News
Views
Government
On campus
Noticed
In the harbour
Footnotes
News
1. Origin BioMed
This morning the Chronicle Herald has a short article about Origin BioMed, giving a cursory report on some of the documents filed with the court. This part jumped out at me:
[Peter Wedlake, senior vice-president at Grant Thornton Ltd] confirmed Tuesday that Origin’s total debt is $6.2 million, as the insolvent operation also owes unsecured creditors a total of about $3.8 million.
The bulk of that unsecured debt, about $2.8 million, is owed to the Atlantic Canada Opportunities Agency.
That’s right, besides Nova Scotia’s Business Inc.’s $7.9 million equity stake, another $2.8 million of taxpayer money channeled to Origin BioMed via ACOA is probably going to evaporate.
Reporter Bill Power actually went to the courthouse and looked at the documents, something I couldn’t pull off yesterday. Still, I think we need a fuller discussion of the documents, so I’ll go look at the documents myself today.
You can read my three-part series on Origin BioMed here:
Part 1
Part 2
Part 3
2. Film subsidy
Finance minister Diana Whalen tried to dial back concerns that the Liberals are going to cut the film subsidy, reports the CBC:
“I don’t think that it’s good even for the industry to be so, I guess, so worried,” Diana Whalen said. “It’s important that we now know that we have the door open. We will be talking and there’s going to be a tomorrow, let me put it that way.”
Part of the problem around this issue is the use of the term “film tax credit,” which muddies the rhetoric. The “tax credit” is, in fact, a straight-up subsidy.
Asked about the film tax credit, here’s how Thomas Storring, the provincial director of Economics and Statistics, explained it to the legislature’s Economic Development Committee last year:
In terms of — I want to separate out tax credits because there are two kinds: refundable and non-refundable. A non-refundable tax credit is something that simply reduces your tax liability, but if your tax liability reaches zero, that’s it — your tax liability is zero.
A refundable tax credit is something where even if you’ve reduced your full tax liability to zero, if the value of the credit exceeds what your tax liability is, you receive a refund. So administratively the way to think of a refundable tax credit – and our Film Industry Tax Credit is a refundable tax credit – is more to think that because it’s not actually calculated with respect to the tax liability itself, it’s effectively using the tax system as an administrative vehicle for a subsidy.
Indeed the accounting standards around this are changing and I believe — I’m just going to pull out our Budget Assumptions and Schedules document — the standard is now saying that these – again, forgive my jargon here – we call these tax expenditures, that we are actually supposed to be reporting tax expenditures separately and not actually taking them as a net from the revenues that are earned. I’m not sure of our exact treatment of it here, but we do actually report them separately.
To get back to the comment just in general about tax credits — when you talk about tax credits, in one sense you can say that they reduce a tax liability, and if a tax liability constitutes a distortion in economic activity then they have reduced the overall level of distortion, but at the same time they are introducing a further wedge in the price signal to say the difference between non-credited activities and credited activities and the tax itself.
So it’s really difficult to unpack that relative scale of distortion. I don’t want to speak specifically about the Film Industry Tax Credit itself just because I’m not fully acquainted with the particular economic dimensions of that industry and its tax treatment.
I think what’s happened is that the provincial economist told the legislature that the film tax credit has been accounted for incorrectly, and realization of that fact perforated down into Laurel Broten’s tax report, and so we’re likely see a reformatted accounting for it.
Not just for better accounting, but also for better public understanding, the tax credit should be recharacterized as a film subsidy, or a grant. That’d be more honest, anyway. Calling it a subsidy doesn’t mean that the level of the subsidy should change — in fact, later in the same discussion at the Economic Development Committee, NDP MLA Lenore Zann, herself a former actor, made the case for the continuation of the subsidy:
ZANN: Would you say though in particular with the film and television tax credits, it’s also about economic spinoff, which I believe that most economists don’t really pay much attention to – they just pay attention to the bottom line of how much is going out, is that correct
STORRING: Oh no, that’s our jargon. We pay a lot of attention to that.
ZANN: So do you pay attention to the economic spinoff then that these industries create in a province?
STORRING: In general, yes. In this specific circumstance, I don’t have an answer about that, but in general, yes.
ZANN: But the film and television credit, as you know, has been part of our system for some time now. Would you say that would also be an industry that could attract more people to our province – as well as, for instance, the shipbuilding contracts – if there is, in fact, more investment in that kind of knowledge-based economy?
