Jan 17, 20206 min read

Crown Corporations (Part I)

Defund the CBC: A review of Canada’s crown corporations, how they are run, and which ones are burning money

Chris

Jan 16, 2020

Minor formatting updates were made Jan 17, 2020.

Canadian Crown Corporations are “state-owned enterprises” owned by the Crown of Canada. These corporations are established by an Act of Parliament or primary legislation and the statutes of which are passed by parliament. There are also Provincial Crown Corporations like the Liquor Control Board of Ontario (LCBO), owned by provinces. Each crown corporation reports to a body of parliament (either federal or provincial) via a Minister of the Crown in the relevant cabinet.

While they are government organizations that operate following a private sector model, they usually have a mixture of commercial and public policy objectives. They provide services required by the public that otherwise would not be economically viable as a private enterprise. That should be the first alarm… because the Government of Canada is using taxpayer funds for a business model that the private sector would not invest in. It’s much easier to invest money that isn’t yours to lose.

Crown Corporations can either be an agent or a non-agent of Her Majesty in right of Canada or simply, of the Crown. Agency status is important because corporations with agent status enjoy constitutional immunities, privileges, and prerogatives that are enjoyed by the Crown. One of those privileges is the immunity from provincial and municipal taxes and fees.

By agreement, the federal government and its agents voluntarily pay the equivalent of those taxes and fees (except for provincial corporate income tax) through the Federal-Provincial Fiscal Arrangements Act and Payments in Lieu of Taxes Act. Crown corporations also do not have to comply with municipal zoning regulations and bylaws.

While getting the same perks as a government organization, crown corporations remain “shielded from constant government intervention and legislative oversight” (Tupper, Allan, Crown Corporation, The Canadian Encyclopedia, 2006). I suggest this leads to little incentive to use taxpayer funds efficiently, keep redundancies at a minimum, and innovate processes, products, and services.

Agency and proprietary corporations are required to "submit annual capital budgets to the responsible minister, the Minister of Finance, and the treasury board" and in addition, agency corporations also must "submit operating budgets to be approved by the responsible minister and the President of the Treasury Board.” Appointments, remuneration, and dismissal of crown corporations’ board of directors and senior officers is controlled by Cabinet. Beyond these two (or three) obligations, little is holding corporations accountable to revenue growth or return on investment of tax dollars.

Beginning in the 1970s, a debate commenced regarding the government’s ability to control the corporations and privatization of some companies began to take place with Air Canada in 1988, and CN Railway in 1995. The Alberta Liquor Control Board was among a list of crown corporations sold under Prime Minister Mulroney. The LCBO in Ontario remains a provincial crown corporation which we will investigate in Part II of Crown Corporations.

Petro Canada, Highway 407ETR, and more recently Hydro One have also transitioned to private ownership. In 2003, an Auditor-General investigation into a federal sponsorship program revealed financial management concerns at crown corporations including Canada Post, VIA Rail and Business Development Bank of Canada.

Furthermore, retired judge John Gomery released a report examining questions of transparency and financial management involving government contracts and appointments under Liberal rule. This report led to major reforms at crown corporations and resulted in the 2006 Federal Accountability Act which expanded the list of crown corporations accountable to the Access of Information Act. The Federal Accountability Act is an act providing for "conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight, and accountability."

Financial reporting for crown corporations dating back to 2012 can be found on the Government of Canada’s website:

https://www.canada.ca/en/treasury-board-secretariat/services/reporting-government-spending/inventory-government-organizations/crown-corporations-financial-data.html

In 2013, Prime Minister Harper’s budget bill introduced new powers over collective bargaining, salaries, and working conditions at four crown corporations including the CBC. A National Post article from 2015 reports that when Harper was asked about CBC budget concerns he said, “The reason for the difficulties aren’t the cuts. The reason is the loss of (CBC’s) audience. It’s a problem for the CBC to fix.”

