The Atlantic Provinces “special snowflake” syndrome.

special-snowflake

The term “special snowflake” is generally used as a term of derision in the service industry. It comes from the term parents may use for their singularly wonderful child being “special”, like a “snowflake”.

After being popularized in the 1999 movie Fight Club, the term has transmuted into a sneering reference to those who feel they are or-so-very unique, but generally fall into columns of all-too-common attributes.

Kind of like our provincial governments.

In many ways, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador are indeed unique. The geography is somewhat different, the weather is more severe in some areas and in some locales, we speak in unique and charming dialects.

Beyond that, all of us, all 2.4 million Atlantic Canadians, are dealing with pretty much the same thing. Our economies are primarily resource based, we are in debt up to our ears (personally and publicly) and for a population slightly smaller than downtown Toronto, we are grossly over-governed with far too many people living on the public dime.

22.6% of all jobs in Atlantic Canada are in the civilian public sector. That’s fully five points above the national average.

To add to this problem, the public service continues to grow while public sector unions complain about “austerity” when governments simply try to reduce the speed of spending growth. There has been only one year in this century that Nova Scotia has seen a drop in the percentage growth of program spending, while most years spending has far exceeded the benchmark of population growth and inflation.

Do you feel we are getting 3 billion dollars worth of better government than we did in 2007? I didn’t think so.

To govern us across this region we elect almost 200 federal and provincial politicians and if we are counting just the major census areas (not including small villages, towns, county and other governments) we elect a total of 137 municipal councilors. To manage just the municipal and provincial affairs of the region we are forking over in excess of 33 billion dollars to politicians and the public service.

If we were getting absolutely awesome service from our over-investment in politicians and the public service, perhaps we wouldn’t have reason to complain. If we were getting “World Class” public services, we could all look at our tax bills and rejoice at the universal higher standards of living here in Atlantic Canada.

Except we don’t because the vast majority of our citizens know our total tax burden is much too high and “government customer service” is the punchline to a joke.

For mostly parochial or political reasons, governments in Atlantic Canada have historically felt our uniqueness trumped all. Because our respective provinces were somehow unlike any other province in the region, it was necessary to have separate provincial regulations, laws, and labour standards reflecting our “specialness”.

Not so much. There is no longer any rational economic justification for the layers of unnecessary governance Atlantic Canadians must contend with. A recent APEC report clearly explains the problem and quantifies the burden, and it isn’t pretty.

However, a glimmer of hope has arisen in our region. Perhaps because of the tireless lobbying of group like CFIB, or maybe the stars lined up to provide four political parties of the same stripe in power at one given time, or perhaps just because of the urgent need to finally try to address the problem, we have a body to attack some of our ridiculous regional redundancies.

With Newfoundland and Labrador signing on in December to complete the quartet at the Joint Office of Regulatory Affairs, the region now has a central tool to start dismantling some of the unnecessary costs and confusion that comes with four sets of rules to do business.

While such an event may have only titillated the wonkiest of public policy aficionados, it could prove to be a pivotal moment in the political and economic evolution of our region.

If the four governments finally come to grip with reality and accept the tax load on our shrinking population to support our unnecessary layers of government is unsustainable and must be lowered,  if they can come together to find governance efficiencies between provinces and enact sensible regulatory and interprovincial trade policy, perhaps Atlantic Canada has a fighting a chance at being a special snowflake.

Cutting Red Tape: An old problem finding new solutions

scissor-red-tape

I was having coffee with an old political warhorse recently and we were talking about red tape. He told me a story about how after John Buchanan won the 1981 election, his government promised to cut red tape. The classic line from Digby Liberal Joe Casey in the legislature was, “He sure is cutting, but lengthwise.”

This is to say, there’s nothing really new about politicians promising to cut red tape. The idea has been kicked around for years because red tape is a horrible drag on the economy. What’s new, however, is after years of hounding federal and provincial governments, the Canadian Federation of Independent Business (CFIB) is beginning to see some results.

To give credit where it is due, during John Hamm’s government, there was some movement on red tape, but it was no secret the bureaucracy regarded the project as bothersome. The “Better Regulation” initiative was largely ignored, then quietly shelved during Rodney MacDonald’s years and completely jettisoned during the Darrell Dexter years.

However, under Stephen McNeil regulatory reform has been revived and Nova Scotia’s grade on CFIB’s annual Red Tape Report Card has climbed from the “D” he inherited in 2013. As it is Red Tape Awareness Week, CFIB is announcing Nova Scotia is receiving a mark of “B” for 2016 putting the province back in the top half of Canadian jurisdictions.

