[Recorded by Electronic Apparatus]
Thursday, February 20, 1997
.1105 
[English]
The Chairman: I declare the committee session open.
I ask members to bear in mind that we have two or three items of business to conduct after hearing our witnesses. As a courtesy to our witnesses we'll start with them.
Mr. Abbott.
Mr. Abbott (Kootenay East): Mr. Chairman, I came to this meeting prepared with the information I had received. When I arrived at the meeting I then was given about five times as much information again. The problem, obviously, is that much of the information contained in this package I'm sure would be of great value to be able to talk to the witnesses about.
There's nothing we can do about this meeting, but I wonder if in future there's some way we can alert the witnesses that it would be really beneficial to have this information a few days ahead of the meeting.
The Chairman: Your point is well taken, Mr. Abbott. In fairness to the witnesses, I must say, we ourselves were unable to give them a fixed date, for various reasons. At one point, for instance, Mr. Leroux couldn't be here, and we needed somebody from the opposition. We didn't have opposition members on the first date we'd scheduled. I suppose from their point of view they didn't know where they stood, really.
But I think your point is well taken. I agree with you that it would have been very good for us to have had this a few days in advance to study it. I hope the witnesses will make their position clear as we hear them.
This meeting has been called pursuant to Standing Order 108(2). If you'll recall, there was a motion by Mr. Bélanger to hear from representatives of the -
[Translation]
Mr. Leroux (Richmond - Wolfe): I'm sorry, but I would like some clarification as to the order of business. I understood quite clearly the reasons given in so far as the documents, deadlines and so forth are concerned, but I do want to point out that I have received a document from the Canada Television and Cable Production Fund in English only. I did not receive a French copy and this is a great inconvenience to me.
The Chairman: I apologize, Mr. Leroux, but we did not receive the document until yesterday and we sent it off to be translated immediately. I totally agree that this is a regrettable situation. The translation is unavailable this morning and I agree with you that we should have received it in both languages.
Mr. Leroux: It is annoying and bothersome for us to always have to ask for the French versions. People say that we are always complaining about not having the documentation in French. I'm always forced to go on the offensive and this isn't justified. I don't like feeling this way. This isn't the first time this has happened and it annoys me to no end.
The Chairman: I think you have made your point.
Mr. Leroux: I realize that a number of agencies are not paragovernmental, but surely some must comply with the provisions of the Official Languages Act.
The Chairman: Allow me to introduce the witnesses to you:
[English]
Mr. Philip Lind, vice-chairman of Rogers Communications Inc.;
[Translation]
Mr. Bill Mustos, President of the Canada Television and Cable Production Fund; and Mr. François Macerola, Executive Director of Telefilm Canada.
.1110
[English]
Considering it was your motion, Mr. Bélanger, I wonder if you could briefly open the meeting by giving us the gist of what you wanted the witnesses to bear on, especially so that they know what your view was.
[Translation]
Mr. Bélanger (Ottawa - Vanier): I would simply like you to refute the claim that outside Montreal, there are no opportunities to secure funding. I got wind of a meeting last January attended by a dozen or so independent producers who were not from Montreal. Two were from western Canada, two from Ontario and four from Quebec. There were also two from Sainte-Foy, one from Matane, one from Aylmer and one from New Brunswick. I wasn't at the meeting, but I believe they were unanimous in their criticism, particularly of Telefilm Canada, and in asking what could be done to improve the situation of independent francophone producers outside Montreal.
There are always three sides to every story: mine, yours and the facts. I think it would be interesting to uncover the facts. That's why I suggested, and my colleagues agreed to this, that we give the benefit of the doubt to representatives of the two groups concerned, namely the Canada Television and Cable Production Fund and Telefilm Canada. I read the document that I received yesterday. Things appear to be moving in the right direction as far as the Canada Television and Cable Production Fund is concerned. As for Telefilm Canada, we received the background material this morning. Therefore, aside from these comments, I would prefer to wait and see if the witnesses have presentations to make.
We know that the government has just injected $100 million and that half of this total and of the previous fund, namely $75 million, will basically flow to Radio-Canada and the CBC. I want to know if plans are in place to ensure the equitable distribution of this money. I want all parties to receive their fair share of the funding.
The Chairman: Mr. Leroux, briefly please.
Mr. Leroux: As far as today's proceedings are concerned, we clearly supported Mr. Bélanger. However, if my colleague is in agreement, considering that the announcement made last September has some entirely new components and involves a completely different structure, new players and so forth, I would suggest that we hear first from the witnesses as to the type of structure they are putting in place and how they plan to administer it. Subsequently, we could discuss related issues with them. I will make this a motion if my colleague agrees to this. I know that you have some very pointed questions for the witnesses.
Mr. Bélanger: Go ahead. It's not up to me to decide.
The Chairman: I think we should let the witnesses respond to Mr. Bélanger's suggestion and we can then act accordingly. You will have every opportunity to ask questions then.
Mr. Leroux: Yes, but things have to be made clear first.
The Chairman: I understand.
[English]
Mr. Lind, we'll give you about 20 minutes.
Mr. Philip Lind (Chairman, Canada Television and Cable Production Fund): Thank you, Mr. Chairman. We won't need that long.
I endorse Mr. Leroux's suggestion. If it's okay with both committee members and you,Mr. Chair, we'd like to make a brief statement to explain who we are.
In private life I'm a vice-chairman of Rogers Communications Inc. Today I'm appearing before you as chairman of the Canada Television and Cable Production Fund, created last September by the Minister of Canadian Heritage and Deputy Prime Minister, Sheila Copps.
.1115
Appearing with me today are Bill Mustos, executive director of the CTCPF's licence fee program, and François Macerola, executive director of Telefilm Canada and the CTCPF's equity investment program.
I appreciate the opportunity to meet with you today to tell you a little bit about the CTCPF and the industry it supports, and to answer any questions you might have about the fund.
The new fund is essentially an amalgamation of the former cable production fund with the equity investment fund of Telefilm Canada. The resulting organization is being operated as a private-public partnership between our board and Telefilm. Roughly speaking, the cable industry and Telefilm have each contributed $50 million to the new fund. The Department of Canadian Heritage is participating with another $100 million of new money. This brings the total money for this year to $200 million.
If you'll permit me, I briefly would like to describe how the fund is structurally organized, how it operates, and why its support is critical for the production of programming that tells Canadian stories to Canadians.
First, how does it work? The fund is a non-profit Canadian corporation made up of nine member associations. These members include all of the major Canadian broadcast, production, cable, and distribution trade associations along with CBC/Radio-Canada, educational broadcasters, and the Department of Canadian Heritage.
The board has 16 directors, chosen by members according to an agreed-upon formula. For example, the Department of Canadian Heritage can nominate three directors. Among them they have chosen Deputy Minister Suzanne Hurtubise to represent its interests. About a third of the board is francophone. It is broadly representative of the regions of Canada. So we have a diverse group representing all the principal participation in the Canadian production and distribution systems in both the public and private sectors, along with a strong voice from the Government of Canada.
How does it operate? The fund has two programs, the licence fee program and the equity investment program. The CBC has access to up to one half of each of these programs, providing their productions are acquired from independent producers.
The licence fee program is managed by the same staff that previously had responsibility for the cable production fund. They report directly to our board.
The equity investment program is administered for the CTCPF by Telefilm Canada under an agreement that requires both us and Telefilm Canada to mutually agree upon Telefilm's business plans and operational guidelines. I must say, despite the initial concerns of some of our board members about this form of unusual management structure, it has functioned extremely well. We are quite confident of its continued workability.
Since the launch of the new fund, both staffing components have been cooperating effectively. I am pleased to report that the guidelines of the two programs have now been almost completely harmonized. For the industries involved, this is by itself a major and long-awaited development.
As to the administration costs of the new fund, we will easily achieve the government's requirement that we not spend more than 5% of the budget of our new moneys on our overhead.
Finally, what job is the fund doing, and why is it so important for the country? Because of all the recent publicity surrounding the Canadian export success stories in the cultural sector, it must be stated that lots of Canadian programs are gobbled up by foreign markets. Shows like The Adventures of Sinbad, from Atlantis, have broad international and commercial appeal, but they don't necessarily tell Canadian stories.
We don't fund these shows. They don't need our support to succeed. We fund only programs that have at least eight out of ten Canadian content points, effectively ensuring that only one of the writer, director, or lead performer can be non-Canadian.
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With this requirement this is what you get: Traders, produced in Toronto; North of 60 and Jake and the Kid, both produced in Alberta; This Hour Has 22 Minutes, produced in Halifax; and Omertà - La Loi du silence and Urgence, both produced in Montreal. These shows need our support. They all tell particularly Canadian stories to Canadian audiences.
