On Public Asset Sales

Selling off public assets that yield steady and lucrative revenue streams is rarely a good idea. In Ontario, Kathleen Wynne did just that with 60% of Hydro One so she could claim a balanced budget. It is a betrayal I will never forgive her for.

As I have written previously, Justin Trudeau would like to do the same thing, for similar reasons, with our major airports. It is a very bad idea, as are most of the schemes promoted by neoliberals.

Happily, the possibility of relief from such madness is shimmering on the horizon:

A Parliamentary committee is recommending against the Liberal government’s plan to sell off Canada’s airports to raise billions in capital to be used towards other public infrastructure projects.

“Limit rising passenger and operational costs by preventing the privatization of Canadian airports,” the House of Commons Standing Committee on Finance, said in its report of the Pre-budget consultations in advance of the 2018 federal budget.

The committee's report, Driving Inclusive Growth: Spurring Productivity and Competitiveness in Canada

summarized the strong opposition to airport privatization by various stakeholders, including the Air Transport Association of Canada (ATAC), which believes that the sale is near-sighted and will result in significantly higher costs for airlines and passengers.

“Recent experience in such projects, for example in Australia, has resulted in costs per passenger to increase by 50% in the decade following airport privatization,” ATAC told the committee in a briefing. “To add insult to injury, the government would impose a huge new burden on our industry and its passengers while not reinvesting one penny of the billions generated back into aviation.”

Empirical evidence like this should carry much weight, but the Trudeau government is refusing to release the privatization study by Credit Suisse Group AG that it commissioned. Therefore, whether such disquieting facts were even considered is unknown. This unwholesome secrecy is opposed by the National Airlines Council of Canada, which is calling for open and public discussion around the entire issue.

I seem to recall Justin Trudeau, upon taking office, promised an open and transparent government. What a difference two years in office have made to that promise, eh?

Another Pending Betrayal

As we become increasingly disillusioned about the growing disparity between the Trudeau promise and its reality, another betrayal of that promise is pending. Like his neoliberal soul sister in Ontario, Kathleen Wynne, who insists that selling off 60% of the provincial crown jewel known as Hydro One is a no-brainer, Mr. Trudeau apparently thinks it is a keen idea to consider delivering our national airports over to profiteers, a.k.a. the private sector, to raise money for his 'national vision.' The upcoming federal budget looks to begin the process:

The budget is expected to signal the government’s interest in finding a way to tap the value of airports with a process, perhaps led by Transport Minister Marc Garneau, to more formally explore selling them off, the Star has learned.

The potential benefit for Ottawa is huge. One study done by the Vancouver airport authority estimated that the federal government could reap between $8.7 billion and $40.1 billion by selling off the country’s eight largest airports, including Toronto’s Pearson International Airport.

That may be good news for a government with a burgeoning deficit, but bad news for the rest of us:

Yet the privatization scheme is ringing alarm bells among airlines, airport operators and some municipalities who warn that handing over Canada’s airports to owners with a profit motive sets the stage for rising fees that will force travellers to pay more.

Vancouver airport has teamed with those in Ottawa and Calgary on a public information campaign to oppose privatization.

“We think it’s a bad idea,” Craig Richmond, the chief executive officer of the Vancouver Airport Authority, told the Star.

“This idea of a one-time payment, that’s like selling the family jewels and then regretting it forever,” he said in an interview.

The consequences of such a sale will be far-reaching and costly for those who fly:

... the authority concludes that privatization would add “hundreds of millions of extra costs” that would have to be recovered through cost-cutting, increased fees and reduced investment in airport infrastructure.

“It would be too costly for a for-profit buyer to acquire an airport such as YVR without reducing services and passing these costs on to airport users through higher fees and charges,” the report states.

So while the private sector may salivate over the prospect of windfall profits, as is the norm in the neoloiberal vision embraced by people like Trudeau and his fellow travellers, the rest of us, the mere peons in this 'grand' vision, will be left to pay the price.

Open And Transparent, Eh, Justin?

While no one would argue that the government should conduct an open-house on their impending NAFTA renegotiation, the cone of silence that has characterized Mr. Trudeau's approach to the talks is disquieting, especially given his pre-election promises to conduct an open and transparent administration.

The Liberal-dominated House of Commons trade committee has quashed a move to invite the prime minister and other high-ranking cabinet members to answer questions about Canada’s NAFTA renegotiation priorities, as calls continue for more transparency about how the government plans to handle upcoming talks on the deal.

The committee, instead, approved a Liberal plan to hear from Foreign Affairs Minister Chrystia Freeland, who is the lead member of cabinet for NAFTA and Canada-U.S. relations. She is slated to attend a meeting on Aug. 14, two days before negotiations are set to begin in Washington.

NDP MP Tracey Ramsey...is “not happy” with the result of Friday’s meeting, especially after Trudeau said this week that he would be willing to share Canada’s strategy on NAFTA with the opposition.

