tony-clement

Infertile Ground

This week, the Conservative government in Ottawa nixed a $39 Billion takeover bid of Potash Corp by Australia-based BHP Billiton. Industry Minister Tony Clement broke his rhythm as he read a prepared statement in the foyer of the House of Commons reading his “Canada’s open for business” preamble and then taking a deep breath and then delivering his verdict against foreign investment.

Economically, this shook the faith of fiscal conservatives. The Investment Canada Act mandates compulsory review of such foreign takeovers when they exceed $299 million in assets exchanged. But as fiscal conservatives can we be surprised when our ideas don’t sprout when they have not taken root?

The blocking of the potash takeover put to shame our principle of free investment and our global reputation of being open to business. By the time Clement had finished speaking, it was front-page news on the Wall Street Journal’s site. The blackberries of Ottawa-based consultant lobbyists buzzed with bewilderment from clients in Frankfurt. However, this wasn’t a decision made in the broadest political context of global economic stimulus, it was one made in the more raw and narrow context of saving 13 Conservative seats in Saskatchewan. And by doing so, acting wholly unconservative.

Politically it was the right move, but it should not have been. More votes were saved in Saskatchewan this week than were lost on Bay street. Yet as with the stimulus, for Conservatives both in name and in principle, it ripped at our guts and gave us great pause as to what we’re doing in Ottawa if not acting to advance rational objectives and liberal free-market principles.

Back in early 2009 when other developed nations doing it and spending at least two percent of GDP on government make-work projects, this government caved to peer-pressure and took a hit of illicit economic enhancing stimulus. In order to participate in the global pork project, Canada — while best-positioned to whether the global economic downturn — conceded by jumping into the sordid business of direct economic intervention in order to keep borders open to other countries (especially the US) who were looking at stimulus out of conceived necessity rather than as a go along. Indeed, if we had eschewed stimulus, our access to markets would have been closed to government projects in other countries. That 2% of GDP was rationalized by our government in Ottawa as a small price to pay for shelter from a global wave of protectionism that lapped at our shores and border. Yet, I have never heard my government discuss this concession to fiscal conservatives so plainly. But in turn, we fiscal conservatives also fail the governments we elect.

I’ve written before that parties and governments are only principled up to a point. By definition, a government must win a majority or at least a plurality of votes or seats to act. This week the government acted according to a majority of opinion where it counted as votes — in Saskatchewan. Eighty five percent of the residents of that province were firmly against the foreign takeover. As Conservatives with populist roots we should at least take comfort that provincial rights were respected. While acted as a central planner, the plan recognized provincial autonomy.

What should shock and concern us though is that a great number of Saskatchewans either thought that their government still owned the resource or that the majority of shares in Potash Corp were actually owned by Canadians. A Conference Board of Canada report held the sobering truth. For the knee-jerk economic nationalists, it was unknown that a majority of shares of Potash Corp were foreign owned. What should shock us further is that a great number of Canadians are not passionate about the free market principles that have brought more people out of poverty than any other miracle in our history.

These past couple of years have been jarring for a town filled with reporters that cover five news beats with an inch of depth and politicos that write policy on the fly between their stints in undergraduate and business school programs. From constitutional crises, to prorogation, from censuses to potash, if Wikipedia were a publicly traded company, the government would have already nationalized it as a “strategic resource”. Hours before the announcement, many reporters were scrambling to justify their gut feeling that the government was about to go in the wrong direction on the file and approve the takeover. “Apparently potash is some kind of fertilizer made of salt,” one remarked. “‘Pawd-ash’ not ‘pot-ash’ is how its pronounced,” remarked another. When you pair understaffed newsrooms against an army of online amateur “experts” and professional rent-seekers willing to step into the void, you have a recipe for reactionary policy that grows like a weed.

The major communications challenge unmet by this government and by the movement that puts its hopes in the same is that the ground on important issues such as foreign-investment in potash has not been prepared; the studies sit on dusty shelves, the advocates recline unprepared or over-confident. In the new world of Facebook populism, where activism is made more broadly accessible, parties struggle to cultivate grassroots activism and observers sometimes fail to calibrate to measure the significance of an online uprising.

