Fast & Curious: Short Takes on Random Things

Budget

Vintage gas pumps. Texas. (The Library of Congress from Washington, DC, United States.)

Vintage gas pumps. Texas. (The Library of Congress from Washington, DC, United States.)

This week, I’m going to focus on the federal budget tabled Tuesday by Liberal Finance Minister Bill Morneau and discuss a couple of points of particular interest to Cape Bretoners.

The first is the government’s decision to double (for one year only) the gas-tax revenue available for infrastructure spending by municipalities. This is good news for the CBRM, as even Mayor Cecil Clarke had to admit, telling the Cape Breton Post:

The commitment to infrastructure was very critical for us. Any increase that would double from $6.8 million to $13.6 million would further go against other pressures we have for base infrastructure in the CBRM.

The federal government’s sharing of gas-tax revenue is an interesting phenomenon in and of itself because it represents the feds doing an end-run around the provinces to send money directly to municipalities.

Provinces don’t like these sorts of arrangements, which is why there are so few of them, but academics find them very interesting (she says, having just googled “academics gas tax municipal autonomy Canada”) because they represent a “significant departure from traditional revenue transfer arrangements.” The big issue, of course, is that the federal government has no constitutional authority over municipalities which are, famously, “creatures of the provinces.”

The Federation of Canadian Municipalities (FCM) has described the current funding arrangement as “hourglass federalism”:

The federal government is the top half of the glass with resources, the provinces are the choke point in the middle, because their resources have all been sucked into providing medicare. The cities are in the bottom with many problems but few resources.

Which is one reason why a funding arrangement like the gas tax is of great interest to a chronically-underfunded municipality like the CBRM (I’ll get to another one in a moment).

First, I need to note that, since the gas tax transfer was first introduced in 2005, it’s had a huge green component. The 2005 budget outlining the plan stated that:

The federal government wanted all projects to help fund local environmentally sustainable infrastructure that contributed to cleaner air, cleaner water and reduced GHG emissions.

Which leads us to the second point. Cue new item:

 

Coal 

The CBRM is a community at cross purposes.

While our mayor is saying this (in response to the one-off gas-tax windfall):

The municipality will also have to delve deeper into the details of budget initiatives dealing with areas such as green energy, broadband and coal power phase-out including a transition fund for workers to see what the opportunities or implications may be for the CBRM, Clarke said.

“The CBRM has the single largest coal-fired power generation capacity in Nova Scotia … I’ll be reaching out to the utility to see what they know and how we can get a better understanding of what to expect from that,” Clarke said, adding there are currently many local good-paying jobs associated with Nova Scotia Power.

We are also being asked to celebrate this:

Nova Scotia Power will be burning Donkin coal at the Lingan generating station for several years under a new agreement.

(Mind you, that last quote is from July 2018, months before a series of roof falls closed the Donkin Mine which reopened in January on a limited basis and has already begun racking up infractions.)

The point is, you can’t have your cake and eat it too — you can’t embrace both a coal mine and a coal phase-out program. You have to choose.

Or Mother Nature will choose for you.

 

Start the Convo

The other reason Cape Bretoners, in particular, should be interested in the gas tax transfer is that it represents something new in federal revenue transfers — and the very fact that “something new” is possible in this department is of interest.

At it’s most extreme, a new arrangement for Cape Breton would look like provincehood or territorial status. (Actually, at it’s most extreme I suppose it would look like nationhood, but nobody seems to be arguing for that which is probably just as well.)

But extreme as those possibilities are, they were actually floated by Senator Dan Christmas in 2017 when he gave the first annual Father Greg MacLeod lecture, which he titled: “Cape Breton, Nova Scotia, Canada: Reflections on an Island.

As I wrote at the time:

[W]hat an opening gambit! Once you have, with sad (and totally fake) reluctance, agreed to drop the demand for provincial status, there would still be so much left on the table — a fair share of federal equalization payments, our own Nominee Program for immigrants, increased powers for municipal governments, an agreement that all federal government offices in the province should be in the CBRM.

I saw Christmas’ bold suggestion as a starting point, not an end point, and apparently I wasn’t alone in that. A mysterious group (there are literally no actual names attached to their Facebook or Patreon pages) has launched a project called, “Start the Conversation,” based on Christmas’ idea.

Here’s their first video:

 

 

Where’s Cecil?

