The Canadian Construction Association (CCA) is urging its members to oppose government-owned enterprises and the threat they pose to the Canadian construction industry.
In an email to its board members, partner associations and corporate members, CCA recently announced it has advised the Government of Canada of its opposition to government-owned or controlled entities competing for construction contracts.
“Government-owned and government-controlled entities have completely different access to capital, making it difficult for Canadian companies to compete,” explained Chris McNally, chair of the CCA.
Government-controlled entities can also be influenced by political agendas, he added.
“We want a level, competitive playing field,” said McNally.
“This is not about foreign competition. This is about government-owned and controlled entities competing with private and public commercial businesses. Capital cost is only one example of how government-owned entities have an unfair advantage.
“Separate from the cost of capital is the possibility that the government-owned entity might be willing to take work below its costs and below market costs for political purposes rather than the need to be profitable.”
In late October, Aecon, a Canadian publicly-traded construction and engineering firm, stated it agreed to be acquired by Chinese state-owned China Communications Construction Company International (CCCI), the investment arm of China Communications Construction Company, one of the world’s largest network of engineering and construction companies, headquartered in Beijing.
As part of the $1.5-billion sale, the Aecon board unanimously recommended the transaction, but there were and still are some regulatory hurdles for the sale to be final. In December, Aecon announced it had received two regulatory permissions, one was a “no action” letter granting approval under the Canadian Competition Act and the other was approval from the National Development and Reform Commission, a Chinese economic planning regulator. It also requires regulatory approvals under the Investment Canada Act.
The CCA has asked the government to extend the time of the current review of the CCCI transaction to allow for more fulsome input from industry.
“We want the review period extended so that our members have time to voice their opinions,” said McNally.
“CCA would like those members who are concerned about this situation to lend their voices to our efforts by contacting the senior assistant deputy minister (industry sector) Paul Halucha. There should be no state-owned enterprises competing in the Canadian market.”
McNally said he is concerned that state-owned enterprises such as CCCI could mean the Chinese government will make sure the company’s policies are in accordance with the government and party policies. There have been reports of CCCI potentially installing a communist party unit within Aecon, he claimed.
CCA’s opposition to government-owned or controlled entities in the construction business is based on one of its long-standing policy statements on contracting out/public sector competition which states, “CCA opposes government-owned, or controlled, entities competing for construction contracts” and “CCA opposes the government’s practice of supporting crown corporations that compete with the private sector.”
The CCA is encouraging its members to make their views known by writing to Deputy Minister Halucha at email@example.com.
– With files from the Canadian Press