The improvement in the mark is not because we’ve seen significant regulatory burden reduced for business, it’s because of the political leadership and excellent groundwork completed by a small group of dedicated individuals led by Chief Regulatory Officer, Fred Crooks.

We were very pleased to see Regulatory Accountability and Reporting Act passed, the creation of the Joint Office of Regulatory Affairs and Service Effectiveness, the Premiers’ Charter of Governing Principles for Regulation adopted, the creation and implementation of the ground-breaking business economic impact analysis tool and the initiation of a “Business Navigation” project to help new businesses get off the ground.

In particular, the Premiers’ Charter is a beacon of hope for small businesses in Nova Scotia. The commitment to enact fewer and better regulations, as well as the cost-for-cost rule, should keep the current regulatory burden in check. It’s now also been adopted by the three other Atlantic Provinces with mirror legislation as part of their participation in the Joint Office.

While this is all good, to see improved satisfaction levels from business owners, the government must begin producing results in time and/or money saved. With new technologies designed to make secure, online transaction readily available, there are tremendous opportunities for government to find creative solutions to cut costs, fix the government customer service experience, measure improvement and deliver real results.

To advance this, CFIB is recommending the province establish a baseline measurement of the existing red tape burden faced by Nova Scotia’s small businesses, set clear targets for its reduction, and publicly report on how it’s going. We believe only accountability will force this innovation.

If the Premier really wants to make Nova Scotia “the best regulatory environment in Canada”, we need to get at it, and now. The groundwork is done, it’s time to take action. Let’s navigate away from bureaucracies that are simply held accountable for process and move to a service oriented public sector that is held accountable for results.

This article was originally published in the Chronicle Herald on Thursday, January 26, 2017 

We have all the evidence we need. It’s time for action to support small business

reports1

How many more studies until government finally takes the necessary steps to fix the drag on our regional economy?

There have been many reports generated to reinforce that which we already know. We know this because we’ve written many of them.

From CFIB’s work on inter-provincial trade barriers to multiple pre-budget submissions, red tape report cards, and other position statements, our members have consistently identified regulatory burden and taxation levels as the primary constraints on their business growth.

The latest, compelling piece of proof, comes from the government’s own joint office of regulatory affairs via Atlantic Provinces Economic Council (APEC). The new APEC project, Trade Barriers in Atlantic Canada: Opportunities for Regulatory Reform, reinforces what CFIB has been repeating for years; red tape and trade barriers are destructive to our economy.

The author, economist David Chaundy, says it’s some of the most significant work he’s ever done. In a career that has seen plenty of economic analysis of our region, that’s saying something. We were pleased here at CFIB to see APEC provide clear quantification of the problem. We believe this report, along with the other work we and other groups have presented, provides plenty of evidence to put regulatory reform (red tape) and interprovincial trade barriers squarely on the front burner in Atlantic Canada.

If governments in our region are serious about doing something meaningful to assist economic growth (as they should if we want to avoid plummeting head-first into a demographic abyss), it’s time everybody gets with the program.

Chaundy’s work identifies how the Atlantic provinces, more than any other region in the country, suffer economically under the weight of unnecessary regulation and inter-provincial trade barriers. It points to recent research which estimates the gains from removing all trade barriers in Canada could be as high as 3.3 per cent of GDP ($65 billion). This translates proportionately to even greater gains in the Atlantic region of 7.6 per cent of GDP or $8.5 billion.

trade-liberalization
From Trade Barriers in Atlantic Canada – APEC 2016

To put it in more relatable terms, this kind of cost reduction is the equivalent of an after-tax income increase of $2,000 for every person in Atlantic Canada.

Lowering interprovincial trade costs for Atlantic businesses will also improve their international competitiveness. With the signing of the Canada and European Union Comprehensive Economic and Trade Agreement (CETA), eliminating regional trade barriers have now become increasingly more urgent and more important.

Freeing up trade restrictions must become a central ingredient in the economic growth model being prioritized by each of the Atlantic provinces. It’s time for politicians to discard Donald Trump style parochial protectionism in favour of unfettered interprovincial free trade.

We have enough reports now all pointing in the same direction. As we noted at the time of its inception, the joint office of regulatory affairs can play a pivotal role in dismantling these trade barriers, removing red tape and setting our region on a path toward greater economic growth and prosperity.

