HERI Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 10, 2000

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[English]

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): I would like to call to order the meeting of the Standing Committee on Canadian Heritage,

[Translation]

which is meeting today with representatives of the Board of Trustees of the National Arts Centre Corporation.

[English]

We are extremely pleased to welcome here today representatives and members of the board of trustees of the National Arts Centre Corporation. The NAC has appeared before us twice before. The first time was about a year ago and again six months after that to give us a progress report.

We're very pleased to welcome today Mr. David Leighton, the chair of the board of trustees; Mr. Peter Herrndorf, who is the new director general and chief executive officer;

[Translation]

Mr. Bernard Geneste, Corporate Secretary;

[English]

and Mrs. Kelly Ann Beaton, the director of communications.

I should mention that we regret the delay in starting our meeting, which was unavoidable, because of two votes in the House. We hope that within this hour we'll have a chance to have an exchange with you as much as possible.

Before I turn the meeting over to you, Mr. Leighton, I would like to say how pleased we are to hear the great news about the NAC, especially after what was a tough start for you and your colleagues. It's very welcome news.

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So, Mr. Leighton, the floor is yours.

[Translation]

Mr. David S.R. Leighton (Chair of the Board of Trustees, National Arts Centre): Thank you, Mr. Chairman. Good afternoon, ladies and gentlemen.

[English]

When I appeared before this committee last June 10, I had recently been appointed chair of the board of trustees. Elaine Calder, who was interim director and chief executive officer, presented our report on behalf of the NAC. Ms. Calder had previously announced her intention to leave the NAC at the end of the month, and the report was a summation of her eight months' tenure. We—the board, the selection committee, and I—were actively engaged in the search for a new director and chief executive.

Much has happened since that meeting.

The standing committee had been quite critical of our predecessors, particularly for a lack of planning and for obvious weaknesses in financial management and controls. In her report Ms. Calder addressed those issues and outlined the actions that had been taken to address them since she had taken office the previous October. She presented, I believe, a very impressive account, which subsequent events have substantiated. Financial controls are in place and are working. The office of the Auditor General has expressed its approval of both the actions taken and the presentation of results in our recent annual report for the 1998-99 fiscal year, copies of which we have tabled with the committee.

I would like to acknowledge the highly professional job provided by Ms. Calder during her short tenure as interim director. She did much of the dirty work required to put the centre on a sound footing, and she deserves credit for much that has happened since, particularly with regard to the quality of our financial management and reporting.

I would also like to thank the many people of the national capital region who have demonstrated strong support during a period of management turbulence.

After a rigorous search for Ms. Calder's successor, the board was pleased to announce in August that Mr. Peter A. Herrndorf had accepted the position of director general and chief executive officer effective September 1, 1999. Mr. Herrndorf came with impressive management credentials in the arts, publishing, and broadcasting. An MBA graduate of the Harvard Business School, Mr. Herrndorf has held senior positions with the CBC, as publisher of Toronto Life magazine, and as chairman and CEO of TV Ontario. He has also served as chair of the board at the Museum of Civilization and the Stratford Festival.

In his five months in office Mr. Herrndorf has taken hold quickly, decisively, and effectively. Staff morale, which had been at a very low ebb, is today at a high level. He has worked tirelessly and constructively with management, staff, and the board to articulate a vision and a future direction for the National Arts Centre.

Mr. Herrndorf will address the main thrust of this strategic direction in his prepared comments, and he and I will be pleased to deal with any questions that may arise. The principal elements of our strategic direction are directly attributable to Mr. Herrndorf's leadership and have been discussed with and endorsed by the board of trustees.

At this point in the proceedings, I'd like to turn the microphone over to Mr. Herrndorf.

The Chair: Thank you, Mr. Leighton.

Mr. Herrndorf, congratulations on your appointment, and the floor is yours.

Mr. Peter Herrndorf (Director General and Chief Executive Officer, National Arts Centre): Thank you.

[Translation]

Mr. Chairman, ladies and gentlemen,

[English]

thank you for the chance to meet today. I'm pleased to be here as the new director general and CEO of Canada's national showcase for the performing arts, and I look forward to our discussion.

There's a great deal I'd like to include in my opening remarks, but because of time restraints, I'll keep my comments relatively brief. I'll simply highlight what we've done at the National Arts Centre already and some of the things we intend to do in the future.

When I came to the National Arts Centre, I knew it had a glorious 30-year history, and I knew it had an important mandate and an enormous amount of potential, but I also knew that we had to re-establish a solid foundation if we wanted to move ahead with confidence.

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I'm happy to report to you today that we've made significant strides in re-establishing that foundation. This is certainly the case financially. We've just reported an operating surplus of more than $2 million in fiscal year 1998-99, eliminating our accumulated deficit from the past few years.

