Hear, hear Minister Clement.
For background, Premier Wall made a patriotic and impassioned speech to the Regina Chamber of Commerce where he explained his decision not recommending the sale. It’s worth listening to. (1/3)
Part Two
Part Three
The issue isn’t so much one company buying another, it isn’t as black and white as that. PCS isn’t the only player in the potash market in Saskatchewan, just the biggest. Agrium, Mosaic and others are also involved.
They all share ownership of a company called Canpotex. Canpotex is basically the distribution and marketing arm for the Saskatchewan potash companies. They own a lot of rail, rail cars and port terminals in Vancouver and Portland. They sell the potash. PCS supplies approximately 60% of the potash Canpotex sells.
BHP has explicitly stated that they prefer to market their own product. They made it clear that they would not be interested in supporting Canpotex.
An affirmative decision from Ottawa with regards to this sale would adversely affect Agrium, Mosaic and Canpotex to a great degree and ultimately leave them ripe for a fire sale.
Last year the potash companies all halted production because the potash market had been saturated. The state of the global economy couldn’t support the volume of potash being mined. This depressed the stock prices, caused lay-offs in numerous Saskatchewan communities (of which Delisle was one because Agrium is about 6 miles away and PCS’s Cory mine is about twenty miles away).
This depressed market is what spurred BHP to come in and make a play for PCS. Good business and I’d applaud them. However the fact that BHP’s business model is so radically different from what is in place, the fact that the proposed take-over would threaten much more than just the board of directors for PCS, and the fact that potash is integral to the Saskatchewan economy made Saskatchewan very leary of the proposed take over.
I applaud Premier Wall for sticking up for his province against his normal prejudice and I applaud Minister Clement for the same. As I understand the Saskatchewan MP’s advocated strongly with the Federal Gov’t on Premier Wall’s behalf. They’ve been through a rough ride over this and they deserve thanks as well.
This doesn’t make us look good in the US and the world’s financial circles. I heard and read interviews and analyses today on both Bloomberg and CNBC. They’re quite shocked and don’t understand why Canada is doing this.
Harper and the CPC blew it once again. A little flip-flop/betrayal on income trusts with this? Trick or treat!
BHPB has 30 days to satisfy the conditions required. If there are proposals that change the perceived problems it could change the decision. The ball is in BHPB’s court. There are business models and other considerations. BHPB is a big player in the provinces diamond play. They run a good company. Diamonds aren’t strategic and potash is. Australia didn’t sell gas to Royal Dutch, China tightened rare earth metal shipment to Japan.
See strategic. As in one friggin’ mega-corp controls everything. McD’s with no Wendys, White Castle or BK. Would McD have dollar meals then? If there is an offer are we obliged to take it? Was your spouse forced to marry you cuz you asked?
Canpotex is not like the CWB. They are more like supply management of dairy and poultry. If some one sells outside of Canpotex a government agency will not come down an slap them, like if you sold eggs without a quota.
If it was three companies getting together to market a product it’s no big deal. They can share costs on transportation and perhaps this approach is more efficient.
However, it is a big deal when the government tries to protect the marketing agency by preventing a takeover of one of the members of the agency.
Are there any conservatives left?:
Someone up above said “CPC=LPC”. The flaw there is that the LPC has never blocked a private deal (let alone 2), never run up this size of a deficit, never grew the state to this size, never increased their own PMO pork by 30% during a recession, never had a $60 million sign campaign or a $2 billion 78 hour luxury vacation for political elites, never spent $20 billion to “stimulate” the economy and turned it into pork.
The Liberals never did any of this? Really? In 80 years of governing, the Liberals never ran a similar sized deficit relative to the size of the economy? They never held G7/G8/G20 summits? They never attempted to “stimulate” themselves out of a recession? They didn’t set up an utterly useless $2 Billion registry? I guess the millions in sponsorship dollars run out of the PMO never happened either? Apparently Mr. Mulroney DIDN’T start his term as Prime Minister with an accumulated deficit of 180 billion which was approximately 45% of GDP at the time?