STORRING: I don’t have a sense of that, so I wouldn’t want to speculate. That would be a new speculation for me as opposed to some of the speculation I’ve already made, so I don’t want to make a new speculation to say that would have that kind of impact.
ZANN: I’m just looking at some of these statistics here again from KPMG. Digital entertainment for Canada is 76.2 per cent and in the United States it’s 100 per cent. I’m thinking that video game production, software design . . .
Unfortunately, Joachim Stroink, the chair of the committee, ended the meeting at that very moment, with Zann in mid-sentence, so the committee didn’t get into a deeper discussion of the tradeoff between the film subsidy and the economic benefits it brings.
We’re having that discussion now.
3. Peter Kelly
Former Halifax mayor Peter Kelly was in town over the Easter weekend and announced he is considering running again for the mayoralty in 2016.
People seem to want me to talk about Kelly, but I don’t have anything much or insightful to say. I’m still exhausted from writing this.
4. Fire hydrants
A fire at an apartment building on Robie Street yesterday presented difficulties, reports the CBC:
The situation was complicated because crews had to run hose for more than one-block as fire hydrants closer to the building were unused, many of which remained buried in ice and snow.
Fortunately, the fire was contained. But how is it possible that it’s well into April and fire hydrants are still buried?
5. Wild Kingdom
Migratory birds are starving to death, as the fields are covered with snow.
Views
1. The fog of rape
The journalism world is now rocked by the scandal of Rolling Stone magazine’s “A Rape on Campus” article, written by reporter Sabrina Rubin Erdely. Erdely uncritically accepted the story of “Jackie,” who claimed she had been gang-raped in a University of Virginia fraternity. A Columbia School of Journalism review of the story found that:
Rolling Stone‘s repudiation of the main narrative in “A Rape on Campus” is a story of journalistic failure that was avoidable. The failure encompassed reporting, editing, editorial supervision and fact-checking. The magazine set aside or rationalized as unnecessary essential practices of reporting that, if pursued, would likely have led the magazine’s editors to reconsider publishing Jackie’s narrative so prominently, if at all. The published story glossed over the gaps in the magazine’s reporting by using pseudonyms and by failing to state where important information had come from.
Especially with a big story making serious allegations, reporters have got to stick to old school journalistic basics: verifiable facts; fully investigating a source’s allegations; disclosure of missing or contradictory information to readers; giving people accused of wrong-doing the opportunity to present their side of the story; and a strong reluctance to use anonymous or pseudonymous sources. Rolling Stone got it wrong on all counts.
In the context of the failed Rolling Stone piece, Chronicle Herald columnist and UNB Fredericton journalism prof Jan Wong is to be congratulated for stewarding her students through an intense project they call “The Fog of Rape: Normalizing a Campus Crime,” a 13-part series published in the New Brunswick Beacon, the class newspaper.
In her column, Wong shows how she and the students got the details and the process right. In the future, journalism schools should contrast the two rape stories — Rolling Stone’s and The Beacon’s — as a lesson in bad and good journalism, respectively.
2. Cranky letter of the day
I made my way into Halifax on a lovely, sunny day to see the new library….
What greeted me? White walls, white staircases, white, white — as if the snow fields I had passed had been pressed into service to remind me that it was winter in Halifax, 2015.
Oh, I thought, “Those clever modern architects! Who would have thought to do that?”
As I made my way up white block staircases, I stopped to take it all in and exclaimed to myself: “A reading place in the heart of our lovely city with all the warmth of a walk-in freezer!”
Not a single piece of wood to soften the harsh lines of white staircases or to warmly tell me I was welcome. When I retrieved the book I was looking for, I pulled out a chair to browse through it.
The harsh noise of iron footings on the concrete floor caused by moving the chair was, I am sure, heard all the way to Sackville.
As for the exterior, patrons should be warned that those blocks overhanging the sidewalks are not books. They are Corn Flakes boxes.
That’s why they don’t look like books. After all, architects don’t need books; they play with Corn Flakes boxes.
Don’t believe me? Take a look at those new apartment buildings or the residences on SMU’s campus. To the library board I say: “Pudeat te.” (Shame on you!)
Fred Vaughan, Hubbards
Government
City
Special Events Advisory Committee (9am, City Hall)—just an orientation for new members of the committee, no other business.
Regional Watersheds Advisory Committee (5pm, Helen Creighton Room, Alderney Public Library)—here’s the agenda.