Halifax Stanfield International Airport

Halifax Stanfield International Airport

At the risk of running New York Post-style blind item…No, lets keep it real, I am running New York Post-style blind item and I need to own it:

A (very) reliable source tells me that Mayor Cecil Clarke was at the Halifax airport again on Friday evening. This would make (at least) two trips last week, as Clarke was in Halifax Tuesday for a meeting which caused him to miss a (rescheduled) council meeting.

I have no idea whether he was arriving in Halifax or passing through Halifax on his way home (or elsewhere). Perhaps he was just going to Halifax for the weekend. But I was curious, so I asked his spokesperson Sheilah MacDonald (twice) what the purpose of the second trip was. She has yet to respond to my inquiry.

Because as everyone knows, when you ignore reporters, they just go away.

 

Government aid

Ironically, although I started out talking about the federal budget, I haven’t had time to go over the “Support for Canadian Journalism” section.

Tim Bousquet at the Examiner has, though, and his preliminary findings confirm my suspicions: this is not support for digital startups like the Examiner and the Spectator.

Which is fine in one way, I’m ornery enough to want to be beholden to no one but my readers. But I share a number of Tim’s concerns about the way the assistance has been structured, which is why I am going to shamelessly reproduce them here.

He starts by noting the three journalism-related initiatives contained in the budget:

• allowing journalism organizations to register as qualified donees;
• a refundable labor tax credit for qualifying journalism organizations; and
• a non-refundable tax credit for subscriptions to Canadian digital news.

To benefit from any of these, a media organization must first qualify as a media organization:

An independent panel will be established to recommend eligibility criteria for the purposes of these measures. Once the panel has made its recommendations, eligibility of organizations will be evaluated and a recognition process will be put in place.

This is the easily the scariest part of the whole shooting match — who is going to be on that “independent panel” deciding who does and doesn’t qualify as a media organization? Tim’s nightmare panel includes Mark Lever of the SaltWire Network. Mine includes anyone who, in 2019, still uses the term “blogs” to describe online news publications.

And that’s just the beginning:

The devil will be in the details of the eligibility criteria, but it already seems designed as a big tax giveaway to legacy media.

A QCJO will be required to be organized as a corporation, partnership or trust.

As it’s a corporation, Halifax Examiner Inc. qualifies, but right off the bat, many startups organized as sole proprietorships or as co-ops won’t.

One provision seems specifically designed to accommodate PostMedia:

A QCJO that is a corporation will be required to meet the following additional requirements in order to qualify:

  • if it is a public corporation, it must be listed on a stock exchange in Canada and not be controlled by non-Canadian citizens; and
  • if it is a private corporation, it must be at least 75-per-cent owned by Canadian citizens or by public corporations described above.

PostMedia is owned primarily by an America hedge fund, but the weird criteria in this provision allows it to receive the tax subsidy because PostMedia is offered on the Toronto stock exchange and is “controlled” by Canadians — that is, its president and officers are Canadian, even if its budget and profit demands are ultimately dictated by the hedge fund.

Moreover, the budget goes to great lengths to exclude small operations:

…an organization will be required to meet the following conditions to be a QCJO:

it regularly employs two or more journalists in the production of its content who deal at arm’s length with the organization.

“Arms-length” means that the subsidized reporter does not control the corporation. So, Halifax Examiner Inc. can’t receive the subsidy to offset Tim Bousquet’s wages. As the Examiner is currently organized, we’d be ineligible for any of the tax credit, as we don’t pay two full-time reporters who aren’t named Tim Bousquet. Again, nearly every other startup media entrepreneur — Mary Campbell in Sydney, Joey Coleman in Hamilton, etc. — would be excluded. All the money goes to the big players.

In addition, those two reporters must be paid $55,000 a year. Tim did the math for the Examiner and figured he’d need 1,000 additional subscriptions to cover those costs — a total he doesn’t think is out of the question, but which could take some time to reach. Meaning, to qualify as a news organization and tap into those subsidies, he’d have to go into debt, something he’s avoided in growing the business so far.

The Spectator isn’t structured as a corporation, so I’d have an additional hoop to leap through were I to decide to chase this government assistance.

Tim says he’s not sure what he’s going to do. Me, I don’t think I’m going to do anything other than try to attract more subscribers by producing content they can’t get elsewhere. If that changes — if, for example, I decide to sell the publication to a hedge fund — I’ll let you know.

 

 

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