Fall Back Up with Jeremy White

Jeremy White and his wife Melanie were looking for a summer retreat in Cape Breton after honeymooning in 2008. What they found were a new way of life and a successful small business.

Big Spruce Brewing sprung from a passion for craft beer and a serendipitous real estate buy in Nyanza.

Jeremy’s background was in international engineering and while living in Nicaragua, they stumbled upon an opportunity to relocate to Nova Scotia.

He had been a home brewer for years, and have wanted to scale his production up to a commercial level for a long time.

With favourable condition for growing hops and an industry that has been taking off in the region, they opened up Nova Scotia’s first certified organic on-farm brewery. Big Spruce quickly established itself as a local favourite.

Jeremy has made his views known broadly about the public policy challenges facing the craft beer industry publishing this open letter to the people of Nova Scotia.

In our wide-ranging conversation, we talk about the challenges of starting the brewery, his ongoing frustration with regulatory issues and his views on the future of craft brewing and the Atlantic Canadian economy.

I spoke with him in the brewery in the beautiful setting overlooking the Bras d’Or Lakes.

Click here to listen

What the parties are saying about small business in the Nova Scotia election

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As an advocate for small business, job one is getting issues in front of politicians. Prior to this election, the Canadian Federation of Independent Business (CFIB) presented each of the parties in the Nova Scotia election a small business “platform’ outlining key areas our 5,200 members in Nova Scotia have identified as priorities.

We sent out a survey to the leaders and they responded. While it wouldn’t be appropriate for CFIB to endorse any of the party’s positions during a campaign, it seems clear each of them understand the importance small- and medium-size business plays in the economy. It’s also clear their approaches differ, sometimes dramatically.

The areas we focused on in the creation of the platform were tax relief, regulatory reform (or “red tape” reduction), spending restraint and support for SME innovation activities to increase productivity and competitiveness.

You can find our platform here, the survey for the leaders here and the responses we received on these issues from the parties, by clicking on their logos.

Atlantica  Green Party of NS nslplogo NDP  Progressive_Conservative_Party_of_Nova_Scotia_2016

If you operate a business in Nova Scotia and are still considering your vote in this final weekend, it might be worthwhile to have a quick look at these documents. You can glean from them the importance each of the parties place on the issues we presented.

CFIB establishes its advocacy agenda based on responses to the many surveys we do of our membership to ensure we are focusing on the priorities that are important to small business. It’s our hope that any government elected on Tuesday, will do the same.

The future of our region depends on the prosperity of our small- and medium-sized businesses. We are not only the engine that drives the economy but are also the first to be impacted by bad government policy. I would encourage you to take few moments and have a look at where each of these parties intends to focus should they be given the opportunity to govern.

Cap and Trade for Nova Scotia Still Fuzzy for Small Business

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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.

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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.

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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.

Economic barbed wire

Barbed Wire

Steps are being taken by Atlantic Canadian political leaders to dismantle a virtual wall erected between provinces over more than a century.

In perhaps one of the most memorable moments of his presidency, in 1987 Ronald Reagan stood before the Brandenburg Gates in Berlin and implored Soviet Union leader Mikhail Gorbachev to “Tear down this wall!” The purpose of the speech was to compel the Soviets to submit their economy to accountability, transparency, and greater freedom. While there may be lingering questions about the impact of Reagan’s rhetorical flourish, there’s no doubt the subsequent destruction of the Berlin Wall was transformative for the European economy.
While not the magnitude of Reagan’s oratorical overture, steps are being taken by political leaders in Atlantic Canada to dismantle a virtual wall erected between provinces over more than a century by creating a new office to begin pulling apart the red tape that often acts like economic barbed wire between provinces. Mention of internal trade barriers is frequently met with confused stares. After all, there are no border guards on the Confederation Bridge or economic sanctions against the province of Nova Scotia. Our members tell us that these barriers take the more insidious form of unnecessary and burdensome regulation.
Whether due to political interference, parochial interests, or simply grown from the nature of our different bureaucratic cultures, red tape inhibits businesses that aim to work in other jurisdictions by creating a prohibitive and expensive maze of differing rules, requirements, regulations, and practices.

