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Richard Stursberg: Enough with committees and consultations. The CBC needs a mandate with teeth

Commentary

The news media in Canada is in crisis. Policy responses to date are failing to solve for the information that citizens need to make informed decisions about important issues and debates. The Future of News series brings together leading practitioners, scholars, and thinkers to imagine new business models, policy responses, and journalistic content that can support a dynamic future for news in Canada.

The minister of Canadian heritage, Pascale St-Onge, says that she wants to see the role of the CBC “redefined” before the next election. She would like to establish a mandate for the corporation’s activities over the next 10 years. This is a worthy undertaking. As things stand now, the CBC has no agreed mandate.

The Broadcasting Act’s policy for the CBC is no help at all. It requires that the CBC “inform, enlighten and entertain” everyone, including “national and regional audiences, while serving the special needs of regions”, French and English audiences, including “the special needs of official language communities”, while reflecting the “multicultural and multiracial character of the country, indigenous cultures, and disabled people”. In other words, it requires the corporation to be everything to everyone. It is not guidance but a recipe for failure. No organisation on earth could achieve these colossal requirements.

What is needed is for the government to define what it expects the CBC to deliver in a way that is both clear and doable. The United Kingdom does this through the Royal Charter, which is, in effect, a contract between the BBC and the government. It specifies what the BBC will do over the next ten years, along with a commitment to the necessary funding. It is a mandate with teeth. 

St-Onge wants to do what no government has ever done before. She also wants to have the new mandate in place within the next year. This will be a challenging undertaking. How best should she approach it to ensure that she is successful?

First, she should NOT under any circumstances set up a committee of worthy Canadians to look into the matter. Such committees are inevitably time-consuming. They always require consultations across the country, new research, and much head-scratching that never takes less than a year. She cannot possibly meet her election deadline if she creates a committee.

Besides, the government might not agree with its conclusions. The history of these gargantuan exercises is that they are simply ignored. They make endless recommendations that are immediately put on the shelf and forgotten.

There is also nothing that a Committee of the Good and the Great could add to our knowledge of the CBC, what different parties want from it, or how the public feels about it. All these matters have been covered extensively by the CRTC at the recent licence renewal hearings for the corporation.

Instead, the government simply needs to make up its mind about the future of the corporation. It needs to produce a mandate that is similar to the Royal Charter, outlining the principles that should guide the CBC’s evolution. To be useful, these cannot be the mush that appears in the Broadcasting Act. They must be clear principles with clear consequences. Inevitably, this will involve difficult choices.

By way of example, most people seem to agree that the CBC should not duplicate the work of the private sector. Why spend public money on what is also already being done? But if that principle is followed, it means that the CBC would have to wind up all of its supper-hour newscasts. It would have to reshape its news to focus on the things that the private sector cannot afford. It would focus on in-depth investigative journalism, international coverage, and national issues.

In a similar vein, is there a financing principle that requires the French and English sides of the corporation to be treated equally? Right now, that is not the case. Radio-Canada receives 44 percent of the government subsidy and the CBC 56 percent. This means that on a per capita basis the French side gets $70 a person and the English $23, making Radio-Canada one of the best-financed public broadcasters in the world and CBC one of the worst. This can only be rectified by either decreasing the money that goes to the French side or dramatically increasing money to the English side.

People walk into the CBC building in Toronto on April 4, 2012. Nathan Denette/The Canadian Press.

Similarly, is there a principle that requires equity of service to the different communities in the country? If so, why does Charlottetown, with a population of 44,000 have a radio service and Hamilton, with a population of 580,000 have none?

Sometimes making decisions around these issues does not require new money. Redirecting the news does not need more money; rebalancing the French-English split and building new radio stations does. There is no point in having a new mandate for the corporation that is not properly costed with the necessary resources committed on a multi-year basis. Without the necessary money, the best mandate in the world is only air and dust. 

Historically, governments have been afraid to address these contradictions and complexities in a clear way. Much of the reason for the corporation’s current challenges is that no government has had the courage to provide a mandate with real teeth. Without it, however, the CBC/Radio-Canada finds itself in an impossible position. No matter what it decides, it will be crucified. If it winds up the supper-hour newscasts and puts the money into international and investigative news, it will be attacked from every region of the country. The private sector might be happy but most federal politicians will be furious.

