Frontier Centre Releases Crown Corporations and Government Divestment

Press Release, Crown Corporations, Jan Pavel

Today, the Frontier Centre for Public Policy issued: Crown Corporations & Government Divestment authored by Jan Pavel.

Many Canadian Crown corporations were divested in late 1980s and 1990s. Two decades later, a large majority of the privatizations have proven to be very successful. The data clearly shows that going private was beneficial for the companies’ financial health, profitability, debt ratio, productivity as well as it contributed to overall social welfare. Governments used proceeds to reduce public debt and collected more taxes. Success materialized even in industries where few expected it – Canadian National Railway being an example.

Since early 2000s little has been achieved towards further liberalizations. Most studies measuring the size of the government sector in Canada include only federal Crown corporations and thus portrait an incomplete picture. New research shows that provincial businesses take up in total numbers as much or more of the economic output as the federal government. In addition, there are unaccountable municipal government-run businesses. It is evident that all levels of government in Canada are still busy doing business.

This leaves lots of room for private sector to help bring more efficiency into the public sector. Past experiences allow for a more optimal approach to privatizations. Effective procedures that include deregulation and competition introduction ensure that government monopolies are not simply replaced with private ones. The public and governments are also increasingly more aware of various forms of Public Private Partnerships. Efficiencies, quality improvement and faster completion of projects can be brought by including private sector as partner financier, contractor or manager.        

View the entire study here: