A reminder to Mayor John Tory and other members of Toronto City Council: the private sector is not magic.
Saying that might seem unnecessary. Outside of October baseball games, magic is not a real thing. Everyone knows that.
But lately there have been increased levels of magical thinking about the private sector at city hall, and it’s starting to make me nervous.
The mayor has argued that “unlocking the value” of the city-owned energy utility might be necessary to fix the city’s aging power infrastructure. He’s warned that without an injection of money, city hall will need to raise property taxes to pay for grid upgrades.
It’s a weird argument. Investors, as a rule, aren’t rushing to buy companies with massive unfunded infrastructure liabilities. They don’t snap up government-owned assets out of the goodness of their hearts.
They buy things to get a return.
The notion that Hydro can’t afford to pay for infrastructure needs is complicated by the fact that the agency has paid the city more than $250 million in dividends since 2010.
Why wasn’t that cash used to finance grid upgrades? Is Toronto really going to sacrifice long-term dividend potential for short-term infrastructure fixes?
Meanwhile, over at the TTC, some more magic.
Last week’s meeting of the TTC board saw commissioners consider a report on “microtransit.”
The report wasn’t about awesome model railroads, but instead about the TTC partnering with the private sector to provide some kind of alternative transit service in hard-to-serve areas.
There are a growing number of examples of microtransit around the world. Everything from dollar vans in New York City to shared ridesharing options offered through Uber.
On its own, the idea is mostly inoffensive. There may well be a role for more private involvement in spaces where the TTC can’t justify running a full-service bus route.
Where things get ridiculous is when microtransit is held up as something that can disrupt the traditional government-funded model of public transit.
Again, the reason comes down to profits.
In North America, transit is not a money-making venture. It’s heavily subsidized. Private companies might be willing to take small parts of the transit market – the part where riders can afford to pay higher fares, for example – but they’re never going to insert themselves in the part of transit delivery that costs money.
If there aren’t profits to be had, they’re not going to show up.
And there’s nothing wrong with that. Scolding the private sector for seeking profits is like scolding a raccoon for seeking your green bin. But keeping that motivation in mind is critical. The private sector will always prioritize profits over people. Government is supposed to do the opposite.
This post was originally published at http://www.metronews.ca/views/toronto/torys-toronto-matt-elliott/2016/10/03/privatizing-toronto-hydro-is-risky-thinking-for-john-tory.html on 2016-10-03T00:00:00.000Z