CHER Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 4, 1997

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[English]

The Chairman (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): The meeting of the Standing Committee on Canadian Heritage is now open. I regret the late start. It's due to a previous committee having finished late.

I should explain that this takes part within the context of the study on Canadian culture that the committee has started. The idea today would be to hear from the officials of the Department of Canadian Heritage. We invited the ministry as such and asked them to participate today.

Mr. Wernick, before you start your presentation, it would be important to let the members know that there has been a recent reorganization within the ministry. How do the two of you fit in? What type of reorganization has taken place? This is so we know exactly what the ministry looks like today.

I would also like to mention to the committee members and witnesses that right now we are finishing off the general work with the closing of the House in December. We'll have one more session on Tuesday, after which we're going to start round tables and panels in February.

I would like to mention to the members that the clerk and researchers will be assigned to define that program and suggest to you a program of work for February onward in panels and round tables. This will be sent during the break for you to look at so that in February, when we'll start, we'll have a session of work whereby we'll look at this program to see whether you agree or disagree. If you have any suggestions when you receive the program, please contact me or the clerk so any changes or adjustments can be made to suit you.

So we will send this to you as soon as the researchers and the clerk have worked on it. In the meantime, I would like to welcome Mr. Wernick and Mr. Peters.

Mr. Wernick, the floor is yours.

[Translation]

Mr. Michael Wernick (Assistant Deputy Minister, Strategic Management, Department of Canadian Heritage): Thank you, Mr. Chairman.

[English]

As an introduction, I'll try to answer your first question about the state of the department's structure right now.

The structure of the department as laid out in some of the documents made available to Parliament—that's the part III of the main estimates and the performance report that was tabled only a couple of weeks ago—is essentially the one we're moving into. So in fact there's very little change from what you have been exposed to or what you would be familiar with.

There was a sector in the department—this was from its creation in 1993 until the current reorganization—that was called cultural development and heritage. It essentially pulled together four lines of business or lines of service into one sector under one assistant deputy minister. There was a group to deal with each of these areas: arts policy, heritage policy, cultural industries, and broadcasting. The current reorganization simply splits those down the middle and creates two ADM positions where there used to be one.

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I am one of the other ADMs in the department. My day job is assistant deputy minister of strategic planning. I try to assist the deputy and the minister in other functions, such as communications, planning, policy development, and so on. And I'm filling in on an acting basis now, looking after the new sector, which will be styled cultural development,

[Translation]

it includes both cultural industries and broadcasting.

[English]

As for my colleague Mr. Peters, his full-time job is director general of the Canadian Conservation Institute. He's filling in on an acting basis in the new sector of arts and heritage. The deputy minister and the Public Service Commission are working hard on filling the two ADM positions on a full-time basis. Nobody will be happier about that than Bill and I, as we're doing double duty.

[Translation]

The Chairman: Mr. Wernick, may I ask you whether the two new positions replace the position held in the past by Mr. Rabinovitch?

Mr. Michael Wernick: The position was simply split in two.

The Chairman: So it is what Mr. Rabinovitch did.

Mr. Michael Wernick: Yes, but there are not really any major changes in structure. We have simply taken one side to manage it more intensively and we are doing the same with the other side. That is all.

Within each sector, we will perhaps think about grouping people to make the work more efficient, but we will not be adding any resources. For the time being, we are simply reorganizing the work to advance the agenda that we want to discuss.

Ms. Suzanne Tremblay (Rimouski—Mitis, BQ): Does that mean that Mr. Rabinovitch's job is now done by two different people and that Mr. Rabinovitch is no longer doing the job?

Mr. Michael Wernick: Yes.

The Chairman: Mr. Wernick, we are ready to listen to your presentation and then members will have questions for you.

Mr. Michael Wernick: Absolutely.

The Chairman: There are several questions on the reorganization.

Mr. Michael Wernick: Okay. Thank you, Mr. Chairman.

[English]

I know time is pressed, so I will try to move through the presentation as quickly as possible.

[Translation]

Thank you for the invitation. The Department has been following your deliberations and the presentations by witnesses over the past few weeks with great interest.

[English]

What I'll try to do today is move fairly quickly through a broad-brush presentation on some of the challenges facing cultural policy, as we understand the interests of the committee, and certainly the interests of the department. I hope that will leave many openings for question and discussion.

The first slide simply tries to articulate some of the objectives of Canadian cultural policy. This is not an attempt to be exhaustive, but just to outline the important objectives that Canadian cultural policy pursues. Also included are some characteristics of the Canadian approach that differentiate us from the ways in which other countries, other partners, deal with the same issues.

Moving very quickly through them, we are pursuing long-term, stable goals of ensuring access to Canadian voices and Canadian spaces, stimulating the promotion of quality Canadian content, reflecting Canada's diversity, protecting Canada's heritage by taking what we've inherited from past generations and passing it on to future generations, and making a significant contribution to Canada's economic growth and prosperity.

The way Canada approaches these questions is different from the way other countries do. We have a unique model, one that is of great interest to other countries. It is a model based on a great deal of freedom of choice for consumers as to what they wish to watch and read and look at, and a great deal of freedom of expression for creators and artists as to what they wish to express. There's a very diverse range of policy instruments, ranging from structural to subsidy tax and public institutions, and quite a diverse mix of partnerships between the private, public, and para-public sectors and between levels of government. Indeed, there are sometimes quite complicated partnerships in those areas.

Perhaps it might help the committee to think about the chain of the aspects of cultural development. Some issues are more pertinent to the creation phase, the actual generation of new artistic and creative product or expression. Other issues are related to its production, getting it to market, getting it financed. Once you have something, sometimes there are complex issues around distribution and getting it to the people who wish to consume it, see it, read it or surf it on the net. There is promotion, making sure Canadians and other countries are aware of what we're doing, and then there's the issue of conservation. We make sure the best is conserved, protected and made accessible to Canadians through our heritage institutions or through new digital media, and that it is passed on to future generations.

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[Translation]

This page is simply a very brief overview of technological changes. The message here is that our policies have always had to take into account new technological challenges. In the 1920s, a network of radio stations was created; in the 1940s, there was the advent of television; in the 1960s, there was the advent of cable; in the 1980s, the new compact disk format was developed and a large part of the movie market was replaced by video libraries, as well as video rentals and sales; and in 1990, satellites and multimedia industries emerged.

[English]

All that is to say the cultural industries and arts and heritage sectors have been dealing with technological change from the beginning, and to some extent the fact that they're dealing with technological issues now is nothing new. I think one of the interesting things for the committee and the department to pursue would be what is it that's qualitatively and substantively different about the new technological shifts as compared to some of the ones we've been through in the past.

Canada's not alone in being buffeted by these technological changes—any other society would deal with them as well—but the way they impact on Canada is quite particular. We have a relatively small population spread out over a very big geography and areas of broadcasting and other areas, and that creates particular challenges. The costs of production in Canada are similar to those in any other country. The cost of making an hour of television or film or producing a CD-ROM is about the same as in other societies, but it cannot be spread over as big a market as, say, the American market or the broader European market, or the Japanese market for that matter, so there's a much more difficult cost and return issue for Canadian producers.

We live in close proximity to the largest entertainment industry in the world, one that's becoming much closer to the Europeans and other societies, but we've been living next to them for the best part of 30 or 40 years.

