2010 Federal Budget: The Action Plan Winding Down, but Administrative Reform Ramping Up

CCA Bul­letin 7/10

March 4, 2010

 

Exec­u­tive Summary

The 2010 Bud­get includes sta­ble fund­ing to arts and cul­ture with no cuts, but also yields no new invest­ments into the cre­ative econ­omy. The CCA sees no invest­ment towards cul­tural infra­struc­ture, or funds for pro­mo­tion abroad and audi­ence devel­op­ment. It is encour­ag­ing that char­i­ties are given more flex­i­ble means to con­duct busi­ness, and research grant­ing asso­ci­a­tions will have an increased abil­ity to fund higher edu­ca­tion within the knowl­edge econ­omy.  Mov­ing for­ward, some con­cerns include admin­is­tra­tive reforms, freezes on depart­men­tal oper­at­ing bud­gets, and changes to strate­gic reviews. These mea­sures may not be viewed as cuts at the moment, but may lead to finan­cial dif­fi­cul­ties for the arts sec­tor down the road.

Just the Facts

After an unchar­ac­ter­is­ti­cally long Speech from the Throne yes­ter­day, the Hon. Min­is­ter of Finance, James Fla­herty tabled the Fed­eral Bud­get for 2010 titled: Lead­ing the Way on jobs and Growth. The gov­ern­ment returned to Par­lia­ment yes­ter­day after a two-month long pro­ro­ga­tion, taken to recal­i­brate the agenda. Today, with the Main Esti­mates for 2010–2011 in hand, the CCA exam­ines how the 2010 Fed­eral Bud­get will impact Canada’s arts and cul­ture sector.

To begin, there is no men­tion of arts in the 2010 Fed­eral Bud­get. The over­ar­ch­ing theme of the Bud­get places an empha­sis on wind­ing down the sec­ond year of Canada’s Eco­nomic Action Plan, and prepar­ing for fru­gal spend­ing in years to come – a total of $17.6 bil­lion in sav­ings over the next five years.  In the fol­low­ing analy­sis the CCA will out­line how gov­ern­ment spend­ing will impact the abil­ity of pro­grams to sta­bi­lize and nur­ture the arts sec­tor and the cre­ative economy.

Bud­get 2010

Though arts were absent, we did see cul­ture men­tioned in today’s Bud­get, where gen­er­al­ized spend­ing mea­sures were men­tioned to sup­port indus­tries and com­mu­ni­ties. “In 2010-11, the Gov­ern­ment will pro­vide $1.3 bil­lion in sup­port to affected sec­tors, includ­ing forestry, agri­cul­ture, small busi­ness, tourism, ship­build­ing and cul­ture. These invest­ments will help to main­tain and cre­ate jobs across the coun­try.”  Unfor­tu­nately, the bud­get does not go into detail on how fund­ing for Cana­dian cul­ture will be addressed, nor is arts or cul­ture men­tioned under the purview of the Depart­ment of Industry.

As we saw yes­ter­day in the Speech from the Throne, this gov­ern­ment will seek to advance a dig­i­tal econ­omy strat­egy. The “Gov­ern­ment will develop a Dig­i­tal Econ­omy Strat­egy that will enable the ICT sec­tor to cre­ate new prod­ucts and ser­vices, accel­er­ate the adop­tion of dig­i­tal tech­nolo­gies, and con­tribute to improved cyber secu­rity prac­tices by indus­try and con­sumers.” It is inter­est­ing that inno­va­tion is con­tin­u­ally men­tioned in the 2010 Fed­eral Bud­get; how­ever, there is no men­tion of the impact made by inno­v­a­tive artis­tic pro­duc­ers within Canada’s cre­ative economy.

In addi­tion to the dig­i­tal econ­omy strat­egy, the CCA also pre­vi­ously men­tioned increased com­pe­ti­tion and for­eign invest­ment in telecom­mu­ni­ca­tions. With the full Bud­get in hand, it appears that this will only affect for­eign own­er­ship of Cana­dian satel­lites and should not, at present, impact the pro­duc­tion or dis­tri­b­u­tion of con­tent by Cana­dian cre­ators. The CCA will con­tinue to keep a watch­ful eye over this issue.

