Finance Department looking at ways to keep deficit down
The Harper government, under pressure to prevent the federal deficit from ballooning, is pressing ahead with an asset review that could lead to the sale or privatization of several well-known Crown corporations, including Canada Post, Via Rail, the Royal Canadian Mint and the agency that oversees security at Canada’s airports.
The government signalled its intent to sell Crown assets last fall, but it was only in the federal budget that it identified the four ministerial portfolios to be reviewed first: Finance, Indian and Northern Affairs, Natural Resources, and Transport and Infrastructure.
Some of the Crown corporations that fall under the authority of those departments have been known to be on the block for some time, such as Atomic Energy of Canada Ltd.
But the review also will cover some names likely to raise eyebrows, especially in the Transport portfolio, which includes Canada Post, Via Rail, the mint, and the Canadian Air Transport Security Authority.
In the next few months, Finance Department officials will ask each of the four departments to identify assets that could be sold, including any real estate in their portfolios. Although the process is still at a preliminary stage, Finance officials have not ruled out any Crown corporations from the review.
“The corporate asset review is proceeding as planned,” Mike Storeshaw, a spokesman for Finance Minister Jim Flaherty, said in an e-mail. “Departmental officials will be working over the coming year to analyze the relevance of specific assets to the government’s core responsibilities.”
The budget states that Finance officials could conclude that “selling an asset to a private-sector entity may generate more economic activity and deliver greater value to taxpayers.”
The challenge for the government is that its budget forecast is based on the aggressive assumption that officials will be able to raise as much as $4 billion through sales or privatizations by the end of March 2010.
Flaherty started musing publicly about selling Crown assets in November, but department officials only formally launched the review process after the budget was introduced on Jan. 27. That gives the government about 14 months to oversee a large-scale divestiture of assets, a complex process that will involve numerous layers of bureaucracy, might require major legislative amendments, and could create serious political headaches for the Harper cabinet.
If officials can’t find enough assets to sell, the government could be forced to revise its forecast to show a bigger deficit for 2009-10, when the deficit is already expected to hit $34 billion.
In deciding which assets to put on the short list, Finance officials will consider a number of criteria, including whether Crown corporations are still meeting their stated policy objectives, whether assets can be sold within the tight time frame set by the budget, and how best to maximize returns for taxpayers. Eventually, the review will be expanded to include all government departments. The review of the Canadian Heritage portfolio, which includes the CBC and the Canada Council for the Arts, could be a political minefield.
Another option for the government will be to expedite the transfer of surplus real estate from departments to Canada Lands Co., a Crown corporation that sells rezoned federal lands to private developers.
“We have had calls from different people in the government who know our work and respect us and wanted to know . . . whether we thought we’d be able to take on more properties,” said Canada Lands vice-president Gordon McIvor, adding that the company plans to sell numerous assets this year, including a residential development on a former military base in Calgary and parts of a harbour-front redevelopment in Montreal.
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Bank of Canada
Canada Deposit Insurance Corp.
Canada Development Investment Corp.
Canada Pension Plan Investment Board
PPP Canada Inc.
Indian, Northern Affairs
First Nations Statistical Institute
Atomic Energy of Canada Ltd.
Cape Breton Development Corp.
Atlantic Pilotage Authority
Blue Water Bridge Authority
Canada Lands Company Ltd.
Canada Post Corp.
Canadian Air Transport Security Authority
The Federal Bridge Corporation Ltd.
Great Lakes Pilotage Authority
Laurentian Pilotage Authority
Marine Atlantic Inc.
National Capital Commission
Old Port of Montreal Corporation Inc.
Pacific Pilotage Authority
Parc Downsview Park Inc.*
Ridley Terminals Inc.
Royal Canadian Mint
Via Rail Canada Inc.
By Andrew Mayeda, Canwest News Service
February 18, 2009