There have been some good first steps, but each of the provinces now must re-double its efforts to tackle these important issues. With the body of evidence in front of them, the premiers must unify behind and forcefully advance this agenda.

Council candidates on a Living Wage ordinance…leaving more questions than answers.

confusion

Halifax journalist/blogger Tim Bousquet has re-opened up a particularly interesting debate during this municipal election by asking candidates for council their opinion on a living wage ordinance.

On his Halifax Examiner site, Tim is dedicating a page to a couple of questions, one of which is, “Will you support a living wage ordinance?”* Tim provides some background where he argues his position in favour of such a policy and also includes another link to material promoting the idea at Living Wage Canada. There are no counter arguments presented.

*This might be behind a paywall, so if you really want to read the responses…click here

I’ve commented about this before, but here we go again.

For anyone unfamiliar with the idea, the Living Wage for Halifax was identified by the Centre for Policy Alternatives in a report commissioned by the United Way in 2015 and set at $20.10 per hour. The study sets the wage by establishing a baseline standard of living for a family of two working parents with two school aged children.

It weighs the needs of the family to live what the CCPA considers a dignified life with opportunities for advancement. There are a great many reasons to question the methodology, but for our purposes, let’s accept the figure at face value.

Bousquet sells the idea, explaining how he is puzzled how anybody not paying employees over 20.00 per hour can “look at themselves in the mirror” and goes on to note that at his publication, the Halifax Examiner, he pays everyone a living wage.

As a small business owner, Tim’s desire to see those he employs earning a fair wage is admirable. It is also not particularly uncommon. Most small business owners try to do the same. However, many small business owners do not have the luxury of meeting an arbitrary living wage target by simply employing part-timers and freelancers on an ad hoc basis.

Employers with full-time employees base their salaries on a variety of economic factors including the industry standards, the economic value and availability of labour, revenue and business costs, the profit margin of their company, payroll taxes, benefits and a myriad of other market-driven external economic pressures beyond the employer’s control.

Living wage ordinances are nothing new. They’ve been in place in many jurisdictions in the US since the 90’s but it is difficult to compare the Canadian and US experiences as the minimum wage rates and labour standards, in most states, have historically been much lower than the levels we have in Canada.

The beachhead for these living wage policies in Canada is in British Columbia. New Westminster has had a living wage ordinance in place since 2011, followed by Port Coquitlam.

Vancouver also recently approved a plan to become a living wage employer. However, interestingly, evidence now shows almost no one will earn more under this policy. Why? Because Vancouver established much stiffer criteria around who should be paid a living wage. Among other restrictions, only contractors who have an annual service contract with the city more than $250,000 and provide regular and ongoing services on city sites fall within the scope of the city’s guidelines.

The result is the Vancouver living wage policy is little more than a feel-good, public relations campaign so politicians can say they are doing something about wage inequity or poverty.

For municipal employees and large-scale suppliers, such as is the case in Vancouver, it won’t matter a whit. The vast majority, if not all, already are making more than $20.10 per hour already. In Halifax, many make much, much more, but for smaller firms where profit margins are slim, costs continue to escalate and labour is hard to find, it would matter a great deal.

Without the sort of restrictions we’ve seen in Vancouver, a living wage ordinance would be highly discriminatory for many small businesses who want to bid on city contracts.

It is a simplistic notion to think all companies doing business with the city can set an arbitrary full-time wage floor of $41,808 annually. Adopting a municipal ordinance to enforce such a notion would be disastrous for some small firms, which as part of their business model, do business with the municipality.

What would such an ordinance mean for employers who pay their seasonal employees $15.00, $17.00, $19.00 per hour? Are they simply be disqualified from the tendering process? It stands to reason a policy of this sort would also force employers wanting to be compliant to eliminate full-time positions and replace them with temporary, contract positions to meet the $20.10 per hour threshold.

Also, how would such an ordinance be enforced? How much red tape is required? Would the city demand all businesses submit their payroll to the municipality to confirm they employees are meeting the requirement or do they just sign a declaration? Does CRA get involved? Also, how would it affect the competitive tendering process?

And what happens to employment opportunities for lower-skilled workers? Certainly, employers are not going to be providing entry level positions at that pay scale. This means employment opportunities will simply dry up for youth and entry-level employees.

