Debt? What debt?
The thing I don’t understand—one of many actually, but let’s start with this one—is whatever happened to the debt?
Whenever governments decide to put us on short rations—as the NDP did after it came to power in 2009, as the federal Liberals did in the 1990s—they do their best to frighten us into submission with the double-whammy bogeymen of unsustainable annual deficits and future-defying, long-term debt walls.
But then, as soon as they tame the former, they quickly forget the latter lives on.
How else to explain Darrell Dexter’s pre-budget good-news announcement last week? The province is declaring a balanced-budget dividend and will soon begin lowering the HST it raised to slay the deficit dragon Not to forget eliminating the large corporation tax, cutting the small business tax and throwing in a few tax-credit bones for good measure.
Tucked in a forgotten drawer of the next day’s budget speech was the reality that, despite declining annual deficits, the province’s net direct debt will actually increase from $13.3 to $13.7 billion by the end of the coming fiscal year.
That represents a $14,547 hobble for everyone of us, infants and the elderly included. And paying just the interest—$881 million a year, or about 10 per cent of what government departments spend on actual services—“crowds out government activities from sectors that it should be more active in, from education to social welfare to economic development,” as the government’s blue-ribbon economic panel of economic advisors succinctly put it back in 2009.
The NDP isn’t alone in ignoring the debt.
Tory leader Jamie Baillie, who hasn’t met a tax he wouldn’t cut, was puppy eager to slash the HST deeper and faster. Oh, yes, and balance the budget yesterday too. Debt? What debt?
Liberal leader Stephen McNeil wants the government to cut the gasoline tax.
Business leaders—who pretend they know how to read a balance sheet—clamoured for even more tax cuts… for themselves.
No one, it seems, wants to talk about the debt. Or, alternatively, restoring some of the public services cut in the name of restraint.
And so the debt grows. Until the next time a government needs to scare us with an even bigger bogeyman.
Copyright 2012 Stephen Kimber
Howling at the Moon
Why did Nova Scotia business wail wolf over first contract legislation?
On Dec. 14, 2011, Sobeys announced it was swallowing whole every one of Shell Canada’s 250 service stations east of Ontario.
No big deal. The day before, Empire, which controls the Canadian super-sized supermarket chain, had reported a quarterly profit of $78.1 million. Sobeys had the cash to buy whatever it wanted. Buying Shell’s stations offered the company “an exciting opportunity” to expand its own already expanding retail gas bar-convenience store network. Fair enough.
What was most interesting about the deal, however, was what was unsaid. Twenty-three of the service stations were in Nova Scotia.
Nova Scotia?
Five days before, the Nova Scotia legislature had passed “totally unnecessary” legislation Sobeys that declared would “do serious damage” to the province’s business investment climate. During a rare appearance before the legislature’s law amendments committee, the company hinted ominously that if the government passed its proposed business-busting bill, it would . . . well, “affect” how Sobeys (Nova Scotia’s largest retail employer) did business in its native province.
Take that, Darrell Dexter!
What had the NDP government done to wrap Sobeys’ knickers in a knot?
The legislation, known as Bill 102, provides for something called first-contract arbitration. It’s specifically tailored for those rare situations when newly unionized workers and their employers can’t reach a first contract themselves — perhaps because the employer refuses to negotiate, or the union demands the moon, or the company and workers simply aren’t used to bargaining collectively. If the two sides can’t settle their differences in a reasonable time, an arbitrator can impose a one-time contract.
Such legislation is commonplace. The first first-contract arbitration law in Canada was passed in British Columbia in 1974. “Employer-unfriendly” B.C., of course, is where Sobeys spent $260 million to buy up a rival supermarket chain in 2007. And Quebec — where most of Sobeys new Shell stations are located — has had such legislation since 1978.
Today, six provinces and the federal government all have some form of first-contract arbitration. Eighty per cent of Canadian workers, including the 15 per cent of Nova Scotians employed in federally regulated enterprises, are covered.
Those laws haven’t, as its Chicken-Little critics contend, encouraged workers to recklessly embrace evil unions. Canada’s unionization rate has been declining in every province for decades.
The law is rarely used. In Manitoba (the province on which Nova Scotia’s legislation is based), there were just six applications for first-contract arbitration from 42 newly unionized workplaces in 2009-10. Only two of those resulted in imposed contracts.
In fact, studies show the mere existence of legislation increases the chances of a negotiated contract and reduces work stoppages by a “statistically significant” 65 per cent. Not a bad outcome, surely.
And it isn’t just unhappy unions that apply. In British Columbia, fully one-third of arbitration applications come from employers.
So . . . why did Nova Scotia businesses wail “wolf” over first-contract arbitration?
