Ontario mulls Crown asset sales - Macleans.ca

Ontario mulls Crown asset sales

Liquor stores, casinos and the electricity system could soon be up for grabs


The Ontario government is considering selling off some of its most lucrative Crown corporations in a bid to reduce its yawning $24.7 billion budget deficit. Provincial officials have admitted liquor stores, casinos and the electricity system could be wholly or partly privatized once the two investment banks hired by the government to evaluate the returns they could generate complete their assessments. “We’ve got a responsibility to look at all our assets to make sure we’re getting the best bang for the buck,” said Premier Dalton McGuinty, “and especially now in the context of a global recession and a significant deficit.” Like his sudden support for a harmonized sales tax, a move towards the privatization of public assets would mark a significant departure from past positions for McGuinty. In 2003, the Liberal leader criticized the then-Conservative government for selling Highway 407 and pledged not to privatize Hydro One when the Conservatives considered doing as much in 2002. McGuinty has defended his latest potential change of heart as the “right thing to do.”

Toronto Star

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Ontario mulls Crown asset sales

  1. "We've got a responsibility to look at all our assets to make sure we're getting the best bang for the buck."

    I'm no economist, but how is that possible during an economic downturn?

  2. I'm no economist, but selling assets in the midst of a downturn seems dumb.

    Also, I can't imagine them selling the LCBO without removing its monopoly, which would further diminish its value.

    • Good point. The sale price for a non-monopolized LCBO will probably be less than the net present value of its future profits, AKA selling at a loss. Although there are always a lot of investors willing to believe that a large beaurocracy will somehow become much more efficient simply because its ownership changes.

      Basic finance theory suggests that prospective purchasers will only be willing to pay slightly less than what the assets are worth, or they won't make any money. This, plus the transaction costs (such as paying the investment banks to research this stuff), suggest selling the assets is a long-term "lose" situation. Add long-term regulation costs to the picture, and it looks less and less like a big deal.

      Efficient Market Theory notwithstanding, common sense suggests these types of assets tend to devalue in a recession. Again, this means selling at a loss.

  3. Ontario should auction off McGuinty first.

  4. Ugh. Absolute wrong time to sell anything, let alone real estate in Ontario. I understand that we have a large deficit, but we're not going to improve our long-term fiscal situation by making irresponsible sales out of desperation.

  5. Eighty three percent of Ontario is crown land. Why not sell the northern half – some of the most undeveloped and isolated land on Earth – to the feds? Or perhaps the Chinese? We're not using it or developing it and haven't the cash to do so anyway.

    SeanStok – we're not in the middle of an economic downturn, though you'd be forgiven for believing that since the media has grossly distorted the so-called "recession" that wasn't actually a recession. GDP is growing in Canada at the moment and employment is increasing, that's kinda the exact opposite of an economic downturn. To the extent the economy is a tad sluggish, what do you expect after a year long propaganda campaign by the Canadian media falsely claiming that we are in a recession and experiencing the worst economic crisis since the Great Depression?

  6. the government should be in the business of governing and not running businesses…sell it all off, use the money to cut the deficit

  7. This is classic "Schock Doctrine" behaviour. First NB Power (which at least is being sold to another province, not a private corp.), now this. There will be more.

    • I think you meant to say "Schlock Doctrine". :)

  8. The Government has the mandate to not sell to minors and because of public pressure, if they do, it would be a serious black eye or a scandal. If the LCBO is sold off, that lack of "business sense" -ie a paying customer is a paying customer- is gone. If the LCBO were sold to a Business, that is their mandate – make money… I think someone already mentioned the 407…
    If you have any questions about Businesses making money on any people who pay, when was the last time you saw an _underage_ teenager smoking??? Oh that's right, YOU JUST PASSED ONE ON THE STREET!

    • i don't get why the government is running liquor stores, if they are the government and are responsible for public health shouldn't they be going out of their way to convince people not to drink?

  9. If Hydro One's debt exceeds it's value, wouldn't we have to pay someone to "buy" it? Oh, here is now to do it – keep the debt and give away the assets – like a divorce!

    • can they make it go bankrupt and start over?