Some good news for the arts and cul­ture sec­tor is included in the pro­posal of reforms to the dis­burse­ment quota for char­i­ties. Until now, quo­tas were intended to ensure that a sig­nif­i­cant por­tion of a reg­is­tered charity’s resources is devoted to its char­i­ta­ble pur­poses. How­ever, with unpre­dictable dona­tions and fis­cal activ­i­ties, this led to much uncer­tainty and insta­bil­ity for Canada’s charities.

“Bud­get 2010 pro­poses to elim­i­nate all dis­burse­ment quota require­ments except those related to the require­ment to annu­ally dis­burse a min­i­mum amount of invest­ments and other assets not used directly in a charity’s oper­a­tions. This require­ment is being updated to pro­vide char­i­ta­ble orga­ni­za­tions a greater abil­ity to main­tain reserves to deal with con­tin­gen­cies. The reformed dis­burse­ment quota rules will apply to char­i­ties for fis­cal years end­ing on or after March 4, 2010.”

Also within the realm of cul­ture, Bud­get 2010 will pro­vide $1 mil­lion per year (over two years) towards the Com­mu­nity War Memo­r­ial Pro­gram to part­ner with com­mu­ni­ties across our coun­try who wish to build memo­ri­als. The CCA hopes that this pro­gram will con­tribute to the com­mis­sion­ing of works by Cana­dian artists and cre­ative producers.

Bud­get 2010: Tell me more

The 2010 Bud­get is very clear that the goal is to return to a bal­anced bud­get. There are cer­tain strate­gies being taken which may affect pro­grams, grants, and con­tri­bu­tions within the realms of arts, cul­ture, and heritage.

This “exit strat­egy” will wind down the Eco­nomic Action Plan and intro­duce other mea­sures to curb gov­ern­men­tal spend­ing. Some telling themes include a move from pub­lic spend­ing to pri­vate and cor­po­rate spend­ing: “The deci­sion to phase out the stim­u­lus mea­sures as planned reflects the Government’s belief that, over the long term, the pri­vate sec­tor is and should be the pri­mary source of jobs and growth. Gov­ern­ments have an impor­tant role to play in cre­at­ing the right con­di­tions for Cana­di­ans and busi­nesses to thrive.”

This theme is con­tin­ued by an empha­sis on con­tain­ing the admin­is­tra­tive costs of government.“For 2010-11, depart­men­tal bud­gets will not be increased to fund the 1.5-per-cent increase in annual wages for the fed­eral pub­lic admin­is­tra­tion. Employ­ees will con­tinue to see their wages increase as set out in col­lec­tive agree­ments and the Expen­di­ture Restraint Act, which is in effect through 2011. How­ever, depart­ments will be required to real­lo­cate from the remain­der of their oper­at­ing bud­gets to fund these increases. For 2011-12 and 2012–13, oper­at­ing bud­gets of depart­ments, as appro­pri­ated by Par­lia­ment, will be frozen at 2010-11 lev­els. The Gov­ern­ment expects that other fed­eral orga­ni­za­tions, for which expenses are not appro­pri­ated by Par­lia­ment (for exam­ple, enter­prise Crown cor­po­ra­tions), will fol­low suit and freeze their oper­at­ing expenses.”

In addi­tion to freez­ing depart­men­tal oper­at­ing bud­gets to their 2010–2011 fund­ing lev­els, there will be a con­tin­ued review process for gov­ern­ment oper­a­tions. The new piece of infor­ma­tion here is that in the past, when pro­grams were asked to assess and iden­tify 5% of their bud­get which was achiev­ing low­est pri­or­i­ties and low­est per­for­mances, those depart­ments were also asked to sug­gest a course of rein­vest­ment for the iden­ti­fied funds. Going for­ward, “To max­i­mize sav­ings in future strate­gic reviews, depart­ments will no longer be asked as a mat­ter of course to sug­gest rein­vest­ments of strate­gic review savings.”

