for economic freedom
Updates from the Prairie Centre Policy Institute from Regina, Saskatchewan.
Hot off the press! Don Baron's Jailhouse Justice
web posted August 19, 2002
Open for business - Saskatchewan farm land ownership
By Ken Ziegler
Since first being introduced in 1974, the law governing the ownership of Saskatchewan farmland has been changed many times. Until recently, farmland ownership laws have been much more restrictive in Saskatchewan than has been the case in either Manitoba or Alberta.
Saskatchewan has restricted ownership of Saskatchewan farmland by Canadian residents to a maximum of 320 acres. Neither Alberta nor Manitoba has similar restrictions. All three provinces restrict ownership of farmland by non-Canadian residents. Saskatchewan limits ownership of farmland by non-Canadian residents to 10 acres, whereas Alberta has a limit of 20 acres and Manitoba has a limit of 40 acres.
Saskatchewan has suffered a steady decline in rural population, an aging farm population and a restricted number of willing investors in agriculture. These factors, coupled with a growing demand by residents from other provinces to invest in Saskatchewan farm land, has recently moved the Government of Saskatchewan to undertake a review of the farmland ownership rules.
The Standing Committee on Agriculture conducted hearings with respect to the agricultural land holding provisions in Saskatchewan. A common theme in witness submissions to the Committee suggested that farmland ownership rules need to change to address fundamental concerns in rural Saskatchewan and be competitive with neighbouring jurisdictions. The Committee considered these submissions and recommended changes in the law to the Government of Saskatchewan.
The Saskatchewan Farm Security Amendment Act, 2002, is the result of this process. This Act has been passed by the Saskatchewan Legislature and will be proclaimed law this fall. The Act now provides for the following:
A person who is a Canadian citizen or is resident in Canada (183 or more days per year) is no longer restricted in the amount of Saskatchewan farm land he or she can own;
Similarly, Canadian companies involved in the business of farming are not restricted in the amount of Saskatchewan farm land they can own; but,
Non-resident persons and non-Canadian owned companies are still restricted to 10 acres of farm land, unless special permission is granted by the Farm Land Security Board;
A non-Canadian owned entity may own up to 320 acres of Saskatchewan farm if the majority of the issued voting shares are legally or beneficially owned by Saskatchewan residents.
Over the past few years, there has been a growing trend among agribusiness in both Alberta and Manitoba to expand into Saskatchewan. Many factors have contributed to this, but the significant difference in land values has certainly driven much of this trend. In some cases, this investment has been in the form of an expanded land base intended to complement the existing farm operation; in other cases, it has been in the form of a relocation of part of the farm business or the establishment of a new operation in Saskatchewan. We can only speculate on how the changes to the Act will impact on this trend, but it is clear that the unrestricted ability by non-Saskatchewan residents to now invest in Saskatchewan farmland will facilitate those individuals and companies seeking to expand or establish new agribusiness in Saskatchewan.
There was substantial evidence submitted to the Standing Committee on Agriculture that much of the new agricultural capital (both human and monetary) in Saskatchewan will come from Europe. This prompted the committee to recommend another significant change to the lawone that would allow non-Canadian residents to own up to 320 acres per person. The government of Saskatchewan chose not to include this recommendation in the Act, but with the winds of change blowing across rural Saskatchewan it remains to be seen whether further changes will be made to farmland ownership in Saskatchewan in the near future.
Ken Ziegler is President of the Prairie Centre Policy Institute.
web posted August 12, 2002
Ponzi was a piker
By Kevin Avram
Almost fifty years ago, Clarence Manion wrote a wonderfully insightful piece about Charles Ponzi*. He called it, "Ponzi was a Piker." It was the story of how an unfunded government pension system is as sleight-of-hand as any scheme concocted by the notorious Ponzi.
Ponzi was an Italian immigrant living in the US who claimed he could double anyone's money in 90 days. His simple plan was to use money from future investors to pay a fat dividend to current investors. Things were humming along for Ponzi right up until August of 1920. That's when government authorities seized his bank accounts. The next day Ponzi was arrested. He stoutly maintained his innocence, stating that he'd paid everybody he'd promised to pay, and that if left alone, he would continue to do so.
At Ponzi's trial the judge didn't mince words. He said that Ponzi's scheme was "the old fraud of paying the early comers out of the contributions of later comers... that Mr. Ponzi took advantage of a weakness and willingness of the community to be victimized is apparent... [for] so long as money continued to flow in, he could pay the first investors with receipts from the latter... [He was] robbing Peter to pay Paul..."
After serving many years in jail, Ponzi was released and deported back to his native Italy. The irony is that he was hardly out of the country before the government that had imprisoned him adopted a national pension scheme patterned after his original sleight-of-hand arrangement. It was called the US Social Security System. Some years later our own Canadian government embraced a similar scheme, calling it the Canada Pension Plan (CPP).
The fact that the Canadian and US governments cannot be prosecuted for fraud means that unlike Ponzi, they can get away with a Ponzi-like plan. And because a national government can make participation in the scheme mandatory, people are in it whether they want to be or not.
That the Canada Pension Plan is a colossal Ponzi scheme may surprise a lot of people, but it is absolutely true. Its viability depends entirely on the willingness of future wage earners to pay for the pensions of those who are retiring today. The program is a giant financial vortex that has an unfunded liability of $442 billion.** That is the amount of money it doesn't have but is obligated to pay.
