NCPA - National Center for Policy Analysis

Buy Canada

September 2, 1995

Canada is planning an ambitious new round of privatizing government enterprises, including its largest federally owned company, the Canadian National (CN) railway.

The sale of CN is expected to raise $1.5 billion, but to make stock in the company salable, the government has taken several steps, including:

  • Lifting restrictions on the extent of foreign ownership.
  • Giving CN an extra $900 million in equity.
  • Providing tax incentives, such as allowing it to carry forward tax write-offs from past years.
  • Giving managers incentives to improve operating efficiency in the form of post-sale share options, if they cut costs and approach profitability.

The federal government also plans to shed its 70 percent stake in Petro-Canada, an oil and gas firm, with the air navigation system and government printing presses to follow.

Provincial governments have also been active in privatizing:

  • Alberta sold its telephone company.
  • Saskatchewan spun off big potash and uranium producers.
  • Nova Scotia's electric company is now listed on the Toronto stock exchange.
  • Ontario plans to reduce its $90 billion (Canadian) public debt by selling Ontario Hydro, a chain of liquor stores and TV Ontario.

Source: "Privatization in Canada," The Economist, September 2, 1995.

 

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