Posts Tagged ‘Sun Media’

The True Cost of the CBC

October 24th, 2011
Comments Off on The True Cost of the CBC

So you’re the CBC and your under pressure to justify the $1.1-bilion taxpayer subsidy you receive. How to ease the pressure? How about, you turn the tables, and re-invent accounting for the people putting the pressure on.

Thus, Quebecor media, who is trying to hold the publicly funded CBC to account through legal access to information requests, actually received a $333-million subsidy themselves, according to the CBC. As Brian Lilley reports:

…when Quebecor bid on and won the right to set up a cellphone network in Quebec and Eastern Ontario, it received a $333-million subsidy…

CBC President arrived at this amount by claiming that we would have had to pay that much more to the government had Bell, Rogers and Telus been allowed to bid.

Leaving aside Lilley’s argument that paying $555-million is a strange definition of subsidy, what the CBC are talking about is opportunity cost, and it can apply both ways.

What is the opportunity cost of the CBC?

Well, that $1.1-billion is after tax money, what the CBC keeps. Forgone taxes, at 28% tax rate (Federal corporate tax = 16.5%, Ontario tax = 11.5%.) is $308-million – approximately what the CBC claims Quebecor got as a subsidy – turning their total subsidy to $1.4-billion.

But wait, that 1.4-billion has it’s own opportunity cost. What if the Government of Canada paid down debt with that $1.4-billion? At 3% prime interest rate, they would save 42-million, compounded yearly on interest payments. Just five years of paying debt, instead of the CBC, we would save $210-million on interest alone, assuming the interest rate doesn’t rise. And since we are borrowing the money to give CBC, therefore increasing our future interest payments by the same amount, we can actually double that money, meaning in five years, with compounding, we can easily add half-a-billion dollars to the CBC bill.

The above doesn’t take into account the effect of removing $1.4-billion from the productive economy to give to the CBC. Some estimates are that leaving the money in the economy, through not taxing it, could have a multiplier effect of as high as 1.5, meaning the cost to productive activity of subsidizing the CBC could be as high as $2.1-billion a year.

So yes, Brian Lilley, the CBC’s comparison of Quebecor to itself is “a load of bull.” However, spreading the load of bull across the whole field, and thing are much worse for the CBC than they at first appeared.

CBC, Economic Fundamentalism , ,

Oh, The Irony

September 24th, 2009

Greg Weston was one of the journalists in the Parliamentary Gallery who got his nose particularly out of joint with the PMO when it got invaded by Conservatives. He has since calmed somewhat and seems to be offering fairer reportage. Today, he offers up a tidbit I never heard before, but which gave me a good laugh:

"Stop wasting my money!"

"Stop wasting my money!"

It has been almost 30 years since a flock of geese flying across Canadian television screens caused a national flap over taxpayers’ money being used for partisan political propaganda…

Liberal MP Bob Rae, then a member of the NDP, said at the time: “I will never be able to look at Canada geese in the same way again. I’ll see them as Liberals in disguise.”

Turns out Bob Rae was the Liberal in disguise, who knew?
Besides providing an easy swipe at Bob Rae, Weston makes an error of, if not fact then certainly, content. Writing of the Conservative’s “we’re spending your money so fast we hardly have time to count it,” ads. Here’s what he wrote:
Even right-wing commentator Gerry Nicholls decried the campaign as “an abuse of tax dollars,” describing the ads as “clearly partisan, clearly Conservative propaganda.”
Entirely true, Gerry Nicholls has been critical of these ads,. However, the way Weston writes this it suggests Nicholls is an otherwise compliant Conservative who never criticizes the Harper Tories, and that’s simply not the fact. In fact my friend Gerry is often criticized for speaking out against the Conservatives.

Gerry Nicholls, Ink Stained Wretches , , , , , , , ,