By Rob Antle
Expropriation is still an option for the provincial government if it finds another operator for Abitibi-Consolidated’s soon-to-be-shuttered paper mill in Stephenville, Premier Danny Williams says.
“There are two clear options for us – we can go in under the Expropriation Act, or we could just bring in separate legislation to deal with those Abitibi assets,” Williams told The Telegram in an interview. “That’s heavy-handed, for want of a better term.”
The premier acknowledged that any such decision could have a chilling effect on other outside business interests looking to invest in the province.
“Sure, you had to be concerned about it,” he said. “Any time you take an extraordinary measure against private industry, you have to be concerned – there can be repercussions. But you have to weigh the greater good. The important thing here is I have a whole region that’s at risk, and is going to be in some jeopardy, certainly in the short term (as a result of the mill closure).”
The province has had no formal expressions of interests about taking over the Stephenville mill to date.
But Williams doesn’t expect any until Abitibi moves forward with its plans to close the Stephenville mill on Oct. 28.
“I don’t think any company wants to get embroiled in it at this stage,” he said.
Williams first raised the possibility of expropriation during a Sept. 22 news conference to announce the province and Abitibi had reached an impasse in negotiations.
The company reacted coolly to the talk.
“I’m not going to participate in sabre-rattling, finger-pointing and that kind of mudslinging,” Abitibi vice-president of communications Seth Kursman said Sept. 22. “We’re not going there.”
Abitibi indicated it would not voluntarily turn over the keys to Stephenville to a competitor.
“We’re not going to compromise other facilities and jobs in our organization,” Kursman said.
But the premier said he is prepared to move forward, if a suitable operator can be found.
“If we have somebody who’s a bona fide purchaser, and we just have a stubborn, obstinate vendor who doesn’t want to sell under any circumstances for purely competitive reasons, well then we would have to step in and have a look at it,” Williams said.
The possibility of expropriation received at least qualified support from both opposition parties.
“There’s no reason to rule it out if there’s a good business plan for another company,” NDP Leader Jack Harris said.
“That doesn’t mean that government should subsidize a new operation to the point of expropriating it for a large market value and then giving it away. But in principle, if there’s a viable business plan for the Stephenville mill and the obstacle is the ownership of Abitibi-Consolidated, then expropriation should be considered as an option.”
Liberal Leader Gerry Reid said the province should get back to the table with the company. He doubts the premier would follow through on the expropriation option.
“You have to wonder how far you would push them with the threat of expropriation,” Reid said. “At the end of the day, I don’t think the premier will exercise that option because of his business background.”
But Reid said he would support expropriation as a last resort.
“At the end of the day, if that’s the only option that’s left, then yes, and if it’s in the best interests of the people of the province, he should do it.”
But at least one economic and social policy think-tank believes such a move could hurt the province’s reputation in business circles.
“Basically, the message that you’re sending is that if you aren’t willing to act in the way the government wants you to – even when the business case for doing what the government wants is not there – the government will compulsorily take your property and perhaps even use it in such a way that it will benefit your competitors, at your expense,” Brian Lee Crowley of the Halifax-based Atlantic Institute for Market Studies (AIMS) said.
“Frankly, there aren’t many people who are interested in investing under those kind of conditions.”
Expropriations have been rare in this province in recent times.
The Public Utilities Board has only dealt with expropriation orders three times in the past 10 years. One of those times, the PUB simply ruled it had no jurisdiction.
The PUB is responsible for conducting hearings to determine how much compensation an interested party will receive as a result of an expropriation.
If the province decides to bring in standalone legislation to take over Abitibi’s Stephenville assets, it can unilaterally determine the purchase price.
About 300 workers will lose their jobs when the Stephenville mill closes at the end of the month.
This and other stories can be found at www.thetelegram.com