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Balanced Budget

Both of Fair Hydro’s bonds are doing well in the secondary market, trading above par and outperforming Ontario bonds. Ontario’s bonds have dropped 0.1 per cent since the first Fair Hydro bond was sold in February, while the trust’s bonds generated a 2.1 per cent return, according to data compiled by Bloomberg. The program is expected to peak at almost $20 billion outstanding by 2029 and mature in 2047.

The reality is our children have to cover this debt

The plan allowed Finance Minister Charles Sousa to announce that the government had balanced its books as promised in fiscal 2017-18 while still cutting hydro bills by 25 per cent. That was a significant reprieve for Ontario rate-payers who had seen residential bills rise about 70 per cent between 2008 and 2016 compared with an average 34 per cent across Canada, according to a Fraser Institute report.

Auditor’s Censure

But the plan has drawn a rebuke from the Auditor General of Ontario who said in a report the government was “making up its own accounting rules” by creating “a needlessly complex” structure that would cost Ontarians as much as $4 billion more in interest expense. The government, the auditor said, didn’t keep the office sufficiently informed about the plan as it was “acutely aware” the auditor would take issue with it.

“There was a willingness to incur an additional cost in order to get the accounting solution that they wanted,” Auditor General Bonnie Lysyk said in an interview in Bloomberg’s office in Toronto. “They intentionally kept us out of the discussion.”