Business
5 year payback estimate for EV battery-maker subsidies off by 15 years! – PBO
From the Fraser Institute
Ottawa’s super-charged EV obsession reaches new heights
Every week, it seems, we get another report revealing the deep thoughtlessness and fiscal recklessness of Ottawa’s electric car and electric-car battery fixation. For example, the Parliamentary Budget Officer recently asked how long it will take for the federal government to see a return on the $28.2 billion of production subsidies to EV battery-makers Stellantis and Volkswagen. The answer—about four times longer than government originally claimed.
Remember, Prime Minister Trudeau said the “full economic impact of the project will be equal to the value of government investment in less than five years.” But according to the PBO, it will take 20 years, not five years, to merely recover the money the government “invested” on behalf of Canadians. There’s no actual profit to be had at that point.
Why the discrepancy?
To figure that out, the PBO looked into the government’s modelling used to generate its “five-year” payback scenario and found that the government’s estimate included numerous assumptions about other investments (and assumed production increases) outside the direct battery-making process including assumed capability in battery-material production, which is shorthand for mining and refining of critical metals and minerals needed to make EV batteries. Of course, this is a notoriously uncertain proposition given Canada’s dismal performance in bringing new mining-related infrastructure projects with EV-battery potential to fruition.
In fact, as the PBO notes, of the total “investment package” government modelled in calculating its “payback” date, only 8.6 per cent was directly related to battery production at the Volkswagen plant. More than 90 per cent was based on assumptions about developments outside of the subsidized battery-makers purview or control.
By contract, the PBO’s modelling of the investment cost-recovery focused only on “government revenues generated by cell and module manufacturing, upon which the production subsidies are based.” And unlike the government’s analysis, the PBO analysis starts when production is actually expected to begin at the new battery plants, which is not until sometime next year.
And yet, the PBO analysis remains quite generous as it excluded “public debt charges that would be incurred to finance the production subsidies” and simply accepted estimates of production capability by Stellantis and Volkswagen.
Clearly, the Trudeau government’s EV crusade is textbook bad public policy where the government attempts to pick winners and losers in the economy, in this case dependent on fanciful scenarios of future developments in global markets far outside Canada’s control. The crusade is also out of step with developments in the largest likely market for Canadian EVs and EV products—the United States, where car buyers are increasingly rejecting EVs despite heavy subsidies and massive government spending initiatives to promote EV manufacturing.
Governments in North America have been trying to push EVs over internal combustion vehicles for 30 years now, and it has not worked. EVs have consistently failed to compete with combustion vehicles on performance and cost, and failed to win broad consumer support despite oceans of government subsidies for manufacturers and buyers alike. It’s long past time for government to take off its rose-coloured glasses on the EV transition. There are better uses for government’s time and money. Getting people’s food and housing costs down, for example, might be a good place to start.
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Business
CBC’s business model is trapped in a very dark place
I Testified Before a Senate Committee About the CBC
I recently testified before the Senate Committee for Transport and Communications. You can view that session here. Even though the official topic was CBC’s local programming in Ontario, everyone quickly shifted the discussion to CBC’s big-picture problems and how their existential struggles were urgent and immediate. The idea that deep and fundamental changes within the corporation were unavoidable seemed to enjoy complete agreement.
I’ll use this post as background to some of the points I raised during the hearing.
You might recall how my recent post on CBC funding described a corporation shedding audience share like dandruff while spending hundreds of millions of dollars producing drama and comedy programming few Canadians consume. There are so few viewers left that I suspect they’re now identified by first name rather than as a percentage of the population.
Since then I’ve learned a lot more about CBC performance and about the broadcast industry in general.
For instance, it’ll surprise exactly no one to learn that fewer Canadians get their audio from traditional radio broadcasters. But how steep is the decline? According to the CRTC’s Annual Highlights of the Broadcasting Sector 2022-2023, since 2015, “hours spent listening to traditional broadcasting has decreased at a CAGR of 4.8 percent”. CAGR, by the way, stands for compound annual growth rate.
