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Law timeS • September 7, 2010 Cash-hungry Libs changing the rules between friends? The numbers are out, and the Liberal govern- ment is breathing a sigh of relief. Things aren't as bad as the government thought they were. Heck, the government was only $19.3 billion short be- tween what it spent and what it took in last year. It could have been worse, much worse. Last October, they were expecting to be $24.7 billion in the hole. It's something they can be W proud of as they head back to work next Monday when the legislature resumes sitting. This is the deficit, mind you, the difference between spending and revenues. So it's money being heaped on the debt, which is the accumulated shortfall and the mortgage on the future of the province. How big is the debt? Brace yourself: $212.1 billion, up $35 billion and growing and $13,500 for every person in the province. But don't worry. Finance Minister Dwight Duncan plans to balance the books by 2017- 18. It's a conservative timetable that leaves a little bit of wiggle room should things not go as expected. That's probably wise since nothing has gone as ex- pected lately. Still, as Lakehead Univer- sity economics professor Livio Di Matteo points out, the gov- ernment says revenues will rise 17 per cent between now and 2012-13 while spending is to increase by just eight per cent. But it's the debt that's the elephant in the room with 40 cents of every dollar spent go- ing to servicing it, says Di Mat- teo. If interest rates rise, things get worse as a one-per-cent in- crease will trigger $500 million in spending. The issue, Tory house leader and MPP John recession, Yakabuski, it's according isn't the the spending habits of Premier Dalton McGuinty's government. "In seven years, Dalton McGuinty has increased gov- ernment spending by 70 per cent, during which time the Ontario economy grew by just seven per cent," he says. "And despite new taxes like his HST and eco tax grabs, McGuinty is on track to single-handedly double Ontario's debt during his time in office." The province is clearly des- perate for new income and has given the green light to the Ontario Lottery and Gaming Corp. to explore sanctioning online gambling. It may not be purely revenue driven, but the government has also agreed to lift the ban on mixed martial arts events, which will generate some cash flow via taxes. At this point, ev- ery little bit counts. to hat's a cou- ple of bil- lion dollars Inside Queen's Park By Ian Harvey The big money, however, is going to come in the form of government salary freezes, which means the Liberals are going to go toe-to-toe with the big public-service unions. Don't hold your breath, though, as we've already heard from Sid Ryan and company on that subject. So far, it's not sounding very conciliatory. Make no mistake, this cash-hungry government is looking in every nook and cranny to find money. Look for user fees on driver's li- cences and registrations to rise and levies to increase since boosting taxes before an election is political suicide. But is it too little, too late? "What does Ontario have to show for this orgy of spending and taxation at a time when its economic pro- ductivity was flat?" asks Di Matteo. "Ontario is at best a mediocre performer whose skills have been nurtured by years of a philosophy that the government that governs best is a government that regu- lates most. Witness the initia- tives of recent years: closing cost-effective coal plants and implementing higher-cost en- ergy initiatives in the name of the environment; sequestering large land areas of the prov- ince's north from economic development; and banning pit bulls and pesticides, as well as both smoking and cellphones in vehicles. Of course, most of these regulatory initiatives probably required substantial expert consultations resulting in the expenditure of more government dollars." Di Matteo suggests the gov- ernment will have to find a 20-per-cent reduction in spend- ing to get back on track in addi- tion to benefiting from a fortu- itous trend in the economy. With barely a year to go before having to face voters, however, the chances of a third term for the Liberals are getting slimmer by the min- ute. The irony, though, is that whoever does take the reins of power next year will have to make some deep spending cuts to turn things around. The government will also face the unpalatable task of selling tax hikes. Regardless, we all know who is going to pay the price in the end: you and me. Ian Harvey has been a journal- ist for 32 years writing about a diverse range of issues including legal and political affairs. His e-mail address rogers.com. is ianharvey@ COMMENT PAGE 7 Ontario tilting at windmills as province alters course midway BY AARON ATCHESON For Law Times of fields of turbines dotting the Strait of Juan de Fuca or the Bay of Fundy. Prior to the media coverage over the past year, W they would have been unlikely to think of the Great Lakes as one of the most promising areas for wind development in Ontario. In particular areas, the wind regime in Ontario's portions of the Great Lakes is impressive and the waters shallow enough to plan for some of the largest offshore wind farms in the world. Notwithstanding the po- tential, this industry is certainly in its infancy in North America, including in Ontario. Despite the constant refrain of the business community about the necessity of maintaining consistency in policies and incentives in order to avoid chasing investment out of the sector, the Ontario government and its power purchasing body, the Ontario Power Authority, have made several changes recently to programs and require- ments for the renewable energy sector, including those relevant to offshore wind developments, that have angered project developers and raised doubts within the finance community. The amendment to