Finance Minister Ralph Goodale has promised, again, to clear up uncertainty about the income trust sector. But these and other indications fuel serious questions, quite apart from the froth of political debate

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After making a speech in Toronto at a Canadian Manufacturers and Exporters conference, Goodale said, “I say very clearly that this is not a sham consultation. This is a very serious, reasoned discussion that I think is going to yield very good public policy in the end.”

He promised to “move quickly” to set out new tax rules for income trusts after the consultation process was completed in December.

Clarity may have been the well-intended objective. But the comments were very confusing. 

The difficulty with Mr. Goodale’s statement is that it indicates that Ottawa has already decided to make changes.  So too, it is a statement that responds directly to the very comments by Canaccord Capital analysts to suggest the process is a “sham”.  With the process not yet complete, many might perceive Goodale’s comments as furthering political while detracting from the consultation process. Not everyone has responded to that process yet, but Goodale is talking as if changes will be made.

His comments were even more confusing to market participants in the context of back room discussions that suggest a fair system was desired as the outcome to the consultation process.  Those welcome statements are supported by suggestion that Ottawa will analyse all feedback after the consultation is complete.  Furthermore, they have said that any proposal to change policies would actually trigger a follow-up consultation process to focus on the item of change.

Fair outcomes may result from thoughtful and comprehensive considerations.  And that requires due time and process.

Mr. Goodale seems to be struggling to back up the credibility of the consultations process as he said that so far they had produced a “very constructive, useful discussion” as if it would help shape policy.  What he didn’t say was that the file has been moved into the Prime Minister’s office out of concern as Paul Martin now receives thousands of responses a day.

Investors are still responding to the fact that, before the consultation process was two weeks old, Mr. Goodale changed policies by stopping all preliminary tax rulings.  And unfortunately, every commitment to act fast appears to threaten action in a situation where one option preferred by many is “to do nothing”.

Many question the quality of analysis and the potential for balance in consideration of complex issues when Mr. Goodale is saying, “I intend to move very quickly as soon as the consultation is concluded.”

Estimates of lost value due to uncertainty in the market have ranged to very little after the release of the Consultation Paper to almost $10 billion with the freeze on tax rulings to recent suggestions that more than $20 billion in market value has disappeared due to retreating investors.  And some influential analysts are suggesting that this market “has yet to hit bottom”.

Without appropriate time and space for fair and thoughtful policy formulation, uncertainty about the income trust market could drain confidence in Canadian markets in general.

The Institute hopes to help by providing solid and neutral ground for informed discussion and dialogue.  It is an initiative that will involve a Roundtable event in December and welcome participants from all sides of the market, including invitation to Mr. Goodale.  Membership and registration will begin by the end of the week.