BC Business
Many of B.C.'s crown corporations rank among the province's biggest companies.
Crown corporations are big business in B.C. and crucial to the province's economic life. (Return to B.C.'s Top 100 of 2011.)
Many of B.C.’s crown corporations rank among the province’s biggest companies.
B.C.’s love-hate affair with Crown corporations doesn’t negate the importance of these entities to the province’s economic life. Many of them rank among the province’s biggest companies, generating profits that feed government coffers – the same government that, under former premier Gordon Campbell, made moves to privatize many of them.
B.C. Rail was sold, but the privatization of the B.C. Liquor Distribution Branch stalled, leaving a hybrid liquor sales system that gave the province a taste of what private retailing could be like but with none of the freedom. B.C. Ferry Services Inc. was made over in the private image but was retained within the B.C. Ferry Authority. B.C. Pavilion Corp., which operates the Vancouver Convention Centre and B.C. Place, saw assets sold and is now chaired by developer David Podmore while operating under the management of Warren Buckley, no stranger to private enterprise when it comes to convention centres.
But these are only the tip of the iceberg. Many more Crown corporations maintain a low profile. The province has established companies to oversee carbon credits (Pacific Carbon Trust), public-private partnerships (Partnerships B.C. Inc.) and the partnership behind construction and operation of the Port Mann Bridge (Transportation Investment Corp., described on its website as “a distinct, commercially self-sustaining entity”).
Saskatchewan is the one province that occurred to Ken Peacock, director of economic research at the Business Council of B.C., as having an equally significant number of public sector corporations. But even Peacock was surprised to hear that the number of Crown corporations and Crown agencies in B.C. totals approximately 30. “I’m at a bit of a loss with how to interpret it myself,” he says.
The sheer number of Crown corporations, relative to the number of private sector companies big enough to place on the Top 100 list, is less surprising, says Peacock: “The combination, they tend to loom a little larger in the Top 100.”
But don’t mistake the number of Crown corporations for an entrepreneurial bent on the part of government. Campbell was pushing to sell assets, not to keep them as part of government. The public benefit of an entity such as the B.C. Liquor Distribution Branch, which raked in profits of $877 million in fiscal 2010, was secondary to getting government out of a business in which government’s presence was allegedly not needed.
But for UBC Sauder School of Business professor Jim Brander, the move was less a business decision than one of governance. Victoria has been establishing Crown corporations since the 1980s, he says, and the Campbell government was merely continuing in this tradition.
The goal, however, was to give certain divisions of government more autonomy and freedom to act as private sector businesses, free of day-to-day intervention by politicians and bureaucrats.
“That transition really started a long time ago, in the 1980s, so there’s nothing new about that,” Brander says. “The idea is that the Crown corporations are more businesslike, they’re more insulated from day-to-day politics. And that’s true.”
An exception to the trend is Tourism B.C., established as a Crown corporation in 1997 but rolled back into the government’s Ministry of Jobs, Tourism and Innovation in early 2010. But other entities, such as B.C. Transit Corp. and the B.C. Lottery Corp. – not to mention Partnerships B.C. and Transportation Investment Corp. – have been placed outside of direct government oversight.
This has allowed them to cultivate a market orientation that’s seen them remade in the image of private sector businesses. B.C. Ferries has pursued a makeover of its terminals to make them less utilitarian and more consumer friendly, for example, and the government-owned network of B.C. liquor stores has pushed forward with a real estate strategy that includes the development of so-called Signature Stores that aim for an upscale retail vibe. B.C. Lottery Corp. also undertook a rebranding and expansion of its community gaming centres under the Chances banner.
The changes, however, were mostly cosmetic. “It does represent a businesslike attitude toward business activities, but it’s not new and I wouldn’t describe it as particularly entrepreneurial,” Brander says.
He notes that privatization gets short shrift in the province. Union opposition to privatization of the liquor trade and the public backlash against the B.C. Rail sale and other initiatives are examples that underscore the political risks the province holds for governments that want to sell off high-profile public assets.
The result is a cohort of Crown companies that is stable, if not dynamic, providing good jobs and complementing the private sector.
“I think in B.C. we’ve got a pretty good structure of Crown corporations right now,” Brander says, although “it’s not a very volatile area nor a very exciting area.”