COLUMN

A classic case of running amok

While the world around them adapts, Crown corporations often remain immune to criticism and sheltered from the marketplace

MARY JANIGAN August 8 1994
COLUMN

A classic case of running amok

While the world around them adapts, Crown corporations often remain immune to criticism and sheltered from the marketplace

MARY JANIGAN August 8 1994

A classic case of running amok

COLUMN

While the world around them adapts, Crown corporations often remain immune to criticism and sheltered from the marketplace

MARY JANIGAN

It is perhaps a sign that an institution is truly out of control when it disturbs the dead as much as the living. I never knew Selim (Aggie) Aggiman. He died of a stroke in 1976 at the age of 75, after a career as the treasurer of a consortium that was trying to save New Brunswick spruce from the fatal bud worm. He loved trees. His knowledge was so extensive that he once identified forgotten species for a Hawaiian university campus. He charged no fee for that particular service. He did it for the sheer joy. Because he had no family in Canada, he willed his ashes and his scant estate to his closest friends, my husband’s family. They honored him with a cairn ringed by 18 spruce at their farm north of Toronto. Last month, Ontario Hydro inspectors announced that they could not approve additional electrical service for the farm because the institution had churned out more regulations since the last installation. Now, all trees within a four-metre radius of any new wires had to come down. At least 400 trees had to fall. The inspectors were particularly emphatic about Aggie’s spruce. Rules are rules.

That unsettling decree epitomizes the problems that beset most large institutions, especially Crown corporations, in the 1990s. While the world around them adapts to the changing economy, they often remain hidebound, tangled in regulations, oblivious to their customers, immune to criticism and sheltered from the signals of the marketplace. When they do change, new strategies replace old strategies with scant public consultation or debate. Every Canadian can cite an example of a department or agency that serves itself, not the public. (Remember the old post office?) But for the perplexed residents of Ontario, Hydro has become the classic, increasingly weird example of an institution that has lost its way.

The corporation has been meandering dangerously off the path for decades. But the voters, and their successive provincial govem-

ments, were hesitant to criticize—partly because of the corporation’s godlike image as the bestower of light and its venerable histoiy. Ontario Hydro was created in 1906 by aggressive entrepreneurs who understood that secure access to power was, literally, power— and who feared that American firms would monopolize the generating might of Niagara Falls. Its mandate was to supply electricity at the lowest possible cost. But throughout the 1970s and the 1980s, the corporation (and the provincial government itself) overestimated and overbuilt for future power requirements. It swamped its would-be overseers with paper. It was overstaffed. And it is now $37.3 billion in debt, despite rate increases of 30 per cent in the early 1990s. One out of every two cents in revenues is earmarked for interest payments.

In December, 1992, the New Democratic Party government called upon a Visionary Leader, that canny capitalist and environmentalist Maurice Strong, to rescue its troublesome asset. When chairman Strong was good, he was very, very good. In a single year, he postponed or cancelled $13.6 billion in capital projects. There was no 1994 rate increase. He reduced the staff by almost 5,000 employees through buy-out packages. Another 4,000 contract employees were not rehired. The

corporation might actually show a $200-million profit this year, after a staggering $3.6-billion loss in 1993.

But when Strong was bad, as the old rhyme goes, he was horrid. The NDP government believed that it had a tacit understanding with Strong: he would propose no major policy changes in 1994 because it was a possible election year. The trouble is, Visionary Leaders are not usually inclined to listen to advice. And they are not usually democrats. Since the Ontario Energy Board began its review of Strong’s initiatives and his request for a 1.4per-cent rate increase in 1995, Hydro has peppered it with proposals for change. There was a policy paper on privatization. Hiere was a report that identified 1,500 additional surplus staff. Then, three months ago, opposition members of the legislature revealed that Hydro was considering the purchase of a rain forest in Costa Rica. It was one of 18 possible foreign projects, such as forest restoration in Panama, that Hydro was studying. While Ontario ratepayers were trying to reconcile Hydro’s job cuts at home with its new mission—possibly outside its mandate—to save the Earth, Hydro announced a new triumph. For $73 million, over the private qualms of many board members, the corporation had purchased an interest in a Peruvian electrical distribution company. In response to criticism, Strong was defiant. He asserted that Hydro would spend up to $200 million on purchases in high-growth nations. And he vowed to pay no heed to the “whims and idiosyncrasies and uninformed judgments of individuals.”

Interesting. From 1985 to 1991, the only period for which comparable data is available, the Peruvian economy shrank an average of one per cent per year while Canada’s grew by 2.2 per cent. And the U.S. state department’s latest bulletin on Peru should have chilled anyone’s ardor, even the Strong: “With the exception of certain tourist areas, terrorist violence, which has diminished over the past year, continues to occur in many areas of the country.” Hydro transmission lines are a prime terrorist target

There has to be a better way to change institutions. With little public debate, Hydro has apparently become a capitalist buccaneer, both at home and abroad, and an ecological do-gooder. While it makes little sense to privatize the gigantic monopoly, there are good arguments that could be made to privatize its non-nuclear generation systems—and to introduce real competition. But with the exception of the current low-key, nonbinding Ontario Energy Board hearings, there has been little public consultation on Hydro’s future. Democracy is messy—but it would be interesting to try it

In the meantime, we did manage to save Aggie’s spruce. A friend suggested that the wires could be buried underground. A private company charged $3,600 to dig a trench and lay the cable. The forest is intact. Aggie’s soul is at peace. With no help from Ontario Hydro, the marker for his memorial can remain: “Selim Aggiman. 1901-1976. Good Friend and Lover of Trees.”

Mary Janigan is a Maclean’s Contributing Editor.