Ont. reviews asset sales in light of $24.7B deficit
The Ontario government is looking to ease its deficit burden by selling some of the province's most valuable assets, including the LCBO and OLG Corp., according to a report.
Sources in the banking industry told the Globe and Mail that government officials have ordered a review of privatization opportunities in the province.
CIBC World Markets Inc. and Goldman Sachs Group Inc., two banks that deal in privatizations, have been hired by the Liberal government to investigate the matter. Their report should be ready for review in a couple of months, sources said.
Ontario's assets that could be up for sale include Hydro One Inc., the Ontario Lottery and Gaming Corp., the Liquor Control Board of Ontario and the Ontario Power Generation.
One banker who requested anonymity from the Globe said one of the ideas being touted is that of a "super-corporation" that would manage and control several of Ontario's companies. A stake in the assets would be sold to public investors.
"The politicians have said they are willing to look at anything, that they don't want to prejudge the outcome," the source said.
Ontario is currently facing a $24.7 billion deficit.
Premier Dalton McGuinty told reporters gathered at Queen's Park Wednesday that the province has to be mindful of their budget shortfalls but insisted no decision had been made on the matter.
"I do think we have a shared responsibility to look at our assets and make sure we get the best bang for the buck and that's what we intend to do," he said.
However, the opposition was quick to denounce the idea, saying the assets may be too valuable to sell off.
"We do not support the idea of selling off our public assets," said NDP Leader Andrea Horwath. "Those assets are owned by the people of Ontario. They bring revenue over time and a short quick fix that sees the government getting some cash in their pocket immediately will probably mean that over the long term people will pay more."
Finance Minister Dwight Duncan said in his fall economic statement that the province has no choice but to take a close look at how it is managing its assets.
"These assets are worth billions and billions of dollars, and I think it's incumbent upon us to look at all of them and to make sure that we're maximizing them," he said in October.
The minister's office declined comment to the Globe when asked about plans to privatize some of Ontario's publicly-owned companies.
A source close to Premier Dalton McGuinty said the province is eager to get rid of the OLG after years of scandals involving insider wins and mismanagement. The OLG is credited with contributing $1.7 billion into the province's economy.
This isn't the first time the province has seriously considered selling off its assets.
In 2001, Ontario's Conservative government was set to sell Hydro One with an initial public offering worth $5-billion but the company's unions derailed the plan with a court challenge.