Breaking the iron-triangle

Media Appearances, Crown Corporations, Frontier Centre

The Frontier Centre for Public Policy is a private think-tank based out of Winnipeg, whose job it is to push the envelope.

“Our job is to put new ideas on the table,” said Frontier president Peter Holle. The name of the company was selected because Holle wanted to talk about public policy ‘on the frontier.’

“We didn’t want to play it safe. We make sure that we’re there to rock the boat.”

In Canada there are very few, only half a dozen, independent think-tanks who do not accept funding from government. Holle added there are some which are given money by government. Because of that financial link, their ability to free-think is curtailed. “It’s not a surprise that government is paying to have them toe the line. Because if they are dependent on funding from politicians and then stray out of the box or say something that might trouble the political class, that would put their funding at risk.”

Holle said private entities, such as his, have been established to talk about ideas that, “are essentially difficult to discuss in an economy that is dominated by government spending.” The president of the Frontier Centre, said that in our province half the economy is political.

While Holle admits there is a place for government in broad strokes such as roads, the court system and defense. But the massive political machine shouldn’t venture into private business. “Government is well suited to develop, set and regulate policy. It creates rules for society and is there to provide public goods. It is there to create an environment that will allow private enterprise to thrive.

“It is not there as an entrepreneur or business operator.”

An example that was cited by Holle during his presentation to the Brandon Chamber of Commerce on Nov. 14, was a comparison between MTS and Sasktel. “It showed that there were two crown corporations that were roughly the same size and had similar markets. What we have seen is that MTS now (after privatization) is far larger than Sasktel, as far as jobs. Generally, it is a relative success story.”

Holle said evidence indicates that a population which wants a growing economy, more jobs, and a higher standard of living, “wants government ‘not’ to do things that it is not-well-suited to. They are not well-suited for running commercial activities.”

For Holle, health care is another example where he feels government should fund, but not operate. But he feels privatization is not the best route either. “The privatization of health care is a red herring. It is more an issue of a monopoly that is funded by the public. If you follow the iron-triangle discussion, there are very strong and powerful vested interest groups who have an interest in not having competition and not have a consumer-focused system.”

Holle feels health care should be funded by government, but it should be operating in a marketplace, “where they are purchaser of the service and buying that service from public or private providers with good pricing information.

“The market can still operate in a government funded environment,” said Holle, citing that is how it is being done in Europe.

The ‘iron-triangle’ Holle referred to, is a system where funding downloading is fueled through a triangle that has special interest groups, bureaucracy and government working in concert. “Generally, if you have a monopoly in any situation, the costs are significantly higher. A rule of thumb is 50 per cent.”

The president of the Frontier Centre doesn’t think the money will end up with the common denominator. “It’s not going to end up with the average Joe on the street. It will be captured by well-organized groups who can spend a lot of money to capture it.”

With a competitive element added into the iron-triangle, Holle feels there will be a lot of pressure added to the mix. “There are lots of incentives to keep the customer innovative and consumer- oriented. That will drive all sorts of efficiencies in the system. We don’t have those here. The government department is essentially paying itself.”

Despite the ideas the Frontier Centre and Holle put out for discussion, he remains optimistic about the province. “We are certainly a rich, wealthy and successful society. It is a comfortable place, but part of the problem is that Ontario and Alberta are paying for a lot of our lifestyle. We are becoming much more dependent on transfer payments and equalization. The average person might think it’s okay, but those monies are being captured by inefficient public policy.”

In the end, the Frontier Centre for Public Policy does have successes. Holle says those successes are evident when he hears the language his think-tank has created on the street. “There are discussions around raising electricity prices, or when there is concern about a smart energy debate. Any debate around equalization originated with the Frontier Centre language and lingo. That is our job.”