Tag Archives: Privatization

Rocco Rossi Goes Underground

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So now Rocco Rossi’s going to build us subways. Two kilometers of track and one stop per year for the next ten years. Once we get that albatross Toronto Hydro from around our necks, the world will be our oyster! Get cheque. Go to the bank. Pay off debt. And the money will start rolling in.

Monetization of public assets. It’s so simple that it’s amazing no one else has ever thought of that before.

Oh, wait. They have. Margaret Thatcher. Ronald Reagan’s President’s Commission on Privatization in 1987. Our very own Mike Harris. Remember the 407? (Hey! There’s a snappy campaign catch phrase. Remember the 407! Reminiscent of the defiant battle cry, Remember the Alamo! It’s open for public use. Maybe you want to use it, Councillor Pantalone. A little bump to help you step up and get involved in the conversation.) How about the recent long term lease deal/debacle in Chicago where they outsourced the revenue for parking meters and lots into private hands?

What I’d like to know before we go all weak in the knees over Mr. Rossi’s plan to trade Toronto Hydro for subways is does it make an economic sense? With more than a few substantive examples of privatization plans gone awry, where are the positive illustrations of asset monetization? One? Any? I’m all ears here.

Even in the Fraser Institute’s call to privatization arms, the to-the-point article entitled Time to privatize, there’s talk of the tremendous benefits of “sweeping privatization” backed by overwhelming research in academic literature. The results have shown that privatized firms increased profitability, efficiency and dividends while reducing debt ratios. OK, but what about any benefits to the public purse? What does the public gain from monetizing assets?

Errr… well, a better run, more profitable company will help increase economic growth overall. More money, more tax revenue. So we’re counting on that old trickle down theory that conservative groups like the Fraser Institute love so much. There’s also the possibility of an increased amount of capital investment which would also stimulate overall economic growth, taking us back to trickle down again.

There seems to be a much more robust argument against privatization coming from people like Dexter Whitfield and the Municipal Services Project. Mr. Whitfield summarizes the crux of his recent book, Global Auction of Public Assets: Public Sector Alternatives to the Infrastructure Market and Public Private Partnerships, in a post at Truthout. His view seems to be that the public is better served by directly investing in infrastructure without relying on the private sector. Real life examples seem to back his argument up.

Examining Mr. Rossi’s plan specifically, things just don’t seem to add up. If I understand correctly, the city of Toronto garners more equity annually from it’s ownership of Toronto Hydro than it spends on servicing the debt. In selling Toronto Hydro, we pay down some of the debt thereby decreasing the amount of interest we pay per year. But after the one time payday, we get no further revenue from Toronto Hydro. So unless Mr. Rossi plans on paying off the debt entirely, we’re still in a negative cash flow situation as opposed to a slightly positive one if we keep revenue coming in from our ownership of Toronto Hydro.

And he plans to build 2 kilometres of subway track and one station per year at roughly $200-300 million a pop? How? Where’s the money going to come from?

Yet this announcement was made to great fanfare yesterday morning. What has Rocco Rossi done to earn himself such a free ride? Serious candidates should have serious plans not simply the hocus-pocus of you want subways? I’ll give you subways. Just don’t look behind the curtain.

Rossi’s announcement is the latest in a trend from our conservative candidates of shameless pandering that was best summed up in the Tweet-o-sphere yesterday by Graphic Matt. Look at me! I’m a right-wing candidate for Mayor of Toronto. Here is my proposal: subways! Here is how I will pay for them: magic!

— head scratchingly submitted by Cityslikr

Someone Should Stick To Food Reviewing

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Maybe it was because I was awaiting major dental work that the article in last month’s Toronto Life got right up in and under my craw. “The case for privatizing the TTC” declarative on the front page under a tasty looking plate of pasta most certainly caught my eye as I was sitting in the reception area. Bold, I thought. I will attempt to set aside my reservations about the idea and listen to a well thought out argument on the subject. Go ahead, impress me, convince me, sway me, Mr. Chris Nuttall-Smith.

It did not take long for that openness on my part to dissipate. Never trust an argument that begins its journey with a long preamble full to bursting with aspersion casting and name calling of those that would be against said argument. It takes me back a quarter century or so to the 1988 federal election that was fought primarily over the proposed free trade deal with the United States. The anti voices expressed concern about the flight of capital southward to lower cost regions, taking good paying manufacturing jobs with it. Lily-livered, knee jerk, head in the sand, backward looking, parochial, old time nationalists came the studied response. Don’t be ridic-uuu-lous, to borrow a TV catch phrase of the time.

Cue irony machine and Homer Simpson D’oh! What’s that you say? Good paying manufacturing jobs? Never heard such crazy talk.

So goes Nuttall-Smith’s argument in favour of TTC privatization. Those who are against it are well-meaning but ill-informed, ill-equipped, fearful of the future and, worse yet, engineers. Why engineers have been bad for the TTC Nuttall-Smith never bothers taking the time to explain. He even calls TTC chair, Adam Giambrone, ‘Chairman Himbo’. That’s early on in the article and Nuttall-Smith’s argument never really rises much higher than that.

