Category Archives: Nova Scotia Public Policy

Fall Back Up

This week, I have two more episodes of Fall Back Up for your weekend listening pleasure.

 

Bill CarrIn the first I talk with actor, commentator, motivational speaker, restorative justice specialist and now president of the Professional Speakers Federation, Bill Carr. I’ve known Bill for many years and we cover lots of territory in our conversation, from growing up in rural Nova Scotia and his athletic and theatrical career at Acadia, to restorative justice practice and how to give a better speech.

 

LisaAlso this week, entrepreneur, designer and philanthropist Lisa Drader-Murphy. After building a successful career in the textile business in Calgary, Lisa decided, along with her partner, to move their family to a renovated 18th century sea captain’s estate in Falmouth, Nova Scotia. I met her there to talk about why she decided to move to Nova Scotia and what it takes to build a successful business with no debt, on retained earnings and find ways to give back.

 

You can either click on the images above to go to my PodBean site or play the podcast directly from the Soundcloud players below. I’m still testing each of these platforms and if you have any comments on which work best for you I’m all ears…so to speak.

Again, if you have any suggestion of people you think might be good to interview for this podcast, just let me know on the contact me page up top…

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Winter is Coming

Game of Thrones

Nova Scotia’s electoral Game of Thrones is in full swing and while it may lack the dramatic flair of the HBO series, it has one thing in common, winter is coming. Unfortunately, the parties are either unaware of it or are seemingly oblivious to a stark reality.

All of the parties have launched their offensives by flinging open the doors to the treasury, each with new and creative ways to spend our tax dollars with the greatest political efficiency.

The number one priority for CFIB’s 5,200 members in Nova Scotia, consistently, is a reduction of the overall tax burden and the clearest path to this is through alignment of public sector wages and benefits to private sector norms and an overall reduction of the size of the public service. In other words, reduce the cost and the size of government.

For those who argue we have already been dealing with austerity budgets, here’s the reality. Since 2007 Nova Scotia government spending has risen from $7.3 billion to $10.5 billion, an increase of 43 per cent. Additionally, we’ve seen a whopping 22.5 per cent increase in our debt from $12.4 to $15.2 billion over the same time period. All this with an increase of only 16 per cent in the CPI (inflation) and our population flat-lining at 1.5 percent. This is not restraint and certainly not “austerity” by anyone’s definition.

Spending restraint is becoming more important than ever before. Perhaps because the weather is warming our politicians are floating sunny prognostications but there is an inevitable, relentless sociological cold front headed our way. Stretching our Game of Thrones metaphor, let’s call it “The Wall”.

According to Statistics Canada, that “wall” can be found in baseline population predictions. In 20 years, those over 65 years of age will make up fully 30 per cent of our population. A great majority of those will be out of the workforce and needing higher levels of healthcare. Keep in mind, in 2013, that same cohort made up only 17 per cent of Nova Scotia’s population.

By 2038, the forecasts indicate our median age will be nearly 50 and our overall population is expected to decline to under 934,000.

So who will carry additional tax load? If you’re a voter in your 20’s and 30’s, have a look in the mirror.

While efforts are being made to increase immigration, and claims are being made about having the largest population “ever”, the fact remains, unless we make some fundamental and dramatic changes to the way our government spends, we will be faced with some very, very difficult decisions indeed.

Absent in all of the spending promises in this election is a discussion of any long-term fiscal planning to deal with this issue. By long term, we don’t mean 4 years out, we mean 25 years out. Intergenerational forecasts which will set sustainable spending patterns.

Where are the real plans to deal with the inevitable decline in revenues from a shrinking and aging workforce? While some creative gains are being made through immigration, they are incidental and the problem is not getting people to Nova Scotia, it’s keeping them here. More than half of those who arrive leave within five years.

It’s not much wonder as we’ve been struggling with economic growth and carry the some of the highest tax burdens in the country. Our public service is nearly 5 points larger than the national average and their salaries and benefits are completely out of whack with private sector norms. Is anybody connecting the dots?

Meanwhile, the front pages are littered with political spending sprees.

Small business owners want politicians to have the courage to not just stop the bleeding, but begin to fix the problem through an actual reduction in the size of government, lowering the costs of doing business and a putting laser-like focus on better regulation and more efficient service delivery.

