Thursday, October 27, 2016

Moving the Goal Line

SOURCE: CBC News: Opposition Vows to Fight Government on What in Means to "Privatize"

SOURCE: CJME News: Government of Sask. Changes Definition of "Privatize" when it Comes to Crown Corps.

There's going to be a fair amount of sources linked in the body of this post, and I do encourage you all to read those links for a better understanding of what we're discussing, but other than that let's get right to it.

While much of Saskatchewan was getting ready for municipal election night, the Attorney General stood up in the Legislature and introduced Bill 40 - The Interpretation Amendment Act, 2016. Now, the name itself doesn't sound all that intimidating or imposing; until you realize the implications behind the Bill.

Bill 40, a copy of which you can open externally here, seeks to set down a definition of Privatization with regards to government legislation. It's an amendment to the Interpretation Act of 1995, and would add a section that covers, in the current government's view, what is and what is not privatization.

For those of you who didn't want the external link, here's the defintion:

"‘privatize’ means, with respect to a Crown corporation, the transfer to the private sector of all or substantially all of the assets of the Crown corporation, the controlling interest of the Crown corporation or the operational control of the Crown corporation through one or more transactions that use one or more of the following methods:
  • (a) a public share offering; 
  • (b) a sale of shares through a negotiated or competitive bid; 
  • (c) a sale of the assets and business of the Crown corporation as a going concern; 
  • (d) a management or employee buyout of the Crown corporation; 
  • (e) a lease or management contract; 
  • (f) any other method prescribed in the regulations; 
but does not include a winding-up and dissolution of the Crown corporation or other restructuring of the Crown corporation; («privatiser »)."

Now, why is this concerning? Well, because it's a potential out for the current government on the issue of selling Crown Corporations.

Crowns are protected under the Crown Corporations Public Ownership Act of 2004. The ground rules for a government who wishes to privatize a Crown Corporation are laid out pretty clear, but the important rule is:

(3) Notwithstanding any other Act or law, every Act authorizing the privatization of a Crown Corporation must contain a provision stating that the Act must not come into force until a date that is at least 90 days after the date fixed for the return to the writ for the next general election held pursuant to The Elections Act, 1996 that follows the enactment of the Act.

To simplify: If you pass an act privatizing a Crown, it cannot come into effect until 90 days after the next general election. Therefore, a government must campaign on the sale and be re-elected to have it go through.

Now, in the most recent election, Wall and Company did not campaign on selling any of the Crowns. In fact, political commentators in the province bemoaned that then NDP Leader Cam Broten continued to invoke the NDP "boogeyman" of a secret agenda to privatize the Crown Corporations. I imagine now is the time to start cooking the crow, because those commentators are going to be eating it soon.

After the election, MTS was sold in Manitoba to Bell for nearly $4 billion. That of course led Wall to muse that any offer for SaskTel must start at $4.1 billion.And that any serious offer would be considered, especially if it cancelled out the government's current operational deficit.

Well, response was swift. An online campaign for Keep SaskTel Public was launched quickly, and others like Save SaskTel on social media, and the general provincial consensus was that while there was a percentage who supported the sale, the majority was against it. This consensus, more or less, dampened Wall's previous talk of perhaps opening a potential sale of SaskTel to a referendum within the province. That, and the Chief Electoral Officer saying that under current laws a referendum would be "unworkable."

As such, all of Wall's potential options for a sale of SaskTel seemed to completely come apart at the seams.

Enter Bill 40.

While it is true that the current Interpretation Act doesn't include a definition of privatization, the definition being presented in Bill 40 is hardly an apt one. The general consensus, without a proper definition, is that privatization means sale of something to private interests.

Bill 40 changes this, by allowing privatization that remains outside of a controlling interest. So, 49% of SaskTel could be sold off to private interests under this definition and not be considered "privatized". So even though we are granting 49% control of a Crown to a private interest, under government legislation it would not be called privatization because it was not the transfer of a controlling stake.

So, now that we can see the true scope of the legislation; let's talk about why this is a horrible idea.

Let's start at the pocketbook.

Did you know that Saskatchewan is amongst the cheapest places in Canada to have a cell phone? It's so cheap, that there's a "black market" among consumers to get plans that pay Saskatchewan rates. With the sale of MTS, many Manitobans worry that their current plans will increase in price to match Bell's plans in the rest of Canada.

And it is true; eventually, those rates will increase to fall in line with rates across the country. They may get a temporary reprieve in order to avoid a complete customer abandonment, but eventually the rates will rise. With MTS gone, SaskTel is the last bastion.

And that's direct cost passed onto the consumer. So, while the province would receive a one-time payout from a potential buyer; the average Saskatchewan cell phone user would see their rates increase to bring our lower rates into line with the rest of Canada.

Speaking of the government's cut of the pie, let's talk about SaskTel's revenue for the province as a whole. In 2010, Wall's government took a whopping 100% of SaskTel's profits to shore up government revenue and prevent running an on paper deficit. Prior to that, clawing back 80% or more of their profits was not uncommon for Wall's Government.

So, what happens when you sell 49% of the Crown to private interests?

For 2015/2016, SaskTel reported profits of $126.7 million. 49% of that, provided my math is right, is $62,083,000 or $62 million dollars. Considering our current budget deficit of $675 million, $62 million sounds like a drop in the bucket; but look at some of the services we're already losing and think of how that money could be spent to prevent cuts.

SaskTel was built by the people of this province. It's our money and our people who laid the foundations, built the infrastructure, and put up the money to develop our telecommunications system. It's seems incredibly odd to me that after that level of public investment, we'd simply allow private interests to come in and help themselves to $62 million dollars. 

We haven't even talked about service impacts. SaskTel has ensured that people in rural areas have access to telecommunications, this was especially important given that the "big 3" didn't seem interested in investing in the infrastructure needed in Saskatchewan to provide coverage outside of Regina and Saskatoon.

And what about jobs?

SaskTel has already been hit by Wall and Co since 2007 by an increased use in contracted services, as opposed to regular SaskTel based installers; and any push towards privatization will diminish good paying jobs in our province. Considering the current state of the world economy, especially towards resource economies like ours, now is the time to ensure we're diversifying our economy and creating jobs outside of resource development...Now is not the time to be further constricting those jobs.

And the big one: Public interest.

SaskTel's responsibility now is to the people of Saskatchewan. That's why they invested in rural service when the Big 3 didn't want to; and why their profits are returned back to the people through government transfers. But when you privatize, your responsibility shifts from the people to your shareholders. And as stated, using 2015/2016 numbers, that means a removal of $62 million of potential income from our economy into the hands of private shareholders.

That money is much better served by staying to serve the people of Saskatchewan. We've made the investment in SaskTel since it was founded in 1908. We're coming up, in a little under a year and a half's time, of 100 years of SaskTel operating in our province. That's a significant milestone and it says something about the people of this province: We've had this service for nearly 100 years. It's been there for us when we needed it to be. Now we need to be there for it and to tell Wall and his government to keep their hands off our Crown Corporations.

No comments: