Friday, April 05, 2019

Smooth Move, Mike

In 1998 the Ontario government of then premier, Mike Harris, sold the 407 highway to for $3.1 billion to a Spanish-led consortium that included - wait for it - SNC-Lavalin. The Ontario government had built the 407 for around $1.5 billion but Mike needed to get the books in order to win his second majority government.

Now SNC Lavalin wants to unload, not its entire 16 per cent minority interest, just 10 per cent, for $3.25 billion.

In 2019 dollars, the original privatization price was about $4.4 billion. The price Lavalin scored suggests the 407 highway is now worth upwards of $30 billion. That's close to 1,000 per cent appreciation.

And then there is the matter of the tolls that 407's owners have reaped over the years. For the year 2017 alone that totalled over $1.25 billion. A billion dollar plus toll revenue per year on an asset that originally cost just over $3-billion atop the killing you've made on ten-fold appreciation.

That's what happens, kids, when rightwingers flog off public assets for low, low prices. Governments and taxpayers get screwed, royally screwed.


ffibs said...

Sadly the opposite is also true when governments buy back assets

The Mound of Sound said...

True enough.

John B. said...

It’s sickening to reflect on this because anybody with the sense to open his eyes before looking knew it was a rotten deal for the public when it happened. It was as obvious as a turd in a glass of milk. Has Chainsaw Mike ever been asked in an interview subsequent to leaving office why he alone couldn’t see that turd? But of course, maybe he did. It was not he, but the powerless losers of Ontario, who’d be forced to drink the tainted milk. Yeah, that’s smooth.

No politician and few analysts that are afforded any press time have ever called out market-libertarianism for the obvious fraud that it is. It’s more than a fraud for God’s sake; it’s a fucking joke. The continuing failure of the public to give its collective head shake allows the con men flogging it to flourish. And even now as we speak the heads remain unmoved in America as Trump, Jesus loves me, is trying to put one of their cheapest whores on the Fed’s board of governors.

We arrived at this place by being allowed to grow up stupid. Most of us wouldn’t have survived a potato chip famine.

The Mound of Sound said...

John my memory of the 407 privatization is peripheral at best, having left Ontario in the late 70s. I do recall a degree of controversy at the time but it was plainly not enough to derail Harris' plan. The privateers have been rewarded handsomely, especially when you factor in the toll revenues they've collected for the past two decades.

the salamander said...

.. 'wouldn't have survived a potato chip famine' - we love that.. !

I've been maintaining for quite a while now (2 months) that Canadians need NOW .. to know the extent of Lavalin enterprises under way in Canada. More specifically, the relationships to Federal and Provincial Governments.

Projects and/or Assets - Dates - Names - Funding and/or Approvals - Partnerships - If done as a flow chart and it all won't fit on one page, break it into Provinces or Amount of money involved - Foreign ventures can be separate from Canadian. Projects that include noteworthy Criminal Court cases or substantial lawsuits should be noted clearly

Anonymous said...

Yes you can't trust "far right" neocons and neoliberals as far as you can throw them!

If you think the privatization of the 407 was bad, the following Neo-Liberal government privatized the electricity system! Something no neocon would have the balls to do!

In fact, a number of privatization schemes blew up in their faces: like Ornge Air Ambulance service that looted $25 million.

Liberal/Tory same old story. Both are the parties of dogs who eat the scraps that fall from their Masters' table.

Of course, Dippers are toddlers who know nothing about politics, economics or human nature. Their party is not rotten with pay-for-play. It's rotten with Establishment-university ideology. (They were designed to fail. Welcome to The Machine.)

BTW, Doug Ford is a neocon globalist. He is no Donald J. Trump!

The Mound of Sound said...

From the distant side of the country I did wonder about what Ontario had done with what I once knew as Ontario Hydro. I never believed that the private sector could deliver essential services better or at a lower cost than the public sector which ran counter to the mantra of the neoliberals. The rentier factor was just too strong a temptation to cut the public a deal on what often was, in fact, public property.

A local example is how the BC Liberal governments of Campbell and Clark privatized BC Ferries primarily for the convenience of the ruling party. The ships, the docks, the terminals, the lot were handed over for a buck. It used to be so galling to have to pay to park in a lot, once owned and paid for by the BC public, by virtue of it having been given away.

However, once the deal was complete, the legislature was insulated from public pressure over labour issues and there was no longer as much attention on the ferries as an integral part of the Trans-Canada highway. That was also when the new "owners" switched to buying ships from foreign shipyards, depriving BC of jobs, revenues and taxes.

Owen Gray said...

And they say they know how to manage things. The question is, "For Whom?"

Anonymous said...

All that money going into the pockets of Private Banksters when that money could have been borrowed from our Public Bank of Canada...but nope we can't make life easier for the minions paying that tax money to the uncaring politicians. Let's face it, Socialism doesn't mean taking wealth from those who work hard and giving it to those who don't. If you do, you are thinking of "Free Capitalism". Anyong

The Mound of Sound said...

I suppose you just have to "follow the money," Owen. It's pretty sweet. You recover your capital cost, your investment, in 10 years from toll revenues. The next ten years is pure gravy. At the end of that you wind up with an investment that has appreciated ten fold.

You plonk down $3 B, collect $7-8 B in toll revenues, and wind up with an asset valued in excess of $30 B. It doesn't come much sweeter than that.

The Mound of Sound said...

Anyong, John Kenneth Galbraith called it "socialism for the rich."