Tuesday, March 24, 2009

Flaherty's comments on Suncor deal reveal his hypocrisy and incompetence

OTTAWA (Reuters) - Flaherty, speaking to CTV television, said it was a "good thing" that regulators were reviewing the [Suncor/Petro-Canada] deal l to ensure fair competition in the oil industry, but added that, "We believe in investment as well in this country. We want to grow this economy."

How does a share for share takeover of Petro-Canada by Suncor amount to "investment"?

Meanwhile Flaherty conveniently avoids speaking about the resultant job losses?

Nor does Flaherty talk about how he decimated investment in the energy sector with his income trust tax that killed the 20% of Canada's energy sector held in royalty trusts?

Apart form the 31.5% tax itself, how does imposing growth constraints on income trusts, as Flaherty did, help to "grow this economy"?

Flaherty also conveniently ignores that his income trust tax was the sole cause for Prime West Energy being acquired by middle eastern Abu Dhabi Energy and TransAlta Power being acquired by Hong Kong billionaire Li Ka Shing.

Why are Canadian investors penalized when it come to investing in Canada and foreign investors are not? Is this the kind of investment that Flaherty prefers in our energy patch? Foreigners over domestic investors?

Meanwhile where is Flaherty’s proof of tax leakage? Does Flaherty not believe in transparency or government accountability?


Kephalos said...

The purpose of any government policy is given by the results that the policy obtains.

Under Harper, the growth of Canadian ownership in the oil industry has been crippled and foreign ownership has been incented.

The take-over of Petro-Can satisfies a inter-generational bloodlust by major oil to kill Trudeau's hated intrusion into the industry.

The industry is regressing to the 1950s when central Canada was slow to invest in the oil industry, and the Ernest Manning decided "The hell with Canadians, give everything to the Americans."

The problem with true believers and their holy war is that any victory is temporary and the war never ends. Canadian nationalism as a political force will return.

Anonymous said...

This whole Petro Canada / Suncor thing is very suspicious .. Excellent post. I was hoping you would comment. Thanks. Unfortunately I think this purchase is going to provide you tons of material for more posts - but sadly I see this as bad news for Income Trust investors or investors in general.

Also interesting those teachers are involved again ... They started making waves with PC around January. Very suspicious just weeks ago PCA was down to $25.00 per share and has now conveniently shot up to $37.00???? Why is nobody talking about the role of these teachers with this company?

Another question is how is Imperial going to respond? The 2 companies always follow each other ... Ron Brenneman was CEO at Imperial before going to Petro. He is great at "house cleaning" or "downsizing" --- so very valid point about job loss. Especially for Ontario as this company has been slowly pulling out of Ontario and pushing their Calgary operations or making sure any jobs are sent West.

Hmm maybe more foreign investment for Canadian oil companies? Most likely 10 steps back when it comes to the environment? Most alt energy companies are in the form of Income Trusts ...

I also found this interesting ...

Suncor, Petro-Canada to Push for Government Repeal, Post Says

By Sean B. Pasternak

March 24 (Bloomberg) -- Suncor Energy Inc.’s C$19.3 billion ($15.8 billion) agreement to buy Petro-Canada requires the two companies to lobby the Canadian government to revoke ownership rules placed on Petro-Canada, the National Post reported.

A clause in the 90-page purchase agreement requires both Calgary-based companies to “co-operate and use their reasonable commercial efforts” in convincing the federal government to change the laws, the newspaper said.

The Petro-Canada Participation Act, originally enacted in 1991, limits any single shareholder from owning more than 20 percent of Petro-Canada stock.

Dr Mike said...

"A clause in the 90-page purchase agreement requires both Calgary-based companies to “co-operate and use their reasonable commercial efforts” in convincing the federal government to change the laws, the newspaper said."

"Reasonable Commercial Efforts"????

Maybe this is what us old income trust investors did not have enough of , "reasonable commercial efforts"

As well , Flaherty does not care a whit about jobs as he is interested in the concentration of power in the hands of the few industrial heavyweights that he includes on every panel he sets-up.


Dr Mike.