11/4/12

Liberal problems come from their turn to the right

As two Liberals on the (presumed) left of the party declare their intention to run for the leadership, it bears recalling that almost all of the major problems the Liberals have faced in the last few years have come from attempts to re-position the party to the right.

First, Premier McGuinty (and  departing Finance Minister Dwight Duncan) supported moves to privatize public services. This led to a series of failures and scandals that angered the public:
Mississauga gas plant
  • Overpaid private contractors at eHealth; 
  • Scandalous, hidden extra costs at the Brampton "public private partnership" (P3) hospital; 
  • Bloated salaries, highly dubious corporate payments, and limited public oversight enabled at ORNGE by privatization;  and
  • A massive corporate payout after the Liberals opened up energy production to for-profit corporations
Indeed, the Globe reports that the corporation that won the  now infamous Mississauga gas plant project (cancelled at great expense during the last election) was actually in the process of suing Ontario Hydro when it won the bid. The corporation eventually took $10 million from the government for this lawsuit. (But what's that between friends?)

Moreover this corporation paid an incredible 14% interest for construction cost loans for the plant. Capital costs are a major expense in construction projects and this is much, much more than the cost of capital for a public project (over the summer the government was able to borrow at a rate of 1.65% for seven year bonds).  While P3 capital costs are always very pricey, this is a whole new level.

Luckily (for the corporation, not the public) the government kindly agreed to boost their guaranteed revenue by 50%!

At that rate, perhaps it was a bargain to pay hundreds of millions to kill the deal.

It was also a turn to the right when McGuinty and Duncan attacked free collective bargaining in August.  The Liberals were, in effect, tearing up their brand as the party of social consensus.

Notably, this was immediately followed by a sharp fall in the polls for the Liberals as teachers and other labour groups began to return fire over the loss of a core civil right won over decades of struggle.  Shortly, the exit of McGuinty and Duncan followed too.

Will we see any re-thinking by the Liberal leadership candidates of this right wing direction?  There is little sign of it yet.  But time will tell.

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