[Translation]

Obviously, there have been profound changes in demographics and Canada has become more diverse, whether it be in terms of linguistics, multiculturalism or its cities. There have been several changes and they all affect the cultural sector.

[English]

The next page is a quick summary to make the point that Canadian cultural policy instruments are not static. Some people like to say they're stuck in the past or haven't been looked at for a long time, but if you look at the list, even over the last five or six years, as many members of this committee are aware, there have been many inquiries, studies, task forces, responses, policies and the creation of brand-new instruments such as the Canada Television and Cable Production Fund. There is experimentation and trial and error, and while the basic goals that I described in the first slide remain fairly stable, the instruments themselves are under constant review and scrutiny.

On balance, Canada's cultural sector is a success. We'd like to argue that this is not an accident, that it's an act of will and of public policy by Canadians. Canadian cultural policies have ensured the creation of a very vibrant cultural sector.

[Translation]

There are examples of artistic achievement success stories. Everyone knows the big stars and the big names in Canadian cultural expression, like Atom Egoyan, Robert Lepage, Céline Dion and Michael Ondaatje. The list is very long, and it gets longer each year.

[English]

More and more Canadians from different backgrounds are contributing to that artistic achievement. There's nothing second rate about Canadian cultural expression. It's appreciated not only at home but around the world.

Public policy has led to the expansion of a range of cultural institutions across Canada. The number, by almost any indicator, has grown quite rapidly through the last 20 years or so. Whether it's the number of theatres, museums, dance companies, art galleries or film producers, there's been a tremendous expansion and it has touched every corner of the country.

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The diversity of choices offered to Canadians has grown quite broadly. Whether the number of television channels they can flip through, the number of magazines they can read or the kinds of services they can get over the Internet, there's a tremendous richness of choice available to Canadians, both of Canadian and of foreign content.

I think the contribution the cultural sector has made to the economic agenda is becoming more and more recognized. Many of the parts of the cultural industries are quality jobs. They're high-tech jobs. They involve young people. They're knowledge economy jobs. There are many success stories. The contribution to employment, even during the period of recession in the early nineties, was quite substantial.

I guess my message today is that while the policy instruments have evolved over time, the basic goals that we've been pursuing remain relatively stable. The current challenge we're facing is to adapt the policy instruments in the face of a changing environment. I'm sure that's a subject of interest to the committee.

Two of the major challenges you've been discussing, and which the department is confronting, are international trade and investment liberalization

[Translation]

and the challenge relating to new information technologies.

[English]

I know you heard from my colleague Mr. Gero at DFAIT last week, so I won't spend a lot of time on the trade and investment issues at this stage, but we can certainly come back to them later. One point we want to make is that Canada is in fact an open market to foreign cultural product—a number of indicators are on the screen there. Given this openness and our proximity to the American entertainment industry, Canada has to work extra hard to ensure a certain degree of shelf space for Canadian products in our own market. It takes a little extra effort of will and an extra effort of public policy.

As Mr. Gero outlined for you, culture has been addressed in a number of trade and investment agreements to date. I think you went through some of the provisions of the GATT and the NAFTA, some of the negotiations that are either under way or on the radar screen, whether it's the OECD agreement on investment

[Translation]

or the future negotiations on services, investment and subsidies.

The challenge for Canada is to ensure that our domestic cultural objectives continue to be fully considered during these negotiations. We are working very closely with the Department of International Trade and the Department of Industry to ensure that this is the case.

[English]

As markets globalize and open up, there are very exciting export opportunities. Given the quality of what we produce and the receptivity in other countries, there is tremendous ability to get Canadian cultural product out to foreign markets. The economic dividends from that help strengthen the base of the cultural industries and ensure that they continue to flourish in the future.

During the trade negotiations we want to make sure that as new rules come into place and are negotiated—sometimes indirectly because the main subject of discussion might be services or investment—we keep some flexibility for the future, that we don't end up locking in certain ways of doing things. Given the fact that we have to constantly reinvent and reassess our cultural policy instruments, we want to make sure there's some room for growth. The future is a little fuzzy to predict, so we want to make sure there's some room for innovation and new policy instruments.

Moving on to technology, and I know you discussed this with Industry Canada last week, the important characteristic of the new technological change that we're going through, as opposed to some of the old ones that I described in an earlier slide, is the convergence of what used to be relatively distinct industries or markets. When things are in a digital format, when they're encoded as a stream of bits, they can be put together and manipulated and new products, new combinations created that challenge traditional industry structures.

There are new ways of dealing with things, and that's essentially the story of multimedia. You can take a piece of video, a piece of music and a piece of text, and they can be put together in very interesting ways. A good example of that, if you're interested, would be The Canadian Encyclopedia. It's a very interesting combination of those formats on a CD-ROM and it can be updated directly over the Internet.

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The other aspect of the digital technologies is that they allow more interactivity. Instead of simply picking up a magazine and then reading it, you can visit a magazine's web site and get into a discussion group and become much more involved. It's not just passive consumption but there's a much more interactive quality to new technologies.

So the policy implications of the new technologies I'd oversimplify as three.

[Translation]

The first one is the challenge of reserving Canadian space,

[English]

because the ongoing challenge is to make sure that some of the choice available to Canadians is of their own stories, their own products, their own expression.

[Translation]

That is the challenge of enforcing intellectual property rights, as the committee is well aware.

[English]

The ability to enforce intellectual property rights in the new media when images can be put on the Internet, manipulated, put back on the net, flipped around the world, recombined and so on are very important, because much of the cultural industries is not in fact about the buying and selling of plastic and cardboard, it's about the buying and selling of rights to things, the rights to produce something, the rights to sell something and the rights to market something. And if those rights cannot be enforced, then a lot of the economic basis for the industry could be challenged. So it's certainly a very big challenge for the future.

[Translation]

The other aspect is that new technologies challenge traditional industry structure and policy measures.

[English]

And I think this is another issue the committee's familiar with. The Internet is a little bit like broadcasting, it's a little bit like telecommunications, when magazines are put together using satellite technology, when you can get radio over the Internet and so on. Companies are finding new ways of doing business and making money, and that certainly can rub up against the ways they're currently legislated or regulated, or not legislated and regulated, and those are some of the public policy issues that the committee, I'm sure, has heard quite a bit about and will want to explore in the future.

The challenges of new technology are not to, like King Canute, wish it would go away or to turn it away but to adapt cultural policy to the new technologies.

[Translation]

The challenge is to ensure equitable access to these new technologies.

[English]

The challenge is to enable Canadians to access Canadian digital information as much as possible through current infrastructure, the computers, the televisions and the telephones that they already have, and this is where Canada has an enormous head start on other countries. We are a very connected country. We essentially have 99% or universal access to telephones, radios and televisions. The penetration of cable is extremely high by world standards. The usage of home computers is very high. The cost of Internet service in Canada is the lowest of any OECD country.

So we start with a very strong technology and communications base on which to build. The challenge will be to generate the investment to foster the creation of Canadian content and services and to make sure the regulatory framework doesn't get in the way and in fact helps this transition.

