Teck Resources tops hoarding list with $4.3 billion cash

Suncor Energy and Bombardier are also high on a list of Canada’s top corporate hoarders, according to a CLC report.

(The Canadian Press) In a new report, the Canadian Labour Congress has granted Teck Resources Ltd. (TSX: T.TCK.A, Stock Forum) (TSK: T.TCK.B, Stock Forum) (NYSE: TCK, Stock Forum) top prize for corporate hoarding. Canada’s largest diversified mining company has $4.3 billion in cash.

The runners up were Suncor Energy Inc. (TSX: T.SU, Stock Forum), with $3.8 billion and Bombardier Inc. (TSX: T.BBD.B, Stock Forum), with $3.3 billion.

The top 10 list also includes George Weston Ltd. (TSX: T.WN, Stock Forum), Barrick Gold Corp. (TSX: T.ABX, Stock Forum) and (NYSE: ABX, Stock Forum), Research in Motion Ltd. (TSX: T.RIM, Stock Forum) (NASDAQ: RIMM, Stock Forum), Husky Energy Inc. (TSX: T.HSE, Stock Forum), Goldcorp Inc. (TSX: T.G, Stock Forum) and (NYSE: GG, Stock Forum), Kinross Gold Corp. (TSX: T.K, Stock Forum) (NYSE: KGC, Stock Forum) and Magna International Inc. (TSX: T.MG, Stock Forum)

Gregory Thomas of the Canadian Taxpayers Federations adds that many companies have been able to use their cash reserves to survive the economic downturn.

"These CEOs, if they think they can make a buck on an investment, they'll make it. They are not going to spend their nest egg if things are looking scary."

However, a new report, released Tuesday, attempts to make the case that Canadian firms have benefitted greatly from years of Conservative and Liberal government tax policies, which have cut business levies more aggressively than personal taxes.

In a new analysis, the labour group says business taxes represent only 8.3 per cent of the federal and provincial revenue in 2011, down from 8.8 per cent in 2010 and around 11 per cent in the 1960s and 1970s.

It attributes most of the change to a steady reduction in the federal corporate tax rate, from 28 per cent in 2000 to 15 per cent today. Provincial rates have also declined, but not as dramatically.

But while the rationale for reducing corporate taxes is to encourage investment and job creation, the CLC says most of the money has gone to fatten corporate bank accounts and to pay the high salaries of executives.

Quoting Statistics Canada data, the labour group notes that cash reserves held by private non-financial corporations in Canada ballooned to $575 billion in the last quarter of 2011 from $187 billion in the first quarter of 2001 — despite three of those years being deep in recessions.

Between 2010 and 2011, corporate cash reserves grew an extra $72 billion, while the federal government was reporting a $33 billion deficit.

Executive compensation

As well, compensation to chief executives in Canada's top 10 non-financial firms averaged $11.9 million in 2011, the CLC says.

"Corporations in Canada are taking advantage of corporate tax cuts, but they are not necessarily using them to invest in productivity and jobs," the report argues.

"Instead, they have accumulated billions of dollars in cash reserves."

It estimates that had the federal corporate tax rate stayed at 21 per cent, where it was when the Harper government came to power in 2006, Ottawa's revenues would be $13 billion higher, which would allow it to eliminate the deficit sooner.

The CLC notes that Bank of Canada governor Mark Carney has also lamented the "dead money" phenomenon.

Business groups have dismissed Carney's criticism, saying firms have increased cash buffers since experiencing a credit squeeze during 2008-9 recession. They add firms will invest more once there is less uncertainty.