Still digging

It was an anxious weekend for wind and solar energy developers in Ontario. On Friday Premier Kathleen Wynne signalled she would address electricity rates in the province by way of a new throne speech in the Legislative Assembly on Monday. After losing a safe seat in a by-election in Toronto, she had to do something.

The quickest, most effective way to do that would have been to end the lavish gravy train of subsidies and support to producers of intermittent and expensive sources of power. It isn’t as though it is needed—Ontario exports more electricity than wind and solar sources generate on most days.

So it was a weekend spent on pins and needles for these folks. Their lawyers just a speed dial away from spinning into action on Monday morning.

Imagine their foaming-mouth frustration— having paid the Liberal party a lot of money, having spent a fortune on expensive dinners with Kathleen Wynne and her cabinet, and now, now she was going to turn on them? How dare she? They had filled her next election campaign war chest with looted taxpayer dollars, and now she was going to cut them loose? There would be hell to pay.

They needn’t have worried. On Monday, Wynne announced her government would take the revenue hit—not the producers. Their sweetheart deals were left untouched. Instead, the province would forgo its sales tax revenue. Next year.

It’s like the familiar scene in the heist movie when the thieves are busy cracking the safe and drilling through the ceiling when the security guard wanders too close. The burglars freeze and hold their breath. It must have been like that. Until the security guard determines everything is in order and continues on his rounds.

Kathleen Wynne’s tax cut will only cost the province a billion dollars a year. When you owe $300 billion, it doesn’t seem such a big deal. The beauty part is that Kathleen Wynne and her big wind and solar dinner guests get to carry on. Without scrutiny. Still enjoying the heaving bounty of the well-laden gravy train.

The trouble is that is our money. All of it. The loot being plundered. And now the sales tax that is being forgone. You and I will have to make up this lost revenue—either in higher taxes or debt payments. We pay—one way or the other.

Wynne could have cut at the source of the problem—ending the subsidies that bathe and pamper big wind and solar developers. Instead, she will shift a small portion of hydro bills onto taxpayers—hoping we don’t notice. It is a purely cynical play.

But she can’t have Ontarian’s looking too closely at the monstrous creation that electricity generation has become under the Liberal government. At this point, no one outside the most faithful Liberal supporter could reconcile Dalton McGuinty’s green energy ambitions with the malformed and malevolent Frankenministries of the environment, energy and natural resources that have been hideously reshaped by this government.

When it is all over, there will be investigations, studies and commissions established to find out what went so terribly wrong and what can be done so that it never happens again. But we are not there yet. We are still at the getting-worse, digging-the-hole-deeper part.

Next year, Ontario will join California and Quebec in a cap and trade emissions market. It is designed as an indirect tax on carbon—though energy providers are prohibited by the province from showing this new cost on your gas and hydro bill.

It is a complicated scheme that hasn’t worked well in Europe and is in trouble in California and Quebec. Governments have a poor track record of using market mechanisms to realize public policies. This is likely related to the fact that governments tend to turn to such mechanisms when trying to obscure unpopular policy.

The problem is that, given time, everyone—except government and consumers—learns to game the system to their advantage. Powerful multi-national businesses will always be more agile and more motivated than government.

But Kathleen Wynne only needs it to be successful for a few months. To show that her scheme is producing the revenue she says it would. Enough to get her reelected in the spring of 2018.

It won’t be easy. At this point, voters have made a firm connection between the Liberal government and their eye-watering electricity bills. It will be hard to break. Wynne needs the Ontario PCs to do something colossally stupid. Fortunately for her and her government, Ontario’s PCs have shown a talent for this.

rick@wellingtontimes.ca