Saskatchewan Crowns: To Have or To Lose
Ralph Klein and Elwin Hermanson tell us to vote for the Saskatchewan Party. One of their major goals is to sell the Crown assets so that private entrepreneurs can make a profit from basic services such as telephone and internet, natural gas, automobile and other forms of insurance, electricity, and social housing. Alberta has deregulated and privatized these public services and Klein and Hermanson want us to do the same.
There is one major issue in this election: the future of our Crown corporations. These businesses are owned by the people of the province, provide essential services at affordable prices and give employment to the people of Saskatchewan. The provision of basic services which everyone requires is the responsibility of government. Hermanson argues that the Crown utilities should not be monopolies; i.e., they should be open to competition. This is faulty economic reasoning as it confuses the goals of a public monopoly with those of a private monopoly. The Crown utilities were created to provide services to all the people of the province at the least cost, thus it is logical for a publicly owned monopoly to do this. A private monopoly provides a product, not to everyone but to those who can pay, in order to maximize profits for its owner(s). A public monopoly is accountable to all the people of the province, whereas a private monopoly is accountable only to its owner(s).
Publicly-owned and co-operatively owned companies are the backbone of the Saskatchewan economy. Looking at the top 20 companies in Saskatchewan based on revenue we find that 13 are either publicly or co-operatively owned. This is the way Saskatchewan people operate. We have always worked together to build our communities and to satisfy common needs.
The Crown Investment Corporation (CIC), the umbrella group that manages SaskPower, SaskTel, SaskEnergy, SGI Auto, SGI Canada, and many other businesses in Saskatchewan had $8.1 billion in assets in 2002, and employed about 9000 people in full-time, permanent jobs in over 70 communities throughout the province. The four major Crowns (SaskTel, SaskPower, SaskEnergy, and SGI) partner with over 600 local dealers and brokers to deliver services across the province.
Most businesses invest for growth, but there is no way to guarantee that all investments will be successful. Unfortunately Elwin Hermanson seems to think that public sector investments, unlike those in the private sector, can be made without taking risks. This curious double standard for public enterprise would mean that Saskatchewan citizens would lose out on important public sector opportunities under a Sask Party government.
Some of the Crowns have been in the forefront of scientific research and technical innovation. The Saskatchewan Research Council supports research in agriculture, mining, information technology, health, tourism, water, the environment, co-operatives and much more. This research endeavor is extremely important for our universities and the provision of good jobs for young people.
Hermanson says he will consider selling all CIC assets if the price is right. Imagine what we stand to lose: ownership and control of the provision of basic services we all need, profits which would flee the province to new owners, and head offices moved to larger cities out of province. The loss of head offices in Saskatchewan would cost 4000 to 5000 jobs. The sale of SaskOil is a good example of the latter problem. SaskOil was a Crown corporation sold in 1985. In 1997 Canada Occidental Petroleum assumed total ownership and the Head Office moved to Calgary. We lost the jobs, the control, and the profits.
Our Crowns make life more affordable. Alberta drivers pay the highest car insurance rates in the West. For the same car and driver the auto insurance premium in Saskatchewan is $904, while in Alberta it is $1853. Between August, 2002 and August, 2003, auto insurance rates increased nationally an average of 21.8%; Saskatchewan rates increased in the same period by 3.9% and Alberta rates increased by 24.3%. Natural gas prices more than doubled for many homeowners in Alberta (where they actually produce the gas!) under competition and deregulation. This is what Hermanson and Klein mean by a “business-friendly environment”.
CBC News Online ( October 20, 2003) stated “Canadians looking for affordability in housing should check out Reginaâ€ where 2004 average prices are projected to be $107 000 compared to a Canadian national average of $209 000. Sask Housing, another Crown corporation, can take some credit for stabilizing housing prices, particularly for low income families, throughout the province.
There are other examples of the benefits of Crown ownership: the lowest cost utilities package in the country; “buy Saskatchewan” policies put about $2 billion into the provincial economy every year in goods and services and employee earnings. Altogether they support over 12 000 Saskatchewan businesses across the province.
And Hermanson would kill the goose that lays this golden egg.
There are only four ways of paying for public services: through taxation, public sector investments, borrowing, or the sale of public assets. Hermanson is promising huge tax giveaways on the assumption that economic growth will offset these losses. Yet Saskatchewan’s growth is dependent primarily on things beyond our control: the vagaries of weather and foreign markets. Historically Saskatchewan responded to these uncertainties through public sector and co-operative ownership. Hermanson’s ideological solution leaves borrowing and privatization of pubic assets as the likely means to finance tax cuts and whatever public services remain. We took this borrowing road before and we’re still paying for it. All of the provincial sales tax in the past decade has gone to service the debt left by the Devine government, and we still owe about $11 billion. Debt financing is great for the banks, but we, the citizens, pay the price for years and years.
Some people believe that nothing would change if we privatized the Crowns. This simply is not true. Everywhere in the world, under privatization jobs are lost and users pay more in order to generate profits for private owners. Under NAFTA rules, once a publicly owned company is privatized there is no turning back; we, the people, can never regain ownership. Before we succumb again to the political argument made famous by Grant Devine, namely, “it’s time for a change”, we need to ask, “what kind of change?”. Let’s defend the ” Saskatchewan way” and the ” Saskatchewan advantage”, not the narrow economic ideology of our Alberta Party.
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