While they are indisputably rating hits in Canada, there's unfortunately very little interest from the United States. It's true that Traders has a sale in the United States to the Lifetime network, but it may not be renewed. There have been no sales to the U.S. of North of 60, Jake and the Kid or This Hour Has 22 Minutes. This is a reality despite the persistent efforts of such skilled exporters as Atlantis Releasing, Alliance Releasing, Nelvana, Salter Street, and CINAR.
It must be emphasized that the lack of foreign commercial revenue for these programs has nothing to do with their quality but everything to do with the low level of interest from non-Canadian buyers in programming that is, frankly, aimed at someone else's home market. This is a problem shared by many domestic programming industries throughout the world.
Authoritative reports indicate that programs of this type are lucky to receive back 20% of their original production costs from foreign markets, including the U.S. Yet it is vitally important for Canada that programs with Canadian stories be produced, and produced in quantity. This is the goal to which public and private broadcasters and cable operators and producers together are genuinely committed. That's why we support the CTCPF.
The job of the CTCPF is not to provide resources to producers and broadcasters; the real job is to ensure that Canadians get programs about Canada. That's what they want to see. We are confident that we can achieve this objective and that CTCPF will soon be seen as a major public policy success story.
My colleagues and I would be pleased to attempt to answer any questions you might have for us today. I thank you.
The Chairman: Thank you very much, Mr. Lind.
[Translation]
Mr. Leroux: Let me begin by saying that when it was announced that $200 million was being invested in the fund, our reaction was swift. We stated that this was an important development. Creation and distribution are both important elements, important because the objective is to reflect our cultural vitality and identity, as well as our historical heritage. Therefore, the creation of this fund was welcomed.
Obviously, we were somewhat taken aback by the creation of a new structure to administer this fund because systematic cuts have been the order of the day everywhere. This was particularly true at Telefilm Canada which was hard-hit when its budget was reduced from $120 to $80 million. While this is happening, a new structure is being set up to inject money into production. We are surprised by this development.
You described the new management structure as a partnership. This partnership will be administered more by the private sector, although the vast majority of resources will come from the public sector.
I know that Telefilm Canada has a legal obligation to report to the government. My question is this: will this new entity also have a legal obligation to report on the management of this fund?
At the same time, we know very well that the $50 million in the cable production fund comes from cable subscribers. It must be remembered that these are surplus funds and that users, who also pay taxes, have filed for an injunction in this matter. Therefore, money is flowing into the fund from two sources.
.1125
Mr. Macerola, why weren't the $50 million in the cable production fund transferred to Telefilm Canada? In my view, Telefilm Canada's credibility is well-established, as is its expertise. That's why I'm asking the question.
With respect to the partnership arrangement, why exactly was a private board of directors appointed to oversee the fund? I also have some questions about the appointment to the board of directors of a government member. We know that this is cause for some concern given the campaign that is currently being waged with respect to national entities. Will this have an impact on the criteria you apply?
What is the role of this partnership? Will it be required to report on the administration and use of public funds and how?
Mr. François Macerola (Executive Director, Telefilm Canada): First of all, the decision to create this partnership and this new board to administer public funds was a ministerial decision.
However, as a public servant, I must say that this is an excellent decision because it allows for the possibility of decompartmentalizing undertakings such as Telefilm Canada and of slowly bringing them around to the reality of the private sector.
Canada is a country with diverse public sector and private sector cultures, and in a number of European countries, new models have been adopted for the management of public funds in partnership with the private sector. On the one hand, the cable production fund was doing a marvellous job with selection processes very different to ours. They operated on a first come, first served basis. On the other hand, Telefilm Canada had its own selection process and at some point, someone in Ottawa set up a small working committee to bring these two sides together.
The most interesting end result of this partnership arrangement, aside from the privileged relationship between a public cultural agency such as Telefilm Canada and a private body such as the cable production fund, will be a new vision and new approach to doing business and above all, the harmonization of program guidelines.
At one point, my colleague Bill Mustos could decide for himself whether or not to give a bonus or a rebate. At Telefilm Canada, I didn't have to follow suit if I didn't want to. We now have a board of directors composed of individuals responsible for their own programs, but the fact remains that it is a public board. Consequently, the programs are public. The advantage I see to this is the harmonization of program rules over the past four to five months.
As for Mr. Bélanger's question about whether or not any opportunities exist for producers outside the Montreal region, both sides met and agreed on harmonized rules to ensure that producers outside Montreal do have opportunities. That's the second point and it's very important.
Lastly, regarding this private-public partnership, you know as well as I do that in a number of years, other funds will possibly be added to the mix. Therefore, the government has created a structure which can accommodate all of these funds and ensure that they are managed capably and harmoniously by the private and public sectors.
The government could have decided to take the $100 million and give it to Telefilm Canada. We would have welcomed this decision. However, I don't think that this would have satisfied all of the needs of our society and of government which invests in culture. The public sector must maintain an arm's length relationship. As for the private sector, it has other rules to observe. When we combine all of these elements, I think the outcome is a positive one.
Mr. Leroux: There will no longer be an arm's length relationship, because an official from Heritage Canada now sits on the board of directors and this department provides for 75 per cent of the funding.
Mr. Macerola: Can I say something about the arm's length relationship?
In the case of a cultural agency like Telefilm Canada, an arm's length relationship must exist insofar as products and programming are concerned. At present, in the case of the new fund, projects are not discussed, only business plans and these plans are public.
.1130
I have to tell you that the deputy minister who sits on the board has delegated an official to act on her behalf. This is the same person with whom Bill Mustos and myself were in contact in our previous lives.
Consequently, in my opinion, there is no danger of not maintaining an arm's length relationship in this new structure.
Mr. Leroux: The fund is administered quite well by the nine voting members on the board. They have very specific decision- making authority. That individual represents the department that is responsible for 75 per cent the funds and we're talking about public funds.
Mr. Macerola: I agree with you.
Mr. Leroux: I would like you to clarify further for me the whole question of the administration of the fund and the criteria in place because I feel it is important to understand what's at stake here and the criteria governing the distribution of the available funds. Apparently, there will be a business plan in place which will influence the administration of the fund.
Mr. Macerola: The fund contains $200 million, that is $100 million in existing funds and $100 million in new money. The board of directors has agreed to administer these funds in an egalitarian manner. The licence fee program administers $100 million while Telefilm Canada administers the remaining $100 million.
I will let Bill explain to you the criteria that are applied to the licence fee program. Telefilm Canada has not altered its selection criteria in the least. We continue to finance feature films and television programs with money taken from the fund. We continue to act as a cultural agency, but we rely on commercial and industrial means to carry out our mandate.
In more concrete terms, what this means is that Telefilm Canada draws up a plan detailing how it intends to spend $100 million. Of this total, approximately $85 million is earmarked for television productions and the remaining $15 million for feature film productions.
We table our plan of action which must be endorsed by the new board of directors before it can take effect. Each month, we report back to the board on our expenditures and commitments. Projects are not discussed in any manner in this forum and increasingly, we try to ensure that our two action plans are harmonized.
For the moment, I think that we can claim victory. There have been no radical or dramatic changes at Telefilm Canada. We have an obligation to uphold, although we have retained our status as a Crown corporation.
Mr. Leroux: Aside from grants, you operate with other budgets.
Mr. Macerola: That's correct. The only obligation we have is to be a little more open and public with our clients. In a nutshell, that is the situation.
Mr. Leroux: Since your criteria do not appear to have changed in any way, I have a question for you regarding Telefilm Canada only. We often hear people say that Telefilm Canada interferes not only with the script development but with filming as well. How do you respond to this allegation?
Mr. Macerola: It's true that there was a time at Telefilm Canada when certain officials liked to think of themselves as private or independent producers. When I was appointed slightly less than two years ago, I gave two speeches: one in Montreal and one in Toronto. I met with producers associations and I told them that content was their responsibility. Telefilm Canada was not a studio and no longer pretended to be a studio or an executive producer.
Telefilm Canada is an investor and since it cannot support every project, there is a qualitative selection process in place.
Mr. Leroux: Then I have to conclude...
The Chairman: Very briefly, Mr. Leroux, because I would like to give Mr. Mustos an opportunity to respond. I will come back to you later.
Mr. Leroux: I'm prepared to listen to Mr. Mustos' presentation.
.1135
[English]
Mr. Bill Mustos (Executive Director, Licence Fee Program, Canada Television and Cable Production Fund): Speaking for the former cable production fund, we represent the private sector side of this public-private partnership, with about $100 million a year to spend.
It might be helpful if I gave you a quick background on where we came from. We're the new, young organization on the block. We actually are a creature of the CRTC. In February of 1994 the cable production fund was established by the commission through a public notice. The fund was created by the commission to support high-quality, high-Canadian-content television productions in specifically five under-represented genres of programming; namely, drama, children's production, documentaries, variety, and music and dance.
