Government investment ends as financial disaster
by Fred McMahon
The Moncton Times and Transcript, The Halifax Daily News
Come ‘n listen to my story ’bout a man named Jed
Poor Mountaineer barely kept his family fed
An’ then one day, he was shootin’ at some food,
An’ up thru the ground came a bubblin’ crude.
Oil that is! Black gold! Texas tea!
— From the Ballad of Jed Clampett
You all know the story of Jed Clampett, the hillbilly who struck it rich. As you’ll recall, the “Kin-folk said, ‘Jed, move away from there.’ Said Californy is the place y’oughta be, so they loaded up the truck, and they moved to Beverly. Hills that is!”
Now, let’s imagine Jed had called on the Nova Scotia government to manage his resource wealth. Well, somewhere halfway to Californy-Missouri, perhaps-state troopers would have pulled over Jed’s truck.
Seems it had been repossessed. When old Jed got back home, he’d find himself locked out of his dilapidated cabin. Seems there was a lien on it for $700 million.
That’s what the Nova Scotia brain trust managed to do with this province’s resource wealth. Nova Scotia Resources Limited (NSRL), a provincial crown corporation, is now nearly $700 million in debt. How do you turn offshore wealth into a barrel of red ink?
Nova Scotia taxpayers, through our government, guaranteed NSRL’s borrowing, so we’re all on the hook for that $700 million. If we ever needed an object lesson on why government should get out of managing the economy for our good, NSRL provides that lesson.
But, we’ve already had plenty of such lessons. How about the rich economic development subsidies for the Westray mine? How about the many millions of dollars to bankrupt or disappeared high tech companies? How about the $32 million in bad loans, including $12 million for Westray, the provincial cabinet wrote off in December, 1998, and then back-dated to the 1997-98 budget so they wouldn’t show up in this year’s faux-budget.
Even after all that backdating, Economic Development still had $15 million in bad loans to write off in the 1998-99 budget. Still, the bad loans didn’t actually show up in the budget. They came to light in June, a month after the budget numbers were released. The budget showed Economic Development loan losses of $600,000. But, why get concerned? Losses were merely 25 times the projected amount.
Yet, the bosses at economic development will tell you their work is key to Nova Scotia’s prospects.
They claim the wisdom to pick winners of the future. They know who to benefit with subsidies and, to put it bluntly, who to screw. How would you like to run an unsubsidized firm when your politically-connected competitor gets bags of taxpayer money to put you out of business?
NSRL’s $700 million disaster is just part of the billion dollar surprise package John Hamm inherits. Sydney steel-another provincial crown corporation, one which has eaten through $6 billion (in today’s dollars) of your money – will cost at least $300 million to close.
There’s more. Former NSRL president Jim Livingstone has predicted NSRL could eat through a billion dollars of taxpayer money itself by the end of the day. The Liberal government fired Livingstone in 1995 for planning to take NSRL public. The government ultimately gave him $500,000 of taxpayers’ money to go away so we could continue to lose taxpayers’ money through NSRL.
Then, there’s economic development in Cape Breton, and not just those miracles of job creation, Sysco and Devco. The RCMP have alleged Liberal operatives tried to shakedown Techlink International for one million shares in exchange for a $1.4 million loan from Economic Development.
Techlink refused and Economic Development turned down the loan. Then Economic Development Minister Manning MacDonald claimed the loan was rejected because of murky “outstanding issues.” RCMP Cpl. Ian Black says there is “compelling evidence” the loan was turned down because no payoff was provided. This is allegation. Stay tuned for the trial.
But, surely this is enough – loan losses, crown corporation losses, conflicts of interest, charges of corruption – to convince John Hamm the Nova Scotia government should stop managing the economy for our good. We’ve been looted enough.