Canada Battle lines drawn over privatization - The battle lines are drawn over Grant Devine’s plans to sell off two more of Sas- katchewan’s public assets — SaskEnergy and the Potash Corp. of Saskatchewan (PCS). With the NDP opposition blocking Tory legislation, a provincial election could take place long before the fall of 1990, when Devine’s second term runs out. NDP leader Roy Romanow and other New Democrat MLAs stepped up the fight April 21, when Devine, breaking an election promise that he would not sell off public utilities, introduced the SaskEnergy bill, The opposition refused to let the legislature proceed until this bill and a similar move to privatize PCS are withdrawn, or until an election is called. (After more than two weeks, during the which time they allowed the legislature bells to ring and refused to return to the house, the New Democrats agreed to go back Monday in return for government agreement to delay the bill until after a series of public hearings which will not be held to a deadline. The NDP also tabled a petition opposing the privatization with 50,000 names attached — Ed.) SaskEnergy is the natural gas arm of Sask Power, the Crown corporation set up under the CCF government to provide for the province’s electrical needs. Under the Tories, Sask Power has been split into sev- eral divisions in preparation for the sell-off, with SaskEnergy issuing its own billings to customers for their natural gas consump- tion. Almost $1 billion of its natural gas reserves have already been sold to private industry at far below real value. Since the Vander Zalm government pri- vatized B.C. Hydro’s natural gas division, SaskEnergy has been the only publicly- owned natural gas distribution company in Canada. In 1988, the company made $226 million in profits, although the bulk of this came from the sale of reserves. Potash plantin Esterhazy, Saskatchewan, (r) Premier Grant Devine of privatization not enough to defeat it. chewan residents. However, nothing pre- vents initial buyers from selling their shares outside the province, and it would not be difficult for several large corporate investors . to buy eight per cent each to gain decisive control of the corporation in the long run. The Tories also proposed to use funds from the share offering to “minimize future electrical rates,” and to reduce (for one year) power bills at skating and curling rinks by 50 per cent. But by creating a cabinet- appointed “rate commissioner” with very limited powers, the Tories have left consu- mers unprotected, according to observers such as Roy Billinton, a member of the Public Utilities Review Committee, dis- Kimball Cariou The Tories constantly point to the “heavy debt load” of Crown corporations, claiming they are forced to offer shares to reduce the debt and cut down on interest - payments. But SaskEnergy’s debt of $450 million could be steadily reduced through company earnings, according to industry analysts. SaskPower as a whole, according to its president, George Hill, would need to earn $100-$150-million annually to “make a dent” in its debt, a figure far surpassed by the company’s total profit of $292 million last year. Also, the corporation could ease its debt problem by stressing conservation of energy, rather than borrowing huge sums for projects such as the Shand power plant and Rafferty and Alameda dam — a $1- billion scheme. : By splitting off SaskEnergy, with its more favourable profit/debt ratio than the rest of Sask Power, the Devine government has provided investors with a juicy target. Ana- lysts expect the government to sell about half of SaskEnergy’s $800 million in assets when shares are offered, possibly providing tax incentives to purchasers. Trying to head off criticism of the sellout, the Tories have announced certain restric- tions — only Saskatchewan residents will be let in on the initial offering, individual buyers will be held to a maximum of eight per cent of the total shares, and two-thirds of the board of directors must be Saskat- 6 e Pacific Tribune, May 15, 1989 FROM SASKATCHEWAN banded by the government in 1987 for tak- ing positions contrary to Tory policy. Seeing the details of the legislation, the NDP promptly called for a standing vote on first reading, then walked out leaving the bells ringing. Romanow predicted a “‘politi- cal firestorm the likes of which this province has seldom seen.” The recently formed Citi- zens Against Privatization quickly began mobilising phone blitzes to the Legislature against the Tory bills. The SaskEnergy privatization bill came within days of the PCS move. Potash is an emotional issue in Saskatchewan, which has the world’s largest deposits of the mineral used for agricultural fertilizer. Early devel- opment of potash in the 1960s was carried out entirely by private capital, mainly U.S.