Returning British Columbia to Prosperity

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Industrial and Privatization Policy: Getting Government Out
of the Business of Business

This policy section combines two policy areas under one common umbrella: industrial policy and privatization. The reason for the amalgamation is that both deal with economic development. Industrial policy broadly deals with how to expand business and economic development. It also assesses the role, if any, for government in the process.

Privatization is simply one policy alternative available under the auspices of industrial policy. It refers to the reversal of the most activist or interventionist type of industrial policy a government can pursue: outright ownership and operation of a business.

This section deals both with the proper role for government in developing industry as well as with the principles of privatization. It presents the economics of industrial policy and the particular issue of privatization. It also includes a summary presentation of the state of Crown Corporations in British Columbia along with a general assessment of the industrial climate. The section concludes with a series of policy recommendations.

Economics of
Industrial Policy

There are two major schools of thought regarding industrial development: the interventionist school and the market school. The interventionist school argues that the most effective way to promote economic development is through direct ownership of business by government (Crown Corporations), the provision of subsidies and trade protection for select businesses, and the provision of incentives, such as tax holidays for new businesses to establish themselves.

Alternatively, the market approach to economic development focuses on establishing the proper environment within which competitive businesses can flourish. Rather than directly subsidizing or protecting businesses, the market approach to development calls for a hands-off approach wherein taxes are competitive, regulations focused and streamlined, and government spending prioritized.

Most countries employ an industrial policy somewhere between the two extremes by incorporating portions of both policies. Many countries "select certain industries, technologies, and/or firms whose advancement is of critical importance for the economy as a whole, and award selective incentives, whether through subsidies, import restrictions, and/or special efforts to promote exports" (Mihlar, 1994).

Evidence suggests, however, that governments are not usually successful in picking winners and losers, and in many instances, the overall costs of such endeavours outstrip any benefits. Activist industrial policies have been found to protect inefficient firms and channel millions of dollars into political pet projects that produce very few economic benefits (Mihlar, 1994; Walker, 1984). Regional economic diversification programs, which are usually subject to political interference, have been found to generate no net benefits (Savoie, 1990). Government has been no more successful directing existing industry through regulation than it has been picking industrial winners in the marketplace. Command and control regulations, for instance, have often impeded innovation and enterprise, actually reducing economic efficiency (Wolf, 1993). In fact, the growth of a government bureaucracy with an agenda of its own has often contributed to rent-seeking behaviour that raises costs to consumers (Niskanen, 1971).

The 2000 Summer Survey of Investment Managers in Canada, a survey of senior pension and investment fund managers with nearly $249 billion in assets under administration, indicated a strong preference for the market approach to economic development. In fact, of ten factors they rated important to a positive investment climate, direct subsidies to business ranked last with a score of 3.5 out of a possible 10 (Clemens and The Fraser Institute, 2000). The results from both the 2000 survey as well as previous surveys completed in 1999 and 1998 indicate overwhelming support for government to focus on the economic fundamentals to create and maintain an environment within which businesses can prosper.

Defining Privatization

Before discussing the economics of privatization, it is important to define the term. Surprisingly, among the different countries that have employed privatization, there is quite a bit of agreement about what the term means. The spectrum of privatization efforts ranges from the sale of public-sector enterprises to the private sector, to the simple contracting-out of public service provision to private contractors (Adam Smith Institute, 1986). This section takes a broad view of privatization in order to include any private sector involvement in what were formerly public sector initiatives.

Economics of Privatization>

The core economic question regarding privatization is efficiency: can efficiency gains be achieved through privatization, whether by transferring assets from the public sector to the private sector outright, or by contracting out public services to private providers? Efficiency refers to the ability of producers to combine various inputs in order to produce an output. Privatization, therefore, makes sense if through the privatization process, producers are able to produce a given level of output with less input. Privatization of government enterprises, or Crown Corporations, is only worthwhile if efficiency gains can be realized.

There are a variety of reasons to believe that private producers are more efficient than public ones. One principal reason is that public sector managers face different incentives from their private sector counterparts (Hanke, 1987). Private enterprise is largely concerned with profit. Private firms are forced, by competition, to focus on a number of internal and external factors. For instance, internally, firms must constantly monitor costs, productive efficiency, and employee contentment and retention. Externally, firms must continually innovate in order to ensure that they are delivering a high quality product at a reasonable price (Gwartney and Stroup, 1993).

