Rhino's Ramblings - Scotch On The Rocks

By Robert Thomas – Opinion\Commentary

It is one of those issues where I have personally been hearing a lot of feedback both pro and con on and that is – what are Councilors Scott McMann and Brian Swanson thinking by opposing the three year property tax exemption for a new distillery?

In a nutshell people are asking two questions – how can they oppose an initiative set to bring in millions of dollars in foreign investment as well as potentially 15 new jobs? And the other one is why should any company receive such a tax holiday?

For the pro-side on the issue it would appear the two Council members have lost touch with the reality which the city is facing. That is the local economy is in really rough shape and there needs to be stimulus applied to get things moving.

While on the con-side the response is what is the City doing giving out such gifts? They cannot see a justification of something “so rich” given to any company.

And there is a third factor out there – albeit not as large – but what about the property and business owners down on High Street West who took a financial beating last year? The City was asked for property tax relief there but Council turned down the request due to the financial implications. Does this send a mixed message out there?

In the opinions expressed by the two councilors the City already has a very generous incentive program and by doing this one deal, as well as reviewing and revising the program, we are opening up the flood gates to similar requests.

As Councillor McMann put it if you say yes to the distillery group how do you say no to others who might approach the City and demand the same treatment?

Is the City opening the floodgates to not just foreign but local investors as well who will also request multi-year tax holidays to invest, upgrade existing facilities and build in the city?

On the other side of the argument lies the perceived desperate need to really do something to kick start the local economy. People need jobs and the city needs growth. The time for talking about it and putting people to work has arrived if not today but months and years ago.

The picture which is being painted is not a great one but it is indeed the reality Moose Jaw is facing.

Gone are the glory days of the past when the city could boast having some great amenities - many admittedly subsidized by senior levels of government – as well as believe it or not a vibrant manufacturing base.

Moose Jaw use to be the home of some very unique manufacturing and processing firms over the years.

At one time we had one of the largest meat packers in the country employing hundreds more than now, we made uniforms for major companies all over North America and believe it or not we also made windows which were installed in buildings all over North America.

But most of it now is just a memory.

There is still a pork plant here. But there was a time we did strive to bring back the glory days of pork processing but we found ourselves on the losing end of an incentives bidding war as Brandon won the major new pork plant.

It leaves me thinking are we returning to the bad old days when we had to bribe firms to set up shop in the city? Do we run the risk once any firm do set up under what are described as “generous” terms that once the incentives are gone that any company – not just the proposed distillery - simply disappear unable to compete without a subsidy?

Economic development for the city has drifted from industrial development of the 1960's to one of a lower paying service industry based economy.

Now is it just a Moose Jaw phenomenon? No its something many Prairie towns on both sides of the border are facing. We are in an economy which is not only digitized but also global in scope.

The days of simply supplying regional farmers with many of the things they needed has diminished as farms have grown larger and rural centres are in many cases are skeletons of what they once were. We have seen the rise of Amazon and other online retailers putting enormous pressure on our brick and mortar retailers.

In many ways we need to embrace the digital world of commerce and that means looking for investment and new jobs from all over the globe.

We now live in a global world with federal and provincial policies geared more towards immigration and with it foreign capital. Opportunities we maybe don’t see or take for granted here locally are with a second set of foreign eyes being spotted.

It’s starting with restaurants, hotels and even convenience stores as foreign entrepreneurs are looking for opportunities. Some of it is immigration investment driven while other foreign investment is driven because there is true opportunity spotted.

And in that spirit Royal Distilleries from India has decided to set up a small distillery in Moose Jaw. They are going to make spirits not only for the local market but they are looking at exporting globally.

I did some sneaking around and from what I’m hearing is Royal Distilleries have much bigger plans for the Friendly City. It’s not simply going to be a place where they manufacture spirits, there are long range goals such as a distribution centre and further expansion.

Remember this is an established and respected company in India and they have a money making formula based upon high quality product and aggressive marketing. They are not a new entrant to the highly competitive market of alcohol production they are experienced, skilled and above all they are succeeding.

They have searched elsewhere and after looking over other locales have tentatively decided to establish a small distillery in the city. Albeit they are just requesting one favour when it comes to their property taxes over three years until they get revenue flowing in.