We've also completed the first four months of the 1999-2000 fiscal year. With revenues well ahead of target and expenses well below budget, we're now in a position to forecast a healthy surplus for this year as well. We're close to completing a PIILT arrangement with the Department of Public Works and the City of Ottawa, whereby we will be receiving $48.5 million for much needed capital improvements over the next 10 years.

This is also the case in terms of audience growth, with our box office revenues, subscriptions, and attendance up significantly. Overall, NAC's subscription revenues are up 7.3% over last year, reaching their highest levels ever. We've also attracted a lot more NAC subscribers overall, with 34,644, a record for the 1990s. The NAC orchestra has more than 15,000 subscribers this season, also an all-time high.

That tells us in very clear terms that people are responding to the quality of music, theatre, and dance that our artistic directors Pinchas Zucherman, Jean-Claude Marcus, Marti Maraden, and Michel Dozois are putting on our stages. If you'll indulge me for a moment, I want to congratulate all of them for a superb 1999-2000 season. We've had a spectacular season of dance, a riveting theatre season in both English and French, and all of the ongoing excitement of Pinchas Zucherman's first full season as the orchestra's music director.

Canadians in other parts of the country are also responding to our work. We feel strongly that the NAC exists for all Canadians, not just those fortunate enough to live near our home base on Elgin Street. This is not simply the board's point of view or mine. It's our mandate. It's what Canadians have every right to expect.

That's why we were so pleased with the success of the Canada tour by the NAC orchestra during the fall, a tour that the House of Commons and your Speaker honoured on December 6. Maestro Zucherman has always believed strongly in reaching out to bring music to the widest range of audiences possible, and Pinchas and the orchestra very much succeeded in achieving that goal during the Canada tour. The tour played to full houses in almost all of the cities it visited.

The tour was an even richer success because of its outreach elements, both in those communities we visited and over the Internet. The tour was important to us because it showed that we can engage and move the people who come out to hear our concerts, but it also showed how we can use new media effectively to reach people who live hundreds or thousands of kilometres away from our live performances, in Dauphin or in Digby or Vegreville. The tour also showed we can work with schools and educators to reach out to the children and young people who will be our next generation of audiences, and that applies to dance and theatre as much as it does to music.

One other point I want to make about the tour reflects the hallmark of our programming at the National Arts Centre. The tour worked through partnerships with the local orchestras that were our hosts in each city. The same is true in all of our programming. Our English and French theatre and our dance series usually co-produce or present the best work done by other theatres and dance companies across Canada.

Last Thursday's opening in Dartmouth, Nova Scotia, of Whylah Falls, a co-production between the Eastern Front Theatre and the NAC's English language theatre, is a perfect example of the kinds of creative partnerships that can be built across this country. Last month's co-production of the Odyssée with Montreal's Théâtre du nouveau monde was another very good example.

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Even with these successes, there is much more to do. Let me then turn briefly to the broad changes we're in the process of making.

Probably the most fundamental initiative we have underway is to change the NAC organization from a bureaucratic culture to a more creative and entrepreneurial one. David Leighton and I are extremely optimistic about the future of the performing arts in this country, about the potential impact of new media such as the Internet, and about the future of the National Arts Centre.

We believe, as a result, that we can afford to take a more ambitious approach to mapping out where we want to go. Whether we do so by increasing our touring, like the orchestra's Europe and Middle East tour in early October, through CD recording, through radio and television broadcasts, through web casting, or through a greater emphasis on youth programming, we are well positioned to respond to the demand for high-quality artistic performances. We can do it in ways that reach a wide cross-section of Canadians and we can do it in ways that are compatible with our resources.

The centrepiece of our strategy has to be a commitment to artistic innovation and expansion. As I mentioned earlier, most of our production partnerships have involved bringing the work of Canada's best artistic organizations to our stages in Ottawa. We've hosted Les Grands Ballets Canadiens, les Ballets Jazz from Montreal, the National Ballet of Canada, and the Royal Winnipeg Ballet in the past year, and we have recently showcased works from the Vancouver Playhouse, the Citadel Theatre in Edmonton, Soulpepper and Canadian Stage in Toronto, and Théâtre Denise Pelletier from Montreal, to name just a few. In addition, we present les Quinze jours, an extraordinary 15-day festival of the best French language theatre from across the country, every two years.

All of that will continue to be important because we should be a showcase for the best of what this country is producing. But we also need to do more work at the NAC that we can take on tour as well. We need to be continually more inventive, more imaginative, and more willing to take on exciting projects, flexing our artistic muscles, as it were. I'm confident that we have the artistic leadership, the musicians, and the artists who can do all of that extremely well.

