Government won’t make any more ABCP investments

The Yukon government will no longer invest in asset-backed commercial paper (ABCP), but the opposition says it's something that should have been done a lot sooner.

The Yukon government will no longer invest in asset-backed commercial paper (ABCP), but the opposition says it’s something that should have been done a lot sooner.

Last summer, it was learned the government’s investment of $36.5 million in the market was being held longer than its 30-day maturity date, along with billions of dollars put into the funds by other investors, due to a global market issues.

It’s expected the funds will be rolled over into long-term investments of seven years, but investors have yet to vote on a restructuring plan for the funds.

This morning, Liberal Leader Arthur Mitchell said it’s unfortunate Premier and Finance Minister Dennis Fentie decided to close the barn door after the horses have gotten out. The premier announced the policy change this morning.

While the government has opted not to make any ABCP investments, Clarke LaPrairie, the deputy minister of Finance, said this morning the department stopped investing in the asset-backed commercial paper last August when the problems first occurred.

Given the situation, the Department of Finance stayed away from the investments.

It was only in the last week or so that the government gave the department instructions not to make the investments any more.

Fentie would not speak to reporters this morning about the announcement, instead directing calls to the department.

In a statement, he said the decision is a “prudent action”, given the situation in the global market.

“The Yukon government will not invest in asset-backed commercial paper regardless of whether the paper is guaranteed by a bank, and regardless of its credit rating,” the statement reads.

Mitchell argued the premier should be apologizing to the Yukon public and accepting responsibility for the investments.

While Mitchell said he didn’t want to prejudge an auditor general’s report he requested last year that’s set to come forward in February, he said the timing of Fentie’s announcement is interesting.

While the legislature’s public accounts committee, of which Mitchell is chair, is set to hold hearing on the auditor general’s upcoming report on the 2007 Canada Winter Games, no hearings have been set for the report on the investments.

Mitchell said members of the committee will likely take a look at the report before deciding how to proceed.

Like Mitchell, NDP Leader Todd Hardy also said the announcement comes as no surprise, and is something the NDP has been calling for.

“It’s the public’s money, and we shouldn’t be doing high-risk investment,” he said.

With the $36.5 million now likely tied up for seven years and the possibility of a coming recession, Hardy argued, there could be a major impact on the territory’s spending.

The government, he argued, should be using the positive economic situation the territory is currently in to prepare for less prosperous times in the territory.

He noted the economy of the Yukon has always gone up and down, and more should be done to diversify the economy for the downturn.

“This government has no vision,” he said, pointing out the territory could soon be facing a recession, especially given the closure of the Adanac mine.

Hardy also argued it was the former Liberal government that started investing in ABCP and the Yukon Party government that continued to make such investments until now.

The NDP leader also continued to state his stance the government needs to look more closely at its investment policy, making more ethical, secure investments.