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Wednesday, November 26, 2008

Is the Harper Government serious about selling crown assets? And what should be done with the cash?

Stornoway_3 One of the few things in life that pleases me as much as witnessing the state divest itself of political authority, is witnessing the state divest itself of crown assets.

Authority should be returned to private hands – let parents raise their children, farmers sell their wheat, and business owners run their affairs – and so to should the wealth of the nation be returned to private hands. The political allocation of resources is always less efficient than the market allocation of resources – and this efficiency advantage is what makes free market economies prosperous.

But not everyone shares this enthusiasm for limited government, of course.

Today, Winnipeg New Democrat MP Pat Martin sent a letter to Auditor General Sheila Fraser requesting a formal investigation into the October 31st, 2007 sale-leaseback agreement between the federal government and Larco Investments Limited. Seven federally-owned buildings were sold to Larco with agreements to lease them back directly to the federal government. It’s a very typical arrangement that allows the seller to get a hold of some cash, while incentivising the new buyer with a long term lease agreement in a soft rental market.

“Canadians deserve to know if this was a good deal or not,” said Martin. “It certainly was a good deal for Larco. Guaranteed tenants for 25 years – it’s like a real estate dream scenario.”

On the subject of dream scenarios, in the Throne Speech, the Harper Government hints at the possibility of the strategic selling of more crown assets:

The Harper Government will conduct a thorough strategic review of all program spending to streamline operations and save taxpayers money and this review will also include all Crown corporations and assets. As part of this review, all Departments and agencies will be required to produce detailed quarterly financial statements accessible to the public.

Kevin Gaudet with the Canadian Taxpayers Federation thinks the government should “turn assets into tax relief” by selling assets, paying down the debt and applying interest savings toward tax relief, which is exactly what the government’s “tax back guarantee” policy does. In an interview with the Western Standard, Gaudet said:

“Crown assets are on the asset side of the balance sheet and, if you are going to sell them, the best way to transfer them in a manner that gets the most long term value for taxpayers is to provide debt relief. And that works especially well with the government’s ‘tax back guarantee’...debt relief provides interest relief, which provides tax relief.”

The “tax back guarantee” policy of the Harper Conservatives binds the government to apply interest savings from debt retirement toward tax relief.

Gaudet thinks the first step to divesting crown assets is to “create an inventory to determine which assets are worth selling.” And while he thinks the government should move cautiously given current market conditions, he would still like to see crown corporations like Purolator put up for sale.

So would I.

(Picture: Remember the heady days in the conservative movement when Reform Party leader Preston Manning promised to sell Stornoway? Perhaps now is the time to sell the official residence of the Leader of the Opposition and move Dion and his family into a modest, two-bedroom bungalow in Gatineau. We can call it Manning House.)

Posted by Matthew Johnston on November 26, 2008 in Canadian Conservative Politics | Permalink


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Matthew, it seems like Harper is using the early days of his mandate to pass some truly conservative/quasi libertarian policies. He is more likely to get them passed now since the opposition is not likely to bring them down, and he has more time to recover if he is making a mistake with popular opinion.

I hope they stand firm and go through with it.

Posted by: TM | 2008-11-27 7:36:11 PM

I hope you're right, TM. So far so good.

Posted by: Matthew Johnston | 2008-11-27 7:59:58 PM

Remember the heady days in the conservative movement when Reform Party leader Preston Manning promised to sell Stornoway?
Posted by Matthew Johnston on November 26, 2008

I also remember Deborah Grey and Monte Solberg opting out then opting back into the MP's pension plan. Manning to his credit did stay out.

Posted by: The Stig | 2008-11-27 8:21:20 PM

But Manning did move into Stornoway when more modest accomodations were not provided.

I don't blame him. It's hard to reject the perks of office.

Posted by: Matthew Johnston | 2008-11-27 8:38:55 PM

Yeah, you are all right, the governments are to blame for the shit-storm that the world economy is in right now. Its definately not the economic pirates that currently run the largest corporations worldwide who have been working uncontrolled for the past decades. We should definately let them pilage our crown asset companies for their assets and leave their employees destitute, it s clearly working so well in the private sector...
The US is currently installing more government controls as a way of pulling themselves out of this mess and what we're talking about here is the opposite. 2.3 billion for our crown assets? Who the hell cares about 2.3 billion? On a federal scale its a pittance, and it certainly wont do anything for our economy - don't kid yourself.
This is our finance minister using the shock associated with the economic downturn to implement a policy that everyone in the world thought was a good idea UNTIL the downturn.

Posted by: Nick M | 2008-11-28 6:43:56 AM

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