When Magna International founder Frank Stronach demanded close to $1 billion for the multiple-voting shares that allowed him to control the company, lead director Mike Harris was set upon by pension funds and governance advocates for failing to haggle. Harris was even forced to testify before the Ontario Securities Commission. The fuss must have reminded him of his divisive days as Ontario's premier, but it doesn't appear to have bruised him. With Stronach backing slowly off the stage, the 66-year-old Harris has now been elected chairman. Plus, he still has his day job at Cassels Brock & Blackwell, advising clients on how to win over Conservative Ottawa-a town full of his former ministers and aides. He spoke to Jeff Gray at his Toronto office about Magna, politics and budget cuts.
Given your reputation for balancing the books, what do you make of Europe? When I was premier, we started significant cutbacks in Canada. The biggest cuts came from Jean Chrétien, in transfers to the provinces. And if you check the record, you will find that I said, "We agree. We accept." We didn't fight, because my view was, there's no point in being the best-run province in a bankrupt country. Now it's a global economy, so we all have to be part of the solution. There's not much point in Canada leading the world, if the world can't buy our products. I think Europe will work their way out of it. But you can't work your way out of it by looking at the status quo. They're facing some challenges because their entitlement programs have been excessive.
Do you talk to Stephen Harper much? I don't, but he certainly knows how I feel. I have a great deal of confidence that he and his team will get Canada right-sized, if you like, from a government-spending point of view. The stimulus helped us through a period of time, but it has to be taken back in the appropriate way. I think the governor of the Bank of Canada has done a good job, and I think he understands very well, too, that the stimulus provided by record-low interest rates can't stay forever.
It seems that the people who could really use your advice are the Liberals. They're in the same position the Ontario PCs were in when you took over. You're right-we had this 42-year record in Ontario until 1985. Some said we suffered from complacency and a divine right to rule, and that is exactly what the federal Liberal Party is facing. The second thing that is similar is some of the old-I don't want to say old people, but the old established cliques. It was not until we went to one member, one vote, when the newest immigrant who joined the party had the same vote as the Norm Atkins of the world, that we got beyond power-broking to what we really stand for. The Liberals need to do that.
Ontario Teachers' Pension Plan and others accused you of failing shareholders over the Magna buyout of Stronach's multiple-voting shares. How do you respond to that? Well, I don't respond to it, particularly. The option to redeem the multiple-voting shares came about after several years of succession discussion with the board, with management, with the Stronachs. The price was the price. Was it an expensive price? In historical terms, yes. In terms of value to the shareholders, it's pretty cheap, actually, when you look at the share price and how it responded afterwards.
One of the changes you've made means that you and every other Magna director will face a direct vote from shareholders, instead of running on a slate. You seem pretty confident, but the two main proxy advisory agencies for shareholders have said you should go. That'll come next year, and we'll see. Do I worry about that? No. Do I worry if the shareholders want a different direction? It's their company-they're paying my salary, they're paying Frank's salary, our management's salary, and they're the ones who should decide, not academics or others who don't own shares.