Thursday, October 21, 2010

The reviews are in

The Star-Phoenix editorial board nicely points out the difference between the many observers who have pointed out serious issues worth dealing with in a potash takeover, and the Wall government's short-sighted concern with getting cash into its pocket:
(W)hat rankles in this case is the revelation that the government had been demanding that Billiton ante up an unprecedented one-time tax payment of more than $1 billion plus hundreds of millions more in infrastructure payments, presumably to offset what a Conference Board of Canada analysis found would be a tax and royalty loss of at least $2 billion over the next decade. The Wall government suggests the figure would be closer to $3 billion.

The government's attempt to wrest $1 billion-plus up front from Billiton as a condition of a favourable recommendation to the federal government smacks of the kind of opportunistic cash grabs that have discredited many Third World political regimes, not of a responsible democracy in a rich nation whose leaders are supposed to weigh the public interest in making decisions that affect the future of a key industry.
Whether it's Mr. Jarislowsky's worries about the impact the sale will have on the ability of this country's pension funds to invest in the TSX in blue chip companies that pay dividends in Canadian dollars, to Mr. Blakeney's concerns that BHP would sell PCS the moment selling potash mines becomes more lucrative than selling potash, to Mr. Phillips's concerns that the PotashCorp would be treated by BHP as a cash cow to feed its other operations, Premier Wall's government has plenty of issues it needs to address.

Yet, it would appear the government was willing to lay it all to rest in exchange for a billion or more in cash up front as it heads into an election year.

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