There would also be job losses with larger employers.  CentrePlate has a contract with the city and provides both part-time and full-time employment. Their workforce employs many youths and other entry-level or lower-skilled workers. For some, it’s an all-important first job, for others, it’s additional household income.

If the city were to institute a living wage policy, even one with the sorts of exemptions we see in Vancouver, CentrePlate would be captured. By almost doubling the wage floor from the current minimum wage of $10.70 to $20.10, a significant labour market distortion is created. CentrePlate would then have decisions to make. They would either reduce staff, cut service or operate at a loss. What do you suppose would happen?

My guess is the more experienced workers would keep their jobs, all full-time entry level positions would be eliminated, workers hours would be reduced and service levels lowered. How exactly does this help? Would council decide to exempt Centreplate? If so, what then becomes the criteria for exemption?

A municipal living wage ordinance would also mean private sector service providers would lose competitive advantage against municipal unions, which (in case the connection is not clear) is why CUPE, Unifor, and other labour organizations are funding these Living Wage campaigns.

There could be other unintended consequences as well, including upward pressure on other salaries. If $20.10 is the new base rate, experienced employees will rightly be asking for higher levels of compensation for their work. As labour costs rise, so will inflation.

With increased costs to government, businesses would also be forced to absorb higher taxes in this equation. Along with the higher wages, there will be additional payroll taxes in higher EI and CPP contributions and additional municipal property taxes.

So the two options emerging are; adopting a living wage policy with many exemptions such as in Vancouver or; adopting a universal living wage for all municipal staff and contractors. The first option is a do-nothing, status quo, public relations exercise, the second is an arbitrary, inflationary tax grab and job killer. Take your pick.

Money obviously just doesn’t magically appear when a policy like this is adopted. For most small businesses trying to grow, there is no money tree they can harvest or a pot of unused cash to make up these wages.

I do applaud Tim and the Examiner for injecting this question into the municipal election. While we don’t agree on this, there is no doubt it will be an important public policy debate in the months and years ahead. The labour movement is plowing lots of money into this campaign and there are lots of social activists cheerleading this as a poverty reduction measure, so it isn’t going away.

For those prospective councillors who have provided answers, I would respectfully suggest it might be a good idea to go back and do a little more research and then make up your mind. From the answers I read, for many, there appears to be confusion around what is a minimum wage, a living wage and for that matter, where and how the idea is being adopted.

You can find other background material here and here. I also don’t think it’s unreasonable as citizens to expect well thought out responses to complex problems from our prospective politicians after they’ve taken the time to evaluate more than one argument.

 

Why are Halifax building inspectors trying to kill small business?

Cross-eyed businessman wrapped in red tape

Today, Sailor Bup’s posted a missive about what has become an all too familiar story of the heavy-handed, anti-small business attitude of the building inspection department in the City of Halifax…you’ll find it below and if you have any interest in the growth of small business in Halifax, I encourage you to read it.

This comes on the heels of a meeting CFIB had this week with the folks at The Darkside Cafe on Wyse Road in Dartmouth who are suffering under the same level of destructive bureaucratic engagement. The Darkside story is equally discouraging with the city’s Chief Building Inspector directing subordinates to “throw the book” at a small business operator who has perpetrated the egregious crime of not being clear on if it’s an art shop that sells coffee…or a coffee shop that sells art.

Cultures of mediocrity in public service delivery become ingrained in government in spite of the even the best individual efforts. In Halifax, we’ve had poor public service so long, the city is no longer even embarrassed by its shortcomings, and it would be difficult to imagine how the opinion of citizens and business around of the delivery of public services could be much worse.

In a submission to HRM, the Greater Halifax Partnership provided an Index of Business Opinions of Municipal Government Regulation. With 0% being the point of neutrality, the City’s score was minus 26.1%. In fact, it has been below zero for the past 12 years, ranging from a worst of minus 39% to a high-water mark of minus 14% in 2013. This data was supplied by staff to Council in their recent recommendation on red tape reduction.

Regulation opinions HRM

While “regulation” itself may seem like an abstract, it is the backbone of government service. Councillor Jennifer Watts pointed out to The Coast, “That’s the nature of who we are…Everything we do in government is regulation.” Poor service delivery can utterly destroy the application of even the most reasonable regulation…and the opinion of service delivery in HRM is clearly abysmal.

And this is not news. Years of protestations from the citizenry notwithstanding, in 2013 at the Atlantic Mayors’ Congress here in Halifax, leaders of 24 municipalities passed a motion to create a committee to study ways to engage provincial governments and reduce the regulatory burden on businesses. So, how’s that been going?