Where will that lead us? Well, we hope people in Calgary, for example, will feel increasingly proud that they have a vested interest in two very good orchestras. They have a local orchestra, the Calgary Philharmonic, that deserves their strong and loyal support, of course. But we hope they feel just as proprietary about the National Arts Centre Orchestra, or Canada's orchestra, as many journalists dubbed it on our tour. It's an orchestra they'll see in Calgary regularly and an orchestra they'll have far greater exposure to in Calgary through the media, through radio broadcasts, television, CDs, and the Internet.

We hope they'll also see the NAC as the place that creates some of Canada's best theatre, plays that are available to theatre-goers across the country, and always in partnership with the local and regional theatres in their own cities.

I want to stress that this does not anticipate some federally financed growth spurt. In fact, we've been working on the assumption that our parliamentary appropriation will be stable for the next few years. I believe that for us to achieve the kinds of goals we have in mind, the NAC has to generate far more of its own revenue. We have to improve our marketing, we have to improve our fundraising—we're about to launch an NAC foundation to help in that—and we have to generate significantly more net proceeds from all of our other revenue centres. I'd be happy to talk about that in a few moments.

We then have to use that earned revenue to cross-subsidize our programming plans, not our infrastructure. In other words, we have to invest in the seeds of our own future success, and that will happen if we can reach more Canadians with the kind of music, theatre, and dance that moves and inspires them.

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I want to conclude these remarks by pointing out that I've only been in this job for about five months. There's a great deal to do, but I believe we're heading in the right direction. I'm also pleased with the support and advice the board has provided, and I hope we can work with your committee, Mr. Chairman, in the same way.

Thank you again, Mr. Chairman. We look forward to your questions.

The Chair: Thank you very much, Mr. Herrndorf, for your very hopeful message and really for the remarkable turnaround at the NAC.

[Translation]

As usual, we will begin with questions from two opposition members, followed by two Liberal members. The second round will proceed in a similar fashion, and then we will go to an open round.

[English]

I would like to point out to you that we have 35 minutes left, so could people be conscious of this so that everybody gets a chance?

Mr. Mark.

Mr. Inky Mark (Dauphin—Swan River, Ref.): Thank you, Mr. Chairman.

I would like to welcome our witnesses from the National Arts Centre. It's been six months since you came here last time, and it's good to see you back.

One of the perceived problems the NAC experienced was what the Auditor General deemed leadership problems. My first question relates to that. The accusation was that the former chairman of the board was too hands-on and too much of a micromanager in terms of directing the big ship. Do you believe the board's role has changed at this time, that it will be a policy-oriented board versus a micromanagement kind of board?

Mr. David Leighton: I think it appropriate that the chair talk to that question.

Let me just say the relationship is excellent between the two. I understand the difficulties that took place earlier. My personal philosophy is that the CEO should be left to manage—under guidance from the board, but the CEO manages the business. That doesn't mean it's a passive board or a board that is not committed and working hard, because there are many functions the board performs that have to be done, and done conscientiously.

We've made quite a number of steps, some of them outlined in our annual report, to try to give that kind of sense of responsibility and action required on the part of the board, including setting out quite clearly the functions of the board in what I would loosely call a position description for board members. It took a good deal of discussion among the board members. It went through a number of drafts. The process was an extremely interesting one. It did help clarify some of the difficulties that had taken place in the past.

There's more to be done there as well, and we're working on that. Peter and I have undertaken the writing of our own job descriptions and where the lines fall between our two responsibilities. We have a considerable advantage in that both of us have experience on both sides of that fence, one from the board's point of view as chair and one as chief executive officer working for a board. That gives us a great deal of confidence that we can work effectively together, which we are.

The Chair: Mr. Mark, do you have another brief question?

Mr. Inky Mark: The other question I have to ask is, have you formalized a process to show that the NAC is transparent and accountable, so that the public would have access to your general meetings? And the follow-up to that question is, will you put in place an internal audit so that periodically at least you review your own records, so that we avoid things happening such as today with HRDC?

Mr. David Leighton: As those are primarily in the board's area of interest, I should respond to that as well. But if you have any further comments—

A witness: No, go ahead.

Mr. David Leighton: I'll take your second point first, the internal audit. We are in the process of installing an internal audit function. We've been helped in this by the Auditor General's department, which at the most recent meeting of our audit committee made a presentation on the alternative ways of dealing with the internal audit function.

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I'd just point out that it's a difficult function to undertake in a relatively small institution like ours. Larger corporations and other bodies can hire internal auditors; we don't feel we should, and we're probably going to go along the route of hiring an outside firm to do our internal audit for us. That process is almost complete.

Your first question centred around transparency. Each of our board meetings is public. We have four public board meetings a year. We have an in camera session first and a public session following the private or in camera session that we have first, and we intend to keep that process going. We've also, I think, tried to open the activities of the centre in our annual report and other published documentation, and we intend to keep that process moving ahead too.

