The asset-sale bait and switch

Lana
Lana Payne
Send to a friend

Send this article to a friend.

It's beginning to feel like déjà vu all over again.

Whenever governments get in deficit trouble, the first and short-sighted economic response is to sell off government assets. It reeks of desperation and a total lack of imagination.

For some, the recession and subsequent government deficits allow them to carry out what they couldn't do in good economic times - give away the shop and dismantle parts of government all in the name of deficit-slaying.

It's beginning to feel like déjà vu all over again.

Whenever governments get in deficit trouble, the first and short-sighted economic response is to sell off government assets. It reeks of desperation and a total lack of imagination.

For some, the recession and subsequent government deficits allow them to carry out what they couldn't do in good economic times - give away the shop and dismantle parts of government all in the name of deficit-slaying.

It's rather ironic that some of the winners in this great government sell-off will be those who championed the same privatization and deregulation policies which caused the financial meltdown in the first place. Now they will reap the benefits as governments continue to operate within the parameters set by those who have too much self-interested say - the corporate class.

In order to pay for the greed and deregulation that caused the greatest recession since the 1930s, Canadian governments are about to mount the greatest Canadian selloff and privatization scheme since Mike Harris came to town in the mid-1990s. Of course, cuts to programs and services will also be in the mix. Indeed, some provinces have already started, although it appears Newfoundland and Labrador, because of its better financial position, will not be among those laying off public sector workers, contracting out, or auctioning off its assets.

Canada's finance minister is adamant. He will balance the federal books. And he could sell off government assets as part of the plan.

A desperate premier of New Brunswick is giving away his province's hydro assets at a fire-sale bargain price, leveraging the future of his province for very limited, short-term gain.

Ontario is considering selling its hydro assets as well as its liquor and gaming corporations. You might remember that the Wells government tried a similar thing in this province in the early 1990s, but citizens fought back preventing the privatization of Newfoundland Hydro.

Today that citizen-led campaign can only be viewed as forward-thinking. Today, Newfoundland and Labrador Hydro has been turned into the giant energy warehouse and crown corporation, Nalcor, which will be an engine of economic growth in this province for years to come.

One thing is for certain, those who control energy, especially green energy, in the future will be the economic winners. Any government that doesn't understand that doesn't deserve to govern.

Jim Flaherty floated the great Canadian sell-off in late 2008. At the end of 2009, he added that slaying the deficit he created will not include raising taxes, even though his government's reckless tax cutting is partially responsible for the fiscal troubles in which the federal government finds itself. They emptied the cupboard and they still have the audacity to say they are good fiscal managers.

Some of the deficit is because the Canadian government, like governments around the world, had to spend to stimulate the economy. It was this global stimulus spending plan that kept the planet from going into an economic deepfreeze.

And even before the recovery is underway, business groups are already calling for governments to rein in their spending and to cut programs and services in order to do so.

They need reminding that outside this province, private sector spending and investment is still in the toilet and, if governments stopped spending, we'd still have an even bigger problem on our hands. But that doesn't stop them from mouthing their usual nasty medicine.

Mr. Flaherty says he won't cut transfers to provinces. That remains to be seen. I suspect the provinces will be in for a trimming, but not before another federal election.

He will listen to his corporate friends and cut federal spending - which means services will suffer. He will listen to them the same way he has been listening to his fend-for-yourself economist friends. Mr. Flaherty did, after all, without a qualm appoint Jack Mintz, a former head of the C.D. Howe Institute, to head up a research review of pensions in Canada.

Mintz is on the record as an enthusiastic defender of individual responsibility for retirement savings and RRSPs. Therefore, no one should be surprised that Canada's finance ministers were told not to worry when they recently met in Whitehorse. That there is no pension crisis and the status quo is working fine.

At a time when 11 million Canadians don't have a workplace pension, when 1.6 million seniors qualify for GIS benefits and therefore earn less than $11,300 per year, when employers use bankruptcy courts to dodge their pension promises, when average fees gouge RRSP earnings and when overall savings are in decline, the status quo isn't an option.

The great recession may soon be technically over, but citizens will be feeling the second wave of this crisis when governments start cutting and selling off assets and when they maintain that the nation's pension system is not broken, but rather in "good shape."

As Canadians, have we learned anything from this economic crisis? Have we learned to question the narrow economic parameters that define so much of the national debate? Or will we take the harsh medicine that is likely coming while those who caused this problem smugly walk to the bank with their fat bonuses and dish out more economic prescriptions for the rest of us?

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by e-mail at lanapayne@nl.rogers.com. Her column returns Jan. 16.

Organizations: Newfoundland and Labrador Hydro, C.D. Howe Institute, Newfoundland and Labrador Federation of Labour

Geographic location: Canada, Newfoundland and Labrador, New Brunswick Ontario Whitehorse

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Razor
    July 02, 2010 - 13:32

    Lana, Harper did not casue the economic crisis. Canada's banking system is one of the most soundest in the world. Stop looking for boogeymen under the bed to promote Jack Layton and the socialist vision of big brother who should provide a fully funded government pension. That is what TFSA's RRIF, and RRSPs are for. Start taking personal responsibility (remeber that?) for your own retirement because I am not paying for it.