If you have similar stories of building inspectors in Halifax acting in this fashion, we want to hear about it. Last year Halifax was awarded CFIB’s National Paperweight Award for the ridiculous nature of its patio laws. We are continuing to take submissions to shine the light on heavy-handed, unnecessary regulatory burden imposed by the city government. We want to hear from you at msns@cfib.ca

SAILOR BUP’S VS HALIFAX – ROUND 3

We sat quietly on this for almost a year, but now it’s time to go public.
First the liquor, then the sign in our downtown shop, now our Dartmouth shop. We may be a little brash and outspoken (we think it’s part of our charm), but since people trust us with their heads and faces, we always play by the rules where regulations are concerned. Today, we are bummed out to tell you we have now AGAIN been pushed into a battle with HRM. This is a lengthy read, but if you like gossip straight from the source, here it is.
A couple weeks after opening in Dartmouth, we were visited by an HRM building inspector. Before we opened the shop, we painted, installed a back bar, put up a partition/non load bearing wall, built a bench, laid down flooring, painted, installed shelving on the wall, installed some new lighting, installed new sinks (to existing plumbing) and that was about it. Pretty standard stuff. The trigger to spur HRM’s visit was the sign that we installed on an already existing sign holder that had been there for decades. Starting to sound familiar?
That inspector walked in and, before “inspecting” a thing, said “Nice shop you have here. Looks like you did a lot of work. Too bad we’ll be shutting you down in 30 days.” This was said in front of both staff and our customers. It’s important to note that this happened only a couple months after our first sign battle with HRM Planning & Development. Ourselves and another business protested a number of seemingly arbitrary fees that kept getting tacked on to our applications, got a bit of media attention, and the city backed down. We assume they didn’t like that. Maybe that’s just us.
A formal complaint was lodged with HRM against this inspector and, to our knowledge, it has yet to be addressed—no one ever followed up with us. A little while later, HRM ordered an issue of compliance for us to obtain an occupancy permit, stating that the day-to-day business of the leased spot had since “changed use” from the previous occupant and we were in violation.
The previous occupant was a DVD rental and laptop repair shop. This means they fell under the category of personal services and mercantile. That’s how we are categorized, too. Haircuts, shaves, beard treatments, etc. are personal services. Selling pomades, t-shirts, etc. makes us mercantile as well. Seems pretty straightforward. Still, we welcomed the inspection without question.
HRM sent a different inspector this time (we wonder why…). They told us we needed to patch a few small holes in the ceiling made by the previous owner, install an illuminated exit sign over the door, and move the fire extinguisher by 3 metres—and that if we did these things, the permit would be granted. Okay, fair. We had this work done in a matter of days.
At the same time, we were getting nervous. Not because we thought we were doing anything wrong, but because we had gone down this road with HRM before and suspected the circus was just beginning. We contacted both our lawyer and Councillor Gloria McCluskey. Our lawyer advised us to let him handle anything else stemming from this issue going forward. Councillor McCluskey looked into the inspection history and told us to simply get back to work and not worry about it from this point forward.
When it came time for the followup inspection, our lawyer made sure he was present. This next inspector informed us that the plumbing was not vented and that he was concerned about some aspects of the residential side of the building. Our lawyer asked if that was the end of his concerns because we wanted to get everything sorted and get back to work. The inspector sneered at our lawyer and said “well, let’s get everything, then.”
He picked up his clipboard again and took another look around the shop. He found two additional holes in the washroom (literally made by thumb tacks) in a spot he had inspected not five minutes before. Our lawyer asked why the other two inspectors hadn’t made any mention of them and the inspector laughed and said “I guess they didn’t look up”. After that, the inspector asked to have access to the apartments upstairs. Our lawyer informed him that we couldn’t give him access as we didn’t own the building and had no legal connection to or authority over that portion of the building. In response, the inspector said the building wasn’t up to fire code. Our lawyer asked why two previous inspectors AND the inspection he had “finished” before apparently being rubbed the wrong way by a question hadn’t caught such a large issue. The inspector handed our lawyer his report and walked out without saying a word.