Mr. Inky Mark: Would you consider having your public meetings broadcast on CPAC?

Mr. Peter Herrndorf: Sure. Absolutely.

Mr. Inky Mark: That would make it very transparent, obviously.

Mr. Peter Herrndorf: If CPAC were willing to do it, we'd be delighted to welcome them.

[Translation]

The Chair: Mr. de Savoye.

Mr. Pierre de Savoye (Portneuf, BQ): Thank you, Mr. Chairman. Thank you for taking the time to come and meet with us today. I would like to add my apologies to those of the Chair, but a number of votes in which we must participate are scheduled to be held in the House. Regrettably, we will have to cut our time short. Therefore, I will limit myself to one topic which I consider to be of utmost importance.

I took a look at your 1998-1999 annual report in which you talk about official languages. On page 6, you noted that the resignation of the Chief Executive Officer in the fall of 1998 had resulted in a temporary restructuring of the Corporation's management and that the NAC had been forced to cancel all language training.

Members may recall that in your SILO 2 system, designed to ensure sound compliance with the Official Languages Act, you had at the time 47 bilingual supervisors, when in fact you should have had 61 in total. After all, your corporation has many Francophones on staff. For example, we note that Administrative Support Services have 83 Francophones and 23 Anglophones on staff, while on the operations side, there are 192 Francophones and 137 Anglophones. However, on the management side, unfortunately, the proportion is largely reversed.

This being said, I have three questions for you. Have you resumed language training so that you are in compliance with the Official Languages Act, which was enacted around the same time as the NAC came into being? Apparently, you have been lagging behind in terms of applying the provisions of the Act.

Why is it that at the management level, there are fewer Francophones then there should be, compared to the other areas of the corporation?

In which language are meetings of your board of trustees conducted? Do you provide simultaneous interpretation services for Francophone staff members? Since we're talking about CPAC, obviously this service would be indispensable.

Where do things stand? You are required to comply with the law. What I can't understand is you saying that you lost your CEO and therefore had to cancel all language training. Yet, by law, you are required to provide that training. Did you also tell Revenue Canada that you lost your CEO and therefore could not remit source deductions until some time later? Why comply with one law, and not the other? Where exactly do things stand? Thank you.

[English]

The Chair: Mr. Herrndorf.

Mr. Peter Herrndorf: Thank you very much for that. Let me go through your questions in order.

First of all, in terms of the resumption of linguistic training, I feel very strongly—and I guess I'm the test pilot for it—that this is an organization that should be far more bilingual than it is. As you may know, I have begun French language courses during the last three months and I hope the next time I'm here I will be responding en français.

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But it's part of a larger philosophy. I think the National Arts Centre, because it operates the way it does, has to be particularly sensitive to the rhythms of both languages and both cultures, and my commitment to you is that we will reinforce that approach through linguistic training in a major way, number one.

Number two, your comment about the—

Mr. Pierre de Savoye: Mr. Chair, could you give numbers or dates on this commitment? This is not the first time people have come here from the CNA and committed themselves. Could you be more precise?

Mr. Peter Herrndorf: I will be happy to do that in the next week or so, if you'll permit that.

[Translation]

Mr. Pierre de Savoye: Thank you, Mr. Chairman. You can pass along this undertaking to all committee members. Thank you.

[English]

Mr. Peter Herrndorf: Okay.

In response to your second question on senior management, it's interesting to note that at the moment we have a loosely formed senior management group of 14. That group is made up of eight anglophones and six francophones, and the language of that particular forum is primarily English, although there is a great deal of French spoken in that management forum. A number of my colleagues are far more comfortable speaking exclusively in French, and that is encouraged. So it is a management meeting not unlike many management meetings that take place in Ottawa, where both languages are used a great deal.

As for the makeup of the staff, just to spend a moment on that, the staff of the National Arts Centre is about 55% anglophone and 45% francophone.

Finally, the language of the board meeting is not unlike the language of the senior management committee: it is primarily English, but there is quite a lot of French spoken.

Going back to the main point, I'll be back to you within a week in terms of a commitment and some timelines related to that.

[Translation]

Mr. Pierre de Savoye: One last comment, Mr. Chairman.

[English]

The Chair: Just a moment. Mr. Herrndorf, if you could send the information to the clerk of the committee, she'll make sure all the members have it.

Mr. Peter Herrndorf: I would be pleased to do that.

[Translation]

The Chair: One last brief question.

Mr. Pierre de Savoye: Sir, I did you the favour of saying a few words in English. After three months of French training, could you perhaps say a few words to us in French?

[English]

Mr. Peter Herrndorf: My promise is that the next time we will have an extended dialogue in French.

[Translation]

Mr. Pierre de Savoye: I'll take you at your word. Thank you.