After consultation with the public and the Canadian television programming industry, the commission set forth a mandate and specific operating criteria for the fund. At that time they made provision for the cable industry to provide dollars to this fund on a voluntary basis. We were extremely pleased in our first year of operations to see an almost 100% buy-in by the cable industry such that our first-year budget was in the neighbourhood of $50 million.
As Phil Lind mentioned, we too initially had a board of directors made up of representatives of the Canadian production, broadcasting, and cable industries. That has worked very well for the last two years.
The fund was set up to operate differently from Telefilm Canada. It was to try a different approach to the support of high-Canadian-content television production. The approach is objective and market driven. Applications for funding on our side are received on a first come, first served basis to ensure that all producers, whether they be big or small, French or English, from Vancouver or from Halifax, begin from the same level playing field.
Furthermore, the fund has established, and consistently applies, objective criteria to determine whether or not a program is eligible for support. That is to say, no subjective criteria, such as evaluation of the program's content or the experience of the producer, is used to determine eligibility for funding. Furthermore, a French-language envelope we administer guarantees that French-language producers have access to one third of our funds each year.
Pleased with the success of the fund, as well as the results of the funding principle set forth by the commission and the board and the staff of the fund, the Department of Canadian Heritage chose to enter into this partnership with the cable production fund for us to administer the licence fee portion of the fund. A contribution agreement was signed between Canadian Heritage and the CTCPF in November of 1996.
More specifically, as a market-driven program one of the primary criteria used by the fund to determine a program's eligibility is the commitment from one or more Canadian broadcasters to the payment of licence fees at a minimum threshold level. We also require that those broadcasters commit to exhibit those programs in prime time, 7 p.m. to 11 p.m. As Phil mentioned, we also require that all of our productions achieve eight out of ten Canadian content points.
Like the cable production fund before it, the CTCPF's licence fee program contributions are meant to supplement the pre-sale broadcast licence fees paid by Canadian broadcasters for Canadian programs. Its contributions benefit producers by providing a significant portion of their financing required to produce the program while also serving as an incentive for Canadian broadcasters to purchase Canadian programs at a more affordable cost.
In the end, we hope Canadian television audiences will have access to more and better-quality television programming on their screens in prime time.
The Chairman: I'd like to turn to Mr. Abbott.
.1140
Mr. Abbott: I'd like a quick definition of ``year''. We're talking about $200 million for the year. What is the year's beginning and ending? Does it coincide with the government fiscal year-end such that this $200 million will have been allocated before March 31, 1997?
Mr. Mustos: That's right.
Mr. Abbott: Okay.
As well, there has been some question about this cable industry contributing these funds on a voluntary basis. I'm not going to canvass that topic at all, but I am curious to know, if we were to take the gross revenue of the entire cable industry in Canada, roughly what percentage would $50 million be?
Mr. Lind: I'd have to do a little math. We have 7 million subscribers. They pay us in the low twenties a month, roughly. It's a low percentage. If someone has a calculator...
Mr. Abbott: So 1% or 2% of the cable subscriber's fee would ``voluntarily'' be contributed by the cable companies to this fund.
Mr. Lind: Right - in addition to other things the cable industry does, such as its community programming and things like that.
Mr. Abbott: Yes. I'm just trying to get an idea here. If a person is paying $20 for their cable, it would be of interest to them to know that 20¢, 30¢, or 40¢ of that $20 is going there.
Mr. Lind: It's around that, but it depends. You see, it's done on a rate mechanism affixed to your capital expenditures.
Mr. Abbott: Yes. I don't want to canvass that, as I said. That's a topic of its own.
Mr. Lind: Right.
Mr. Abbott: I'm curious about what appears to me to be the potential of a duplication of effort here. What I'm keying in on is the fact that, as I understand it, there's $15 million from the Telefilm allocations; there's $50 million from the commercial cable production fund; and there's $100 million of new money into this $200 million thing. At the same time, Telefilm continues to function. In other words, Telefilm hasn't turned over its whole budget; $50 million of the budget is there.
I recognize the very obvious reality that there is a difference in format between feature films and films made for television. Nonetheless, why do we have to have two boards, two sets of criteria, two hearings, two processes?
Mr. Lind: In fact, it's really done the reverse. What we have here is a situation where we had two very successful groups working... The cable production fund is very lean in terms of its staff, and Telefilm Canada is getting much leaner, getting very efficient. They have more staff because they have subjective criteria. They manage different kinds of programs.
Now, the government saw two alternatives. They could create another group and another set of staff and another board and so on. They could also say, okay, we'll give you more money, but we want this money to go directly into programming. We don't want it to stop at administration at all. So they gave the cable production fund more money but told them to administer with roughly the same staff; Telefilm, the same idea. Instead of creating a superstructure, they decided to have a board that operates on a voluntary basis. Board members aren't paid. They get expenses to fly to the meetings, but that's all. Government decided to create no hierarchy at all and made them run with the same amount of resources they were running with before. Much more money could then go into the programming sector.
The industry people, I think, are very critical, or have been traditionally, of administrative overhead in anything. They want the money going directly to them. As far as I've heard, the industry is uniform in their praise for the efficient manner in which these funds are being dealt with. I think it's quite universal in that regard.
My submission to you, sir, would be that it's a highly efficient method of getting money into the programming sector.
.1145
Mr. Abbott: But you can see my confusion in the fact that we have these criteria by Telefilm, some of which overlap. In other words, in some instances Telefilm is involved in allocating funds for production of works that would be shown directly to television, that would not be feature films, and at the same time is also taking part in this other board. You can see that there appears to be duplication -
Mr. Lind: No, because what we've done is actually eliminate a lot of it. You see, what Telefilm does is invest in the equity side of a television program, and what Bill does is top up the licence fee side, what the television stations pay. So in essence it's the same program, but they're funding it entirely differently.
So what the government thought was, because they are dealing with the same program and the same set of program producers, wouldn't it be great if we got these two together and harmonized the guidelines so that even though they're funding for different reasons they're totally at one in terms of their approach.
François, you might comment, but I think that's the way it's working.
Mr. Macerola: At Telefilm Canada, we do invest. We don't give contributions, but we do invest and we have some returns on our investment. This year it will be in the order of $35 million to $45 million in revenues.
So we're working together and we're trying to harmonize our rules. We are investing in almost the same television programming, but we're using a different set of criteria to do it and, on the other hand, we're using a different type of approach in order to be able at a certain point to achieve our objective.
The $100 million is only half of my budget. I have some other responsibilities. We are responsible, as a public organization, for administering a program of feature films, distribution, international marketing, film festivals, and so on and so forth, with another $100 million.
Mr. Abbott: I really don't want to get into an argument, but it just strikes me that if we have taxpayers' funds funding Telefilm Canada and they are investing in project A under certain criteria, and if three-quarters of this production fund is also taxpayers' dollars and they are investing in this project, it is still taxpayers' dollars that are funding this program. It just seems to me that it appears to be two separate entities when in fact it's the same taxpayers' wallets. That's my concern.
In other words, Telefilm has its criteria, the production fund has its criteria, and in that way we get more Canadian taxpayers' dollars going into it. That's my concern.
Mr. Lind: Just to come back to it, sir, I think the government wanted more money to go into the sector because it has tremendous multipliers. You put $100 million in and you generate $700 million or $800 million worth of jobs. It's highly job creative.
Then if they're putting this money in, they have to decide what's the most efficient way to do that. They don't want it in overhead and they don't want it in administration. So if they can look at a situation where they have two programs working well now and they can put another $100 in and not raise the price of the administration, I think they would be very satisfied. That's in essence what we're doing here.
Mr. Abbott: Thank you.
[Translation]
The Chairman: If I understand correctly, Mr. Duhamel, you have to leave around 12 noon Therefore, I will let you go first, followed by Mr. Bélanger.
Mr. Duhamel (St. Boniface): I want to thank Mr. Bélanger for allowing me to split the time with him. This morning, I am substituting for Guy Arseneault for a few minutes. He will be returning, however.
[English]
There are two questions of great interest to me. The first one is that when I look at all of those various programs and funds, I must confess - because I don't have a whole lot of background in that area - I find it quite confusing. Maybe I'm the only one who does, but I would ask if there is a simple way to somehow categorize that which would be useful for me as a lay person.
But my more important question this morning is as follows. What assurances can I have - perhaps none - that those from western Canada, either English- or French-speaking, who are interested and might qualify for this type of funding will indeed get their fair share?
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[Translation]
Obviously, I am particularly interested in francophone affairs in Western Canada and I wanted to be certain that if any francophone producers applied for funding, they would be considered. I sense that you are about to tell me: "Yes of course, their applications will be considered." However, I want to be very certain that this is the case and that you are not merely saying this because you know it's what I want to hear. What assurances can you give me?
