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LOOKING BACK

W
e know that Canada has turned to crown corporations to pursue public policy purposes and to organize activities to a far greater extent than its major trading partners, in particular, the United States and Japan. The Economic Council of Canada explained that in Canada the "public and private sectors have worked in partnership" to build the national economy and that the concept of "public enterprise" became "deeply embedded in the fabric of Canadian society." The council added that crown corporations became the policy instrument of choice because of "a vast physical expanse, a relatively sparse population, the looming presence of an economically and politically powerful neighbour, strong and distinct regional interest and the existence of two main cultural and linguistic groups." Canada's reliance on crown corporations became such that by the late 1980s there were at the federal government level alone 53 parent crown corporations and 114 wholly owned subsidiaries with assets worth about $60 billion and employing 180,000 people. The provinces followed Ottawa's lead in establishing crown corporations and, in some instances, actually led the way.

The Economic Council of Canada summed up well the reasons why Canada embraced the crown corporations concept. In brief, a pragmatic political culture combined with the challenges of building a country with too much geography, but not enough history and population, go a long way in explaining the rise of crown corporations as a public policy instrument of choice in Canada. Indeed, looking back, it is clear that crown corporations were not established in an orderly fashion or based on clear criteria that would automatically trigger either their establishment or their divestiture. For example, the Canadian National Railways (CNR) was established in 1919 to "safeguard the government's large investment in the railways [and] to protect Canada's image in foreign capital markets." Later, in 1932, fearing that Canadian broadcasting would be dominated by broadcasts originating in the United States, the R.B. Bennett government set up the Canadian Radio Broadcasting Commission to administer a national broadcasting service. Still later, the Mackenzie King government saw that the private sector was unwilling to launch a new enterprise to provide domestic air services and established Trans Canada Airlines. It was only during the Second World War, however, that the government began to make extensive use of crown corporations. At the start of the war, there were fifteen crown-owned corporations. Thirty-two were added during the war years because it was felt that they were better suited to lure business people to manage war programs than a typical government department would be.

Although most crown corporations established during the war were later disbanded, some continued, including Polysar and Canadian Arsenals Limited. In addition, new ones were created to participate in the post-war reconstruction, and many of these were established under various statutes rather than by an act of parliament. The Canadian Mortgage and Housing Corporation (CMHC), for example, was created during this period to promote new housing construction. By 1951, there were still thirty-one federal crown corporations. There was an accelerated increase in the number of crown corporations in the 1960s and early 1970s, and some were also able to avoid parliamentary scrutiny.

What about the provincial level? The provinces, regardless of their political and economic history, would also turn to crown corporations to establish and manage new activities and services. Nowhere was this more evident than in producing and distributing electric power.



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