Beyond these issues, a proper mandate would need to specify—among other things—whether the CBC should be in advertising, whether it should have an international service, whether it should commission films (a la BBC films), whether it should emphasise broadly popular programming over art house fare, and whether it needs to produce a certain proportion of its news, documentaries, and current affairs as co-productions between the English and French sides of the corporation.

The current environment is extremely challenging. The rise of social media and international streaming services has made it even more imperative to define clearly the role of the public broadcaster in the Canadian media landscape. Very difficult decisions will have to be made.

A proper mandate would not only provide real guidance, but it would also provide the legitimacy that the corporation will need to make hard choices about its future. If we want an effective CBC in 2035 then we need to be very clear about where it should go and how it should evolve.

We will know whether the minister is serious very shortly. If she appoints a committee of worthies, we will know she is not. If, on the other hand, she approaches the problem by negotiating a contract with the CBC—like the Royal Charter—we will know that she is serious. And if that contract were to define the CBC’s mandate clearly for the next ten years with the appropriator financing attached, it would be a historic achievement.  

The Future of News series is supported by The Hub’s foundation donors and Meta.

‘Shaping up to be a bumpy landing’: Trevor Tombe breaks down 2023’s inflation numbers

Commentary

Today Statistics Canada released inflation numbers for December 2023 that shows the inflation rate somewhat unexpectedly increased to 3.4 percent. We turned to The Hub’s resident economics expert Trevor Tombe to understand what these numbers mean. He breaks down the data and offers his perspective on whether or not—and to what extent—inflation will continue to grow in 2024. The upshot? We shouldn’t be too worried yet—the December inflation increase counterintuitively shows that inflation pressures are in fact easing, even if not as fast as some might hope.

SEAN SPEER: What should we make of the news that inflation actually increased from 3.1 percent in November to 3.4 percent in December? Is this a temporary blip that can be explained by contingent factors or is it a sign that inflation is stickier than we might have anticipated?

TREVOR TOMBE: This is a great question that highlights an important feature of inflation calculations that many don’t appreciate: they’re a year-over-year comparison. This means the December 3.4 percent rate is effectively the accumulation of twelve months of price changes since last December. Effectively, we drop last year’s December and add in this year’s to get the updated inflation numbers. Last year, there was an unusually large price drop and this year there was a relatively normal price drop. (Prices normally fall in December because of holiday sales.) So since last year’s unusually large drop was eliminated, that tended to make the 12-month total increase slightly.

The inflation rate of 3.4 percent for December 2023 was actually a sign that the average consumer price increase between November and December 2023 was relatively normal. It’s not necessarily a sign that things are going to get worse. And perhaps most interestingly of all, we’ll see this continue for several months. If everything from here on out proceeds normally (with monthly price changes aligned with a 2 percent annual inflation rate), then we’re not likely to see an actual drop in the headline inflation rate for the next several months, as I illustrate below. So, overall, December 2023’s number continues to show that inflation pressures are easing, even if not as fast as some might hope.

SEAN SPEER: There’s been a lot of talk about a so-called “soft landing” and the potential to bring inflation back to target without provoking a recession. What, if anything, do the December numbers tell us about that scenario? Are they a sign that we may need to see further tightening in the labour market and the economy more generally before inflation falls back to where it needs to be?

TREVOR TOMBE: Inflation has come down a lot from its 2022 highs, and much of this might be thanks to rising interest rates by the Bank of Canada. Not all, of course. Energy prices falling from their summer 2022 highs account for roughly 40 percent of the drop compared to December 2023. But if we look over the past year, the decline in inflation pressures is fairly broad-based. From groceries to communications to vehicles and more, most product categories are contributing less to inflation. Demand for many goods and services, especially those sensitive to interest rates, is showing particularly large drops in price pressures, as research by myself and my colleague Dr. Sonja Chen documented in a recent C.D. Howe paper.

