VICTORIA - I can see why people are worked up about the takeover of Terasen Inc. by U.S.-based Kinder Morgan.
There are reasons to worry , and to feel betrayed. It was only two years ago, as Terasen successfully lobbied the government to lift Canadian ownership requirements, that CEO John Reid downplayed worries about a takeover. "Our head office is firmly planted here in Vancouver, British Columbia, and we have every intention of keeping it that way," he said then.
But still the government is right to keep its hands off the deal, and resist the call to use it as a weapon in the softwood battle.
First some history.
Terasen, known as BC Gas until two years ago, was a publicly owned natural gas distributor for 50 years.
In 1988 the Socreds decided to privatize the utility. But the Vander Zalm government was worried that foreign ownership, or control by any small group of owners, would hurt B.C.'s interests. So it passed a law limiting foreign ownership to 20 per cent of shares, and barring anyone from owning enough stock to exercise control.
The law lasted for 15 years, until the Liberal government repealed it in 2003. There was no real debate or discussion. The two-person NDP opposition was focused on bigger BC Hydro issues in the same piece of legislation; Liberal MLAs asked no questions.
The Liberals said the change was needed because government shouldn't be setting ownership rules for a private company. The new freedom would make it easier for Terasen to raise money through stock issues, it said.
They are not bad arguments, but it might have been a tough sell if people were paying attention. More than 6,000 British Columbians have written letters opposing the Kinder deal.
Terasen is big in the pipeline business, moving oil from Alberta into B.C. and to five U.S. states. (It does not actually produce any oil or gas.)
But the corporation's core business is delivering natural gas to about 880,000 B.C. households and businesses. It's a monopoly, regulated by the BC Utilities Commission, and the company's performance and rates are important to more than half of British Columbians.
They have some right to be concerned. Gas distribution in B.C. was hugely important to Terasen. To Kinder Morgan, it is just another profit centre. Terasen, as one of B.C.'s largest corporations, was conscious of its image and reputation. Kinder Morgan will be much less interested.
But the time for such concerns is past.
The law was changed. Kinder Morgan made an offer to buy the company, obeying all the rules, and the shareholders have accepted. The deal is worth about $700 million in gains to Terasen shareholders. (About half the shares are held by pension and mutual funds and other institutions.) It would be wrong to leap in now.
The sale still has to be approved by the BC Utilities Commission, which will look at whether it is in the public interest. A federal review is also under way. British Columbians will have to count on those reviews establish that their interests can be protected.
The New Democrats, with Corky Evans in the lead, have been calling on the government to stall the sale as a pressure tactic in the softwood dispute. Richard Kinder, the acquisitive CEO, is a friend and supporter of George Bush. Holding up the sale for 90 days could encourage Kinder to tell Bush that energy matters more than softwood, they argue.
It's appealing, but not the right action. The delay would penalize Terasen shareholders for something they nothing to do with, and send a message that B.C. is a risky place to do business.
Especially because a 90-day freeze is unlikely to have any impact, leading to pressure for a longer and longer delay.
Basically, this is just another corporate takeover, changing one group of self-interested shareholders for another.
And that's really not the government's business.
Footnote: The sale means Vancouver loses another corporate head office. On a per capita basis, B.C. already trails four provinces - including Manitoba - in the number of head offices located here. It's a significant problem. Corporate head offices provide increased business and career opportunities, and tend to offer more support for community projects of all kinds.
Friday, November 04, 2005
Thursday, November 03, 2005
New U.S. passport rule could clobber B.C. tourism
VICTORIA - Tourism Minister Olga Illich is right to be fighting new U.S. border security measures that threaten the tourist industry.
B.C. has run into a nasty alignment of three big tourism problems, all certain to keep American visitors away. Two of the three - painful gas prices and a strong Canadian dollar - are beyond the province's control.
But there is at least hope that B.C., working with the other provinces and U.S. border states, can stall an American plan to make passports mandatory for all travelers. "We've been taking every opportunity to get into their faces and say we're unhappy about this," says Illich.
The new law will mean that a family heading up from Bellingham for a weekend in Vancouver won't be admitted back into the U.S. without passports. Since two out of three Americans don't have a passport, that's a big problem. A family of four is not going to spend $400 on passports just to come to B.C. for a week’s holiday.