Now this column is not totally about the right or wrong of Council approving the three year property tax exemption granted to Royal Distilleries but rather it also highlights some of the underlying political tones which brought about the 5 – 2 vote.

For instance take a look at at Councillor Crystal Froese said to justify the three year tax exemption .

What Councillor Froese astonishingly did was something highly uncharacteristic and that is take a very negative view on the state of affairs in the city.

Instead of the usual everything is great message she often uses at Council what she Councillor Froese did in actuality was adopt a very negative stance regarding the outlook in the city.

What Councillor Froese stated is Moose Jaw is stagnating in both its economic growth and population base.

There was none of what many call the usual boosterism or “rah rah” in her reasoning for supporting the tax exemption.

Although I personally believe her evaluation to be accurate as well as the true reality it is something, as far as I can remember, Councillor Froese has never before admitted to at a public meeting – especially one which is televised.

In many ways it did in fact leave me thinking in one small part of my mind was this Councillor Froese or Councillor Swanson speaking?

It might sound bizarre but over the past two Civic Budgets these are some of the talking points of everybody's most lovable naysayer Councillor Brian Swanson when it comes to property tax increases.

The poor local economy has businesses and home owners at the breaking point is usually a Councillor Swanson story line.

Now did Councillor Froese ‘s words about Moose Jaw's stagnation help her in this debate? I believe they did.

With that said though, and I am only guessing, but who wants to bet Councillor Swanson doesn’t use what Councillor Froese said in the still upcoming Budget Committee meeting(s) to press his concerns home?

But in reality does it pass the Baloney-O-Meter? Or is it mere political posturing based on misconceptions?

The population growth concerns are easily illustrated by the 2016 Federal Census.

Despite a growing urban foot print of new housing and commercial development it’s obvious it’s not being accompanied with a growing population but other realities.

In the 2016 Census Moose Jaw's population was recorded at 32,724 an increase of only 160 people from the 2011 Census figures when 32,564 lived here. Now if you look at the historic trend it is a population actually less than in the past. For example in 1966 Moose Jaw had a population then of 33,417 which in the minds of many seniors are the “Glory Years” for the city. The Post War Generation which saw the population grow percentage wise from 1951 - 1961 by over 30 percent.

Moose Jaw's Population

Population of Moose Jaw According to the Census

If you want to take a further look at the city's population we have almost literally sat at that 33,000 population mark – with some variations up and down - since 1971. The growth hasn’t been there for close to 50 years.

Population wise it leaves me thinking if we are seeking growth we need something to dynamite us out of that rut. The good paying government and industrial jobs of the 1960's when the City's population increased over 30 percent is a good example of how growth in good paying jobs drove growth in population.

On the economic front I can tell you I have a lot of anecdotal information from contractors, building suppliers and others telling me the building trades, and their better paying jobs, are down.

What I have been told is many contractors in 2018 did about 40 to 50 percent of the work they did in 2014. Some of it was the economic downturn some of it the new six percent provincial sales tax applied to their industry.

It is with this backdrop or should we say stark realities the majority of Council approved Royal Distilleries request.

The bigger issue out there now, which needs to be answered, has Council opened the floodgates? Is everyone considering investing in existing buildings going to be requesting the same treatment? And if so is it a good thing or a bad thing?

Is this just a one off request and we won’t be seeing any more? Is it going to stimulate others to invest and hopefully grow the local economy?

What about the new southeast industrial park? Could it turn into the City is going to have to give away more than they presently are prepared to in order to get tenants?

Additionally how far do you extend the tax break? If I want to redevelop an existing property is there a way for me as an existing business to qualify? And is this fair if I am a competitor of an established local business?

Although the issue seems to be cut and dry with the City opening it’s doors to hopefully further foreign investment, especially in the area of value added agriculture production, will it in fact be the right course?

Personally I truly believe which side an individual sits on this issue depends if you are a pessimist or an optimist to some extent.

And is taking a negative tack when it comes to selling a move politically going to impact in other areas? Can those who supported and spoke out about poor growth – including Mayor Frasier Tolmie – be taken seriously if and when they speak positively in those areas?

Given the true state of the local economy in my opinion it appears in many ways to be a winner here is hoping it’s a home run which all of a sudden doesn’t blow foul.