Tories try sleight-of-hand with transit.

When we first saw the Ontario Conservative’s proposal for Toronto Transit, we thought it was one of the silliest we had heard for a while. It just made no sense why they thought the provincial government would make less a mess of the job of running the subways and light-rail systems than the city. It turns out that what they are really proposing is changing the ownership on a lease-back type deal.

It seems when Toronto Mayor John Tory saw the idea, he also asked if they were that crazy. He had no idea how they could keep Toronto’s transit running in an integrated manner. It turned out that the Brown Conservatives only want to have the assets on their books instead of on the city’s books. By having tangible assets behind the debt, it becomes a way to hide other debt.

It is all sleight of hand. Now you see it, now you do not see it. Debt enables accountants to do their magic. As long as it is a lien against a substantive asset, it effectively disappears. You have balanced your books.

I was surprised as a business executive when I learned that the goodwill of the company was whatever you needed to make the balance sheet balance. Provincial governments certainly do not seem to build up much goodwill. They do need assets to offset debt. That is why it always seems a desperation measure when the politicians want to sell off assets.

Only a banker would have told the Kathleen Wynne government to sell off Ontario’s Hydro One electrical distribution network. They could have kept the golden goose and sold off the Liquor Control Board. The booze network is worth far more than the sum of its parts and the liquor taxes keep on giving.

But why would Wynne care about that? She could make herself look foolish announcing new booze outlets at her friends at Loblaws.

But it is Patrick Brown we are dissing today. Obviously, his accountant friends had come up with this great idea to take the transit assets away from the city. They have no thought of running the system but they have far more use for the transit assets than the city people.

But, as I said when this first came up, kids just love playing with trains.


Copyright 2017 © Peter Lowry

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