By the way, we called a plumber in that same day to find out why the plumbing wasn’t vented. It was. The vent pipe is the first thing you see when you open the access door. The plumber was quite confused as to why the HRM inspector would have claimed that.
Anyway, we patched up the thumb tack holes, got a letter from the building owner confirming that all plumbing was pre-existing and were reassured by a plumber that everything was in order, and called HRM back for a followup inspection. That was in April. This is September. They haven’t been back. They’ve ignored our requests to direct correspondence to our lawyer on numerous occasions.
This is a David vs. Goliath story, and Goliath is accountable to no one. They seem to make the rules up as they go.
The story gets better, too.
After all this, we had a meeting with two individuals from HRM Planning and Development thanks to the help of Councillor McCluskey. We left completely astounded and more confused than we were going in. They told us that their definition of “previous tenant” was not the last person actually in the unit, but the last tenant to hold an occupancy permit on record with them. They then told us according to their information they were leaning “90% in the other direction” in terms of the change of use claim. We asked them who the last “previous tenant” was so we could look into it. They replied with a brief pause and, then, “we’re not quite sure”. It’s very interesting to us that they could calculate their disagreement to the precise number of 90% without even knowing what they were disagreeing with. It’s also very interesting that they weren’t at all bothered by the previous tenant (according to everyone’s definition except, apparently, their own) allegedly operating without an occupancy permit for over a decade (again, according to them).
Our research shows the last tenant was a DVD sales and rental/laptop repair place. The one before that was a trophy shop that also did engraving on the plates of the trophies he sold. Both personal services, both mercantile. This puts us back almost 20 years.
Planning and Development asked us to write them a letter stating that we changed our stance on the “change of use”, and they would grant the permit. Nothing came. No permit. And now, months later—after absolutely no reply from the city to come follow up on the inspection—they have had us charged in relation to the building code with items such as plumbing (that was independently inspected by another plumber who we’re sure would have loved to hand us a repair bill but couldn’t actually find anything to repair, and was pre-existing according to a letter from the building owner himself) and other items that pertain to the residential portion of the building which we have no control over because we do not own or lease it. We lease 700 sq ft in the front of the building. That is it. Nothing more. That would be like your next door neighbour hitting you with a repair bill for his broken furnace. Ridiculous at best.
Among the laundry list of things we discussed with HRM, they told us the building is not wheelchair accessible and that every business in HRM needs to be wheelchair accessible. Which is 100% correct. They do. In the worst way. In fact, we requested a ramp for our downtown shop. And were rejected. We were told that if we even had a removable one, we would be fined each day it was out on the sidewalk. So all we can take from this is that the enforceable by-laws are enforceable based on the level of interest from HRM. Now they have an interest in seeing that our Dartmouth shop gets closed, so it is suddenly enforceable.
We know that consumers are entitled to support the businesses they like and not support the businesses they don’t like. HRM doesn’t have that right. They have to be impartial, even if they didn’t like the outcome of a previous disagreement over, say, a sign. They have to be fair, even if they looked a little silly, just as a hypothetical example, after telling adults they couldn’t enjoy a single beer in the middle of the afternoon. They can’t make up problems out of thin air and cost a small business thousands and thousands of dollars in legal fees just because.
Except, unfortunately, it seems they can.
Mayor Savage, you say you love small business. You say that Halifax needs small businesses. Do you really? Does it really? These employees report to you. Hold them accountable. When is this going to end? Take a look around your city. Empty spaces and businesses closing down everywhere. You need to change how officials interact with small businesses in your city. If small businesses are the backbone of your city, stop trying to break them.
We are already anticipating the visit to our Gottingen St location after seeing the HRM By-Law vehicle parked immediately outside and someone writing on a clipboard. Stay tuned for that one.

