The Encyclopedia of Saskatchewan

 

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Privatization

With the election of the Progressive Conservative government led by Grant Devine in April 1982, the issue of selling the province’s publicly owned Crown corporations became a priority of the new administration. A senior Cabinet minister, Graham Taylor, was put in charge of this initiative; some highly publicized conferences were held, with internationally known speakers, to promote the concept which had become known as privatization. Beginning in the early 1980s, a number of Crown corporations and major Crown assets were sold to private companies or individuals as private investors. Sask Oil and Gas Corporation, which had been established by the Blakeney NDP government in the 1970s, was privatized in 1986. This sale immediately became a political issue: in its last three years as a Crown corporation, Sask Oil made profits of $31 million, $44 million and $41 million respectively; these earnings resulted in substantial dividends for the provincial treasury. Privatization ended that flow of revenue to the provincial treasury and transferred it to the new private shareholders, 75% of whom were non-residents of Saskatchewan. Within 6 months of being privatized, Sask Oil laid off one-quarter of its workforce, and the company was transferring its exploration focus to Alberta.

In 1988, the provincial government sold off 510 billion cubic feet of natural gas reserves which had been owned by SaskPower; this was the equivalent of fifteen years’ consumption by residential consumers in the province. This natural gas was sold to a private energy corporation for $325 million. Those sceptical of the wisdom of the sale pointed to the fact that at the time, the wholesale market price for that volume of gas entering the province at the Alberta border was $984 million.

In 1987, SED Systems, a high-tech firm in Saskatoon jointly owned by the province, the university, and its employees, was privatized when the provincial government sold the sophisticated research company to Fleet Aerospace of Ontario. The loss of the head office to another province and the fact that seventy workers lost their jobs caused further controversy.

Privatization also involved government departments. In 1983, the Highways Minister terminated 157 workers from his Department, and the following year another 237—telling the former employees and the public, “I’m giving them an opportunity to work in the private sector.” It was announced that in future, private contractors would build the province’s highways. In May 1984, the Highways Department privatized more than 400 pieces of road-building equipment in a giant auction sale on the Exhibition Grounds in Saskatoon. This move drew adverse comments from the opponents of privatization because dumping that quantity of highway machinery on the market all at one time depressed the price and yielded only $6 million during the auction. Much of the road-building and earth-moving equipment was bought up by out-of-province contractors. The replacement value of the equipment was estimated to be $40 million.

In 1982, SaskPower’s coal operations in southeastern Saskatchewan were privatized. A huge dragline was sold to Manalta Coal of Alberta, with the government of Saskatchewan guaranteeing the loan the company took out to buy it. Two years later, the province’s $129 million investment in the Poplar River Coal Mine at Coronach was sold to Manalta for $102 million; furthermore, the provincial government lent Manalta $89 million to make the transaction, and guaranteed the private Alberta company a thirty-year coal supply agreement for the Coronach Power Station.

The privatization initiatives of the 1980s saw a wide range of assets in provincial parks—everything from ski hills to wild animal parks, boat rentals, food concessions, golf courses, and winterized cabins and condominiums—sold, leased or in some way transferred to private operators. Higher fees were charged for services, hours of operation were cut, jobs were lost and lower wages were paid to the workers.

In 1986, the Prince Albert Pulp Company and related assets were privatized. The giant forestry corporation Weyerhaeuser of Tacoma, Washington bought the mill for no money down and thirty years to pay at a preferred interest rate, with no payments required in years when the company’s profits were less than 12%. Also under the agreement, the province was obliged to build many miles of forest roads each year for Weyerhaeuser.

SaskMinerals was a small but quite successful Crown corporation that produced sodium sulfate at Chaplin and Fox Valley, and peat moss at Carrot River. In its forty years of operation, it had made a profit every year but one. The sale of SaskMinerals to two out-of-province companies again prompted a reaction by those opposing privatization. They pointed out that the sale realized $15.9 million—less than the earnings of SaskMinerals for three years when it was publicly owned.

Some privatization caused less public debate, such as the sale of the Sask Computer Utility; but most of the deals drew widespread media and public attention as well as stiff opposition from privatization opponents. With the defeat of the Conservative administration in 1991, the privatization program was discontinued, but not reversed, by the incoming Romanow NDP government.

Garnet Dishaw

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