Sask. First Puts Taxpayers Last: Schwartz

Crown Corporations, Frontier Centre, Media Appearances, Uncategorized

The 'Saskatchewan First' policy announced by the province last fall to force Crown corporations to divest themselves of out-of-province assets puts taxpayers last, says a former Crown Investments Corp. (CIC) official.

Sheldon Schwartz, a former vice-president of finance and administration for CIC, says putting additional restrictions on Crown corporations can only reduce their value over time.

"If you owned shares in a private company, and the government went and did that, would you want to hold those shares — if you could own shares in an otherwise identical company that didn't have those restrictions?'' Schwartz said an interview from his home Victoria.

In a commentary for the Frontier Centre for Public Policy released Wednesday, Schwartz said Crown corporations have inherently "less flexibility and choice in (their) operating and investment decisions'' by dint of their political control and public policy purpose.

By imposing the Saskatchewan First policy on Crowns — which requires, with some exceptions, their out-of-province assets to be sold off and investments focused on Saskatchewan — their value can be expected to erode even further, Schwartz said.

"I would expect that there would be an impact on opportunities, and some of those opportunities might be ones that could add to profits and those things tend to add to the value of the investment. If you can't do it, you would be constrained in being able to create value.''

For example, if SaskTel is saddled with additional restrictions by the Saskatchewan First policy, such as selling off some profitable out-of-province businesses, the value of the corporation would tend to decline compared with its private sector competitors, like Telus or MTS.

"What public policy purpose does it serve to reduce opportunity to create value for the shareholder? What public policies is SaskTel supposed to deliver that it wasn't delivering before (Saskatchewan First) that it can deliver now?"

Schwartz added the province should undertake regular reviews of the valuation of Crown corporations to determine whether these policies are increasing or reducing the value of the Crowns.

"That's why I think it's important to have a review and look at what is the public policy purpose of owning, say, SaskTel anymore. If SaskTel is being discouraged from competing with the private sector in the province and (it's) not supposed to invest outside the province, exactly what are you supposed to invest in?''

But a spokesman for CIC said the Saskatchewan First policy is entirely consistent with the public policy purpose of Crown corporations in that the Crowns are investing more in products and services for Saskatchewan people, rather than customers outside the province.

Mike Woods, communications director for CIC, cited SaskTel's recently announced $130-million investment in expanding high-speed Internet and wireless phone service to rural and remote areas of the province.

"SaskPower is investing a billion dollars a year, year after year, investing in infrastructure. SaskTel is investing heavily in Saskatchewan. A lot of the Crown capital is being invested in the province in things that that are proven to create revenue and improve services to customers. The shareholders are benefiting.''

Woods added that many out-of-province investments were money losers and all out-of-province assets will be sold for fair market value. "There's no fire sale. It may take years to sell them. They will be sold at the right time at the right price.''