CHER Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 28, 1999

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[English]

The Chairman (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): The meeting of the Standing Committee on Canadian Heritage is convened in regard to the study of Bill C-64. This is a meeting we arranged yesterday in view of the time pressures and the fact that the committee can't sit tomorrow. We had made a commitment with the members that we would try to devote one hour to this session because of various time constraints.

We are pleased to welcome Mr. David Walden and Mrs. Eileen Sarkar.

We'll turn the meeting over to you for information on the bill and then to the questions from the members. The floor is yours.

Ms. Eileen Sarkar (Assistant Deputy Minister, Arts and Heritage, Department of Canadian Heritage): Thank you very much, Mr. Chairman. I'm in your hands as to how you would like to proceed, but I would propose that the best use of your time would be for me to do an extremely brief presentation—I've made copies of the presentation available to your clerk—and then Mr. Walden can take you through the various provisions of the bill.

I don't know if the document has been circulated.

The Chairman: We're doing it now, if you can just give us two minutes.

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Mr. Mark Muise (West Nova, PC): Mr. Chairman, while that's being done, is the vote a fifteen-minute bell or a half-hour bell?

The Chairman: It's a thirty-minute bell.

Ms. Eileen Sarkar: I believe most members have the bill now. In the interests of your time, I'll begin.

The first point I would like to clarify is what we mean by indemnification. Indemnification is not insurance. In indemnification, the state assumes the financial risk instead of paying insurance premiums. The federal government did have an insurance program for travelling exhibitions between 1985 and 1995, whereby $6 million was paid out, basically to buy insurance in a cost-shared program. Under the indemnification, we only provide compensation for damages or losses to exhibitions which would have, in order to be admissible under the program, passed through some very rigorous criteria. Therefore, there's no expenditure unless there's loss or damage.

[Translation]

Now for a word about the indemnification experience in other countries. In all, 14 other industrialized countries have indemnification programs in place. They're listed in the handout, so I won't bother naming them. The important thing to remember is that all of these programs rely on a sliding-scale deductible and on supplementary insurance coverage obtained from commercial insurers, as we recommend in our program.

[English]

The second point I'd like to make is that in all 14 countries there has been no or very little indemnification paid out in the programs.

[Translation]

For example, since the program was first introduced in the United States 24 years ago, only two claims have been settled, for a total value of slightly more than $100,000.

[English]

Now, the objectives of the bill, very briefly. The Canadian Museum Association has been lobbying for an indemnification legislation since 1979 and they've told us in very simple terms that what it's about is that the cost of insurance is basically an impediment to more interprovincial travelling of exhibitions and to bringing in exhibitions from other countries. So our objectives are to increase access to our heritage and to facilitate the hosting of major exhibitions, and to do this at the same time that we are reducing costs and minimizing risk.

There are advantages for Canadian museums. In many cases, they will pay no insurance premiums because they will have in-house insurance to cover the deductible that we will build into the program. In some cases, they will pay a very reduced premium. I'll give you an example to give you an order of magnitude. When the Group of Seven exhibition toured Canada several years ago in four cities—Toronto, Ottawa, Montreal and Vancouver—the cost of the insurance was $80,000. With an indemnification in place as we're proposing to design it, our estimate is that the cost of the insurance would be about $5,000. That would be the order of magnitude.

We're expecting, as the museums we've consulted have told us, that they would redirect those savings into program activities. They've also told us that when they're competing in foreign countries for major exhibitions to bring to Canada, it does make a competitive difference to be able to tell foreign galleries and foreign governments that there is a kind of imprimata of the government backing them, that there's a government indemnification program.

[Translation]

Regarding program eligibility, the requirement for international exhibitions is one single venue. However, domestic exhibitions staged by Canadian museums must travel to at least two provinces.

Stringent eligibility criteria are in place for security and environmental control for one obvious reason, namely to minimize the risk of damage.

Lastly, we will benefit from the services of expert advice/risk management programs when making program selections.

[English]

Finally, there will be a deductible, based on the principle of shared risks with our partners in the museums. This is consistent with all of the other international programs. One of the things it does is to reduce what we would call the “nuisance claims”, where you get the scratches and bumps when objects are being transported. It's also more cost-effective to have insurance companies that are used to dealing with small claims, which are often labour intensive. That would be the responsibility of the institutions, and it means that we have a true partnership with them.

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My final point is one of economic impact. We have access to a number of studies that prove the very substantial economic impact of such exhibitions, which I'm sure you've heard of or seen, exhibitions like the Barnes exhibit, the Corot exhibit, or the Renoir exhibit. Again, in the interests of time, I won't go over that, but there are major economic impacts throughout and beyond the cultural sector for all levels of government.

