By on April 2, 2014

oshawaGM

The Globe and Mail is reporting that the Ontario government may dump its shares of General Motors as a way of helping to fund expanded public transit in the Greater Toronto Area.

According to the newspaper, the sale of GM shares will be part of a broader asset sale. With tax increases (namely an increased sales tax and a new levy on gasoline sales) being ruled out, the asset sale will likely be used to make up the shortfall in funding for badly needed public transit for Toronto and its surrounding regions.

At current market value, the shares are valued at $1.4 billion CAD.

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14 Comments on “Report: Ontario Government To Sell GM Shares To Fund Public Transit...”


  • avatar
    JK43123

    How ironic, since GM killed transit in the US.

    John

    • 0 avatar
      Veee8

      It’s the circle of life….I can hear Elton singing it now.

    • 0 avatar
      geeber

      GM didn’t kill transit in the U.S. The story about GM purposely dismantling the entire street car system in this country is a myth.

      The old street car lines went of business largely because the federal government passed the Public Utility Holding Company Act in 1935.

      And, of course, more people were switching to cars, even prior to World War II. Transit use was declining in the 1920s and 1930s. It experienced an uptick during World War II, when people couldn’t buy new cars or new tires, and gasoline was rationed, but once the war was over, it resumed its long-term decline.

      In the 1920s and 1930s, most electric street car companies were owned by private electric utility holding companies. These street car companies were generally unregulated, while the electric utilities were regulated.

      The electric utility company sold electricity to the street car affiliate company and marked up the price in order to affect the accounting costs of the regulated utility. Under this system, the parent electric utility subsidized the streetcar system, but also increased the electric rates charged to both business and residential customers.

      The 1935 federal act forced utilities to divest themselves of their street car companies. Unfortunately, these lines had never been profitable, as the new owners quickly discovered. Plus, many municipalities were eager to have the street car tracks removed (they made repaving the roads more difficult and expensive,) and there was a clamor for a system of transit not necessarily tied to one line. The answer was buses. GM, of course, was a major seller of buses. But GM didn’t have to “kill” street cars in order to sell buses. Most municipalities wanted rid of them at that time anyway.

  • avatar
    28-Cars-Later

    Has absolutely nothing to do with any scandals or recalls whatsoever.

  • avatar
    Lou_BC

    1.4 billion value. Talk about a wonderful return on investment. IIRC, Ontario ponied up 4 billion as part of their contribution to the GM bailout.

    Sell explanatory as to why Marchionne expecting a 700 million dollar cheque.

    • 0 avatar
      wmba

      If you are saying that selling off its remaining shares for a potential $1.4 billion is the only return Ontario has received from its share of the GM bailout, you certainly do not recall correctly.

  • avatar
    danio3834

    How about Toronto funds Toronto transit. Between this and the proposed fuel tax on the entire province solely to fund Toronto transit, it’s pretty clear that Toronto feels that the rest of Ontario exists solely to serve its interests. Or perhaps Torontonians simply don’t realize there is an Ontario outside of the GTA.

    • 0 avatar
      05lgt

      I’m not Canadian, so in addition to being inherently rude I’m also amazingly ignorant of anything beyond the US borders, but… I’m willing to assume that the transportation, communication and power infrastructure of the surrounding areas with much lower population densities were funded on the backs of Torontonians taxes.

      • 0 avatar
        scwmcan

        Actually the areas surrounding Toronto have much higher tax rates than the city itself, and the residents of the city constantly complain about their rates despite them being much lower than the surrounding areas. The politicians there are very good at begging for money from the other levels of government to fund their projects ( that said I don’t think they have the same ability to charge city sales taxes etc that I have heard exist in some parts of the states, so their revenue generators are pretty much property taxes as far as I know).

      • 0 avatar

        > I’m willing to assume that the transportation, communication and power infrastructure of the surrounding areas with much lower population densities were funded on the backs of Torontonians taxes.

        I can also vouch this is case everywhere in the US, and Canada doesn’t seem different enough from the all times I’ve been there to warrant an exception.

        City dwellers pay for everything (irrigation, roads, etc) while the flatland rubes vote against them out of spite. Democracy at work.

    • 0 avatar
      Maymar

      To be fair, it says it’s to fund transit in the Greater Toronto Area, not just Toronto – that’s an area that represents about half the entire population of Ontario. I know as it stands, the TTC and Metrolinx are working together to extend the University-Spadina line into York Region.

      On the other hand, what if we just get all of the non-Toronto residents who commute into the city to pay a toll, fund transit that way? I’m sure it’d switch back to coming from our tax dollars real quick.

  • avatar
    JK43123

    No it’s not a myth, read this:

    http://www.intransitionmag.org/archive_stories/streetcar_scandal.aspx

    And here in Columbus, the transit system was privately run until 1972 because the electric company owned it.

    John

    • 0 avatar
      geeber

      GM was convicted of conspiring to require transit companies to buy GM buses instead of the buses of other companies. (In other words, GM was trying to monopolize the sale of buses.) It wasn’t convicted of conspiring to replace street car lines with buses.

      Read about it here:

      http://www.theatlanticcities.com/commute/2013/06/be-careful-how-you-refer-so-called-great-american-streetcar-scandal/5771/

      The changeover in Columbus to buses was complete by the late 1940s, and it was because people wanted more flexible routes, according to the Columbus Dispatch:

      “There wasn’t much sentimentality on Sept. 5, 1948, when the last two streetcars finished their routes on the Main and Neil line between Bexley and Ohio State.

      “‘The conversion of the Columbus transportation system from streetcar to motorbus or trolley coach has now been accomplished on all lines,’ The Dispatch dryly noted, ‘and there yet remains only the task of removing rails and repaving on a few streets.’

      “People’s fondness for streetcars grew later, said Alex Campbell, a rail buff whose collection of photos and history resides online at www. columbusrailroads.com.

      “‘Of course, the kids loved it,” he said. ‘I’m sure if you were a commuter on one — day in, day out — you’d be just as happy with the bus.\'”

      I spoke too broadly about the effect of the 1935 act. It didn’t completely bar a utility from owning a non-related business. The act did, however, give the federal government the ability to veto ownership of an unrelated business by a utility company. Under the act, a utility had to receive approval from the Securities and Exchange Commission (SEC) to do so, and said business had to be kept entirely separate from the regulated portion of the utility’s business.

      Even more importantly, the act completely barred electric utilities from using the losses racked up by street car lines (and other businesses) as an excuse to raise prices for residential and business customers. Even if the SEC did approve the ownership of a street car line by a utility, the act still prevented the utility from using it to justify price increases for electricity sold to business or residential customers. Which, of course, greatly diminished the reason for owing a transit company in the first place. That had nothing to do with GM.


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