Let’s break a deal

When is a deal not a deal?

Apparently, and sadly, when you sign it with the Ontario government, or at least the @fordnation iteration.

As of this writing, the Progressive (LOL) Conservative government was working toward passage of legislation intended to cancel midstream a 10-year agreement between the province and the Beer Store. The move dismantles a negotiated agreement between the retailer and the previous Liberal government to allow limited grocery store sales in return for investment and expansion of availability by the Beer Store.

While it will likely have to be sorted out in court, some pundits are citing legal experts who contend that ripping up the contract will result in Ontario taxpayers paying hundreds of millions, perhaps as much as $1 billion, in penalties. Hope you enjoyed that “buck-a-beer” while it lasted.

However you feel about the Beer Store’s quasi-monopoly, this isn’t the first contract this Tory regime has trashed. One of its first acts was to cancel a cap and trade agreement between Ontario, Quebec and California, the financial repercussions of which will be reverberating for years.

You would think a government with an “Open for Business” mandate would have the support of organizations like the Ontario Chamber of Commerce. But that group, whose members understand contracts, has denounced the deal-breaking. In a May 29 letter to Minister of Finance Vic Fedeli, the chamber warned of consequences.

“Cancelling a contract sends an alarming message to the business community in Ontario and beyond which could potentially deter investment,” chamber president Rocco Rossi wrote. “Breaking a legitimate contract is a short-sighted approach.”

Astoundingly, Fedeli told Queen’s Park reporters earlier this week that multinational companies working in Ontario don’t expect incoming governments to honour contracts signed with previous regimes.

“All multinationals understand that any contracts that are signed by one government, especially bad contracts, don’t need to be carried forward by another government,” he said.

Citing the principle of parliamentary sovereignty, Fedeli noted convention holds that legislatures can’t bind future legislators. For example, he pointed out the current government can’t pass a law banning tax hikes in perpetuity.

Aside from demonstrating a lack of understanding of the difference between legislating and deal making, that sends a pretty chilling message to any entity a current or future government might want to make an agreement with.

However, if that premise holds, Doug Ford and company may have actually solved Ontario’s fiscal woes in one brilliant stroke, uncovering a heretofore unseen means of slaying both the deficit and the debt. If one government can’t bind the next, how can we be compelled to keep paying the interest and principal on loans taken out by those long-ago legislators?

All those debentures issued by municipal governments to support infrastructure? Why keep up the payments in a world where everyone keeps their fingers crossed behind their back? Maybe because we hope others will keep up their end of bargains and be willing to forge new ones with us?

Hard to believe there was a time when people worried this government might replace “Yours to Discover” with “Open for Business” on Ontario license plates. At this rate, we may soon feel obligated to print a series with “We can’t be trusted” as the new slogan.