BUDGET '95

Volume 8, Number 3 - April, 1995

THE MONTHS LEADING UP TO PAUL MARTIN'S second budget were characterized by noticeable hype and speculation. During its second year in power the Liberal government underwent a number of public consultations on the budget and the future of Canada's social programs. Throughout the year there had been several leaks and trial balloons released by the government on possible directions that the budget would take.

From this somewhat intense pre-budget speculation most pundits and commentators were acquainted with the contents of the budget prior to its release. For example, on February 27, 1995, the Sunday night before the budget was read, CBC's Keith Boag accurately noted many of the budget details: "In spite of the apparent secrecy, Martin has actually drawn a fairly clear picture of what's in store tomorrow . . . . He began fleshing out this year's budget in the 1994 budget . . . . The three year targets for deficit reduction and the cuts to get to three percent of GDP, or 25 billion, by 1997 were all laid out then. In the fall, when rising interest rates threw Martin's projections way off, he revised his projections and made it clear he was looking for billions more in cuts and taxes . . . . Then things got quite specific. The government publicly confirmed most of the cuts in its budget will come from government operations. It identified the nine departments most directly affected, including agriculture, transport, fisheries, defence. It said 45,000 jobs will be cut over the coming three years and it put a rough price tag on what it will cost to break the public service unions' job security agreement: somewhere between $700 million and a billion dollars. And the provincial governments also have more than a rough idea of what's headed their way. When the provincial finance ministers met in Ottawa a couple of weeks ago, they already had a written commitment that federal contributions to provincial health, post-secondary education and social programs will be the same as they were last year, and they were told the federal government will be sitting down with them to discuss a new formula for transferring that money in one lump sum in future years, and that whatever changes are made they will be getting less money. It will be a budget that hits many people very hard."

The networks differed little in terms of their pre-budget speculations. While CTV's Craig Oliver also gave a fairly accurate account of the spending cuts, he also predicted tax increases: "I'm speculating somewhat here . . . but I'm expecting increases in liquor taxes, in gasoline taxes, in taxes on family trusts, a closing of tax loopholes which would be a tax increase for many people, and very possibly also gasoline taxes and a tax on people in higher incomes, a sort of temporary, perhaps, income tax levy of some kind."

This issue of On Balance examines how the networks reported the budget in the first five days it was released. This analysis also includes each network's special live budget coverage.

Budget details dominate coverage

As was the case in the coverage of Liberal Paul Martin's first budget, television news provided mostly neutral statements of the 1995 budget, giving little analysis or comment. Seventy-two percent of CBC and 70 percent of CTV coverage of the budget was a straight presentation of the facts. The networks reported and repeated the statements of the finance minister and consequently significantly less attention was paid to critics and other commentators.

Budget commentary predominately negative

Criticism of the 1995 budget outweighed praise nearly twice as often on CBC and nearly three times as often on CTV. But of those comments, critics were more likely to argue that the budget went too far than to argue otherwise.

CBC focuses on spending cuts

The most frequently mentioned aspect of the budget on CBC was the announcement of $12 billion in spending cuts. Over one-third of CBC, but slightly less than one-fifth of CTV attention to the budget focused on the cuts (figure A).

TV analysis at odds with public reaction

Of the assessments of spending, 62 percent on CBC and 70 percent on CTV indicated that the cuts went too far. Nineteen percent of CBC and 14 percent of CTV attention criticized the cuts for not going far enough, while 19 percent of CBC's and 16 percent of CTV's sources' assessments indicated that the cuts were about right. On March 2, 1995, a poll by Angus Reid found that public opinion of the budget differed from that of the commentators on television news. Of the 1,023 adults interviewed on February 28, 43 percent thought it didn't go far enough, whereas 11 percent said it went too far, and 39 percent said it was about right (figure B).

