June 18, 2009
Privatization of VIA Rail?

In a June 2, 2009 news article by Andrew Mayeda of Canwest News Service, documents obtained from the Federal Department of
Finance under the Access to Information Act, show that the Harper Conservative Government has flagged several prominent Crown
corporations as "not self-sustaining," including the CBC and VIA Rail Canada, identifying them as entities that could be sold as part
of the government's asset review.

In its fiscal update last November, the government announced that it would launch a review of the country’s Crown assets,
including Crown Corporations, real estate and other holdings of the government.  They said that the review will focus on enterprise
Crown Corporations, such as the Royal Canadian Mint and Ridley Terminals - a coal shipping terminal in Prince Rupert, B.C. - which
are not financially dependent on parliamentary subsidies.  But the documents also revealed that the government would consider
privatizing Crown Corporations that require public subsidies to stay afloat and competes directly with private enterprises and/or are
not self-sustaining despite being commercial in nature.  The Finance Department identifies nine Crown Corporations that fall in this
category, including Atomic Energy of Canada Ltd. (AECL), the CBC and VIA Rail.

The government recently announced that it will split AECL in two and seek private-sector investors for the Crown Corporation's
CANDU nuclear-reactor business.

The Crown asset review comes as the government recently announced that the country's growing deficit is expected to top $50
billion this year.  The January 27, 2009 Federal Budget indicated that the government would be able to raise as much as $4 billion
through asset sales by the end of March 2010, which could go towards the ballooning deficit.

The vast numbers of unionized employees employed at VIA Rail are represented by CAW National Council 4000.    

Privatization would most certainly have a negative impact on our VIA Rail membership.

Privatizations of this nature have normally seen interest from the private sector on Crown entities that are viewed as having a good
chance of turning a profit.  This could mean Crown Corporations could be dismantled or sold off in piece work, and/or made smaller
to attract interest from potential buyers.  We witnessed this at the time of the government’s privatization of Canadian National
Railway in 1992.

With privatization comes job cuts.  As was reported in the Canwest News Service article, Aidan Vining, a professor of business and
government relations at Simon Fraser University, said that “it's not clear that CBC and VIA Rail could operate as profitable ventures
while maintaining the public mandates they provided as Crown corporations.”

In the case of VIA Rail, the Windsor-Toronto-Ottawa-Montreal-Quebec City corridor would most likely be seen as attractive and
profitable, but what about the remainder of VIA’s lines in Northern Ontario, Atlantic and Western Canada?

Privatization means a lack of public control over entities that taxpayers have paid for.  Privatization of public services undermines
the democratic control that Canadians have over the public services that their governments are obligated to provide on their behalf.

Some privatization advocates recommend that the government should turn government owned buildings over to the private sector
so they can be leased back to the public, notwithstanding that Canadians have invested in this property through their taxes.  Why
should the private sector benefit?

All you have to do is look at CN, or the provincially owned telephone companies (BC Tel, Alberta Government Telephones and
Edmonton Telephones – now TELUS, or Manitoba Telephone System - MTS).  The private sector has prospered, at the expense of
the taxpayer.

Also, privatization of Crown Corporations and assets lets government avoid its responsibility for services and security, as the
enforcement of regulations is being privatized through deregulation.

Privatization hurts both taxpayers and workers and increases the cost of public services, as contracts with the private sector include
many hidden costs.

Under the Financial Administration Act, Parliament would have to approve the privatization of any Crown corporation. "It's hard to
believe that some of these sales would go forward in a minority Parliament," said Vining.

The Finance Department has also begun to examine the government's vast real-estate portfolio, which includes 31 million hectares
of land, and more than 46,000 buildings totalling 103 million square metres — more than double the office space available in the
Greater Toronto Area, according to the Finance documents.  The government's holdings are worth at least $17 billion, Finance
officials estimate.

If the need should arise, our membership, and Canadians in general, will have to stand up and demand that their Members of
Parliament refrain from privatizing assets that we as taxpayers have long invested in by way of our tax dollars.  

Below is a document from the Department of Finance, Public Accounts of Canada, which lists the Crown Corporations, identified by
the government as "not self-sustaining":  (Company name, commercial revenues, parliamentary subsidy, expenses)

  • Atomic Energy of Canada Ltd., $614.2 million, $285.3 million, $1.3 billion
  • CBC, $565.5 million, $1.1 billion, $1.7 billion
  • Cape Breton Development Corp., $5.1 million, $60 million, $94.1 million
  • Federal Bridge Corp. Ltd., $14.6 million, $31.0 million, $42.9 million
  • National Arts Centre Corp., $26.0 million, $40.6 million, $65.7 million
  • Old Port of Montreal Corp., $16.7 million, $15.1 million, $32.0 million
  • Parc Downsview Park Inc., not available, not available, not available
  • VIA Rail Canada Inc., $293.9 million, $266.2 million, $505.5 million

Source: Files from Canwest News Service - Andrew Mayeda & CAW Council 4000