Prairie Centre Policy Institute Weekly Commentary WHERE DO WE GO FROM HERE October 27, 2003 Title: Capital Punishment? If Saskatchewan is to grow and be prosperous, it must be capable of attracting private investment capital. And you don’t have to be an economist to know that it is virtually impossible to attract investment when you keep biting the hand that feeds you. A healthy private sector and business friendly environment are often the first things the private capital market looks for when allocating their investment dollars. They tend to shy away from Saskatchewan, where investment funds are often allocated by the government rather than the market. Investors don’t like it when politics replaces return on investment as the basis for allocating funds. The problem with government intervention is you end up with investment projects that often reduce rather than enhance wealth because resources are wasted on political boondoggles like Spudco, mega bingo, the land titles registry and other such expenditures that seem to be favoured by the current NDP administration. No where is the effect of government intervention more evident than in the Western Canadian oil patch. For years we’ve been told that Alberta is wealthy because it has oil and gas. And, as you can see from the attached map, that statement appears to be absolutely true. The oil and gas fields do stop abruptly at the Saskatchewan border. The question is, however, do they stop because: a) that’s where the oil and gas ends; or, b) the industry does not want to invest in Saskatchewan. Obviously, it’s investment and not the resource that ends at the border. In fairness, I must point out there is a difference between the geological formations of the two provinces. As a result, the sweet light crude oil found in Alberta is worth more and costs less to recover than and the heavy crude found in Saskatchewan. But, that is not necessarily the main cause for the cut-off along Alberta’s eastern border. According to industry insiders, the real culprit is Saskatchewan’s Oil and Gas Conservation Act. This Act gives the minister responsible absolute power over the oil and gas industry. It states, in part, that the minister has exclusive jurisdiction over all matters pursuant to this act. It also says the minister may reconsider any matter that has been dealt with and rescind, alter, amend, suspend or confirm any decision or order made, approval granted, or permit or license issued. Furthermore, there is no appeal from an order or decision of the minister and all decisions, findings and orders pursuant to this Act are final and conclusive. They are not reviewable in any court of law, and no decision, finding or order of the minister shall be restrained by injunction, prohibition or other proceeding or be removed by certiorari (appeal to a higher court) or otherwise by any court. Now, Minister Cline has stated he would never use this power and I believe him. But, I’m not a big investor either. It has been widely reported that many of those who do have the capital and desire to invest purposely avoid Saskatchewan. The reasons for this are closely related to the perception that public policy in this province is largely driven by a long-standing contempt for capitalists and private sector investment. Success is a dirty word and we don’t want any of that here. This anti-business attitude was ignited by the 1933 Regina Manifesto, which created the CCF along with their now infamous declaration that they would not rest content until capitalism was eradicated. Fuel was added to the fire when the CCF joined with the labor unions to form the NDP. It was in full fury when a Saskatchewan NDP government nationalized the potash industry by expropriating private property. And, this sentiment is not exclusive to New Democrats. Given its political history, no wonder investors are more than a little reluctant to put their money in Saskatchewan. I read somewhere that any government that destroys capital markets will pay a severe price for their folly. Do we call that Capital Punishment? Allan Evans Allan Evans is a marketing consultant and the Business Manager for the Prairie Centre Policy Institute. “Where Do We Go From Here” is a feature service of the Prairie Centre”