Third and final in a series on conservative businessman and theorist, Peter Pocklington.The Ralph Klein revolution in Alberta started with the financial devolution of Peter Pocklington. By the time the province realized his wisdom, it was too late for him to benefit..The story starts in 1978 when Pocklington traded 300 apartments in Calgary to acquire Gainer’s meat-packing plant in Edmonton. By 1981, he decided to scale up, acquiring a competitor’s plant and the rest of their Canadian operations, all run by the United Food & Commercial Workers Union (UFCW)..In 1984, UFCW agreed to a wage freeze for existing employees, a wage cut for new employees from $12 to $7 per hour, plus a reduction in benefits. In exchange, Pocklington promised profit-sharing for employees..Unfortunately for Pocklington, price-setting by Alberta Pork Producers Marketing Board left him stuck with a distorted price and no profit for him or his workers. He recalled the situation in the 2009 book I’d Trade Him Again..“Why a so-called free-market government would get into collectivism is beyond me. I don’t think they understood the economics of it. Obviously they didn’t, it was all about vote-getting. Go to the farmers and say, ‘We’ll make sure you get so much for your hogs, regardless of the market,’” Pocklington recalled..“The province went from ten packers to one by the time they dismantled the hog marketing board. And the one plant that was left was owned by the pork producers themselves..“If that’s capitalism, that’s ridiculous.”.In a free market, producers would make more hogs when the price was good, and less when it was bad. An artificially high price set by a marketing board incentivized more people to produce hogs. However, more supply weakens consumer demand, driving prices down..Pocklington was stuck in the middle..By 1986, hard times had handed Alberta 50,000 job losses, yet the union demanded a 27% wage increase for its 1,100 Gainer’s workers..“Because of the hog marketing board, I couldn’t afford to give them that. I couldn’t afford anything,” he said..“The government destroys you with their policies and then expects you to deal with a union wanting a big raise. It’s just beyond comprehension.”.As part of what Pocklington called “crazy unionism,” the UFCW organized a boycott of Gainer’s products. The banks refused to finance his company because the economics no longer worked..In December, Premier Don Getty phoned Pocklington to ask what it would take to end the strike..Pocklington said he wanted the hog marketing board gone and a $50 million interest-free loan from the government. Gainers would pay 10% of its operating profit annually for the first four years in lieu of interest. Getty said, “All right, you’ve got a deal.”.Or maybe not. Follow-through was entrusted to Lethbridge MLA and provincial treasurer Dick Johnston, who apparently changed the terms. Instead of an interest-free loan, the province would guarantee a $2 million loan to Gainer’s every six months at a floating interest rate that started at 10.5%..The government would back the loan, up to $55 million, but it would incur interest and included a 0.5% 'stamping fee.' The loan created a $6 million annual drain on the company’s finances, yet the marketing board remained..“‘You guys speak with forked tongues,’ I told them. ‘That wasn’t the deal. What goes on here?’ They said, ‘Well we had to get it approved by cabinet and cabinet wouldn’t approve it.’ What a load of horses___.”.The province gave Gainer’s another $67 million to upgrade the Edmonton plant and another $25 million to build another plant in Picture Butte, just north of Lethbridge. Pocklington saw no point in building a second facility doomed to lose money, so he never did..The province took over Gainer’s in October 1989 as it suffered $80 million in operating losses through 1993. That year, they sold it to Burns Foods of Calgary for $3 million..“They just destroyed the business,” Pocklington said of the Getty government. “They didn’t know what the hell they were doing. They destroyed everything.”.By 1993, then-Alberta treasurer Jim Dinning called the province’s acquisition of Gainer’s “a mistake.” With Ralph Klein as premier, the province decided to “get out of the business of business.”.In 1996, the hog marketing board lost its monopoly position and with it the ability to set prices. That same year Burns and Gainers were bought by Maple Leaf Foods, owned by Wallace and Michael McCain of New Brunswick..When UFCW workers at the Edmonton plant threatened to strike in 1997, Agriculture Minister Ed Stelmach said the province would stay clear of negotiations. The company shut down the plant and shifted operations to a new plant in Brandon, Manitoba..By 2001, the hog marketing board had only one purpose: marketing. That was also the year the Klein government introduced a flat income tax of 10%, along with a generous personal exemption..But Pocklington had advanced such ideas for years..He proposed a flat tax during a 1982 speech at the Empire Club in Toronto, and made it the central part of his bid for the federal Progressive Conservative leadership in 1983. Both businesses and individuals would pay 20% federal taxes, but an individual should get the first $12,500 free..“We could shrink the huge civil service involved in tax collection. We could do away with a tax form longer than a single sheet of paper. We could do away with millions of man-hours spent trying to figure out not only how much we owe, but how to beat it,” Pocklington told the club..Alberta implemented the idea to great success, while Ottawa never learned. By now, Canada Revenue Agency has nearly 60,000 employees enforcing a tax code past one million words. Peter Pocklington has the edge on Robert Stanfield as the greatest prime minister Canada never had..Read previous articles by this author on Pocklington and public policy here and here.