The Chairman: You have asked two questions. First, you want to know...
Mr. Duhamel: As for my first question, the witness could send me a short memo. The second one is more important.
Mr. Macerola: First of all, I have already had the honour of serving as chairman of the National Film Board and of appearing before your committee. It was much easier for me to answer at the time because I was in control. I could say to you: "Listen, it's true that we haven't necessarily upheld our commitments in a particular sector. When I come back next year, my goal will be to have increased these commitments by 5 per cent." When I returned the following year, members never failed to ask me if I had met my objective of a 5 per cent increase.
My problem right now is that I do not initiate projects. In order for television programs to be accepted for funding by Telefilm Canada, projects must be accompanied by a letter of commitment from a broadcaster stating two things: first, that the broadcaster is prepared to pay a certain amount of money and secondly, that he is prepared to broadcast the program at a particular hour. In the case of a feature-length film, we need a letter from a Canadian distributer stating the following: "I am prepared to distribute this film. Here is the amount that I am prepared to pay to ensure that I own the rights to this film."
Since I do not initiate projects, I can only adopt an approach which could initially benefit production outside Montreal. Bill Mustos can tell you that by harmonizing our policies, we come to the question of bonuses. Regional productions are awarded a 10 per cent bonus, while francophone productions receive a 5 per cent bonus.
Will this move be enough to convince broadcasters and distributers that it is time for francophones outside Montreal and outside Quebec, francophones who pay taxes and have the right to express themselves, to have access as well to this country's existing cultural infrastructures and to public funds?
I can't answer that question for certain, but I can tell you that good will prevails. Already, the funding split for English and French programming is two thirds/one third. Telefilm Canada is always a little more generous in the case of French language productions for a number of reasons too lengthy to get into here. In light of this one-third funding split, the only thing I can do along with Bill Mustos is to establish incentives which will encourage broadcasters and distributors to make good use of public funds.
[English]
The Chairman: Mr. Mustos, would you like to add to that?
Mr. Mustos: Yes, I would. I'd like to highlight a subtle difference between our program and the Telefilm program, and I think perhaps in my response I'll attempt to answer your first question as well, because I think they're linked.
The layperson's view of the licence fee program ought to be that we have a program that, not only in name but in practice, operates truly as a transparent, objective, first come, first served fund. People make applications to our fund, and we date-stamp and time-stamp every single piece of paper that comes through our door. When we have a project that has satisfied the requirements of eight out of ten prime time exhibition and licence fees, then that project automatically and quickly reserves money from the fund.
Just as Mr. Macerola mentioned, we can't initiate or create the projects. It's the producers who have gone out into the marketplace, have pedalled the shows, have made the sales, have got the licence fee commitments that they put together with a few other details and submit to our offices.
.1155
We have a pretty good track record in our short history of supporting not just the big production companies that have the big production slates and the big offices with business affairs people who can pull together these applications. In our first year we supported 171 projects from coast to coast, and 81 of them were low-budget documentaries that came from all parts of the country. They had access in the same way as the biggest production companies had, in that they lined up and were treated as favourably as anyone else. I think our track record in the regions and in Quebec does speak for itself; however, I will freely admit that in terms of the regional French-language production we are not where we'd like to be, and we have made adjustments to our guideline policies for the year that is coming up to address just that.
Mr. Duhamel: That's very useful, and I thank you for those responses.
Clearly the concern is not that certain people be given an advantage that would be unfair towards others. My experience as an academic, for example, when we were applying for grants, was that if you were a big player who had been around for a while and came from a name institution...you know, I really had to work extremely hard, even though my project might have been as viable. I just want to make sure that, to the extent possible, no individuals, whether they are English- or French-speaking or other, who have a good product, because they happen to be in a particular area of the country and perhaps have not been around as long as others, are denied the opportunity to shine or to get their fair share. That's the point I wanted to make.
[Translation]
The Chairman: Mr. Bélanger.
[English]
Mr. Bélanger: I want to make sure I understand one thing. If there's an attempt to harmonize the criteria of Telefilm Canada and the CTCPF - that's a mouthful - am I right to believe that there is one element where harmonization is impossible, and that is in the fact that the CTCPF has no subjective criteria whereas Telefilm Canada, because of its investment angle, must have subjective criteria, or desires to have subjective criteria? That will be impossible to harmonize. Is that a correct assessment?
Mr. Mustos: I would say that it wouldn't be our desire, nor would it be the industry's desire, to harmonize on that point. I think there has been repeated validation of the two approaches in that they each have merit and they each accomplish different things. So we would never have even set that out as a goal.
Mr. Bélanger: First I'd like to deal with the CTCPF. You have received, I believe, or someone in your shop has received proposals from le Regroupement des arts médiatiques du Canada (RAM), and I gather you couldn't deal with those proposals to review your criteria in time at your February board meeting. Is it your undertaking to consider them the next time you gather? Those are related to three, if I recall... Let me make sure I have my facts straight here.
[Translation]
The first criteria was to broaden the definition of prime time.
Mr. Macerola: That's right.
Mr. Bélanger: Currently, prime time extends from 7 p.m. to 9 p.m. and the proposal is to extend it from 4 p.m. to 9 p.m. to reflect the reality of regional communities that you want to help. It is a question of being more flexible in terms of types of programming, particularly variety programming, and ultimately to accept with the broadcasting licence that up to 30 per cent of the envelope can be represented by a contribution in the form of goods rather than cash. Are you planning to look into these matters in the near future?
[English]
Mr. Lind: I will ask both Bill and François if they would like to reply. I will say this as a general statement, first of all.
Because of the importance of the amount of money we're dealing with here, we get representations from dozens and dozens of program producers, individually and in association. We get recommendations, and if we took them all and agreed with them all we would be out of money probably in the first month of our operation, which is an annual thing. So obviously we can't agree with them all.
.1200
What we're trying to do is manage the program in a fair but fiscally responsible manner. At our last two board meetings we dealt with recommendations. Our staffs have seen 50 or 60 or more recommendations. They will cull from those and make recommendations to the board. Other board members say whether they agree or disagree, or introduce amendments, which can be made from the floor by members of the board. What we have done, though, is to have our guidelines produced for the next year. Some did not agree with some of those recommendations.
We monitor on a month-to-month basis to see how well we're doing, to see whether or not our criteria of fairness and fiscal responsibility are met. If, for example, we find we're not having the take-up, then we would liberalize the guidelines. If we find we're running out of money much too fast, we try to turn off the tap and tighten the guidelines a bit, which really makes people upset.
So a lot of these suggestions are good on the face of it, but we have so many recommendations.
Mr. Bélanger: That's understood, Mr. Lind. I wasn't suggesting that you accept them. I was asking that they be considered and then, understanding the responsibilities of the board, if they fit in with what you're trying to do and with what the community is trying to achieve, that they be accepted. But it's far from me to impose, or to try to do so.
Mr. Lind: Okay.
[Translation]
The Chairman: I believe Mr. Macerola also wanted to add something.
Mr. Macerola: I just had one brief comment, Mr. Bélanger. The famous guidelines were drawn up following a tour of Canada by Mr. Mustos and officials from Telefilm Canada. They were drawn up in response to a real need. In the document to which you referred, some matters fall within the purview of the fund, while others are the responsibility of the CRTC.
Prime time is the responsibility of the CRTC. This is a very important consideration in terms of services. For example, what happens if the CBC decides to make its services cost effective by including them in the production budget? What happens to the people who market technical services?
When we receive letters like this, we sit down and discuss the matter with people and twice a year, we tour all of Canada and sound people out. Then we come back to the board of directors. There is always someone who comes to these meetings to ensure that the process is correct and that decisions are taken in light of the recommendations made by Bill Mustos and myself to the board. The process is very open.
The Chairman: One final brief question, Mr. Bélanger.
[English]
Mr. Bélanger: To finish off on this, I've looked at your schedule A, the summary of results. It seems to be headed in a good direction, so I'm quite happy.
Has there been an apportionment of that $150 million? If so, is each portion in a separate envelope so that the first come, first served approach doesn't mean that once an envelope is finished you tap into the other one? Or is it first come, first served to a particular envelope?
I hope I'm explaining myself properly here.
Mr. Mustos: It's first come, first served to a particular envelope.
Mr. Bélanger: Thank you.
The Chairman: Mr. Leroux.
.1205
[Translation]
Mr. Leroux: I'm concerned about the name chosen to designate the cable production fund, namely the Canada Television and Cable Production Fund. I tabled a motion to change the name to the taxpayers and cable subscribers television fund. I want to know exactly what the status of the cable production fund is.