The next slide is really talking not so much about the challenges or problems but the opportunities. New technologies have a very positive impact as well in many areas. They have the possibility to increase the choices available to Canadians. As things are digitized, compressed, put together, you can have more variety of television, more variety of radio, more variety of product available to you. On-line access opens up all kinds of possibilities. New technologies, because Canada is well positioned, certainly give us an opportunity to strengthen our economic capacity. In the long run, there will be more jobs in the knowledge economy and the creation of content than in the building of pipes and wires.

The new technologies have all kinds of potential to forge a stronger sense of identity and attachment, to overcome geography, to put Canadians in touch with each other in new and exciting ways.

[Translation]

We must also foster the creation and broadcasting of Canadian content.

[English]

My colleague, Bill, can speak to this much more articulately than I can. But as we digitize heritage collections, put them in new formats, get them on-line, it will be possible in a remote rural area of the country to be browsing the collections of the Canada Council art bank, or the museum of whatever. Access can become much more open through these new technologies.

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We're building on a communications infrastructure that is really one of the best in the world. Many other countries, even France, Italy and Germany, would be quite envious of the ability that Canada has to deal with digital information over its telecom system.

As I said, there will be new trade opportunities. We already have niche areas of expertise and success. Canada does extremely well, as I think you know, in the field of animation and children's programming, and in some ways we're taking over parts of the Hollywood entertainment industry. There will be opportunities to simply sell the product directly to foreign markets and recycle profits back into Canada.

To wrap up and allow you to move on quickly to questions, we'd like to leave some key messages with you as you continue your deliberations.

We like to differentiate between the overall policy objectives in Canadian cultural policy and the instruments. We believe the policy objectives remain relatively stable, that they're valid in the current environment. The committee, I'm sure, will wish to look into that and have views on that, but as the trade-in-technology environment continues to evolve, and in ways we cannot predict with certainty, it will be important for public policy to play an active role in ensuring a degree of shelf space for Canadian content, to let Canadians have access to their own stories, and to contribute to Canadians' sense of themselves.

[Translation]

Canada plays a leadership role internationally, and we want to continue to play this role.

[English]

Bringing cultural issues and social issues to the fore in both trade fora and other fora, bodies such as UNESCO, the Council of Europe, the OAS, wherever there's a forum to listen, Canada will advocate its unique approach to cultural policy and indeed its view that cultural policy is important to public policy in the new millennium.

I leave you with the conclusion, Mr. Chairman and members of the committee, that the department is committed to meeting these challenges of trade liberalization and new technology and to working with you as we explore them.

Merci.

The Chairman: Thank you very much.

Mr. Abbott.

Mr. Jim Abbott (Kootenay—Columbia, Ref.): Thank you.

I enjoyed your presentation very much. It was well defined. I also appreciated receiving copies of the slides. I'll be able to review them later.

I wonder if you could help me understand something. If I go to slide 10, you say: “Enable individuals to access Canadian digital information with their existing home computers/televisions/telephones”.

It's seems one of the difficulties we have to grapple with as a committee is to differentiate in our minds between the medium and the message. I think we're really getting very, very confused on that. While I think it's important that Canadians have the ability to access the digital information, I really wonder how much we can control the content or the message once we do access that.

I'll give you an off-the-wall example: Joe Schlesinger, who used to be on CBC nightly television all the time, on the news. About two years ago, I think it would be, there was a particular event that occurred in the former Czechoslovakia. He went and reported on that. This is an off-the-wall example, but here we have a Canadian reporter, on Canadian television, who because of his own personal roots is now reporting on what's going on in Czechoslovakia. It's not a Canadian story.

I'm not being critical, please; you understand that. I'm just saying that's the kind of weirdness that we get into in trying to talk about Canadian culture without defining Canadian culture.

In slide 9, the last point is: “New technologies challenge traditional industry structures and policy measures.”

You bet they do. If I go back over to the slide where you have all of the studies and what not that have been done, particularly all of the things that have been attempted in 1996, I believe it was, we saw the heritage department basically throw out the CBC-Telefilm Canada-NFB study. Poof! It was gone. A couple of million dollars, and then that was the end of it. Again, there were the other things they were attempting to do.

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I'm not trying to say we should give up. I'm not saying that. Would you agree with me that first we have to be much more specific in defining what Canadian culture is?

After coming up with that definition, we can then look at what measures we're doing, how they relate to the medium, how they relate to the message, and how we're going to pull this together. In fact, we can't even get started on this process until we define what it is we're talking about, which is this ethereal thing called Canadian culture.

Mr. Michael Wernick: I'll try to be helpful in an answer. It's up to the committee to decide whether that's a fruitful avenue to pursue. I'm not sure it'll be very productive at the end of the day. Culture is one of those elastic terms like democracy or human rights, which are very subjective. They cover a lot of ground.

It's clear what some of the core is in arts, heritage, television, radio, and so on, but there are other definitions. Here's one that I find useful. It's simply a personal one. Culture is an ongoing process of expressing our sense of ourselves.

That has its roots in where we've come from. It's related to our current experience and where we are in the world. It's related to where we want to go.

But it's a permeable thing. The government, as you know, has grappled with that and how to arrange the institutions of government to cope with that.

Our sense of ourselves is very much rooted in the land and the environment. It's rooted in sports, which plays an extremely important role in that. Those roots that Canadians have come from other parts of the world.

I've been trying, through other exercises and jobs, to find a working definition. You may not get out of that exercise very easily. UNESCO uses definitions. The Council of Europe uses definitions. We use definitions for the purpose of legislation.

I think if you wait to resolve the definitional issue before moving on to the public policy challenges, it may take a fair bit of your time. If we can be of assistance in that, I'll certainly offer it.

Mr. Jim Abbott: I found the list, by the way, which is on slide 4. We talked about the Juneau report, which was thrown out. In 1996, as well, there was the policy statement on convergence. In 1996, we had the report of the sound recording task force. In 1996, there was the government action plan for the information society.

These are all of these things that people other than I might think of as being kind of make-work projects for bureaucrats. I don't know.

With the greatest respect, I think that until we define what it is we're talking about, how can we know whether we're going to be able to impact “it”? It's whatever “it” may be.

Mr. Bill Peters (Assistant Deputy Minister, Arts and Heritage, Department of Canadian Heritage): Mr. Chairman, I'd like to add to some of the response from Mr. Wernick. I'll turn to Mr. Abbott's beginning point, which I think had to do in part, at least, with ensuring access and the content aspect of that rather thorny question.

Certainly I'd like to point out that the department has put a lot of emphasis on that question of content both in ensuring, as Mr. Wernick pointed out in his earlier presentation, that there's sufficient space and also through a whole variety of measures in supporting the creative process, if I could describe it that way.

This has many dimensions. For example, in terms of some of our national institutions, we talked a little bit about the digitization of collections. Whether that's in our national museums or some of the major archives, libraries, or various institutions across the country, there's quite a bit of work going on to put that kind of information in place precisely to make it available, and also, in another area, supporting the creators themselves, who of course are the source of all of that information that we talk about making available to Canadians across the country.

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So the department puts a great deal of emphasis on those aspects of the creative process, using those huge reservoirs of information that are available to us through the national institutions we've created over many years.

[Translation]

The Chairman: Ms. Tremblay.

