Business
How big things could get done—even in Canada
From the Fraser Institute
By Philip Cross
From Newfoundland’s Muskrat Falls hydro project, to Ottawa’s Firearms Registry and the Phoenix pay system, to Montreal’s 1976 Olympics, Canada is a gold medal winner when it comes to wasting tax payer dollars. It doesn’t have to be this way.
Last year, Bent Flyvbjerg, a Danish professor of economic geography specializing in megaprojects, and Canadian journalist Dan Gardner co-authored a book How Big Things Get Done. They investigate what they coin the “Iron Law of Megaprojects,” which holds they routinely come in well over budget, far past projected deadlines, and without the projected benefits.
Unfortunately for taxpayers, the book contains numerous examples of Canadian megaprojects that follow this Law of Megaprojects. The federal government’s infamous firearms registry is a textbook template for how IT projects can go terribly wrong, ending up 590 per cent over budget. The Muskrat Falls hydro project in Newfoundland is cited as a classic demonstration of what happens when hiring a firm with little direct experience managing such a large complex project. Most famously, the 1976 Montreal Olympic Games wins the title for the largest cost overrun in Olympic history, finishing 720 per cent over budget. The authors suggest Montreal’s “Big Owe” stadium “should be considered the unofficial mascot of the modern Olympic Games.”
One thing all these Canadian examples have in common is extensive government involvement. Not that governments learned from their past mistakes. The federal government’s Phoenix pay system fiasco demonstrates that IT remains a black hole, with the government recently announcing it would abandon Phoenix after spending $3.5 billion trying to implement it. Several light train projects across the country have gone off the rails, the poster boy being the system in Ottawa, which is years behind schedule and already $2.5 billion over budget.
There are several reasons why government projects are chronically prone to failure. One is that politicians, especially late in their careers, want legacies in the form of monumental tangible projects irrespective of whether they effectively meet a public need. You can see this dynamic clearly at work today in Canada, as the Trudeau government pushes for a prohibitively expensive (probably more than $100 billion) high-speed rail connection between Windsor and Quebec City. Meanwhile, Ontario Premier Doug Ford promotes a traffic tunnel underneath Highway 401 between Brampton and Scarborough, and Quebec Premier Francois Legault revives plans for a third link connecting Quebec City to the south shore of the St. Lawrence River. While Canada clearly needs more transportation infrastructure, these projects are not the most cost-effective way of meeting the needs of commuters.
Governments deceptively deploy several tricks to help get uneconomic projects built. They routinely produce unrealistically low-cost estimates to make wasteful ego-driven projects appear affordable. Another tried and true tactic is to just “start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in,” as former San Francisco mayor Willie Brown admitted. This approach preys on the mistaken belief that large sunk costs mean scrapping a project “would be interpreted by the public as ‘throwing away’ the billions of dollars already spent” when it is actually a textbook example of throwing good money after bad.
Unlike other studies of how major infrastructure projects typically are over budget, Flyvbjerg and Gardner have some concrete recommendations on how to manage large projects that respect deadlines and budgets.
These steps include careful consideration of the actual goals of the project (airlines can meet the need for fast transport in the Windsor-Quebec corridor without the expense of high-speed rail), detailed planning and preparation followed by swift execution to minimize costly surprises (summarized by their advice to “think slow, act fast”), accounting for the cost of similar projects in the past, and breaking large projects into smaller modules to allow projects to scale back when they run into trouble. A good example of these principles at work in Canada were several oilsands projects built before 2015, when severe shortages were addressed by firms using modularity and synchronizing their work schedules to free up scarce labour and materials.
However, one major flaw in Flyvbjerg and Gardner’s analysis is their failure to understand the economics of renewable energy. They cite solar and wind projects as examples of projects that routinely finish under budget, a major factor in their declining cost. But building renewable energy is not their only cost to the energy grid, as back-up plants must be maintained for those periods when the sun is not shining or the wind is not blowing, as noted in a recent article by Bjorn Lomborg. The expense of maintaining plants that often are idle raises overall costs. This is why jurisdictions that rely extensively on renewable energy, such as Germany and California, have high energy costs that must be paid either by customers or taxpayers.
However, apart from this mistake, there is much governments and taxpayers can learn from How Big Things Get Done.
Author:
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?
We make content free for you but we require support to create journalism. Please consider a free subscription to our newsletter, or donate an amount of your choice.
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.”
-
Brownstone Institute1 day ago
The Most Devastating Report So Far
-
Business1 day ago
Carbon tax bureaucracy costs taxpayers $800 million
-
ESG1 day ago
Can’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!
-
John Stossel24 hours ago
Green Energy Needs Minerals, Yet America Blocks New Mines
-
Daily Caller1 day ago
Los Angeles Passes ‘Sanctuary City’ Ordinance In Wake Of Trump’s Deportation Plan
-
COVID-192 days ago
Dr. McCullough praises RFK Jr., urges him to pull COVID shots from the market
-
MAiD2 days ago
Over 40% of people euthanized in Ontario lived in poorest parts of the province: government data
-
Alberta1 day ago
Province considering new Red Deer River reservoir east of Red Deer