CBC cuts given most attention on CBC

Of all the cuts announced by Paul Martin, the one to receive the most commentary on CBC was the 5 percent cut to CBC's operating budget for the 1995 fiscal year. This issue comprised more than half of CBC's attention to overall expenditure reductions. CTV's coverage, on the other hand, was proportional; its coverage of the CBC cuts comprised 13 percent of their attention to spending cuts (figure C).

While on budget day itself the cuts to CBC were relegated to merely footnote coverage, the subsequent resignation of CBC president Anthony Manera the following day received headline coverage. The story was the first news item on CTV and the second on CBC; both networks called his departure a "budget casualty." For example, in the headlines to the night's news, CBC's Peter Mansbridge announced: "Budget casualty--the CBC president resigns." Similarly, CTV's Lloyd Robertson stated: "Good evening. It looks as if the first, very public casualty of the new federal budget is CBC president Tony Manera. Manera quit today. He told his employees it was for personal reasons. He told prime minister Jean Chretien it was personal. But, his resignation speech was peppered with references to the government's new spending plan, and how $350 million in cuts will change the public broadcaster. Manera said he had been assured that funding for the CBC would be stable. Well, it isn't, and today, Manera quit." On March 2, CBC Prime Time devoted its entire magazine portion to the history of the CBC and the special role it has played in Canadian society.

The CBC's attention to its own cuts outweighed the coverage it paid to cuts to agriculture, the Crow rate, dairy subsidies, business subsidies, base closures, and spending cuts in general. By any standard, the CBC's inward focus and special pleading was self-indulgent and seriously undermined the crown corporation's credibility as an objective and impartial news outlet.

Proposed changes to transfer payments

In his 1995 budget Paul Martin indicated that the nature of transfer payments to the provinces would change in the 1996 budget. Although no changes were made in this budget, speculation about the impact of such proposals constituted 15 percent of CBC's and 25 percent of CTV's attention to the budget.

Martin's proposal combines the three social transfers, social assistance, health and education into one transfer--the Canadian Social Transfer--to allow provinces to decide how best to use the money. With the added flexibility was a promise to lower the total amount of the transfer. While the details are still to be worked out, the assessments by sources was that the proposal went too far. CBC's sources were nearly twice as likely and CTV's sources nearly three times as likely to say that the proposal went too far as opposed to being about right.

For example, Quebec's deputy minister, Bernard Landry, reacted on CTV News on February 27 by saying: "After years and years of negligence, the federal government is shovelling the overflow of snow in our own back yard which is absolutely non acceptable." On CBC's budget day coverage, Ontario Premier Bob Rae was more pointed in his criticism. He argued that Canada as we know it will change with this budget: "I think that Mr. Martin's speech was a truly historic shift. It really is the end of a Canada that we've all known in which people, I think, had the assumption that--and had the feeling and, in fact, for a long time had the sense of certainty that their government would be there for them. And when I say `their government,' I mean the Canadian government, that it was the government of Canada that was going to be there. We built the Canada Assistance Plan. We built Unemployment Insurance. We built our whole health care network, our hospitals. In Ontario, we were able to expand our colleges and universities in the '60s, build up apprenticeship programs all on the assumption and premise and understanding that a national government would be there that would make a difference. And that world is--that world is now over."

No commentator or source on either network argued that the cuts should have gone further.

CTV emphasized deficit reduction

The most significant difference between CBC and CTV budget coverage was in their focus on the deficit. Deficit reduction comprised only 15 percent of CBC, but 27 percent of CTV overall attention to the budget. Further, there was much more debate on CTV than on CBC about the nature of deficit reduction. Where the networks were similar, however, was that more of their sources argued for further cuts to the deficit rather than argue that there was too much emphasis on deficit reduction. The main source of this position was Preston Manning of the Reform Party. For example, on CBC special budget coverage, Manning said, "Our assessment is that the budget is dishonest, that it is cowardly, that it's hypocritical and that it doesn't get the job done. What he doesn't tell you is that by getting the deficit only down to $25 million in 1997, that what the government will be paying in interest is over $50 billion a year and that is going to be destructive to the social safety net, it's gonna be destructive to virtually everything the government is doing. They had to get down--the deficit under control, they had to aim for deficit elimination and they're not going to do that before the next downturn."