In recent memory, the government has only once prepared the ground for a key showdown on a contentious issue: the long-gun registry. But as for other issues that matter, policy has only been jarringly announced and clumsily if not sparsely advocated. And still, the government is but one megaphone for conservative issues. If conservatives want to see their values implemented in any government (whatever its name), a government that can only a plurality of votes, we must also prepare the soil.

Globally, conservatives must entrench free-market principles as the de facto standard. If protectionists were political pariahs, parties in various countries would compete over who could make the economy freer, not who could protect and reclaim the most from foreign investment. My pride in Canada should be its openness to investment and international growth, not its stagnation for the sake of the failed practice of economic nationalism. Yet, our principles cannot exist in a vacuum; our ideals face competition from special interests. Conservatives cannot believe that government should be small and with limited influence while investing their hopes on it to make transformational change. Our challenge is greater than any government; we have a lot of soil to till because until then our ideas cannot sprout in infertile ground.

Comments

comments

  • http://sean-cummings.ca Sean Cummings

    Politics always trumps principle – why are you even questioning their decision? Any party in a similar position would have done the same thing.

  • Leasa

    Steve, shouldn’t we be open for business for our own farmers? Do you have any idea (especially Ontario) what we are up against? What drives fear into the hearts as farmers is whether fact or fiction that the price of our fertilizer will again triple if it is sold once again. The year before last, the bulk of the available potash was sold to India and China which left little readily available here at home and over night my fertilizer costs tripled. Our cost of production has gone mad. In the face of that, us horticulture farmers are being run off of our own markets by Quebec growers who have subsidy beyond anything else in this world.
    Free Trade as it is does not lift people out of poverty. It is in the interest of the Cargills, Walmarts & Doles of the world to keep these people as poor as possible so they can continue to realize gluttonous profits. We’ve had free trade for decades now and the people or rural China and other countries of the like are not better off today than they were 30 yrs ago. Why would Canada sell off and ‘trade’ away our natural resources to let other countries that have no human rights, are filthy and have no safety standards what-so-ever produce the goods? The last deal that we are about to sign with the EU will put unbearable strain on our farmers. Can you imagine Canada telling France that they cannot promote or favour local product in their government buildings? Can you imagine Germany letting Canada tell them they are not allowed to inspect Canadian product at the border unless a known problem comes forward? Hell no. But that is what Canada is about to agree on, letting them dictate these conditions to us.
    I believe in Trade, but fair trade, trade that insists on human rights, food & product safety and meets our standards in production. If that makes me any less Conservative, so be it.

  • Springer

    Having closely watched politics, and some of the most successful leaders therein, for some 40 years, when push comes to shove pragmatism trumps ideology most of the time. And there’s a good argument for why it should, too.

    Too often strict adherence to ideology requires twisting reality into knots. Life doesn’t work according to prescribed doctrine, never has, never will. Those who persist in trying to make it so inevitably find themselves slamming into brick walls. In politics, they will find themselves quickly out of a job, or conversely, ultimately engaged in one degree or another of conflict…and, in the extreme, war.

    One of the most successful leaders ever in this nation, with a utterly remarkable legacy of achievement, was WAC Bennett. A fiscal conservative, but first and foremost a pragmatist. When it became evident that private corporations simply had no interest in the long term future of the province, he created BC Hydro and took over delivery of power to the province. He did the same with the creation of the BC Ferry Corp. Neither of which were hardly ideologically “conservative”, indeed quite the contrary. But it was what had to happen in order to get the job done. So he did, and it did…and quite spectacularly so.

    Resources, constitutionally, belong to the provinces. Saskatchewan, for whatever reasons, made it patently clear that they did not want this deal, period, end of story. How can we, with Reform Party roots, fly in the face of this? Would not have doing so been a contradiction of one of the core policies of our party? Respect for provincial jurisdiction?

    In politics, as it is in just about everything else in life, there are no absolutes, nothing is black and white.

    …except, of course, for those who hold their ideology paramount above all else.

    I would argue, contrary to popular opinion here on BT, that PM Harper’s success has been largely due to his ability to be adaptive and pragmatic as each challenge arises.

