Message of the day
“There is no clear signal on these transactions.”
Questions not answered
- When will the government clarify the “net benefit” test in the Investment Canada Act?
Power & Politics opened with a briefing on the rejection of the Petronas-Progress Energy deal – that there were negotiations until the last minute, that the government tried to get an extension and that Petronas said no in order to force the government’s hand, and that a lack of a coherent policy is at the core of the issue.
Evan Solomon then spoke to an MP panel of Mike Lake, Peter Julian, and Geoff Regan. Lake said that there is another 30 day period to try and get a revised proposal, and that the government has only rejected two out of some 190 proposals, not including this one. Julian said that the NDP didn’t see this transaction as problematic as the CNOOC deal (given CNOOC’s environmental and human rights record), but that the lack of transparency erodes the confidence in the government’s ability to handle the process. Regan noted that lack of confidence was leading to falling stock prices, and added, “we don’t know if they’re consulting a Ouija Board or tarot cards.”
Over on Power Play, John Manley from the Canadian Council of Chief Executives and Gavin Graham from Graham Strategy Investment weighed in on the issue. Graham said it would help if investors knew what the net benefit test was, and wondered how this deal wouldn’t have been a net benefit considering that the Canada Pension Plan is a majority shareholder in Progress, and that it lost a lot of money when the deal was rejected. Manley, who dealt with the Act for some seven years, agreed that there was never really a clearly articulated set of criteria but generally it revolved around jobs, R&D, head office retention and a stock exchange listing in Canada. Manley said that this decision is a difficult message to understand, and that if the government could at least telegraph that they will refuse state-owned enterprises, it would remove the uncertainty.
Solomon later hosted a debate between Manley and economist Jim Stanford about foreign takeovers. Manley added that Petronas didn’t look good in this deal by not agreeing to an extension, and said that we shouldn’t fear state-owned enterprises in the resource sector because the provinces still own and control those resource. Stanford said he doesn’t believe the deal would have been a net benefit but dislikes the “cloak of confidentiality” that surrounds it. Stanford said that he doesn’t believe any foreign takeover of a Canadian non-renewable resource makes sense.
On Power Play’s journalists panel with Susan Delacourt and John Ibbitson, Ibbitson noted that the Conservatives want the formula to be a bit murky, because clarity means that these state-owned enterprises could hire a team of lawyers to work within those rules even if we don’t want such a deal to happen. Delacourt noted that the guessing game around these rules is part of the government’s pattern, but added that it’s a risky game to play with international markets.
On P&P’s Power Panel, Chris Hall said that investors are raising questions, and that we don’t know if Petronas made the same agreements that CNOOC had around their head office, listing on the TSX and guaranteeing jobs for ten years. Tom Flanagan said that Petronas got caught in the squeeze of the government trying to develop more regulations around the net benefit test. Anne McGrath noted that the decision coming out at three minutes to midnight on a Friday lent to the air of secrecy of the deal, while Rob Silver noted that because of the CPP stake in the deal, all Canadians lost about $10 each from this rejection, and that it damaged our standing in the world.
Don Martin spoke with BC Senator Richard Neufeld about the pipeline project on a day when there were protests on the lawn of the BC legislature. Neufeld, who wants the pipeline to happen but does have his reservations, said that it’s not too late to save the pipeline, but that Enbridge has a huge uphill battle because they came at it the wrong way. Neufeld said that it’s in Canada’s benefit for Alberta to diversify its export market, and that BC should get a reward for its share of risk, but not out of the royalties.
Privatizing the CMHC?
Despite the government’s repeated denials during QP about any plans to privatize the CMHC, Solomon nevertheless assembled an MP panel of Andrew Saxton, Peggy Nash, and John McCallum. Saxton repeated that there were no plans at this time, and then dutifully repeated Economic Action Plan™ talking points. Nash noted the “at this time” qualifier, and said that privatisation wouldn’t be good for a number of reasons, not the least of which is that it has a social mandate that a private insurer would not. McCallum said such a plan would be consistent with Flaherty’s philosophy, and that it was a foolish idea, as CMHC could play a vital role in a future financial crisis.
Power Play’s Strategy Session tackled the issue of spouses of cabinet ministers holding public stocks without being in a blind trust. Jean Lapierre said he is torn on the issue – spouses are their own person, but there is the appearance of a conflict of interest. Goldy Hyer said that because spouses don’t run for office, and it’s not a couple that gets elected, there should be no problem so as long as there is no violation of cabinet confidences. Robin Sears said that while a reasonable person might think this is an intrusion, it’s also a “Caesar’s wife situation,” and that Canada is behind the Americans when it comes to federal politicians needing to ensure their spouses’ holdings are in blind trusts.
With news that Romeo Sanagash was refused boarding on an Air Canada Jazz flight last weekend for intoxication, and that he is taking a leave of absence from the Commons to deal with his alcoholism, Ibbitson noted this happened a few years ago with John McCallum, and that people need to be cognizant of the stresses that MPs face with constantly travelling to Ottawa and being away from their homes and families. Delacourt noted that there is an onus on all of us to be understanding, and that there is a curious history of MPs breaking down in airports, as they are public and stressful places. Both noted that they hope Saganash gets the treatment he needs.
Don Martin had Senator Patrick Brazeau on the show to dispute Martin characterising him as the “Rob Anders of the Senate.” Read what Brazeau said here.