Tuesday, March 4, 2008

CEO of TSX says trust decision knee capped the industry, hurt our reputation abroad

Rik Parkhill, Co-CEO, TSX Group Inc.
Keynote Speaker
Prospectors & Developers Association of Canada
March 3, 2008

TSX Knee capped by Flaherty:

"Last year, we were seventh in the world in raising public equity
capital – nearly $56 billion. Some $19 billion of that was for mining
projects -- $11.8 billion raised on Toronto Stock Exchange, $7.2
billion on Venture.

I might note that seventh was a bit down from previous years. We
have, in the past, been fifth or better. But we took a hit a couple of Hallowe’ens ago when the federal government knee-capped the income trust industry."

The importance of Integrity in Capital Markets

"What brings investors to these products and our markets is a global reputation for integrity as well as liquidity. That is a credit to your industry, to regulators and to our own role as an exchange operator.

But global reputations are not won by a global presence. Reputations are won by integrity and world-class performance. They are hard earned and easily lost. We all have an interest in ensuring that this essential basis for our future global performance is protected and

Arbitrary and unproven policies of the Harper Government

"But the broader policy environment needs work, too. As a destination for foreign capital, we are not as attractive as we could be and should be to global markets. Some of this involves shooting ourselves in the foot.

Whatever the pluses and minuses of the income trust decision, for example, it hurt our reputation abroad.

It is not clear that the decision served the government’s revenue objectives either,
because it made income trusts very attractive takeover targets for foreign funds who could load them with tax- deductible debt.

Equally, the fuzziness that surrounded the question of interest- deduction taxation as it related to takeovers by Canadian companies of foreign firms certainly spooked some key players in our market at a critical time.

The bigger problem, however, is a policy approach that views the Canadian market and especially Canadian capital markets as an island unto itself. "



CAITI said...

Where are the Bank CEO's on this expropriation of Canadian's wealth and on completely false premises?

Or don't they care in their ivory towers?

No changee mister whelan said...

In a nutshell, here is the taxman (rhymes with pacman) that will eat its way through Canadian ownership of Canada.

"It is not clear that the decision served the government’s revenue objectives either, because it made income trusts very attractive takeover targets for foreign funds who could load them with tax- deductible debt."

I'm sure glad that the Co-CEO, TSX Group Inc. said this. Now, perhaps, the financial reporters will start to wonder about, and even better start to report, the financial harm and future erosion that the Harper Tory Party has inflicted on individual Canadians.

In essence Flaherty has given foreign investors a free-ride for tax. They can use non arms-length debt to remove income from Canada tax-free. How can tax-paying Canadians compete with that?

By the way, this is not just about income trusts. Compton Petroleum is a Canadian corporation, and it is being forced to sell at a time when Canadian acquirers have been knee-capped.

Polyian said...

I guess having these people wake up late is better than not showing up. It seems that voices have been hushed on this issue from the beginning. I suspect many are afraid of the bully and intimidation tactics that Harper is flouting. Firing a few people goes a long way to shut up the rest.

This whole scam was stick handled in the press by Flaherty, who may be totally inept at Finance but seems to be an expert at illusion, myth and deception. Hiding behind 18 blacked out pages was outrageous and he got a pass on it from the press.

There should be much more outrage on this issue. Even the energy trust companies seem to have gone quiet. If it was not for CAITI and it's supporters this issue would likely get no press time and not be seen as an issue until seniors raise their voices with their votes at election time.

To borrow a phrase from Quebecers, "Je me souviens" the Harper betrayal.