Two years ago, a mere 8 weeks after an election, Mr. Flaherty stood in the Commons and said that Canada would do just fine if it did nothing through the recession that was happening everywhere but here. They had done some market transactions, but that was it. Two months later he handed down a deficit budget at very vocal insistence of the Opposition parties. As a conservative, I was disappointed, but I knew that the Liberal Coalition would have spent more.
As for BHP taking over the industry? Follow the logic. BHP spends money on Potash Corp and withdraws it from Canpotex. It mines all the potash it can and sells it for whatever price it can get – good for farms (Barcs) bad for everyone else in the province, including Mosaic and Agrium. Mosaic and Agrium, being ONLY potash companies, would have to match price, and eventually mine potash at a loss or not mine at all – bad for everyone, including farmers. When they hit a breaking point, BHP swoops in and buys them out for pennies on the dollar – good for BHP, bad for everyone else. Net benefit to Canada? Bad – one company would then control 50% of the known potash reserves in the world and would hold near monopolistic power on a resource that will be necessary to sustain life.
Now, do you still think it’s a good idea that BHP be allowed unfettered ability to buy PCS shares? I’m a libertarian and I have my doubts about it.
Oct 20, 2010: Stephen Harper — “As members know, this is a proposal for an American-controlled company to be taken over by an Australian-controlled company…”
Nov 3, 2010: Tony Clement — “I can confirm that I have sent a notice to BHP Billiton indicating that, at this time, I am not satisfied that the proposed transaction is likely to be of net benefit to Canada.”
As for reasons for the about-face, here’s one.
Anyone who cares to do any research will discover that BHP has the rights to some of the best potash reserves in Saskatchewan. Any time BHP wants it can open a new mine and export its potash through the US and I doubt that any government would stop it. That is not what this is about. This is about a corporate takeover. Anyone who thinks that corporate takeovers for the sake of corporate takeovers is a good thing didn’t watch the markets in the US when corporate takeovers were all the rage.
Two questions in my mind:
1. What would happen if Potash Corp. decided to move its headquarters to Chicago for tax purposes? I mean, what would Wall say or do in that event?
2. Now that the feds have laid out for BHP the criteria for what constitutes a net benefit to Canada, what will Wall do if/when BHP comes back with another bid that satisfies the feds “net benefit criteria?”
I think that Potash Corp. was shocked by Wall’s eventual reaction. I think their actions were just an attempt to get a better bid for their company. They even said that Wall’s reaction put a chilling effect on their attempts to solicit other bids.
Front page of the Wall Street Journal today.
So much for no one is going to care outside of Saskatchewan.
Clearly, or maybe not, this is not a black and white issue. While I embrace free enterprise, I also see the need for national interests, protectionism if you will. If Canada allows the world to own our resources then we will be no better off than the third world countries that enabled the English, French, Spanish and Portuguese to amass a global empire.
I think if it was an Iranian company instead of an Australian one and they were after uranium instead of potash, there would be a nationalistic outcry and a demand that government do something. Natural resources belong to the people of the province involved, and as such, they require the government to see to it that the best interests of the people are taken into account.
Just as there are many shades from black to white, so is there many steps from pure capitalism to socialism/communism. somewhere in the middle is a shade that will be pleasing for most of us.
Front page of the Wall Street Journal today: online.wsj.com/article/SB20001424052748703506904575592870406638644.html
So much for no one is going to care outside of Saskatchewan.
I’ll throw this out: is BHP working for China on this deal?
Why didn’t the Chinese bid? Only the Aussies do stink bids? There is more to this deal than we are being told.
Like Kate on yesterday’s B.C. thread, I’ll leave this topic for others to debate. I simply don’t know enough about the potash industry, Potash Corp, and this takeover bid specifically to comment with any confidence.
My free enterprise instincts suggest this should be a straight forward corporate enterprise. But, like Texas Canuck aptly states a few posts up, deals of this size and complexity are rarely black and white. In any event, I am following this story with much interest.
BTW, little lance, Canpotex is a single desk seller for SK potash, as the CWB is for SK wheat. So yeah, it is.