Isn't this fund the result of the CRTC's decision, in light of the accumulated surplus, to ask you to go with the investment program? If I understood correctly, you are investing 50 per cent of the surplus. In looking at the figures for the last five years, I see that the accumulated surplus totals $600 million. Of this amount, you have allocated $300 million to the cable production fund and kept $300 million as working capital. I would imagine that you are not accountable for this money.
[English]
Mr. Lind: Who has a surplus, the cable companies?
[Translation]
Mr. Leroux: Yes, the cable companies.
[English]
Mr. Lind: Cable companies almost universally don't make money. By and large, cable operators, especially the larger ones, invest every last cent of their cashflow back into the business. They have no surpluses.
You may be thinking of the telephone companies.
Some hon. members: Oh, oh!
[Translation]
Mr. Leroux: I don't believe Rogers has a $50 million surplus. Wasn't it the CRTC that asked you to set up this fund?
[English]
Mr. Lind: No, Mr. Abbott didn't want to get into it. We will get into it if you want, but it's a tricky one.
There is a capital expenditures recovery methodology. The CRTC has said that in terms of a certain percentage of the money that goes into improving the plant and the cable television system, you can bill part of that portion back to the cable subscriber.
A sunsetting program set up about six years ago was going to be over. The CRTC said that to continue this program you had one of two ways. You could let the program cease and let any further capital expenditure expire - remember, this is only one portion of all the capital expenditures spent, and let's say it was 30¢ a month per subscriber - and reduce the rates by 30¢. The other way would be to take half of it and send it in to the cable television production fund and keep half of what you're spending on capital expenditures.
So you have one of two options. You can either cut your rates by 30¢ or you can continue to recover half of it and take the other half and send it in to the cable production fund. That's how this thing got set up in the first place.
It's voluntary, then, in the sense that cable companies certainly had the right to reduce their rates or they had the right to split it with this fund and put the money back into the system.
[Translation]
Mr. Leroux: Then you would agree with me that we should change the fund's name to the Taxpayers' and Cable Subscribers' Television Fund. This change would reflect the reality of the situation. Isn't that right? We agree with your explanation. In any event, you've just told us where the money in the fund comes from.
Of the nine voting members on the board of directors, how many represent the cable industry?
[English]
Mr. Lind: It's a bit confusing. We're made up of nine member associations, one of which is the cable television industry, but we have sixteen members on our board, three of whom are from the cable television industry.
[Translation]
Mr. Leroux: I would imagine that there is an executive. How does it operate when it comes to the recommendations of Mr. Macerola and Mr. Mustos? When the latter make recommendations, how are decisions arrived at around the table? Are votes taken or does the board operate by consensus? How does it work?
Secondly, to whom is the board accountable? To whom do you report? Do you operate independently or must you account for your actions, and if so, to whom?
.1210
[English]
Mr. Lind: We certainly report on all our activities to the federal government, through Heritage, through our contribution agreements. The government has stated that they have requirements that the fund report on its activities to the federal government.
I think the federal government had two different approaches to take. They could say, look, it's all our money so it's all our board's seats, but I think they looked at how the cable production fund was working and said it was working extraordinarily well.
They canvassed the television production industry, obviously, and they canvassed the TV broadcasters. They said the fund was working extremely well, with very low overhead and very high effectiveness. So instead of just appointing sixteen government appointees, they said, look, we'll have a partnership with what you already have. We'll put the Telefilm equity side under this new body and we'll create a private-public partnership that will administer this $200 million, content that the people on the board are responsible individuals. There are means of reporting relationships, so they can always audit and check and so on.
This was a different approach taken by the government. The board's in control. We are responsible for this money, the conduct of how the money gets spent and the conduct of its officers.
[Translation]
Mr. Leroux: Is there some agreement whereby you are required to account for your actions?
Mr. Lind: Yes.
Mr. Leroux: And what about the board of directors?
[English]
Mr. Mustos: As the side that had no previous reporting mechanism to government, I can tell you that what is expected of us now is very considerable.
[Translation]
Mr. Leroux: This is quite a departure and I would imagine that it is an adjustment for you.
[English]
Mr. Mustos: Absolutely. The accountability is phenomenal. We have monthly reporting, quarterly reporting, business plans, communications plans, annual reports, annual activity reports. I mean, we are in constant contact with the Department of Canadian Heritage. They monitor what we do now every step of the way, including audited financial statements - the works.
[Translation]
Mr. Macerola: I just wanted to say that I do not sit on the board of directors; Telefilm Canada President Robert Dinan is a member of the board. As I see it, the board of directors is composed of three representatives of the cable industry and three public representatives appointed by the government. Between the two entities, you have broadcasters, producers and distributors.
Earlier, you asked how things worked at Telefilm Canada. Well, I table my annual business plan which is then submitted to the board of directors for approval.
Given the urgency of the task at hand, we dispense quickly with some stages of the process, but I personally have not encountered any frustrating situations. Moreover, the chairman mentioned in his speech that a kind of mutual consensus had been reached with Telefilm Canada, but this is not difficult because Mr. Mustos and myself, along with our teams of officials, travel across Canada. When we actually make a recommendation, it is not the result of a visit to Montreal or to Toronto, but rather an indication of the cultural pulse of the entire nation.
Mr. Leroux: I understand very well. Regarding transparency and your accountability to the Department of Canadian Heritage, if either Mr. Abbott or myself wanted to obtain copies of these reports, would it be possible for us to do so or would we have to go through the Access to Information Act?
.1215
[English]
Mr. Mustos: I believe the annual report we prepare each year is probably the only officially public document that goes from us to Heritage and then out to the public at large, but the monthly reporting and the quarterly reporting is probably not so.
The reason for this, I should say, is that we provide some very confidential information in those reports relating to the project budgets - how much broadcasters are paying in terms of licence fees - since we are topping up those licence fees. That's information that companies do not like to divulge, so it's submitted in that form.
Mr. Lind: Remember that this is a competitive process and everybody is trying to get this money. So we try to be fair and not share the competitive information with anyone but the ministry.
Mr. Leroux: Merci.
The Chairman: Mr. Abbott.
Mr. Abbott: Before I ask some questions concerning the split between French and English,Mr. Lind, I'll just try to come to an understanding of what we were talking about on the source of funding for that $50 million with the cable production fund.
Let me just work on a word picture here; let's not worry about the absolute value of the dollars that we're going to talk about. Let's assume that a cable company has certain capital requirements for upgrading, such that they were to charge $1 per month per subscriber over a three-year period. Again, for the simplicity of this picture, let's forget about interest, carrying charges, and everything else. So we charge $1 per month per subscriber. Then over a three-year period, we would have a full cost recovery of that upgrade. Let's just work on that assumption for this one project.
Mr. Lind: It's only a portion of it, but certainly let's say $1.
Mr. Abbott: Did I understand this correctly? You're saying then that the CRTC came along and said that you can't have that $1. If you only take 50¢, then they would take 50¢, and you'll only get 50¢. Is that what you're saying? So in fact this particular mythical project we're talking about would then take six years for the cable company to amortize.
Mr. Lind: Right, they sunsetted this particular program. Well, maybe, to make it easier for all of us, the CRTC has proposed new distribution regulations that will likely come into effect as of January 1, 1998. 1998. Those regulations will call for a flat-out assessment of 5% of revenue for all video distributors, satellites, over-the-air cable, and cable over wire lines.
Of this, they haven't determined... Let's say half of that can be put to the community programming fund, some portion of it anyway. The rest must now be remitted to the cable production fund.
The CRTC is saying that this is being complicated, so they're going to make it simple: they're just going to take a 5% assessment of your gross, and then you mail it in somewhere. So they'll be able to track where all the money is and it will be very easy to explain.
Mr. Abbott: If your competition is paying the same 5% - say we ignore the grey market for a second - isn't that 5% simply passed off to the subscriber of either the satellite service or the land line service?
Mr. Lind: It's a tithe, if that's -
Mr. Abbott: But what I'm saying is that it's not off the bottom line of the cable company or the satellite company.
Mr. Lind: No, it's right off the top. It's 5% of the gross of any distributor in the business of distributing video pictures. If their rates are $20 or $30 a month - whatever - they take 5% of that gross rate and remit it to the cable production fund. That will be the new rule.
Mr. Abbott: But my point still is that the subscriber is paying that before the company is concerned about getting to its net or bottom line. So it's still coming out of the subscriber's hide; it's not coming out of the cable or satellite companies' hide.
.1220
Mr. Lind: It comes out of the gross rate.
Mr. Abbott: Yes.
What I really wanted to take a look at, though, was that in this Telefilm book, Action Plan, 1996-97 - and I assume this book was printed prior to this - the broadcast fund is at $58.2 million and the feature film fund is at $22 million. Can you identify where the $50 million came out?
Mr. Macerola: It would be from the $58 million, television.
