May 14, 2011
Ontario, Opinions

Ontario election may hinge on contract no one has seen

Kelly McParland, National Post, 13 May 2011

There is a small problem involved in Tim Hudak’s promise to rid Ontario of the Liberal government’s grandiose deal with Samsung to turn Ontario into the green energy champion of the world: He doesn’t know what he’s cancelling.

Many of the terms of the contract are secret. That allows Premier Dalton McGuinty to portray it as the greatest achievement in the history of state-sponsored job invention. It also allows Mr. McGuinty to deplore Mr. Hudak’s plan, by predicting all sorts of calamitous results, which no one can verify because of the secret nature of the deal.

Given that Mr. Hudak’s promise is likely to become a centrepiece of the election next October, it’s entirely possible that we’ll spend the intervening months listening to the two sides (actually, three sides if you count the NDP), lambasting one another with dire predictions of impending devastation, with no means of judging who is telling the truth. Because none of us know all the details.

Read the release that came from the Premier’s office when the deal was announced, and you’d think Mr. McGuinty had just negotiated a pact with Nirvana Inc. to turn Ontario into a branch plant of Shangri-La.

A consortium led by Samsung C&T Corporation and the Korea Electric Power Corporation (KEPCO) will invest $7 billion to generate 2,500 megawatts of wind and solar power. These projects will triple Ontario’s output from renewable wind and solar sources and provide clean electricity to more than 580,000 households. The investment will also lead to more than 16,000 new green energy jobs to build, install and operate the renewable generation projects.

The Korean consortium will also work with major partners to attract four manufacturing plants. This will lead to the creation of 1,440 manufacturing and related jobs building wind and solar technology for use in Ontario and export across North America.

Notice how definite all the predictions are. Samsung “will” invest $7 billion, which “will” triple output. and “will” create 16,000 new jobs. Samsung “will” attract more manufacturers, which “will” create another 1,440 jobs. As if it was all pre-ordained. Nothing could go wrong. It all “will” happen. And all for an “economic development adder” of $437 million.

You can be forgiven if you’re unfamiliar with the term “economic development adder.” It means subsidy. The government didn’t want to admit it was paying $437 million to sweeten the deal and make it worth Samsung’s while, so it chose a term no one would recognize. Similarly, it can claim all the other benefits as if they are guaranteed to happen, because no one has seen the terms of the contract. The government says it can’t release them for confidentiality reasons. The NDP did get a copy, but it didn’t include figures for payments or incentives. Those are secret.

Thus, Mr. Hudak has no idea whether there’s a fixed penalty for pulling out of the deal, as he’s promised. The Tories say it shouldn’t be expensive, but they don’t really know. Just as Mr. McGuinty doesn’t really know what Ontario will get for its $437 million, plus the vastly inflated subsidized power rates it committed to. It might produce jobs or, if the industry falls apart here as it has elsewhere, it might not.

We just don’t know. And Mr. Hudak won’t find out until (and if) he becomes premier. Great basis on which to run an election eh?

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