Networks overemphasize strength in dollar

Unlike 1994 when the media virtually ignored market reaction to Paul Martin's first budget, CBC gave 10 percent and CTV 5 percent, respectively, of their coverage to the dollar and interest rates. Those reports were generally favourable; they focused on gains in the dollar and the reduction of interest rates, as well as comments in general stating that the markets were reacting favourably. As   figure D shows, nearly all of the evaluations of the dollar on CBC were positive, and on CTV all were positive. While the dollar initially gained in the days following the budget, it actually lost much more ground in the next few days than it gained on budget day.

On budget day, CBC's Peter Mansbridge introduced the story on the markets by saying: "The financial markets are, of course, taking a very close look at all this. And the early reviews for Paul Martin are good." CTV's Lloyd Robertson agreed in his introduction to a story on the markets: "But already Ottawa's proposals to reduce the country's deficit have received a generally positive verdict."

The theme continued on February 28 with Mansbridge introducing the night's news saying: "Good evening. Well, it has been quite a day, lots of talk about the new budget. First, the word from the markets: they like it. And interest rates are already dropping. The bank of Canada rate fell a third of a percentage point today. The prime rate dropped a quarter point. Some short-term mortgage rates are down. And the dollar, well, it's up, ending the day just under 72 cents U.S." CTV's Lloyd Robertson gave this story less significance, reporting it as the seventh item of the day, and only providing the barest facts: "And there was fresh evidence today that the money markets support Paul Martin's budget. The Canadian dollar gained strength, closing at 71.96 cents U.S., up slightly from yesterday. That allowed the Bank of Canada to drop its trend-setting rate. It is now pegged at 8.02 percent, Down more than a third of a point. The major commercial banks followed the lead and cut their prime rate to 9.25 percent, down a quarter of a percentage point."

The most significant aspect of television's coverage of the markets was how that coverage failed to prime the public's attention to what happened to the dollar on the third day following the budget and afterwards. Although the dollar lost much more than it gained in those two days, neither network spoke of the dollar nor of the relationship between the dollar and the budget. This, despite the fact that on Thursday, Standard and Poor's Corporation lowered its outlook on Canada's foreign currency debt to negative from stable. As can be seen in figure E, the networks only reported on the dollar as it related to the budget when the dollar gained ground. Although on March 3, 1995 CBC reported on the dollar's fall, Peter Mansbridge specifically indicated that it was not a made in Canada problem: "The dollar has been taking a pounding. Not our dollar, but the U.S. dollar. It hit a post-war low today against the yen. And that dragged the Canadian dollar down a bit."

Even during the following week when the media reported on the decline in the Canadian dollar there was no equivocation that the markets were happy with the budget. For example, on March 9, 1995 Pamela Wallin remarked: "I guess what's amazing to many people is last week when Paul Martin brought down this budget, all these guys in the international marketplace, whoever they are, said, `thumbs up, good work, that's what we want you to do. Tackle that debt.' Now in four days they can undo it all."

Rather than consistently report the rise and fall of the dollar in the days following Martin's budget, the networks focused on the positive opinions of market analysts. While analysts were favourable to the budget, they clearly did not represent the world's currency traders. Reporters failed to differentiate market reaction from the opinions of market analysts.

Smile count

In last year's analysis of the budget, we found the networks easier on Paul Martin than on his predecessor Don Mazankowski. The positive treatment Martin received was exemplified by his interview with Wallin and Mansbridge where they smiled, laughed, and exchanged quips.

In keeping with the network's theme that this was a tough budget, the interview of Paul Martin by Pamela Wallin was more sombre than in 1994. Unlike last year where Wallin, Mansbridge and Martin exchanged laughter, this year's interview tended to be more serious in tone. However, the exchange was, on the whole, still friendly with Wallin accompanying almost every question to Martin with a smile for a total of 15 smiles or grins that lasted a total of 22.2 seconds. In return, Martin grinned or smiled back six times for a total of 3.5 seconds (figure F).