[English]

The Chair: I'll now move to the Liberal side for two questions. The list I have has Mr. Shepherd and Mr. Bélanger.

Mr. Alex Shepherd (Durham, Lib.): Thank you very much.

Mr. Herrndorf, as I read your introductory comments, you made much of your pride in having a surplus this year. I look at the financial statements and I look at this line here that says “parliamentary appropriations from operating expenditures”. So in other words, it's the federal government that actually put in money. If we compare 1999 to 1998, we find that in fact the appropriations from Parliament were an additional $2,333,000, which exceeds the amount of your surplus. So is it fair comment to say that the surplus is almost entirely related to parliamentary appropriations?

Mr. Peter Herrndorf: No, I don't think it is fair. The surplus in 1998-99 was, to a considerable degree, the result of, first, the remarkable generosity of Canadians across the country who responded to the challenge campaign with significant amounts of money to the National Arts Centre. These were Canadians from various parts of the country who believed that the National Arts Centre was in grave difficulty and believed in the work of the National Arts Centre, and their generosity represented.... I believe, David, probably in excess of $2 million came in that way.

Mr. David Leighton: Yes.

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Mr. Peter Herrndorf: A second factor had to do with the fact that the organization began to take a much more rigorous approach to cutting costs, to financial controls, and that certainly was a significant factor.

The third point is the one you raised. In terms of 1999-2000, I mentioned in my remarks that based on the results in the first four months of the fiscal year we are forecasting a healthy surplus, and that is based on the classic ways in which surpluses come about. We are exceeding our revenue targets by quite a bit, we are below our expenditure targets by quite a bit, and that's how the surplus will surface in the year 1999-2000.

Mr. Alex Shepherd: Okay, I understand what you're saying, but suffice it to say that if the appropriation hadn't increased by $2 million, there would be no surplus. I think that's a fair comment.

Mr. Peter Herrndorf: The only place where I disagreed with you subtly was that there were a number of factors at play. And I agree that yours is one of those factors, but the generosity of Canadians was not inconsiderable.

Mr. Alex Shepherd: The Auditor General has made comments about the absence of a strategic plan. This is a plan that would go out a number of years. What action is being taken on that?

Mr. Peter Herrndorf: One of the things I asked the board when I arrived at the National Arts Centre was that my senior colleagues and I be given a reasonable period of time to do the kind of diagnosis, the kind of research, about the state of the National Arts Centre and then, within the course of the 2000 calendar year, to present a strategic plan, first to the board, then to key stakeholders, and as well to the parliamentary committee and to the heritage ministry. We are well on our way to doing that. Much of what you heard in my opening remarks this morning revolves around the strategic directions that I have been discussing with the board and with senior management.

As David Leighton indicated in his opening remarks, the board is quite comfortable with the initial approach to strategic directions. About two and a half weeks ago, the senior management of the National Arts Centre went off on a two-day retreat and we pushed that a little bit further. In the middle of March, I will be presenting a document to the National Arts Centre board, spelling out in some detail the strategic directions for the organization—a strategic plan, a business plan, call it what you will. But we're making good progress, and it will be in written form before the end of this calendar year.

The Chair: Excuse me, Mr. Shepherd, could I just give a chance to the others?

Mr. Bélanger.

[Translation]

Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): Thank you, Mr. Chairman. Welcome, gentlemen, madam.

As important as it is for the people representing taxpayers to criticize and ask questions when matters warrant, it is equally important for them to recognize a job well done. I was among those who had some harsh words for the representatives of the NAC and who asked some rather probing questions when they appeared before our committee. While I was critical of their actions at the time, I must acknowledge today that significant progress has been made in terms of the numbers and public participation and compliance with the NAC's mandate.

Therefore, I'd like to begin by congratulating you on the work you have accomplished in a relatively short period of time and to encourage you to keep up the good work.

I would also like to praise Ms. Calder for her work. I'm happy that you mentioned this during your comments, Mr. Leighton, because Ms. Calder and Ms. Riley worked for a time under relatively trying conditions. Before leaving, they managed to turn things around and to bring us to where we are today.

I had to say this, in order to be completely honest with myself.

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[English]

Mr. Leighton, Mr. Herrndorf said that “the most fundamental initiative we have underway is to change the NAC's bureaucratic culture” to one of creative and entrepreneurial modes. I want to address this question to you. You have known expertise in the management of boards and in turning the culture of an organization around. I would like you to expound a bit on that, because, indeed, it is perhaps one of the most difficult and fundamental things to do. I would like you to tell us whether or not there is any need or any way in which the Government of Canada and those of us here can be of help in your achieving of that.