“We’re not asking for the specifics on how they’re going to negotiate every item, but we can clearly see from the 18 pages of priorities with the U.S. that they’ve made public — we could do the exact same thing,” Ramsey said.

Like the secret study he has commissioned to study airport privatization, one must ask an unavoidable question: Exactly what is Mr. Trudeau hiding from the voters?

The Art Of Misdirection

While it is difficult in some ways to attribute anything resembling a method to the madness of the American Moron-in-Chief, it would be wrong to think he is totally unmoored and rudderless. Trump's tax-reform plan attests to this. As does the furor that was stoked over U.S. Health Secretary Tom Price's obscene and very expensive use of charter flights on the American public's dime, for which he has now walked the plank. Both serve, I believe, as a misdirection to obscure a much more sinister long-term goal, one that all citizens of so-called liberal democracies, including Canada, should be concerned about.

The first misdirection comes in the preamble to the tax plan:

It is now time for all members of Congress — Democrat, Republican and Independent — to support pro-American tax reform. It’s time for Congress to provide a level playing field for our workers, to bring American companies back home, to attract new companies and businesses to our country, and to put more money into the pockets of everyday hardworking people.
- President Donald J. Trump

I won't belabor the obvious here about the risible and false association drawn above between tax cuts and economic growth, but let's just say the fact that corporate Canada was sitting on about $700 billion in 2014 is a sterling example of how ineffective a low tax regime is in creating jobs.

And there is no doubt that corporations and the wealthy will disproportionately benefit from the proposed changes, which aims to:

- Cut the corporate tax rate to 20 per cent, down from 35 per cent. Conservatives are framing the lower corporate tax rate as something that will increase investment and help businesses create jobs.

- Lower the top tax rate for so-called "pass-through" businesses to 25 per cent. These businesses, such as partnerships, S corporations or limited liability companies (LLCs), are only taxed on individual income.

- Eliminate the state and local tax deduction for individuals, thus taking away a break for taxpayers in highly taxed states such as New York, New Jersey and California.

- Scrap the alternative minimum tax (AMT), which was designed to prevent high-income earners from using loopholes to pay zero tax.

- And repeal the estate tax, a provision that affects very wealthy people who leave money to their heirs. The tax is currently set at 40 per cent.

Then there is the Trump claim that he will not benefit from the tax cuts, something that is demonstrably false.

But the fiction surrounding these tax cuts conceals a far more diabolical truth, one that will become apparent, I suspect, in the not-too-distant future. But to get at that truth, one more fiction needs to be dismantled, the one that says this kind of deficit spending will burden future generations. That assertion presupposes that at some point, taxes will have to be raised, and one's children and grandchildren will be paying them.

Personally, given the neoliberal nature of democracies today, I think that is absolute rubbish.

Putting aside that politicians generally lack the fortitude or the integrity to rescind tax breaks (look, for example at the fact the Harper TFSA still exists under the Trudeau government), let alone raise taxes, the truth is that future generations will pay for these deficits, just not in the way one might expect.

Payment will be extracted, not through increased taxation, but with the gutting of American social programs, entitlements like Medicaid and Social Security, etc. This will be coupled with an increasing rate of privatization of public resources, the neoliberal wet dream. And who will feel these cuts the most? The poor and the working class, most immediately, followed by the middle class through the much higher rates they will pay for newly privatized services, utilities, etc.

Already we have seen this plan being enacted in Canada, with more just around the corner. Consider the great privatization of Hydro One that has taken place under Premier Kathleen Wynne, something about which I have posted in the past. A boon to Bay Street and a bane to Main Street, it was done under the pretense of allocating all of the profits to green infrastructure initiatives. Predictably and cynically, however, Wynne has instead used some of the money to balance the books while also serving as a willing vessel for the neoliberal agenda.

There is every indication that the federal government is watching such betrayals of public ownership with avid interest. I have previously written about Justin Trudeau's secret study to privatize Canada' major airports. Again, the argument being advanced is that it would free up billions for infrastructure projects; more accurately, as Craig Richmond, the chief executive officer of the Vancouver Airport Authority, says,

“This idea of a one-time payment, that’s like selling the family jewels and then regretting it forever..."

Except, of course, there is never any semblance of regret when it comes to the nabobs of neoliberalism and their government functionaries, all of whom view public assets as fit only for corporate plunder.

So yes, everyone should evaluate each policy and event on its own merit. People are right to be disgusted with Tom Price's profligate abuse of taxpayer money, and people should be outraged that Trump's "middle class miracle" will benefit mainly the wealthy. But they should also be acutely aware of and outraged by one other thing: the purposeful misdirection that all such things represent, and should consequently rise up in deep protest as more of the neoliberal agenda is carried out by their kleptocratic Commander-in-Chief and his assorted masters and minions.