Friday, July 9, 2010

"Big Break" Golf Sale

The following is an article that I wrote for my regular column Fish to Fry in Atlantic Business Magazine which came out yesterday as an insert in the Globe and Mail... I titled this month’s article "Big Break" Golf Sale and most of my readers in Atlantic Canada probably won't get the "pun" in my mentioning the "Big Break”... our Province threw away $1,500,000.00 on a scheme that netted them no results as our Provincial golf business is down over 8% this year already and it's a shining example why Government shouldn't be in business... if you would like a free subscription to Atlantic Business magazine you can sign up at and you can view my past articles on line at

“Big Break” Golf Sale
by Tim Banks
Atlantic Business Magazine
August issue

The other day I passed a bright new heavy duty dump truck hauling a new asphalt spreader on a new low deck equipment trailer. I turned to see who this impressive gear belonged to and saw the PEI government’s logo front and centre. I called up one of my road-building buddies to taunt him about the competition only to learn what I saw was only a sample of what’s in the province’s arsenal.

Seems I’ve been too busy competing against Crown Agencies like the Charlottetown Area Development Corporation to notice our elected officials trying to become private enterprises – a mandate they weren’t elected to follow.

Our provincial government is into meat packing, apartment rentals, campgrounds and golf courses to name a few enterprises, all likely bleeding money without factoring in any capital return. I’m sure if we examined the origins of each of these endeavours, we might find a case for fiscal support from government among them. But my instincts suggest job creation from a patronage perspective was the prevailing factor above any long-term financial responsibility.

Look at Brudenell and Mill River golf resorts - each originally developed by government to foster Island tourism. Fair enough. But as golf became more popular, Crowbush Resort was added to reinforce PEI as Canada’s golf destination. Then Dundarave (at a cost in the excess of $10 million) somehow got added to what is now “Golf Links Prince Edward Island”, our very own public business enterprise, a decision that should’ve raised major red flags for taxpayers. Golf Links believes “their” courses are worth over $30 million. But they’re consistently losing $1.5 million a year without getting any capital return. In the real world a lender would have locked the gates long ago.

Their business solutions are not working and government courses are no longer leaders but competitors to more than 25 private operators they encouraged into the industry.

I’ve ventured into situations making investments that haven’t always worked out but was forced to face reality and cut my losses. With today’s ballooning public deficits it’s time government considered doing the same.

In the 1990s, Joe Ghiz was faced with tough decisions regarding a broken Crown corporation, Georgetown Shipyards, losing 600,000 taxpayers’ dollars annually. The shipyard had 40 employees, no business and was run by a politically appointed board. Ghiz sold the entire business to the Irvings for $1.

Employees cried foul, townsfolk talked devastation, the opposition had a field day and Islanders questioned how government could give away millions in assets to the wealthy Irvings who “would likely move the entire operation to Saint John.”

Well the world didn’t end, Joe got re-elected and eighteen years later the rebranded East Isle Shipyards employs 120, the Irvings have invested millions in capital improvements and Holland College operates a successful welding institute working closely with the shipyard. Joe’s brilliance turned that “buck” into a cool $30 million return that continues growing for Islanders. He was brave enough to give away a losing proposition knowing the entrepreneurial Irvings would stop the bleeding.

There is a serious lesson to be learned here.

Joe’s son Robert is now Premier and many think his tackling of health care and education will be his demise. But my money is on this young gun to come through with the tough creative changes we need our government focused on and I’m sure he’ll be re-elected. I’m hoping he’ll soon tackle issues he campaigned on, like our money-losing golf courses, to prove that tough decisions aren’t necessarily the end of the world as the media likes to play it. I like hearing the Premier talk about “short term pain for long term gain” particularly if he can pass this message on to bureaucrats, local governments and fellow Premiers.

I’d like to see a provincial golf course blow out sale or possible lease opportunity. Governments should stick to their core duties; education and health. They should sell assets outside of this core, putting them into the hands of entrepreneurs who will run them well, then use the profits to reduce debt, and put an end to continual increases in taxes and other various fees.

A government focused not on operating businesses but on increasing efficiency of core services would be fresh, welcome thinking.

I hope the next time I see that government asphalt spreader it’s on sale and my buddy is buying it so he can provide competitive prices to government instead of them trying to put him out of business.

Tuesday, July 6, 2010

"Wasted Days and Wasted Nights"... same old tune!!

What an eerie feeling heading into the bowels of IRAC last night to finish off another silly IRAC hearing... it was quite a show yesterday and I'm sure Freddie Fender would have been able to hum a few more bars of the "blues" at the end of the night had he been there...

The foolishness all started around 9:30 am when the 2 lady appellants were looking to have the hearing extended two weeks so they could review a few worthless documents that the City's solicitor gave them earlier in the week.... so the Commission had a big Pow-Wow and decided to give the ladies a few hours to review the documents and rescheduled the hearing for 1:30 pm at which time it gave me the opportunity to head over to our law firm and commence a civil action against the two ladies for filing such a frivolous claim... and to my surprise (and I didn't say delight) the document server actually served notice to the appellants a few minutes before the hearing recommenced which certainly was a little tacky... but it shouldn't have been a surprise to the ladies as I had previously let them see a draft of the action at our office a few weeks previous to the event but they "milked" it up and put on quite a front for "natural justice"... had they not tried to continue to "postpone" the process we probably would not have commenced the action.

In any event the show continued and the ladies presented their case that our proposed hotel was going to cause snow removal problems, block the sun from the front of their homes at certain periods, and that the City was in a conflict (or more like a conspiracy) as the City owns 15% of Charlottetown Development Corporation so they "must" be in a conflict... they didn't have anyone to support their claims or they didn't provide any new evidence other than pass over a few of my blog posts where I beat up on IRAC... as if that was some startling new revelation as I've been pounding away at that for years and I'm obviously not getting anywhere when the current Government sends in what I believe is a socialist or communist (I really can't make up my mind) to be the new Vice Chair...

After the ladies were done the City gave a rather good explanation as to how the application process took place and it was clear that the City took every effort to see the rules were followed... the notice of the project was mailed out to 72 property owners within the neighbourhood for their comments... the application then went through a Heritage Board process and meeting... then the application went to Planning Board for approval... and then professional City staff provided a full report to City Council who, like all the others, unanimously approved the application for our development.. by the time the City's expert gave her testimony it was time for supper so a good deal of time was spent by IRAC staff figuring out the complexities of how to reconvene the meetings for 7:00 pm when the Mall doors might be closed...

In any event I got to come back that evening and get some clarification from the City's development officer that there is absolutely "no bylaw" relating to "shadowing" a building which seemed to be of some interest to the Commissioners... I also had an opportunity to give APM's side of our approach in trying to develop a project in the Downtown Core that is in keeping with the objectives of the City's Official Plan and provides Jobs, Investment and Choice to our Community...

Well it may have been all for not as I got the big stare down and lecture from The Right Honourable Vice-Chair Singer Songwriter Allan Rankin that I was "out of line" in defending my right to invest in my Community and he was heading for the Supreme Court... it's the same old tune from The Don't Get Ahead Gang and maybe Wes the Cat and I can write them a new tune....