- based transnational corporations. The then right-wing Liberal government of Ross Thatcher put only a minimal 2% per cent - royalty on potash sales, leaving most of the profits to flow out of Saskatchewan. Fierce competition led to over produc- tion, falling prices and frequent layoffs of miners. Finally, even Thatcher had to impose production quotas to stabilize the industry. Coming to power in 1971, the Blakeney NDP government struggled to raise its income from potash, and finally moved to nationalize about half the industry in the mid-1970s. After an intense political and legal battle, PCS was established by 1976. Since then, its fortunes have been mixed. During the late 1970s, PCS earned $413- million profits, some of which went to sup- port expanded social programs. But under the Tories, mines in the private sector were consistently given an inflated share of over- seas sales by Canpotex, the industry’s mar- keting agency. That favouritism, coupled with falling prices hurt PCS, which lost $166 million from 1983-87. és Now the situation is different. World demand for potash is stronger, and prices have climbed to over $112 per tonne. A share offering by International Minerals and Chemicals of Minnesota, whose Ester- hazy mines is a major producer, has doubled in value since 1988. Paving the way for privatization the Tories arranged in 1987 to reduce PCS’s debt load by $662- million, cutting its interest cost by some $60-million annually, and leaving it with only a $100-million long term debt. That helped boost profits to $106-million last year, a figure the government delayed announcing as long as possible. The government is also down playing the real value of PCS, placing it at $1.2 billion, while other analysts estimate its worth from $1.7 to $2.1-billion. As miany people have observed, the Tories are trying to have it both ways. They want to portray PCS as an “albatross” around taxpayers’ necks, but they also want to make PCS shares look like a good investment. So they hint that initial share prices will be undervalued, to jump quickly on the stock market, earning a tidy profit for purchasers and political goodwill for the government. Regina Leader Post business columnist Bruce Johnstone, an enthusiastic backer of Devine, predicted: “PCS shares will be a gold plated offer only the most dyed-in-the- wool NDPer would refuse.” As with SaskEnergy, the government relies heavily on rhetoric about “public par- ticipation’ and “‘tens of thousands of people investing in Crown corproations.” The PCS bill spells out a five per cent ownership limit for individuals, and 45 per cent limit on foreign ownership, and the head office is required to stay in the province. But again, there is nothing to stop big capital from gaining the major influence over PCS, even if the government initially sells only half the corporation. On April 19, speaker after speaker at a large rally kicking off the Citizens Against Privatization Campaign pointed out that a good chunk of public property here has already been sold off at bargain rates. If the Devine government completes this unpopularity agenda, with PCS and SaskEnergy crucial to the process, the polarization of wealth ~ and poverty here will grow even faster. Pro- vincial control of vital resources and the economic infrastructure will soon be a thing of the past. The provinces’s income from public assets will be greatly reduced, forcing either a new round of cutbacks in social programs — the route preferred by Devine and his cabinet, who never tire of extolling : the glories of food banks — oreven heavier tax increases. So the battle is on to win public opinion on perhaps the key issues Saskatchewan will face in coming years. The Tories are expected to pump more millions of dollars into their PR campaign around “public par- ticipation,” and to accuse the NDP of stop- ping the elected government from fulfilling its functions. The Tories have other heavy ammunition to use — documents indicating the Blake- ney government was considering some forms of share offering in the Crown corpo- a rations before it went down to defeat in 1982. For its part the NDP has much public support already. There remains a deep vein of support for public ownership in the pro- vince, and a fear that outside capital may regain dominance over the province’s eco- nomic direction. Unfortunately, the NDP has deliberately avoided preparing an elec- tion platform — this is scheduled to take place only in the fall of this year — so at this point, Romanow has little to offer voters. It’s a scenario raising the spectre of — 1986, when Blakeney suffered his second consecutive defeat largely because of a very limited policy platform. : Meeting April 23, the Saskatchewan Committee of the Communist Party — emphasized that the key question now is whether the mass movements — labour, farm, women, Native people, the Social Jus- tice Coalition — can be mobilized to resist successfully the entire Tory agenda, not just privatization. Without such a mobilization, the NDP could well face an uphill battle in the fight to unseat Grant Devine.