  • Graham
    July 02, 2010 - 13:30

    One thing we have all learned Lana is not to put as much faith in Jack Layton as you do. thats why he will NEVER be anything more than the washed up bottom feeding looser that he is. He like you has all the answers. Blame blame blame. Then again thats easy to do when you know you will never have to deal with any of this yourself. With a choice between Layton, Iggy, and Harper give me Harper any day thabk you very much. For someone with all the answers why dont you run for leadership of the NDP Lana. You certainly cant make the party any worse than it allready is.

  • Gerry
    July 02, 2010 - 13:30

    Graham, you have said it so well and so succinctly.
    There are a whole lot more of us who agree with you, than disagree. You hit the nail right on the head.

    And what a way for Ms. Payne to start off the New Year. Negativity personified. I wonder what it's like to live in a seemingly constant negative mindset and yet feel you have all the answers?

  • CFA
    July 02, 2010 - 13:23

    As a refugee from Harris' Ontario, we can expect a lot harsher medicine from Harper and his gang. The working class is going to pay for the big business bailouts, while Graham (Gerry?) blames blames blames the victims while cowering behind the skirts of the privileged.

  • Gerry
    July 02, 2010 - 13:16

    Graham, you have said it so well and so succinctly.
    There are a whole lot more of us who agree with you, than disagree. You hit the nail right on the head.

    And what a way for Ms. Payne to start off the New Year. Negativity personified. I wonder what it's like to live in a seemingly constant negative mindset and yet feel you have all the answers?

  • Eugene
    July 02, 2010 - 13:09

    Sounds like Harper et al's game is right on schedule. Not unlike the IMF blackmailing 3rd world countries into ending social programs in order to qualify for loans, the Harper gang, much like their neo-con brethren south of the 49th, argue fiscal responsibility and small government then make it, small government, a reality through their fiscal mis-management. If we keep on returning Reform - cum - Tory governments (minority or majority, apparently) the larder will be bared and the debt will be so high that cutting programs will seem like a logical step. Too bad that Canadians (especially those of us in the middle class) can't see beyond their own paycheck to see how this government's agenda is altering Canada's social fabric.

  • Eugene
    July 02, 2010 - 13:08

    Razor Shines writes: Start taking personal responsibility (remeber that?) for your own retirement because I am not paying for it.
    But you will be paying for pensions for every political hack who hoodwinked the public into electing him/her for 2 terms, right? The biggest problem with our publically funded pension plan (well, it is actually user-funded) is how the plan has evolved into a fiefdom for it's over-paid and under-scrutinized bureaucrats.

  • Razor
    July 01, 2010 - 20:21

    Lana, Harper did not casue the economic crisis. Canada's banking system is one of the most soundest in the world. Stop looking for boogeymen under the bed to promote Jack Layton and the socialist vision of big brother who should provide a fully funded government pension. That is what TFSA's RRIF, and RRSPs are for. Start taking personal responsibility (remeber that?) for your own retirement because I am not paying for it.

  • Graham
    July 01, 2010 - 20:18

    One thing we have all learned Lana is not to put as much faith in Jack Layton as you do. thats why he will NEVER be anything more than the washed up bottom feeding looser that he is. He like you has all the answers. Blame blame blame. Then again thats easy to do when you know you will never have to deal with any of this yourself. With a choice between Layton, Iggy, and Harper give me Harper any day thabk you very much. For someone with all the answers why dont you run for leadership of the NDP Lana. You certainly cant make the party any worse than it allready is.

  • Gerry
    July 01, 2010 - 20:18

    Graham, you have said it so well and so succinctly.
    There are a whole lot more of us who agree with you, than disagree. You hit the nail right on the head.

    And what a way for Ms. Payne to start off the New Year. Negativity personified. I wonder what it's like to live in a seemingly constant negative mindset and yet feel you have all the answers?

  • CFA
    July 01, 2010 - 20:08

    As a refugee from Harris' Ontario, we can expect a lot harsher medicine from Harper and his gang. The working class is going to pay for the big business bailouts, while Graham (Gerry?) blames blames blames the victims while cowering behind the skirts of the privileged.

  • Gerry
    July 01, 2010 - 19:55

    Graham, you have said it so well and so succinctly.
    There are a whole lot more of us who agree with you, than disagree. You hit the nail right on the head.

    And what a way for Ms. Payne to start off the New Year. Negativity personified. I wonder what it's like to live in a seemingly constant negative mindset and yet feel you have all the answers?

  • Eugene
    July 01, 2010 - 19:45

    Sounds like Harper et al's game is right on schedule. Not unlike the IMF blackmailing 3rd world countries into ending social programs in order to qualify for loans, the Harper gang, much like their neo-con brethren south of the 49th, argue fiscal responsibility and small government then make it, small government, a reality through their fiscal mis-management. If we keep on returning Reform - cum - Tory governments (minority or majority, apparently) the larder will be bared and the debt will be so high that cutting programs will seem like a logical step. Too bad that Canadians (especially those of us in the middle class) can't see beyond their own paycheck to see how this government's agenda is altering Canada's social fabric.

  • Eugene
    July 01, 2010 - 19:44

    Razor Shines writes: Start taking personal responsibility (remeber that?) for your own retirement because I am not paying for it.
    But you will be paying for pensions for every political hack who hoodwinked the public into electing him/her for 2 terms, right? The biggest problem with our publically funded pension plan (well, it is actually user-funded) is how the plan has evolved into a fiefdom for it's over-paid and under-scrutinized bureaucrats.