Ms. Suzanne Tremblay: I would like to start by making sure that I have a clear understanding of the department's org chart that was provided with the document. I do not know if you have it in front of you, but it comes from the 1997 performance report.

There seem to be three divisions: the Identity Program, the Corporate Management Services Program and the Parks Canada Program. Everything is clear with respect to the two deputy ministers mentioned on the side, but I have a question about the three deputy ministers mentioned in the middle. They are called assistant deputy ministers of cultural development and heritage. Is that correct?

Mr. Michael Wernick: The position was divided in two.

Ms. Suzanne Tremblay: So there are now four deputy ministers instead of three.

Mr. Michael Wernick: For the time being, there are six in total, but a parks agency is being created. Parks Canada will be leaving us next year and so we are going to reduce the number to five.

Ms. Suzanne Tremblay: There is an agency that is responsible for citizenship and it comes under the Multiculturalism Secretariat. Those are the two that I was talking about. There were three for Canadian heritage and there was one for parks. So now you're going to have four.

Mr. Michael Wernick: Not exactly.

The Chairman: This is to explain that if something is divided... But perhaps you do not have the chart in front of you.

Ms. Suzanne Tremblay: Is your name mentioned in the document? So the position of assistant deputy minister for cultural development and heritage is divided in two.

Mr. Michael Wernick: The change that needs to be made on this chart requires dividing in two the position for assistant deputy minister of cultural development and heritage.

Ms. Suzanne Tremblay: Is another assistant deputy minister being added?

Mr. Michael Wernick: Yes. The four activities are described there: an assistant deputy minister will be responsible for the first two, broadcasting and cultural industries, and the other will be responsible for the other two, arts and heritage.

Ms. Suzanne Tremblay: I see. The rest remains intact.

Mr. Michael Wernick: Yes, there are no changes.

Ms. Suzanne Tremblay: Perfect. Are you in one of those two positions?

Mr. Michael Wernick: In the strategic management position.

Ms. Suzanne Tremblay: Have the two deputy ministers been appointed here?

Mr. Michael Wernick: No, not yet.

The Chairman: Excuse me, Mr. Wernick. In which of the two positions are you acting?

Mr. Michael Wernick: Broadcasting and cultural industries; I am looking after the sector until a permanent assistant deputy minister is appointed.

The Chairman: Who's looking after the second sector until the deputy minister's appointed?

Mr. Michael Wernick: Mr. Peters. We hope that the permanent appointment will be made shortly.

The Chairman: Thank you.

Ms. Suzanne Tremblay: I had quite a laugh at the start when I saw the two slides, because they clearly show incomprehension in terms of language. Your first slide is entitled "The Distinct Canadian Model" in English, and in French, you call it "Le modèle canadien unique". So the unique society we are being offered in the Calgary declaration is apparently the distinct society we were being offered before.

If you don't mind, I would like to go to page 7, which is entitled "Trade and Investment Liberalization." I am going to be very careful with all of the words I use, but I would like to read this to get a better understanding. I am almost left with the impression, in reading this, that we are talking about trade liberalization and invasion instead of investment. I see the word "invasion" where you talk about liberalization.

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It says here that foreign feature films account for 95% of business in Canada, and that only 5% of box office revenue comes from Canadian and Quebec films.

Then it says that 87% of retail revenue in the sound recording industry was from the sale of foreign content, which means that Canadian content only represents 13%, etc.

So there is nothing at 50%. The most we produce is 50% of the total domestic magazine retail revenue in Canada, and the WTO decision with respect to the surtax that had been placed on advertising in magazines may get the better of us.

To what extent can we say that at present the treaties we have signed, the FTA, NAFTA, the WTO, the GATT and everything else, have really succeeded in protecting Canadian culture?

Mr. Michael Wernick: Our analysis is that the exemptions obtained under NAFTA and the WTO agreement are very strong. It is really an exception that the Americans succeeded in using the former GATT treaty to attack our measures that protect the magazine industry.

Our analysis—and this is an opinion—shows that there are no other sector or industries that are as vulnerable to these measures. In future negotiations, we, in co-operation with the Department of Foreign Affairs, will be very careful to maintain the same level of protection and flexibility.

Ms. Suzanne Tremblay: So we could go as far as to say that in the negotiations that are under way at the OECD on the MAI, we want to be protected and ensure that the other treaties will fill in the gaps. Is that what you were saying? Is the government prepared to go that far?

Mr. Michael Wernick: I do not understand your question.

Ms. Suzanne Tremblay: At present, you are telling me that we are well protected by NAFTA and the WTO. But that we have been had by the GATT. It's all very well to be protected by NAFTA and the WTO, but we have been had by the GATT.

We are trying to protect and overprotect ourselves in the MAI, because we now know that the FTA and the WTO are things of the past. But are we still risking anything? Is it possible to make the MAI strong enough so that we are not had again, not even using the GATT? Are we assured of being protected?

Mr. Michael Wernick: That is a judgment call that I will leave to the international trade experts. We are working in close co-operation with these experts to obtain the flexibility and the protection that we are seeking. Our analysis tells us that there is a very strong link between industrial property and the Canadian component.

There are several areas, in the cultural industries, where there are no restrictions or regulations. Foreigners are free to come and buy or set up companies. We have however established some protective measures and we want to keep the protection and flexibility required to enable us to decide for ourselves if we want to maintain them or adapt them to future needs so that we are not forced to change our policy by external forces.

That should be a decision made by this committee and the Parliament of Canada.

Ms. Suzanne Tremblay: I have one last short question. You say on page 2 that Canadian cultural policy addresses creation, production, distribution, promotion and conservation.

With respect to feature films, since 95% of film production is foreign, do you think that something can be done to overcome that? Since distribution belongs to the Americans and production is 95% foreign, but highly assisted by Americans, is there something that can be done to help us overcome this?

During the periods when people go to the movies often, like the Christmas period or during the summer holidays, young Canadians and young Quebeckers who go to the movies are 99% sure of seeing an American movie, because the Americans are both the producers and the distributors. Young people see American movies instead of Canadian or Quebec movies.

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Are we going to be able to reverse the situation? In that respect, we can prepare all kinds of policies, but if what you see is American, we're missing the boat.

Mr. Michael Wernick: You have identified the crux of the challenge for the film industry. We are currently working hard to produce an analysis, a discussion document and options for Minister Copps, who is very concerned with the film and feature film issue. We're going to pursue these issues next year, with the assistance of the committee, I hope.

I think that the four components will help us in our reflection, because there are no problems in Canada and Quebec with respect to creating quality films. There are a lot of film producers who do quality work. In terms of funding, we have instruments like Telefilm in addition to instruments of promotion and conservation.

The crux of the problem for the industry is distribution. It is not simply a question of movies, because the market for renting and selling cassettes is double what box office revenues are. Films are viewed in hotel rooms, airplanes, via satellite, on TV, etc. Movie theatres are very, very important in terms of advertising and promotion to create the market. We are going to examine all these issues, and make sure that there are quality films available for Canadians in the movie theatres or at Blockbuster.

Ms. Suzanne Tremblay: Thank you.

The Chairman: Mr. Wernick, I would like some clarification, because there is something I'm not sure I've understood. Did you say that the magazine sector is the most vulnerable with respect to the WTO and marketing instruments?

