http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/08/12/kevin-libin-when-government-creatures-turn-on-their-masters.aspx
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If the fate of the Canadian Wheat Board means little to the majority of Canadians not involved in the production, sale or export of grains, it does at least provide an edifying lesson about the dangers in building powerful government creatures. For three years now, the Conservative government has tenaciously worked to try and end the CWB’s monopolistic, “single-desk” marketing power over Western wheat and barley. Though the board was created by Ottawa, has been funded by Ottawa, and is granted its extraordinary market-control powers by dint of federal legislation—permitting it even to jail farmers who independently sell their wheat without its permission—the board has nevertheless become what some critics describe as a Frankenstein agency. Turned on its master, it has aggressively and bitterly fought Ottawa at every step to resist deregulation. A few weeks ago, the federal government won a quiet (because it went largely unreported) and significant court decision that asserts its right to tell the marketing board what to do. As usual, the Wheat Board is vowing to keep resisting. And at stake is whether governments have the right to control the very agencies they create.
The Wheat Board argues that it is independent of government, owned and controlled by farmers—a line it has advocated since Ottawa began permitting farmers some, but not all, of the board’s 15 directors. This was made possible, though, only because the Liberal government of the day allowed it to be possible. But when the federal government held a plebiscite in 2006, surveying barley producers on whether they would rather have “marketing choice”—that is, the option to sell to the Board, as is now mandatory, or to sell to another buyer of their choosing—or stick with the single-desk system, the CWB rebelled. It undertook an intensive political campaign to promote the single-desk side.
The Tories didn’t like that, and issued an order in council directing the Wheat Board to stop spending money on politics, since the money was being taken from farmers’ funds, and not all farmers were in favour of the CWB’s position. In fact, most weren’t: 62% voted for marketing choice anyway. But the Board claimed the government had no right to tell it how to operate. Last year, a federal court agreed. In essence, the judge said Ottawa could only prioritize the board’s spending if there was a shortage of cash (there wasn’t). And the ruling, chastening Stephen Harper’s Conservatives, made headlines across Canada.
A few weeks ago, that ruling was overturned by an appeals court. The government, the three justices ruled, had the right to order the CWB to pretty well do whatever it wanted, under Section 18(1) of the Canadian Wheat Board Act, which states that “the Governor in Council may, by order, direct the Corporation with respect to the manner in which any of its operations, powers and duties under this Act shall be conducted, exercised or performed.” Directors must consider these orders, whatever their own opinions, to be in the “best interest” of the board. The Board, they added, “is a creature of statute and, as such, it has no powers, rights and duties save those bestowed on it by the Act.” As much as the CWB may claim to be a farmer-run, independent agency, unanswerable to Ottawa, this is, according to the high court’s ruling, a delusion on the part of directors who apparently repeated it to themselves so often that they came to believe it. According to the law, the CWB is the official property of the agricultural ministry.
Not surprisingly, the CWB, even today, insists differently. And it now says it will to use the revenues it takes from selling Western farmers’ wheat and barley to battle the government again, having pledged recently to take the case to the Supreme Court of Canada—so it can argue in favour of using Western farmers’ wheat and barley to continue to fight against allowing farmers the freedom to sell their grains independently. It is, CWB chairman Larry Hill said the other week, a “vital question of control.” Indeed: with its authority validated, the federal government could order the directors to do more than just stop issuing pro-monopoly spin. They might just order the board to start handing out export permits to anyone who wants one, and stand aside peacefully while farmers sell their own goods to the buyers of their choice—giving western producers the same freedoms enjoyed by growers everywhere east of Manitoba. (Presumably the Tories are also free now to order the CWB not to appeal to the Supreme Court, but probably fear looking thuggish and fearful in blocking the administration of justice). In short, the Tories could start effectively ending the monopoly by making the directors do it for them.