That was my brief introduction. Now, if you agree, I'll ask my colleague, David Walden, to take you through the clause-by-clause unless you prefer to proceed in another way.

The Chairman: Just one moment.

Mr. David Walden (Director, Movable Cultural Property Program, Department of Canadian Heritage): I have one copy that I can photocopy. I don't have enough to distribute.

Mr. Joe Jordan (Leeds—Grenville, Lib.): So rather than...

[Inaudible—Editor]

...government is going to assume the risk. Is that essentially...

Ms. Eileen Sarkar: Rather than contribute to a museum to purchase an insurance policy, we'll assume the risk, under certain conditions.

Mr. Joe Jordan: Okay.

Ms. Eileen Sarkar: We've determined a lower level of $500,000, for a number of reasons. The first point I might make is that the $500,000 includes not only the value of the works of the art; it would include, for example, the display cases and the things they would have to put them in. Also, when we consulted with the museum community—because we consulted extensively with our clients to make sure that this would work with them—the CMA members were fairly comfortable with that. Most of the time, museums have insurance policies in place for their collections, and, for a very small amount, they can get a rider that will cover that smaller amount.

The Chairman: When the Group of Seven exhibition toured Canada, what amount did you say it cost for insurance?

Ms. Eileen Sarkar: It was $80,000, Mr. Chairman.

Mr. Mark Muise: Would the lower amount, $500,000, limit smaller exhibitions from travelling or smaller museums from doing... for example, within the province or in their region, let's say?

Ms. Eileen Sarkar: I'll ask my colleague, David, to comment on that.

Mr. David Walden: Our sense is that it will not, that an exhibition under a certain value is going to be only hosted by the institution that organizes it. There is a sort of critical mass in terms of value and composition before an exhibition will travel. There is also the requirement in the bill that exhibitions organized and toured by Canadian institutions have to travel to at least two provinces. That stipulation will in effect push exhibitions to a certain level in terms of quantity and quality.

The Chairman: Mr. Walden, why don't you take us through the bill now?

A voice: Quickly.

The Chairman: Excuse me. Can I just mention this to the members? I've just checked as to whether we can pair off and not go and vote and finish this thing on time. Our whip's office tells me that because of the numbers in the House now, they need one of us to go back. If we agree with that we can carry on, or we can just all go and vote. It's up to you. I don't want to put you on the spot or anything like this. What is your decision?

An hon. member: By “one of us”, do you mean from this side?

The Chairman: Yes.

So what is your decision?

An hon. member: I have no concerns...

[Inaudible—Editor]

The Chairman: Then let's carry on as far as we can, and we'll all go and vote.

[Translation]

An. hon. member: There's a vote in half an hour?

The Chairman: Yes, in half an hour. We have about twenty minutes left.

[English]

Are there any questions for Mr. Walden? It's a short bill. It has only six clauses, including the coming-into-force clause.

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Maybe you can just run through it quickly, Mr. Walden.

Mr. Mark Muise: I have a couple of questions.

The Chairman: Okay.

Mr. Mark Muise: Mr. Walden, you mentioned the fact that in order to qualify, the exhibition has to go to, let's say, two provinces, and then there's the minimum of half a million. Initially, I guess, my concern was—and maybe I was wrong, but I'm looking for clarification—that this might limit travelling by some of the smaller exhibitions that still maybe should be promoted, with those “smaller” artists being promoted.

Mr. David Walden: I would assume that there will always be a limiting factor unless you are going to offer indemnification for every possible exhibition that could be out there. Our sense is that there are certain types of exhibitions that will travel and that there are certain types of institutions that will create travelling exhibitions. There are other museums that themselves do not actively participate in the organization of such exhibitions. That relates in part to the mandate of the institution and the size of the institution in terms of staff, budget, and collection.

Certainly our sense was that some of the larger institutions, some that even function as de facto provincial institutions, such as the Art Gallery of Newfoundland and Labrador... they wrote to us and said they strongly supported the bill and the process, but they doubted that they would ever benefit from it.

Mr. Mark Muise: Right.

Mr. David Walden: I think it's difficult to draw a line at which point it would happen, because there are institutions that are considered major and there are medium-sized institutions that are major in their regions, and they're saying they might or might not be organizing exhibitions that would qualify. Certainly a community museum would probably not organize an exhibition that would qualify for indemnification, but they're not doing that now either.

Mr. Mark Muise: On the other side of the spectrum, Madam Sarkar mentioned the Group of Seven travelling exhibit, for which the cost was about $80,000. I'm wondering about something like Renoir or Picasso. Would there be limiting factors in the fact that we stop at $450 million? I believe that's the figure.

Mr. David Walden: Yes.

