Crown corporations are ‘not for sale,’ CIC minister insists
REGINA The minister who chairs the body overseeing Saskatchewan’s commercial Crown corporations said the government has no intention of repealing the law that protects them from a sell-off.
“The Crowns, as I’ve said, are not for sale today. They’re not for sale tomorrow,” said Joe Hargrave, minister responsible for the Crown Investments Corporation (CIC).
“The people of Saskatchewan have spoken very loudly and clearly. We love our Crowns. I love our Crowns.”
Hargrave made those comments on Friday as the CIC released its 2019-20 annual report, which detailed $350 million paid out to the government’s general revenue fund. That includes $250 million in dividends and a $100-million equity repayment.
CIC is the holding company for Saskpower, Sasktel, Saskenergy, Saskwater, SGI, Saskgaming and Saskatchewan Opportunities Corporation. Hargrave said that Crowns will be an “integral part of the solution to rebuild Saskatchewan.”
The NDP Opposition has repeatedly accused the government of harbouring a hidden agenda to sell off Crowns after the election, as it struggles with a record-high deficit of $2.4 billion. Premier Scott Moe has responded that the government has no plans to sell any Crowns.
But he has also uttered what sounds like a caveat: “As long as that legislation is in place, this is government that will be following that legislation.” The government can, of course, change the legislation, as the NDP was eager to point out.
The Crown Corporations Public Ownership Act bars the government from privatizing a Crown until after a general election. Under former premier Brad Wall, the government passed Bill 40, which would allow it to circumvent that law when selling up to 49 per cent of a Crown. It later repealed Bill 40 after sustained outcry.
Hargrave said Friday that there is no intention of “introducing any new legislation” on Crown selloffs. He pointed to the strength of the Crowns in recent years, even during the pandemic, and noted the hefty sums they’ve pumped into the economy and provincial coffers.
Over the 2019-20 fiscal year, the Crowns spent $1.3 billion on capital. They earned $435.4 million in consolidated profits. That was $105.2 million lower than the year before, with the report blaming the drop on “volatile markets,” the pandemic shutdown and low commodity prices that affected consumer demand.
The four biggest Crowns — Saskpower, Sasktel, Saskenergy and SGI Canada — all fell short of their budgeted earnings for the fiscal year.
NDP Leader Ryan Meili doesn’t buy Hargrave’s commitment to defend the Crowns.
“It’s unbelievable that they’re having the guy who sold off STC try to tell people that the Crowns are safe,” said Meili.
“There’s zero credibility from this government.”
Meili also doesn’t accept the notion that COVID -19 played a major role in pushing down net income. He said the economic downturn that predated the pandemic played a more significant role. Saskatchewan’s economy shrunk 0.8 per cent in 2019, according to Statistics Canada data at basic prices.
In his view, the pandemic shows how important the Crown sector is to the economy. They were, after all, able to offer utility deferrals that spared Saskatchewan people
It’s unbelievable that they’re having the guy who sold off STC try to tell people that the Crowns are safe.
additional financial pain as they grappled with massive job losses.
According to the annual report, the impact of COVID-19 on the Crown sector remains uncertain through the current fiscal year. During 2019-20, it led to higher than normal expenses, writedowns and declining revenues.
CIC CEO Blair Swystun predicted that profit will likely be lower over 2020-21 due to reductions in demand for services combined with some cost increases. But he said it’s too early to tell how hard the hit will be.
“We will see significant challenges,” he said. “The Crowns are operating from a position of strength, though, so we think we’re very well positioned to manage through this.”
Swystun agreed with Hargrave that the Crown sector can play a major role in the recovery through capital spending, which is expected to be $1.7 billion over 2020-21.
He also reviewed the overall effect of the 17-day strike that struck the Crown sector over the fall. It led to higher costs that added up to $3.9 million across the Crown sector, including $1.2 million at Saskpower, $1 million at Sasktel, $1.6 million at Saskenergy and $100,000 at Saskwater.
Debt across the CIC crowns ticked up to $10.3 billion. That was about half of their assets, and CIC met its debt ratio target for the year.