Networks illustrate differences with use of sources

For both networks the most frequently used source was the government. Over one-fifth of CBC's and nearly one-fifth of CTV's sources' statements originated with the government, and of that, most were from Paul Martin himself.

Apart from focusing on the government, there were more differences than similarities between the networks in their selection of sources. For example, CBC relied heavily on interviews and on reactions from provincial government representatives. On their special budget coverage, for example, they interviewed Alan Maher, New Brunswick's finance minister. CBC also conducted lengthy interviews with Ontario's premier, Bob Rae, and Newfoundland's premier, Clyde Wells. Briefer clips of Saskatchewan premier Roy Romanow and Quebec's finance minister Jean Campeau were also included in CBC's budget coverage. The only attention CTV provided provincial government representatives was one brief quote from Roy Romanow and a few comments from Bob Rae.

CBC did not go to Alberta government for reaction to budget

CBC may have relied on some provincial government representatives for comment on the budget, but of particular interest is the provinces and governments whose comments they did not seek. In the first week of the budget, CBC aired no opinions from British Columbian, Albertan, or Manitoban premiers or their finance ministers. Nor did they go to Nova Scotia or Prince Edward Island. In fact, CBC presented no provincial Conservative government's reaction to the budget.

CBC executives provide majority of commentary on budget

On CBC the sources who presented the most statements on the budget and its aftermath were CBC executives. Their focus was on the budget cuts to CBC and the subsequent resignation of Tony Manera. On March 2, 1995 Manera was interviewed alone with Pamela Wallin. Later Wallin conducted a panel discussion with Jim Byrd, the Vice President of English Television news, and Gerald Caplan, who co-chaired the 1986 task force on Canadian broadcasting and is a defender of CBC. Those who argued in favour of the cuts on that panel were Izzy Asper and John Godfrey. As a result of these segments, CBC officials and supporters outnumbered any other group or individual, including provincial government representatives. This finding is quite shocking. Figure G shows that CBC executives and supporters got more air time than either opposition party, than social activists or other special interest groups, or indeed than any other group directly or indirectly affected by the budget.

On CTV the budget's effect on the CBC did not warrant the same degree of scrutiny. As such, CBC executives comprised only 2 percent of sources' statements and were presented less frequently than most other sources.

CTV provides variety of sources

CTV provided a more even-handed approach than CBC to their use of sources; they relied on many different reactions from different groups. The main responses to the budget were from business journalists, notably Diane Francis, and from social activists, notably Maude Barlow from the Council of Canadians. These two women presented the bulk of their comments on CTV's special coverage where they sat at the anchor desk with Lloyd Robertson and debated the effects of the budget.

Summary

The most frequently mentioned aspect of the budget on CBC was the announcement of $12 billion in spending cuts. Cuts to the CBC comprised nearly 60 percent of CBC but only 13 percent of CTV attention to budgetary cuts.

Of assessments of the spending cuts, 62 percent on CBC and 70 percent on CTV indicated that the budget went too far. In contrast, according to an Angus Reid poll, 43 percent of Canadians thought that the budget didn't go far enough, whereas 11 percent said it went too far, and 39 percent said it was about right.

The really significant difference between CBC and CTV budget coverage was in the focus on the deficit. Deficit reduction comprised only 15 percent of CBC but 27 percent of CTV overall attention to the budget. Further, there was much more debate on CTV than on CBC about the nature of deficit reduction.

Methodology

Results are based on 31 CBC Prime Time, and 20 CTV News stories as well as each network's entire special budget coverage, excluding Paul Martin's speech from the release date of the budget, February 27, 1995, to March 3, 1995. All stories appearing during that time on the budget were coded, representing a total population rather than a random sample of stories.

Further information or details on the coding design and methods may be obtained by contacting the National Media Archive.

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Last Modified: Wednesday, October 20, 1999.