Montreal, March 20, 2020—With reports yesterday that the Trudeau government is preparing a $15-billion bailout of the Canada’s oil and gas sector, Green Party leadership candidate Dimitri Lascaris sees a debacle in the making.
“We’re about to repeat the same mistake we made in the financial crisis. These bailouts are negotiated by corporations, and they’re designed to help corporations, not workers and communities,” said Lascaris.
“These corporations are asking for breaks on taxes, breaks on royalties, breaks on loans, and for what? The truth is, we’ve been bailing this industry out for years, and they’ve never hesitated to lay off workers. Each and every Canadian pays more than $1600 in subsidies and other costs every year, just to keep the oil industry alive. If these corporations are going to come to us now and ask for even more public money, it needs to be on our terms, not theirs.”
Not only do Canada's oil and gas companies receive massive subsidies, they also abuse share buybacks to inflate their stock prices. By buying large amounts of their own shares, they increase demand and drive up the share price. As Canadian economist William Lazonick explained in the Harvard Business Review, the main purpose of this exercise is to benefit executives, whose compensation comes largely from stock options.
Canadian oil and gas companies, including Imperial Oil Ltd., Encana Corp., and Suncor Energy, have been among the biggest users of share buybacks. "The massive sums these corporations used for buybacks could have helped them weather tough financial times, instead of needing to ask the public for a bailout," said Lascaris.
Lascaris outlined several conditions that should be imposed on bailed-out oil and gas companies, demanding that they be required to:
- Reduce executive salaries to no more than 20 times that of workers’ salaries;
- Pay 10% of net profits into a fund for the future cleanup of orphaned wells, mines, and pipelines (cleanup costs for which the Alberta Energy regulator currently has a shortfall of between $50-$250 billion dollars);
- Stop using share buybacks to falsely inflate their stock prices, and cancel all existing stock options for directors and officers;
- Change corporate by-laws so that at least one-third of the board of directors is elected by workers;
- Commit to paying every employee a living wage for the community where they work, and to not using replacement workers in the event of a strike;
- In the case of large bailouts, issue enough shares to the federal government to give it a controlling interest in the corporation.
Lascaris also called for an immediate transition to renewables. “All new exploration and construction has to stop. The government should use its controlling interest in companies that receive large bailouts to reinvent them as leaders in renewable energy. Renewables employ many more workers per dollar of spending than fossil fuels, and with much less uncertainty.”
“This is an opportunity to help average Canadians. We can give people jobs, stability, and a solution to the climate crisis—but our leaders need to have the political will to take control of these negotiations and bail out workers and communities, not corporate executives.”