Thursday, May 28, 2009

Spanish Highways, French Reactors. Welcome to Canada.

Government of Canada Moves Forward on Restructuring Atomic Energy of Canada Limited

“Our Government is acting now to inject strength into Canada’s nuclear industry by enhancing the culture of growth; the culture of efficiency; and the culture of leadership,” said the Honourable Lisa Raitt, Minister of Natural Resources. “The ultimate objective of this restructuring is to leverage Canada’s long-term investment in nuclear energy and strengthen Canada’s nuclear industry at a time of global expansion.”

I don't think I've ever heard so many corporate weasel words come out of somebody's mouth since Enron, but the upshot is this: The government is planning to split AECL, sell off its ownership stake in the profit-making reactor sales division (probably to a foreign entity like France's AREVA), and keep the leaky, expensive, isotope-producing NRU and all the financial and environmental liabilities that go with it on the public books.

Not only that, but they'll be selling AECL before it officially wins the expected multi-billion dollar Ontario reactor contract, but after the price has been driven down by the recession, the failure of the Maple reactors and a fresh new isotope crisis.

Private wealth and public squalor.

None of comes as a surprise to anyone, of course. The minute the government initiated its "strategic review" of AECL back in 2007, it was pretty much a foregone conclusion that the review would tell Jimmy P.E. ("Privatize Everything") Flaherty exactly what he wanted to hear. And it's not like we haven't seen all this before. Those of us who suffered through his buddy Mike Harris' 'Common Sense Revolution' will recall their bargain-basement sale of the income-generating 407 toll highway to a Spanish consortium, as well as the (thankfully failed) attempts to privatize the LCBO and Ontario Hydro after carving the latter up in a very similar way to what's being proposed for AECL.

I would love to be able to blame Lisa Raitt for all this. I really would. But really, now that all the renegades have been culled from the Conservative herd, you know that none of this was actually her idea. Besides, she is just doing what is in her reptilian corporate nature to do. Maximize profits. Divest toxic assets. And above all, don't think beyond the numbers to fuzzy, human considerations like quality of life or a national strategy or the long-term benefit to the nation. In fact, this situation is perfectly suited to her skills. You can tell when words like "restructuring" and "leveraged investment" drip so effortlessly from her lips - she's in her element.

Hear now the words of John Ralston Saul, from "A Fair Country". He's talking about the private sector, but he could just as easily be talking about AECL:

When you look at how Canada came to lose its entire complex and successful steel industry through a series of takeovers squeezed into little more than two years, ending in 2007, you conclude with the same answer. The industry leaders, financial market potential investors, regulators, civil service leaders and politicians all saw themselves as followers, as temporary holders of wealth. And since others wanted control of our industry in order to shape it to their own interests, it was our duty to hand it over as rapidly as possible. Why? In order that the new owners should derive downstream, complex, long-term benefits. Our reward for such passivity? Some handsome payouts to short-term, first-tier managers. And with luck the new owners would allow the second-tier and below employees to continue as their employees.

... [speaking of the owners and CEOs of Barrick Gold, Bombardier and other major Canadian businesses] All of them would agree that the statistics showing our legal corporate headquarters to be growing in number are nonsense. "A head office of a subsidiary is not a head office." Why? Because it is missing the leadership jobs, the key ser vice jobs, the research and development jobs.

These five men represent some of the most powerful business leaders in contemporary Canada. Yet Conference Board of Canada economists, who do not earn their living in the marketplace, accuse these most successful of our corporate leaders of "sentiment and emotion," of being "commercially xenophobic." These protected employees, who rarely leave their cloistered offices in Ottawa, hide behind the Conference Board to accuse a few Canadian businesses leaders who do well around the world of suffering from "fear of foreigners." They argue with a certain glee that foreign owners are better for Canada than Canadian owners.

... The economists in the Ministry of Finance use almost the same numbers and makes reassuring sounds about head offices, without analyzing the type of head office and what they do or do not contain. They reveal no understanding of economic strategy - the sort of strategy used by other countries. They use the old concept of foreign direct investment, which does not differentiate between real investment - that which works to create wealth - versus buying out fully developed corporations - or entire sectors - in which the purchase implies no investment in wealth creation. In fact, the buyer usually uses the wealth of the company bought out to finance his taking control. Often the buyers then treat the company like a car wrecking yard - they cut it up and sell off the pieces that can make them quick money. When you read the assertions of the finance ministry thinkers over foreign investment or corporate headquarters growth, it is as if you are dealing with the brain dead. Strong words? Not at all. The strong words are those of economists in positions of influence who refuse to think. For example, although the figures are available, they make nothing of the difference between takeovers and new investment. Approximately 97 percent of what they call foreign investment is for takeovers; approximately 3 percent is for real new investment.

What is frightening is that Canada's economic policies are largely shaped from the ideas and advice of Ministry of Finance economists.

Here endeth the lesson. God help us all.


  1. Excellent piece, Jennifer - came back to read it a second time.

    CTV : "Ontario is currently looking to buy two new reactors to fill growing demand for power in the province, in a deal worth $28 billion. The federal government hopes that the private sector can make Candu reactors competitive with bids from France and the United States."

    As you say : Private wealth and public squalor

  2. Hey, Reporter Girl :
    House of Commons Standing Committee on Natural Resources :
    Study of the Atomic Energy Facility at Chalk River.
    June 2 3:30 - 5:30