WhatFinger

Like all businesses, Saskatchewan’s Crown Corporations are a meeting point for three groups

Why you can’t have it Three Ways with a Crown Corporation

By Guest Column ——--November 9, 2010

American Politics, News | CFP Comments | Reader Friendly | Subscribe | Email Us

  • Like all businesses, Crown corporations are a meeting point for investors, customers and employees, who have competing interests, all would take a better deal at the expense of the others if they could.
  • Deliberately or otherwise, successive governments and interest groups have managed to ignore this basic fact, extolling the benefits of Crowns from one point of view but ignoring others.
  • The Lowest Cost Bundle Policy (favours consumers) and the 100 per cent dividend policy (hyperactive investor returns) are recent examples of such selective acclamation.
  • For the good of the Crowns and the wider Saskatchewan economy, this inherent compromise between the roles of investor, customer and employee should be more automatically acknowledged in discussions of Crown Corporations.
Regina: The people of Saskatchewan are simultaneously investors, customers and often employees of their Crown Corporations, and these roles have competing interests. A new Frontier Centre Policy Seriespaper Having it Three Ways, written by its Saskatchewan director David Seymour and released today argues that many policy debates on the Crowns neglect this basic fact to the detriment of all involved. It is a logical fact that unless the Crowns are spectacularly productive performers year in, year out, then consistently above average benefits claimed from one point of view (for example good investment returns) must be costs from another point of view (for example customers or employees). Nevertheless, politicians and interest groups on all sides of the crown debate routinely fail to acknowledge this basic conflict, in effect asking to have their cake and eat it, too. Like all businesses, Saskatchewan’s Crown Corporations are a meeting point for three groups. Investors own the capital, employees use it to provide goods and services, and customers consume them. In any company the three roles are in constant tension, each wishing for the best possible deal at the expense of the other two roles.
Investors would like to increase their returns at the expense of a poorer deal for either the customers or the employees. Customers would like the employees to work harder for less or the investors to provide more capital for lower returns (or both), so that they might get better services at lower prices. Employees, for their part, would like to improve their remuneration and conditions at the expense of the other two.
The paper goes on to argue:
If it is true that the roles are inevitably in conflict, Saskatchewan politicians have been able to juggle pressure from all three in recent years without acknowledging that a conflict exists. "Five years ago the provincial government championed the Crowns as providing the ‘lowest cost bundle,’ an apparent victory for the customer role,” says the paper’s author. “This year we saw a policy of taking one hundred per cent of profits as a dividend to cover government expenditure. It is wrong to implement such policies without acknowledging that benefiting in one role means costs for another, but politicians from both parties have been able to get away with it too often.”
The paper concludes that the Crowns are subject to a “three way compromise” between investors, customers and employees, and that future discussions should automatically ask whether and to what extent any proclaimed benefits from the Crowns have come at the expense of the other two roles more than they have in the past. seymourd@fcpp.org Marco Navarro-Genie, Ph.D. Research Director, Frontier Centre for Public Policy navarrom@fcpp.org About the Author: David Seymour directs the Centre’s Saskatchewan office. He holds degrees in Electrical Engineering and Philosophy from the University of Auckland, where he also tutored Economics. After working as an engineer in New Zealand, he is applying his passion for sound policy analysis to policy issues on the Prairies. In his first three years working for the Frontier Centre, David has carried out extensive media work, presenting policy analysis through local and national television, newspapers, and radio. His policy columns have been published in newspapers in every province as well as the Globe and Mail and the National Post. David has produced policy research papers on telecommunications privatization, education, environmental policy, fiscal policy, poverty, and taxi deregulation. However, his major project with the Frontier Centre is the annual Local Government Perfor mance Index (LGPI). The inaugural LGPI was released in November 2007 and comes at a time when municipal accounting standards in Canada must improve if the municipal government sector is to reach its potential as an economic growth engine for Canada.

Support Canada Free Press

Donate
Subscribe

View Comments
Guest Column——

Items of notes and interest from the web.

VIEW Comments

Sponsored