Pour me another of the PEI priority
Only on PEI can beer be considered a strategic government investment.
Eyebrows were raised recently with news that the Ghiz government is loaning PEI Brewing Company $2.14 million to expand the micro beer operation owned by noted Charlottetown businessmen Jeff Squires and Kevin Murphy.
Timing may have played a role in the public’s reaction because news of the loan broke just as the The Globe and Mail ran a long and rightfully glowing story about Kevin’s brother Danny and his $80 million Tim Hortons empire. Kevin was described as a very successful - the Globe estimated his annual revenue at $20 million - restauranteur and hotelier. It’s a valid description.
Kevin Murphy is successful. But he is also known for having close ties with government and promoting events and developments that have enjoyed significant government support.
For instance, Murphy played a prominent leadership role in the former Tourism Charlottetown when it took on high profile and costly events that failed to deliver promised results. An independent review found Tourism Charlottetown routinely invested in high risk events that were beneficial to the business interests of those sitting around the Tourism Charlottetown table.
Most notably Kevin Murphy and his associated companies hold the distinction of receiving the single largest benefit under the controversial Provincial Nominee Program. Murphy is on record as saying his companies received 19 units, which equates into an estimated $1 million he was able to freely invest in his assorted companies.
While timing played a role in the public’s reaction, so too did government’s initial failure to release full details on the loan.
Those details were only released after requested by The Graphic last week.
Why is it that government routinely ignores the first rule of public relations: Secrecy always breeds suspicion.
The $2.14 million loan will fund expansion of the micro brewery that has grown from a small operation at Gahan House into a growing export product that is now sold on liquor store shelves in New Brunswick. The plan is to expand even further with a goal of creating 25 new jobs. An existing $850,000 with the PEI government will be folded into the $2.1 million total. PEI Brewing is also receiving a $500,000 loan from ACOA. Shareholders, who are personally guaranteeing the loans, will invest $220,000 of their own money in the $2.8 million project.
PEI Brewing’s loan with the PEI government comes via the PEI Century 2000 Fund Inc., a subsidiary of Island Investment Development Inc., the government body at the centre of the provincial nominee controversy.
Repayment on the five year loan charging four per cent interest begins in July.
Investment priorities for the Century Fund are specific. According to a recent annual report: “PEICF’s lending activities are aligned with Prince Edward Island Business Development Inc’s (“PEIBDI”) strategic sectors of Aerospace, Renewable Energy, Bioscience, and Information Technology. On occasion, PEICF may also finance certain strategic projects that may fall outside of PEIBDI’s strategic sectors, but have significant economic benefits to the Island community.”
Nowhere is there reference to investing in beer. Government will hang its hat on the potential job creation. Here’s the bigger question. How is investing in a connected Charlottetown brewery a provincial priority when rural PEI is starving for the types of development promoted by the Century Fund as true priorities?
Over the past 30 years Maritime history is littered with examples of small breweries expanding with the promise of increased success only to fail miserably. There was Old Abbey, Highland Classic and Maritime Brewing. Competition is even tougher now as massive breweries specialize in speciality crafts beers. I wish PEI Brewing all the success in the world. They produce a good product. However, it is difficult to see how investing in a brewery becomes a funding priority over aerospace, renewable energy, bioscience and information technology. Or for that matter a priority at all.
Liberal politicians talk about job creation and government offers calming words that no favouritism occurred. But ordinary Islanders look at the deal with a more jaundiced eye, developed over decades of watching Liberals and Tories fritter away our sparse resources.
They ask a simple question: If it’s such a good deal why not go to a bank like the rest of us?
Paul MacNeill is Publisher of Island Press Limited. He can be contacted at firstname.lastname@example.org