Weekly Bulletin #9

This will be my last post for 2009 as I will not be posting next week due to the Christmas Holidays, but will return on the first Sunday of the New Year. The Copenhagen Summit wrapped up and while a draft deal was made, it has no binding targets and still falls short of what many want. I am glad the deal did not go through since although I believe we need to take action, trying to get a deal at an international level which is acceptable Canada is naive. This idea that we have much influence as some like to claim is simply not true. United States, European Union, India, and China are the big players and we are just a small fish in the pond so no matter how constructive we tried to be, our ability to shape a deal is very limited. Also people need to stop pretending countries are doing this out of their own goodwill. Every country does what is best for the national interest, not what is best for the world and the national interest of others may not coincide with ours. When considers how difficult it is to get 10 provinces to agree, then just imagine how difficult it is to get 192 countries to agree who are not only more numerous but the differences are far starker than the differences between our provinces. I believe we need to deal with the issues of climate change, however we should not sign any deal that involves a wealth transfer to the developing world or one that unnecessary infringes on our national sovereignty. Trying to be liked by the world does not mean abdicating our national interest. We should always do what is best for Canada irrespective of what others think. Any deal we sign should include everyone do their fair share, not unnecessary burden us while let others off the hook like Kyoto did and it should also not infringe on our sovereignty. This can be achieved through two methods, which are having a termination clause not exceeding 1 year much as NAFTA has a 6 month termination clause or allowing countries to retaliate through tariffs on Canadian imports much the way the WTO does. Granting the United Nations the power to fine Canada or override our laws is not acceptable and should be not be allowed under any circumstance no matter how noble the cause is. Likewise we give enough in foreign aid and considering the track record of many of the third world dictators in terms of how they use the money received, we are right to say that not one red cent will go to other countries to help them combat climate change. That money should stay in Canada for the benefit of all Canadians. However, failure to get a deal does not condemn us to inaction. California has taken a lead role on the environment even when the federal government wasn't and likewise British Columbia, Ontario, and Quebec have all been taking action even in the absence of the federal government, so we can do the same. And unlike Harper advocates, we should never blindly follow the United States. Blindly following any international organization or foreign country should not be done regardless of the reasoning. As mentioned before, our government should have called a national conference with a meeting of all 13 premiers, the mayors of the cities, business, environmental groups, labour, and all other concerned groups. Oil producing provinces like Alberta and Saskatchewan have legitimate concerns that taking action would cause too much economic harm while likewise Ontario and Quebec feel they are having to pick up the slack for others. A national conference could help resolve those differences that would benefit both sides. Finally to end things off, regardless of what one thinks of our government, we should never bash our country abroad. I will always be a proud Canadian and no matter who is in power, my view that Canada is the greatest nation on the face of this earth is unwavering.

The other issue is Ontario is looking at privatizing some crown corporations to deal with the deficit. Privatizing simply to reduce the deficit is a lame excuse, but privatizing crown corporations because they can be done better by the private sector than public sector makes perfect sense and should be looked at regardless of the fiscal situation. While many opponents are quick to point to the bad experiences such as the Highway 407 or British Rail in Britain, they forget many have been successes. Prior to 1995, CN Rail was a money losing inefficient crown corporation. Since privatization, it has grown to be one of the largest railways in North America and has in fact taken over several American railroads. While many Canadians complain about our industries being bought up by foreigners, this is an example of a Canadian success story who has bought up many foreign companies. This means privatization doesn't have to be a failure if done properly. Also some complain government will lose revenue due to this, but they forget crown corporations don't pay corporate taxes whereas once privatized they will and this will make up for much of the loss revenue and if they grow enough, it may even bring the government in more revenue not less. Anyways here is my view on the four being looked at.

1. LCBO - Government should be responsible for regulating and taxing the sale of alcohol, but not for the retail and distribution. Thus they should sell the retail and distribution side while keep the regulation side. However, the sale should be done on a store by store basis rather than replacing a government monopoly with a private monopoly. In addition to this, we should allow the sale of alcohol in grocery stores and gas stations as Quebec, most US states, and much of the rest of the developed world does. Our liquor laws are about 50 years out of date and should be updated. Easier access to alcohol doesn't necessarily mean more abuse. France, Germany, and Spain all have far easier access than Ontario, yet because having alcohol is a social thing, not to get drunk, they have fewer problems with alcoholism.

2. OLG - They should sell the casinos while lottery I am not sure whether to sell this or not. There is no reason for the government to be in the business of selling lottery tickets, but if used as a source of revenue, I guess I am okay with it.

3. Ontario Power Generation - We should sell off individual generating facilities to create greater competition, but not sell it off as one piece and likewise there may be some facilities that are best to not be sold enough. Privatizing it does not mean the replacements will be less environmentally friendly. In Germany, most of their electrical generation is done by the private sector, yet they have a huge wind energy sector and are quite green in their electrical production. Likewise in Denmark, generation use to be done almost exclusively by state owned generators, yet today much of the greenest forms of electrical production come from privately owned ones rather than state owned ones.

4. Hydro One - Sell but regulate, however probably better to only partially sell as this would raise some cash without relinquishing control. EDF in France had 30% of its shares floated on the stock exchange to raise cash, yet 70% is still owned by the French government thus maintaining Control. Enel in Italy and Endesa in Spain are predominately privately owned but the government still is the largest shareholder while in Britain, the government sold all shares, but retained a golden share thus not totally relinquishing control . Any of these three methods can be used. Likewise here in Canada, Petro-Canada was under mixed ownership for 14 years as the first shares were floated on the stock exchange in 1991, but the sale was not completed until 2005 when the government sold its remaining shares. So mixed ownership is maybe an idea with considering in the short-term and only full privatization if this works well. Otherwise a first, only float a minority of shares, if this works well, reduce the government holdings below 50% but still continue to hold shares and only if this works well sell outright. At the same time since it has a monopoly and is a form of infrastructure, it should be required to stay under Canadian ownership. I don't mind if a private company from another province such as ATCO in Alberta or Fortis out of Newfoundland buys it nor do I mind if another province's crown corporation such as Hydro-Quebec buys it, but it should not be sold off to foreigners. The requirement should be that the headquarters must remain in Canada (but they can be in another province), at least 50% + 1 of the board of directors must be Canadian, if privately held, 50% + 1 shares must be held by Canadians, while if floated on the stock exchange, no foreigner should be allowed to own more than 10% (The combined total would have no limit) and all preferred shareholders must be Canadian. I generally oppose most restrictions on foreign ownership, but this is a case where it makes sense. I do however totally oppose any restrictions that give Ontario residents or firms preference over those from other provinces.