Here we are in 2020 and the CBC is in worse shape than ever. According to Blacklock’s Reporter (an Ottawa-based internet publication covering Canadian government administration), CBC ad dollars have fallen 37% with fewer than 1% of Canadians watching local suppertime newscasts. The state-run broadcaster is “unsure whether it can remain sustainable without subsidies” it included in its ad revenue report. Small, digital outlets succeed without any funding and many do not have the luxury of big-spending advertisers either. It is obvious that CBC has an issue with operating costs and want us to fork over more for their overspending.

The $1.2billion in annual subsidies it receives isn’t enough to keep them operating but because Trudeau and his Liberal Party “love the CBC” (A quote from Justin Trudeau) and arguably CBC is valuable to the Liberal Party for their regurgitation of the party’s narrative (in my opinion), funding for CBC will increase this year according to Canadian Heritage and Multiculturalism Minister, Steven Guilbeault.

The mandate, handed down from Trudeau, is to “strengthen the regional mandate of CBC/Radio-Canada”. In addition, Trudeau asked Guilbeault to make it a top priority to “regulate social media for hate speech and illegal content”. It has not been disclosed how much additional funding the CBC can expect this year, however, if they increase local news coverage and work with smaller platforms, they are sure to see more of our money… even if on average 14% fewer people watched the CBC in 2019 over the year prior. Advertisers are less and less interested resulting in a 53% drop in ad revenues over the last five years.

In 1975, CBC Radio predicted it could earn $24.3million per year in advertisements, but their highest advertising revenue year brought in just $1.4million.

Anecdote time: I worked for Rogers Media as a Radio Advertising Sales Account Executive in a secondary market and my annual quota (which was attainable) was $1.4million. Me, one of seven sales reps, sold as much in one market than CBC could sell for their entire Canadian Radio budget… pathetic!

“Our objective is not to make money but to provide a service and fulfill our mandate,” Radio-Canada Executive VP Michael Bissonnette said in early 2019. “We reinvent ourselves every year to try and find new ways to do things because we have to offer more, but with a smaller budget. So that requires visionary talent.”

You can read CBC’s mandate here:

https://cbc.radio-canada.ca/en/vision/mandate

It focuses on providing “informative, enlightening, and entertaining” content in English and French, across the country, with a concentration on “multicultural and multiracial” topics. This mandate is based on The Broadcasting Act which is currently under review, and the CBC is attempting to contribute to any potential provisions by submitting a paper, pushing for public broadcasting to be strengthened. The report is expected to be completed this month, meaning the CBC mandate may be revised to reflect any provisions.

I also recommend reading the CBC Strategic Plan (found under the ‘Vision’ menu on their website) where they claim to be “Canada’s most trusted brand” [insert laugh track here] as well as noting a business plan to increase revenue which they obviously plan to do through begging to Guilbeault and Trudeau, not produce a good product to attract viewers/listeners like every other media company.

When testifying before a parliamentary committee on May 30, CBC’s CEO Catherine Tait told members that the broadcaster’s role was to “protect the truth” and “dispel misinformation”. As covered by True North, CBC has failed to live up to its own standards on multiple occasions including misrepresenting poll data and selectively publishing only part of a report.

For many reasons, I believe it is time to finally #DefundtheCBC

1. More than ever before, they report biased information in favour of one political party (Liberal)

2. Their programming is sub-par at best (prove me wrong?)

3. They are not Canada’s most trusted anything and should not be responsible for handling “disinformation”

4. Advertisers are not interested in spending money to reach their diminishing audience

5. Their reporters are partisan (see #1)

6. Canadians are not interested in tuning in

Now is the time to write to your MP and let them know that this enormous waste of money should be halted. In future articles, I will explore other crown corporations like LCBO, Canada Post, and Bank of Canada. In many cases I will advocate for privatization however I don’t think that there is any value to the Canadian Broadcasting Corporation and thus it should be dissolved, funds reallocated or cut from the budget entirely. The only benefactors of the CBC are the employees who make good money but terrible content and the Liberal Party of Canada.