(What follows are my speaking notes from my presentation this evening to the Finance and Economic Affairs Committee of the Ontario legislature.)
Thank you for the opportunity to appear once again before this committee, this time to address Bill 144, the Budget Measures Act.
My remarks focus on two issues both arising from proposed changes to the Electricity Act contained in Bill 144 — transparency of the government’s electricity accounts and impacts of this legislation on future municipal government tax revenues.
The legislation would repeal Sections 85(2) and 85(6) of the Electricity Act, along with other related subsections. This means is that the Minister of Finance will no longer be required to report the value of the residual stranded debt or the stranded debt held by Ontario Electricity Financial Corporation (or OEFC), or to announce when the residual stranded debt has been defeased. Of course, successive Ministers of Finance ignored the requirements to report on the status of the residual stranded debt, and only grudgingly complied when called on the carpet by the Auditor General in that agency’s 2011 report on stranded debt.
Notwithstanding the fact that successive Ministers of Finance ignored the requirement to report publicly on status of the government’s electricity debts, the original Electricity Act requirements enshrined an important principle. The public ought to be entitled to a regular accounting of the status of our electricity debts. Instead, a new veil of darkness is coming to these accounts.
OEFC was initially constituted under Mike Harris as a financial instrument dedicated to winding down the old Ontario Hydro’s debt. Sadly, Harris’s government did not make provision for OEFC to report its revenue projections, an accountability gap that allowed mischief to ensue. Without disclosure, the Ontario Liberals have gradually subverted the purpose of OEFC, turning it instead into an unfocused, unaccountable, non-reporting government electricity bank with authority to borrow on behalf of, and dole out money to, government pet projects. Major elements of OEFC’s financial statement are now directly contradicted by actions this government is taking. Far from clearing the air to protect future consumers, the government instead seeks to reduce transparency. I plead with the Auditor General and the Financial Accountability Officer to ensure transparency over at OEFC.
Bill 144 will also repeal Section 92(4) of the Electricity Act. That section originally would have redirected the flow of municipal taxes back to municipalities (and away from OEFC) once that portion of OEFC’s liabilities called the Residual Stranded Debt were paid off.
You may remember that the Residual Stranded Debt was the part of OEFC’s debt the government claimed all along was being paid off through the Debt Reduction Charge on all our bills. Taking in about $1 billion a year for more than 13 years, far more has been collected from that tax than the initial $7.8 billion of principal of that debt plus interest.
After Bill 144, the flow of tax revenues once earmarked for municipalities will never reach those municipalities. This stripping of income from municipalities is obviously driven by the government’s need to fill the hole coming in OEFC’s income caused by the sale of Hydro One. It is a reflection of the reality that the government’s electricity investment are more than 100% mortgaged and there is no windfall to be had from the sale of Hydro One. What all of this means is that this government’s signature initiative to claim a windfall from the sale of Hydro One is to be achieved in part seizing revenue from another level of government. Shifting tax revenues from one level of government to another is hardly a winning strategy to build transit.