Premier Kathleen Wynne’s cash-strapped government could “free up $2 billion to $3 billion” to fund transit by selling some Hydro One assets and modernizing the LCBO’s retail operations.

That’s according to TD Bank chair Ed Clark in his privatization panel’s interim report to Wynne, whose administration is saddled with a $12.5-billion deficit.

“We estimate that between $2 billion and $3 billion, depending on market conditions at the time, can be realized and invested in Ontario’s transit and transportation infrastructure,” Clark said Thursday in a 77-page report, entitled “Retain & Gain: Making Ontario’s Assets Work Better for Taxpayers and Consumers.”

“These investments will create jobs directly and indirectly through investments in critical infrastructure which will remove impediments to economic growth.”

His report — done with former Progressive Conservative treasurer Janet Ecker and former NDP cabinet minister Frances Lankin — comes as Finance Minister Charles Sousa is set to deliver the fall economic statement on Monday.

It urges the Liberals to sell off parts of Hydro One, the provincial transmission company, including Hydro One Brampton and Hydro One Networks’ distribution arm.

The panel also recommends keeping the Liquor Control Board of Ontario monopoly, but expanding its retailing online and with “warehouse depot stores,” specialty boutiques “which emphasize craft beer or craft distillery products” and wines.

“For example, a store on the Danforth in Toronto could specialize in Greek wines and spirits while in Little Italy customers could find an exclusive selection of Italian wines and beers,” the report said.

The 639-outlet chain must also boost Internet shopping to bring in more money than the $1.74 billion it annually returns to the provincial treasury.

“We believe the LCBO can use its online platform to create an open marketplace on its website, allowing suppliers and agents around the world to list products for consumers to purchase for pick-up at their local LCBO store.”

As well, the LCBO should be allowed to sell 12-packs of beer instead of just six-packs. That would help craft brewers, though cases of 24 would still be exclusively sold at The Beer Store, a government-sanctioned private monopoly owned by AB InBev, MolsonCoors, and Sapporo.

“We believe that the relationship between the provincial government and The Beer Store should be revised to ensure that Ontario taxpayers receive their fair share of the profits from The Beer Store,” the report said.

“Consumers should not see an increase in prices as a result of this change.”

But last month, Jeff Newton, president of Canada’s National Brewers, which runs the 448 Beer Stores across Ontario, warned consumers would be affected by the change.

Newton noted that “adding new taxes to The Beer Store and selling larger packs at the LCBO, where government adds another $4.95 to every case of beer, is a recipe for higher beer prices.”

Still, Wynne’s government will be moving forward with the panel’s recommendations.

That’s because the premier has promised $29 billion for transit and transportation infrastructure over the next decade — $15 billion for the Greater Toronto and Hamilton Area and $14 billion for the rest of the province.

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“The government agrees with the council’s initial proposals and is asking the council to move to the second phase of its review,” Sousa said a statement.

“During this collaborative and transparent process, the council will work with the Ministries of Finance and Energy, as well as other affected ministries, to keep the government apprised of its progress. Its activities and recommendations will help inform the province’s 2015 Budget process.”

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