By Paul Wells - Thursday, December 13, 2012 - 0 Comments
Paul Wells on Stephen Harper’s recent reversals
The other day Stephen Harper’s government announced it will support an NDP bill that will require officers of Parliament to be fluent in French and English. “Our support for this bill,” said Industry Minister Christian Paradis, “sends a clear message that the promotion of the two official languages, now more than ever, guides the actions of the federal government.”
Paradis’s comment was accurate. But it would have been more precise if, instead of “now more than ever,” he had said, “now more than in October 2011, when we appointed an auditor general who couldn’t speak French and spent months insisting that was no big deal.” In short, the government is now preparing to require, by law, that it not do what it just did.
It has been that kind of month. More or less explicit repudiation of previous acts and stances has been the theme of the year-end for Stephen Harper and his colleagues. One of the questions we are left with is how Harper, notoriously a risk-averse, control-freak incrementalist, managed to leave hundreds of feet of skid marks around a bunch of big files.
Take the new jet fighters. We used to call them F-35s, but now we are less sure. In the office of Rona Ambrose, the public works minister, there is a jar. I am told in all seriousness that if anyone involved in ﬁnding a replacement for Canada’s aging F-18 fighter fleet calls that replacement “the F-35,” the minister has them put a dollar in the jar. That’s how adamant Ambrose is that the choice of the F-35 not be locked in.
Of course for two years the government was adamant that the choice of the F-35 was locked in. It’s a little cruel to dig up old quotes on this. But just one. On March 10, 2011, the Prime Minister said: “This is the option that was selected some time ago, because it is the only option available,” he said. “This is the only fighter available that serves the purposes that our air force needs.” Hope you have a dollar for the jar, big guy.
Of course what happened is that times changed. The government’s costing of the F-35 was optimistic and short-term to begin with. Optimism worked out the way it usually does when you’re buying something big and untested. The old talking points grew stale, then ludicrous, and the government stuck with them until the government looked stale and ludicrous, and now it denies saying what it once said. None of this is a tragedy: the jets haven’t been bought, no purchase order has been cancelled, there is still time to choose a more realistic course. But it’s all been a bit awkward.
Take energy. A year ago Harper pronounced the nation’s energy sector open for business, shed a tear for the newly reluctant Yankee customer who had blown whatever right he might once have had to our bounty, and looked eastward, which means westward across the Pacific, to new markets. These markets included China, which was new only in the sense that Harper had spent five years hoping he could find some other market as ravenous as China but less, well, Communist. The Chinese welcomed our new-found willingness to sell them things, and responded with new-found eagerness to buy Canadian things. Things like Alberta. Harper faced another conundrum.
At the beginning of the month he announced his solution: state-owned enterprises would be permitted to buy Canadian firms just this once, and then not again. His stated reason was that if too many state-owned enterprises from one country bought up parts of the oil patch, it would constitute foreign government ownership of an entire industry. So he would permit two proposed takeovers, including the purchase of Nexen by China’s CNOOC, then no more.
Got it. State-owned industry bad, oil sands sensitive. None of this explains why the government rejected the purchase of Potash Corp., which is not in the oil sands, by Australia’s BHP Billiton, which is not state-owned. Nor does it explain why the government first blocked the takeover of Progress Energy by Malaysia’s Petronas, before accepting it later.
(Full disclosure: my spouse, Lisa Samson, is a registered lobbyist for Progress and Petronas.)
The likeliest answer is that Harper was surprised by the antipathy the CNOOC-Nexen bid stirred up. His candidate and visiting party dignitaries heard an earful about it from voters on the doorstep during the recent Calgary Centre by-election campaign. So he improvised an adjustment to earlier plans, and left himself tons of wiggle room for next time. Further energy-sector takeovers by state-owned companies will be accepted “in exceptional circumstances,” which means: “We’ll tell you when it happens.”
None of this is a pretty sight, but neither does it spell trouble for Harper in the short term. As long as he usually moves from more trouble to less, he is moving the way Conservative voters want him to. The PM has had a messy year, but on jets, language politics and energy, he has stopped digging himself deeper. Jan. 23 will mark the seventh anniversary of his election.
By Stephen Gordon - Monday, December 10, 2012 at 11:36 AM - 0 Comments
The proper context for thinking about the CNOOC-Nexen and the Petronas-Progress takeovers is what I described here: the real economic story of the oil sands is the investment in physical capital—structures and equipment—that is required before production can even start.
These investment numbers are very, very large. The oft-cited estimate of $650 billion in the next decade should be taken with a grain of salt, because we don’t know the assumptions that went into it. Even so, the fact that the costs of a single oil sands installation is measured in billions of dollars suggests that estimates in the hundreds of billions of dollars are at least plausible. (To give you an idea of how big these numbers are, current Canadian GDP is around $1.8 trillion a year.)
A national accounts identity tells us that all investment expenditures must be financed out of the savings of someone, somewhere:
Investment = Private domestic savings + Public domestic savings + Foreign investors’ savings
Let’s look at each component in turn.
By Aaron Wherry - Friday, December 7, 2012 at 5:50 PM - 0 Comments
The Prime Minister’s remarks this evening on the CNOOC and Petronas acquisitions.
“Today the Minister of Industry rendered decisions respecting two foreign investment proposals.
“These decisions will be closely studied.
“It is therefore important that Canadians, and also foreign investors, understand how the government will approach such decisions in the future.
“In particular, Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend.
“Investment is critical to our Government’s focus on jobs and growth.
“And, Canadians expect that we shall approve foreign investments that are of net benefit to Canada.
“But, all investments are not equal.
By Stephen Gordon - Monday, October 22, 2012 at 11:53 AM - 0 Comments
The Harper government’s unexpected, last minute (check the time stamp) decision to reject Petronas’ bid for Progress Energy has once again demonstrated that the “net benefit” test for foreign takeovers is without meaning. The government rejected the bid because it felt like it and because it could; there are no other reasons.
The Conservatives appear to be mounting a communications counter-offensive, including this remarkable piece by Globe and Mail columnist John Ibbitson, based on a chat with a mysterious “senior figure in the government, speaking on condition of anonymity.” Here’s the key paragraph:
While ivory-tower economists insist investment is investment, other governments have acted to protect strategic assets from falling into what they consider the wrong hands. The Harper government’s approach has similarly evolved. The door isn’t shut to foreign investment from state-owned companies, the government official said. But those companies must be transparent in their dealings and, to put it bluntly, there must be something in it for Canada: head-office jobs retained, or new money for research and investment, or the like.