From a business perspective, why do New Brunswick and Nova Scotia have different requirements in fall arrest requirements when gravity appears to act with remarkable similarity in both provinces? Why would first-aid kits in each province require different contents or trucks require different wide-load signage? Some of the examples border on the ridiculous, but either by default, or in some cases by design, all of these differences add cost, drag productivity, and ultimately make things more expensive for consumers.

The recent signing of the Comprehensive Economic and Trade Agreement (CETA) with Europe further highlights the need to move on freer trade within Canada. In some cases, the new agreement means that European companies will have access to opportunities across Canada that companies in a neighbouring province or territory may not. With a more global business environment and greater opportunities for free trade, we can’t continue to ignore the impact that our own provincial differences have on our economic competitiveness.

In fact, a recent poll conducted for the Canadian Federation of Independent Business (CFIB) by Ipsos-Reid shows that the majority of working Canadians agree it’s time for premiers to work together to remove impediments to the flow of goods, services, and workers across provincial and territorial boundaries.

With that in mind, CFIB has been cheering some of the recent work being conducted by both the Council of Atlantic Premiers and the Council of the Federation to help tear down those walls. Earlier this year, Premiers Gallant and McNeil took the significant step of creating the Joint Office of Regulatory and Service Effectiveness between New Brunswick and Nova Scotia. More recently, Prince Edward Island’s Premier Wade MacLauchlan and Newfoundland and Labrador’s government are showing interest in the process.

All of the Atlantic provinces stated in January that they would create an Atlantic Red Tape Reduction Partnership that would help streamline business requirements to create a more competitive economic environment within the region. Our neighbours are important trading partners, and we encourage these bodies to set meaningful regulation reduction targets, reach them, and report publicly on their achievements.

Further to regional work, the Council of the Federation (Premiers) has also been the scene of some encouraging progress. While we’ll have to wait until next spring to see what progress is made with reforms to our main national trade agreement, the Agreement on Internal Trade, we did see a positive step with the premiers signing the Provincial–Territorial Apprentice Mobility Protocol at their recent meeting in St. John’s.

Most notable about this new mobility protocol is that it follows the principle of mutual recognition. Rather than a lengthy bureaucratic process of trying to harmonize each and every regulation across each jurisdiction, the premiers simply said, “If it’s good enough in Province A, it’s good enough for Province B.” This is the gold standard for modern trade agreements and is precisely the direction we want our governments to go when removing barriers.

While the stakes may not seem as high in Atlantic Canada as for the Soviets in 1987, reality shows that we’re facing many daunting economic challenges and unfavourable demographics. With the world of trade changing around us, it’s becoming increasingly important that we work together to break down barriers between our provinces to make the best use of our economic and human resources. If we don’t, we risk isolating ourselves behind our walls of red tape.

Jordi Morgan is the vice-president, Atlantic Canada, and Erin McGrath-Gaudet is the director, P.E.I. and intergovernmental affairs, for the Canadian Federation of Independent Business. CFIB represents the voices of 11,000 small and medium-size firms in Atlantic Canada, with 109,000 members across Canada.

This piece originally appeared in Progress 101 issue online, by subscription and on newstands across Canada

Parsing Nova Scotia’s Partial Budget

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Left to right, Nick Langley, CFIB Director Provincial Affairs Nova Scotia, Jordi Morgan and Erin McGrath-Gaudet, CFIB Director Provincial Affairs for PEI and Intergovernmental Policy at Nova Scotia Department of Finance 2015-2016 Budget lock-up, April 9, 2015.

