Saskatoon StarPhoenix, Thursday, April 29, 2004
Selling last of Petro-Canada major mistake
by David Orchard
Following is the personal viewpoint of the writer, who ran for the leadership of the federal Progressive Conservative Party in 1998 and 2003. He farms at Borden.
As if ridding itself of an unpleasant memory, the Martin government plans to sell its remaining shares in Petro-Canada, completing the process of privatization begun by the PC government in 1991, then followed up by the Liberals in 1996.
Created by the Trudeau administration to give Canadians a window on -- and a stake in -- the largely foreign-owned energy industry, Petro-Canada became part of the National Energy Program, which had as its goal 50-per-cent Canadian ownership of the oil and gas industry.
We are told, ad nauseam, that Canadians, especially western Canadians, hated Petro-Canada and the NEP. However, according to polls at the time, the overwhelming majority of Canadians wholeheartedly supported Canadianization, prompting journalist Richard Gwyn to note, "Everyone hated the NEP, that is except the people."
Under the NEP, Canadian ownership of the oil and gas industry rose dramatically to more than 40 per cent, the Canadian taxpayers' share of revenues from oil and gas tripled to 26 per cent in 1984 from 8.8 per cent in 1979 and Canada, which in 1978 was importing more than a million barrels of oil a day was, by 1984, almost self-sufficient. In the words of Prof. Stephen Clarkson, Canada had "re-established the right to interfere in its own affairs."
Today, Petro-Canada is Canada's second-largest oil producer; even its enemies acknowledge it as a success story.
Now, Finance Minister Ralph Goodale declares it is time to end Canadian public ownership in the energy industry. Selling public assets, we are informed, will reduce government debt.
In reality, as former British Tory leader Harold Macmillan put it, selling state assets will no more provide a lasting solution than selling off the family heirlooms. The possible one-time payment on debt from asset sales is dwarfed by the loss forever of revenue from these enterprises, many of which are consistently profitable.
When the government sold its two previous batches of Petro-Canada shares, taxpayers were likewise assured that they were making a wise move. In 1991, the shares were sold for $13 each; in 1996, for $20. However, by early 2004, the share price was $70 -- an increase of more than 300 per cent since 1996, more than 500 per cent since 1991. In comparison, over the same period, Canada Savings Bonds have returned only a fraction of that amount.
In 1995, when the Liberals sold the Canadian National Railway (after promising in opposition never to do so), the shares were put on the market in New York and Toronto at a fire-sale price. Finance Minister Paul Martin and Transport Minister Doug Young posed proudly with a mock cheque for $2.1 billion as the shares sold out, supposedly to the great benefit of Canadians. After the sale, the shares doubled in value, doubled again and continued to rise. Within a week, majority control (more than 60 per cent) had passed out of the country.
The great Canadian train robbery was complete. Two-thirds of CN's shares went to U.S. owners who have reaped an increase in value of 500 per cent, a stunning windfall achieved on the work of Cartier, Macdonald and hundreds of thousands of Canadians who founded, built and financed the great railway, North America's best.
Now, as in the CN sale, the government has lifted foreign ownership restrictions on the sale of the remaining Petro-Canada shares.
Selling off the last stake Canadians have in their national oil company will weaken Canadians' financial position, reinforce our status as a resource colony and reduce the leverage Canada has in a vital industry already largely controlled from outside the country.
Like Canada, Norway is an oil producing and exporting country, but it does not allow majority foreign ownership of crucial industries. Norway has a public oil company, Statoil, in which the government owns 81 per cent of the shares.
The country uses its resource returns to give Norwegians a very high standard of living. Norway has, for several years running, replaced Canada at the head of the UN list of best countries in the world in which to live.
While our politicians are boasting about the increased export of Canadian oil and gas, the nation's precious, non-renewable resources are rapidly dwindling and Canadians are getting less and less from these exports.
Alberta today takes in half the revenue per unit of oil and gas produced that it did under Peter Lougheed 15 years ago. Norway collects almost three times as much in royalties and fees per barrel of oil and gas as Alberta.
Even the state of Alaska takes 150 per cent more in revenue per barrel than Alberta. In fact, all the petroleum coming out of the giant tar sands project in north-central Alberta is going south across the border at one-per-cent royalty.
Can anyone imagine the U.S. turning its oil and gas industry over to foreign hands? Just to pose the question is to laugh.
Canada is a cold country, where energy security is a matter of life and death. Those prepared to sacrifice its security on the altar of debt reduction need a dramatic reorientation of priorities.
Yet the Canadian government, cheered on by the Opposition, appears prepared to allow not only the oil and gas industry but every last strategic corporation in Canada to be turned over to foreign owners.