Bill Doyle bears a portion of the resposibility for this decision. He was making the bullets and our press and our politicians were only too happy to fire them. Now what? Will Mr. Doyle receive that windfall for his own shares that he swears they’re worth? Hard to see how if BHP is not allowed to bid on them. Hoist on your own petard, Bill? Every intervention in the market has a cost and ironically some of our strongest NDP union supporters could see less value in their pension funds as a result of this decision. By the way, I understand that Canpotex only sells offshore. Anti-trust laws are a tad too stringent Stateside.
As usual, the larger picture here is lost for many of the posters. As the holder of the largest reserves of potash around the world, the attitudes of the federal and Saskatchewan governments will be noted, particularly in those countries dependent upon fertilizer imports. As noted above, it’s already come out in the WSJ.
The medium term result of this decision will be reduced foreign investment in Saskatchewan potash reserves. That’s a given. Just like what NDP constraints placed upon Saskatchewan uranium, this decision will encourage companies interested in potash mining to look elsewhere for reserves to produce, and Canada’s share of the world market will shrink. The reason is simple. This decision says that Canada welcomes foreign investment, but you may never be able to get your invested capital back.
Of wider importance, it calls into question Canada’s value for foreign investment in any other resource area. Lacking any meaningful standards as to what constitutes national interest, no investor can now safely invest in any Canadian resource operation without some concern that they may not be able to sell or merge their investment. This over time will necessarily depress stock prices and bond holdings, dominated as they are in the Canadian exchanges by resource caps.
A third major consequence will be that Canada’s claims to advocate and defend free trade and the free flow of capital has been irreparably damaged. No foreign trade negotiator will ever take any of Canada’s claims to virtue on this seriously.
Fourth, over the last two decades, Canada has become a net exporter of capital, Canadians investing in other countries. What kind of reception do you think those investors will get when the home country does this? Other governments will be entirely justified in saying that we will get treated no better than we treat others.
So Lance, don’t ever pretend to any of the rest of us here that you are any great defender of free enterprise and free markets. Wall’s arguments and yours are bogus. Irrespective of what BHP did in its future business, the potash remains in Saskatchewan, is the property of the Crown for which it extracts whatever royalties it wishes. No corporate takeover or merger ever affects that. And by defending Canpotex, you’ve just weakened your arguments about CWB as well. Dress it up however you like, it’s protectionism. And in a country dependent for nearly half its GDP on exports, it’s a policy that Canada can never afford. Well done, big guy, you sacrificed the long term for the short term.
TC, wake up and smell the coffee. Potash Corp. is majority foreign owned now, primarily out of Chicago.
“If Canada allows the world to own our resources…” What drivel. Are you entirely unaware that in Canada, the provinces own the resources entirely? They simply grant extraction rights to companies in return for royalties. WE own the resources by law, TC, always have and always will. All that is at stake here is who we allow to extract them for us. And are you seriously comparing BHP and potash to some gang of Iranians coming to extract uranium?
Andrew “mine all the potash”: more drivel. Do you have any idea of how much potash Saskatchewan is sitting on? It’s enough potash to meet world demand for about half a millenium. And then sells it at a loss to force the others out of business. Maybe it hasn’t occurred to you that shareholders get mighty unhappy with CEOs who make mega billion dollar acquisitions that then do nothing but lose money. Those CEOs get dumped and fast. No, what this decision really means is that Canada’s attractiveness in potash has gone down and will tend to lose investment capital over time. Even as a Canadian investor this is a bad decision because it means that if I buy stock in the company I will never be able to achieve a gain through merger. And since it pays garbage dividends now, it just sent out a market signal of Sell, sell now.
So, puck, you claim that $130 was a complete joke. Well if that’s the case that the bid undervalued the company then one would have presumed that investors hungry for returns would have been lining up at the door to invest. Leveraged takeovers of good assets have never been so cheap, given interest rates as they now stand. As for net benefits test, it has always been distorted in the interests of politics where convenient. It’s distorting effect is that the squealers don’t ever have to prove any of the harm they claim will come from any proposal.
Here’s the only comment I’ll make, which may help explain why I’ve decided to take the fence on this one.
The private property issue isn’t a cut and dried one. I’ll use a ridiculously simply example.
Suppose that I have a gravel pit on my farm. I own the gravel, but decide to contract out the management and hauling to a private company.
