Businessman's Book Rails Against Quebec's Politicized Economy
TORONTO — QUEBEC's foray into the management of its economy has cost the province billions of dollars. That is the conclusion of a book by a Quebec businessman who was once deeply involved in the government's control of businesses through a provincially-run pension fund called the Caisse de Depot et Placement, known as ``the Caisse.''
Pierre Arbour's ``Quebec Inc. and the Temptation of State Capitalism'' caused a stir in Quebec when it was published in French last year. The book has now been translated into English. The Caisse is a sacred cow to many Quebec nationalists because of its size - $41 billion (Canadian; US$30.2 billion) in assets - and the political motivation behind many of its investments.
``This influence of the state on the Caisse de Depot had begun soon after the election of the Parti Qucois (PQ) in November 1976 and the nomination of Jacques Parizeau as finance minister of the province,'' Mr. Arbour writes. His book details how Mr. Parizeau, who is now leader of the PQ, packed the Caisse with political appointees, including a top civil servant, Jean Campeau, who was named manager in 1980.
The book lists a series of financial misadventures by Campeau and the Caisse:
* In trying to keep the Steinberg grocery chain in Quebec, the Caisse lost $448 million, according to Arbour. The Caisse lent money to a Quebec-based entrepreneur to keep the chain out of the hands of an Ontario grocery chain. The company eventually went bankrupt.
* The Caisse's investment in a mining and forestry corporation called Brascade-Noranda cost the pension fund $858 million.
* Taking control of Domtar, a pulp and paper firm, cost $117 million.
The politicians and managers of the fund say they believed they were helping Quebec's economy become self-sufficient while offering more opportunities to French-speaking businesspeople. Parizeau has defended the Caisse's strategies and says he would do the same thing again.
Arbour says that political intervention has meant that Quebeckers don't have as much money in their pension fund as they should.
``If the Caisse hadn't made so many bad, politically motivated investments in the 1980s, it would be one of the best performers on the continent,'' asserts Arbour, who was a member of the Caisse's board of directors and worked there from 1967 to 1979.
The Caisse manages all the money collected by the government for state-run pensions, especially the old-age security plan that is funded by payroll deductions. It was founded by the government in 1965, when Quebec was five years into the so-called Quiet Revolution, the awakening of French Canada.
The political slogan of the day was ``Maitre Chez Nous'' - master of our own house. It was a period that saw the nationalization of Quebec's electricity companies into the state-owned Hydro Quebec utility. It also spawned the Caisse.
It has since expanded beyond administering the pension fund to managing the money from a state-run auto-insurance fund and even a provincially operated fund to protect consumers who lose money to travel agents.
Arbour is not alone in his criticism that the Caisse should stick to making money from investments. ``There's too much political interference and patronage at the Caisse,'' said Leo-Paul Lauzon, an accounting professor at the University of Quebec at Montreal.
Arbour's book ends by criticizing ``linguistic interventionism,'' the passing of language laws which the author says forced at least a quarter of a million English-speaking Quebeckers to leave the province from 1966 to 1986, mainly for other parts of Canada.