There was a time, not too long ago, when owners of Canadian newspapers could simply pick up the phone and call Ottawa to get what they wanted, as the Southam family did when Lester Pearson’s government agreed to ban foreign ownership of Canadian dailies in 1963.
Those days are gone, as the country’s newspapers just found out when they sent a brief that asked for federal help in staying alive. Not only did the papers not succeed, they had to endure the humiliation of being called an industry “no longer viable” by Mélanie Joly, Minister of Canadian Heritage.
Newspapers Canada (now Media Canada) closed its Ottawa office years ago and the industry has acted like lobbying is beneath it. But, to be a favoured industry, you have to be a player in Ottawa.
All governments deny picking winners and losers in the private sector. Then, those same governments set about picking winners and losers and deciding who offers strategic value if coddled.
Just ask Bombardier Inc., which has been the beneficiary of significant largesse by successive governments. Or ask Boeing Co., which is spending a fortune on advertising to remind us of the firm’s long love of Canada and all the Canadians it employs, all in an effort to get back into Ottawa’s good graces after the C-series trade complaint.
Or Netflix Canada, which probably deserves a prize for most creative tax avoidance in its recent deal with Heritage Canada to spend $500 million on Canadian content over five years as part of Ottawa’s much hyped strategy for a creative economy.
As an implied part of that deal, Netflix Canada won’t have to remit GST or HST collected from consumers. The consumers will bear responsibility to remit GST or HST when they download from Netflix.
The common estimate is that if Netflix was required to remit these taxes, it would be sending Ottawa $50 million a year. That’s a cozy relationship to have with a government.
The previous government considered its friendship with the oil and gas sector to be so important that the phone lines were perpetually burning between Ottawa and Calgary. We will never know the extent of that connection because the Harper government put a clause in the Lobbying Act that states that corporate executives who speak to government as in-house lobbyists don’t have to register as lobbyists unless they spent more than 20% of their time lobbying – a ridiculously high threshold. As a result, registration of in-house corporate lobbyists effectively became voluntary and there’s little public record of the Harper government’s dealings with the oil and gas sector – or any other.
This current government loves anything digital or involving artificial intelligence (AI). Several top aides have been recruited from Google or Facebook Inc. For example, Leslie Church, chief of staff for Joly, came from Google Canada.
This is why Prime Minister Justin Trudeau seems to love to have his picture taken with executives in the digital or AI industries. And Trudeau’s government is in the process of giving $950 million to support “superclusters” of companies that will form innovative partnerships and renew the economy.
And, of course, the prime minister found the time to phone Jeff Bezos to tell the head of Amazon.com Inc. how much Canada would love to be the location of the company’s second headquarters.
All governments like to cosy up to the sectors they think can help their economic and political agendas. And sectors with something to gain love to cozy up right back.
These relationships also are a way of validating a political brand. If a government brands itself as innovative, politicians must be seen with players the public regards as innovators – just as the last time any politician had a photo op with anyone from Sears Canada Inc. probably was a very long time ago.
In Washington, D.C., despite U.S. President Donald Trump’s anger with several high-tech entrepreneurs, Silicon Valley has been supplanting Wall Street as key policy influencers. The same thing is happening in Ottawa.
As these companies are emerging as monopolies that enjoy lower taxes, Bay Street and Canadians should be watching.
As for Canada’s beleaguered newspapers, they need a new government relations strategy, one that shows how they can contribute to a digital economy instead of just sticking their hand out.
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