Then another company tries to buy out the one contracted to run my gravel pit. Am I forced to permit them to take over the management? Is it wise to stand back and say “not my business to interfere”?
I don’t think so.
Wall has two balls to juggle, and I don’t envy him. He not just responsible for the investment climate in the province – he’s also representing the owner of the gravel.
News to y’all: Farmers in Canada do not usually apply potash fertilizer to the soil – we’ve got reserve and aren’t usually deficient in that nutrient. Those who believe that lowering the price of potash would create cheaper food and that it would translate onto store shelves have me laughing my a$$ off. Plus, the private shareholders of Potash Corp would never have accepted this deal (it was so underpriced) so either way, Wall and Harper were right to refuse the take over. Plus, never in the history of the free market has a single company tried to take over a complete 1/3 of global production in one go – do we really want to try this experiment?
Suppose that I have a gravel pit
The smart thing would be to eliminate the middle man and haul and sell the gravel yourself and maximize your return. If you choose to contract
that out, it is none of your business who ultimately owns that contractor, as long as
they continue to fulfill their part of the bargain.
How easy it is to theoretically live by the John Galt sword
but how reluctant you are to die by it when
reality stares you in the face.
Kate, you are entitled to say no if the new owners are proposing to change the business terms of the contract. But a contract is a contract; if the new owners are promising to adhere to all the agreed terms, then you don’t have such a right to interfere in the other company and determine who owns and manages it.
Free market or no free market … that is the question.
Harper has made a big mistake.
On a brighter topic … Jim Prentice has announced his resignation.
Good riddance….
Scratch a Saskatchewan so called free market supporter and eventually a parochial collectivist will appear. A sad day for free markets and those who truly believe in them.
yeah who would want the largest mining company in the world coming in and mining potash.?
they may just open up another mine
canpotex is exactly the wheat board.
I dont like this one bit.
“If Sask’s people were that concerned why’d they let the Provincial government sell their share to private industry?”
If the provincial government had retained ownership of Potash Corp as a crown corporation, we wouldn’t be having this discussion. Remember, back in the day, the NDP were busy running the business into the ground. Privatization made it the thriving, sought-after entity that it is today.
The Riders control the means of production.
Wall and Harper should stick to politics and leave business to businessmen. By dipping their oar, the two politicians acted like they had learned their trade at Trudeau’s knee.
I happened to be working in Australia a number of years ago when the Campbell Soup Company made a bid for Arnotts Biscuits. Every Aussie in the land was raised on Arnotts Biscuits, and the furor was unimaginable. The Big Bad Yanks were taking away a piece of Oz, and that would swiftly lead to the end of the world.
Eventually the Big Bad Yanks prevailed, and the business deal went through. The world did not reverse its direction of rotation, and the biscuit recipes weren’t sullied by the addition of Coca Cola. The political tempest went away.
As it would have in Canada, had Wall and Harper just minded their own #**!!@ business.
I don’t have time to read the comments so I have no idea which you guys are going but this is an absolute embarrassment to anyone who thought the Cons were free marketers. BHP buys, BHP gets. Simple as that. Shareholders sell, shareholders lose. What the eff is the problem?
The markets seem to think that this was a good thing for BHP. The price of BHP stock is up almost 6% today, while Potash Corp is down 2.4%…and on a day when both the U.S. and Canadian stock markets experienced fairly big gains.
Could it be that the markets are telling BHP that they are better off not operating in Saskatchewan after all?
Shocked by this post, not shocked to find that Kate didn’t write it. Commie!
Since when is fricken fertilizer a strategic national asset?
And what do you think BHP is going to do, cut up SK and move it down under? They still have to mine it in SK. It isn’t going anywhere.
Idiocy is still idiocy if it happens in your backyard.
This was a stupid decision economically. It’s just selfish politics on the supposedly conservative governement at both levels.
What does Kate keep saying? pleasing your enemies doesn’t make them your friends? Well, kowtowing to the lefty-nationalists won’t get them to put an x beside your name at election time.
And if you’re happy with this outcome you’re economically illiterate and certainly no real conservative.