The concerns for public sector enterprises are very different. Public sector firms do not have to generate a profit in order to remain viable; in fact, generating profits often results in a reduction in state subsidies, a result that creates a real disincentive for profitability. Because they have no profit motive, public sector enterprises tend to focus much less attention on cost control and productive efficiency. Also, public sector enterprises have little or no competitive pressures forcing them to innovate and improve product quality and service. Public sector enterprises increasingly stagnate because of their institutional inability to innovate and improve in a climate that values innovation and sensitivity to changes in public needs, tastes, and values. Producer concerns rather than consumer interests tend to dominate decision-making and resource allocations in the public sector (Mitchell and Simmons, 1994; Niskanen, 1971).

The mix of labour and capital also varies between the public and private sectors. Public sector enterprises generally tend to use more labour than similar private sector firms. Further, public sector enterprises tend to use capital much less efficiently than similar private sector firms (Pirie, 1988). Inefficient use of inputs is costly to the economy because it reduces the amount of labour and capital available for other uses. Public sector enterprises also tend to have more rigid labour and workplace rules that, despite their good intentions, inevitably impede innovation and experimentation (Pirie, 1988).

Numerous studies of public sector enterprises before and after privatization have shown that, in practice, productivity gains are achieved by transferring assets from the public sector to the private sector. For instance, a 1997 CD Howe Institute review of evidence on the effects of global privatization initiatives by Carleton University economics professor D.G. McFetridge concluded that there were generally positive outcomes associated with privatization (McFetridge, 1997).

Case Studies in How Can Privatization Yields Savings

A number of case studies corroborate the findings discussed above and provide further evidence of the benefits of privatization. A successful example of contracting out public sector services exists in Richmond, British Columbia. Significant efficiency gains were achieved when the municipality began contracting out garbage collection (McDavid, 1988). Professor McDavid estimated that after privatization, the tonnes of garbage collected per crew person per day increased from 6.2 to 10.25, while the per household cost decreased from $52.71 to $31.72 (McDavid, 1988).

Another example of successful privatization is the prison systems in the United States. Privately operated, for-profit prisons tend to use more sophisticated surveillance systems, which enable guards to monitor more inmates. In other words, fewer guards are needed, while the quality of supervision remains high (Thomas, 1998). Professor Stephen Easton of Simon Fraser University has estimated that Canada could save in excess of $200 million dollars per year by employing similar privatization techniques in Canada's prisons (Easton, 1997).

A final example of a positive privatization effort is the Alberta Liquor Control Board (ALCB), which was privatized in 1993. The ALCB devolved control of liquor outlets to the private sector. Since privatization, consumers have enjoyed increased access to liquor retailing outlets, improved product choice, and better service (West, 1997).

Since the Thatcher revolution in Britain, privatization has become a major movement. According to a 1997 analysis by the Dallas-based National Center for Policy Analysis (NCPA), privatization efforts by governments world-wide amounted to $86 billion in 1996 alone. Between 1985 and 1997, over $600 billion worth of public assets were sold or transferred to the private sector world-wide. The study by the NCPA quotes a World Bank study that examined 60 privatized companies in 18 different countries. The study concluded that post-privatization profitability increased 45 percent, efficiency by 11 percent, output by 27 percent, and investment in plant and equipment jumped 44 percent (NCPA, 1997). The public sector enterprises that were privatized included airports, air-traffic control, telecommunications, mining, oil and gas, banks, and postal services.

Public Sector Enterprises
in British Columbia

The government of British Columbia expects to collect $1.448 billion from government enterprises in 2000/01, representing 6.7 percent of total consolidated budget revenues (BC Ministry of Finance & Corporate Relations, 2000a). This figure is down slightly, 0.2 percent, from the revised forecast of $1.451 billion for 1999/00.

According to the Second Quarterly Report, British Columbia is actually experiencing major increases in the amount of revenues received from Crown Corporations. For instance, the loss associated with tax-supported Crown Corporations and agencies was $27 million better than expected (BC Ministry of Finance and Corporate Relations, 2000d). Further, the performance of self-supported Crown Corporations was $977 million better than anticipated (BC Ministry of Finance and Corporate Relations, 2000d). In total, the net contribution by Crown Corporations for the first six months of 2000/01 was $1.004 billion better than originally budgeted (BC Ministry of Finance and Corporate Relations, 2000d). However, the deterioration of the energy sector in California, a major customer of BC Hydro, may temper the financial results of Crown Corporations in the next two quarters. Nonetheless, Crown Corporations in British Columbia continue to provide government well in excess of budgeted revenues.

