Crown corporations could be sold, privatized

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The Royal Canadian Mint is one Crown asset that could be put up for sale.

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 email. "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 a recent analysis, Parliamentary Budget Officer Kevin Page warned of a "significant risk" that the government might not climb out of deficit as quickly as projected, because of several assumptions that might not pan out, including a quick recovery in tax revenue and expected savings from spending cuts and asset sales.

Don Drummond, chief economist for TD Bank Financial, said the review should be a useful exercise for assessing the value of the government's holdings, but he recommended waiting until asset values recover to close any deals.

"If you're not getting good value for them, or if there's a more efficient way of delivering the public service they're providing, I think you should always be looking at selling them," Drummond said in an interview. "That said, asset values are depressed right now, and, if you try to unload them, now might not be a great time to do it."

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.

-- Canwest News Service

Republished from the Winnipeg Free Press print edition February 18, 2009 A3