The cost of this has been slower economic growth, however. Unemployment in June 2022, when inflation peaked, was less than 5 percent. Today, it’s nearly 6 percent. And overall economic growth has slowed to a crawl and is dramatically outpaced by population growth—meaning that on a per capita basis Canada’s economy is significantly smaller today than in recent years. Canada has avoided a central bank-induced recession so far, which some might consider a soft landing. I tend to view the data as showing a relatively successful reduction in inflation, but not one without costs. It seems to be shaping up to be a bumpy landing, but ultimately one we can walk away from without too many bruises. I’ll take it.

SEAN SPEER: There’s been some attention (including recently at The Hub) about wage inflation reflected for instance in the growth of wage settlements in 2023. Is there any concern in your mind that the persistence of wage increases (even as unemployment ticks up) may make it more difficult to bring inflation back down to target?

TREVOR TOMBE: Wage growth has indeed been rising over the past year. The latest data from the labour force survey shows average hourly wages are up 5.4 percent compared to a year earlier, and average weekly earnings are up 5.2 percent. That’s good news for individuals since that’s higher than inflation over the past year. So we’re slowly recovering our lost purchasing power. However, there is a valid concern that rising wages, which are a considerable cost to businesses, may wind up leading to further price increases as those businesses seek to cover those rising costs.

This isn’t a necessary outcome, though. If productivity growth rises, then rapid wage growth doesn’t actually increase business costs since each hour worked will produce more than before. So on a per-unit basis, labour costs don’t necessarily rise. The trouble is that Canada’s productivity performance has been pretty terrible over the past few years. Labour productivity growth has been negative for 12 of the past 13 quarters! This is my main concern. If productivity continues to fall while wages continue to rapidly rise, then something will have to give. Indeed, the Bank of Canada, for its part, highlights this as one of the key “upside risks” (that is, risks to inflation rising).

SEAN SPEER: What other factors are you following that could influence the Bank of Canada’s efforts to restore price stability?

TREVOR TOMBE: One of the biggest factors behind the current high rate of inflation is shelter. Much of that is housing costs. Average rents are rising at a rate of 10 percent over the past three months (on an annualized basis), property taxes are rising at 13 percent, home insurance at 11 percent, and, of course, mortgage interest costs are rising at an even more rapid 28 percent. Shelter is at the heart of the broader affordability challenge for many Canadians, especially in some of our largest cities. This is perhaps the single largest issue to keep an eye on.

Goods inflation has returned almost to relatively normal levels, including grocery price increases, which have essentially returned to normal (although price levels remain far, far above where they were). And excluding shelter costs, services inflation is also not a particularly large problem. It’s all coming down now to shelter costs, something The Hub has rightly highlighted as a challenge for quite some time. There are exceptions to this, of course. Restaurant prices are rising faster, for example, which might be related to wage pressures that we just talked about. But the biggest items, as I show below, are dominated by shelter-related items.

SEAN SPEER: How will December’s results influence the Bank of Canada’s thinking about interest rates? Do you think they may cause a delay in rate cuts this year?

TREVOR TOMBE: The main headline rate of inflation includes many volatile components that are a poor guide to monetary policy. The Bank needs to think about where Canada’s economy will be one to two years down the line. It does not react month-by-month to changes in the overall rate of inflation. Instead, it uses (along with many other pieces of inflation) measures of “core” inflation that strip out volatile components. It’s not that these volatile components aren’t important to individuals—all price changes can strain a family’s budget. But by stripping out the volatile components, the Bank gets a better indicator of where total inflation may be headed in the future. They’re better predictors, if you will. The December results, unfortunately, showed that three of the key core measures reversed the positive trend we were seeing. Over the past three months, those measures rose between 3.4 percent and 4.2 percent (on an annualized basis), which I plot below.

So for me, that probably means a modest delay in when we should expect rates to fall. I strongly suspect we won’t see a reduction in rates at the January 24 meeting. The one to watch will be March 6, and that might still be a coin flip. April and beyond may be when we see some changes. The Bank has been clear that it needs to see “further and sustained easing in core inflation” before it lowers rates. The December data shows we aren’t seeing that yet.