Two Types of Crown Corporations

There are two types of Crown Corporation: taxpayer-supported and self-supported. Tax- payer-supported Crown Corporations require government subsidies in order to continue operating while self-supporting Crown Corporations cover their own operating and debt-servicing costs while providing government with dividend payments. Privatization Table 1 contains information for both taxpayer-supported and self-supporting Crown Corporations in British Columbia.

According to government of British Columbia figures, the various Crown Corporations listed in Privatization Table 1 contributed a net $406 million to the summary government accounts in 1999/00 (BC Ministry of Finance and Corporate Relations, 2000b).

A review of the various public sector enterprises and their recent financial performance reveals the scope of government enterprises in British Columbia. Estimates of market values or tax revenue savings are also presented, where possible, for each of the Crown Corporations, based on either full privatization or the implementation of competitive contracting out.

Taxpayer-Supported Crown
Corporations

The BC Buildings Corporation generated a $45 million net profit, $30 million below budget expectations. The lower-than-expected performance was essentially due to lower property sales than expected. In 1999/00, the BC Buildings Corporation paid a $71 million dividend to the government for profits earned in previous years (BC Ministry of Finance and Corporate Relations, 2000b). The likelihood that similar dividends could be remitted to the provincial government in the future is highly doubtful since the dividend was based on accumulated profits over a number of years.

The BC Ferry Corporation posted a net loss of $299 million in 1999/00, $248 million above budget and $185 million higher than in 1998/99. The serious deterioration in the performance of the BC Ferry Corporation was largely attributable to a $240 million write-down in the value of the newly-constructed PacifiCat ferries, the so-called fast ferries. Excluding the write-down of the fast ferries, the BC Ferry Corporation posted a net loss of $59 million. The net loss occurred even as operating revenues increased and the provincial grant of $24 million (1998/99) was replaced by a dedicated fuel tax totalling $65 million (BC Ministry of Finance and Corporate Relations, 2000b). The introduction of competitive bids for the operation of BC Ferry lines combined with a rationalization of subsidies such that the government would only subsidize lines that were unprofitable was estimated to save taxpayers roughly $17.5 million annually (Lippert, 1996).

The BC Transportation Financing Authority (BCTFA) posted a net profit of $22 million in 1998/99, a significant improvement from the previous year's loss of $114 million. The improvement is largely the result of a one-time adjustment of $91 million in 1998/99 to transfer Lower Mainland highways to TransLink. Operating revenues increased 67 percent from the previous year (1997/98), largely as a result of the 1 cent a litre dedicated fuel tax while expenditures (excluding one-time items) increased 57.5 percent (BC Ministry of Finance and Corporate Relations, 2000b).

Forest Renewal BC generated net income of roughly $1 million, significantly out-performing budgetary estimates of a $243 million loss. The improvement was generally a result of higher than expected stumpage fees (revenues increased 49 percent) and lower than expected expenditures (expenses declined 32 percent) (BC Ministry of Finance and Corporate Relations, 2000b).

There are a host of other taxpayer-supported Crown Corporations in British Columbia, including BC Assets and Land Corporation, BC Pavilion Corporation, Pacific National Exhibition, and the BC Assessment Authority. In total, these 'other' taxpayer-supported Crown Corporations posted a net loss of $44 million (BC Ministry of Finance and Corporate Relations, 2000b).

Self-Supported Crown Corporations

BC Hydro and Power Authority, one of British Columbia's largest corporations, posted net income of $416 million after a $129 million transfer to the authority's rate stabilization account. Domestic revenues rose 2.2 percent, even though a rate freeze imposed by the BC government is in its sixth year. BC Hydro and Power Authority paid a $343 million dividend to the government in 1999/00 (BC Ministry of Finance and Corporate Relations, 2000b).

An analysis by the late Bruce Howe, former President and CEO of Atomic Energy of Canada Ltd. and Frank Klassen, former Vice-President of Finance and Administration for BC Hydro, estimated the market valuation of BC Hydro at roughly $14 billion in 1996. The privatization of BC Hydro could, therefore, in 1996 have reduced total British Columbian debt by $12.2 billion (net) without incurring any adverse effects in power delivery, accessibility, or overall cost (Howe and Klassen, 1996). The resultant reduction in provincial debt would yield additional annual savings of roughly $134 million achieved through lower debt servicing costs (Lippert, 1996).