Is Halifax “the new Seattle”? We have some work to do…

nova centreIt’s been 25 years since someone at Melody Maker declared Halifax “the new Seattle.” The reference was to the early 90’s burgeoning alternative music scene and what seemed to be a genuine surge in hip music, culture and attitude in the city.

Halifax is still a pretty cool place to live, all things considered, but it isn’t Seattle. However, there are signs we may be taking steps toward acting a bit more like the home of the Seahawks.

This week, Halifax Regional Council voted to do something to help businesses being pummelled because they are located next to large scale development projects. CFIB has been working for a couple of years to assist the city with the development of plans to mitigate the severe damage being done to businesses suffering in the shadow of construction disruption.

The construction site management technical guidelines approved this week are designed to help folks contending with future projects. The speed of the action taken indicates the mayor and councillors understand the severity of the problem.

A lack of appropriate guidelines, oversight and management capacity on the part of the city has wreaked predictable economic havoc.

What is puzzling is the city’s reluctance to publicly accept responsibility for any of the damage. CFIB acknowledges and supports the new guidelines as a positive step forward. Still, as Economy Shoe Shop owner Victor Syperek noted to the CBC this week, for many of the businesses adjacent the Nova Centre, it’s closing the barn door.

argyle-street-downtown-business-878x494

Recently, some of these businesses have launched legal action to seek redress. In response, the city immediately distanced itself, saying the suit, which is rooted in a statutory claim of “injurious affection,” fell outside the interpretation of the law. Certainly the city is well within its rights to defend itself against a lawsuit, but there seem to be contradictory messages here.

On one hand, the rapid development of a construction management guideline recognizes the city did a lousy job protecting small businesses against a development it approved. On the other, the city claims it legally bears no responsibility for the impact. Hmmm.

So, back to Seattle. In contrast to the Halifax approach, in advance of recent major work along an important avenue populated by many small and micro-business, Seattle set up the 23rd Avenue Stabilization Fund with the intent of providing support to businesses which would inevitably be affected by major road reconstruction.

Businesses were invited to apply under clear criteria for support, ranging from deferrals of taxes, licensing and utility payments, to direct financial assistance. Direct and individualized support was provided by the city to assist business owners in gathering the necessary documentation. Communication from the city was clear, precise and issued well in advance of any activity. Consideration was given to access and promotion of business in the region.

Seattle also did a similar and wider scale project in the early 2000s called the Rainer Valley Development Fund during their light rail transit line construction, so it’s not the first time they’ve thought outside of the box and looked beyond state laws to find ways to compensate small business.

With this in mind, Halifax now has to look at not just construction regulation, but the complete picture; a more empathetic approach with creative solutions to let small business know it’s actually valued in this city.

It may not be Nirvana, but it’s certainly better than what we’ve seen.

This post originally published in the Chronicle Herald

Of Trade and Liquor and Lawyers.

http://www.cbc.ca/news/canada/new-brunswick/gerard-comeau-border-alcohol-ruling-1.3554908
Gerard Comeau after a judge dismissed a charge of bringing too much alcohol into New Brunswick because it violated free trade provisions in the Constitution. (CBC NB)

A few years ago, Gerard Comeau, a retired steelworker from Tracadie, New Brunswick, went on a 185 kilometre booze run to Pointe-à-la-Croix, Quebec. Like countless other folks in New Brunswick, Gerard opted to make the two-hour drive to cross over the Restigouche River into the neighbouring province to pick up cheap booze which often sells at half the price of the same product in the New Brunswick Liquor Corporation (NB Liquor) outlet.

When Gerard brought his 14 cases of beer and three bottles of liquor back home that day, little did he know he was triggering a series of events which would place him in the company of our Fathers of Confederation. Sir John A. MacDonald and George Brown’s healthy taste for tipple notwithstanding, Gerard had something more in common with the framers of the Constitution: the desire to promote free trade. Gerard’s free trade efforts, however, led to him being charged with illegal importation of alcohol.

Three years later Mr. Comeau showed up for court. With the help of some constitutional experts and lawyers, Gerard argued that Section 134 of the New Brunswick Liquor Control Act is unconstitutional.

New Brunswick’s regulations, like Nova Scotia’s complex assortment of liquor laws, are empowered by a 1928 federal statute, the Importation of Intoxicating Liquors Act. It demands alcohol only move in or out of provinces with permission from its liquor control board. It was designed primarily to stop bootlegging as Prohibition was lifted at different times in different jurisdictions. It’s also a pretty handy law should a province want to enable a monopoly and jack up its prices without having to consider all that messy stuff like supply, demand and other market forces.

When they got together in Charlottetown, this isn’t quite how the founding fathers envisioned our free trading Dominion.

In his decision, Provincial Court Judge Ronald LeBlanc dusted off our history and ruled that New Brunswick’s restrictions on bringing alcohol into the province violate the Constitution’s free-trade provisions. LeBlanc cited Section 121 of the Constitution Act; “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”

Judge LeBlanc correctly recognized and emphasized free trade between the provinces was the intention of the signatories and a founding principle of Canada.

To find the turning point between the signing of the Constitution and when our free-trader Gerard was charged, we need to go back to the 1920s. During the height of the Prohibition era, the Supreme Court of Canada (SCOC) was asked to rule on an interprovincial trade dispute and, in the process, essentially gelded the free trade provisions in Section 121.

