The Importance of Being Ernie

Deregulation has brought us corporate crime on a large scale. It has brought us monopoly media and monopoly financial credit. Ralph Nader

By Sydney White

Glib and glossy television ads have been showing up all over New York State, with Ontario Premier Ernie Eves at his carnival barker best. He's wooing the corporate world to come to Ontario and make more profits than ever before.

Ernie can do that because he has embarked on the biggest vote-buying campaign since his predecessor, Mike Harris. He has promised to ban teachers' strikes during school terms; he has promised that mortgage interest will be deductible; and he has promised lower property taxes to the elderly.

But the biggest worm on the hook is the so-called "rate cap" on our hydro bills. He has neglected to tell us that we're still paying the high rates, because the amounts over the cap have simply been shunted over to a growing tab which now resembles the Hulk.

Ernie is safe using "deductibles" as bait for the votes of homeowners. If he gets away with selling off the public generators, causing atomic-size hydro bills, we won't be able to take advantage of Ernie's "deductibles" because we won't be able to carry our homes or businesses.

We cut him off at the pass when he wanted to sell Hydro One, but his worst policy is that he will try and proceed with for-profit electricity generation in a deregulated market. The largest part of our hydro bills is the cost of generating electricity and this is where the privateers make the most profits. They are eagerly waiting in the wings for Ernie to make his move.

The Ontario Electricity Coalition is continuing its valiant efforts to restore and renew public power. Last March 6 they held a public meeting to disclose Ernie's real hydro plan. Those who had believed that the rate freeze was the answer to overpricing were dismayed to hear that the rate cap was bogus -- the tip of an iceberg that would sink Hydro in the long run, leaving it open to privatization of the remaining 51 per cent of our public asset.

According to the Ontario Electricity Coalition, Ernie is hiding the fact that we are still paying private electricity producers their demanded prices. Every month $100 million of public money is flowing into their coffers and everything that is owed above the "cap" has become a debt. As soon as the rate freeze becomes too expensive to maintain, the rates will soar again. In fact, it was announced June 18, that the rate will be capped until May 2006, at which time consumers are supposed to get a renewal package "in the mail". Meanwhile, the debt created by the hydro cap continues to grow.1

We're betting the summer brown-out bills that the interest is compounding. The following explains the deal that Ernie is not disclosing.

The gap between the 4.3 cents paid by consumers and 8.5 cents received by generators is covered by the Ontario Electricity Finance Corp., which raises the money by -- wait for it -- borrowing! Taxpayers are responsible for payment of this debt and, of course, the added interest.

When central banks do not support their citizens and their assets by issuing new money interest-free and loans to government at minimum interest, we all suffer from "anti-economics" or a system based on social debt. The crucial part of the OEFC's debt ($20.1 billion as of April 10) is not offset by any assets --thus it is called the "stranded" debt. I disagree that it's not offset by assets, because government has a habit of devaluing our public assets when they enter them in the books. For years, contrary to all proper accounting practices, government investments in infrastructure, both physical and social, have been entered in the books as "expenses" and thrown into the deficit to promote more privatization.

Bruce Sharp of Aegent Energy Advisors Inc. estimated that by April 30, ending the first year of the subsidy program, the cost not covered by the Ontario Power Generation refund was about $470 million.

So much for Ernie's big (and lonely) idea. I'm sure California and 22 other states will back me up.

Paul Kahnert of the Ontario Electricity Coalition states emphatically that if we were to conserve, we could cut demand by 40 per cent. "We would not need the coal-fired plants" which are killing so many Ontarians and "we would not need the dangerous nuclear plants," he says. Our wasted money could be paying down the Hydro debt, which we wouldn't have without our old "profit" conservationist, Maurice Strong, who reduced our biggest and healthiest asset to rubble.

U.S. presidential candidate Ralph Nader stated in Toronto June 4 that "Deregulation has brought us corporate crime on a large scale. It has brought us monopoly media and monopoly financial credit." All over the globe, the privateers, fronted by government pawns, are grabbing all the publicly owned resources and pricing them beyond the citizens' reach. Even pro-corporate papers such as the Wall Street Journal revealed as early as 1999 that the privatizers in Russia had stripped the country's best assets and transferred their winnings to offshore corporations that they controlled. Estimates of $10 billion capital flight from Russia each year are probably conservative. They laundered the money in London, Geneva and New Jersey, we were told.2

In the United States last year, Goldman, Sachs -- who were around when the Federal Reserve was inflicted on America in 1913 -- pushed Montana Power to deregulate and go into telecommunications. Goldman, Sachs made $20 million on the transaction. But it was proven by investigators that they knew the telecommunications bubble was about to burst when they sold Montana Power their advice. Montana Power CEOs got several million, but thousands of citizen shareholders lost every dime of their retirement money.

Montana Power was just like Ontario Hydro: cheap, regulated electricity with years of solid stocks, which citizens handed down to their families. Interestingly, it was Goldman, Sachs and the Canadian Imperial Bank of Commerce who did "background studies" on the privatization of Ontario Hydro, but would not release them because "it would injure the banks".