The Liquor Distribution Branch generated a net income of $617 million, all of which is included in the government's consolidated revenue fund. In 1996, Owen Lippert, studying the experience of the Alberta government which privatized its liquor distribution, concluded that the privatization of liquor retailing outlets could yield increased annual tax revenues from profitable liquor outlets totalling $250 million (Lippert, 1996).

The BC Lottery Corporation achieved a net income of $532 million, $22 million higher than budgeted and 17 percent higher than in 1998/99. The increase was mainly due to increased casino and electronic bingo activity. A total of $523 million was remitted to the provincial government of which only $107 million was transferred to charities and local government; the remaining amount was included in the consolidated revenue fund (BC Ministry of Finance and Corporate Relations, 2000b).

The BC Railway Company incurred a net loss of $582 million resulting from a one-time write-down of rail investments of $617 million. Excluding one-time write-downs, operating income totalled $34 million (BC Ministry of Finance and Corporate Relations, 2000b). An analysis of the value of the BC Railway Company by Owen Lippert in 1996 estimated that privatization of the company would yield roughly between $600 and $750 million. In addition, the commensurate reduction in interest costs resulting from the reduction in debt would yield an additional savings of $54 million (Lippert, 1996).

The Insurance Corporation of BC (ICBC) generated a net profit of $96 million for the year ending December 31, 1999. Despite a premium freeze, ICBC was able to increase revenues slightly while reducing the costs of claims by 3.7 percent (BC Ministry of Finance and Corporate Relations, 2000b). A 1996 analysis by Owen Lippert estimated that a privatized ICBC would result in annual revenues of roughly $250 million (Lippert, 1996). This flow of tax revenue would be in addition to any revenue garnered from the privatization, that is, the sale of the corporation to public.

Conclusion

In its pre-budget submission, the BC Business Council called for a thorough review of all Crown Corporations. It further recommended establishing a multi-year process through which to sell provincial Crown Corporations and other assets in an attempt to reduce the province's debt. The BC Business Council estimated that the sale of Crown Corporations in British Columbia could yield one-time revenues between $7 and $10 billion in addition to future corporate income tax revenues. The resultant reduction in debt and lowering of interest costs was estimated to garner total annual savings in excess of $600 million (BC Business Council, 2000a).

It is important to note that in its analysis of Crown Corporations in British Columbia, the BC Business Council concluded that BC maintains several Crown Corporations in sectors in which private firms are delivering similar goods and services at similar prices and with comparable quality in other jurisdictions, thus questioning the need for government involvement. The BC Business Council followed up its 2000 pre-budget submission with another brief that echoed its earlier recommendation for large-scale privatization with a similar estimate of possible revenue realization (BC Business Council, 2000b).

British Columbia maintains a number of Crown Corporations in sectors that compete with private providers. Given British Columbia's need to reverse its dismal economic record over the last decade, it would be a mistake to continue to subsidize these expensive and unnecessary Crown Corporations. It would be far better to use the funds to reduce debt and interest costs while fostering a more positive economic environment of private-sector competition. In short, British Columbia has the opportunity to reduce costs while facilitating an improved business environment, if only it divests itself of these publicly owned assets.

Fallacy of Government Revenue & Crown Corporations

One of the most strenuously used defences for the continued use of Crown Corporations is that they provide subsidies to the government in the form of dividend payments. Indeed, Crown Corporations in British Columbia do provide net revenue to the government. For instance, the revised forecast for 1999/00 indicates that the provincial government will receive nearly $1.5 billion in payments from Crown Corporations.

The fallacy of the argument rests in the belief that those revenues will stop if the Crown Corporations are sold to the private sector. In reality, the provincial government will continue to garner revenue from the companies in the form of corporate income tax, and a variety of other taxes levied on corporations. Thus, the privatization of Crown Corporations will not reduce the flow of revenue to government but will simply alter its nature from a dividend payment to normal corporate income tax. In fact, privatization may augment revenues. If the firms are more efficient and thus more profitable, it is entirely likely that the revenues garnered through corporate income tax would exceed those currently received as dividend payments.

Business Climate in British Columbia: In Need of a Fix

Over the last three years, the Survey of Senior Investment Managers in Canada has asked pension and investment fund managers with between $140 and $249 billion in assets under administration to rank the investment climates of the Canadian provinces. The results paint a desperate picture of the business climate in British Columbia.

