Sometimes, having memorable fiascos near at hand is useful.
With the federal government floating the idea of privatizing Canadian airports, it’s perhaps timely to recall the bill tabled in the Ontario legislature almost 30 years ago to sell off Highway 407.
The legislation promised to “engage the private sector in improving transportation infrastructure, reducing traffic congestion, creating jobs and stimulating economic activity.”
As we now know, little of that fairy tale came to pass.
Fast forward to this week and the federal government of Prime Minister Mark Carney is again floating the idea of selling Canadian airports to private owners in order to streamline operations and passenger services, attract more business investment to the country and direct possible proceeds into a national sovereign wealth fund.
How very familiar that sounds.
Transportation Minister Steven MacKinnon said Ottawa was in the early stages of considering how to — as the spring economic statement delivered on Tuesday put it — “unlock the full value of airports in support of Canada’s long-term growth.”
When the minister puts it that way, it sounds like found money. It’s not.
The prospect of an airport divestiture was first raised in Carney’s maiden budget last fall.
Proponents suggested the timing was right. Look, they said, at fiscal pressure on the government, the appetite of investors, including large pension funds, and the policy alignment with the prime minister’s aims and philosophical bent.
But the government’s push toward privatization is an unfortunate illustration of how the idea of public goods has been diminished in contemporary political discussion.
We have seen again and again the costs, both financial and human, of privatizing public infrastructure and of putting essential services in the hands of the profit motivated.
Twenty-six of Canada’s larger airports are owned by the government but operated by local airport authorities — usually non-profit corporations that return profits to airport infrastructure rather than to shareholders.
Already critics are pointing out that privatization is bound to increase costs, while, in a bid to maximize profits, private airport owners would likely introduce cost-cutting measures that affected the quality and safety of air travel.
History gives credence to these concerns.
After the privatization of airports in Britain and Australia in the 1990s, results were found to be somewhat less than advertised.
A report two decades later by airlines in Australia and New Zealand found that airports, unsurprisingly, began to use their market power to the detriment of airlines, the broader aviation sector, consumers and the economy.
“Privatization of Australia’s airports promised to offer many benefits: more efficient management of assets, investment, and downward pressure on prices and airfares,” the report said.
“Yet, in the absence of an effective regulatory regime, airport privatization has ultimately resulted in higher costs for users: both airlines and passengers.”
Where privatization has been tried, services such as cleaning, de-icing and maintenance have often been contracted out, while maintenance services have been handed over to temporary or uncertified mechanics. Are these risks Ottawa is willing to take in exchange for dubious financial efficiencies?
Back home in Ontario, the Highway 407 example also suggests that large-scale privatization is often a case of short-term gain and long-term regret.
The 407 sale was the dubious brainchild of Ontario’s Harris government, which came to power in 1995 and sold off the highway in 1999 for $3.1 billion to a corporation owned by the subsidiary of a giant Spanish construction firm.
In doing so, it handed over for almost a century a lucrative public asset that rapidly escalated in value, while forgoing the reliable revenue that had been coming to public coffers. Meanwhile, congestion on nearby highways is worse than ever.
The doctrine of privatization often amounts to a transfer of public assets to the already wealthy.
That being so, Carney’s privatization proposal is a gift to new NDP Leader Avi Lewis.
Though his party had dwindled to a handful of MPs, Lewis has been handed the makings of a crusade in defending the national interest.
Elbows up, indeed.