Sociology Index

CROWN CORPORATION

Crown corporation is a corporate organization established by government, but having a separate legal and organizational identity from the government itself. Provincial crown corporations are also significant. Crown corporations have been established in a wide variety of social and economic sectors including transportation, mining and manufacture, communication and financial services.

Federal Crown corporations are arm’s length corporate entities established to pursue public policy and commercial objectives. They are wholly owned by the government but are not normally subject to the government’s human resource and administrative policies.

The governance framework for Crown corporations varies with the commercial environment in which each corporation operates and the extent to which a corporation depends on parliamentary appropriations for its funding.

Crown Corporation are wholly owned federal or provincial organization which are structured like private or independent enterprises. Crown Corporation are established to carry out regulatory, advisory, administrative, financial or other services or to provide goods and services, generally enjoying greater freedom from direct political control than government departments.

Although the 1951 federal Financial Administration Act (FAA) declared that crown corporations are "ultimately accountable, through a minister, to Parliament, for the conduct of (their) affairs," they are not subject to budgetary systems or direct control of a minister in the same way as government departments.

The first crown corporation was the Board of Works. Crown corporations such as CANADIAN NATIONAL RAILWAYS, PETRO-CANADA and several provincial hydro firms now rank among Canada's largest enterprises.

In many provinces crown corporations are responsible for the generation and transmission of electricity and the retail distribution of liquor. In the Prairie provinces, telephone service is provided by crown corporations.

Crown corporations are prominent in Qu´┐Żbec and Saskatchewan. Crown corporations were extended into the provincial economy after the CCF's landmark electoral victory in 1944 in Saskatchewan.

A central rationale of crown corporations is that the commercial activities of government, to be performed successfully, must be shielded from constant government intervention and legislative oversight. Hence, crown corporations enjoy greater administrative freedom than government departments.

The range of controls and influences over federal crown corporations has developed piecemeal. But a key element was section VIII of the FAA which in 1951 established a regime of financial controls over most crown corporations.