“BTW, little lance, Canpotex is a single desk seller for SK potash, as the CWB is for SK wheat. So yeah, it is.”
Phil, your an a**. I could presumably start up a potash mine tomorrow and ship my product anywhere I want to whomever I want and no one could restrict me from doing that. By law, the CWB would throw me in jail if I did the same thing with number 1 spring red. silly pri*&
agreed kate. it is a tough place to be as a large “C” conservative with a little libertarian twist ..this was bugging me all week because one part of me was going …they can’t just muscle in on a company and buy it and then fire all our employee’s and cancel all of our means of profit…and on the other side i was going oh well it is up to that individual company if they want to seel i would trust that they are intellegent enough to make intellegent decisions for themselves …hmm it is tough an i beelive we should have stayed out of it but if there is even a hint of canada taking a loss of anykind as a collective then well i am glad we said no .
Would you sell your house at a loss,or to just break even if you didn’t have to ?
You could but if the people moving in were going to bring down the value of everyother house on the block as a neighbour i would do what ever it took to not let you do it or at the least to advise you strongly not to do it .
I don’t know what to think, though I think politics have a lot to do with it, I do know for a fact that they should give those in attendance, paper plates and plastic utensils, damn sustainability!
I’m too busy, and don’t know much about the specific industry. BUT:
I think cgh at 5:47 PM has it precisely right!
Read it if you haven’t; re-read it if you have.
Whoever said: I’m ok with the decision if it wasn’t made for political purposes, thanks for the chuckle.
Scratch a Saskatchewan so called free market supporter and eventually a parochial collectivist will appear. A sad day for free markets and those who truly believe in them.
Posted by: jim d at November 4, 2010 6:32 PM
Sadly, jim d is right.
Cartels: My austrian-economics gods tell me that cartels are not really a problem. Cartels are extremely unstable as some member(s) inevitably break ranks in order to gain a competitive edge. Even a monopoly need not be a problem if production is not restricted in order to raise prices. And there are laws to prevent this abuse.
cgh’s comments are bang on. This was a completely cynical political decision, made in the best interests of the Saskatchewan Part and the CPC. Both parties would have gotten a shellacking at the polls had they acted differently, and that was the only reason they did what they did. And I say that as a Sk Party card-holder.
This move essentially says that PCS can never be sold en masse; no one in Canada could ever buy them, and no company abroad will ever attempt it again. Therefore, it will place an effective premium on the share price and ultimately devalue the company as a whole.
In addition, the protectionist cartel argument that compares Canpotex with the CWB is also correct, if not in fact then in practice. This is evident because of BHP’s intent to remove itself from the Canpotex arrangement, which Wall used to demonstrate the so-called no net benefit of the deal. Because of the government’s veto on the sale, it evidences a de facto state-sanctioned single-desk marketing group. None of the parties can now leave this arrangement without raising the wrath of the political leadership. So, yeah, it’s like our very own provincial CWB.
Kate, your gravel pit argument doesn’t hold water either. The government has in its toolbox several instruments that control the resource, namely the royalty and provincial tax structure. But by picking one company over another, the government prevents market selection to take place. As long as BHP would have acted according to the laws and regulations of the land, there is no reason to deny them access to the resource.
True, monopolies are never the most desired outcome, but the market can take care of monopolies if they do not perform. BHP would have still had to have pleased their shareholders. If they were mismanaging the resource, their leadership would suffer the wrath of the management. It would be in their long-term interest to maximize the productivity of the potash reserves. Therefore, Saskatchewan too would have benefited in the long-term.
It was a bad deal, Mssrs Wall & Harper. I understand why you did it, but I wish you’d just be honest about it.
Nice how shareholder’s interests rated a fat zero in the net benefit calculation of Premier Wall.
Once again, government is the big daddy the people are conned into believing will guarantee their future wellbeing.
Why would BHP invest, unless they saw superior profit potential in the potash business by driving down the price? Who is the world’s low cost miner of potash? BHP may believe they can drive foreign competitors out of business, grabbing the lion’s share of the market, with the increased volume making up for a much lower profit per car. Such a scenario would drive up employment in potash, not drive it down.