the very popular feed-in- tariff program to provide a significantly lower rate for small ground-mounted solar projects stemmed from an overwhelming response and the percep- tion that developers were taking advantage of an unintended quirk in the pricing model. However, the proposed rule restricting wind developments to areas greater than five kilometres from shore appears to have been a response to criticism by environmental groups about the effects of the largest turbines going up near human and wild- life populations. When the Ministry of Natural Resources an- nounced in January 2008 that it would be taking new applications for offshore wind projects, the provincial government explained that the previous moratorium period had involved completing sig- nificant study of their potential, the establishment of key partnerships, and an in-depth analysis of certain social and ecological values. Further sup- port for this sector came with the price of 19 cents per kilowatt hour for offshore wind development, which raised the interest of some significant play- ers in the global renewable energy industry, as well as companies like Toronto Hydro. Less than a year later and not even eight months after the ministry gave approval to Toronto Hydro to build an anemometer to test the near-shore wind resource in Lake Ontario, the industry is reeling from the announcement of a proposed re- quirement that no turbines go up within five ki- lometres from shore, which effectively wipes out the Toronto Hydro project and makes its recent investment in testing equipment redundant. The government has issued a discussion paper, posted the requirements for public comment, and promised consultation sessions this fall. Part of the justification for this geographic restriction Editorial Correspondence LT NO RESPONSE AS MINISTER'S MIKE TURNED OFF Justice Minister Rob Nicholson may have held firm, but to what I'm not sure. Having been one of the people who asked him a question, I was somewhat annoyed at not receiving a response. In fact, he answered my question and others at length without ever saying much on point. My question www.lawtimesnews.com hen Ontario residents think about the potential for offshore wind farms in Canada, they likely conjure up images Speaker's is that certain states along the Great Lakes are considering similar rules. Nevertheless, the U.S. government granted the industry a major victory this spring with the approval of the Cape Wind project in Massachusetts at the same time as On- tario was reversing course under pressure from environmentalists. While the mix of federal and state control over offshore wind projects in the United States constitutes a significant drag on de- velopment in this area, with the Cape Wind ap- proval, President Barack Obama's administration has signaled it's serious about encouraging such sources of electricity. So why did Ontario re- Corner verse course? The change ap- pears to be a manifestation of the tension within the larger environmental move- ment between those seeking to replace the most polluting sources of electricity with cleaner renewable energy facilities and more stringent environmentalists who are suspicious of the large industrial wind developments proposed on and offshore in Ontario. The Liberal govern- ment would like both of these groups to support them in the 2011 election. It also wants to avoid driving the reactionary crowd that rises to oppose many new wind projects into the arms of the Pro- gressive Conservatives. The discussion paper on the proposed restric- tions states that the five-kilometre shoreline exclu- sion zone is a result of the Ontario government's commitment to protecting inland water bodies and ensuring safe beaches, drinking water, food, and fish, as well as preserving the province's natural and cultural heritage. Project proponents are ask- ing why this commitment didn't come into play earlier, which would have allowed them to plan de- velopments to avoid the now-restricted near-shore areas. Others note that while the restriction is clear that no wind development will occur within five kilometres of shore, the documentation explains that site-specific factors may require that a proj- ect be located even further away, which results in greater uncertainty among those considering mak- ing an investment. When the provincial government introduced its Green Energy Act in order to expand renewable energy production, encourage conservation, and create jobs, it touted the possibility that Ontario would increase employment in new green sectors as a way of emerging from the global recession and manufacturing slump. But it now appears that many U.S. states actively encouraging devel- opment may challenge Ontario's early lead in the pursuit of offshore wind energy opportunities in the Great Lakes. What can Ontario lawyers do to help their cli- ents navigate the changing landscape in this area? Unfortunately, there are no guarantees in the re- newable energy field, but a good lawyer practising in this sector should pay attention to the critics of the industry as it appears the provincial govern- ment will continue its attempts to keep both the proponents and opponents of wind happy. LT Aaron Atcheson is a partner and national clean-tech group leader at Miller Thomson LLP who has worked on wind projects in Canada, the United States, and Ireland since 2002. was about how, in the minister's opinion, the government could jus- tify spending billions to put more people in prisons for longer periods when the government's own statistics show a declining crime rate. In his 90-second response, the minister did not mention the word prison once. At the end of it, I said, "Thank you minister, but my question was actually about the prisons." But of course, they had turned the microphone off. Comment on lawtimesnews.com by Simon Borys about "Lawyers assail crime agenda."