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Real Pigs at the Trough

Author: Richard Truscott 2000/07/12
Maybe we should feed Big Sky's pigs the leftover potatoes from Spudco.

The Saskatchewan Government, undeterred by the failure of their Spudco potato investment, is once again playing venture capitalist and picking favourites with public money. This time it's a $15 million equity investment with Big Sky Farms to open new hog production facilities. It is the largest corporate welfare payment ever made by the Crown Investment Corporation.

The great thing about private enterprise is that investors weigh risk against reward, and if the private sector can't or won't fund a project there is probably a very good reason. But in Saskatchewan, where central planning, political intervention in the economy, and cronyism still seem like good ideas to some politicians, it is the government itself that provides the best reasons to avoid investing in the province. These are illustrated by the Big Sky investment:

If you are Big Sky Farms, why find investors who are willing to risk their money when the government is willing to risk taxpayer money on your behalf

If you are not as well connected as Big Sky, whose chairman is former NDP Agriculture Minister Darrel Cunningham, why invest in Saskatchewan at all, when the government is willing to hand millions of dollars to your competitors

Why invest in a province with a government whose cronyism is dangerous to your business, and pay ridiculously high taxes for the privilege, when the government is literally tearing up the road you need to conduct business and turning it into gravel

Spudco offers a good example of what can go wrong when government sticks their nose into business. With Spudco and the famous concrete potato barns, the government created an impossible artificial market for lots and lots of potatoes. When prices collapsed, the farmers couldn't afford the exorbitant storage fees for the potato bunkers, and the whole project fell, leaving private investors and farmers with a lot of potatoes to eat (at least no one starved).

Will the government-sponsored decimation of the potato industry be repeated with the hog industry Let's hope not. But the government is treading an interventionist path that has proven to be dangerous. And by making NDP-crony Darrel Cunningham's Big Sky Inc. the government's "prize pig", they have been fundamentally unfair to the rest of the pig industry, and have damaged the prospects of getting real private sector investment in their operations.

Government can help investment in Saskatchewan by making taxes lower, keeping the infrastructure (like roads) in shape, and by helping to sell the province as a good place to do business. But business decisions and investments should be left to business people and investors, not bureaucrats and politicians playing favourites with taxpayer's money. These are simple truths that this government has failed to learn in spite of the expensive lessons of Guyana, Channel Lake, and Spudco.

Oh well. At least for once the "pigs at the trough" are real pigs.

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