Mr. Michael Wernick: With the WTO decision, we have a 15-month period to implement replacement measures or eliminate our current measure.

[English]

The Chairman: Is it true that right now we've another complaint before the OMC by the Dutch regarding distribution of films?

Mr. Michael Wernick: It's not at the same stage. This is the issue of the film distribution policy and its impact.

An hon. member: Polygram.

Mr. Michael Wernick: Polygram is the company that's involved. It has to do with the policies regarding distribution of non-proprietary films, which is to say films that are not essentially the ones made by the company, but ones that they've acquired or have a stake in.

Polygram is very unhappy with the Canadian policy, although they are abiding by it. When they set up business in Canada last year, they undertook to respect the policy and live with it, but they have made noises in Europe, and the British and Dutch government have responded to that by asking a lot of questions.

We have had a number of bilateral exchanges with both the company and with the European governments, with the European bureaucracy in Brussels. Madam Copps was in Brussels only a couple of weeks ago and discussed the issue directly with the cultural commissioner and with Sir Leon Brittan, who is the trade commissioner. The Europeans are now deciding exactly whether they wish to pursue this or not, but we're several steps away from actually being brought before a panel, the outcome of which would be uncertain.

The Chairman: So in your view the sectors other than the magazine sector are better protected by our exemption than the magazine sector?

Mr. Michael Wernick: Yes. I think there was an element of surprise in the magazine decision, because they had to go back to the goods provisions of the original 1947 treaty to get to the measures in question. I don't want to get over my head here, because I'm not a trade law expert—

The Chairman: No, I understand.

Mr. Michael Wernick: —but it has to do with the boundaries between what's a good and what's a service.

[Translation]

The Chairman: Mr. Saada.

Mr. Jacques Saada (Brossard—La Prairie, Lib.): Thank you for your presentation, and thank you Madam Tremblay, for having asked such pertinent questions.

I would like to deal with something entirely different. Canada's demographic make-up is changing in such a way that we can predict that the segment of the population aged 65 and over will get bigger and bigger.

• 1205

We realize, based on the slide you showed us earlier, that multimedia is the most popular vehicle being developed and the one in which we perform the best.

Since seniors will be more and more numerous and will consume more and more Canadian culture, and given the fact that multimedia is the instrument that is the least available to them in cultural terms, do you not think that we will need to try to find means or policies to try to bridge the gap between the two?

Is my question clear?

Mr. Michael Wernick: Yes, I think I understand it.

At this stage of development, there is a gap between the industry and the potential market. I think that marketing of Internet and multimedia services is really aimed at young people, but like you say, there is a significant and growing potential market that is made up of seniors. These people have certain interests and a bit of disposable income to obtain these services.

Based on the most recent figures I have seen—and this is something that changes quickly—about 5% of seniors subscribe to the Internet. So this is a huge potential market. I think the industry has understood that and will make efforts to take advantage of that market.

[English]

The obstacles for a more universal access partly are technological—to do with making sure that people are wired and have access either through telephone or cable or satellite to these kinds of services. Part of it obviously has to do with income. For a modem-capable computer with the right kinds of graphics and sound and so on, you're running about $1,500 to $2,000, and that's a lot of money for many Canadians.

I guess the third issue is simply skills and interest and know-how. It's not a case, I think, in multimedia or Internet, of “if you build it, they will come”. I think that's false. People have to see something they have an interest in, that will make their lives better, that will be of interest to their children. I think the industry will respond to that, but I think there is room for public policy as well. It's an issue I'm sure the committee will want to look at, and I think the industry committee as well.

[Translation]

The Chairman: Ms. Bulte, Ms. St-Hilaire and Mr. Abbott.

[English]

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you very much, Mr. Chairman.

I'd like to talk to you about Canadian content. I'd also like you to tell me how Heritage works with the CRTC, especially in light of what is happening now with the CRTC hearings and the discussion of Canadian content. In today's Globe and Mail it's reported that SOCAN made a presentation to the CRTC, and there was some question about what was Canadian content.

That is then integrated with the space. Should we control, should we regulate when that Canadian content is broadcast or aired?

Could you comment, because I'm not quite sure of how Heritage works with the CRTC. It is my understanding that the CRTC comes under the auspices of Industry, but Heritage has some kind of.... If you could explain that to me, I would appreciate it.

Mr. Michael Wernick: It's an area I haven't dealt with in great detail until recently, but I'll take a stab at an answer. The CRTC is there to enforce two key pieces of legislation—the Broadcasting Act and the Telecommunications Act. We have a great deal of interest in the Broadcasting Act. The heritage minister is responsible for it. The industry minister is very interested in the Telecommunications Act, because that's the minister responsible for the Telecom Act.

A lot of what the CRTC does can be fairly easily separated into the two baskets, but as the technologies evolve, there is this phenomenon of convergence and an interest by people to get involved, to become broadcasters or distributors. That's exactly the issue the government was wrestling with and tried to deal with for a period of time with the 1996 convergence policy.

• 1210

Our role with respect to the core broadcasting issues is a tricky one. It's an arm's length regulator, and we wouldn't presume to get involved in licensing decisions and the kinds of trade-offs for which the commission is there.

As a matter of public policy the government has decided to have an arm's length body to hear the various strongly held views on very contentious issues. Whether they're broadcasters or consumers, they have some expertise. The commission will hear them and make decisions.

It's very rare, but possible, that those decisions will be appealed to cabinet. The minister might have to take a view on whether to uphold the decision or ask the commission to take another look at it. Those situations are very exceptional.

The minister and the department step back a little from that and deal with the long-term development of the broadcasting system. You wouldn't reopen the Broadcasting Act very often. The last time was about 10 years ago. You would be concerned about whether it's valid, how it's being applied, and so on.

You'd be monitoring and following issues in areas such as access to services in both official languages and how diversity is being reflected. You'd be trying to think one or two steps ahead on the chess board about where the technology is going to have an impact. We'd deal with it at the policy issue level.

There are discussions with the commission. We have very close working relationships, but we have to be careful about not crossing the line into what's their legitimate regulatory role.

I don't know if that's of help to you, but—

Ms. Sarmite Bulte: I guess what you've said actually frightens me more. I understand the CRTC is independent of the government, but if you look at today's Globe and Mail...it frightens me that this independent agency—not politicians, not the department—is going to determine what Canadian content is and in what space it will be put. Those are concerns you talked about today: space and content.

There seems to be a gap. It's frightening. I don't believe the route is to appeal to cabinet. Personally, we can't. I see a very big gap there.

I have one last question related to the Multilateral Agreement on Investment. I sat on that subcommittee. Mr. Dymond and I talked about what culture was and that NAFTA was the starting point for the cultural definition, exception, exemption, or reservation, as the case may be. Mr. Dymond did say that he was having conversations with the officials. I would like to have some reassurance and would ask you to please continue to have your input into those discussions.

Mr. Michael Wernick: I can assure you, I've seen Bill about three times in the last two weeks. We've been meeting exactly about these sorts of issues. He'll take his instructions from cabinet ultimately. The end game of those negotiations is several months away, so we'll be working quite intensely with them to see what the best starting point is.

As you know from the other committee, there is already a bubbling up of ideas. We'll have to look at it with a lawyer's eyes and ask, if we add this word or subtract that word, what it will do.