The National Film Board of Canada, Tele­film, CBC, and the Canada Coun­cil for the Arts were all recently sub­ject to strate­gic review of their direct pro­gram spend­ing. How­ever, the CCA is pleased to report that no real­lo­ca­tions were nec­es­sary as pro­grams deliv­ered by these orga­ni­za­tions are aligned with the pri­or­i­ties of Cana­di­ans. The CCA hopes that in the next four years these pro­grams will be exempt from review so they can con­tinue to ful­fill their man­dates to all Canadians.

As well, the Bud­get notes that the “fund­ing pro­vided to orga­ni­za­tions is tied to fur­ther­ing gov­ern­ment pri­or­i­ties and achiev­ing results for Cana­di­ans.” The CCA will con­tinue to watch this trend and where 5% of oper­at­ing bud­gets will be mov­ing? We will pur­sue the ques­tion of whether these funds will be re-allocated to con­sol­i­dated revenue.

In the 2010–2011 Main Esti­mates, we see that Oper­at­ing Expen­di­tures for the Depart­ment of Cana­dian Her­itage have gone from $265,654,000 in 2009–2010 to $216,811,000 in 2010–2011. As well, grants and con­tri­bu­tions went from $959,770,000 in 2009–2010 to $901,281,000 in 2010–2011. How­ever, the Esti­mates here do not take into account mea­sures announced in Bud­get 2010 or expected adjust­ments to fund cost pres­sures. With the increase in annual wages for fed­eral pub­lic admin­is­tra­tion, pro­grams under a 5% strate­gic review, and a freeze on depart­men­tal bud­gets, it is appar­ent that arts and cul­ture spend­ing will be see­ing a pinch as the Action Plan comes to an end.

The 2010 Bud­get sees no cuts to arts and cul­ture with sta­ble fund­ing lev­els, but also sees no new invest­ments into the cre­ative econ­omy. The CCA sees no invest­ment towards cul­tural infra­struc­ture, or funds for pro­mo­tion abroad and audi­ence devel­op­ment. It is encour­ag­ing that char­i­ties are given more flex­i­ble means to con­duct busi­ness, and research grant­ing asso­ci­a­tions will have an increased abil­ity to fund higher edu­ca­tion within the knowl­edge econ­omy.  Mov­ing for­ward, some con­cerns include admin­is­tra­tive reforms, freezes on depart­men­tal bud­gets, and changes to strate­gic reviews. These mea­sures may not be viewed as cuts at the moment, but may lead to finan­cial dif­fi­cul­ties for the arts sec­tor down the road.

A Fifth Report to Canadians

Included in the 2010 Bud­get doc­u­ment was the government’s fifth fis­cal report to Cana­di­ans. Some inter­est­ing ele­ments in the arts and cul­ture sphere include:

• The re-appearance of $25 mil­lion for Canada Prizes for Arts and Cre­ativ­ity in 2010–2011
• In 2009-10, the Canada Cul­tural Spaces Fund com­mit­ted $27 mil­lion of a total of $30 mil­lion in cul­tural infra­struc­ture fund­ing and com­mit­ted $24 mil­lion of the 2010-11 allo­ca­tion of $30 mil­lion, sup­port­ing 96 cul­tural infra­struc­ture projects across Canada.
• As of March 2010, the Canada Arts Train­ing Fund has funded nine projects worth $5 mil­lion to sup­port the highest-calibre insti­tu­tions in Canada to train the most tal­ented emerg­ing artists for pro­fes­sional careers.
• A $15-million invest­ment in 2009-10 pro­vided Cana­di­ans with con­tin­ued access to more than 1,000 Cana­dian mag­a­zines and community newspapers.
• In 2009-10, a $100-million invest­ment in the Cana­dian Tele­vi­sion Fund is sup­port­ing projects, in part­ner­ship with the broad­cast­ing indus­try, to pro­duce high-quality, dis­tinc­tively Cana­dian tele­vi­sion programs.

What can I do?

Read the 2010 Fed­eral Bud­get and com­ment on how you think this Bud­get will affect Canada’s arts, cul­ture, and her­itage sector.