Mr. David Leighton: I think this commitment to a more entrepreneurial culture has to be seen in a little bit of historical perspective. The National Arts Centre suffered some pretty severe budget cuts during a period of three or four years. I wasn't around, but my recollection is that they were approximately 30% of the federal government allocation.

What that created—and does create quite naturally, I think, in an organization—was a tendency to withdraw into one's own function. Each department began to look over their shoulder at the next one and say they were going to try to protect their turf at the next one's expense. It became an inward-looking and somewhat bureaucratic move, where all of the tools of the established bureaucracy were used to protect the turf of the individual groups. I think that's quite natural. Under the circumstances, people were acting in a predictable way.

The problem is that when that becomes an entrenched way of doing things, you have to try to wrench the organization around to face the challenges of acting in a creative way towards improving the operation and thinking about the organization as a whole in doing so, about what's good for the organization as a whole. That's difficult. It doesn't happen easily and it doesn't happen quickly. It has taken years to get into this protective mode, into what has come to be known as the silo mode, and it's going to take a little while to get out of it as well.

I think we hit bottom a year ago. I think we're on the bounce, on the upgrade. I think Mr. Herrndorf would probably agree with me that it's going to take a matter not of months but of years before we're really into the sort of culture that he's talking about. Doing that is going to take some new blood and leadership at senior management levels. We have a number of vacancies in senior management. Those will ultimately be filled. We have some younger members of the organization who themselves are being brought along to take that kind of leadership.

Mr. Peter Herrndorf: Let me just jump in a second here, if I may.

Mr. David Leighton: Yes.

Mr. Peter Herrndorf: The interesting thing about the National Arts Centre is that it is first and foremost a creative organization and has terrific creative leadership. Whether you're talking about Pinchas or whether you're talking about Marti Maraden, Jean-Claude Marcus, or Michel Dozois, these are people who do very good work artistically, creatively, whether it's on the stage of the National Arts Centre or whether it's working with other companies across the country. They have to be given the greatest possible manoeuvring room to do their stuff.

The other activity we're very actively involved in is that we're a business organization. We are actively involved in marketing. We're actively involved in sponsorships and fundraising. We run a restaurant. We have a very successful catering operation. We run a commercial parking garage. We do rentals. We do various kinds of special projects. We're doing one right now for the Canadian government in terms of the Hanover 2000 World Fair. These are business activities that have to be quite entrepreneurial.

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So you have an organization that is creative and entrepreneurial, and the whole infrastructure of the National Arts Centre should be there to provide support and backup to that. An organization that becomes too risk averse, too inward looking, and too bureaucratic really runs afoul of the main things Canadians expect the National Arts Centre to do and that the National Arts Centre can do very well. That's, I think, the heart of it.

The Chair: Mrs. Lill.

Ms. Wendy Lill (Dartmouth, NDP): Thank you very much for coming here today. I'm sorry I was a bit late.

I want to say something. I hear really good news here today, but it's sort of like when you hear that one friend of yours has just fallen in love and you're very happy for them, but then another friend of yours has just been diagnosed with terminal cancer, and you're not happy about that. At the time you're sitting here telling us some very good news, we are hearing about more and more cuts to the CBC. The CBC, as we know, is an incubator for culture, which is the culture you showcase all the time at your wonderful centre. These parallels are something we can't ignore, and it's a serious problem.

I hear you say that you don't expect any more federally financed growth spurts. I would say that we need many more federally financed growth spurts and investments in culture, and I think we need it at the CBC. I don't think we should always be apologizing for that. I think we have to be moving ahead with our culture and say that this is something that is going to give us the strength to move and think globally and to deal with media convergence and the whole ball of wax that's ahead of us. If we lead with our culture, we make sure we have enough resources in it. So I'm not apologizing for investing in culture. That's my little rant on that.

I would also like to say that I did see the Whylah Falls co-production, and I talked with Carole McDougall, your board member there, and she's very happy with things now. I spoke with her over a year ago when things were not going as well. I've spoken with staff. Everybody does have a sense that there is a new energy and they're very hopeful, and I'm just delighted about that.

The only question I would have is, we know there's sort of an elitist sense about the board here, and you have a long way to go to dismantle that idea. Aside from, say, four public meetings and Inky's idea of putting it on CPAC, do you have any other ideas about a board outreach or getting some kind of input from communities so that they realize this is their centre and not simply an ivory tower in Ottawa?

Mr. Peter Herrndorf: Perhaps I could make a couple of comments. First, when we talked about the funding for the National Arts Centre, it wasn't that we were discouraging additional money. It was simply that we weren't counting on additional money. Our argument was that because we weren't counting on it, we had to take the steps to make sure we were generating our own earned revenue. I think investment in the arts in this country is a remarkably good investment, and I share your view on that.

In terms of further outreach, one of the main elements of the strategic plan will have to do with outreach. It will have to do with outreach in the national capital region and in francophone and anglophone communities across this country. The outreach will be national in scope.