There is some risk in moving away from the NAFTA definitions. People will ask why it is different and whether it has any impact on how you interpret the NAFTA discussion. There are merits to the French government's proposal, there are merits to the SOCAN proposal, and so on. All I can assure you is that we follow it extremely closely.

Ms. Sarmite Bulte: I think the SOCAN proposal does not address the multimedia industry or the technology. I guess that's my concern.

Mr. Michael Wernick: I'm not a lawyer, but sometimes the more specific you are the more restrictive the actual effect is. If you use general language it can sometimes be applied quite broadly. That's exactly the kind of discussion we'll have to have.

Ms. Sarmite Bulte: Thank you.

Thank you, Mr. Chair.

[Translation]

Ms. Caroline St-Hilaire (Longueuil, BQ): First of all, thank you very much for your presentation. At a recent meeting, we heard from officials from Industry Canada, who did not talk about the Copyright Act very much. Perhaps they forgot to do so. They spoke a great deal about multimedia and new technologies. One of my concerns is about artists, particularly songwriters. I don't know whether your department has thought about defining a strategy in Bill C-32. I don't think it includes the new technology, and I don't know where you are at as regards protecting artists' rights.

• 1215

Mr. Michael Wernick: Your question covers a number of areas. We have three copyright projects and they are linked. We have not managed to implement 100% of Bill C-32. We are still discussing the regulations with Industry Canada, and with the artists and producers. We hope that the vast majority of the regulations will come into effect as of January 1. It may take a little longer for some of the regulations.

As you know, Canada must decide whether or not to be a party to certain international treaties by the end of the year or to participate in the process following the signing of the treaties. All of these discussions quickly lead us to issues related to new technologies. I must say that we are in the process of identifying concerns. We hope to launch a very broad, transparent consultation process to bring together all the ideas and see what differences exist between the new technologies and digital formats.

This will be difficult and will bring out the same conflicts and discussions that occurred in phase 2. However, it must be done, because the world is changing rapidly. The Americans are very far ahead in the area of electronic commerce. They have a very commercial outlook. They have promised—and this will not be easy for them—to implement rules on the electronic market this year. That will force us to move ahead and to speed up our work in this area. I hope the committee will be studying this subject soon.

[English]

The Chairman: Mr. Abbott.

Mr. Jim Abbott: As I say, I found your presentation really helpful and these slides in particular...putting down on a piece of paper and crystallizing where the department is coming from.

In slide 2 the Canadian model is based on freedom of choice for consumers and freedom of expression by creators. Then flip over to slide 7, where it talks about Canada being one of the world's most open markets. Foreign feature films account for 95% of total domestic box office revenue, and it goes through the sound recording industry, television, books, and domestic magazines.

If we do believe the consumer is sovereign, the consumer makes choices with his or her Visa card, dollar bill, or cheque book. Companies are not in business to lose money. Companies are in business to maximize their profits. Take, for example, the distribution of feature films. If a Canadian company is in charge of distribution, would a Canadian company out of a sense of nationalism actually make different choices than are presently being made by the distribution companies?

Am I not correct that if a movie is playing well at the box office, any company would leave that movie at the box office and continue to rake in the ticket sales and therefore the profits? The same would be applicable to these other items.

Mr. Michael Wernick: In the film industry it's not a level playing field. The American film industry produces a basket of 40 or 50 films a year. The average budget is in the $20 million to $30 million range. The promotion and marketing budget of the film, before it has even left the can, is in the order $5 million. In the big blockbuster films it can be $10 million, $15 million, and $20 million just for marketing.

A Canadian film producer would be lucky to scrape together $4 million or $5 million for everything from production to distribution and marketing.

With the access and the cross-promotion of the American entertainment conglomerates, it's often the same companies that own a television network, magazines, and film productions. They cross-promote; they use their magazines to hype up the stars, they use the TV shows to talk up the films, and so on. They have an enormous economic advantage before the two films have even shown up in the same Cineplex down the road. That's why distribution policy is of great concern if the film industry is going to have long-term success.

• 1220

I'm not sure if that's helpful to you. It means the chain is important; it's not simply stimulating production and content. We do very well at that. We produce a lot of television, films, magazines and books. The trick is sometimes making sure that it's seen, and the evidence is that Canadians do prefer Canadian choices when they're offered to them. It's not a question of shutting out the foreign product, but if there's a Canadian product there, there is a tendency to gravitate to your own stories.

Canadian films are at this kind of disadvantage, but we do extremely well in television; we do extremely well in magazines; we do quite well in books. What the challenge will be, compared to the kind of economic clout of the Hollywood film industry, is whether the Canadian film industry can compete. That's exactly the same issue as the Italians, the French, the Dutch, and anybody else who has a home cinema are facing.

Mr. Jim Abbott: Doesn't that make the point? Again, I ask this question. If you had Canadian ownership of distribution, would we expect a profit-oriented company to be making decisions that are different from those being made by the American profit-oriented company? In other words, the consumer makes a choice, so surely we are not contemplating the idea of saying that if you're going to have a movie screen in Canada, you must show 20% Canadian content. Surely we wouldn't be doing that, would we?

Mr. Michael Wernick: I'm not aware of that. What you're discussing, in fact, is the kind of issue that Investment Canada will deal with when a company comes in to set up a business or to take over a Canadian firm. They make undertakings that are valid for several years.

The question you're raising of whether ownership affects content is one the committee will want to wrestle with. Does it matter whether ownership is foreign or Canadian? And what degree of foreign ownership should be allowed in these areas?

It's the same issue as the banking or financial services industries face, or the telecommunication industry or others face. That's why the MAI is going to be a very difficult negotiation. You can't just walk into the United States and buy a television station. They feel there is something important to their cultural and national security about who owns television stations. So do we, so we'll share that point of view when we sit down at the table.

Most areas of the cultural sector are in fact not regulated either in terms of content or ownership. We don't actually regulate the content of most of what's out there in the retail end of videos, books, records, magazines, cinemas and so on, other than the laws of libel, pornography and those sorts of things.

There are very few areas where content is regulated, and it is usually just about shelf space rules. There are many areas where there's no foreign ownership restrictions. Obviously, there has been no problem for Blockbuster Video to come into Canada. There are very few obstacles to coming in and setting up in the retail end of the music business. In film production and exhibition it hasn't been difficult for American companies to come in.

Mr. Jim Abbott: Where I'm coming to is this. If you go to content again, let's change the medium and talk about television for just a half a second. Clearly, This Hour Has 22 Minutes, The Royal Canadian Air Farce are quintessentially Canadian. They would go absolutely nowhere outside of this country, as much as they're very well done here. If I take a look at a production on CBC like Life and Times, that is distinctly Canadian, where we're talking about Peter Lougheed or we're talking about the Dale sisters or whomever.

If I take a look at a program like Due South, it is a classic, showing a caricature of what is Canadian. A program like Traders is also a universal story.

We come back to my opening question. How do we define Canadian content? How do we say that Due South or Traders should be funded or shouldn't be funded, and so on and so forth? Do you understand where we're getting with this? Without a specific definition of what we're attempting to achieve, how can we be achieving whatever it is? We don't know what it is.

• 1225

Mr. Michael Wernick: There's a lot there to try to respond to. I'll try to be helpful.

