The Conservative MP approves of the CNOOC and Petronas takeovers, but questions the idea of the federal government judging “net benefit.”
The further reality is that it is not entirely clear to me that governments and not shareholders are in the best position to make these decisions. Certainly, if you own a small business, you would be able to sell that enterprise to whomever you chose to. Why should stock certificates in a larger enterprise notionally be any different?? Absent some extraordinary security rationale, shareholders should be able to sell their personal property (shares) to whomever they choose. Why, in a free market, should they be forced to sell their stock at a discount in a smaller pool of government approved purchasers??
It is for this very reason that, in my view, the net benefit test has an inappropriate reverse onus. Absent an investment injurious to national security, deference should be given to markets and to the owners of property. If there is not “Net Harm” to national security, the transaction should be allowed to proceed. The issue of state ownership poses further issues, although more perceived than real. It is acknowledged that states will occasionally pursue political rather than economic objectives. That is why I am generally suspicious of Crown Corporations. But in the case at hand, the costs of bad decisions are bourne by the citizens of China and Malaysia, while the benefit accrues to Canada. The precious resource, while in the ground, does not belong to the extractor—it belongs to, and is regulated by, the provincial government. I see no net harm by allowing Asian State Owned Enterprises to pay royalties to the Province of Alberta and taxes to the Government of Canada.