Leave financing to private financiers

Bourse - Québec inc. vs Toronto inc.

Uh-oh, hang on to your wallets. The Quebec government's making noises about getting into the paper-making business - again. You'd think the Parti Québécois government's disastrous experience with the Gaspesia project would have been sufficient warning to all future governments to stay away from buying up struggling companies, especially in the paper industry.
But sometimes it seems that governments - unlike the Bourbon kings - learn little and forget plenty. Call it political amnesia - a helpful affliction that permits you to make the same vote-pandering mistake several times, without political penalty.
For those whose memory is as short as the government's, Gaspesia is one of Quebec's more flagrant examples of misplaced government largesse. In 2001, the PQ government of the day and a pair of private companies bought up the shuttered Abitibi-Consolidated plant in the Gaspé town of Chandler, with plans to adapt it to produce fine, coated papers.
It was a fiasco, a major sinkhole that sucked up hundreds of millions of taxpayers' dollars without producing a single sheet of paper. When cost overruns hit 50 per cent, the private partners bailed. Premier Jean Charest's Liberal government finally put the whole sorry project out of its misery.
That was just five years ago, but the lesson seems to be fading already. Last week Economic Development Minister Clément Gignac hinted that Quebec might be ready to buy a stake in AbitibiBowater Inc., a Montreal-based giant that produces more newsprint than any other company on Earth.
Newsprint prices have slumped to record lows and AbitibiBowater is desperately trying to restructure itself before it sinks. And government again seems poised to rush in where private investors fear to tread.
It's easy to understand why the government is tempted. AbitibiBowater is a major company and its failure would be a blow to the economy and to thousands of workers. And it has to be said that the impact would be felt hardest out in the regions where Quebec elections are won and lost.
But that's an explanation, not an excuse. If the Gaspesia mess wasn't enough of a cautionary tale for Charest and his government, we can list plenty of others: the millions squandered on Montreal's Technodome project, for example, and millions more poured into Noranda's abandoned Magnola magnesium plant, and a scheme to build a memory-chip plant in the West Island that never came to anything.
The culprit in most of these debâcles has been the Société generale de financement, the very same state agency that so eagerly backed Gaspesia. It seems to have an instinct for picking duds.
The government might have a useful role to play in facilitating AbitibiBowaters's restructuring. But the job of saving it - if it can be saved - with cold, hard cash is a job best left to private bankers and financiers.

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