Brian Lee Crowley

Provincial liquor monopolies’ Achilles’ heel

If you’ve ever wondered why it is that provinces, who have no constitutional authority to regulate either interprovincial or international commerce, seem able to stop you from buying directly from your favourite Scottish distiller or French vintner or the micro-brewery in the province next door, go to the head of the class. That is the real question we should be asking as we contemplate the future of the provincial liquor monopolies. The place to go to defeat these quaint holdovers of a more moralistic and censorious age is not the province. It is Ottawa first, whose legislation confers on provinces their local monopolies, and the courts second, because it is far from clear that Ottawa has this anti-free trade power to give. Read all about it in my latest column for the Ottawa Citizen and other Postmedia papers.

Column: Why government and gambling do not mix

In my latest column for the Ottawa Citizen, Calgary Herald, Vancouver Sun and other Postmedia dailies I examine the issues raised by governments’ enthusiasm for casinos. Politicians have allowed their addiction to the ready cash that casinos provide to distract them from vital issues such as where the money comes from and the ethics and economics of a government being a self-interested promoter of gambling.

Governments should get out of gambling

Brian Lee Crowley, Ottawa Citizen, July 19, 2013

Gambling can be a terrible addiction, made worse by government’s addiction to money.

Ottawa and Toronto are only the latest communities to get caught up in the rush to expand access to gambling. Casinos are all the rage — in addition to Ottawa and Toronto, many aboriginal communities want them, for example. (Of the over 70 casinos in Canada about a fifth are aboriginally owned.) Once Detroiters saw their money going across the river to Windsor’s, they built three.

But while the discussion about casinos usually focuses on where to put them, and how to divide up the spoils, too little attention is paid to the huge issue they represent for governments and fairness. As one participant in a conference on gambling observed a few years ago, “the Canadian government gambling model focuses on revenue generation and glosses over harm.”

If you’ve ever sat in a bar watching punters feed loonies into video lottery terminals (VLTs) you’ll know that a lot of gambling has nothing to do with the Hollywood image of tuxedoed high rollers betting vast sums on a roll of the dice. Much of it is cheap and sordid, vulnerable people enticed to throw away the rent money in the eternal quest for the Big Score.

Knowing that the industry preys on human weakness, governments sensibly used to make it hard to gamble. Casinos were only available in distant places like Reno and Las Vegas, or restricted to private clubs to ensure that low-budget punters didn’t get in to squander that week’s pay. Because they didn’t depend on them for revenue, governments could be the disinterested regulators that potentially dangerous activities require.

Then they discovered what the Mob has known all along — that gambling generates huge amounts of cash for those who own or control casinos. After that the jig was up. Governments’ insatiable search for money, born of an inability to control their own spending, unleashed a wave of state-promoted gambling dens to relieve the credulous of their cash.

By a sleight of hand every card sharp ought to admire, these governments shifted the discussion from preying on human weakness to all the benefits that could be created by politicians getting their hands on casino cash cows. Think of all the great public purposes that could be achieved, the good works, charities and sports teams supported, the “community reinvestment” and so forth. And all without raising taxes.

But in the rush to cash in the chips, governments forgot that it matters enormously to the integrity of public spending how the money spent is raised. Doing good with the money is not enough.

It is the job of government to decide what public services the community needs and can afford but also to ensure that the money raised to pay for those services meets certain standards. We endlessly debate the fairness of the tax system, the regressive nature of sales taxes, how the tax burden should be shared out between individuals and corporations, how much harder the income tax should hit those at the top of the income scale than at the bottom. We worry about how user fees will affect low income people. Ability to pay is a crucial part of the debate over taxes, as Margaret Thatcher learned when she was driven from office in part by a decision to impose a tax (the “community charge”) that took no account of ability to pay.

Somehow gambling revenues escape this scrutiny. Yet if politicians are genuinely convinced that the things they spend gambling revenue on are legitimate public purposes, then they should use the established tax system to collect those revenues, making everyone contribute their fair share under the law, and not just those vulnerable to the siren song of Lady Luck.

Remember that no matter what the politicians promoting gambling say, gambling revenues from local casinos by and large comes from local people, not outsiders. The casinos don’t generate new wealth for the community. They take money from locals who would have spent it on other things, on clothes and rent and food, and exploit human weakness to transfer that money into the hands of those same politicians to dispense on projects that they think make them look good.

Yes, we’ve always taxed vice (think tobacco and alcohol) and we should continue to do so. But clearly the scale of revenues governments get from controlling (and not just taxing) gambling have become so large that they no longer focus successfully on the damage gambling does. Governments that should be arm’s length independent regulators of gambling in the public interest are now shabby self-interested enablers. Everything we used to understand about how to limit the harm gambling does has been tossed out the window by politicians in the pursuit of cash. Shame on them.

