Thursday, November 15, 2007

Enterprise Saskatchewan: Former C.D. Howe Institute president calls plan “potential slush fund”; business groups look to cash in on election promises

It appears the province’s business community will soon be lining up to cash in their markers now that the new Brad Wall-led Saskatchewan Party has formed government.

Immediately following the Nov. 7 election the media dutifully sought out and reported the opinions of business leaders and lobby groups.

In Atchison optimistic about new gov’t (StarPhoenix, Nov. 9, 2007) Mayor Don Atchison said he sees a long list of potential benefits for the city of Saskatoon under the Saskatchewan Party government.

During the election the party promised “to redirect $140 million in proceeds from the privatization of the NewGrade upgrader to municipal roads and highways, along with a pledge to negotiate long-term revenue-sharing deals for municipal governments, starting with an immediate seven per cent increase.”

The list also includes “plans to increase spending on transportation infrastructure” and a “promise to put more police officers on the streets and crack down on gangs.”

That Atchison, a local business owner, seems pleased with the Saskatchewan Party victory is not surprising. During the 2003 provincial election he endorsed Roger Parent the party’s candidate for Saskatoon Centre. A testimonial from Atchison appeared on one of Parent’s campaign brochures along with Don Morgan and Shelley Hengen.

Shirley Ryan, the North Saskatoon Business Association’s executive director shares Atchison’s optimism about the new government.

“We do have, I believe, in the Saskatchewan Party a business-friendly government that will make some changes.”

Ryan said she expects the party’s promise to increase revenue-sharing for cities will be kept, and the province will gain an enhanced reputation as a place that’s “open for business.”

(Oddly, in a December 10, 2004, letter to the Saskatchewan Business Council, Saskatchewan Party Leader Brad Wall said that the province has the “reputation as a business-friendly environment.”)

According to the StarPhoenix, Kent Smith-Windsor, executive director of the Greater Saskatoon Chamber of Commerce, shares the same view of the election results.

As for the Canadian Federation of Independent Business, Marilyn Braun-Pollon, the lobby group’s vice president of Saskatchewan and agri-business, said they’re “going to watch closely to see that the new government does live up to the promises it has made to small business.”

Small business will be looking for improved highways, more ‘balanced’ labour laws and tax relief from the new Saskatchewan Party government, said Braun-Pollon. [Business groups happy, labour leery (Leader-Post, Nov. 9, 2007)]

That shouldn’t be difficult to deliver. After all, in a March 31, 2004, letter to Braun-Pollon, leader Brad Wall said: “My party has had a very good relationship with your organization through the years and that will absolutely not change under my leadership. The position the CFIB puts forward, for the most, reflect our own.”

Furthermore, the Saskatchewan Party Policy Book states “that a Saskatchewan Party government will ensure Saskatchewan’s income, corporate, property and capital taxes and resource royalty rates are competitive with other provinces and do not create a barrier to increased private sector investment, job creation and economic growth.” The policy book also states that “a Saskatchewan Party government will make Saskatchewan a small business tax free zone” by eliminating the small business tax. The party also considers the PST, fuel taxes and labour laws as barriers to growth.

On the subject of highways party policy states “that a Saskatchewan Party government will commit, as a minimum, all provincial fuel taxes collected to fund provincial and municipal transportation infrastructure construction and renewal in Saskatchewan.”

Lee Harding, the new Saskatchewan director of the Canadian Taxpayers Federation says that the election of a Saskatchewan Party government should be generally positive for its members.

The article Wall has several issues to discuss (Leader-Post, Nov. 14, 2007) shows that big business hasn’t forgotten about the BC-Alberta Trade, Investment and Labour Mobility Agreement (TILMA).

Dale Botting, president of the Saskatchewan Trade and Export Partnership, said he hoped Saskatchewan will take a lead “on issues such as lowering interprovincial trade barriers.” The problem, though, is most serious studies conclude that there are few significant obstacles to trade and investment within Canada.

In fact, on April 3, 2007, an Edmonton Journal editorial said there is “little in the way of genuine trade barriers remaining between the two westernmost provinces” and Saskatchewan Party Leader Brad Wall said in a news release that Saskatchewan is “the lowest cost jurisdiction…with fewer trade barriers and restrictions than either B.C. or Alberta.”

“When it comes to major incentives in terms of hand-outs of forgivable loans (from the federal government), I don’t think there’s a lot of appetite in Western Canada to see a distortional flow of revenue to the automobile sector, say, as a carve-out sector. And I think Mr. Wall is on record also as not being in favour of distortional grants or subsidies as well,” Botting said.

Not to worry. British Columbia’s Minister of Economic Development Colin Hansen has stated that “TILMA is designed to eliminate subsidies.” Not to mention a lot of other things.