 

Finance Minister Diana Whalen delivered a budget which she says will set a path for economic growth. Perhaps, but there’s still a lot of work to do, especially getting public spending under control and providing much needed clarity on taxes. The Canadian Federation of Independent Business (CFIB) was very pleased to see there was no increase in the small business tax rate…yet. Unfortunately there are still many question marks as the Finance Minister is looking to further review taxes in the months ahead.

This budget also did nothing to address many of the recommendations highlighted by CFIB and the Tax and Regulatory Review including the reduction of personal income tax, elimination of “bracket creep” (indexation of tax brackets with inflation), raising the small business tax threshold or reducing the general corporate tax rate.

Another disappointing feature was the reduction of the Non-eligible Dividend Tax Credit to 3.5 per cent, from 5.87 per cent. This will extract another 30 million from small business owners. The action was taken to correct what was essentially an oversight of not aligning the tax credit with the small business rate which should have been done for the past three years. This means many small business owners who pay themselves in dividends will be hit hard in 2016 by these changes. CFIB hopes the government will offset this tax increase by raising the small business tax threshold in the next budget and implementing small business tax reductions when the budget is balanced.

The budget also included some much needed trimming of the public service through the re-structuring of departments. The Finance Minister indicated a new Ministry of Business, recommended by CFIB, the Tax and Regulatory Review and the Ivany Report, is designed to save money, streamline services and encourage more private-sector economic activity. We are hopeful this department will operate using the principle that changes to the tax system must be predictable and consistent to allow time for small business to transition and avoid the chaos created with the removal of the Film and Digital Tax Credits and the Dividend Tax Credits.

This new department will also include an office to deal with regulatory reform which we hope will provide direction and political accountability to red tape reduction. At one time, Nova Scotia was a leader in reducing red tape, it’s hoped this new structure will again both measure and publicly report its activities. CFIB will be monitoring this department closely and hope to work with the government to see meaningful reform.

CFIB has also been advocating for a reduction in inter-provincial trade barriers to cut down on regulatory interference when doing business between the Maritime Provinces. A commitment was made prior to the budget by the Premier that this new office will work closely with New Brunswick to address these concerns. We hope the Premier and the new Minister will also be reaching out to their counterparts in PEI and Newfoundland and Labrador.

So, while small businesses are pleased to see some financial restraint, CFIB remains very concerned about the level of spending in the public service in Nova Scotia. Public sector wage and benefits are outpacing economic growth leaving a deficit and debt burden which is clearly unsustainable. Had previous the government not committed to these generous settlements, the Finance department indicated Nova Scotia would be reporting a $200 million surplus this year.

Over 81 percent of small business owners when asked what the Nova Scotia government should do to balance its budget said reduce the size of government and 61 per cent said reduce spending. With significant labour negotiation ahead, CFIB is recommending the government hold the line on public sector wage and benefit settlements.

Want to help entrepreneurs? Make Nova Scotia a leader in regulation again, and make it the law.

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Regulation is necessary. Some regulation is quite positive, supporting efficiency, business and consumer protection and ensuring the health and security of citizens. Business owners understand this and have no objection to needed rules being administered fairly. Unfortunately, small and medium size businesses are feeling the brutal impact of unnecessary regulation and red tape and it’s killing the entrepreneurial spirit in Nova Scotia.

The Canadian Federation of Independent Business (CFIB) has released its 2015 Red Tape Report Card, comparing the relative merits of efforts to reduce red tape across the country. Nova Scotia’s mark? A dismal D-. This mark may deserve an asterisk but that depends on what action will be taken by the government over the next few months.

Last week, an announcement from the office of Minister of Municipal Relations and Service Nova Scotia, Mark Furey, showed some signs the importance of doing something about measuring red tape and being held accountable for the damage it causes to small business is taking hold in the public service.

Service Nova Scotia will now have two branches, one focused on service excellence and the other focused on program modernization and red tape reduction. A Deputy Minister has been assigned and it looks like an administrative framework is being created to start tackling the problem.