MLI Study in the Vancouver Sun: First Nations support key to future of pipelines

Following the release of MLI’s latest study The Way Out: new thinking about Aboriginal engagement and energy infrastructure to the west coast, part of our ground-breaking series Aboriginal Canada and the Natural Resources Economy, my project co-leader Ken Coates, and I write in the Vancouver Sun that First Nations support will be one of the most important aspects for any energy project in Canada.

First Nations support key to future of pipelines

BY BRIAN LEE CROWLEY AND KEN COATES, VANCOUVER SUN MAY 31, 2013

Just a few weeks ago, proponents of pipelines between the Prairies and the West Coast were preparing for the worst. Adrian Dix, the apparently victory-bound leader of the B.C. NDP, had already declared Enbridge’s Northern Gateway would be dead on his watch and, mid-election, pronounced a similar sentence on Kinder Morgan’s Trans Mountain pipeline expansion plans.

The subsequent Liberal upset victory, which many analysts attribute to the NDP’s fervent opposition to wealth-creating pipelines, has given the Northern Gateway project a partial reprieve. But despite strong federal backing and now a pro-growth provincial government, the project hangs by a thread.

Premier Christy Clark has significant reservations, and knows that proceeding would attract cries of outrage from environmentalists. B.C. has its own problems with Alberta, and the souring of relations between the two western provinces over pipelines has the potential to cause great economic harm to the country. Neither issue, however, is the greatest barrier to the project’s success.

First Nations along the pipeline route hold the hammer on this project. If they remain opposed to the Enbridge proposal or to the idea of energy corridors to the coast, no pipeline will be built. Full stop. First Nations have primary social and cultural standing in this debate. If they cannot be convinced that the pipeline serves their interests and provides adequate environmental protection, the project is not going to proceed.

Equally important, First Nations have growing legal clout, best embodied in the Supreme Court recognition of the government’s duty to consult and accommodate aboriginal interests, which could hold up construction indefinitely. Even with strong federal government support and an approved environmental plan, the Northern Gateway Project likely cannot proceed.

With strong aboriginal support, however, much becomes possible. The most intense environmental activists will oppose Northern Gateway, no matter what. More practical environmentalists and conservationists, including the B.C. public, realize that resource development can be properly and safely managed. First Nations’ support, with its environmental credibility, would likely weigh heavily with them. With aboriginal backing, we think a majority of British Columbians can be brought on board.

The First Nations’ power over development arises out of a complex web of unresolved land claims, legal victories, constitutional recognition of aboriginal rights, and indigenous self-government. Aboriginal Canadians are now indispensable partners in resource development – including major infrastructure – and this reality is not going to change.

Nor is this a bad thing. Most First Nations are supportive of development, provided it proceeds on their terms and with appropriate returns in the form of jobs, revenue and business creation. There are dozens of major projects underway across the country in real partnership with First Nations, bringing substantial benefits to local communities, Canadian business and the national economy.

How will this work for Northern Gateway? Some First Nations along the pipeline route, including the Haisla on whose traditional lands the Kitimat terminus is located, are willing to proceed with properly managed development projects. First Nations along the route will have to agree to participate in Northern Gateway, ideally as equity partners (the Enbridge proposal includes 10-per-cent aboriginal equity ownership). In addition to equity participation, a proper arrangement would involve a commitment to the world’s highest standards for environmental protection along the corridor and on the coast, plus arrangements for aboriginal business development and job training, and sustained revenues for First Nations communities.

Assuming Northern Gateway gets suitable environmental and regulatory approval from the current Joint Review Process, a new approach to First Nations participation will still be needed. That almost certainly means more substantial equity ownership (not least because the equity must be shared among so many First Nations) and aboriginal involvement in environmental and project management and oversight. First Nations must be assured that they will be primary beneficiaries from a project that crosses their lands, bringing opportunity and employment instead of the unregulated socio-economic change and environmental risk they too often experienced in the past.

The way we develop resources in Canada is changing profoundly. Like it or not, Northern Gateway is a symbol for the new order. The project’s current trajectory stokes vigorous aboriginal opposition that alone could be enough to stall or even kill a project that could create vast wealth for Canadians.

A much better outcome is possible, one that meets the objections of most who oppose the project on environmental grounds and that assures aboriginal people of sustained and long-term benefits from the construction and operation of the pipeline. Northern Gateway could, with political will and openness to new arrangements, be transformed from a symbol of the new-found power of aboriginal people to stop vital national projects into a model of the real partnerships that henceforth will be the indispensable key to responsible resource development in Canada.

Brian Lee Crowley is managing director of the Macdonald-Laurier Institute. Ken Coates is the Canada Research Chair in Regional Innovation at the University of Saskatchewan. They are co-authors of The Way Out: New thinking about Aboriginal engagement and energy infrastructure to the West Coast, just released by the institute and available at macdonaldlaurier.ca.

Brian Lee Crowley
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