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The Ontario Liberals’ plans to sell Hydro One could cost the treasury $500-million annually and will eventually increase the province’s net debt, the financial accountability officer has found.
Stephen LeClair’s inaugural report slams the Liberal government’s plans to sell 60 per cent of the utility — which transmits most electricity in the province — as a short-sighted cash grab that will cost more than it makes in the long run.
The report notes that, in the short term, the sell-off will make it easier for Ontario to balance its budget by its planned deadline of 2017/18, but the lost revenues will hurt the bottom line over the longer term and make it harder to balance future budgets. The plan is to sell a 15 per cent stake in the Crown corporation each year until 2019, when the province’s stake will be reduced to 40 per cent.
“Once the full 60 per cent has been sold, the province would experience an ongoing negative impact on budget balance from foregone net income and payments-in-lieu of taxes from Hydro One,” the report notes, putting that number at $100 million annually.
The treasury will also forego 60 per cent of the current $750-million dividend Hydro One pays the province each year — or another $450 million
That means the province will lose hundreds of millions a year in revenue from selling 60 per cent of Hydro One for less than $9 billion. The report says just $3.3 billion to $5.8 billion of that would make it into the province’s Trillium Trust to build infrastructure — the whole point of the sell-off.
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