National Post Blasts Privatization

While The National Post typically supports privatization, today’s lead editorial correctly characterizes Premier McGuinty’s recent musings as “a desperate government trying to unload assets during a down market.”

The following paragraphs note the extreme difficulty in getting anything approaching fair value for the sale of huge, complex assets like electric power systems and the folly of trying to balance the budget with such one-time sales:

Desperate sellers rarely get the prices they hope for. Especially when the pool of buyers is limited by the sheer size of the assets, and the likely reluctance of the government to sell to customers outside Ontario’s borders. It’s difficult to imagine Ontario peddling OPG to Hydro-Quebec, as New Brunswick recently did with New Brunswick Power.

So the pot of gold may not be as large or glittering as hoped for. And the impact on the bottom line, while significant, may not be long-lasting. Even if the government was able to offset one year of its forecast deficit, that would do nothing to reduce future shortfalls, which are projected – some would say optimistically – through to 2015. Having sold off its best assets, Ontario would quickly find itself back in the red, having done nothing to address the underlying problem.

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