Mr. Abbott: Then Telefilm still only has $8.2 million in the broadcast fund. It committed$50 million to this -
Mr. Macerola: No, we've committed $50 million to that new fund and we've used the$8.2 million in other programs.
Mr. Abbott: Okay.
Finally, just for clarity, on page 6 of the English version it says:
- The situation of Canadian feature films is of continuing concern to Telefilm. Although
French-language productions are successful at home, they receive a fairly lukewarm welcome
on foreign markets.
A voice: It's British.
Mr. Abbott: But that's my point. My point is, it seems to me we have, in the English-language programs available, as you point out in this, fairly wide acceptance, whereas those in the French language do not.
Is that a French-language cultural issue or is it the choice of programs that Telefilm is making on behalf of French-language programming for the province of Quebec and for other French-language distributions in Canada?
Mr. Macerola: Are you referring only to television or to feature films?
Mr. Abbott: Let's just talk about television.
Mr. Macerola: I believe the productions made in Quebec are of high quality, as are the English-speaking productions. I guess the main problem is the question of language.
The Quebec market is very small, six or seven million people. On the other hand, it's very difficult to export.
Mr. Abbott: My question is, why?
Mr. Macerola: Oh, I see. Why is it difficult to export? Mainly because we're producing in French. That's the main problem. Very often some decisions have been made concerning the exportation or concerning the international marketing of our products based on a kind of ``political-cultural relationship'' with countries.
For example, the French films in Quebec have better success in Germany than in France. Nevertheless, we still invest a lot of money in France. I was with my French counterpart from Quebec, Pierre Lampron, last week, and we had that discussion. We said that at a certain point we should be able to try to join forces to be able to open up these markets and to stop referring to France as always being the ideal market for our production.
I personally believe there's some room in the international market for Quebec productions. There's certainly a choice made not by the broadcasters but by Telefilm Canada. At a certain point we should be a little bit more open-minded toward exportation not outside Canada but within Canada.
For example, in Quebec everybody will refer to La Petite Vie, which has a rating of 4 million people. That's great, but it's impossible to export that kind of production. While we are producing La Petite Vie, which is for me culturally important, at the same time we should be able to produce some other types of productions that should have, or could have, international acclaim. It's a question of choice, market size, language, and money available for French productions.
.1225
The Chairman: Mr. Abbott, can I just turn it over to other members?
Mr. Collins.
Mr. Collins (Souris - Moose Mountain): Thank you very much, Mr. Chairman.
This is with regard to what Mr. Abbott was referring to. In the context of that paragraph, when you got to the English side, it made a rather clear distinction. In that distinction, are they talking about all the English productions or are they talking about this particular element vis-à-vis foreign film?
What they said in there is that the situation of Canadian feature films is of continuing concern to Telefilm. But when it gets down to the point of English-language feature films, on the other hand, the story is almost the opposite. Is that in terms of abroad as opposed to at home?
I would say this. It's my particular opinion. If you get that kind of market in Quebec, I'm not so sure I would be worried about the extraction into the foreign market. I think you're doing very well in the reception it's receiving.
Let me just move off that. Sir, with regard to the board structure, I commend you. What I want to say is that on the accountability side, you're mentioning government. This always bothers me. It seems that we kill ourselves with reports. Somebody's always looking for a report. If it isn't next week, it's the next minute. So we regurgitate reports until God has little green apples, and I wonder why.
I see that at one stage... We said to small business that we're going to help them out. We're going to ask them to report quarterly. So I'm just saying that if you had your druthers... Maybe you don't want to tell us, but I would like to know how the hell you help us by saying to somebody else to cut down the reporting.
Mr. Lind: I think I'll answer that question because Bill might answer it differently.
Mr. Collins: Could I just ask another? He raised a very good point - I commend you - when we were talking about taxes. Then you brought out the point...
But let's take a look at the economic feature and what it does for providing jobs. Everybody's saying that this is the dollar value, but then we don't look at what the multiplier effects are. I would like to see somewhere - I didn't see it when I just glanced through your books - a graph to put this all together to tell the whole picture.
Mr. Lind: I think you're so right. It isn't just in Vancouver, Toronto, or Montreal. The type of production that's going on in this country right now is unbelievable in all parts of the country. It's not just big cities in which you can hardly drive around any more because of the big vans parked everywhere. Incredibly labour-intensive productions are going on all over the country.
I was intrigued the other day to read a report that in British Columbia, those in the film group there were astounded that there was an additional $275 million of revenue in film production or television production that they had not anticipated at the beginning of the year.
This industry is white hot. This is probably the most dynamic industrial sector in the country right now. A significant part of the reason is because of this $200 million. It starts small, but keeps on going, because then the broadcasters, syndicators, and everybody else get into it. All of a sudden, it mushrooms.
François could check on this, but we're told that Canada is the second-largest exporter of television production in the world. That's ahead of France, England, and Australia. That's phenomenal. Just us: little old Canada.
We're doing that because of programs such as this whereby they're tightly administered, directed, and market-driven. I think that's really the key to the success. We're not saying we're going to socially engineer how production ought to be run in this country now. We're going to let the decision-makers who have the dollars at stake make the decisions. We'll back them up with funds.
.1230
It sounds immodest because we're sort of involved, but I think it has been a great success, and we're all proud to be part of it.
The Chairman: If I may butt in, Mr. Lind, we are going to proceed with a sort of extensive study of the federal government's role with regard to Canadian culture, which will be starting imminently. If, by any chance, you have any statistics or information to let us have on the success of the export market, it would be useful.
Mr. Lind: I think that's a great suggestion. I think the suggestion about the multiplier effects and things like that and where your dollars are at work... You're right that this is made up of taxpayers' dollars, but they're certainly being put... And jobs are being created because -
The Chairman: Is there any chance you or Mr. Macerola both could provide the clerk with any information in that light? It would be very useful.
Mr. Lind: We will try to do that.
Can we answer that question about reports? It probably has made it tougher at the top side of the equation because of these reports, but it was pointed out that this is public money.
We haven't been swamped as yet. We would push back if that happened, because we're responding to the private sector and the public broadcasters here. We're out there trying to get money into people's hands as fast as possible.
So we reckon that we're trying to balance the responsibility we have because it is public money and we are a private body. There's an extra level of responsibility there. But at the same time, we're trying to create as efficient an organization as possible and not be burdened by huge requirements. I think Heritage has been fair with us so far, but we'll let you know if they get rough. Maybe you can help us.
The Chairman: Could I get the agreement of members before I pass on to the next speaker? It's just after 12:30 p.m. I would suggest that we carry on until 12:45 p.m. with our witnesses so that we can deal with our items of business, which will take a little while. Is that fair enough?
[Translation]
Mr. Bélanger.
Mr. Bélanger: I would like to ask several questions about Telefilm Canada and focus on the criteria. Setting aside the element of subjectivity, have you proceeded to harmonize all of your criteria for this or the coming year with those of the cable production fund?
Mr. Macerola: Yes. Speaking of subjectivity, we use certain criteria, that is to say we operate on a first-come, first-served basis. Accordingly, we read the screenplay, analyze it and evaluate it.
Mr. Bélanger: What about the funding formulas?
Mr. Macerola: We have harmonized 95 per cent or more of the funding formulas.
Mr. Bélanger: I noted in the background material that you distributed this morning that in the past three years, you have attained 0.7 per cent overall, that is less than 1 per cent. I would imagine that you are not proud of this record.
Mr. Macerola: Not at all.
Mr. Bélanger: As criteria evolve, do you think there will be enough incentives to improve this situation?
Mr. Macerola: The situation will certainly improve. If we combine the regional bonuses of 10 per cent and of 5 per cent for productions made outside Montreal and Toronto, the total could rise to 15 per cent. We could come back with slightly better figures next year. Again, as I mentioned earlier, we do not initiate projects. I do, however, think that this is a sound policy.
Mr. Bélanger: Mr. Chairman, if the witness is offering to come back next year, then I gladly accept his offer.
Could you describe for us briefly what would happen to the tax credits if Telefilm Canada refused to participate in a project?
Mr. Macerola: There would be no impact at all.
Mr. Bélanger: None whatsoever?
Mr. Macerola: There would be no impact as far as Canadian productions are concerned. If Telefilm Canada decides not to invest in a project, the tax credit comes into play because it is an automatic process through which the government injects $100 million into the production industry.
Mr. Bélanger: I see.
.1235
Mr. Macerola: Telefilm Canada is responsible for administering coproduction agreements. We administer approximately 37 or 38 such agreements which generate some $500 million annually. When Telefilm Canada does not certify a coproduction, the tax credit is not applicable because the production is not viewed as a Canadian production.
Mr. Bélanger: I understand.
[English]
My final question is off in left field, really. Is CTCPF restricted to television?
[Translation]
Mr. Macerola: No, $15 million in the fund are earmarked for feature film production.
