Blair Gable/Reuters
The announcement from Canada’s telecom regulator that it would end unlimited-use Internet plans unleashed a populist uprising that swept the nation. Hundreds of thousands of irate Web surfers signed an online petition opposing the decision, and the issue was blogged, shared and tweeted to no end. Amidst all that seething, though, only one opinion really mattered. “I will be reviewing CRTC decision forthwith with a view to protecting Canadians & promoting choice,” federal Industry Minister Tony Clement declared via his Twitter account. And with that, a 98-character missive threw the $60-billion telecommunications sector into chaos.
As the weather vane of public opinion swings, so do Canada’s policies toward business. Over the past two years, there have been repeated cases where Ottawa has stunned investors with populist decisions that took precedence over sound policy. The moves raise the question: is the supposedly laissez-faire government of Prime Minister Stephen Harper actually hurting Canada’s reputation as a stable and open market for business and investment? “No one likes risk and these interventions add yet another source of uncertainty when it comes to investing in Canada,” says Stephen Gordon, a professor of economics at Université Laval. “Clearly we’re not Russia, but then again, we’re not the Canada we used to be, either.”
But while critics like Gordon may be concerned, corporate Canada is mostly silent. With tax cuts on the table, instability is a price executives seem willing to pay. Besides, with federal politicians deep into the business of picking winners and losers, companies are keen to stay on the winning side.
No issue has sparked as much public fury as Internet download limits. In its ruling, the Canadian Radio-television and Telecommunications Commission ordered that major telecoms, which are required to sell Internet capacity to smaller independent providers, can now charge for usage above certain limits. As it is now, the big providers, Telus, Bell Canada, Shaw and Rogers (which owns Maclean’s) all impose download limits, while independents have been free to offer unlimited access. In response to Clement’s knee-jerk statement, the CRTC has delayed the changes for 60 days while it reviews its decision.
It wasn’t the first time Clement intervened in the name of consumers. At the end of 2009, he overturned another regulatory ruling that barred an Egyptian-owned wireless company, Globalive, from setting up shop. In rejecting that decision, Clement said his edict would “enhance competition for the benefit of consumers… by giving more choice at better prices and higher quality.”
The move seemed to send a loud message to the business world: all you coddled industries reaping huge profits thanks to long-established oligopolies, watch out—this is a government willing to stick up for the little guy. So when Emirates Airlines, the flag carrier for the United Arab Emirates, pressed for the right to ?y more planes between Toronto and Dubai, Air Canada might have been in trouble. Not so. Instead, the Tories went to the mat for the airline, which claimed Emirates would undercut it with cheap fares. In other words, intense competition from Emirates, an airline regularly ranked among the top 10 in the world for customer service, would give consumers more choice at better prices and higher quality.
In short, it’s impossible to tell which way the Tories will come down on big issues, says Gordon. “The government should announce what the Prime Minister had for breakfast each day, because it’s probably the best predictor of what the government will decide on a given file,” he says.
The hit-and-run approach to economic policy has left chaos in its wake. Fourteen months after the arbitrary decision to open Canada’s doors to Globalive, that industry and others that are heavily regulated, such as airlines and financial services, remain in the dark as to what the country’s stance on foreign ownership is. Just last week the Federal Court ruled the government’s Globalive decision was “based on errors of law,” throwing the industry even deeper into confusion.
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