Third and final in a series on conservative businessman and theorist, Peter Pocklington.The Ralph Klein revolution in Alberta started with the financial devolution of Peter Pocklington. By the time the province realized his wisdom, it was too late for him to benefit..The story starts in 1978 when Pocklington traded 300 apartments in Calgary to acquire Gainer’s meat-packing plant in Edmonton. By 1981, he decided to scale up, acquiring a competitor’s plant and the rest of their Canadian operations, all run by the United Food & Commercial Workers Union (UFCW)..In 1984, UFCW agreed to a wage freeze for existing employees, a wage cut for new employees from $12 to $7 per hour, plus a reduction in benefits. In exchange, Pocklington promised profit-sharing for employees..Unfortunately for Pocklington, price-setting by Alberta Pork Producers Marketing Board left him stuck with a distorted price and no profit for him or his workers. He recalled the situation in the 2009 book I’d Trade Him Again..“Why a so-called free-market government would get into collectivism is beyond me. I don’t think they understood the economics of it. Obviously they didn’t, it was all about vote-getting. Go to the farmers and say, ‘We’ll make sure you get so much for your hogs, regardless of the market,’” Pocklington recalled..“The province went from ten packers to one by the time they dismantled the hog marketing board. And the one plant that was left was owned by the pork producers themselves..“If that’s capitalism, that’s ridiculous.”.In a free market, producers would make more hogs when the price was good, and less when it was bad. An artificially high price set by a marketing board incentivized more people to produce hogs. However, more supply weakens consumer demand, driving prices down..Pocklington was stuck in the middle..By 1986, hard times had handed Alberta 50,000 job losses, yet the union demanded a 27% wage increase for its 1,100 Gainer’s workers..“Because of the hog marketing board, I couldn’t afford to give them that. I couldn’t afford anything,” he said..“The government destroys you with their policies and then expects you to deal with a union wanting a big raise. It’s just beyond comprehension.”.As part of what Pocklington called “crazy unionism,” the UFCW organized a boycott of Gainer’s products. The banks refused to finance his company because the economics no longer worked..In December, Premier Don Getty phoned Pocklington to ask what it would take to end the strike..Pocklington said he wanted the hog marketing board gone and a $50 million interest-free loan from the government. Gainers would pay 10% of its operating profit annually for the first four years in lieu of interest. Getty said, “All right, you’ve got a deal.”.Or maybe not. Follow-through was entrusted to Lethbridge MLA and provincial treasurer Dick Johnston, who apparently changed the terms. Instead of an interest-free loan, the province would guarantee a $2 million loan to Gainer’s every six months at a floating interest rate that started at 10.5%..The government would back the loan, up to $55 million, but it would incur interest and included a 0.5% 'stamping fee.' The loan created a $6 million annual drain on the company’s finances, yet the marketing board remained..“‘You guys speak with forked tongues,’ I told them. ‘That wasn’t the deal. What goes on here?’ They said, ‘Well we had to get it approved by cabinet and cabinet wouldn’t approve it.’ What a load of horses___.”.The province gave Gainer’s another $67 million to upgrade the Edmonton plant and another $25 million to build another plant in Picture Butte, just north of Lethbridge. Pocklington saw no point in building a second facility doomed to lose money, so he never did..The province took over Gainer’s in October 1989 as it suffered $80 million in operating losses through 1993. That year, they sold it to Burns Foods of Calgary for $3 million..“They just destroyed the business,” Pocklington said of the Getty government. “They didn’t know what the hell they were doing. They destroyed everything.”.By 1993, then-Alberta treasurer Jim Dinning called the province’s acquisition of Gainer’s “a mistake.” With Ralph Klein as premier, the province decided to “get out of the business of business.”.In 1996, the hog marketing board lost its monopoly position and with it the ability to set prices. That same year Burns and Gainers were bought by Maple Leaf Foods, owned by Wallace and Michael McCain of New Brunswick..When UFCW workers at the Edmonton plant threatened to strike in 1997, Agriculture Minister Ed Stelmach said the province would stay clear of negotiations. The company shut down the plant and shifted operations to a new plant in Brandon, Manitoba..By 2001, the hog marketing board had only one purpose: marketing. That was also the year the Klein government introduced a flat income tax of 10%, along with a generous personal exemption..But Pocklington had advanced such ideas for years..He proposed a flat tax during a 1982 speech at the Empire Club in Toronto, and made it the central part of his bid for the federal Progressive Conservative leadership in 1983. Both businesses and individuals would pay 20% federal taxes, but an individual should get the first $12,500 free..“We could shrink the huge civil service involved in tax collection. We could do away with a tax form longer than a single sheet of paper. We could do away with millions of man-hours spent trying to figure out not only how much we owe, but how to beat it,” Pocklington told the club..Alberta implemented the idea to great success, while Ottawa never learned. By now, Canada Revenue Agency has nearly 60,000 employees enforcing a tax code past one million words. Peter Pocklington has the edge on Robert Stanfield as the greatest prime minister Canada never had..Read previous articles by this author on Pocklington and public policy here and here.