In fact, a great deal of work has already been done with Service Nova Scotia’s Access to Business (A2B) initiative over the past couple of years, unfortunately there’s no way the public can measure either its impact or effectiveness. While these moves are very encouraging, tinkering with the bureaucracy is simply not enough. Regulatory reform must be politically championed and enshrined in legislation.

In both last year’s pre-budget submission and our Tax and Regulatory Review submission, CFIB provided the provincial government with clear criteria in five specific categories used to grade regulatory accountability. It includes political leadership, public measurement, putting constraints on regulators, legislating the commitment and demonstrating momentum in red tape reduction.

When Laurel Broten presented her Tax and Regulatory Review in December, almost every suggestion brought forward last spring by CFIB on red tape was adopted as a recommendation. The government is now holding another round of public consultations on the report. On the regulation piece, CFIB is asking the government for prompt adoption of these sensible improvements and make it law.

We’re asking the Premier and the Minister of Finance to step up and state clearly this is a priority for government and bind any action with the discipline of legislation. Not only would this be a low-cost political win, it would be a meaningful improvement in conditions for small and medium size business in Nova Scotia.

Of all the issues of concern to Canadian small business owners, government regulation and paper burden is second only to the overall tax burden. We are very pleased to see Minister Furey working on the mechanics inside Service Nova Scotia, but when the next budget is delivered, both the Premier and the Minister of Finance must also step forward and plant the flag for regulatory excellence in this province.

Additionally, as cabinet prepares for the spring budget, every Minister around the table should be arguing to do what is necessary to show the Nova Scotia government takes red tape as seriously as it is taken by our entrepreneurs.

Small Business Tax Hike Sticks Out Like A Sore Thumb

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Nova Scotia’s Tax and Regulatory Review included a number of sound recommendations for the McNeil government to consider. In fact many of the recommendations put forward by CFIB in our submission can be found throughout the report.

What is completely incongruous is the suggestion that big business should benefit from a corporate tax reduction paid for by an astronomical hike in the small business tax rate. CFIB has fought to have the small business tax threshold raised to $500k from $350k since the Dexter government reduced the threshold. As identified in the report, having the lowest threshold in the country was a clearly identifiable disincentive to growth. Why, in the same breath, the author would suggest raising the small business tax is puzzling.

This plan highlights a corporate tax cut for big business at the expense of small business. This is not a drawn conclusion, it states in the report the small business tax hike is actually designed to pay for the corporate tax cut. Raising the small business rate from 3% from 8% will give Nova Scotia the honour of having the highest rate in the country. It will deter small business start-ups, act as a disincentive to immigration and lower Nova Scotia’s growth prospects.

CFIB welcomes the inclusion of many of the recommendations in this report. There are many wise and strategically sound measures. As mentioned, raising the small business tax threshold brings Nova Scotia in line with the rest of the country. Expanding the small business Equity Tax Credit may prove useful to start-ups. Seeking more interprovincial cooperation on this and other regulatory matters is also helpful.

On red tape, the report recommends naming a Minister responsible for Regulatory Modernization, creating an Office of Regulatory Modernization and launching a three-year plan to eliminate ineffective, out-dated or inefficient regulations. Nova Scotia used was a leader in regulatory reform but much of that momentum has been lost in recent years. It’s encouraging to see government taking the impact of red tape seriously so that our businesses and government can be more productive.

Regarding personal taxes we’re pleased to see a recommendation to boost the basic personal amount (the amount Nova Scotians get to keep before they begin paying taxes) and eliminating bracket creep by introducing automatic indexation so that the personal income tax system is adjusted each year with the cost of living.

How to create a better environment for small business in Nova Scotia is outlined very clearly by the Ivany Report. Much of what was included in this latest review reflects those findings and the author should be applauded for listening carefully to input and applying it to this document. In contrast, a small business tax hike sticks out like a sore thumb. CFIB will be fighting the adoption of such a strategy at every turn and strongly encourages the government to dismiss any advice in this report that would further disadvantage small business in Nova Scotia.