Saturday 1st October 2016

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The Quebec election

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Liberal Clement Gignac, Natural Resources minister in the last government, countered that Australian companies could more likely afford the massive tax hike because of their proximity to Asian markets and a warmer climate which results in lower operating costs. (Gignac lost his riding.)

Two years ago the Liberals raised the provincial tax on mining profits from 12% to 16%. According to a comparative study released last month by the law firm Fraser Milner Casgrain, the Liberal policy “allows government to capture a large part of the economic rent when prices are high without burdening mining operations with added fixed costs throughout the mining cycles.” The Liberals say that mining royalties brought the government $4 billion over the last 10 years.

Both parties want to restrict foreign takeovers, a proposal with potentially huge effects on mergers and acquisitions and, consequently, investor confidence in juniors operating in the province. The Parti Quebecois might go further by designating the rest of Canada as foreign regardless of whether Quebec separates.

In a campaign characterized by flip-flops on both sides, the Liberals eventually imitated the PQ proposal to give a company’s board of directors the right to veto a foreign takeover if it’s deemed contrary to the interests of employees or the community. Under the PQ plan, a BOD could nix a foreign takeover even if shareholders want it.

All three parties have some fairly novel ideas about how to pump public money into private companies. The PQ wants to create a $1-billion fund to invest in Quebec companies. The Liberals want a $1-billion fund to help Quebec companies acquire properties outside Quebec and outside Canada.

The PQ also wants to create a $10-billion fund to buy shares of companies threatened by foreign takeovers. The Coalition Avenir Quebec wants a $5-billion fund to invest in Quebec mining companies.

Quebec’s existing mining tax “allows government to capture a large part of the economic rent when prices are high without burdening mining operations with added fixed costs throughout the mining cycles.”—A report by law firm Fraser Milner Casgrain

The Liberals wanted to encourage small-scale investors to back Plan Nord projects by offering a 10% tax credit on investment up to $5,000, with RRSP eligibility.

Both the PQ and CAQ want to boost taxes on capital gains.

The Liberals stand alone in their support for asbestos mining. Just before the election, Charest’s government approved a $58-million loan guarantee to develop an underground operation beneath the former Jeffrey open pit in the town of Asbestos. Marois pledged to cancel the guarantee, while the CAQ said it would ban the export of asbestos.

The CAQ’s support will be necessary for the PQ minority to push through any of its policies. Although all Quebec parties are to some extent left-wing nationalists, the CAQ is probably closer to the PQ than the Liberals. CAQ leader Francois Legault is a former PQ cabinet minister, although he’s sometimes labelled as right wing.

But it’s possible that little will be accomplished by the PQ government and Quebec will go back to the polls fairly soon. If so, the results are anyone’s guess. At press time the popular vote was tallied at 31.9% for the PQ, 31.2% for the Liberals and 27.1% for the CAQ. A new leader might or might not revive Liberal fortunes. Charest lost his own riding yesterday.

PQ policies notwithstanding, Quebec politicians tend to consider mining important to their society’s future. In that, they contrast strongly with British Columbia’s New Democratic Party (NDP), which polls favour to win the B.C. provincial election scheduled for May 2013.

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