Saskatchewan politicians delivered a tough message to federal Industry Minister Tony Clement: The province's rejection of BHP Billiton Ltd.'s offer to buy one of its key resource companies is not a bargaining tactic, but rather its final word.
In a private meeting with Mr. Clement in Ottawa, Saskatchewan Energy and Resources Minister Bill Boyd and Enterprise Minister Jeremy Harrison shot down the idea that the province's position might be negotiable.
"[Mr. Clement]asked whether this was a bargaining position," Mr. Boyd said in an interview Tuesday. "I indicated that no, it was not ... We believe this is the correct response to the net-benefit question."
The conversation shows that Ottawa and the province's centre-right ruling party are not working in unison on a decision whether BHP's bid for Potash Corp. of Saskatchewan Inc. should be approved.
The federal government is expected to decide as early as next week whether BHP's offer, and the spending and employment promises that come with it, will be a "net benefit" to Canada under the Investment Canada Act.
Saskatchewan is against handing over a long-term strategic resource to a foreign buyer, and while the province doesn't have veto power over the deal, Ottawa has said it will consider its view.
The provincial ministers were in Ottawa Monday and Tuesday where they held meetings with their federal peers in a bid to block the BHP deal. "We think that they are hearing the concerns of Saskatchewan and we are optimistic they will agree with out position in the end," Mr. Boyd said.
The decision is a tough one for Stephen Harper's Conservative government, which must balance Canada's reputation as a nation open to foreign investment, the interests of its own resources industry, and the political fallout if it acts against Saskatchewan's wishes.
Saskatchewan Premier Brad Wall said Australia, where BHP is based, has a more clearly defined "national interest" test when it comes to foreign investment. He said BHP's offer wouldn't pass it its home country. He points to Australia's consideration of the size of the deal, the company in play, the amount of resources involved and the impact on government tax revenues.
"The merit here is that there is a little bit more context to net benefit," Mr. Wall said in an interview Tuesday. "Shouldn't Canada's review process be at least as strong as Australia's?"
Former Liberal industry minister John Manley said Saskatchewan is somewhat belatedly proclaiming the essential strategic value of Potash Corp., given that earlier provincial governments took no action to ensure it remained under Canadian control. Potash Corp was a provincial crown corporation when it was privatized in 1989. The province held a "golden share" that kept it under Canadian control, but that was relinquished by the NDP government in 1994.
"If it's special and strategic, then you have to ask what was the public policy behind privatizing it in the first place," said Mr. Manley, now the head of the Canadian Council of Chief Executives. "And if you are going to privatize something and you want to maintain some sort of control over it, it is within your power to put limitations on who can own the stock and how you control it."
While Mr. Harper faces a potential political backlash in Saskatchewan if Ottawa approves the deal over Mr. Wall's objections, a decision to block the takeover also has ramifications for foreign investment. "Of all the problems we have, too much foreign investment is not very high on the list," Mr. Manley said.
Liberal Deputy Leader Ralph Goodale, the only opposition MP from the province, said there is a broad, non-partisan consensus in the province opposing the takeover, a consensus that 13 federal Conservative MPs "ignore at their peril."
Australian views on foreign investment are as conflicted as Canada's - keen about the jobs it brings, but worried about losing control of key industries and being a branch-plant economy. While Saskatchewan Premier Brad Wall argues that the Australian system is more protective of home-grown corporate champions, whatever differences exist appear to result from political will rather than policy guidance.
Under Australian law, foreign investors acquiring assets worth more than $231-million (Australian) are subject to a review by the Foreign Investment Review Board, which then advises the federal treasurer when the deal is in the "national interest."
As with Ottawa's Investment Canada reviews, the Australian system has no formal list of factors that are considered in the "national interest" test. The government does, however, explicitly note that it takes into account the "widely held community concerns of Australians" with regard to foreign control of their economy.
Ottawa can also decide that Canadian concerns about foreign domination in a key sector would be enough justification to block a specific deal, even if the arithmetic of the takeover is a net plus for Canada. Says former Liberal industry minister John Manley: "Net benefit includes national interest."
Earlier this month, the Australian government approved Calgary-based Agrium Corp.'s controversial $1.2-billion (Canadian) acquisition of AWB Ltd., the Australian wheat board that controls 25 per cent of grain exports. Canberra also recently rejected - or forced the withdrawal -of two proposed acquisitions by state-controlled Chinese firms, including China Non-Ferrous Metal Group's $400-million (Australian) bid for rare metal producer, Lynas Corp. Australia also rejected a plan by Royal Dutch Shell PLC to acquire a major domestic oil company.