One of the first things we're doing at a national capital region level is that on the last weekend in May the National Arts Centre will have an open house. We are hoping to have 30,000 people at that open house, and it's exactly on the basis you just described. It's their National Arts Centre, and we hope that families, parents, children, and grandparents will come and get a flavour of the human side of the performing arts, of the enchanting, enjoyable, inspirational side, but also the fun side.

The tour we've just finished doing across the country with the orchestra is the best example of outreach that I can describe. It was an outreach that used the Internet all across the country while the orchestra was touring, and it was an outreach that used a whole variety of musical and educational outreach, such as master classes. But in every city we visited, whether it was Halifax, Calgary, Edmonton, or Vancouver, that kind of outreach was going on. That's relatively new for us, but you're going to see it as very much a staple in the future. Again, I underline that the National Arts Centre belongs to Canadians, and we will do everything possible to link them to the National Arts Centre and for the National Arts Centre to link to them, whether they come to Ottawa or we go to where Canadians are across the country.

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The Chair: Mr. Muise.

Sorry, Mr. Leighton, I apologize.

Mr. David Leighton: A very small point in response to your question. We are starting a process of holding at least one board meeting a year outside of Ottawa. We're rotating them, starting this year in Moncton and Caraquet.

Mr. Peter Herrndorf: The actual board meeting is in Caraquet.

Mr. David Leighton: Part of our problem is that we have a very small board, with 10 people in total, of whom two are ex-officio, the mayors of Ottawa and Hull. It leaves vast parts of Canada to be represented by one person. We have made a request and are working on a redefinition of our act so that we can have two additional members appointed to the board, which would give us much greater flexibility and a better ability to represent the regions.

The Chair: Before I turn it over to Mr. Muise, I should mention that it's very close to 1 p.m., and if the members and our witnesses would agree, we'll extend the meeting by a few minutes. I have Mrs. Bulte and Mr. Bonwick on the list, and that way everybody will get a chance to put their questions forward. Is that all right?

Some hon. members: Agreed.

The Chair: Mr. Muise.

Mr. Mark Muise (West Nova, PC): Thank you, Mr. Chairman. Welcome to our guests, and thank you.

I get the feeling that you've finally regained the reins that we didn't see were there last year, and that's really good to see. I'm really happy for the turnaround.

One of the questions I had, which my colleague touched on, had to do with the strategic plan, and I think that's so very important. I recognize that you have a lot on your plate, and I'm glad to see that you're moving in that direction. I'm looking forward to having a chance to review it as soon as it's finished.

I was interested in your annual report where you mentioned that expenses for fundraising basically increased by some $80,000 last year, and you were explaining that is partly due to the challenge fund. Could you describe to us what your long-range, ongoing fundraising plans are? Will we see those expenses increase? If so, do you see that increase in cost being offset by the benefits you will receive?

Mr. Peter Herrndorf: Thank you for that. There are three characteristics to the fundraising initiatives we'll be taking. The first is that we will be creating a National Arts Centre foundation, and it will be the vehicle through which fundraising is done. Secondly, we are in, I hope, the final stages of recruiting an executive director of development, and that individual will also run the foundation. The third element of our fundraising strategy is that the fundraising will be national in character.

That fundraising would include the fairly widely understood definition of fundraising. We would be much more aggressive in terms of pursuing sponsorships and major gifts. We would for the first time become actively involved in planned giving. We as an organization would take on some national capital campaigns, much like other arts organizations have done, along with universities and hospitals. We now do a very good job in terms of special events, and we do quite a good job in terms of membership. But we will be doing all of those things across the country.

One point to stress is that we've talked a lot to our colleagues in orchestras across the country, including local orchestras, regional theatre companies, and dance companies, and it is our belief and certainly the belief of many of those organizations that as Canadians have become more prosperous over the last five or six years, there is the likelihood that individual Canadians, individual Canadian families, and foundations will be able to be persuaded to invest more in the quality of life of their fellow Canadians—that they will in fact begin to invest more through major gifts to arts organizations, to hospitals, and to universities. And it's our belief that we can do it on a national basis without cannibalizing the fundraising done at the local level for orchestras.

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As you'll notice, in the way we tour, we work in partnership. We work in partnership with the theatre in Dartmouth; we work in partnership with the Philharmonic in Calgary; we work in partnership with Canadian Stage in Toronto. That is our style. But it is our sense that since the National Arts Centre belongs to all Canadians, we should ask all Canadians to participate in the fundraising efforts on behalf of the Arts Centre.

The Chair: Mrs. Bulte.

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

Thank you both for coming.

First of all, congratulations on a subscription base to be envied, as we know. In our past lives, we tried very hard and never got quite that close. Your fundraising has doubled at what I would submit was a limited increase in expense. You're to be congratulated.

