Regulatory wrongs eroding private property rights in Canada

For Mark Milke, the Barbarians were in the Garden City, but now they’re on your property. That’s more than a nuisance in this province and elsewhere in Canada. It’s bad for business.The Barbarians in the Garden City, according to the 2001 book of the same name by the Fraser Institute senior fellow, were the Mike Harcourt and Glen Clark NDP regimes and the damage they did to B.C.’s business investment landscape and economy.

But the barbarians now encroaching on private and business properties blur all political party lines.

They are the subject of Milke’s Stealth Confiscation: How governments regulate, freeze, and devalue private property – without compensation.

The book is an exploration of what Milke sees as the disturbing growth in Canada of the regulatory state. That growth results in everything from expensive inconvenience for business on up to legalized property theft. The former is best illustrated by seemingly right-thinking regulation. For example: civic governments decide to require bars and restaurants to install expensive ventilation and discrete smoking and non-smoking sections in their buildings, only to have their provincial government then rule that all such operations be entirely non-smoking. Under outright theft, Milke cites examples that include the City of Vancouver declaring a 22-kilometre CPR corridor a public thoroughfare in 2000. The bylaw’s effect, according to the courts, “was to freeze the redevelopment potential of the corridor and to confine CPR to uneconomic uses of the land.” The city offered CPR no compensation for its expropriation via regulation.

On the surface this might appear to be the beneficial application of government leverage for the common good, especially when it involves a large corporation, but the common good is ill served when it erodes property rights, a fundamental building block of free enterprise.

As Milke points out, when the more ethically challenged governments of yore wanted private property they stole it through nationalization or other means.

Today’s expropriation via regulation is not far removed from that corrupt regime approach. Property rights, after all, are not protected in Canada’s Constitution.

Elsewhere in Canada the impacts of weak or non-existent individual property rights are best illustrated by the country’s native reserves, where in all but the Nisga’a lands in B.C.’s northern interior, property is held as a collective asset for the band. Individual band members have no fee-simple property rights and are thereby cut off from a fundamental source of equity that could be used to raise investment capital for business. Too many bands consequently remain dependent on the state for all their income.

Internationally, Canada has a comparatively poor record when it comes to respecting the value of private property.

Milke points to a survey of 13 countries that relegated Canada and Australia to the bottom of the heap in compensating private citizens and businesses for regulatory takings or “de facto expropriation.”

For all its current economic missteps, Europe, he says, is superior to both Canada and the United States when it comes to government compensation for property expropriation.

In the here and now, expect the profile of urban land expropriation issues to hit page 1 if Kinder Morgan Canada’s plan to twin its Trans Mountain pipeline wins approval. Its Lower Mainland right-of-way would doubtless need some growing room.

Government pokenose policies that eliminate property value via regulation might make political decisions cheaper and easier, but they undermine its worth as an investment tool.

As Milke points out, the unintended consequences of such stealth confiscation include erosion of wealth and reduced job creation – which B.C. and the rest of Canada can ill afford. •