To be sure, a Ponzi-like pension scheme looks attractive if there are 8 or 10 people working for every retiree, but when birthrates fall and only one or two people are working for every retiree, the only way a retiree's pension can be paid is if workers' contributions represent a huge percentage of their earnings. In Sweden for example, one source indicates that unless its pension system is made solvent and self-supporting, workers will eventually be paying 36% of their wages in pension contributions. Sweden is not alone.
In 1929, Chile was the first country in the Western Hemisphere to establish a government-run pension scheme. Twenty years ago it became the first country to fully reform such a plan when it devised a system that ensured every pension dollar paid by a worker could be invested in a retirement account that the worker and his family owned. Subsequent to Chile's groundbreaking pension reform, in half or full measure, numerous countries initiated pension reform or are considering ways to do so.
With an eye to ensuring that Canadian retirees, workers, and their families enjoy a stable economic future, Ottawa would do well to consider such reforms. After all, a fully funded pension system in which every wage earner and his or her family owns real assets is much more desirable than a government administered arrangement with an outstanding unfunded liability of $442 billion.
Kevin Avram sits on the Prairie Centres Board of Trustees.
* Source: The Manion Forum of Opinion Broadcast, February 5, 1956. The entire text of Manion's original piece can be seen at the Ideas on Liberty Website at www.fee.org
** The 18th Actuarial Report of the Canada Pension Plan states that the CPP has assets of $44 billion and outstanding liabilities of $486 billion. For more information see the full report (note pages 100-113) at: www.osfi-bsif.gc.ca/eng/office/actuarialreports/pdf/cpp1801.pdf
*** For a backgrounder on Chile's privatized pension system see www.enterstageright.com/archive/articles/0997privsocsec.htm
web posted July 29, 2002
U.S. farm bill cultivates a crop of grief*
By Kevin Avram
The US-based Internet website free-market.net regularly considers a number of policy issues and options. In a recent article it looked at the implications and cost of the new US Farm Bill. As Canadian politicians, farmers and agricultural organizations still consider how to respond to the Bill, it's worth pondering what US analysts are saying about the policy and the government that hatched it. In part, the article read:
The [new US] farm bill is so over-the-top that even some members of the Senate -- a body that rarely shows enthusiasm for reining-in government expenditures -- are showing signs of embarrassment. Senator John McCain called the legislation "an appalling breach of federal spending responsibility."
Why such embarrassment? Well, the Congressional Budget Office says the legislation increases agriculture spending by $82.8 billion over the next 10 years. That's nearly an 80 percent hike over the cost of existing programs, and almost $10 billion more than the bill was originally expected to siphon from taxpayers' pockets.
That's an awful lot of money to be ponying up at a time when the federal budget surplus has evaporated and Americans are shouldering the cost of a "war on terrorism."
Just as perverse, says Jonathan Tolman of the Competitive Enterprise Institute, is the inevitable result of guaranteeing farmers high prices for their products. His 1995 study found that agricultural subsidies harm the environment by stimulating unnecessary production at prices that ignore real-world market conditions. Subsidies give incentives to bring marginal land into production and to get crops with intensive use of fertilizer and pesticides. Tolman suggested that "a fifty percent reduction in subsidies would decrease per acre chemical use by an estimated 17 percent and fertilizer use by an estimated 14 percent."
Worse, the new spending is exactly what Congress tried to eliminate just a few years ago. The 1996 "Freedom to Farm Act" was intended as a first step in weaning U.S. agriculture off government subsidies so that farmers could compete and succeed -- or fail -- in a free market just like the majority of Americans.
In a desperate play for votes in rural swing states, the new farm bill returns to a system of guaranteeing farmers high prices for their products -- a promise that can be made only when backed by the wallets of taxpayers who enjoy no similar security.
The farm bill isn't just a burden to Americans at tax time -- it's a menace in other ways, too. According to David Orden and Robert Paarlberg of the Cato Institute, the bill "will damage U.S. positions in international trade; foreign countries will respond by maintaining restrictions on the importation of American-made goods and will continue, and even increase, subsidies to their own farmers."
The European Union is already poised to retaliate against the U.S. for steel tariffs. Now the EU says it's prepared to challenge the subsidies before the World Trade Organization, raising the prospect of a nasty trade war.
Kevin Schmiesing of the Acton Institute, an organization that examines policies from a moral and religious perspective, worries that maintaining farmers as federal supplicants breaks down their relationships with their communities. It prevents the development of local social connections that might deal with real problems better than distant bureaucrats ever could. "Governmental subsidies gloss over individualized needs and chafe at the natural bonds of community, discouraging the recognition of interdependence among farmers that could go a long way toward providing a safety net in times of hardship," he says.
So the new farm bill drains taxpayers in order to keep farmers on the dole so that they'll use marginal farmland to grow crops for which there's no real market. In the process, the federal government gains control over our pantries, the environment suffers, communities erode and a trade war simmers.
That's quite a crop of grief that Congress has cultivated.
*See: CORPORATE WELFARE: FARMERS ON THE DOLE at www.free-market.net (Free-market.net is a project of the Henry Hazlitt Foundation.)
Kevin Avram sits on the Prairie Centre's Board of Trustees.
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