Let me turn around one of your comments. Because very authentically Canadian stories may be of limited interest to non-Canadians, that creates one of the economic dilemmas. If you have something such as This Hour Has 22 Minutes, where you're not going to get the joke outside Canada, you can only market it to an audience of 30 million, and at that, probably only the 23 million anglophones. So the amortization, the spreading of risk, is on a very narrow base.

If you're an American television producer, you can spread it over 250 million and an international market that is much larger. So the American television industry will take the risk of producing 120 pilots a year in the hope that each year one Seinfeld or one ER will pop up, and the rest will be thrown on the scrap heap. Canadian industry will never have those kinds of economics.

And consumer tastes are unpredictable. At the risk of contradicting myself, it's not clear that authentically deeply rooted stories aren't of interest. In fact, they are of great interest in some cases. There are various examples; the Anne of Green Gables stuff is a fascination to the Japanese. There are programs that do extremely well in Germany or Italy precisely because they have this Canadian quality. Europeans are fascinated by our aboriginal culture and so on.

We're interested in period dramas of 19th century English authors or in French culture from France, so it's not that easy to know what's going to be of interest and what's going to sell, which makes it a risky business to be in. That's why the support measures matter a great deal to the industries.

One of the successes of the cable television fund—and I know you were at the event marking its results—is that it's allowed a broader range of programs and more episodes to be produced. That means the risk gets spread around a little more. Those programs are not all going to be huge successes at home or abroad, but you have to be able to produce quite a range in order to have some of those successes, which will then give the company in question the financial stability to keep going.

The Chairman: Mr. Peters, do you want to add something?

Mr. Bill Peters: I'd just add a bit to the question. Mr. Abbott has very well defined the complexity of some of the issues that are before the committee and obviously that the department continues to be seized of, but let me amplify a little bit my colleague's response.

Part of what we need to do is find measures that will support the creative process itself. My point is it is not simply a matter of coming to an agreed-upon definition of Canadian culture or Canadian content. We also continue to advance policies designed precisely to support the creators—the people who write the books, who create the films, or who are now becoming involved in the multimedia process as technology evolves.

So what the department also does is put forward a range of policies designed to achieve those ends as well, and that of course is one of the dimensions of the puzzle you have described, Mr. Abbott.

The Chairman: Madame Tremblay.

[Translation]

Ms. Suzanne Tremblay: I think it is important to ensure that producers and distributors start by distributing their own product, before distributing other people's products. I think that is self-evident. I have seen successful Canadian films that were not being shown, even though American duds were being shown, because the distribution companies were owned by Americans.

But that is not the point of my question. It is about grants. I think that since the cuts to this department (and to every other department as well) there have been some changes made in the policies on grants. There's something I do not understand.

• 1230

We give grants to professional organizations because they are professional. We may support one, two, three or four orchestras, for example. We support a ballet company or some other group. But we stop supporting some orchestras that are less professional, because they do not have professional standards.

When I was on the Canadian Heritage Committee for the first time, I heard that some groups in the Toronto area had lost their grant because there had been a change in policy.

I've recently been at a number of book fairs at which publishers told me that the policy on publishing grants should be reviewed. You can perhaps confirm this for me, but I think that the higher the sales figure, the higher the grant we provide to the publishing firm. This gives smaller publishers the impression that they will eventually be gobbled up because they will not be able to afford to subsist in the market.

First of all, can you confirm that this is more or less the department's policy? Second, why should well-established organizations not get less money so that we could give more to new orchestras, in the interest of openness and competition?

I don't want us to stop providing funding for the Montreal, Toronto, or Winnipeg symphony orchestras. However, I think the people living in Eastern Quebec don't get much opportunity to hear orchestras. They will never go to Montreal or Toronto. Twenty thousand dollars for a little symphony orchestra in the Lower St. Lawrence or the Gaspé regions, for example, is a lot of money. Could you provide us with some information on this?

Mr. Michael Wernick: I can tell you that there is a whole range of granting mechanisms with different criteria and objectives. If you are referring to something specific, we can come back with specific information.

Some grant programs have a more industrial or academic focus. In other words, they help support a private sector industry in the film or publishing sectors. Other programs are meant to serve the voluntary or not-for-profit organizations in the arts, heritage or museums.

The federal approach in this area has long been to depoliticize these grants as much as possible and to create a mechanism within the Canada Council to receive the application and have them judged by a panel of experts according to artistic criteria. Clearly, there is not enough money to accommodate everyone, and the decisions are difficult, whether we are talking about orchestras or publishing firms.

The cultural industries have the same problem as the aerospace or other industries as regards economics. Should we be supporting strong companies, or should we rather try to help small and medium-sized firms? There is never enough money to go around. The decisions are difficult, and this means that trade-offs have to be made.

Ms. Suzanne Tremblay: We know that in publishing, if we end up with huge publishing companies—with say two in Quebec and two or three in Ontario—publishing will be concentrated in the hands of a very few people. There is danger that in the future only certain authors or certain types of literature will be published.

• 1235

For instance, it would be hard for a poet to find a publisher, because he may sell only 500 copies of his book in his whole career. Concentrating artistic authority in the hands of just a few individuals is dangerous.

Mr. Michael Wernick: I fully accept your analysis. If there are some problems with the way our programs are implemented, we could come back and talk about this some more.

Ms. Suzanne Tremblay: Thank you.

[English]

The Chairman: Mr. Abbott.

Mr. Jim Abbott: Coming back to what I've been suggesting about trying to differentiate between the medium and the message, I'm taking a look again at your slide 7, where you point out that 87% of total retail revenue in the sound recording industry was from the sale of foreign content.

I know at the Cancom hearings by the CRTC in Hull right now that there's some controversy as to when the 30% is presently being broadcast. Still, if we take it that 30% Canadian content is being broadcast and only 13% of sales are being made on that basis, and then we have SOCAN asking for 40% and the recording industry asking for 50%, the decisions that are being made by the broadcasters are profit-motivated decisions. If, in their judgment, the Canadian content was going to continue to drive the listenership to their radio stations, they would be playing the Canadian content. The 30% would not be a ceiling; it would be a floor.

So it goes back to a response you made, I believe it was to Madame Tremblay, about working towards increasing the value or making Canadian content better.

What I'm trying to drive at here is that I'm not really sure in my own mind...again, just keying on slide 7 here, where you talk about Canada being one of the most open markets and the fact that 95% of the films are foreign, 87% of the records, 61% of the television, 60% of the total domestic book and 50% of the total domestic magazine retail revenue. I believe Canadians are making these choices, and I'm not really sure that if we didn't have more Canadian content, more Canadian message of a calibre and a quality and a desirability, we wouldn't see those numbers being driven up by Canadians' choices.

In other words, on the fact that we're stuck at 50% of the total domestic magazine retail revenue in 1994-95 being foreign, well, maybe if we had more critical mass and of a quality and a calibre that Canadians wanted to buy, that number would be higher.

I'll rephrase that, and let me state that I don't believe regulation of content is the answer. I think if we can encourage a more desirable product or service coming from our Canadian artists, Canadian consumers of those services will gravitate towards them and show that gravitation by flashing their MasterCard.

Mr. Michael Wernick: There are a couple of things I'll try to respond to.

