By Terence Corcoran - The Globe and Mail December 10, 1996

THE campaign of disinformation surrounding Ottawa's Candu nuclear reactor sale to China appears to have been successful. Everybody has moved on to other topics, leaving Atomic Energy of Canada Ltd. by far the federal government's most expensive and wasteful technological adventure to gloat over having pulled another fast one on the Canadian public.

The only critics still trying to draw attention to the unconscionable China transaction are the Greens. They have a legitimate technical complaint, which is that the cabinet had to secretly scrap federal environmental regulations so that it could then secretly lend $1.5-billion to the world's largest fascist dictatorship to pay for Canada's share of the work on the reactors.

As noted in a previous column, assorted federal cabinet ministers Trade Minister Art Eggleton and Natural Resources Minister Anne McLellan and official press material fabricated by AECL have pretended that a $1.5-billion loan provided by the Export Development Corp. is a normal commercial affair offered to the dictators at regular rates and terms. In fact, the money is coming right out of Ottawa's budget under a special provision of the export financing legislation called the Canada Account.

The Canada Account is another manifestation of the growing trend in Ottawa, which is to hand power over to the politicians and turn the federal cabinet into the board of directors of Canada Inc., accountable to no one and capable of changing the rules as they go along. The Canada Account is the back door through which Ottawa approves export financing loans that the EDC cannot accept and that any private sector institution would rate on the prudence scale as too crazy to contemplate.

So on three counts ethical, environmental, financial the Candu sale to China fails to meet any reasonable test. The official material on the sale misrepresents the financial deal struck with the Chinese, glosses over the moral and political problems of dealing with a dictatorship that denies human and economic rights as a matter of state principle, and pretends that the environmental issues are non-existent.

Also being misrepresented by AECL and the government are the economic benefits the country allegedly gains from the Candu nuclear industry. AECL's press release on the China deal trumpeted the results of a 1993 economic study that purported to prove that Ottawa's nuclear industry generated billions in investment and tens of thousands of jobs over the past 45 years.

Here's what AECL said: "A recent study by Ernst & Young analyzed the 4.7-billion investment made by the Canadian government in Canada's nuclear industry from the period 1952-1993. The analysis revealed that [the] return to the Canadian economy was almost fivefold, $23-billion. For every dollar invested in Canada's nuclear industry, almost $5 has been generated in economic activity."

This claim continues to appear in AECL material even though it is false and misleading. The first number, $4.7-billion, is the actual dollars Ottawa has spent over the years measured in the dollars of the day a meaningless number in itself. A more accurate number would have to convert the dollars into today's dollars, which would put Ottawa's subsidy of the AECL up in the $30-billion dollar range.

The other number, the $23-billion in "economic activity" that AECL claims was generated by its nuclear operations, is not comparable to the $4.7-billion.

Most of the $23-billion represents Ontario Hydro's massive cost overruns building its Darlington plants. At least $12-billion worth of Ontario Hydro's spending is a writeoff. But according to AECL, the money Ontario spent on Darlington represents solid returns to the nuclear industry.

Under this economic analysis, the greater the cost overruns at Darlington, the greater the benefit to the Canadian economy. University of Lethbridge management dean George Lermer demolished the AECL economic analysis in an article earlier this year. As he put it, according to this methodology, "the higher the cost of producing nuclear power, the greater is the contribution to GDP and the higher the benefit."

The more Ontario Hydro overspent, in other words, the more nuclear power contributed to the economy. Taking the analysis further, Prof. Lermer concluded that under this approach, had Candu actually been an economic success, the Ernst & Young methodology would have reported it to be an economic failure."

AECL's financial accounts also misrepresent its financial affairs. The Auditor-General qualifies its financial statements because it fails to account for the cost of disposing of nuclear waste. That may soon be rectified, however, because the board of Canada Inc. has agreed to give the Crown corporation another back-door financial injection. The value is uncertain, but it's likely to be in the $800-million range.

The Candu nuclear project is about 50 years old. The total cost to Canadian taxpayers, in today's dollars, may exceed $50-billion. And the end is not in sight.