To date, the CWB has cannily used the court system to stall attempts by its Ottawa bosses to loosen its chokehold on the Western grain market. Before this, in 2007, board lawyers convinced a judge to strike down a Conservative cabinet order that would have ended its barley monopoly just hours before it was to take effect (she found that any change of that nature required Parliamentary approval). Court cases can easily outlive governments, especially minority ones, and quite possibly, if the Supreme Court agrees to hear the case (and the question of a government’s right to command an agency of its own creation may be important enough to warrant it), by the time that happens, the Liberals may be running the country. And to date, the Liberals have opposed the prime minister’s deregulation plans for the CWB.
But then, the text of section 18(1) that provides the government, according to the appeals court, such power over the board, was not put there by Conservatives. It was, rather, added in 1998, under Liberal prime minister Jean Chrétien. Though it was also Mr. Chrétien’s government that appeared to grant producers greater ability to elect many of their own directors, he retained several seats, including the chairmanship, as appointees of the governor in council. And his legislative rewrite carefully ensured that all directors could not, anyway, act so independently as to resist the directive of government. Apparently no one noticed that the elections that the government allowed the CWB were, we can see clearly now, far more hollow than they appeared.
What’s also clear, then, is that this is not, as some would cast it, merely a power face-off between a market-oriented Conservative government and a monopolistic, socialized grain marketer. This is, rather, the struggle of a nation’s legislators to control the things they create by their legislation—as relevant to the wheat board as for any of the new agencies being created or enterprises being taken over in this era of larger government. The Liberals may not be eager to grant Western farmers freedom to sell their own grain (though Michael Ignatieff has not yet pronounced on the issue), given how they passed on earlier opportunities to do so. But they also had the chance earlier to make the Wheat Board truly independent. They passed on that, too, and it seems unlikely the Liberals would be eager—particularly now, in light of the Wheat Board’s demonstrated indiscipline—to give the CWB any more latitude than it already has. The would-be mutineers at the Canadian Wheat Board had better dearly hope that the Supreme Court agrees to hear their case, and that they succeed in overturning the ruling as it now stands. For, if not, they will be stuck submitting to federal bosses, and to the wishes and whims of whatever government—even an anti-monopoly one—is in power on any given day.
National Post
copy/past to read the comments
If the fate of the Canadian Wheat Board means little to the majority of Canadians not involved in the production, sale or export of grains, it does at least provide an edifying lesson about the dangers in building powerful government creatures. For three years now, the Conservative government has tenaciously worked to try and end the CWB’s monopolistic, “single-desk” marketing power over Western wheat and barley. Though the board was created by Ottawa, has been funded by Ottawa, and is granted its extraordinary market-control powers by dint of federal legislation—permitting it even to jail farmers who independently sell their wheat without its permission—the board has nevertheless become what some critics describe as a Frankenstein agency. Turned on its master, it has aggressively and bitterly fought Ottawa at every step to resist deregulation. A few weeks ago, the federal government won a quiet (because it went largely unreported) and significant court decision that asserts its right to tell the marketing board what to do. As usual, the Wheat Board is vowing to keep resisting. And at stake is whether governments have the right to control the very agencies they create.
The Wheat Board argues that it is independent of government, owned and controlled by farmers—a line it has advocated since Ottawa began permitting farmers some, but not all, of the board’s 15 directors. This was made possible, though, only because the Liberal government of the day allowed it to be possible. But when the federal government held a plebiscite in 2006, surveying barley producers on whether they would rather have “marketing choice”—that is, the option to sell to the Board, as is now mandatory, or to sell to another buyer of their choosing—or stick with the single-desk system, the CWB rebelled. It undertook an intensive political campaign to promote the single-desk side.
The Tories didn’t like that, and issued an order in council directing the Wheat Board to stop spending money on politics, since the money was being taken from farmers’ funds, and not all farmers were in favour of the CWB’s position. In fact, most weren’t: 62% voted for marketing choice anyway. But the Board claimed the government had no right to tell it how to operate. Last year, a federal court agreed. In essence, the judge said Ottawa could only prioritize the board’s spending if there was a shortage of cash (there wasn’t). And the ruling, chastening Stephen Harper’s Conservatives, made headlines across Canada.