And since the U.S. is by far the most important external market for B.C. tourism, providing three out of four foreign visitors.
B.C. has allies. All the provinces and Ottawa are opposing the passport requirement. And because the rule would also apply to Canadians visiting the U.S., most border states have joined the fight, fearing a loss of Canadian visitors.
But time is running out. The rule is set to apply to travelers coming by air and sea - a significant group for Victoria - by the end of next year, and to all travelers by Dec. 31, 2007.
The Canadian Tourism Commission reports that the new rules are already scaring away visitors who are confused about the passport requirement, keeping more than 50,000 potential tourists away from B.C. this year.
The threat comes at a bad time.
American visits to Canada fell to their lowest level in 25 years in August. Visits to B.C. are down 2.9 per cent so far this year.
Soaring gas prices are already taking a toll on tourism. BC Stats estimates that each one-cent increase in gas prices results in the loss of 3,600 same-day and 2,400 overnight visitors a year. American gas prices, pushed up in the wake of Hurricane Katrina, are up 60 cents from a year ago, costing the province some 360,000 visits. The impact is greatest in smaller centres, dependent on car travelers.
A hotel room that cost $90 Canadian would have translated into the bargain rate of $60 U.S. at the beginning of 2003. This month, the same room would have cost an American traveler more than $75 in his own currency. Across the board - meals, attractions - the cost of a break in the Okanagan, or on the Island, is up 25 per cent just because of the exchange rate.
B.C. has just released its submission to the U.S. Homeland Security Department on the passport issue, which reinforces the threat.
The brief warns that convention organizers are already looking at striking B.C. from their list of potential sites because not all delegates will want to get passports.
And the province’s chances of building on the 2010 Olympics to increase tourism and trade would be hurt, B.C.argues in the brief.
It’s hard to judge the chances of success in this campaign. The U.S. last month ignored complains and began requiring many visitors from France and Italy to have a visa because those countries’ passports aren’t considered secure.
But pressure for easing the passport requirement is building within the U.S., and there appears to be some softening in the homeland security position. Security secretary Michael Chertoff says the government is looking at cheaper, easier-to-get - but still secure - ID cards as an alternative. Some states are considering adding more security information to drivers’ licences to make them an acceptable substitute.
It’s a battle worth hundreds of millions of dollars - and thousands of jobs - for British Columbia.
Footnote: The province’s brief warns that damage from the passport regulation will go beydnd tourism. The requirement will clog borders and hurt trade between the two countries, B.C, warns, and make it more difficult for businesses to seize opportunities on the other side of the border. A coalition of U.S. Chambers of Commerce is fighting the change on the same ground.
B.C. has run into a nasty alignment of three big tourism problems, all certain to keep American visitors away. Two of the three - painful gas prices and a strong Canadian dollar - are beyond the province's control.
But there is at least hope that B.C., working with the other provinces and U.S. border states, can stall an American plan to make passports mandatory for all travelers. "We've been taking every opportunity to get into their faces and say we're unhappy about this," says Illich.
The new law will mean that a family heading up from Bellingham for a weekend in Vancouver won't be admitted back into the U.S. without passports. Since two out of three Americans don't have a passport, that's a big problem. A family of four is not going to spend $400 on passports just to come to B.C. for a week’s holiday.
And since the U.S. is by far the most important external market for B.C. tourism, providing three out of four foreign visitors.
B.C. has allies. All the provinces and Ottawa are opposing the passport requirement. And because the rule would also apply to Canadians visiting the U.S., most border states have joined the fight, fearing a loss of Canadian visitors.
But time is running out. The rule is set to apply to travelers coming by air and sea - a significant group for Victoria - by the end of next year, and to all travelers by Dec. 31, 2007.
The Canadian Tourism Commission reports that the new rules are already scaring away visitors who are confused about the passport requirement, keeping more than 50,000 potential tourists away from B.C. this year.
The threat comes at a bad time.
American visits to Canada fell to their lowest level in 25 years in August. Visits to B.C. are down 2.9 per cent so far this year.
Soaring gas prices are already taking a toll on tourism. BC Stats estimates that each one-cent increase in gas prices results in the loss of 3,600 same-day and 2,400 overnight visitors a year. American gas prices, pushed up in the wake of Hurricane Katrina, are up 60 cents from a year ago, costing the province some 360,000 visits. The impact is greatest in smaller centres, dependent on car travelers.