  • Liz J

    What’s so wrong about listening to the people? What choice does a minority government have in the HOC when all the opposition gang up for one decision on an issue? The best decision was made for all concerned at this point. Of course it’s political, this is politics.

  • jad

    Stephen, with all due respect, I think you should look at the details of the deal. BHP wanted to withdraw from Canpotex, which is the marketing and distribution arm of ALL the Saskatchewan potash companies, not just PCS. This would have left Agrium and the other companies in a deep hole and made them ripe targets for takeover. Of course the only company interested in taking them over would be …. BHP. So the deal was definitely not in the interests of other Canadian companies, no matter whether it was a good deal for PCS or not

  • calgary_junkie

    Many of the business commentators on the Business News Network, most notably Dick Haskayne, agreed with Clement’s decision. On the political side, I would only add that PMSH won’t easily throw away many of the electoral gains the CPC has accumulated since 2004. Harper is a competitive, determined, tenacious leader. That is why the Opps want him gone. As Tom Flanagan said, they would prefer facing off against a leader like Bob Stanfield.

    So, to the purists who aren’t happy with this decision, I say read Springer’s post above. Watch some of the BNN videos, to get some high quality, INFORMED opinions. And ask yourself: do you want the CPC to become the NDP of the right ?

  • Mthielen

    I was hoping someone would mention that aspect of the deal. Considering most bloggers and media type did not know what potash was, or how it is shipped/sold etc, they are probably unaware of this possible problem.
    Sort of like when the CWB come up, everyone had to google it to find out what it was.
    As an aside, my uncle was the first mining engineer involved with the start up of the potash mines in Sask, (from the USA).

  • Mthielen

    I was hoping someone would mention that aspect of the deal. Considering most bloggers and media type did not know what potash was, or how it is shipped/sold etc, they are probably unaware of this possible problem.
    Sort of like when the CWB come up, everyone had to google it to find out what it was.
    As an aside, my uncle was the first mining engineer involved with the start up of the potash mines in Sask, (from the USA).

  • Gabby in QC

    I agree with Clement’s decision, because I do consider potash a strategic resource for agriculture. Yes, I admit, I had to look it up in Wiki, never having heard of potash — which Ignatieff pronounces like the French word for soup, “potage” — before this issue came up.

    Nevertheless, I would rather see the status quo than have the largest mining company in the world BHP Billiton take control of Potash Corp. I don’t think “monopoly” — of the potash market or any other market — is a conservative principle, is it?

  • Anonymous

    I agree Stephen, this gov’t. has lost its way!

  • http://www.facebook.com/dennis.forbes Dennis Forbes

    As an Ontario conservative supporter, this government would have entirely lost my support had they not blocked this bid.

    Lip service to concepts like “open for business” sound quaint and are superficially justifiable. In reality, however, where every country is only interested in their own self-interest, Canada has played the role of naive on the international business scene. The hollowing out of Canada is absolutely real, and wherever Canadian success takes root, not long after we are turned back into a nation of hewers of wheat and miners of rock, undulating under foreign decrees.

    No other country on the planet has allowed the sort of strategic undermining that Canada has. The Conservatives were planning to give this one the rubber stamp as well, and it was, as you postulate, just politics that they didn’t, but it was the right decision however misguided the motives.

    It is telling that Canada’s greatest international success story has been our banks: Tightly regulated and domestically controlled, if the current mindset had hold we would have collapsed under the defaults of the Royal Bank of Citibank and the Canadian Imperial Bank of America.

  • Liz J

    I would hope, even with a majority government, the Harper government would have taken heed of the wishes of the majority of people, those closest to it, those in the know on such matters, and made this same decision and for the same reason, it’s best for Canada.

    I think it’s stupid to keep talking up about what we could or would not do if we had a majority, not smart politics, it serves to make people wary of granting it. Those of us who live in Ontario are living that scenario with McGuinty and look where he has taken us? Of course, he is a big spending Liberal.

    The only thing I think we could talk about is looking forward to less government and less spending if we get that majority this government deserves.