He quotes Giambrone’s response to calls for privatization of the TTC back in 2008 after it was subject to yet another unionized workers strike: “Aside from London, England, he [Giambrone] said, ‘There are no major centres that run privatized operations – there’s a reason.’” Nuttall-Smith quickly swats that claim aside, telling us, in fact, there are dozens of them and, after some more name calling, eventually gets around to listing a few although aside from a couple of exceptions, he reels off countries who have gone the privatization route rather than cities which doesn’t really refute Giambrone’s assertion about ‘major centres’. That’s called comparing apples to oranges, Mr. Nuttall-Smith.

He does have a couple examples of ‘major centres’ in his back pocket, though. Copenhagen and Stockholm have privatized aspects of their transit systems. And they’re both great! Although, strictly speaking, transit operations in the Swedish capital are only partially privatized. If I understand the gist of Nuttall-Smith’s argument, the buses and subway are public owned while the maintenance of them and actual moving of people has been contracted out to private firms. The whole operation is overseen and regulated by a public body.

An operation that is heavily subsidized, Nuttall-Smith quietly admits in a quick paragraph after all his ejaculatory swooning over Stockholm’s “private” transit system.  “Granted,” he states, “Stockholm does this with an annual operating subsidy of $900 million – more than double what we drop on the TTC every year…” Hello. What? More than double the TTC funding?! And didn’t you tell us earlier on in your article, Mr. Nuttall-Smith, that the Stockholm transit handles half the daily traffic of Toronto? So they get double the money to move half the people.

“But great transit systems cost money.” Chris Nuttall-Smith informs us.

Well then, how about this, Mr. Nuttall-Smith. Why don’t we first start funding this city’s transit system properly and see what happens. If things don’t pick up and turnaround after that, then we can begin to have the privatization conversation. With someone who can put forward a coherent case in favour of it instead of just ideologically driven drivel.

— hungrily submitted by Cityslikr

Let’s Hear It For A Job Well Done

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Amidst all the irate rhetoric in the air about the state of this city’s services, whether it be the TTC or, well, the TTC… there’s been a lot of bitching about the TTC of late… I think a shout out should be made when something positive catches your attention. A reminder to all the nabobs of negativity out there that Toronto runs pretty darn well and our needs are met with an efficient routine that goes largely unnoticed until it doesn’t, usually when something goes wrong which, as I’m trying to say in this long, convoluted introduction occurs less often than we might think. Or that politicians running for office would like us to think in order that we vote for them.

It was garbage night in my neighbourhood last night and, as is my wont, I threw my cape on up over my shoulders, and went out for a stroll to garbage pick, I’ll be frank. A treasure hunt for artifacts that others deem to be extraneous; my own personal recycling program. Springtime is a particularly bountiful period for this as people are more prone to junking stuff that has driven them batty over the long winter season, cramped up with it in close quarters as they were.

Making the rounds last evening, I was stopped up in front of a house, struck silent and motionless by the sheer amount of content sitting at curbside. It was not anything that I was on the lookout for, an old art deco floor lamp, for example, or LPs of long forgotten artists, just simply everyday detritus that must be dealt with every week (or bi-weekly as the case may be) from every house, on every street, in every neighbourhood. Tonight, for example, along with the compostable material in the green bin and non-recyclable garbage in the black, there was yard waste. Paper bags filled with old leaves, dead plants, pruned clippings or clipped prunings.

At this particular house that I stood before, there were 9 of these paper bags, all full. In addition to which, there were two neatly tied bundles of branches that clearly came from the dogwood which stood just back further up the front yard. And a Christmas tree, looking shockingly and robustly green. How is that even possible? Why would anyone still have a Christmas tree in April?

Moreover, there was no way in hell this was all going to be picked up tomorrow morning, I thought. It’s too much. Too, too much. What if everyone in every house on every street in every neighbourhood chucked away this amount of refuse, fully expecting it to be hauled away to some miracle location? The work would be non-stop and ultimately impossible to stay on top of.

Besides, haven’t we had it drummed into our subconsciousness that the city workers who do this job are lazy, shiftless, strike-taking ne’er-do-wells who are simply underworked and overpaid? No way, no how was this heap sitting out in front of this house all going to be taken away in one trip tomorrow morning.

Yet, gone it was as I took a slight detour up the street on my morning run early today. All of it. Not a twig left behind. Even the Christmas tree.

As we have pointed out in an earlier post here, all of this for a mere $6.39 a day for Toronto homeowners (in addition to all the other services we receive). What’s there to bitch about, people? Yes, it’s their job and they’re doing it. Could it be done cheaper? I guess so, although I’m still waiting for someone to send me the numbers to show where and how that’s being done. The only way it could be is to pay people less for doing the exact same job. Why would we want to do that? How does reducing people’s wages and benefits add to the well-being of this city?

Should they have the right to strike and inconvenience us all? Call me old school and a traditionalist but I say yes. It seems to be the best, most cost effective way we’ve come up with to maintain a healthy equilibrium in the ongoing struggle between management and workers. The alternative is simply a one-sided, take it or leave dynamic that never encourages but only instills fear and resentment. That’s a tone that plays well on the campaign trail, even to a larger degree during times of economic uncertainty like this one, but ultimately leads to piss poor governing.

Before giving in to that frame of mind, take a moment and think about all the things that go unnoticed throughout the course of one day and marvel at just how smoothly our city does in fact operate.

— chidingly submitted by Urban Sophisticat