Mr. Mark Muise: Would there be some problems created by that and by the fact that we're going to a maximum of $1.5 billion?

Ms. Eileen Sarkar: I think the limiting factor there, if I bring you back to the mathematics of it... Yes, overall, $1.5 billion is what the government was prepared to take as an initial risk for a brand new program.

Mr. Mark Muise: Yes.

Ms. Eileen Sarkar: There's always a balancing there. Within that, we wanted to be able to service as many as possible, hence the maximum. You could have one exhibition eating it all up if you didn't have a maximum. In fact, the economics of the amount of money it would cost to buy that supplementary insurance, the way the risk works—

Mr. Mark Muise: It's reduced.

Ms. Eileen Sarkar: It's very much reduced because you're at the high end of...

There's one other factor, not to bog you down in technical things. We will have criteria, for example, whereby only so much value can be carried in transporting something on an individual airplane or something. That's why the risk becomes very reduced when you're up at those high levels. The likelihood of losing that much money is very small, so the insurance costs are very small.

Mr. Mark Muise: Those were my two concerns.

The Chairman: So for any one exhibition, the government guarantees up to $450 million. Is that correct? Or do I read it wrong?

Mr. David Walden: Yes, potentially. There would be—

The Chairman: I realize it's potentially, but just as a matter of information, are there any exhibitions that get into the hundreds of millions of dollars?

Ms. Eileen Sarkar: The Corot exhibit was estimated at about $1.3 billion.

The Chairman: Wow!

Ms. Eileen Sarkar: The Barnes exhibit was over $1 billion.

Mr. David Walden: The Picasso exhibition here at the National Gallery was about $500 million.

The Chairman: Mark.

Mr. Mark Muise: That leads me to my next question. I know the risk is not substantial, but what happens if you have one of those exhibitions and a couple of others and all of a sudden you have two that are $400,000 and one that's $1.2 million, and you get over the $1.5 billion and are left with the last claim. You can't insure for it because the indemnification plan sets out $450 million per, and you're okay with that, but you happen to be the third on the list and you are actually up to $1.7 billion, and oops, you just lost $200,000.

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Ms. Eileen Sarkar: David, do you want to explain how we try to predict ahead of time?

Mr. David Walden: It will be done on probably an annual or a semi-annual basis in terms of applications being submitted—

Mr. Mark Muise: Oh, okay.

Mr. David Walden: —and there's no requirement. The bill is worded in such a way that it says up to $450 million. So if we had five candidates at $400 million, for example, we could take the risk for $200 million each and keep some back for the next round.

Mr. Mark Muise: So you would never expose yourself to more than $1.5 billion?

Mr. David Walden: Under the bill, we cannot do more than $1.5 billion in any given year, but there is no requirement to take the $450 million per exhibition. That's the maximum.

Mr. Mark Muise: Okay. Good.

Mr. David Walden: Certainly in terms of the thinking of how we would administer the program, with the experience we know about from other countries, you do precisely what I think you're suggesting: you look at everything that comes in and then say, how much risk will we take on each one of these particular exhibitions?

Mr. Mark Muise: Right. So you don't leave someone out in the cold.

Mr. David Walden: Exactly.

Mr. Mark Muise: They know what they will be covered for and they are covered for that.

Mr. David Walden: Exactly. Again, to return to your previous point, they still are very much financially ahead, because the middle slice of the risk is where it gets—

Mr. Mark Muise: It's the expensive one.

Mr. David Walden: It's the expensive part. Precisely.

Mr. Mark Muise: Thank you very much, Mr. Walden.

The Chairman: Gentlemen, I'm afraid...

[Translation]

Do you have a question, Mr. Dumas?

Mr. Maurice Dumas (Argenteuil—Papineau—Mirabel, BQ): Yes, I do.

The Chairman: Briefly then, because we have to adjourn.

Mr. Maurice Dumas: Ms. Sarkar may have already answered my question. It concerns foreign exhibitions, like the Renoir and Picasso exhibits. Will exhibits like these also be eligible for the indemnification program?

Ms. Eileen Sarkar: Yes.

Mr. Maurice Dumas: You already answered that question?

Ms. Eileen Sarkar: Yes.

Mr. Maurice Dumas: Fine.

[English]

The Chairman: I really apologize for having brought you here for all this time, but I think members are quite satisfied now with the scope of the bill and with what it does. This has been really helpful to us. I'm terribly sorry that we have to rush. It's out of our control. Thank you very much for coming. I guess we'll see you during clause-by-clause study of the bill.

Ms. Eileen Sarkar: Thank you very much, Mr. Chairman and members. It was a pleasure to come here today.

Mr. David Walden: Thanks very much.