Nortel Briefing Note

Targeting the Economic Crises

Policy Briefing Note: Save Nortel

Proposal (Outline the policy option that you recommend to deal with the current economic crisis. This section should clearly and succinctly state the policy and offer a brief description of what it proposes. – 100 words)

To lose one of Canada's great research and development firms because the entire world is experiencing a credit crisis, would essentially be saying to the country that we are no longer a great innovative influence in this world. Students in college and university must have hope and see a future in contributing to new technologies. If they see all the high tech and engineering jobs leaving Canada, what motivation will they have to go into this sector?

The Canadian government must ensure that this country protects its high tech knowledge base in order to prevent our economy from becoming service based. Innovation and manufacturing is the cornerstone of a healthy economy. Nortel has been a leader in this area for over 100 years.

So what could the Canadian Government do to protect this iconic company that is part of our heritage? One of the easiest solutions would be to guarantee the bond holder's their investment at the end of the term. The government would not have to provide money up front and would make Nortel an attractive company to investors because their money is guaranteed by the government of Canada.

Offer retired individuals a TAX CREDIT in return for volunteering at not-for-profit and charitable organizations. Organizations would document the FMV of the volunteer contribution via a T-slip although it is a non-cash item. FMV of the volunteer is determined by market rates for the task being undertaken (evidenced by, for example, rates published in various available Salary Guides). As a TAX CREDIT, this is not a dollar-for-dollar deduction.


Implementation (Describe how the policy would be implemented, as well as the proposed timeline. – 100 words)



Cost of Proposal (Detail the cost of the policy to the Government, either in added expenditure or foregone revenue. – 100 words)


Expected Impact – Short-term (Describe concretely how the policy will help Canada deal with the current economic crisis over the next twelve months. How will it impact taxpayers and families? How will it affect industry and labour? – 200 words).


Expected Impact – Long-term (Describe concretely how the policy will impact Canada over the next five years and beyond. How will it impact taxpayers and families? How will it affect industry and labour? – 200 words)

Background (Present the background considerations that are relevant to this policy proposal. You should list the various facts and figures that support the policy. Has this measure been adopted successfully in other jurisdictions? – 200 words)


Considerations (Present key factors that must be taken into account with this policy: environmental impact, provincial/municipal jurisdictional issues, etc. - 200 words)

Is Nortel viable on its own?

The company, as well as the tele-com industry as a whole, has been in financial trouble since the bursting of the dot-com bubble earlier this decade. Before the government rushes in to support Nortel, it must analyze the international tele-com industry and decide whether the company will be able to survive in the future without government support. This is vital as the aim of any government support has to be the creation of a "new" privately-held Nortel. Privately held in the sense that the government should not have any stake in the new company.


Political Implications (What will the impact be on public opinion? Can opposition parties be expected to support this proposal? What interest groups will support this measure? Which interest groups will oppose it? - 200 words)

Expect the manufacturing and forestry industry to support such a proposal because then it clears the way for these industries to ask for (or more) government support. If Nortel is saved because of its significance to the Canadian economy, then clearly companies in the manufacturing and the forestry industries can argue the same.

Expect opposition from Western MPs, who first of all, dislike any government intervention and wasn't fond of the GM and Chrysler bail-outs and second because Nortel is based in Toronto, there is not much their constituents will gain from any deal.