The most recent survey, the 2000 Summer Survey of Investment Managers in Canada, which included responses from pension and investment fund managers with nearly $249 billion in assets under administration, ranked the investment climate in British Columbia the worst of the 10 provinces. In fact, BC received a score of 3.2 out of a possible 10 (Industrial Figure 1), well below Newfoundland's 4.5, which ranked 9th.

As illustrated in Industrial Figure 2, British Columbia also received the highest negative score (71.0%) and the third lowest positive score (19.4%) in response to whether or not the province maintained the right economic policies in order to foster globally competitive firms (Clemens and The Fraser Institute, 2000).

The results from the 2000 Summer Survey of Investment Managers in Canada mirror those of both the 1998 and 1999 surveys. For instance, in both 1998 and 1999, British Columbia received the lowest score and ranking for investment climates for the provinces (Industrial Figure 1). Further, in 1999, British Columbia received the highest negative response and next-to-lowest positive response regarding the presence of appropriate economic policies required to develop and foster globally competitive firms (Clemens, Dixon, and The Fraser Institute, 1999).

Corporate Development: Attracting Corporate Headquarters>

A combination of poor fiscal policy and poor industrial policy have squandered Vancouver's natural advantage as a location for corporate headquarters. Vancouver's port facilities, access to Asia and the US west coast, coupled with its temperate climate should make it the natural choice for corporate headquarters in western Canada. Unfortunately, the prolonged period of poor public policy have made Vancouver an inferior choice for corporate locations. According to data for the top 500 Canadian companies, Vancouver ranked 3rd in 1990 behind Toronto and Montreal, but fell to 4th by 1999 as Calgary moved up the rankings. Specifically, the number of corporate headquarters in Vancouver (top 500) declined by 17.8 percent between 1990 and 1999, while the number in Calgary increased by 34.1 percent (Clemens and Emes, 2001). In fact, by 1999, Vancouver was barely ahead of Mississauga (a Toronto suburb) in terms of the number of corporate headquarters. Calgary actually leads the nation in the number of corporate head offices when the figures are adjusted for population. Vancouver has clearly sacrificed an important source of business development and prestige due to the poor provincial policies.

Business Investment

Not surprisingly, the poor business climate in British Columbia has translated into poor performance in the level of business investment. As depicted in Industrial Figure 3, British Columbia has not attracted real business investment in the province. British Columbia fared particularly poorly in the 1990s, especially in the last five years. While Canada as a whole and both Ontario and Alberta leapt forward with large amounts of fixed business investment, experiencing 20.2 percent, 30.8 percent, and 36.5 percent increases between 1995 and 1999, British Columbia experienced a net decline in fixed business investment of 4.2 percent. This is even more troubling when the previous five-year period is added, since net fixed business investment also declined during that period by 0.4 percent.

An alternative way of viewing business investment performance is contained in Industrial Figure 4. It presents the cumulative change in business investment in the Canadian provinces between 1992 and 1999. As depicted in Industrial Figure 4, British Columbia had the worst performance of any province over this time period. This is particularly troubling as investment in new plants and equipment partially explain increases in both labour and total-factor productivity, which are the primary determinants of real income.

In its 2000 pre-budget submission, the BC Business Council explained that "A healthy level of investment in new plant, equipment and technology is a prerequisite for both higher productivity and the rising incomes that typically follow in the wake of productivity gains" (BC Business Council, 2000a). The analysis completed by the BC Business Council concluded that British Columbia had done a "poor job of attracting private sector investment" (BC Business Council, 2000a). A report stated that "companies and entrepreneurs across a range of industries do not see British Columbia as an attractive place to put new investment dollars or grow their businesses" (BC Business Council, 2000b).

Assessment of Industrial and Privatization Policy in BC

The British Columbia government has pursued an activist industrial policy. Since coming to power in the early 1990s, the current provincial government has undertaken a number of high profile interventions, signalling a shift in industrial policy away from a market approach focusing on fundamentals towards an activist or interventionist approach.