In 2006, Wall’s support for TILMA was absolute and unequivocal. On June 28, 2007, he ridiculously flip-flopped saying his party wouldn’t sign the trade deal “in its present form.” Saskatchewan hasn’t seen the last of this controversy.

Not everyone in conservative-land is enamored with the Saskatchewan Party or its leader Brad Wall.

In the op-ed Brad Wall needs braver policy (National Post, Nov. 14, 2007) Jack M. Mintz, a Professor of Business Economics at the Rotman School of Management in Toronto, described Saskatchewan’s demographic picture as “bleak” and wondered whether Wall will be a “transformative premier.”

“If the Saskatchewan Party’s platform is any indication, transformation is not on the agenda,” Mintz said.

Mintz, who is also a former President and CEO of the right-wing think tank C. D. Howe Institute, went on to say:
“While the Saskatchewan Party is on the mark with some proposals, several platform policies look like they will do more harm than good. The incoming government seems bent on picking “winning” activities, an industrial policy that fails more than it succeeds.

“The new public-private Enterprise Saskatchewan-- a potential slush fund partly influenced by conflicted private recipients -- will look at barriers to growth, economic development and industry support, with an emphasis on selected “growth” industries, including agriculture, mining, energy and the forestry sector. How forestry became a growth sector is beyond logic, just as it is hard to understand why other industries, such as services, can't play a major role in creating wealth.

“And rather than look at broad tax-reform measures, the new government will play Santa by providing targeted tax support to mining exploration, research and development, as well as provincial sales tax relief for light vehicles and sports and cultural activities for children. The special tax credits might generate some new activity but often at the expense of moving resources from more productive uses.”
Mintz says if Wall “wants to create a legacy for himself, he will need far braver public policies.”

Mintz’s strictly business-friendly suggestions include:

– Reforming labour laws using the Australian approach, particularly “the onerous costs imposed on employers in hiring workers and the strike power of monopoly government agencies and corporations.”

– Selling off Crown corporations to reduce provincial debt.

– Reducing corporate income taxes well below Alberta and cutting personal income tax rates, especially where marginal rates are typically very high.

– Replacing the Saskatchewan retail sales tax with a value-added tax similar to the federal GST.

Surprisingly, the next condemnation of the Saskatchewan Party comes from Alberta.

Lorne Gunter is a senior columnist at the Edmonton Journal, and is also currently the editorial director of the Canadian Centre for Libertarian Studies, a member of the editorial board of and the incoming president of Civitas – a society for conservative and libertarian academics, think-tankers, lobbyists and journalists.

To read Gunter’s column, Wall talked the talk, didn’t walk the walk (Edmonton Journal, Nov. 9, 2007), you’d think Wall and his party had betrayed and sold-out conservatives everywhere.

Gunter says he first met Wall in the fall of 2004. He was in Calgary for a fundraising dinner for his right-wing Saskatchewan Party. The 300-plus guests were “dazzled” by Wall’s “charm and wit and, most of all, his ideology.” He and his organizers went home that night with over $100,000 in their pockets.

“Wall was articulate, intelligent, engaged and engaging. He understood the stimulative power of tax cuts and the economic benefits that come from shrinking the size of government and allowing entrepreneurs to apply innovation to market and social problems.”

Gunter said he was blown away – for about a week.

“But the buzz around Wall and his principled conservatism didn’t last a week,” Gunter said.

“Wall went back home from Calgary and had his caucus vote unanimously in favour of the NDP’s Crown Corporations Public Ownership Act.”

“And nothing has changed in the three years since,” he said.

“It’s too bad, too. Saskatchewan’s Crowns are the elephant in its economic room. They control too much of the economic decision-making and meddle too much in public policy (although usually with the blessing of the government). With more than 11,000 unionized employees, the Crowns are a potent political force. Many families have at least one member who works for a Crown and the province’s all-powerful unions rely on Crown employees for a large chunk of their memberships and dues.”

However, Gunter’s concerns might be premature. Canadian history is littered with broken promises by politicians of all stripes.

Jean Chretien’s Liberals said they’d get rid of the GST, which the despised Progressive Conservative government of Brian Mulroney had introduced, but never did. Gordon Campbell promised not to privatize BC Rail but did just that once elected. Lorne Calvert said his party would hire 200 more police officers but for years came up short. Don Atchison said he’d freeze taxes but every year since being elected mayor of Saskatoon there have been increases. Last but not least is the Harper Conservatives magnificent betrayal of Saskatchewan on equalization.

Brad Wall and the Saskatchewan Party will surely prove to be no different.

“The Sask. Party Platform document makes it clear that Brad Wall has no business sense and that he will promise anything to anyone in order to get elected,” said Saskatchewan Liberal Leader David Karwacki in an October 22, 2007, news release. He’s probably right.

During the 2007 provincial election the Saskatchewan Party made approximately 124 promises and routinely made statements that contradicted party policy. It’s not a question of whether any of them will be broken, it’s when and which ones.


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