Dropping 4.8 percent each year means audience numbers aren’t just “falling”; they’re not even “falling off the edge of a cliff”; they’re already close enough to the bottom of the cliff to smell the trees. Looking for context? Between English and French-language radio, the CBC spends around $240 million each year.
Those listeners aren’t just disappearing without a trace. the CRTC also tells us that Canadians are increasingly migrating to Digital Media Broadcasting Units (DMBUs) – with numbers growing by more than nine percent annually since 2015.
The CBC’s problem here is that they’re not a serious player in the DMBU world, so they’re simply losing digital listeners. For example, of the top 200 Spotify podcasts ranked by popularity in Canada, only four are from the CBC.
Another interesting data point I ran into related to that billion dollar plus annual parliamentary allocation CBC enjoys. It turns out that that’s not the whole story. You may recall how the government added another $42 million in their most recent budget.
But wait! That’s not all! Between CBC and SRC, the Canada Media Fund (CMF) ponied up another $97 million for fiscal 2023-2024 to cover specific programming production budgets.
Technically, Canada Media Fund grants target individual projects planned by independent production companies. But those projects are usually associated with the “envelope” of one of the big broadcasters – of which CBC is by far the largest. 2023-2024 CMF funding totaled $786 million, and CBC’s take was nearly double that of their nearest competitor (Bell).
But there’s more! Back in 2016, the federal budget included an extra $150 million each year as a “new investment in Canadian arts and culture”. It’s entirely possible that no one turned off the tap and that extra government cheque is still showing up each year in the CBC’s mailbox. There was also a $93 million item for infrastructure and technological upgrades back in the 2017-2018 fiscal year. Who knows whether that one wasn’t also carried over.
So CBC’s share of government funding keeps growing while its share of Canadian media consumers shrinks. How do you suppose that’ll end?
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Business
PBO report shows cost of bureaucracy up 73 per cent under Trudeau
From the Canadian Taxpayers Federation
The Canadian Taxpayers Federation is calling on the federal government to rein in the bureaucracy following today’s Parliamentary Budget Officer report showing the bureaucracy costs taxpayers $69.5 billion.
“The cost of the federal bureaucracy increased by 73 per cent since 2016, but it’s a good bet most Canadians aren’t seeing anywhere close to 73 per cent better services from the government,” said Franco Terrazzano, CTF Federal Director. “Taxpayers are getting soaked because the size and cost of the federal bureaucracy is out of control.”
Today’s PBO report estimates the federal bureaucracy cost taxpayers $69.5 billion in 2023-24. In 2016-17, the cost of the bureaucracy was $40.2 billion. That’s an increase of 72.9 per cent.
The most recent data shows the cost continues to rise quickly.
“Spending on personnel in the first five months of 2024-25 is up 8.0 per cent over the same period last year,” according to the PBO.
“I have noticed a marked increase in the number of public servants since 2016 and a proportional increase in spending,” said Parliamentary Budget Officer Yves Giroux. “But we haven’t seen similar improvements when it comes to service.”
The Trudeau government added 108,793 bureaucrats since 2016 – a 42 per cent increase. Canada’s population grew by 14 per cent during the same period. Had the bureaucracy only increased with population growth, there would be 72,491 fewer federal employees today.
The government awarded more than one million pay raises to bureaucrats in the last four years, according to access-to-information records obtained by the CTF. The government also rubberstamped $406 million in bonuses last year.
“The government added tens of thousands of extra bureaucrats, rubberstamped hundreds of millions in bonuses and awarded more than one million pay raises and all taxpayers seem to get out of it is higher taxes and more debt,” Terrazzano said. “For the government to balance the budget and provide tax relief, it will need to cut the size and cost of Ottawa’s bloated bureaucracy.”
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