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«« Caisse de dépôt et
placement du Québec
Is there a case for the Caisse? It's time to judge if 40 years of state intervention has helped the economy
DON MACDONALD
Montreal Gazette Friday, May 24, 2002
Jean-Claude Scraire, chairman of the powerful Caisse de Dépôt et Placement du Québec, ensured a lively debate over the agency's future when he announced his resignation last week.
As his swan song, Scraire proposed a blueprint for reforming the Caisse, aimed notably at decreasing the provincial government's influence on the public pension-fund manager and its $133 billion in assets.
Power Corp.'s Paul Desmarais Jr. is the latest heavyweight to call for reforms to the Caisse following his company's annual meeting yesterday.
Premier Bernard Landry wasted no time in rejecting one of Scraire's ideas - handing over to the Caisse's board the power to choose its CEO, perhaps the most powerful post in the Quebec economy after the minister of finance.
But Landry and Finance Minister Pauline Marois have confirmed that the government is looking at changes at the Caisse. The opposition Liberals are certainly on the warpath over the Caisse's lackluster returns in recent years and its disastrous investments in Quebecor Media and Nortel Networks.
Look at SGf, too
All of this debate is healthy but the soul-searching shouldn't stop here. What's really needed is a commission of inquiry to look into the web of publicly supported investment vehicles at work in Quebec's private sector. The Société Générale de Financement and the giant Solidarity Fund run by the Quebec Federation of Labour are two such institutions that merit close examination.
These funds and the Caisse were put in place in decades past to channel money into Quebec's economic development. Today, their size - and the cozy links that have developed among themselves and the government - mean too few people wield too much power over the province's economy.
In particular, the SGF has benefited from its warm relationship with the governing Parti Québécois to attract a flood of public cash over the last five years. Sadly, the results have been less than spectacular.
Who can forget the SGF's narrow escape, despite itself, from what would surely have been a disastrous investment in a computer-chip factory on the West Island proposed by an obscure Taiwanese firm? Or how about the
rejected $1-billion Technodome amusement park it proposed with Toronto's Reichmann family for the Port of Montreal? Or, more recently, the failure of the Metaforia amusement centre in downtown Montreal?
SGF president Claude Blanchet announced this week that his fund posted a 4.1-per-cent loss last year and has produced a return of just 5.4 per cent over five years. The SGF is, nevertheless, preparing to go back to the government for more money with a new five-year plan to begin in 2003.
Meanwhile, the Solidarity Fund, which has grown fat offering lucrative tax breaks to investors who buy its units, also had a down year. Its portfolio was off 6.4 per cent in 2001 and has posted an annual return of just 6 per cent since its founding in 1983.
It's time to take a close look at what 40 years of this kind of state intervention has produced for the Quebec economy.
Pierre Desrochers, research director at the Montreal Economic Institute, is one who believes a thorough assessment of these state-backed institutions wouldn't be flattering.
"Have they increased the wealth of Quebecers?" he asks. "Are we richer than other jurisdictions where bureaucrats don't do as much? I think the obvious answer is No."
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