[English]
Mr. Bélanger: Do cable broadcasters broadcast things other than television - radio, for example?
Mr. Lind: Do radio signals appear on cable television? Yes.
Mr. Bélanger: Can radio access that fund?
Mr. Lind: No.
Mr. Bélanger: Why not?
Mr. Lind: Revenues derived by a cable television company from selling radio sales would amount to 0.02%. It wouldn't be anywhere near 1%. So it's a minimal thing.
Mr. Bélanger: Thank you, Mr. Chairman.
The Chairman: We have ten minutes left for Mr. O'Brien and Mr. Leroux.
Mr. O'Brien (London - Middlesex): Mr. Chairman, thank you.
I'm a fairly big fan of cable. I know in London, Rogers is a very important part of our community.
I have a couple of general questions, but first an observation on my colleague's trouble - we all share it - with the name. I have no problem with the ``Canada'' part of the name. Maybe we need to get a vowel or two in there to make a nice acronym we can all remember.
As well, I think a couple of us were pleasantly surprised to hear you say that we're the second-largest exporter of TV - to the U.S., obviously - in the world. We were pleasantly surprised. I just wish we could find a way to sell more Canadians on our own product here and reduce the U.S. influence in all parts of Canada. But maybe that's wishful thinking.
You mentioned earlier the multiplier effect. Did I hear you use a number at that time?
Mr. Lind: We threw around the number of six or seven times.
What are you comfortable with, François?
Mr. Macerola: Four or five, depending on the type of project. It's in that order, that's for sure.
Mr. O'Brien: Great. Either one is quite significant. On this side, obviously, I'm quite pleased with this investment by the government.
Did I hear correctly that you're going to give us a firmer number in writing at some point? If that's true, could it indicate as accurately as possible the number of jobs factored into that?
Mr. Lind: Right.
Mr. O'Brien: Can you give any kind of guesstimate right now as to how many people in Canada are employed in cable television?
Mr. Lind: In cable television? No.
Mr. O'Brien: Would that be something that could be found out at some point?
Mr. Lind: Yes, absolutely.
Mr. O'Brien: I'd appreciate knowing that.
Thank you, Mr. Chair.
[Translation]
The Chairman: Mr. Leroux.
Mr. Leroux: I would like to talk about what actually happens when a producer submits a project. Could you describe for us the various stages of the process, up until the application is either accepted or rejected, so that we can get a clear picture? At the same time, could you tell us something about the production budgets apportioned to television projects?
The Juneau report made it very clear that Canadian television series were losing ground in terms of the budgets allocated to French language and English language productions. One French language series was produced with one-third of the budget allocated to an English language production. This was clearly established earlier on and Mr. Beatty pledged to restore some balance to this situation. When we're dealing with a one-hour production, it makes no sense to see this kind of cost gap. We're talking about the same technicians and the same resources. Is this a concern of yours when you allocate budgets or in your mind, is a one-hour production a one-hour production, regardless of where it is being produced? Are the budgets based on the applications made? Does this make any difference? I will come back later with one final question.
Mr. Macerola: The private or independent producer submits a proposal to Telefilm Canada...
Mr. Leroux: Then Telefilm Canada is the point of entry or gateway?
.1240
Mr. Macerola: Yes, that's correct.
Mr. Leroux: You are the point of entry.
Mr. Macerola: Yes. They submit their screenplay and budget and the details about the production team to us.
Mr. Leroux: I'm going to stop you right now. If they submit all of this information to you, is the initial analysis done on the basis of independent criteria? Are subjective criteria applied before others? Have I understood it correctly?
Mr. Macerola: Yes.
Mr. Leroux: Therefore, they submit the screenplay and everything else to you.
Mr. Macerola: Yes, and we are working to reduce the amount of time it takes to process the applications. In the past, it was a drawn-out process and some applications languished for up to80 days. We have now reduced this time to 20 or 22 days and I'm happy to say that everything is going well. Telefilm Canada then issues a letter of commitment which is contingent on a host of factors. Subsequently, the project moves over to the licence fee program.
Mr. Leroux: I see. Therefore, before making its way to Mr. Mustos, the project is evaluated by you. You apply a number of criteria, including the amount requested for the production budget.
Mr. Macerola: Yes. We take into account the involvement of the broadcaster and the amounts he has earned.
Mr. Leroux: As well as the documents he must submit.
Mr. Macerola: Yes, we take all of that into account. The file must be complete.
Mr. Leroux: Therefore, the point of entry is Telefilm Canada following which the project is sent elsewhere. To all intents and purposes, your criteria of first-come, first-served, is non- existent since the application must first be filed with Telefilm Canada. Is this not the case?
Mr. Macerola: No, that is we...
Mr. Leroux: I'm trying to understand how the process works.
[English]
Mr. Mustos: Maybe I can jump in and help here. The first thing I would like to say is that there is no requirement that a project go to Telefilm at all for an equity investment. We analysed our projects from the last couple of years and saw that we were in about 60% of the same projects. That meant that on the cable production fund side we spent 40% of our money on projects Telefilm didn't participate in at all.
So in some cases, producers will apply directly to us. In some cases, they will apply first to Telefilm. I would like to explain to you why they apply first to Telefilm, because I think that's where -
[Translation]
Mr. Leroux: I want producers to know who they should turn to.
[English]
Mr. Mustos: Yes. The situation in a first come, first served fund is that it's really critical that you not commit your dollars until you know the project qualifies under all of your objective criteria and it is more or less fully financed. That last point is really important. Producers will apply and tell you they have a show ready to roll. If you commit money to that project, simply taking them at their word, you may discover down the road that the project never lifts off the ground. What you've done is to tie up money that somebody else can't use.
I had some experience with that in another program at the Ontario government level. It was something we had quite a challenge trying to undo and fix. What was happening was that 75% to 80% of the money was notionally earmarked on the first day of the fiscal year, and it took until the fall or the winter for the moneys to shake out and for us to know whether in fact they could be reallocated to other projects.
We have a very scrupulous system at our shop. We tell them we want to know that they're a qualifying production and that they are more or less fully financed before we will write them a commitment letter.
When a project needs to get that equity investment amount from Telefilm, which might be 25%, 30%, 35% of the budget, and there is no way they can get that show off the ground without Telefilm's investment, then it's absolutely necessary that we see that Telefilm has in fact made the investment. Otherwise, we could be out there with a -
[Translation]
Mr. Leroux: I see that there is still work to be done in this area because it isn't clear to me where the point of entry is.
The Chairman: We have to wrap things up, Mr. Leroux.
Mr. Leroux: Yes, but we mustn't wait 12 months to talk about this because people want to follow this process and it isn't clear to me.
I have a very specific question concerning your project acceptance criteria. You have acquired expertise and a reputation in terms of quality artistic productions and we know that at present, the government is imposing more and more national unity criteria on the cultural community.
.1245
Is your organization bound to comply with national unity criteria?
Mr. Macerola: Even if the government wanted to impose its criteria on us, the independent private sector is the one that generates projects at Telefilm Canada. The criteria according to which we currently operate were developed solely by Telefilm Canada. My predecessors and I have never experienced any kind of political interference when it comes to the criteria that Telefilm Canada applies in accepting or rejecting a project proposal.
Mr. Leroux: Between Brault and Falardeau, who loses out?
Mr. Macerola: That's a perfect example. The last time I appeared before a committee, someone mentioned Falardeau's production Octobre to me.
Attempts are being made to turn Falardeau's project into a political film. Pierre Falardeau's project was rejected by Telefilm Canada, not for political reasons, but solely because the screenplay was poor. Brault's production is more political, but it is better. We're going to see how things go, but I can assure you that these decisions are never, ever based on a project's political overtones. Otherwise, we would go out of business.
Mr. Leroux: Thank you for your answer.
[English]
The Chairman: Mr. Abbott, I'm sorry, but we've just reached the time now.
Mr. Lind, Mr. Mustos, Mr. Macerola, I would like to thank you very much for your appearance.
[Translation]
I would like to thank Mr. Bélanger for suggesting that we invite you.
[English]
I think it has been extremely useful and interesting for the committee. I hope we'll see you next year with a follow-up. Thanks very much for coming.
[Translation]
One moment please.
.1249
The Chairman: We have three items to attend to on the agenda.
[English]
There are three items of business.
Number one is a motion with suitable notice by Mr. Leroux, which has been sent to all the members, to change the name of the organization. Number two is a motion about our study. Number three is that the committee will have to address the question of travel.
.1250
So I will start with Mr. Leroux's motion. You have received the motion. The thing is quite clear. It was already discussed, so we don't want to have a long discussion.
[Translation]
I believe we discussed this matter during your comments, Mr. Leroux. Unless committee members feel differently, we will now proceed to vote...
