Budget myopia: It is a lot easier to prepare a 1 year forecast than a 5-year, or 10-year plan. Any questions about that bromide?
I remember in the early years of my consulting, entrepreneurs asked me to help prepare 10 and 20 year business plans for their revenues to show their investors. I politely refused to put my name to revenue forecast pulled from the air for new untested products and services. Other consultants happily created those wacky dot-com era forecasts. Remember those hockey-stick shaped revenue curves, the slope of which was sufficient to make the business case wildly positive?
I created and managed budgets at a few major service providers, so I fully appreciate the challenges.
With that in mind, today let’s take a look at budgets and planning at Canada’s communications regulator.
Last July, I noticed (and wrote about) the CRTC’s decision to hike telecom fees by 25%. Those are fees paid by telecom service providers, and ultimately consumers, to cover the cost of running the Commission.
How well does the CRTC perform in its budget planning and management?
Each year, the CRTC publishes its departmental plan, including a forecast (and actuals) for financial and human resource requirements. Some interesting trends appear when you look at the staffing levels in the past few plans.
I created this table from the budget summaries in the CRTC’s Department Plans: for 2019-20 [pdf], 2020-21 [pdf], 2021-22 [pdf], 2022-23 [pdf], and 2023-24 [pdf].
For each plan, actual results are provided for two years (shown in blue), the forecast for the current year (shown in red), and two years of planning looking forward (shown in black italics).
Notice that total CRTC staff levels increase 40% from 460 during the year ending March 31, 2017 to a forecasted 640 in the year ending March 31, 2024. Over the same period, CRTC spending increases nearly 60%, from $59.1M to $92.7M.
Look at the shape of forecasted spending, especially over the latest two plans. Last year’s plan called for a “temporary” bump in staffing to 547, falling back to 525 by March 2024. Surprise! The newest departmental plan no longer shows a reduction. Indeed, it calls for the CRTC to grow by another 12%, from 550 to 640. But, don’t worry! The plan drops back to just 603 the following year.
Uh, huh. More budget myopia?
The CRTC forecasted expenditures in 2022–23, in comparison to 2021–22, show a significant increase primarily due to the preliminary work undertaken related to the potential adoption of the Online Streaming Act (Bill C-11) that will continue in 2023–24, and to telecommunications-related activities.
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Funding authorities increase in 2023-24 to undertake preliminary work for the potential implementation of the Online News Act (Bill C-18), and then decrease in 2024-25 as a result of the sunsetting of temporary funding authorities.
The CRTC’s 2019–20 Departmental Plan attributed the significant jumps in staffing and spending “to the implementation of the Broadband Fund regime.” The industry funds the CRTC’s Broadband Fund itself, as well as its administration.
In November of 2020, I asked, “When other agencies and departments at federal provincial and regional levels of government are already in the business of awarding grants, did we need the CRTC to create yet another broadband capital funding program?”
The CRTC has already started significant levels of spending for the Online Streaming Act and the Online News Act. The bills have not yet been passed and proclaimed. As the Commission continues expanding its mandate, are there appropriate and sufficient checks on its spending?
The CRTC has long operated an off-the-books alternate social benefits system outside the government’s tax system. I described this before in 2016 and 2018 among numerous other times.
These added costs of regulation inflate costs to Canadian service providers, ultimately raising monthly consumer bills. It doesn’t help that there appears to be an increasing level of political direction being given to the CRTC, that is supposed to operate “at arm’s length from the federal government”.
Do Canadians support a 40% bigger CRTC, costing 60% more?