatization of Hydro One has begun. In the first week of November, the first public offering of Hydro stocks resulted in the sale of about 10% of the public utility, generating great excitement on the TSX where the RBC Capital Markets and ScotiaBank led the pack in scooping up the largest parts of this and future offerings.
The Hydro One firesale is an out and out gift to the banks and corporations, in exchange for some quick money to fund the government’s unfunded $30 billion infrastructure program – one of two key promises that won them the June 2014 Ontario election.
The government says the main objective of the sale is funding for the infrastructure program. But only $4.6 billion will be realized by the sale – less than one-sixth of what’s needed – and at a huge cost to the public.
Instead, this $30 billion could be generated by reversing an estimated $15 billion in corporate tax cuts and by increasing the corporate tax rate to 22% for an additional $10.5 billion annually. That would raise the funds for the infrastructure program, and maintain Hydro One as a public utility. It would also generate a much larger, and stable revenue stream for other public projects, like public hospitals, the long promised (but never delivered) needs-based funding formula for education, or a provincial system of affordable public childcare, urban and inter-urban public transit.