Province
Legislature sits (1pm, Province House)
On campus
Dalhousie
Flavonoids (4pm, Theatre A Sir Charles Tupper Medical Building Link )—Vasantha Rupasinghe will speak on ““Flavonoids and Their Acylated Derivatives: Potent and Versatile Biological Activities.”
A Lonely Place (8pm, Dalhousie Art Gallery)—the 1950 Nicholas Ray film. “Adapted from Dorothy Hughes’ novel of the same name, this film sees Humphrey Bogart playing a WWII vet turned tormented screenwriter suspected of murder.”
In the harbour
Arrivals
Capri, cargo ship, arrived at Pier 27 this morning
Boheme, car carrier, Fawley, England to Pier 31
Departures
Atlantic Companion sails to New York
OCCL Vancouver sails to New York
Heritage Leader sails to sea
Footnotes
I’ll be joining Dartmouthian Kate Watson on the Sheldon MacLeod Show, News 95.7, at 4pm.
I’m playing with the notion of the “permalinks” in the “News” section of today’s Morning File — clicking on them brings you to a URL that leads directly to each story, which may be useful for sharing purposes. What do you think: worthwhile, or too much clutter? If readers like them, I’ll extend it to the rest of Morning File; if not, I’ll ditch them.
Fire Hydrants: In the Chronicle Herald today a spokesperson for the fire department, responding to the confusion finding a hydrant buried in a snowbank said: “we don’t memorize where the fire hydrant are.” Something to that effect. I was boggled. That’s like a mathematician saying I don’t memorize my times tables.
Maybe if they had GPS systems in their trucks they could have the coordinates of hydrants in the system … ? Sort of like using a calculator rather than memorizing the times tables?
Halifax Water won’t make the locations of fire hydrants for “security reasons”, but I don’t see any reason they couldn’t share those with the fire department. That being said, I don’t even know if the fire department has the technology to make use of that data.
“our Film Industry Tax Credit is a refundable tax credit – is more to think that because it’s not actually calculated with respect to the tax liability itself, it’s effectively using the tax system as an administrative vehicle for a subsidy.”
Tim, as Mr. Storring explains, it’s called a Refundable Tax Credit because it uses the federal tax system as an administrative vehicle for a subsidy. This is unusual because in Canada provinces don’t collect their own income tax, they piggyback on an exclusively federal system with federal rules and administration. The film industry is allowed this special status because of its foundational position in the arts and culture.
Of all the issues at play, the name of this tool “refundable tax credit” and what it does “an administrative vehicle for a subsidy” is probably the least controversial and least interesting part of it.
I can clarify the point of Mr. Storring’s classification talk. He is pointing out, in staggeringly but at least apologetically jargony language, that as it is being reported now the tax credit line includes only the gross payout from year to year (it varies widely depending on the amount of tax credits processed in a year as much as the actual volume of production).
That is to say if the government reports a tax credit ‘cost’ of $20m that number is gross and does not include:
– taxes actually paid by film companies (which I can assure you even from my experience is not zero)
– taxes paid directly by employees, contractors and companies on whose labour the tax credit is calculated (which again is not zero – as folks have been ridiculously forced to point out is not zero… we all pay taxes)
– the capital investment drawn in to Nova Scotia that would not otherwise come… which is the whole point of the tax credit in the first place and its truly unique feature.
That’s why Mr. Storring says “it’s difficult to unpack the scale of the distortion”. In other words, accounting only for the cost and not the revenues of a particular policy or course of action does not give decision makers enough information to do any kind of analysis. Apparently, not enough to even know if it’s a net negative or positive.
It’s also important to remember that “spin-off” has a very specific meaning. When Ms. Zhann asks the question about ‘spin-offs she changes the conversation completely from a discussion of direct costs and benefits to indirect costs and benefits. Economic impact analysis, of which spin-offs are a part, studies the indirect costs and benefits of new wealth introduced into an economy. It’s a useful comparative tool when we’re required to choose between alternate opportunities that bring in similar amounts but may impact the economy in different ways. For example it might be used to compare the film industry with the salmon farming industry.
I am in agreement with Mr. Storring and Ms. Zhann. The actual distortion caused by the film tax credit can not be unpacked unless it is properly matched with its attendant taxes, attracted capital payoff and economic impact. It’s surprising to everyone (though maybe we shouldn’t be surprised) that after 20 years government still does not have the books organized in such a way to simply do that analysis.