The magazine case and the television case show you how you have to look at the chain, from creation, promotion, distribution, and so on. The way media interact with each other is quite important.

On the magazines, I take that number as a success story. The number of magazines available to Canadians has grown from a handful in the 1960s to 1,400. Some of them are very small and incredibly specialized, but there are 1,400 magazines available to Canadians that reflect some aspect of who we are. They may not get sold very far outside of lower mainland B.C. or Montreal, or a particular profession or interest, but they're there.

1240

Nobody tells a retailer which magazines to put on his or her shelf. If you go into the Rideau Centre cigar store, you can stock any magazines you want. Nobody tells any Canadian what magazines to subscribe to. If you want to subscribe to a German or an American magazine you can do that.

So there really isn't that kind of content regulation. Under challenge are particular structural measures that were designed to allow that industry to grow, to flourish and to establish its market. It's similar to other industries, and I'm sure these are issues for debate—whether public policy should be doing things to encourage the incubation of new industries.

On sound recording, the argument is that the content rules on radio over a period of time allowed record companies and producers to take root, and artists and people to get heard in order to build an audience, and that this was a platform and a springboard for the kind of success you see today, whether it's Bryan Adams, k.d. lang, Céline Dion

[Translation]

and there are other francophone artists I could mention.

[English]

The argument is that in the absence of the content rules of the 1960s and 1970s, the marketing and economic weight of American and other record companies would have meant that people would only have heard foreign producers. You grow up with what you hear, and tastes are formed by that.

There's been some success as we've reserved shelf space for a video channel—MuchMusic and Musique Plus. Canadian kids see Canadian artists a bit more than they would otherwise, and that develops an audience, and then the industry can walk by itself.

The fact that the CRTC is holding public hearings on the radio rules is proof of what I said in my second or third slide, which is that the instruments are looked at from time to time, and if the CRTC decides that different quotas are appropriate they'll decide different quotas are appropriate. There is a continuous reassessment of these kinds of instruments.

Mr. Jim Abbott: But in other meetings I've raised the anomaly of the Bryan Adams experience. You mentioned Bryan Adams. We came up with a certain set of rules and regulations and now we have a Canadian artist who, because he missed something on a point system, suddenly is no longer considered to be a Canadian artist. Some of these regulations get a tad bizarre, don't they?

Mr. Michael Wernick: There are going to be boundary issues around any kind of regulatory system. They are reviewed from time to time. The CRTC looks at its regulations. We'll look at the application of content rules for access of the cable fund if it's renewed and so on. It's a process of scrutiny.

The fact that there are artists who will be able to take off in American and European markets and make a lot of money is a terrific success story. We have no problem with that. The role of the public policy instruments, which is one the committee can form its own views on—you don't need mine—is more at the incubation stage, the formative stage, and then the artists and companies can take off on their own.

Mr. Jim Abbott: Thank you.

The Chairman: Just before we close, Mr. Wernick, I want to ask you two things.

The other day we heard Professor Sauvageau of the Caplan-Sauvageau report. I saw that it was not mentioned here and I think it would be quite a landmark to mention it.

The same type of questioning was put to Professor Sauvageau. If I understood him correctly, he explained that you cannot class culture as one monolith. He said there are two value systems within it. One is the commercial value system, the marketplace, and the other is the public service value. It's that public service value that we are primarily wrestling with here, because the commercial content can always look after itself. The big corporations will thrive and some will fall by the wayside, but the public service value....

He made the analogy of a small TV or film producer in Quebec, or in Ontario for that matter. He's telling a community story. If he wants to broaden his commercial potential, then he has to tell a story that is far less community-minded and far more acceptable to other audiences across the road and all over the place beyond these shores.

• 1245

Do you agree that the role of the Department of Canadian Heritage is to really support that public service value within the system, whatever that may be?

Mr. Michael Wernick: I think the role of the department and the portfolio agencies, because most of the actual delivery and interaction is through arm's length agencies, whether it's the—

The Chairman: No, I understand that. I mean as a whole.

Mr. Michael Wernick: As for the public policy role, if it's helpful, I would break it into three categories. The committee will want to come to its own views on the relative weights of that.

Government has, for a long time in Canada, been a doer, a creator. There have been public institutions such as the CBC, National Gallery of Canada, and National Film Board. Those institutions are still with us. Their mandates and budgets change, but they have a role in the actual raw creation of cultural content for Canadians.

Government is also a funder and a patron through subsidy programs or other instruments. There you have things like Telefilm Canada, the various support programs for the sound recording industry, the book industry, and so on. We always have to decide how those dollars should be allocated and whether they're being used in the best way. In that case, it's a private sector creator or a non-profit orchestra or museum that's doing the creation. The government has taken on a sort of modern version of the old patron role.

The third role, which is the trickiest one, is the one of facilitator and enabler. There are certain laws and frameworks that affect the cultural industry or sector, whether it's on the arts side or the industrial side. Those are things like the tax, broadcasting, and copyright regimes.

As I said, much of this area is about the buying and selling of rights. There are things that government can do to simply create a playing field in which other people can do their thing.

The real dilemma—Mr. Abbott touched on this a couple of times—is that culture is an elusive thing. On one level it's very specific and local, and on another level it's very universal. The best culture is universal, but its form may be incredibly local. That's true of Canadian product, but it's also true of the best cultural content from around the world.

The Chairman: Thank you very much, Mr. Wernick. It's been a very helpful session for all of us. I really appreciate your coming here.

Just before we close, we had discussed Mr. Rabinovitch before. There was the possibility of an official of your ministry being assigned to back up our researchers and be a link with the ministry in the context of the study over the next few months until we finish.

Could you take this up? Could you get back to me or the clerk to say if it's possible?

Mr. Michael Wernick: If I understand it, you're going to be doing a little stock-taking next week as to where you wish to go. I'd be very happy to discuss with the clerk how we can be of assistance.

The Chairman: All right. Thank you. Thank you very, very much for coming. We really appreciate it.

I have just one letter that I want to share with the members before we close. It'll take two seconds. I'm going to read it to you.

I received a letter from Senator Joyal, who has just been appointed to the Senate:

[Translation]

The Canadian Heritage Committee that you have the honour and mandate to chair has undertaken an important study of culture and national identity on the eve of the millennium.

I am personally very interested in the subject of your discussions, testimony and study. Consequently, I have requested to have the privilege of attending your meetings as an observer.

I know, of course, that each Chamber has its own role to play and that it would be inappropriate to create confusion.

However, since the committee is not studying a piece of legislation or regulation, but rather is making a general study of the issue, I would appreciate it if I could attend your meetings.

Please let me know what your colleagues think about this.

[English]

I checked with the clerk before I read this letter to you, who told me that in the past people who wanted to sit as observers could do so. I know that in the environment committee, when we had a member of the New Democratic Party, when the members were finished with their questions, if there was time, with the assent of the members, they could even ask the odd question.

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So I just put it to you as to whether or not you're agreeable, or whether you want to think about it and get back to me. It's up to you. But it would be nice to let him know, now that he has written to me to ask for this specifically.

Mr. Jim Abbott: I could get back to you. I'll be back to you before tomorrow evening.

The Chairman: Okay. Thank you very much again.

The meeting is adjourned.