“Individuals and companies profiting from privatization know that donations to parties that support privatization will be rewarded in the form of more and larger privatization deals.” — James Clancy, NUPGE National President
Ottawa (05 April 2016) — Revelations that one of the banks that profited from Hydro One privatization helped sell tickets for an Ontario Liberal Party fundraiser with the provincial ministers of finance and energy shouldn’t come as a surprise. Where well-connected supporters of political parties once received senate seats or other public appointments, they are increasingly being rewarded with lucrative privatization contracts.
“Privatization has become a form of patronage,"said James Clancy, National President of the National Union of Public and General Employees (NUPGE). “Individuals and companies profiting from privatization know that donations to parties that support privatization will be rewarded in the form of more and larger privatization deals.”
Companies profiting from privatization give generously to the Ontario Liberals
Many of the largest donations the Ontario Liberal Party has received this year came from companies that have profited from privatization, or hope to do so.
As was reported recently in the Globe and Mail, the banks that profited from the sale of 15% of Hydro One shares helped raise $165,000 for the Ontario Liberals by paying $7,500 a ticket for cocktails with the Premier and Minister of Energy. Among the more generous donors to the Liberal Party so far this year is Fortis which operates private electricity systems.
While the provincial government's privatization of renewable energy generation increased costs, a number of companies did very well out of it. Many of those companies are giving generously to the Ontario Liberals. Similarly, P3 privatization schemes added $8.2 billion to the cost of infrastructure, but companies that profit from them like EllisDon, Aecon and major banks, have given thousands of dollars to the Ontario Liberal Party.
Political donations show size of privatization industry
The growing role that companies profiting from privatization are playing in financing political campaigns shows how big the privatization industry has become. The most recognizable part of the privatization industry is the companies that are running privatized services. But they are just the tip of the iceberg.
Banks are involved in the financing of privatization projects. Large law and accounting firms profit from the privatization process, as do many consulting firms.
Companies profiting from privatization in position to lobby for more
With the profits to be made from privatizing public services, there is a lot of money to spend lobbying for even more privatization. It occurs directly with professional lobbyists, but it also takes place in more subtle ways.
Companies profiting from privatization will fund business associations, academics and right-wing think tanks to produce reports calling for more privatization. Recent examples are the Ontario Chamber of Commerce reports on strategic partnerships and private health care. Both were sponsored by companies that would profit from more privatization.
Legal work for ORNGE done by firm of Liberal Party strategist
Like all privatization deals, the privatization of Ontario’s air ambulance service through ORNGE required expensive legal work. An estimated $11 million was spent on legal work related to the attempt to privatize the air ambulance service. Of this, $9 million went to a firm where Alf Apps, a Liberal Party strategist, and former Liberal Party president, was a partner.
Like traditional patronage, the public foots the bill
"Just as the public pay when party fundraisers like Mike Duffy get Senate seats, they are on the hook when public services are privatized to give donors more opportunities to make a profit," says Clancy. "Privatization pushes up the cost of public services. The cuts to services that usually come with privatization force the public to seek other more expensive alternatives — or do without services they desperately need."
In fact, when you look at the $8.2 billion that P3 privatization schemes added to infrastructure costs in Ontario, the bill for privatization is a lot higher. Even Mike Duffy, Pamela Wallin and Mac Harb couldn’t find a way to claim that much in expenses.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE