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From Prairie Merchant To Big-City Tycoon: A Q&A With W. Brett Wilson

Public money, personal money, investments, philanthropy, carbon taxes – W. Brett Wilson has thoughts on all of it

Feb 1, 2016

by Michael Ganley

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“We have to focus on what we can control, which is the cost structure. That’s where we as a nation have
to focus.” – WBW

Photography Curtis Comeau

W. Brett Wilson grew up in a modest but comfortable home in North Battleford, Saskatchewan. His father was a sales manager at a car dealership and his mom went back to work as a social worker to help make ends meet. Not that he’s complaining. “We had a cabin and a boat,” he says. “We were okay.”

But my, things have changed. Through his career as an investment banker and then as a straight investor, Wilson, now chairman of his primary holding company, Prairie Merchant Corporation, has become one of the country’s wealthiest people. But unlike most of the uber-rich, Wilson is also not afraid to speak his mind – on anything. Alberta Venture sat down with Wilson to talk about public money, private money, personal money and giving it away.

Alberta Venture: Do you agree with the federal government’s plan to build infrastructure through deficit spending?

W. Brett Wilson: The fact that they’ve announced that they’re inheriting a deficit comes as no surprise whatsoever. You always adjust the books.

I hope they go ahead with infrastructure expenditures. I’m a little worried that they’re going to drag it out through multi-year commitments. We need the money right now for things like the LRT systems in some of the big cities. Where I wish they would be more creative is in pursuing things like the high-speed train between Calgary and Edmonton. When interest rates are low and you’ve just had all of your Canadian–dollar costs hammered down – labour and materials you buy in Canada – things will never be cheaper.

AV: The provincial government has made a similar commitment. What do you think of that?

WBW: Again, I hope they follow through with infrastructure spending. A lot of my PC friends – and I emphasize friends because I always vote right-of-centre – were pretty upset that the NDP were talking about infrastructure spending. Yet for the past 20 or 30 years the PC governments spent as they saw fit on both capital and programs.

I’m an optimist on infrastructure spending. I just hope it’s done in a thoughtful way. Once again, the provincial government has said they’re going to review the high-speed train. The economics of that train can be made interesting when you look at the avoided cost of lives lost on the north-south highway, you look at the avoided cost of having to triple lane it in each direction and you change the game in terms of the way we connect in our province.

AV: Are you an outlier on this point among your PC friends? We often hear that a balanced budget is the be all and end all of government finance.

WBW: The politically correct approach is to talk about being fiscally responsible, but the reality is the Conservatives haven’t been fiscally responsible. To say it and to do it are two different things. We didn’t leave 30 years of PC government with a large heritage trust fund. That would have been fiscally responsible. We have some of the highest per capita costs of health care and education.

The biggest problem now is that our GDP is plummeting, so we’re getting hammered in terms of the province’s capacity to do good. That’s why at a time like this, we need to be visionary and buy our way into some economic activity through capital investments. Every time we rebuild a road or a bridge or upgrade a school or a hospital, we’re doing it for our grandchildren. It’s some of the smartest capital we can spend.

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Photography Curtis Comeau

AV: The province has also embarked on a royalty review. Do you think any good will come of it?

WBW: When I listened to my PC friends claim that the sky was falling because the NDP were going to do a royalty review, I reminded them that the last royalty review was done by the PC government, by an incompetent and ill-informed committee with a misguided purpose. Ed Stelmach said the question asked of Albertans was, “Given that the Alberta oil industry isn’t paying its fair share, do you think it should?” I mean, what outcome did you expect? Stelmach was proud of the fact that 88 per cent of Albertans supported the review. I said, “Shouldn’t you be worried about the stupidity of the other 12?”

Then they ended up having to reverse the whole thing, and no one in the PC party has ever been held accountable for the completely failed royalty review.

This royalty review is run by Dave Mowat of ATB: a well-regarded businessman and a lender to the oil and gas industry, someone with the future of Alberta in mind. Then they have the best energy economist in the world on the committee in Peter Tertzakian. Did I want a royalty review done? Not necessarily. I didn’t think it was a burning need because it leaves industry uncertain, but since it’s going to be done, let’s get it done.

AV: We hear there’s a lot of money sitting on sidelines, eyeing the oil and gas sector. Why isn’t it diving in?

WBW: We see a lot of money circling the industry right now because people know there’s still an economic business model. Let’s go back seven or eight years ago and we were making money at $50 and $60 oil. What’s changed? Our cost structure. So long as we pull our cost structure back in line we still have economic investments. For some companies I’m involved with, wells that would have cost us $5 million a year ago are going to cost us $3 million this year. Vertical wells that would have cost $1 million are going to be $650,000. So we’re seeing 20-30-40 per cent reductions in cost that is bound to translate into economic activity.

People are circling, but they’re looking for deals. Personally, I’m loading up my pistol by trying to liquidate anything I own in the U.S. We’ve had a pretty strong cyclical move in the Canadian dollar, and I call it cyclical because I believe in the oil and gas industry. As a resource economy Canada will improve and therefore the Canadian dollar will improve. It might get down to 70 cents but it will also be back in the 80s in a few years’ time, so if I liquidate substantially all of what I have in U.S. dollars and load the gun ready to go at opportunities in real estate, in services and on energy, that’s what I’m going to do.

AV: What else do you see as a good investment right now?

WBW: I’m still active in real estate. I’ve been very active in U.S. real estate the last few years. It gives me something to lever off of in terms of pulling capital back into Canada. I’m also at a stage in my life  I’ll be 60 in a few years – and my focus in terms of my personal investment strategy is investing in things that don’t require meetings. I want the simplicity of predictable cash flow and great partners. If someone wants me to be active in the business, they’ve picked the wrong person.

AV: What do you make of a national securities regulator and why is Alberta not yet on board?

WBW: There’s some protectionism going on, but to be fair to the provinces, they want to protect their rights: The Toronto-centric perspective is maddening. I was involved at the national level with the investment dealers association 20 years ago, and I remember when it was first proposed then, they said “Don’t worry; we will grandfather junior capital pools.” I looked at them and said, “What do you mean, grandfather?” They said, “Well, we’ll protect them.” I said, “No, we should have an environment where you create them. Don’t pander to us and treat us as a little, pedantic, western-based gimmick. Let’s create capital opportunities.” The arrogance of the Toronto mindset can be insufferable, especially in the investment industry. I’m a big fan of a national regulator, but the Toronto-centric proponents have to be far more respectful of regional interests and not just to pander them.

AV: Alberta recently had a change of policy respecting climate change and there was a global meeting in Paris. Do you think a price should be put on carbon?

WBW: Nobody’s denying that the climate is changing. The fundamental challenge is to understand why it’s changing and then how do you react to it in response. I don’t think the science is proven, so I think regulations wrapped around imperfect science are huge mistakes. I happen to believe that CO2 is not the contributor that many people in the world think it is. I don’t believe the science is crystal clear. I’ve had conversations with people where I almost spin them in circles when they say, “Well Brett, the top 2,500 scientists in the world all agree.”

So I ask, “Where’s the list? There must be a ranking, and I want to know who’s number 2,501 and why they didn’t agree.” Since we don’t actually graduate anyone in that area, how do you make up that you’re a climate change specialist? Is it because you understand chemistry, or because you understand infrastructure? And they can’t answer the question. And I ask “How many climate change scientists are being graduated every year. Is it a million? Five million?” Nobody has a clue.

I start there, to throw some commentary on the lunacy of the commentary that has been provided in terms of “here are the leading experts.” There’s no such list of leading experts, but if you accept [the assertion that the top 2,500 scientists all agree] as true, then you accept everything else. And I go back and point out that, 400 years ago, all the world’s leading scientists agreed that the world was flat.

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Photography Curtis Comeau

AV: So it’s fair to say you wouldn’t advocate for a price on carbon?

WBW: Well, I struggle, because the science isn’t proven and nobody wants to debate the science anymore because they’re saying it is proven. That’s the part that scares me the most. Now, should we use the Earth? Yes. Should we abuse the Earth? No. There are all kinds of things we should be doing to minimize the true pollutants in the world that come out of, for example, coal-fired power plants. And of course clean water, making sure the tailings ponds are properly controlled, all those things make sense, but you don’t have to have a climate change discussion to have that make sense.

So yes, I’m a skeptic about many of the tools that have been contemplated. I think what’s happened is that industry has accepted that there will be an attack on carbon. The money is going to come out of the consumer anyways. Somehow it has to be paid for out of the value chain, but we have to be more conscious of where the costs are.

AV: Where’s the price of oil going?

WBW: I am somewhat confused by the global scene. When you consider the fact that it’s unlikely that Saudi is covering its costs, for sure Putin is not. Let’s assume the Saudis are making $10 a barrel but they were making $50 or $60. They can’t afford to run their lives and businesses the way they did. If Saudi alone was to cut back production by a third or a quarter, and say, “We’d rather produce oil at $60 than at $40,” the economics are compelling. Since they won’t do that, I get to a point where I don’t understand. I keep emphasizing to my own colleagues that we have to focus on what we can control, which is the cost structure. The cost structure is the regulatory regime; it’s the cost of capital, labour and other input costs. That’s where we as a nation have to focus.

We have one other problem, and that’s the made-in-Canada discount because we have stranded resources because we haven’t been able to be thoughtful enough to get pipelines in place. Some of the anti-pipeline movement is staggering in its sheer stupidity, given the tens of thousands of pipelines that exist. The implication that each new pipeline is the only pipeline that is going to be build makes no sense at all. It’s unfortunate that the industry and the extremists have gotten themselves so polarized over the future of Canada.

AV: How have your brushes with mortality affected your approach to money?

WBW: When I went through cancer, round 1, back in 2001, it was humbling because I looked at my life and said “there are a lot of things I haven’t accomplished.” And the most important one was build a relationship with my own children, who at the time were just coming into their teenage years. I’d been working most weekends of their lives, not to mention Monday to Friday. So I refocused and started spending a lot of time with my kids.

When cancer hit me, round two, it was a very different experience. It was more of a military operation as I gathered my team and said, “Here’s what we need to do in terms of food and supplements and drugs.” It sounds morbid to say this but I wasn’t nearly as fearful of dying when cancer showed up the second time because I could look at my life and say, “I had a great run.”

It wasn’t like I was going to give up and not fight, but it was a materially different perspective after having enjoyed one hell of a run post what I call my bachelor’s degree in cancer. I call myself a cancer graduate. I think cancer survivor isn’t nearly as empowering. I like the thought that I’m a cancer graduate. I got my bachelor’s in 2001 and I got my master’s in 2015, and if I have to get my PhD I’m ready to go back to school.

AV: Philanthropy has always been one of your hallmarks. Why have you chosen to give so much money away?

WBW: My parents were community-minded people and when I started in my own business career I realized what a gap there was between what I was doing and what my parents had done. Then I discovered that there was a huge economic benefit to doing good charity work. I often challenge the thought that charity is an obligation that comes with wealth or power or big business. I suggest there’s an opportunity associated with charity which overwhelms any thought of an obligation.

I’ve made a lot of money off the relationships that I’ve built and some people say that’s mercenary, but the goal was to change the community we lived in. The goal was to use our charity budget as our marketing budget and the result was that we ended up building some pretty powerful relationships. I have trouble believing that because the community was better off that there was something wrong with using our charity giving budget as our marketing program.

AV: You took some heat recently for offering to give $100,000 to the Calgary Library if the city permitted Uber. What happened there?

WBW: What’s amusing there is you deal with a small group of vocal people who don’t get it, who think I’ve attempted to bribe city council with a $100,000 donation. I’ve said a couple of times in social media, “If bribing city council is as easy as $100,000, I have a bunch of properties I want to rezone and I’ll pay more.” It’s sheer lunacy that a $100,000 donation to the city of Calgary would be meaningful. It was less than a mosquito on the ass of an elephant in terms of economic impact.

AV: Why Uber?

WBW: I believe in ride sharing and Uber is one model. First of all the taxi industry is monolithic, bureaucratic, bloated and inefficient. We all know that. Anytime you try to hail a taxi in downtown Calgary you can’t. And then you get in a car whose shock absorbers haven’t seen service in years, with a driver you don’t know. From a safety and security point of view, from an efficiency point of view, apps like Uber are timesavers. I can get a car in three to five minutes, I know who’s picking me up and I can communicate with the individual directly. If I have any problems I can reach out to Lyft or Uber and usually those problems will be resolved within 10 minutes.

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One Response to From Prairie Merchant To Big-City Tycoon: A Q&A With W. Brett Wilson

  1. It is maddening that you are asking a man, who has made his fortune from fossil fuels about his take on climate change. It is an absolute conflict of interest. It’s reasonable to assume that Brett still makes massive amounts of money from his investments on fossil fuels. Even a grade schooler can make the intellectual connection, that Brett needs the pipelines to boost his own personal income. He gives money away to charities to lower his tax bracket. Granted science has been proven wrong.. But it’s pretty elementary to connect the dots..since the industrial revolution our planet has heated up considerably.. This isn’t due to the Suns natural expansion.. That takes hundreds to thousands of years.. It is because we are over populating and our infastructure is dependant on fossil fuels.. Or dirty energy. Btw.. You are looking real sexy Brett.. But cut through the BS. xxoo?