‘Cash cow’ provincial Crown corps could spoil internal trade push

Article content

OTTAWA — U.S.-driven tariff chaos has lit a fire under Canada’s political leaders to scrap long-lingering barriers to internal trade, but experts say powerful provincial Crown corporations could be one of the biggest obstacles to real progress.

Article content

Article content

Ujjal Dosanjh, an ex-British Columbia premier and cabinet minister who’s worked on various internal trade initiatives, dating back to the mid-1990s, says provinces are usually willing to play ball until it comes time to weaken their “cash cow” public monopolies.

Article content

“Provincial governments pretty much everywhere have gotten far too used to using the Crown corps as a sort of ATM machine,” said Dosanjh.

Dosanjh said that provinces have become addicted to the revenues that flow into their coffers from profitable government-controlled sectors like alcohol, gambling and insurance.

“These are corporations that make humungous amounts of money, and governments of all stripes divert that money into general revenue every now and then,” said Dosanjh.

Dosanjh says he saw firsthand how B.C.’s addiction to revenues from provincial insurance carrier ICBC led it to drag its heels on adopting no-fault insurance, a model that shrunk premiums and brought it in line with other Canadian jurisdictions.

B.C. became the last Canadian province to ditch the costly and outdated unrestricted litigation-based insurance model in 2021.

Malcolm Bird, a professor at the University of Winnipeg who studies the evolution of state ownership in Canada, says that the non-uniformity of provincial Crown corporations reflects differing regional patterns of development.

Article content

Article content

“Speaking very generally, the provincial Crowns are there because they’re a means for provinces to exert power over their regions,” said Bird.

Bird said that, contrary to popular belief, provincial monopolies aren’t always bad for consumers, pointing to the LCBO’s historical status as one of the world’s single biggest buyers of beer, wine and spirits.

“You go to an LCBO and there’s an unbelievable diversity of products that you will not find in virtually any other jurisdiction,” said Bird.

Bird noted that Quebec has an especially long history of using Crown corporations as province-building vehicles.

Gabriel Giguère, a senior policy analyst at the Montreal Economic Institute, says he agrees, but adds that this is quickly changing as key players like Hydro‑Québec add less and less to the province’s bottom line.

“Hydro‑Québec’s contribution to the provincial government’s revenue was just $4 billion last year, which was less than one per cent of the province’s GDP,” noted Giguère.

Giguère added that a poll MEI conducted with Ipsos in late 2023 found that most Quebecers support opening up the province’s electricity sector, and say that Hydro‑Québec’s “golden age” is coming to an end.

Article content

He conceded that meaningful reform in Quebec’s electricity sector will still be hard to come by.

“Anything that involves Hydro‑Québec will be difficult,” said Giguère.

“There’s still a hard-wired national story we tell ourselves that Hydro‑Québec is the engine of our prosperity and driver of our economy.”

Dosanjh says the federal government will likely have to put money on the table, as Conservative Leader Pierre Poilievre has said he’ll do, to get provincial Crown corporations out of the way.

“If provinces step up and say we’re prepared to take this hit, I think it’s only fair for the federal government to help soften the blow,” said Dosanjh.

Poilievre has said that, if he becomes prime minister, he’ll award each province a special “free trade bonus” every time it opens a protected sector to competition.

Trevor Tombe, an economist at the University of Calgary, says Poilievre’s free trade bonus would be a smart way for the federal government to get around its lack of formal jurisdiction over provincial competition policies.

“It’s encouraging to see this particular proposal is putting on the table what the feds do have, and that’s spending power,” said Tombe.

National Post
rmohamed@postmedia.com

Get more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what’s really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here.

Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our daily newsletter, Posted, here.

Article content