The Ontario government is searching for a palatable method of paying for their LRT plans.
They know we don’t like road tolls or increased taxes, so now, Premier Kathleen Wynne is floating the idea of selling ‘Green Bonds’ to help pay for the transit plan.
Frankly, it’s not a bad idea, but like all government programs, the devil is in the details.
Selling bonds means that only the people who choose to buy the bonds will fund the LRT program, but it’s only going to work if lots of people buy the bonds.
So, what’s the yield on the bonds ?
If the rate of return isn’t attractive, the bonds won’t sell.
On the other hand, if the rate is too high, does that mean that taxpayers will be underwriting the payout to the bond holders ?
That kind of defeats the purpose of selling the bonds in the first place doesn’t it ?
Fact is, people aren’t going to buy green bonds because they like LRT systems, they’ll buy them because the bonds are a good deal.
As long as there are more questions than answers, green bonds are just an idea, not a solution.