Taxing the Trade

August 12th, 2013

How much money does CSA take from Canada’s tradespeople each year?  Well, we can calculate some estimates but exact financial figures are hard to come by. 

Financial data from CSA is decidedly opaque because they’re not subject to the same standards of accountability and transparency applicable to other government agencies.  And CSA isn’t subject to the Freedom of Information Act either, so CSA financial information is scarce.

An accurate estimate of CSA revenue in some areas is possible because certain of these carry the force of law in a clearly enumerated demographic.  The Canadian Electrical Code (“CEC”) is one of these areas.  The CEC is a necessity in many of the electrical trades and, critically, the number of persons employed in each of the subsets of the electrical trade are tabulated each year by Statistics Canada. 

Thanks to information sent to us from Statistics Canada, we have population data on Canada’s electrical workforce.  From industry, we know who within that trade needs the CEC.  From CSA, we know how much they charge for the CEC and, thanks to P.S. Knight Co., we know the cost of producing the CEC, printing the CEC, storing and fulfillment of the CEC, and so forth.  With this data we can generate a reasonably accurate estimate of CSA revenue on CEC sales.

How many electrical workers do we have in Canada?

As of 2012, Canada has 88,000 electricians working in install and related.  There are an additional 34,000 electricians working in areas of industrial and power system applications and about 14,000 power line and cable workers.  Finally, there are 25,000 electrical engineers and power station operators.  In total then, we have 160,700 electrical workers in Canada. 

How many copies of the CEC are sold?

RestoreCSA estimates that 141,800 copies of the CEC have been, or will be, sold during the 2012 Code cycle (22nd Code Edition).  As the Code cycle lasts 3 years, we assume 47,300 averaged, annual unit sales.  These figures account for the fact that not every electrical worker needs the CEC.  In some subsets, cable workers for instance, the CEC has limited use.  For this reason, the estimate of copies sold is lower than the total of workers in the trade.

One should also note that the CSA is currently the only source for the Code.  As the CEC is the collection of rules to work by, its needed by a majority of the trade.  Yet every need for a copy of the CEC must be sourced through CSA.  That’s awfully convenient for them, P.S. Knight’s accountant would be much happier if we could force people to buy our products like CSA does.

What is CSA’s cost of production?

In response to RestoreCSA, the official line from CSA’s media relations team has been that “the development of standards and codes such as this is an increasingly complex process” and that it “involves significant investment, resources and dedication.”  Nonsense, both points. 

In recent years, changes to new editions of the CEC have been a modest affair, they’re nothing like the massive, sweeping reforms which took place in the decades prior to 1980.  Only the CSA could create a bigger, more complex problem out of a smaller, simpler situation.

And what about the “significant investment” made by CSA to produce the Code?  Well, contrary to CSA’s current statement, the CSA is on record as having “limited involvement in the process of developing, recommending and reviewing specific standards.”  Further, CSA only “facilitates the development of standards” by furnishing “administrative support.”  And still further, the “participation of CSA employees is non-voting, consultative or administrative in nature.”  And CSA’s legal filings include the admission that CSA “relies upon volunteer members of technical committees to develop standards.”  All of these quotations are from a court case that CSA fought in British Columbia.  The CSA’s claims about its conduct are flexible to whatever position is most advantageous to them at any given time.  Regardless, official representatives of CSA made these claims under oath and the statute of limitations on these has not expired. 

Recall that the Code itself is generated at taxpayer expense in each of the Provinces.  Unlike the CSA Handbook, their version of ECS Commercial & Industrial, the CSA pays nothing at all for the content of the CEC. 

In this context, CSA’s only development cost is administrative, the compilation and formatting of the book itself.  For purposes of this estimate we are allocating $200k for CEC development.  This is generous by the way, actual compilation and formatting services should cost about a quarter of that figure.

What about the contributions of CSA members on the Code Committee?  Well, these members are, according to CSA, just “volunteers.”  But this claim isn’t strictly true, since CSA members are paying to receive influence on the Committee, and if they’re paying to be there then one can’t really call them “volunteers.”  Still, the fact remains that members’ contributions on the Code Committee cost CSA nothing, the presence of members on the Committee actually generates revenue for CSA.  More than $9MM per year, in fact.

So CSA has administrative costs of, generously, $200k in assembling the CEC, and zero costs in running the Code Committee.

The printing costs for a big run of over 50k units, at about 600 pages, all b&w, with CSA’s cheap spiral binding, is about $12 / book.  They charge electrical workers $175 / book.

Net revenue from CEC sales

Based on the above unit volumes and CSA’s current pricing of the CEC, net profit before tax on CEC sales is estimated as $22,913,400 for the 2012 Code cycle.  On an averaged, annual revenue basis, the CEC net profit before tax sales figure is $7,637,800 in 2012.

As the number of electrical workers has increased, so has the number of CEC units sold.  Since 2000, the estimated unit sales increase is 135% of the 2000 figure.

The total revenue from CEC sales during the Code cycle period 2000-12 inclusive is estimated as $106,091,000 from sales of 657k units (in 2012 dollars).

Total estimate of projected revenue, using the same baselines and rate of growth in the electrical trade, for the Code cycle period 2015-30 inclusive, is $176,633,000 from sales of 1,091k units (in 2012 dollars).

The total combined revenue, current and projected, from the Code cycle period 2000-30 inclusive, is estimated at $282,724,000 from sales of 1,748k units (in 2012 dollars).

What does it cost the trade?

At $175 per copy, the CEC is $160 overpriced.  The typical Canadian electrician will spend $2,333.33 (in 2012 dollars) on CEC editions over a 40 year career.  They should be spending about $200 on CEC products over those 40 years (in 2012 dollars on a current Code cycle; it could be $150 on a standard four year cycle).  The CSA is therefore unnecessarily taking about $2,180 from thousands of electrical tradespersons in Canada.

Bundles of Money

The above analysis contains estimates based on incomplete information, mainly because CSA isn’t subject to the basic accountability and transparency requirements standard to other government agencies.  Regardless, we believe that the figures contained herein are a reasonably accurate estimate of CSA revenues from the CEC publication.

The bottom line is that CSA makes a lot of profit for a not-for-profit.  The problem of course, is that there is no choice for electrical workers, the CEC is available only from the CSA.  They have a monopoly and can charge electricians whatever they want.  Its like a tax on electrical activity.

The CSA is supposed be merely a regulatory entity, a sort of secretarial service to the trade.  Revenues on the scale of the hundreds of millions of dollars are simply incompatible with CSA’s purpose and original mandate.  It is clear that the organization and the people who run it are now facing awkward and uncomfortable scrutiny.  RestoreCSA is committed to a total recovery of CSA, including a return to serving, not exploiting, Canada’s electrical workers.  Together we can build a better regulator.