  • Liz J

    I would hope, even with a majority government, the Harper government would have taken heed of the wishes of the majority of people, those closest to it, those in the know on such matters, and made this same decision and for the same reason, it’s best for Canada.

    I think it’s stupid to keep talking up about what we could or would not do if we had a majority, not smart politics, it serves to make people wary of granting it. Those of us who live in Ontario are living that scenario with McGuinty and look where he has taken us? Of course, he is a big spending Liberal.

    The only thing I think we could talk about is looking forward to less government and less spending if we get that majority this government deserves.

  • James

    As a Sask miner working for Mosaic I am glad this got blocked. For the reasons stated above. You need to regulate the market to some degree…wide open for take overs and in the end, single companies does nobody any good.

    A fire sale of Agrium and or Mosaic because of the loss of Canpotex would be disasterous to Sask. and it’s miners.

    The Aussies that work here all say the same thing, you do not want BHP here…and they are speaking from experience.

  • Anonymous

    I agree with your sentiments. Furthermore, how do you feel about Harper essentially outsourcing Canada’s foreign policy by sticking his nose completely up the US butt?

    The world is telling us what they think of that; Canada was snubbed at the UN, and travelers are now thinking twice about stitching maple leafs on their knapsacks.

    It is telling that Canada’s greatest international success story has been our banks. Tightly regulated and domestically controlled…

    Yes! Bingo. Yet PM Harper had initially planned to dismantle that too.

    So, tell me again why you’re a conservative supporter?

  • east of eden

    My late father was a mining engineer and he often lamented the fact that our country is rich in natural resources but getting Canada and Canadians to invest in our mining industry (and other resource industries) is nearly impossible. We deplore foreign ownership and yet we won’t invest in our resources. We deplore the fact that we import so much from Asia but we won’t spend the extra bit to buy Canadian. We complain about our food coming from other continents but won’t seek out or spend the money to buy locally produced natural food, opting for the cheaper, imported, chemical-laced food we find in our grocery stores. It seems to be the Canadian way, unfortunately, to complain and lament but we won’t act. I am but one citizen and I do my part to buy Canadian but I’m only one person. I am happy that our federal government listened to the people of Saskatchewan. Now, it is up to those people to act and invest in their resources. Why should a foreign company reap the profits of our Canadian resources. It is time for Canada to invest and reap the profits of what we have.

  • east of eden

    Hey Leasa. Long time no see. Good to see you here.

  • Anonymous

    Poor Stephen. It seems that neither the followers of his blog, nor the government he labours for to keep in power, have the same depth and purity of the One True Religion that he has.

    I’m referring of course to Stephen’s core belief in the Omniscience of The Market, and the central belief that The Invisible Hand of The Market will Create Wealth, Reward the Faithful and Industrious and Punish the Slothful, Solve All Problems, Bring Peace, and Make All Things Good, for the Betterment of Mankind.

    While I sympathize – I too once had unquestioning belief in something, and had that belief shattered by reality – all the signs of heresy were there. Any government (and their supporters), who put more attention and effort into trying to kill the Long Gun Registry than the potash deaings, or foreign relations, are clearly not devout fiscal conservatives. Neither do fiscal conservatives single-source pencils, let alone fighter-planes. They do not believe as you do, Stephen.

    As a centrist Canadian (spelled ‘lefty’ by most of you), I happen to believe in free markets, but not in unfettered capitalism without oversight and accountability. The market should serve society, not the other way around. And they cannot be trusted to regulate themselves. The truth of this is all around us:
    – let the market manage energy: you get Enron, the blackout of 2003, dependence on foreign despots for oil, environmental damage, failure to plan for the end of a finite resource.
    – let the market manage health: you get higher overall cost, over 25% of medical funds going to corporate profit, physicians spending too much time fighting insurers, illness causing personal bankruptcies (even when insured), and millions of uninsured citizens.
    – let the market manage labour: you get mass export of jobs to low-wage countries with exploitative labour standards, the wholesale embrace of a giant authoritarian country, with a penchant for human-rights abuses, and for product counterfeiting and cheating on safety standards (lead paint in toys, anyone?), cos they make stuff cheap; migrant and illegal workers at home (whom we call opportunists and criminals, but never punish those who employ them, usually at less than minimum wage) and McJobs for the displaced local workers. And how about how companies have raided their pension funds, leaving thousands of retirees and near-retirees without their pensions?
    – let the market manage financial stability: you get self-created bubbles and false liquidity, the meltdown of 2008/2009 (/2010, 2011…?), too big to fail, bailouts by taxpayers, massive job losses, foreclosures or mortgages under water, the rich get richer.