If not, we are sentencing our next generation to a cold, bleak future, on the other side of the wall.

This originally appeared in the Chronicle Herald, May 13, 2017

Fall Back Up

Jordi FBU Cover 3.01

This week on Fall Back Up, I have two podcasts for you to enjoy with two exceptional people.

The intent of this podcast is to is to provide you with engaging and thoughtful insights into Atlantic Canada through conversations with business leaders, innovators and high performers.

First up this week, one of Atlantic Canada’s digital pioneers. Back in the early 90’s Malcolm Fraser saw a business opportunity in this thing called the Internet. Over the years he built Internet Solutions Limited (ISL) into one of Atlantic Canada’s largest web marketing and development companies, but as you’ll hear, it wasn’t without some bumps in the road.

MalcolmIMG_2060-1000x464-1401900483He is an active member of the business community and has been recognized as one of Atlantic Canada’s Top 50 CEOs and is now the Vice President and Managing Director, Halifax at FCV Interactive.

In this episode we have a wide ranging conversation about the early days of the Internet, what business needs to know about adapting to new digital marketing environments, and what’s really going on in the background while you’re scrolling through social media.

The second episode is with Dr. Jeremy Koenig, a fascinating guy who I first met when I was looking to get in shape to run the Bluenose Marathon in 2012. While I never became marathon man, he did manage to whip my 50 year old carcass into the best shape it had been in for 30 years.

Jeremy is a geneticist and athlete. He got his PhD in biochemistry and molecular biologyJeremy_New specializing in genetics. As he tells it, he ran track because it fed his need to train.

After teaching nutrigenomics at Mount St. Vincent University and training high-performance athletes, in 2014, he launched Athletigen in cooperation with the high tech incubation hub Volta Labs. Athletigen uses proprietary software which looks at an athlete’s DNA to uncover data about strengths, weaknesses and ideal diets.

In another wide ranging conversation, we talk about how he landed in Halifax, how DNA analysis could be a game changer in personal health care and thoughts on success and failure.

If you have any feedback, comments, or suggestions, please be sure to leave a quick note on the comments section of my site.

To access the podcasts, there are a few options here. You can click on the pictures above, take this link to my PodBean site and you also can now also find Fall Back Up on  Stitcher or  iTunes.  The Soundcloud versions are below. I’m testing to see what works best so let me know if you have a preference of platform.

Have a great weekend.

 

Nova Scotia’s pre election budget: anger and gratitude

delorey mcneil
Nova Scotia Finance Minister Randy DeLorey looks on as Premier Stephen McNeil speaks in Nova Scotia Legislature 

Premier Stephen McNeil must be listening to Tony Robbins. One of the tenets of the motivational speaker’s philosophy is it’s impossible to be angry and grateful at the same time. McNeil’s recent budget leverages the idea in spades.

CFIB members have been lobbying for tax relief over the last four years. Finance Minister Randy DeLorey delivered one of our key asks, to raise the small business tax threshold from $350,000 to $500,000, giving small business owners the capacity to retain more money in their business to innovate and create employment. Check that box.

Additionally, we’ve been adamant about providing some relief on personal income taxes, especially so lower-income earners can keep more of their earnings.

By raising the basic personal exemption by up to $3,000 for those earning less than $75,000, many low-and-middle-income earners in the province will see more of their paycheck, a much preferable mechanism than raising the minimum wage.

As we’ve argued for years, as a poverty-reduction measure, minimum wage is ineffective because government becomes the principal beneficiary through higher taxes. With this adjustment to the basic personal exemption, thousands more lower-income Nova Scotians will pay no provincial tax at all.

Another positive benefit of the budget for small business owners is the provincial government’s measurable commitment to reduce red tape. This is a principal file for CFIB. We have been supportive of the efforts of this government to put in place the structures to begin reducing unnecessary regulatory burden. Nailing down a target of $25 million in cost to business is the right thing to do.

CFIB members will be grateful for these improvements, which may temper taxpayer anger heading into the predicted provincial election. While these measures are sensible, and should be commended, there is still much work to be done on tax reform to put Nova Scotia in a competitive position.

