Does the national interest even interest Stephen Harper?
The government of Stephen Harper has been terribly adept at defying the elementary laws of basic physics and turning it into a fine art: sucking and blowing at the same time.
The latest example comes in the form of work being done as we speak to privatize a little known crown corporation that I was once chairman of, Ridley Terminals, a bulk commodity terminal located in Prince Rupert.
I was fired from that $12,000 per year position over a year ago for challenging the government to allow us to run that company for the benefit of the owner – us, the taxpayer – and to either invest in the modernization of that facility or sell it to someone who will.
At the time, I made the strong case that the taxpayer needed to stop giving Big Coal a perpetual subsidy while the company was being run into the ground through neglect, poor governance, and poor management.
RTI was a basket case: it had poor labour relations, poor productivity, and very high costs. Products moving through the terminal enjoyed super cut-rate pricing. In one case, the former management and board were ready to sign-off on a deal with a US-based trading firm that, may I charitably put it, was a “steal” – for them, not the taxpayer. We would have been very much on the wrong end of that transaction. But the pressure on us – and particularly on me as chairman – from the Harper Conservatives and Ottawa lobbyists to agree to a bad deal because it was politically expedient to do so was extraordinarily intense. In fact, it was as uncomfortable a situation as I had ever faced in my entire business career.
My board, our newly installed management, and RTI’s employees responded extremely well to our new leadership and direction, because it made so much sense. In short order, efficiency went way up, productivity went way, up, costs came way down, a new labour contract was signed, and a new era of relations with First Nations was ushered in. Companies getting a free ride were told that those days were over. They didn’t like it, of course, so they complained loudly, cried like babies, and hired Ottawa lobbyists and PR professionals to wage a campaign.
At one particularly delicate stage in this turnaround effort, it was suggested to me by a very prominent and senior Conservative operative in Vancouver that perhaps “you may want to resign quietly, and blame it on personal reasons” because “You have to work in this town.”
This was not meant as a threat by my acquaintance; it was more of a piece of ‘friendly’ advice.
Needless to say, I chose the opposite course of action. Harper had given us no choice but to expose this situation. As a result of the extensive press coverage and commentary, I do not think there is any doubt that the competent board and management of RTI had the “air cover” it needed to follow through on the strategy and direction we had established together.
Ottawa resisted our changes absolutely every step of the way and sided with Big Coal and the lobbyists that they had hired to make their case. But our board and management were adamant that good business and public policy was on our side and we persevered. I am so glad we did.
Today, coal markets are on a tear, largely fuelled by China’s insatiable thirst for steel. In the coming days RTI will be announcing a major new long term contract. For the first time in its history, Ridley Terminals is sold out and extremely profitable.
At a time when it should be focused on consolidating these hard-won gains and building even more value for the taxpayer through expansion and modernization, the Harper government is once again doing what it said it wouldn’t do: privatizing Ridley Terminals.
The Canada Development Investment Corporation, an arm of the Department of Finance, has been tasked with Ernst and Young to assess the value of the enterprise and make a recommendation to the Minister of Finance, Jim Flaherty. Confidentiality agreements have been signed so the Harper government can keep this under wraps. Other crown corporations are under the same microscope. Two years after they announced their intention to look at “strategic alternatives” for crown corporations, they are just getting around to this now. One must wonder if election timing and the preparation of the Conservative platform has anything to do with this.
What the Harper Conservatives should do is support RTI’s plans to invest in an expansion and modernization program. Borrowing the roughly $200 million needed to double RTI’s capacity come from traditional lenders, and be secured against RTI’s strong cash flows. Because of its status as a Crown Corporation, the cabinet needs to approve this.
And it should, without delay. This decision should be a very easy one. But like much else in Harper’s Ottawa, common sense rarely wins out.
Privatization should not occur until and unless the taxpayer can extract maximum value for this asset. Today, it could get $150 million in any sale. Yet, that would increase very dramatically after an expansion and modernization is completed.
RTI should be immediately allowed to borrow to finance the needed expansion. This would create hundreds of new jobs and economic activity for Prince Rupert – a place that needs both very badly – and be a cash boon for the Port Authority. Moreover, other mining projects in Western Canada on the books could proceed with confidence knowing that RTI will have the capacity to accommodate their product. That would mean thousands of new, long term, and high paying jobs.
When you take cynical politics out of the equation, positive things happen. That’s something that Mr. Harper has yet to learn. Let’s hope in this case, he develops a momentary flash of brilliance.