    So, yeah, I’m happy that the BHP takeover didn’t go as planned… it might have satisfied some free-market dogma, but it was NOT a net benefit to Canada. I wish Harper would apply the same thinking to some other business sectors, like maybe better oversight and planning of the oilsands, and maybe insist on local refining, not just piping bitumen across the border as fast as possible for Americans to refine. And how about fostering the development of other industries in Canada, for when the oil runs out? Or were RIM and Bombardier just flukes?

    All I can say is that there is a big difference between being “open for business”, and being for sale regardless of the consequences to Canada as a nation. If the wisdom of our made-in-Canada, regulated-by-Canada banking system hasn’t driven that home, then it’s hopeless, you’re blinded by your faith.

  • Anonymous

    Greed has no morality, and no nationality. Which is why the market cannot operate without proper government oversight, to watch out for the interests of Canada and Canadians.

    This is of course heresy to freemarketers. Tough.

  • Anonymous

    Greed has no morality, and no nationality. Which is why the market cannot operate without proper government oversight, to watch out for the interests of Canada and Canadians.

    This is of course heresy to freemarketers. Tough.

  • Richard

    there are many Canadians investing in minigng in Chile, the reason being there are too many hoops to jump through to make it worthwhile here.

  • Anonymous

    Without making exhaustive comparisons between the resource situation in Canada vs Chile: types of mineral finds, quality of finds, country’s regulations and attitudes… if another country makes it easier for mining startups… so friggin’ what?

    There’s no reason for Canada to drop it’s drawers just because it’s easier to mine elsewhere in the world. You know and I know that if there’s a resource shortage and Canada happens to have that resource, the mining companies will be only too happy to play by our rules.

    What’s the hurry?

  • Anonymous

    This was also a wonderful story for the mainstream media, a perfect Catch 22 with the Harper government in the gun sight. … That’s what is called “Gotcha!” journalism.

    Oh, puleeze… First as shown by Stephen’s post and the comments, this issue very much breaks the boundaries of the traditional left/right debate. Particularly the right. You have Stephen baring his soul as a devout free-marketer, therefore disappointed by the decision; versus his usually fawning acolytes revealing that at some level, they put Canada above free-market dogma. And you get little ole progressive me in rare agreement with the CPC ‘s decision here.

    So this issue is far more complex and interesting than your “gotcha” scenario. Much more. And I’m not seeing “gotcha!” even from the usual suspects.

    http://www.theglobeandmail.com/news/politics/second-reading/bruce-anderson/potash-decision-shows-harpers-savvy/article1787714/

    http://www.thestar.com/news/canada/article/885525–walkom-for-harper-it-s-not-about-the-potash

    http://www.cbc.ca/canada/story/2010/11/04/f-vp-newman.html

    Where’s the Gotchas?

    (Re “Gotcha” journalism, this government is usually its own worst enemy in that regard. Their communication sucks.)

  • http://twitter.com/Brian_Dell Brian Dell

    This decision should not be looked at in isolation. This comes after incurring a big bill for taxpayers related to fallout from a decision to effectively protect Air Canada’s monopoly by not allowing a UAE-based airline to land in Calgary or Vancouver, after the OECD rates us 39th out of 48 in openness to FDI (http://ow.ly/2ZOzl), and after Canada got booted from Pacific trade talks because our govt’s protection of egg and dairy marketing boards have rendered us not taken seriously re international free trade.

  • Anonymous

    In other news…

    US Steel shuts down their last running furnace in Canada, locks out workers.

    And the federal government is still suing US Steel over the company’s failure to live up to production and employment guarantees it made when it was allowed to take over Stelco in 2007.

    Yet another reason not to surrender control of Canadian resource and industry.