“Fundamentally, every employer needs to be in the position of determining wages, benefits and working conditions,” the Nova Scotia Employers’ Roundtable says. A consortium of 21 of the province’s most powerful non-union employers (including Sobeys, Michelin, Irving, Nova Scotia Power, Wal-Mart Canada, Killam Properties and Oxford Frozen Foods), it wrote a lecturing letter to Nova Scotia Premier Darrell Dexter last Fall insisting that companies alone “ultimately have the right to say ‘no’ if it in good faith considers that doing otherwise would adversely impact its interests.” (They apparently haven’t read Section 2(d) of Canada’s Charter of Rights and Freedoms, which includes collective bargaining rights, but that’s another story.)
Businesses want governments to butt out of their business — except when they don’t. Then they want governments to do their bidding.
In Nova Scotia, for example, where employers have traditionally wielded unfettered control over their workplaces, powerful, and powerfully anti-union companies like Michelin have been able to bully governments on several occasions to rewrite provincial labour laws to make it impossible for the company’s workers to organize, let alone bargain for a first contract. Those laws are still on the books.
First-contract legislation is now law. Will companies like Sobeys stop investing because of it? Will the union hordes descend? Will the sky fall? Stay tuned, but don’t hold your breath.
From the March/April 2012 issue of Atlantic Business Magazine.
Copyright 2012 Stephen Kimber
John Risley responds to my Occupy column
John Risley, the president of Clearwater Fine Foods and a columnist for Atlantic Business Magazine, says I've got it all wrong when it comes to the Occupy Movement.
"In the previous issue of Atlantic Business Magazine," Risley writes, "my fellow columnist — Stephen Kimber — attempted to explain the Occupy movement. Unfortunately he got it all wrong. Rather, he completely missed the point, as do most ‘occupiers’ I suspect..."
You can read both my original column, "The Occupy Movement for business... in 15 minutes, more or less," here, and Risley's reponsse, "Missing the Mark," there.
Copyright 2012 Stephen Kimber
Sobeys CEO resigns suddenly
Sobeys this week made what the business website allnovascotia.com called a "shock announcement." Its CEO Bill McEwan will be stepping down this spring for unspecified "health" reasons.
Back in 2003, shortly after he assumed the reigns of the Nova Scotia-based supermarket giant, I wrote this profile of McEwan for the Globe and Mail's Report on Business Magazine.
Bill McEwan is like a kid in a candy shop. His candy shop. “Stand here,” he tells me, pointing to a spot just inside the entrance of this airy, modern, less-than-year-old Sobeys supermarket in Vaughan, a fast-growing suburban community north of Toronto. “We call this the vista.” His arm sweeps across the store from right to left. “A customer should be able to see every department in the store from this one spot.” More...
Copyright 2012 Stephen Kimber
Today’s lesson from the gospel of Peter Munk
In its traditional year-end orgy of page-filling lists of accomplished Canadians—young, old, corporate, literary—the Globe and Mail this year named Peter Munk, 83-year-old chair of “multinational mining giant” Barrick Gold Corp., a finalist in its nation-builder category.
Though born into a well-to-do Budapest Jewish family in 1927, the Nazi occupation wiped out the Munk fortune. Refugee Peter eventually ended up at the University of Toronto where he studied electrical engineering and launched his business career in the 1950s.
The Globe said it chose Munk for using his personal fortune “to support Canada’s role on the world stage by focusing his philanthropy on education and health care.”
“It is your obligation to give back as much as you have taken from a country,” Munk said—though not, it should be said, from the Canada he’d helped to build, or even about that part of Canada from which he had taken much.
Speaking from his winter home in Switzerland, Munk explained: “I've made some money and I wish to give it back.”
He has.
Last year, he gave $35 million—the U of T’s largest ever individual donation—to expand its Munk School of Global Affairs, which an earlier Munk gift helped establish. His name—and generosity—also graces the Peter Munk Cardiac Centre at Toronto’s University Health Network.
Intriguingly, the Globe’s gushing profile makes only glancing reference to one of Munk’s formative business experiences, Clairtone Sound Corp.—an experience for which Nova Scotia taxpayers paid dearly.
In 1958—with $6,000—Munk started a small, innovative Toronto-based hi-fi manufacturer called Clairtone. Its success prompted Nova Scotia’s industry-parched Stanfield government to lure the company here with grants and incentives. The dream—to sell to the world.
The dream fizzled. By the time the nightmare ended, Clairtone had saddled Nova Scotia taxpayers with $20 million in debt.
Peter Munk? Well, we know he learned some lessons, which he clearly applied elsewhere. While he’s never forgotten Toronto's contribution to his success, Munk appears to have long since wiped Nova Scotia from his memory—and philanthropy—map.
Pity.
Pity too that Nova Scotia has never learned its Clairtone lesson. We’re still a sucker for someone else’s big dream.
***
Related: Peter Munk profile
Copyright 2011 Stephen Kimber
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About
STEPHEN KIMBER, a Professor of Journalism at the University of King's College in Halifax, is an award-winning writer, editor and broadcaster. He is the author of one novel -- Reparations -- and seven non-fiction books.
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