A proposed support package from the Nova Scotia government for the province’s wine industry did not follow recommendations in an expert report and was offering too much money to commercial wine bottlers, according to one of the authors of that report.
Last week, members of the farm wine sector walked away from a working group with the government in protest of the offer. While it would have meant an increase in funding, they argued additional money for the two commercial bottlers in the province, which import grape juice, ignored recommendations in the expert report and would have created an unfair competitive advantage.
That prompted Finance Minister Allan MacMaster to write to Acadia University associate business professor Donna Sears, asking her to clarify portions of the report she wrote with fellow professor Terrance Weatherbee.
In her response to MacMaster, which was shared with CBC News and other media outlets, Sears wrote the report provided recommendations and accompanying caveats or provisos, as required.
“It was expected that both would serve to inform decisions regarding support to the sector. It was never envisioned that any of the recommendations would be adopted independently of its associated caveat.”
How to calculate any additional support
The government’s offer to the sector was to increase a subsidy based on sales at Nova Scotia Liquor Corp. stores to 65 per cent from 50 per cent for farm wineries. The subsidy for commercial bottlers, meanwhile, would go up to 35 per cent from seven per cent.
Sears told MacMaster, however, that the report does not call for a replacement of the existing support programs. Instead, she advocated for maintaining the 50 per cent and seven per cent subsidies, and said any further support should be split 65/35 between the farm wineries and commercial bottlers based on the economic contributions they make to the province.
“This ratio was intended to be exclusive of the sale of wine through the NSLC and only applied to support other value-added activities,” Sears wrote.
“Indeed, during the discussions with the [farm wine] working group, there was consensus that while the [commercial wine bottlers] did deserve provincial support — such support should not be based upon the use of previously subsidized inputs sourced from outside the province.”
Consider what other provinces do
Finance Department officials said last week that it would be too difficult to calculate subsidies received by commercial bottlers for the materials they import, and instead proposed a cap on support of $1 million per year per operation.
Sears said that cap might address concerns about a “blank cheque” for commercial bottlers, but “the government’s proposal does not actually address the central and most critical objection made by the [farm wineries], which is the ‘double subsidy.'”
Instead, Sears wrote that any additional support for commercial bottlers should be based on things such as employment creation and other “non-wine direct…
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