One of the more high profile cases involved Skeena Cellulose, a pulp plant in Prince Rupert. The provincial government purchased 52.5 percent of the company even though it was close to bankruptcy. It subsequently spent nearly $329 million on the project, not including debt guarantees amounting to $156 million (Beatty and Fong, 1998; BC Ministry of Finance & Corporate Relations, 2000c). Although Skeena Cellulose is now defined as self-supported, meaning it does not receive direct subsidies from the provincial government, the debt load of the company has increased from $120 million in 1998 to $280 million in 2000 (Beatty and Fong, 1998; BC Ministry of Finance & Corporate Relations, 2000c).

A second high profile example of an activist industrial policy is the PacifiCat fast ferries. Rather than simply purchase fast ferries for the BC Ferry Corporation, the province decided to develop a specialized industry in British Columbia for the construction of aluminium ferries. The result was a $240 million write-down in the value of the newly constructed PacifiCat ferries, little improvement in the operations that the new ferries were suppose to augment (no major reduction in passage times), and extreme difficulty by the province in selling the three ferries (BC Ministry of Finance and Corporate Relations, 2000b).

Other activist industrial endeavours have included J.S. McMillan fish processing ($8.1 million contribution), Western Star Truck Holdings Ltd ($62 million in debt), Pacific Racing Association ($5 million in loans), and the Columbia Basin Power Company ($94 million in debt), to name but a few (BC Ministry of Finance & Corporate Relations, 2000c; Chera and Mihlar, 1998). Additionally, the provincial government has enacted several programs to intervene in industrial development. These include the Jobs Protection Commission, the Ministry of Northern Development, Small Business Venture Capital Tax Credit, Mineral Exploration Tax Credit, Power for Jobs, and the Quick Response Training program (Chera and Mihlar, 1998).

It seems clear that over the last decade, the British Columbia government has implemented many interventionist policies in an effort to improve industrial development. The province has spent fewer resources to improve the environment within which business operates and more resources to influence specific industrial developments.

Unfortunately for British Columbians, the record of privatization in the province is nearly non-existent. Two examples of modest privatization efforts, namely the design of highways and BC-OnLine, were very small in scope and pale in comparison to the growth of the public sector in British Columbia. Further, it is not entirely clear that the devolvement of highway infrastructure to Translink will either be sustainable or, in fact, economically prudent given recent difficulties.

No reviews have been undertaken of govern- ment-sponsored private monopolies such as municipal taxi licensing or the Dairy Marketing Board. Plans to convert ICBC into a co-operative were summarily dropped under political pressure. Encouraging remarks by then-Deputy Premier Dan Miller about the desirability of forest privatization have also not materialized. A few private wine stores have continued to operate in the province, but no government stores have been privatized, and no significant expansion of competition for government liquor stores has been permitted.

There has been no comprehensive attempt to review the role of government and the potential costs and benefits of privatization. A number of Crown Corporations and related agencies have been plagued by charges of financial mismanagement, ever-increasing debt, poor customer service, managerial and staff incompetence, and occasional scandal.

Policy Recommendations

(1) Purposefully move away from activist and interventionist industrial policies towards a market-based approach to economic development.

This will require a broad change in both attitude and policy by the provincial government and bureaucrats.

(2) End all direct and indirect subsidies granted to business.

As part of the move away from activist industrial policy, the provincial government should end the practice of granting subsidies, debt guarantees, monopoly provision rights, or any other type of assistance, whether direct or indirect. The provincial government should further undertake a review of existing subsidies and assistance programs with a view towards phasing them out within the first mandate.

(3) Several Crown Corporations should be immediately designated candidates for privatization.

Given the international and Canadian experience with privatization, there are several BC Crown Corporations that could be immediately designated for privatization, including BC Hydro and Power Authority, BC Ferry Corporation, BC Liquor Distribution Branches, the Insurance Corporation of BC, and BC Railway Corporation.

(4) Review all remaining Crown Corporations.

A thorough, unbiased review of all remaining Crown Corporations should be undertaken immediately with a clear mandate to rationalize. Those Crown Corporations operating in sectors in which private firms already deliver similar goods and services should be immediately identified for privatization. Crown Corporations not immediately designated as candidates for privatization should have their operations thoroughly reviewed in order to determine the feasibility of contracting out services to private providers.

(5) Legislatively require all proceeds from asset sales to be used exclusively for debt reduction.

Specific legislation needs to be enacted to ensure that one-time asset sales are not used to help balance the government's accounts or undertake new spending initiatives.

Fraser Institute Policy Contacts

Jason Clemens, Director of Fiscal Studies
Phone: (604) 714-4544
E-mail: jasonc@fraserinstitute.ca

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