We remain concerned, however, about the propensity of government to create boutique programs to benefit specific sectors. While there are programs geared toward small business growth in areas such as export and innovation, historically the programs go largely unnoticed or unused.

Leaving more money in the hands of small business owners to reinvest, without forcing them through the rigours of bureaucratic process to access benefits is a far more efficient and desirable approach.

Preparing for an election, it’s not hard to see why this government has chosen the former option. It provides more control over who will be the principal beneficiaries and constituencies. That is a simple political calculation.

Many small business owners remain frustrated by high taxes and governments that seem out of touch or ambivalent to their needs. This is a good start, but it’s only a start.

It has been a very long time since the people in Nova Scotia have seen any meaningful tax relief at all. A morsel can seem like a feast for the starving. Now that the math is done in the Department of Finance, it will, presumably, be put to the people of Nova Scotia to determine if they are indeed grateful or angry.

This post originally appeared in the Chronicle Herald, April 29, 2017 on day prior to the call of the 2017 provincial election.

Cap and Trade for Nova Scotia Still Fuzzy for Small Business

cap-and-trade

The Nova Scotia government’s decision to go it alone with cap-and-trade to put a price on carbon raises more questions than answers.

This spring, government released a discussion paper, looking for feedback. They gave less than a month for responses and you needed a degree in environmental science to make any sense of what was being asked.

At an information session, executive director Jason Hollett of the climate change unit tried valiantly to outline a coherent picture, but he was working within an unreasonably tight timeline and without all the tools. In spite of a commendable effort, many left the session scratching their heads. Under questioning, somewhat ominously, he referred to the scheme as “a big regulatory beast.”

Without much heavy industry, Nova Scotia has few large greenhouse gas (GHG) emitters. Our coal-burning generating stations are pumping out the lion’s share (44 per cent). The transportation industry creates 27 per cent, followed by commercial and residential heat (combined 13 per cent) and the oil and gas industry (five per cent). The remainder comes from waste, agriculture and other industry.

For years, Nova Scotians have been paying through the nose to achieve GHG reductions through transition to renewable electricity generation and efficiency. We can pat ourselves on the back. After coughing up the highest power rates in the country over the last 10 years, our renewable portfolio has grown from seven to 27 per cent, exceeding our reduction targets.

Apparently unsatisfied with this progress, the Trudeau government, riding its mandate to legislate away climatic catastrophe, told Nova Scotia to put a price on carbon by 2018 or we’ll do it for you. The McNeil government initially balked, then came up with what it felt was the best option, a go-it-alone cap-and trade-system.

Using cap and trade, the premier successfully avoided the “carbon tax” narrative, opting instead for what appears to be a more saleable version.

The proposed Nova Scotia cap-and-trade model is fairly simple, but its administration is expected to be complex and therefore, presumably, costly.

Government will cap the amount of GHGs emitted into the atmosphere, hand out free credits for that tonnage to this handful of larger polluters and they can trade among themselves. When someone needs more, they can buy in this tiny market of emitters. How that will affect price is unclear.

A central tenet of carbon pricing is revenue neutrality. But with this plan, at least for now, there is no clarity in respect to dollars changing hands or how it will affect the price of electricity or fuel. Other questions: Will the incentive to be greener simply be higher energy and transportation costs? What would be the offset?

Moving ahead without the required evidence in respect to cost and competitiveness will frustrate business owners. In spite of a stated intention by government to measure and cost all regulation prior to application, none of these calculations are yet available.

While public servants are trying to align regulations between provinces to break down trade barriers, Nova Scotia’s approach (in spite of the premier’s openness to having the other Atlantic provinces jump on board) could result in two, three or four carbon pricing schemes in the region.

cap and trade chart

CFIB members support environmental initiatives. Seventy-nine per cent believe it is possible to grow the economy and protect the environment at the same time. But 80 per cent say government must consider the cost to small business before implementing a mechanism to price carbon. That means measuring and communicating real economic costs and environmental benefits and establishing a reasonable window for consultation and implementation.

In light of the work by this government to improve the regulatory environment, introduction of a “regulatory beast” feels counter-intuitive and environmental and economic impacts are still fuzzy. For something of this size and importance to be a cost of doing business in Nova Scotia, we need clarity.

This originally appeared in the Chronicle Herald, April 26, 2017

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.

 

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