I'm going to ask you a tough question. I've heard you talk about your Canadian tour. I've heard you talk about outreach. What distinguishes the National Arts Centre from a regional theatre or regional orchestra? You talk about it being national, but regional theatres are doing co-productions with one another. This is not unique to the NAC. Regional theatres or orchestras are fundraising. The Manitoba Theatre Centre is undertaking a massive capital campaign right now. What distinguishes the National Arts Centre from those groups?

Mr. Peter Herrndorf: We've had this discussion in other places. Several things do, and they're all important distinctions.

The first is that the National Arts Centre belongs to all Canadians—belongs, in a very tangible way. Every Canadian taxpayer has a piece of the National Arts Centre. It is an instrument for them to reflect the performing arts in this country on a national scale. That is a significant difference.

Secondly, the National Arts Centre's national role is mandated by legislation. The Parliament of Canada has spoken on this issue. As much as you and I love Canadian Stage, the Parliament of Canada has not in fact spoken on behalf of Canadian Stage.

Thirdly, in terms of the partnerships in Dartmouth, Calgary, Vancouver, or Quebec City, we do that as a consequence of a national mandate. We do that because we see our role.... I'll use a particular example. During les Quinze jours, which is the French language theatre festival that takes place every two years, the best French language theatre and the best French language theatre companies from across the country are showcased during that fifteen-day period. It's not done to shave expenses, to blend expenses in the way you and I did when we were both involved with Canadian Stage. It is done because it is thought to be in the Canadian interest that Canadians from one end of this country to the other see the very best work being done. So it is a commitment, and in fact a passionate commitment, by Canadians that the very best of the performing arts be showcased, seen, and celebrated across this country.

I should say, with your indulgence, Mr. Chairman, we have Hamilton Southam here, the founder of the National Arts Centre. He's sitting right behind me. This is a man who in many ways articulated all of these ideas and who brought an enormous passion to all of this. You may know that three weeks ago, the National Arts Centre renamed the Opera in his honour, because of the kind of contribution he made to exactly this debate.

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Ms. Sarmite Bulte: Thank you very much.

The Chair: Thank you.

Mr. Bonwick.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Thank you, Mr. Chair.

The first thing I want to do, Peter, is ask you to carry back a message. Everybody who has spoken today has offered you congratulations, but I'd like you to deliver back to your entire team that the committee acknowledges the contribution to the success that's been made by everyone who works with the NAC. That's my first request.

I have a very short question, but I want to touch briefly on my view, as an individual member of Parliament, on parliamentary appropriations. I don't view it so much as a cashflow that would demonstrate a surplus on your bottom line, but rather as an absolute responsibility of the federal government, to ensure there is a National Arts Centre. Just the same as we have a responsibility to ensure business and health care and education, we have a responsibility to Canadians to ensure the Arts Centre is there as well.

Spinning off that, though, you've made comments centred on the incredible financial support you've received across Canada for the NAC. That certainly speaks yards to how Canadians feel about the NAC. But we live in pretty strong economic times right now, so they're very favourable to contribution. I'm not trying to sound like a pessimist, but economies tend to be cyclical.

I haven't had a chance to review the financial report you presented to us, but I'm wondering if you're doing any preparation, such as taking a percentage or a reasonable amount of your surplus and putting it into reserve as a contingency, so that if, four or five years from now, you're finding the well is drying out because of tougher economic times, you're prepared to deal with those situations, rather than coming back and saying you need another million dollars.

Mr. Peter Herrndorf: The comment you've made is a very perceptive one. We have to be very careful, very prudent, over the course of this year and next year and the year after, to make sure we don't get caught in the kind of situation this organization was in over the last few years.

I was involved in the mid-1980s, as David Leighton has said, as chairman of the Stratford Festival. The year before I became chairman, the Stratford Festival had incurred a $3.4 million accumulated deficit. It was the kind of deficit that threatened the very foundation, the very core, of Stratford. We had to very methodically work our way back from that. Of course now Stratford is a wonderful, buoyant organization.

We have to be very careful that we keep money in reserve and that we manage it prudently, and we have to make sure we do not increase our expenditures until we have a pretty good sense that the incremental revenues are flowing in. So we do have to manage in a very prudent way.

The Chair: Thank you very much.

I think everybody has had a chance at questions. Mr. Bélanger asked me for a few seconds before we close.

Mr. Mauril Bélanger: Mr. Chairman, I thank you, but the reason I asked you for two seconds was to recognize the presence of Mr. Southam, which has now been done.

The Chair: Thank you very much, Mr. Leighton, Mr. Herrndorf, and your colleagues, for coming to see us today. We really appreciate it. It was an excellent meeting.

The meeting is adjourned.