A hotel room that cost $90 Canadian would have translated into the bargain rate of $60 U.S. at the beginning of 2003. This month, the same room would have cost an American traveler more than $75 in his own currency. Across the board - meals, attractions - the cost of a break in the Okanagan, or on the Island, is up 25 per cent just because of the exchange rate.
B.C. has just released its submission to the U.S. Homeland Security Department on the passport issue, which reinforces the threat.
The brief warns that convention organizers are already looking at striking B.C. from their list of potential sites because not all delegates will want to get passports.
And the province’s chances of building on the 2010 Olympics to increase tourism and trade would be hurt, B.C.argues in the brief.
It’s hard to judge the chances of success in this campaign. The U.S. last month ignored complains and began requiring many visitors from France and Italy to have a visa because those countries’ passports aren’t considered secure.
But pressure for easing the passport requirement is building within the U.S., and there appears to be some softening in the homeland security position. Security secretary Michael Chertoff says the government is looking at cheaper, easier-to-get - but still secure - ID cards as an alternative. Some states are considering adding more security information to drivers’ licences to make them an acceptable substitute.
It’s a battle worth hundreds of millions of dollars - and thousands of jobs - for British Columbia.
Footnote: The province’s brief warns that damage from the passport regulation will go beydnd tourism. The requirement will clog borders and hurt trade between the two countries, B.C, warns, and make it more difficult for businesses to seize opportunities on the other side of the border. A coalition of U.S. Chambers of Commerce is fighting the change on the same ground.
Wednesday, November 02, 2005
Everything you need to know about Gomery in three minutes
VICTORIA - OK, you’re busy and easily depressed in these darkening fall days, and so have skipped much of the Gomery coverage.
Here, in 650 words, is what you need to know, starting with the basic findings.
First, you were ripped off. Tax dollars you paid in good faith were wasted, stolen and directed to the Liberal Party and its friends. The Martin government has acknowledged $57 million was siphoned off through fraud, but much of the $330 million spent in the sponsorship scandal was squandered on dubious projects of little value.
Second, Gomery clears Paul Martin and the current cabinet. The program was secretive and run from Prime Minister Jean Chretien’s office. Martin, despite his cabinet posts and political network in Quebec and across the country, was out of the loop.
Third, Gomery blames Chretien and his circle. Chretien’s office ran the program without proper oversight, and his friend Jacques Corriveau siphoned $8 million from various contracts, kicking back some of the money to the Liberal Party. “The prime minister and his chief of staff arrogated to themselves the direction of a virtually secret program of discretionary spending to selected beneficiaries,” Gomery found.
Fourth, the whole program was based on the notion that the interests of the government and the Liberal Party were one and the same. Fighting separatist sentiment in Quebec - using tax dollars - meant strengthening the Liberal party, not the Canadian government.
Those are the important findings. The details are sordid and discouraging, the cast large and disreputable, and the lack of honesty before the inquiry appalling. But you knew most of that.
The question left is what happens now.
Martin and company want you to forget about it. That was the old gang, and they are the new, improved Liberal Party.
That seems a tough sell. Martin have moved quickly to set up the Gomery Inquiry and end the sponsorship program once he was in power. But newspaper stories about the scandal, which should have sparked his interest, started appearing in 2000. He didn’t act for three years.
Despite the leadership change, Canadians have reason to be skeptical about what the Liberals have learned. One underlying theme in the evidence was the divine right of Liberals. The people involved were convinced that the party had the right and responsibility to govern, and a duty to win elections even if it meant fund-raising fraud.
And they were convinced that they had a right to rewards for their good work, at the taxpayer’s expense - an inflated contract here, a gift from a supplier there. Being a Liberal party brought an entitlement.
It’s hard to see that those fundamental beliefs have been altered. Martin appoints Francis Fox to the Senate; Pierre Pettigrew flies his chauffeur off to Europe; friendly law firms get government work across the country. David Dingwall is rewarded with a patronage appointment to the Mint, and snappishly reminds MPs that he is “entitled to his entitlements.”
Voters are left with a tough choice in the coming election.