Just now are people beginning to understand that their public assets can only be privatized (stolen), after their money supply has been privatized. The NDP has bravely divulged, to large television audiences, that if given the power, it will stop government borrowing from private banks and return our loans to the Bank of Canada. This move, of course, would give our public assets back to us because we wouldn't be paying $45 billion each year in interest to private bankers. We could develop through interest-free loans from our own bank; the infrastructure of this nation would be unrivalled around the globe.

As a coincidence theorist, I would advise Jack Layton, Joe Comartin and Lorne Nystrom not to travel on the same plane.

Moving on from legalized theft, we find ourselves on the shaky ground of nuclear neglect and possible radiation fallout.

Last Feb.27, the public members of Canada's nuclear safety watchdog found out there was a serious safety problem at the Bruce Nuclear Power Station, which had been leased to the private sector. But the Bruce management team had known about the danger since Dec. 23! An engineer had installed a neutron detector in the wrong place and this was only discovered when neutrons were building up again in the reactor.

According to Bruce management, there was "no potential threat to the public." Commissioner MacLachlan replied:"The flaw is in the system."3

Unfortunately, taxpayers will pay for the "flaws in the system", not the privateers leasing the power station. These "investors" made $90 million in profits in the first six months -- but any problems with the plant itself will be paid for by us.

So Mike and Ernie continue privatizing the profits and socializing the debt and they want to keep it that way.

Another frightening rumour is that Harris, who says our Hydro is a "monopoly-based system", has not given up his secret dream of running in federal politics.

During the "public" consultations over the sale of Hydro One, Energy Minister Stockwell confirmed it as a farce when he announced that he would pass the law allowing the Hydro One sale -- after it had been ruled illegal. He stormed out of the first meeting when he was heckled after a speech by the head of Bruce Power, who had just praised the government for its "vision" in privatizing hydro.

Aside from his indignant presence at the "consultations", the Minister had been busy selling our water cheap. He was helping a Swiss company (with offices in Paris) triple the l.5 million litres it sucks from the Tay River to 4.5 million litres a day. Were we consulted on his little sideline? Of course not. But the locals on the Tay River had a drought last summer.4

Stockwell must have convinced the Geneva bankers and their waterboys that the Tay River was far enough away from Walkerton not to contaminate their 12-year-old scotch. Bill Murdoch, an MPP from Chris Stockwell's party, represented Walkerton during the e-coli tragedy. He said it was not the government's fault. These corporate flunkies, if caught in future deals, may tell us that we can't afford to keep our water clean, so we will have to sell it off.

This leads us to the NAFTA problem.

If we fail to stop Ernie from selling off Hydro's public generators, but then return to publicly regulated electricity, we will be sued under NAFTA for billions of dollars for "cutting off future potential profits" to foreign corporations. In short, once that floodgate is opened, we will suffer the deluge. Once we export electricity to the U.S., NAFTA takes away our right to cut back, even if there are shortages here. If the generators are privatized, as Ernie has planned, they would be selling directly to the U.S. This means that we would be competing with those who can pay more than we can for our own electricity. We would have to pay the same as the U.S. customers or go without.

As in the California experiment, many businesses would fail because of hydro costs. In fact, many thinking businessmen in Ontario are now worried that they will lose their edge, because high prices will take away their competitiveness. Many even suggested turning Hydro One into a non-profit corporation!

We must educate other business entrepreneurs and make them aware of the coup that Ernie is planning.

The easiest way to abolish nuclear plants and their hazards, it appears, is not to lease them to the private sector, but to sell them, with no government subsidy. The corporations will immediately drop the whole idea as the bad investment it is. Then we will merely have to contain all the radioactive waste that already exists.

But of course that won't happen.

The deal is that we are the fall guys, for radiation or debt. But if the corporations did have the responsibility of ownership, Ernie Eves, Chris Stockwell, and others on their gravy train, would probably insist that the upside of a nuclear accident is that we will save on hydro by reading at night in our own blue glow.

The best thing government can do is to abandon this ridiculous and failed market experiment and reconstruct a regulated system of public power at cost -- but one that would be more accountable. All the evidence proves without a doubt that the old Ontario Hydro came through for all of us, including business, every time. A government that cannot act according to the reality of that evidence, and in fact distorts that evidence, is not fit to govern.

Maybe the "importance" of being Ernie can be spelled another way.

Footnotes:
1. Toronto Star, John Spears,10 Apr. 03
2. Wall Street Journal, 30 Aug. 99, pg. 8
Paul Kahnert, The Ontario Electricity Coalition
3. Toronto Star, Peter Calamai, 27 Feb. 03
4. Toronto Star, Slinger, 25 Feb. 03

A member of the Committee on Monetary and Economic Reform, Sydney White teaches Studies in Propaganda at the Free University of Toronto.