But the argument that government would lose revenue – that’s the clincher.
How did investors get screwed? When it jumped they could have sold. If they aren’t making coin at 140 they weren’t making coin at 90 in July. If 50 bucks a share isn’t good enough you are greedy.
Guess western farmers can kiss the prospect of the CWB disappearing altogether goodbye, eh?
Everytime I pay that GST, I see a barcode stamped across my forehead in the mirror: “property of the federal government”.
Welcome to the Gulag.
cgh @5:47pm gets it right.
“Both parties would have gotten a shellacking at the polls”
The vast majority of those that opposed the deal would never vote for the Sask Party or the CPC anyway. Can you visualize the next meeting of the United Steelworkers local with a union honcho urging the members to vote for the Sask Party in 2012? Not likely! Call me naive but I think Wall acted in what he considered to be the best interests of the province. I like to think that not all politicians make decisions to score cheap political points or to save their asses come election time.
” How did investors get screwed? ”
They weren’t permitted to sell their asset freely. Not for you or I to decide except in extreme circumstance, which a threat to a goverment revenue stream most definitely is not.
To anyone who says Canpotex is exactly the same as the Wheat Board, I ask one simple question:
Does the government force Agrium, Mosaic and PCS to participate? Has it legislated them to participate? Does it control 1/3 of the seats at the board table through appointees?
Thought not. It’s more akin to OPEC than it is the CWB – not that either comparison is good.
55% of SK based on several polls over a long period of time biffyjr.
CPC and Sask Party have majorities in SK. Large majorities.
Don’t confuse your point of view with the majority here.
By the way, before Clement’s statement (which I was convinced was going to allow the takeover to continue), I was imagining his opening statement to be: “First of all, I want to thank Brad Trost for his years of service …”
The CPC would have lost at least three seats in SK had they done otherwise, and the SK party would have given Link an opening. Politically, there was only one move to make, and both Wall and Harper responded in that sense.
And now we know how far Wall’s principles will go.
Regarding the gravel pit analogy, the only way in which the owner of a gravel pit would have a say in the ownership of a pit management firm would be if the contract explicitly said so. That would be a pretty rare occurrence. It would be similar to a farm landowner having a say as to who his tenant can sell his own farmland to. I’ve never heard of such an arrangement, and I doubt that I ever will, for good reason. Few tenants would willingly give up that much control over their business for the sake of a temporary rental agreement.
An economy based on such arrangements would properly be termed serfdom, not capitalism.
Otherwise, the terms of a contract pretty much define the extent of the interactions between a tenant and a landlord. No one is entitled to invent new obligations which do not exist in the contract.
You can create huge problems with making someone a partner in a firm without that partner having to risk any capital on behalf of the firm; i.e., without taking on any of the responsibilities and risks that ownership normally entails. It amounts to granting people something for nothing. When you do that, resources usually wind up squandered because, to the beneficiaries, it appeared to cost them nothing anyway.
There is no such thing as a “national interest” or “provincial interest” – there are only individual interests. The decision in this case belongs to the shareholders, not the government. Government is supposed to protect individual rights, not run the economy.
I followed with interest the closing of the TSE today. All over the world, markets were up in one day between 2-4%, a huge one day gain triggered by the Fed buying $600 billion in bonds. It’s a stupid inflation-producing policy, but let’s leave that aside for the moment.
PCS dropped nearly 6%. At the time the price was north of $150/share while BHP’s bid was for $130, made at a time when it was originally trading at $90. All of the institutional investors are largely in agreement that the price was up to $150 because of an anticipated competing bid for PCS. That’s now been shut down, and one can expect that the price will now drop back to the vicinity of its original $90.
In the event of a competing bid, most of the institutional investors were on record as expecting PCS to go for something on the order of $165-180/share. So, the existing shareholders of PCS have been robbed by the governments of a minimum of $40/share (BHP’s bid) and as much as $90/share (the maximum expected share offering). Small c is entirely right; the shareholders were robbed and with no recourse whatsoever. All other things staying the same, I will not be surprised if the price goes below $90, because the market will now price in the protected status of PCS by government. That’s even better than a poison pill but much worse for share value.