As the story goes, the Canada Temperance Act (CTA) governing the sale of liquor finally came into force in Alberta in 1921. In February of that year Gold Seal, a liquor retailer in Alberta, asked Dominion Express to deliver some liquor to customers outside of Alberta. Dominion Express refused because it felt that to do so would violate the federal CTA. So began Gold Seal Ltd. v. Alberta (Attorney General) which eventually made its way to the high court.

In the Gold Seal decision, the SCOC’s interpretation of Section 121 limited its application to prohibiting only interprovincial “customs duties.” For what some have advanced were purely political reasons the SCOC kicked Section 121, and with it the free trade intention of the Fathers of Confederation, to the curb.

Since then, successive politicians, courts, government officials, special interests and political constituencies in every province have used the Supreme Court’s ruling to successfully impose a myriad of trade schemes and regulations on everything from eggs, wheat and coffee creamers to truck parts and, of course, liquor.

However, the LeBlanc decision in the Comeau case has drawn back the curtain on a very important and equally inconvenient truth. Provincial liquor control regulations, which provide the foundation for our provincial liquor monopolies, including the NSLC, may not pass muster according to intention of the constitution.

Last Friday, the New Brunswick government announced it is seeking leave to appeal the Comeau ruling directly to the New Brunswick Court of Appeal. The federal Conservatives are also calling on the federal government to act as an intervener if the Court of Appeal agrees to hear it and are also asking the Trudeau government to refer the case to the Supreme Court to clarify Section 121.

So what does this all mean for entrepreneurs and small business in Nova Scotia? It could mean a great deal.

As a backdrop to all of this, the Premiers are embroiled in retooling the Agreement on Internal Trade (AIT). A deadline for an agreement passed March 31, 2016, but hope remains something will eventually get hammered out. There is some urgency as international trade agreements, such the Comprehensive Economic and Trade Agreement (CETA) with Europe and the Trans-Pacific Partnership (TPP) are coming into play. Why the urgency? Without change, under these new agreements, we may end up with foreign companies having greater access to opportunities in Canada than firms located in a neighbouring province or territory.

We’ve seen some regional progress on this front with the New West Partnership between B.C., Alberta, Saskatchewan and Manitoba and last year the Atlantic Premiers signed the Council of Atlantic Premiers’ (CAP) Red Tape Reduction Partnership and opened the Joint Office of Regulatory Affairs. All moves aimed at streamlining the flow of business between provinces.

In fact, just last month at a CAP meeting in Annapolis Royal, in an under-reported but nonetheless significant development, Premiers McNeil, Gallant, MacLauchlan and Ball agreed to advance three specific recommendations to reduce trade barriers brought forward by business groups led by the Canadian Federation of Independent Business, the Atlantic Chambers of Commerce and Canadian Manufacturers and Exporters.

So while the Premiers seem to collectively understand internal free trade is an urgent priority, the Comeau case could force the issue. If the case is referred to the SCOC and should that ruling be upheld, it will have profound implications for not only liquor regulations, but it might well call into question the constitutional validity of the tens of thousands of other interprovincial trade restrictions, prohibitions and conditions on business now in place; restrictions which are estimated to cost our national economy upwards of $14 billion every year.

It’s also encouraging the Atlantic Premiers are asking business for concrete recommendations to address regional trade problems. CFIB believes this is another step in the right direction. We encourage business owners to bring forward red tape and trade issues which require attention and we will be monitoring to ensure governments respond with solutions. If you do business in more than one province and you’re running into red tape between jurisdictions, CFIB wants to know about it.

With liquor regulations under the microscope, perhaps now is the best opportunity to assist our burgeoning local wine, craft beer and boutique distilleries. These small businesses are providing important economic growth opportunities, especially in rural areas. Eliminating archaic, Prohibition-era liquor regulations is something the Atlantic Premiers should get out in front of now.

This could have enormously positive impacts downstream in the accommodation, food and beverage and tourism industries. More and more entrepreneurs in Nova Scotia are risking their own capital and creating ventures in these sectors which are showing tremendous possibilities. Government needs to create the right environment for business and then get out of the way.

Eliminating cross-border restrictions on trade of alcohol products being manufactured throughout our region is a good place to start looking for solutions. It is one example of a broader need to remove barriers to business. Allowing more competition and freeing up the flow of commerce by eliminating restrictions on internal trade is an idea whose time has arrived.

Originally published in the Chronicle Herald, June 7, 2016

 

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