The Premier needs to change the channel. His Finance Minister needs to find some cash. And sitting at their disposal are a few excellent conversation pieces with the potential to bring in billions of dollars.
If ever Ontario were going to sell one of its big assets - the LCBO, or Hydro One, or the embattled Ontario Lottery and Gaming Corporation - this would be the time.
There is much resistance within government to sell-offs, and a strong case to be made against holding fire sales in a buyer's market. But there is a reason why "Everything is on the table" has become a catchphrase among senior Ontario Liberals.
To an extent, that terminology crops up heading into most budget seasons. There are always people, within government and outside it, who argue that government should leave industries it has no business being in (the sale of liquor is an obvious one) to the private sector.
Then, owing to a variety of social, economic and political considerations, the decision-makers of the day decide it's not worth the risk.
As Ontario struggles to come to terms with a deficit in the neighbourhood of $20-billion, though, there are whispers that some of those decision-makers - Finance Minister Dwight Duncan, and possibly Premier Dalton McGuinty - are taking the idea of asset sales more seriously than usual.
For Mr. McGuinty, the political calculus would be obvious. He needs to get Ontarians talking about something other than expense controversies, and to convey urgent action to address economic challenges - a narrative he was having some success with before it was derailed by the eHealth scandal. That would make the LCBO a particularly attractive candidate for privatization, since it's a hot topic of conversation even when it's not on the table.
The budgetary calculus, though, might be the real impetus. The Liberals have a major cash-flow problem, and they need to do something about it.
At some point, they hope, corporate tax revenues will recover from the nosedive they've taken during the recession. But it won't be in the next year or two, at least not enough for their needs. Heading into the 2011 election, they must be able to invest in some of their key spending priorities, not least an ambitious early childhood education plan. Certainly, they can't afford two straight bad-news budgets, full of spending cutbacks and spending freezes - particularly when the concurrent implementation of the new harmonized sales tax could create the perception among Ontarians that they're paying more and getting less.
The phrase "maximizing our assets," has crept into Mr. Duncan's vocabulary, and sources say the government put out tenders for a contract to provide advice on deficit reduction, with a heavy focus on asset management. (There is some dispute as to whether that's the sole focus.) It could just mean attempts to extract more revenue from government agencies such as OLG. But it could also see the government trying to bridge the way to better economic times by selling all or part of a property.
An obvious argument against going that route, even if the government were able to maintain or improve service levels through regulation, is that it would contribute to a structural deficit by surrendering year-to-year funds in favour of a quick fix. Privatization advocates counter that, through effective licensing, revenues could be steadily increased. They point, for example, to a 2005 government-commissioned study that claimed there is an extra $200-million annually to be reaped from private liquor sales.
There could also be a strong whiff of hypocrisy. In opposition, Mr. McGuinty was so outspoken on the provincial Conservatives' attempts to privatize Hydro One that the energy transmission system (which would bring by far the biggest returns) was not even up for discussion when the Liberals conducted an internal review of assets shortly after taking power. And relinquishing some control of liquor sales or gambling would look mighty odd coming from "Premier Dad."
The counterargument there is the Nixon-goes-to-China trope - that it's easier for Liberals to privatize, because unlike Tories they're not perceived as naturally hostile to public ownership. That may especially be the case with Mr. McGuinty, since he's not exactly a wild-eyed risk-taker by nature. Some top Liberals believe the Premier has built enough trust that if he concluded it was time to sell a big asset, Ontarians would assume he had good reason.
Within a few weeks, there will be hints whether he's anywhere near that decision. Mr. Duncan's fall economic statement, typically used primarily to update the last budget, is expected to begin crafting expectations for what's to come in the next one. Anyone with a few billion dollars at their disposal would be well-advised to read between the lines.Report Typo/Error