The Ontario government is at risk of undermining public support for the sell-off of Hydro One with its puzzling move to give away shares in the company to smooth relations with power workers.

The details won’t be made public until workers at Hydro One and Ontario Power Generation vote on tentative contract settlements. But what’s been revealed so far raises concern that the government is already diluting the promised benefits from the deal and will make it much harder to persuade other public sector workers to restrain their own demands for pay increases.

The Star’s Robert Benzie first reported this week that some 5,500 unionized workers at Ontario Power Generation will receive part of their pay in Hydro One stock as part of a new contract deal. Apparently they will receive 2.75 per cent of their base pay in Hydro One shares, starting in 2017 and for the following 16 years.

According to another report, in the Globe and Mail, Hydro One workers will also get stock in the newly privatized company. They stand to receive 2.7 per cent of their salaries each year for 12 years. All this would be, according to the Globe, in addition to wage increases of 3 per cent over three years for workers at both companies, plus a 3-per-cent lump sum payment.

Energy Minister Bob Chiarelli told Benzie that the OPG deal is a “win-win for both sides” and will be a “net zero” contract, once all the gains and savings are added up. And he says the agreement with the power workers, if ratified, won’t reduce the $9 billion the government expects to make from selling off 60 per cent of Hydro One, as planned. Of that, $5 billion is earmarked to pay off part of Hydro One’s debt and the other $4 billion is pledged to help pay for badly needed transit projects.

It’s hard to understand, though, how thousands of workers can be promised a significant benefit from this sale stretching out over 16 years without it having an effect on what the government receives. Where will the extra value come from? Does the government expect to receive more than $9 billion from the sale, with the extra cash diverted to the power workers? And why should OPG employees share in the proceeds from Hydro One?

Progressive Conservative MPP John Yakabuski put it this way: “It’s like putting a car up for sale, but in the meantime you’re selling the hubcaps and the wheels.” The public deserves to hear more from the government on how all this is going to work without detracting from the promised benefits of the Hydro One deal.

The proposed settlements with the power workers also appear, from early reports, to be pretty rich for what is supposed to be an era of restraint in the public service. Clearly, the government is eager to ensure labour peace in the power sector as the Hydro One deal is rolled out.

It may indeed turn out, as Chiarelli promises, that the deals meet the government’s guidelines for zero net increases once pay and stock gains are balanced against any concessions the unions may have made – most likely in their overly generous pension arrangements. But the headlines will be about wage increases and special stock payouts, and that’s bound to make it tougher to persuade teachers and others to swallow wage freezes as part of the government’s drive to eliminate its deficit by 2017.

The public is already skeptical about privatizing most of Hydro One. A poll this past week by Mainstreet Technologies found that 60 per cent of Ontarians disapprove of selling off a majority of the power company. A huge majority – 77 per cent – believe the sell-off will result in even higher electricity prices.

The Wynne government went into this deal against its first instincts. It eventually came around to the belief that “unlocking value” in Hydro One was the only way to raise large sums to finance transit projects, given the public antipathy to any kind of tax increase, road toll or other “revenue tool.”

But this week’s poll and early reaction to the tentative deal with the power workers should be loud warning signals to the government that this sell-off can quickly go very wrong. It should start by spelling out the details as soon as possible, and offer convincing assurance that the benefits from privatizing Hydro One really will be as advertised.

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