Ontario open for business, but not for everyone

The Conservatives’ interventionist practices are undermining their free-market principles.

During last June’s election campaign, Ontario’s Progressive Conservatives promised to “open Ontario for business”. Since then, they’ve indeed adopted several policies with pro-business appearances. But the policies’ details often include government intrusion into what should be free-market decisions.

The most recent case concerns the province’s legislation on cannabis retailing that passed last week. The Conservatives initially had taken a business-friendly approach to this. In August, they’d cancelled the ex-governing Liberal’s floundering plan for government-owned cannabis stores. Instead, they promised to open pot retailing to businesses. That was a welcome move toward free-market principles.

But their law intervenes in the market by arbitrarily favouring some companies over others. It limits licensed cannabis growers — but no other firms — to a single retail outlet each.

That’s a huge setback for the big growers. Some were planning provincewide chains of perhaps a hundred stores each. The Conservatives’ decision means the firms with the greatest cannabis expertise are all but barred from retailing it here.

It’s a mystifying choice. These are Canadian firms producing products in Ontario, often in Tory-blue rural ridings. They’re leaders in an expanding, potentially global, industry. Why handicap them on their home turf ?

Beer retailing provides another example. One of Doug Ford’s first acts as Premier was to reduce the minimum legal beer price from $1.25 to $1 per bottle. That fulfilled his promise to allow “buck-abeer” pricing. Ontario consumers hadn’t seen that in a decade.

The move was largely symbolic, even nostalgic. Brewers hadn’t been clamouring to cut their prices to 2008 levels. Only three small firms adopted the lower price. But Ford’s declaration nonetheless marked a small reduction in government interference in business.

But then the Premier went farther. He promised priority shelf space and promotion for any brewers providing such dollar-priced beer.

Producers normally pay for such marketing perks. Premium beer brewers were consequently annoyed at the special treatment for bargain brands. Why should the government subsidize some ales over others?

And if the Conservatives must play favourites, why not pick more promising products? Canadians increasingly prefer craft beers over mass-market suds. Since 2008, sales have increased 14 per cent for dark beer and 16 per cent for premium lager. By contrast, they’ve fallen 9 per cent for value-priced beer.

Then there’s auto retailing. It wasn’t surprising when the Conservatives cancelled Ontario’s electric car rebate program. The rebate had its environmental merits. But it involved taxpayers subsidizing private purchases.

However, the Conservatives again added a preferential twist. During a phase-out period, they agreed to still pay rebates on cars already ordered through dealerships. But they excluded orders placed directly from manufacturers; i.e., from Tesla.

Tesla argued the solitary exclusion was unfair. An Ontario court agreed. It forced the Conservatives to include Tesla in its rebate phase-out.

Retailing may seem particularly bewildering for the Conservatives. But the biggest damage to their business reputation instead involves electricity. In July they unilaterally cancelled 758 renewable energy contracts, mostly without compensation.

The old Liberal electricity policy was shockingly inefficient. It’s great the Conservatives are replacing it. But can’t they do that without punishing those who had signed contracts in good faith?

The massive cancellation implies Ontario isn’t a place where contracts are honoured. Using legislative power to avoid compensation claims adds to the heavyhandedness.

Both actions signal “investor beware” rather than “open for business”.

It’s disappointing, really. All these policies featured free-market aspirations. But those were tarnished by the government’s subsequent meddling in the details.

Of course, the Conservatives have only been ruling for a few months. As they gain experience, and if they listen to feedback, they might develop more consistent policies. But the trend so far is concerning.

Will the Conservatives truly open Ontario for businesses? Or only for those businesses that fit their agenda?