With respect to the company itself, one now has to question what will happen to productivity. The way capitalism works, if you run your company inefficiently, someone else steps in, buys out the irritated shareholders and fires everyone and puts in place a new management team. So, you run your company efficiently to keep your job. But now the government has just come in to protect existing management irrespective of their merits.
It might indeed have been legitimate for the provincial government to say that this sale is not in Saskatchewan’s interest and that Saskatchewan is going to nationalize PCS at the current market price of $150 and create a crown corporation. That’s putting the province’s money where it’s mouth is, even though crowns don’t usually run these kinds of businesses very efficiently. But what in fact happened was theft, pure and simple.
And lest any of you think that it doesn’t affect you, this bit is for all of you with your own pension plan and not some union-driven statutory benefit thing. Where do the returns for your pension fund come from? From stocks and bonds and other financial instruments invested in or dependent upon investments in largely Canadian securities. And just what do you think this decision will do? Increase the value of Canadian holdings or decrease them? Canada has enough trouble trying to get growth north of 3%. This implies that real rate of returns on your pension fund will not be more than 3% either. Does this decision encourage or discourage overall economic growth?
Remember that this is part of a pattern. Hands up everyone who remembers MacDonald-Detwiler. So first government said you can’t touch high tech aerospace (even though they sold out on Spar Aerospace years ago which was far more strategically important than MD), and now government has said you can’t touch primary resource. What’s next to be excluded? Because you may be very sure that there will be a next time and it will be something even sillier than this one.
And before you know it, Canada is a no-investment gulag similar to, oh, Venezuela. And with that, we stagnate.
Perhaps the best line in the past few posts was this one, “I like to think that not all politicians make decisions to score cheap political points or to save their asses come election time.”
I think I’m going to die laughing.
All I can say is, treasure your illusions. This sort of pure innocence belongs with Dick and Jane and See Spot Run. Everything in politics is about the next election. Because winning elections means power. And when power’s at stake, they don’t care who gets gored or what the long term consequences are. And rules are made for suckers, to be set aside when they become inconvenient.
“Phil, your an a**. I could presumably start up a potash mine tomorrow and ship my product anywhere I want to whomever I want and no one could restrict me from doing that. By law, the CWB would throw me in jail if I did the same thing with number 1 spring red. silly pri*&”
You’re wrong DT, you are not permitted to open a mine tomorrow. SK government has more than a few forms for you to fill out.
POT is a now Bill Doyle’s domain and he will continue to sacrifice the employ of SK potash workers to keep up his fat cartel margins. The new BNP mine will be a reprieve for potash workers and farmers and POT will wither in this eventuallity. In the last couple of years SK government should have been demanding POT use its mining rights or lose them (or pay a significant penalty for choosing to dry up the royalty stream). The dividend is 10 cents a quarter, with the company now a “Crown”, that’s all its worth to an investor; I wouldn’t own that crap yield.
This whole decision is difficult for people such as we, who generally believe in the Free Market, Laissez-faire, capitalism, etc.. But when I was just a boy, it was W.A.C. Bennett who either nationalized or bought out Black Ball Ferries and B.C. Electric. Of course he was a Social Creditor, who believed that you borrowed money on your physical assets. He was no socialist by any means. NDPer Glen Clark thought he was fantastic. Truth is he was a go-getter, who built the foundation of the province. Saskatchewan has limited resources, no real fishery or lumber industry and outside of its people and farming, oil and gas and potash; not much sustainability in the long run. Perhaps this is a good move?
If potash is so essential to the national interest then the federal government should nationalize Potash Corp. and pay me $150/per share.
If it isn’t that important, then I should be allowed to sell my shares to who I damn well please.
If the SK govt is so concerned about tax revenues it can simply crank up the royalty rate payable to it and make up the difference that way.
This is ridiculous. That any “conservative” would support this decision is egregious. Again, though, it’s a good thing. Let’s me know who the real conservatives are.
I don’t like the decision either but both Harper and Wall were da**ed if they did and da**ed if they didn’t.
Politics trumped free market thinking. Rock and a hard place.
Canpotex and Wheat Board are two different types of organizations. No comparison.