Conservative leader Stephen Harper will try and argue that re-electing a Liberal government is condoning corruption. If there are no consequences for what Gomery called a depressing story of waste, greed and misconduct, then voters would be saying they accept that level of behaviour.
It should be a strong argument. But the Conservatives’ remarkable failure to connect with the priorities of Canadians means that it may well be ignored.
Except in Quebec. It is not much of a stretch for Bloc Quebecois supporters to argue that the Liberals cheated and attempted to steal two federal elections in Quebec. The sponsorship program used tax dollars to support the party, and funneled cash directly to the campaign effort. It has the feel of the kind of fraud seen in psuedo-democracies in the Third World.
Liberals seemed cheerful at the Gomery findings this week. Canadians should just be depressed.
Footnote: Chretien’s decision to demand a review of the findings in federal court is a body blow to Martin. Chretien not only will keep the issue alive as the election nears, but argue that the sponsorship waste was just business as usual in Ottawa, a damaging message for the Martin campaign.
Here, in 650 words, is what you need to know, starting with the basic findings.
First, you were ripped off. Tax dollars you paid in good faith were wasted, stolen and directed to the Liberal Party and its friends. The Martin government has acknowledged $57 million was siphoned off through fraud, but much of the $330 million spent in the sponsorship scandal was squandered on dubious projects of little value.
Second, Gomery clears Paul Martin and the current cabinet. The program was secretive and run from Prime Minister Jean Chretien’s office. Martin, despite his cabinet posts and political network in Quebec and across the country, was out of the loop.
Third, Gomery blames Chretien and his circle. Chretien’s office ran the program without proper oversight, and his friend Jacques Corriveau siphoned $8 million from various contracts, kicking back some of the money to the Liberal Party. “The prime minister and his chief of staff arrogated to themselves the direction of a virtually secret program of discretionary spending to selected beneficiaries,” Gomery found.
Fourth, the whole program was based on the notion that the interests of the government and the Liberal Party were one and the same. Fighting separatist sentiment in Quebec - using tax dollars - meant strengthening the Liberal party, not the Canadian government.
Those are the important findings. The details are sordid and discouraging, the cast large and disreputable, and the lack of honesty before the inquiry appalling. But you knew most of that.
The question left is what happens now.
Martin and company want you to forget about it. That was the old gang, and they are the new, improved Liberal Party.
That seems a tough sell. Martin have moved quickly to set up the Gomery Inquiry and end the sponsorship program once he was in power. But newspaper stories about the scandal, which should have sparked his interest, started appearing in 2000. He didn’t act for three years.
Despite the leadership change, Canadians have reason to be skeptical about what the Liberals have learned. One underlying theme in the evidence was the divine right of Liberals. The people involved were convinced that the party had the right and responsibility to govern, and a duty to win elections even if it meant fund-raising fraud.
And they were convinced that they had a right to rewards for their good work, at the taxpayer’s expense - an inflated contract here, a gift from a supplier there. Being a Liberal party brought an entitlement.
It’s hard to see that those fundamental beliefs have been altered. Martin appoints Francis Fox to the Senate; Pierre Pettigrew flies his chauffeur off to Europe; friendly law firms get government work across the country. David Dingwall is rewarded with a patronage appointment to the Mint, and snappishly reminds MPs that he is “entitled to his entitlements.”
Voters are left with a tough choice in the coming election.
Conservative leader Stephen Harper will try and argue that re-electing a Liberal government is condoning corruption. If there are no consequences for what Gomery called a depressing story of waste, greed and misconduct, then voters would be saying they accept that level of behaviour.
It should be a strong argument. But the Conservatives’ remarkable failure to connect with the priorities of Canadians means that it may well be ignored.
Except in Quebec. It is not much of a stretch for Bloc Quebecois supporters to argue that the Liberals cheated and attempted to steal two federal elections in Quebec. The sponsorship program used tax dollars to support the party, and funneled cash directly to the campaign effort. It has the feel of the kind of fraud seen in psuedo-democracies in the Third World.
Liberals seemed cheerful at the Gomery findings this week. Canadians should just be depressed.
Footnote: Chretien’s decision to demand a review of the findings in federal court is a body blow to Martin. Chretien not only will keep the issue alive as the election nears, but argue that the sponsorship waste was just business as usual in Ottawa, a damaging message for the Martin campaign.
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