Casinos and the Private Sector

Our Mayor has distinguished himself again by revealing his total ignorance and lack of understanding about the issues at hand.  He suggests that “casinos” and the private sector can provide the transit we need without any additional revenue tools – which without the use of consultant’s English, would be called taxes.

First, he continues to use the discredited figure of $100mm per year for the City’s take of casino revenue.  That would not actually be “revenue” but money appropriated from deluded gamblers and at the expense of the previously existing City infrastructure.  Also, the ability of a casino to appropriate that much and give it to the City is without a doubt a pipe dream.  Windsor gets $3mm a year from its casino – which has contributed to the deterioration of Windsor’s downtown along with the effects of a bad economy.

However, let us for a moment, enter the Mayor’s fantasy world.  Toronto receives $100mm a year and that is a net addition to the income – pretend there are no negative City income effects from a casino.  Pretend that this money is 100% allocated to transit as well.

What effect does this have on our transit needs.  The Big Move has a projected budget of $2Bn per year.  This number is widely perceived as understated, but let’s take it at face value and look at what will happen with a no tax increase, fantasy casino revenue of $100mm scenario.  It will take 20 years to finance The Big Move – year one.  The whole project would take 500 years.  Maybe this plan is not so visionary.

As for the private sector – they will only invest in a scheme that has a guaranteed return.  Think of your own RRSPs.  Would you give money to a losing venture?  I think not.  Rob Ford’s embrace of the private sector is only a way of ‘borrowing” not a net contributor to any project.  Since the private sector wants to make a return on its investment, that borrowing is by definition more expensive for the City than the traditional method – issuing debentures.  There may or may not be “efficiencies” in asking private sector parters to enter Public Private Partnerships (PPPs) during the building phase, but that is a question to ask after the funding is in place.  The PPP does not wish to offer a free contribution to any project any more than you or I would want a portion of our RRSP to be given away.  If we want to make a real charitable contribution to a real charity, that is a distinct and separate matter based on our conscience and sense of obligation. Few of us would agree to pay more taxes than our neighbour.

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