Mr. Leroux: I have a brief comment, Mr. Chairman.
The Chairman: She wants to know what "brief" means.
Mr. Leroux: You're going to find out.
Ms Phinney (Hamilton Mountain): It doesn't mean the same thing to me as it does to you. Brief to me means one minute, while to you, it could mean 20 minutes.
Mr. Leroux: Maybe, and then again, maybe not. It won't be brief if you provide an explanation.
Earlier on, we heard some explanations. The money in the production fund comes from the taxpayers and the cable subscribers. Cable companies have invested this accumulated surplus in a production fund. Necessarily, the fund is comprised of taxpayers' and cable subscribers' money. Therefore, to reflect this reality, the fund should be known as the taxpayers' and cable subscribers' television fund. That's all there is to it.
Mr. Bélanger: Shall we proceed to vote, Mr. Chairman. We could also take this opportunity to give the CBC a new name. We could call it the TBC, or the Taxpayers' Broadcasting Corporation. No, I do not wish to make this a formal motion.
[English]
Mr. Abbott: I was just going to propose an amendment such that it would be named the Canadian Taxpayers and Cable Subscribers Television Fund, adding the word ``Canadian'' after the word ``the''.
I don't know if Mr. Leroux would have any problem with that. His point is well taken that as three-quarters of this is coming from the Canadian taxpayer, for it to be called the Canada Television Fund is a misnomer. As for renaming it the Cable Subscribers Fund, I take his point completely that the funds are also coming from the cable subscribers and they should know. So with the addition of the word ``Canadian'' I would have no difficulty in voting for this.
The Chairman: We'll start with Mr. Abbott's subamendment. The question has been called that the motion be amended by including the word ``Canadian''.
Subamendment negatived
The Chairman: The question on the main motion is called.
[See Minutes of Proceedings]
The Chairman: I have another motion to propose to you. The committee researchers feel we might need - I don't say we will - outside help for the study because it's a massive job.
[Translation]
The motion would read as follows:
That the committee, at the discretion of the chairman, call upon Wanda Noel to serve as research officer
[English]
- from February 24, 1997 to March 14, 1997
- to assist it in its study of the changing role of the federal government in supporting culture in
Canada and that this person be paid a daily honorarium of $599, in accordance with the contract
policy of the House of Commons
- up to a maximum of $8,985.
.1255
Mr. Abbott: Mr. Chairman, I think we found the input of Wanda Noel to be really exceptionally valuable in our copyright hearings. She was excellent in that. But I wonder what particular credentials she brings to this. I'm also at a bit of a loss to understand why we require the services of anyone, let alone Ms Noel.
The Chairman: I'll ask Mr. Lemieux to explain.
Mr. René Lemieux (Committee Researcher): The work plan of the committee is very extensive, to say the least. We have three items to do on the work plan.
Before even beginning with that work, we felt the most logical approach would be to ask the department what they already had in this area and what the department was willing to give the committee. I received the answer to this question yesterday. I still don't have the documents in front of me to assess how much work we will need to do once we do receive the documents from the department.
That explains why the motion is couched in the terms of whether or not we require help. That question can only be determined once we have assessed the documents provided by the department.
If you recall, items 1, 2, and 3 on the work plan are quite extensive and will require a fair amount of research. At this point in time, the motion is put before you as a precautionary measure. You are going away for a week. It was felt that if during that time the decision was made that we needed help in order to meet the deadline you've set of March 17 for you to discuss this as a committee, then we should be in a position to hire rapidly.
Your other question was why, if anyone, it should be Wanda Noel. For all her life Wanda Noel has worked extensively in not only copyright but also cultural policy. In other words, it is not something she has started doing in just the last few years.
As you said, you felt that she provided competent advice then. It's my feeling that she would also provide competent advice on the other matters we will be dealing with.
The Chairman: Mr. Bélanger.
Mr. Bélanger: I would like to suggest that we keep it at the discretion of the chairman, with the following notion: that the members of the committee be canvassed in the next few days so that if they have suggestions as to someone other than Ms Noel, they make those recommendations to you, and that we back up the dates by one week, to make it March 1 instead of February 24.
That way, if anybody here wishes to recommend someone else to you, they'd have a few days to do so. I for one will rely on your good judgment to assign this responsibility to someone. That way, if members of the committee wish to put forward someone else -
The Chairman: I would suggest, then, that we change this to read ``a consultant'' instead of ``Wanda Noel''.
Mr. Bélanger: Yes. As well, if we want to give the committee members a few days we should back it off by one week.
[Translation]
The Chairman: In the French version, we have "hebdomadaire" and the text should read "quotidien".
Mr. Bélanger: This would give people who wish to present their views to us...
The Chairman: I did not arrive at this decision without consulting the experts. There are two experts here and I prefer...
Mr. Bélanger: I think that from the outset, we were talking about an enormous amount of work. My colleague is correct about this. We should verify this because he mentioned February 24. You're talking about one week later. First of all, would this be a problem for you? Secondly, as for the explanation concerning Ms Noel, I totally agree. I know that there are other people out there. For example, there's Michel Houle who has done some studies on the subject. There are also other qualified people. However, I completely agree that there should be consultations and that other names should be suggested.
.1300
The Chairman: Agreed. Therefore, do you prefer the 24th or the date that has just been suggested?
[English]
Motion agreed to [See Minutes of Proceedings]
The Chairman: The last item of business is much more important to all of us. There's obviously a reason for us, when we start this thing, to travel. I think all of us are agreed that we can't do it from Ottawa and just invite people; we have to travel.
The clerk has produced an outline for me for two weeks. We would travel in the first week to Vancouver, Edmonton, Regina, Winnipeg, and Toronto. We'd fly to Vancouver and then go to Edmonton, Regina, Winnipeg, and Toronto.
In the second week, we would do the reverse by starting in St. John's and then going to Charlottetown, Halifax, Moncton, and Montreal.
As you can see, the dates would be May 11 to May 16 and May 18 to May 23. Obviously, the reason for those dates is to allow time for us to study the material and so forth.
There are two things. There could be an election declared at that time. I don't know. I haven't got a clue. In any event, this would get wiped out.
But if there isn't one, I think we have to agree first of all that these are suitable dates, because the timing has been geared to the studies and everything else. I think the timing by the clerk is appropriate.
Ms Phinney: The climate is good then. The weather will be good.
The Chairman: The weather will be good too.
Also, if we want to do this, we have to file a budget, which you'll see will amount to $213,000 for the 12 days. This is all in line with committee travel requirements and funding and so forth.
Mr. Bélanger: I have no problem with this. I'd like to see, if it's at all possible - should this happen, I'd be willing to be a volunteer for it - either the whole committee or a few members of the committee go to smaller communities while we're there.
There's a tradition of our committees going to the larger cities -
A voice: Always Toronto.
Mr. Bélanger: - such as Vancouver, Edmonton, and Regina. What about smaller ones, such as Moose Jaw or wherever?
A voice: London, Hamilton.
Mr. Bélanger: I'd be prepared, Mr. Chairman, time allowing, to spin off and drive an hour or two to hold hearings in the evening at some of these places.
The Chairman: I'm agreeable to this.
I would like to suggest this because we have a time factor. We have to file a budget with the liaison committee to be able to get funding. Could we agree on the clerk submitting a budget subject to her sending scenarios to you as to the alternatives? If we're going to reach these places, she'll have to calculate it. So maybe we could kind of pass a motion that travel will happen probably in these two weeks and that we've asked for a budget of around $215,000, which she will adjust.
The Clerk of the Committee: The budget subcommittee is very specific: we have to say where we are travelling. So if we are going to do this scenario, I need to know the specific small communities to which the members wish to go.
Ms Phinney: I just think we shouldn't put Vancouver, Edmonton, Regina, Winnipeg, or Toronto even on there. I think it should be a town outside of each of these towns. There's no reason why somebody in Toronto can't drive outside it rather than having all the people outside it driving into it. I think it should not be in these capital cities at all. I don't think they should be on here. Every town on here should be one that's outside a capital city so we recognize that there are other people in Canada.
There was the comment that every committee does this.
The Chairman: I have to go to the House now to make a speech at 1:15 p.m. Could it be that - we will meet with the minister very soon - when we get back from the recess we can decide this thing?
.1305
[Translation]
Will there still be time?
In the meantime, perhaps you could let either me or the clerk know.
[English]
Perhaps you could submit to the clerk some ideas.
You know, we also have to consider that most of these various institutions are centred in the large cities. We have to give them access also. Maybe we can do a mixture of both.
[Translation]
We will submit...
Mr. Leroux: In exchange, we will agree to the program.
The Chairman: Fine.
Mr. Leroux: In any case, it's a program. Elections will be held on June 9. Therefore, this doesn't present a problem.
The Chairman: The meeting is adjourned.