We’ve all seen sketch calculations from industry advocates over the last week to approximate the required analysis. Generally, the most simple is $100m or so in capital brought to NS, $20m paid out in TC’s through film companies to NS film industry workers. That, simply, is a 400% return on investment with zero risk. There are not many opportunities like that in the world and I propose Nova Scotia take them all that are allowed under our federal tax, trade and tariff systems.
However, that simple analysis does not include any of the direct and indirect factors itemized above which the government, and anyone who thinks about it even for a second, knows are not zero. So the impact of the film tax credit is even greater than the simple analysis sketch.
Far from a dope to be weened off of, it’s an economic development to that works and is available broadly outside the pick-a-winner style that has proved so divisive and discouraging in Nova Scotia. Not only should we encourage more film and TV work, we should be looking carefully for other sectoral opportunities that might be allowed under federal and international tax and trade laws where we can do more economic development in this way.
John Wesley Chisholm
Arcadia Entertainment
KUDOS to Fred Vaughan for «telling it like it is»!!!
There’s an old familiar fairy tale «The Emperor’s New Clothes» which perfectly reflects the Many Millions Monstrosity masquerading as a library.
Not only does it LOOK like a bunch of skewed Corn Flakes boxes, it is just as flawed climatically.
GUARANTEED the «fallout» costs (literal and figurative) this nightmare erection will undergo over the next few years will dwarf its outrageous construction costs. I haven’t yet had the «pleasure» of investigating its interior — the garage band «recording studios» for instance. Mostly out of fear of a stroke brought on by outrage. The same people who conjured up this huge waste, were so destitute they had to scuttle the BookMobile, and cut branch hours back so ridiculously that many branches are virtually inaccessible to people who must travel long distances to reach them.
Just be careful to avoid walking under those massive overhanging, glued-on glass panels — remember the «fallout» on Barrington St. !
Freeman, I was the library board chair when the Bookmobile was eliminated, and the issue is more complicated than money for Central / no money for Bookmobile. (I should also say I have very fond memories of using the Bookmobile myself.) When the library presented its budget to council, in a period in which departments were being asked for savings, council directed the library to defund the Bookmobile, and cut the allocation by the amount saved. The library actually kept the Bookmobile going an extra year or two by pulling in funds from elsewhere, and council I believe also restored some of the money, for a one-year period.
The Bookmobile was prone to frequent breakdowns and costly repairs. If the service was going to continue, the vehicle needed to be replaced. A replacement, if I recall correctly, was somewhere in the neighbourhood of $300,000.
The money for the new library was earmarked for construction by the three levels of government and all had to be accounted for carefully. There is no way we could have used any of it to fund other services, like the Bookmobile.
Lol. “Did not visit. One star”
Tim, permalink didn’t take me anywhere.
Bob
They should take you to the beginning of that particular subsection, so on short subsections you may not see any movement at all. The point is to get the URL. It’s working for me.
re: Fire hydrants.
That’s a good question (to which I’d like to know the answer): who is responsible for clearing the hydrants / ensuring that they are usable – Halifax Fire? Halifax Water? City Works? Residents?
I live in a ‘rural suburban’ area and don’t have hydrants every few hundred feet. I know that the closest one to my home (a bit over 3 km away) has been completely buried for weeks/months. Who knows where the next closest one is? http://www.cbc.ca/news/canada/nova-scotia/halifax-water-won-t-make-public-fire-hydrant-map-cites-security-1.2954876
Re Permalinks: Good idea, but if you could make the story heading the link, that would add the feature without adding clutter.
I second this. Make the section header into the permalink. I think it’s almost expected I had looked for this function on your site in the past, because I regularly share the link to your daily posts on my social media (okay facebook, so I’m old). I have to instruct my readers to “scroll down to #1 under ‘Views’ for this interesting story I am telling you about”. I think permalinks might help people like me bring more people to your site.
Oops missed the ‘.’ after ‘expected’.
No disagreement that the Beacon series on campus rape reflects better journalism than the Rolling Stone article. But in calling it “a campus crime” and “a campus crisis,” the Beacon writers overlook a significant fact: Women in the general population are more likely to be raped than women at university. It’s not clear whether that’s because of university policies and programs about sexual assault, or simply because university students are relatively wealthy, and rape, like all crimes, disproportionately affects poor people. This doesn’t make campus rape any less serious, but the frequently myopic view of campus rape might be blinding people to solutions that are working, and reflects an unfortunate academic isolation from life outside the ivy covered walls.