A few weeks ago, that ruling was overturned by an appeals court. The government, the three justices ruled, had the right to order the CWB to pretty well do whatever it wanted, under Section 18(1) of the Canadian Wheat Board Act, which states that “the Governor in Council may, by order, direct the Corporation with respect to the manner in which any of its operations, powers and duties under this Act shall be conducted, exercised or performed.” Directors must consider these orders, whatever their own opinions, to be in the “best interest” of the board. The Board, they added, “is a creature of statute and, as such, it has no powers, rights and duties save those bestowed on it by the Act.” As much as the CWB may claim to be a farmer-run, independent agency, unanswerable to Ottawa, this is, according to the high court’s ruling, a delusion on the part of directors who apparently repeated it to themselves so often that they came to believe it. According to the law, the CWB is the official property of the agricultural ministry.
Not surprisingly, the CWB, even today, insists differently. And it now says it will to use the revenues it takes from selling Western farmers’ wheat and barley to battle the government again, having pledged recently to take the case to the Supreme Court of Canada—so it can argue in favour of using Western farmers’ wheat and barley to continue to fight against allowing farmers the freedom to sell their grains independently. It is, CWB chairman Larry Hill said the other week, a “vital question of control.” Indeed: with its authority validated, the federal government could order the directors to do more than just stop issuing pro-monopoly spin. They might just order the board to start handing out export permits to anyone who wants one, and stand aside peacefully while farmers sell their own goods to the buyers of their choice—giving western producers the same freedoms enjoyed by growers everywhere east of Manitoba. (Presumably the Tories are also free now to order the CWB not to appeal to the Supreme Court, but probably fear looking thuggish and fearful in blocking the administration of justice). In short, the Tories could start effectively ending the monopoly by making the directors do it for them.
To date, the CWB has cannily used the court system to stall attempts by its Ottawa bosses to loosen its chokehold on the Western grain market. Before this, in 2007, board lawyers convinced a judge to strike down a Conservative cabinet order that would have ended its barley monopoly just hours before it was to take effect (she found that any change of that nature required Parliamentary approval). Court cases can easily outlive governments, especially minority ones, and quite possibly, if the Supreme Court agrees to hear the case (and the question of a government’s right to command an agency of its own creation may be important enough to warrant it), by the time that happens, the Liberals may be running the country. And to date, the Liberals have opposed the prime minister’s deregulation plans for the CWB.
But then, the text of section 18(1) that provides the government, according to the appeals court, such power over the board, was not put there by Conservatives. It was, rather, added in 1998, under Liberal prime minister Jean Chrétien. Though it was also Mr. Chrétien’s government that appeared to grant producers greater ability to elect many of their own directors, he retained several seats, including the chairmanship, as appointees of the governor in council. And his legislative rewrite carefully ensured that all directors could not, anyway, act so independently as to resist the directive of government. Apparently no one noticed that the elections that the government allowed the CWB were, we can see clearly now, far more hollow than they appeared.
What’s also clear, then, is that this is not, as some would cast it, merely a power face-off between a market-oriented Conservative government and a monopolistic, socialized grain marketer. This is, rather, the struggle of a nation’s legislators to control the things they create by their legislation—as relevant to the wheat board as for any of the new agencies being created or enterprises being taken over in this era of larger government. The Liberals may not be eager to grant Western farmers freedom to sell their own grain (though Michael Ignatieff has not yet pronounced on the issue), given how they passed on earlier opportunities to do so. But they also had the chance earlier to make the Wheat Board truly independent. They passed on that, too, and it seems unlikely the Liberals would be eager—particularly now, in light of the Wheat Board’s demonstrated indiscipline—to give the CWB any more latitude than it already has. The would-be mutineers at the Canadian Wheat Board had better dearly hope that the Supreme Court agrees to hear their case, and that they succeed in overturning the ruling as it now stands. For, if not, they will be stuck submitting to federal bosses, and to the wishes and whims of whatever government—even an anti-monopoly one—is in power on any given day.
National Post
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