HERI Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 27, 2001

• 0908

[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]

The Standing Committee on Canadian Heritage meets today to resume its study on the state of the Canadian broadcasting system,

[English]

to continue its study on the state of the Canadian broadcasting system.

So that we are all clear, we're going to group the various parties listed in the agenda into three panels. The first one will be the Canadian Television Fund, the Canadian Independent Film and Video Fund, and the Shaw Children's Programming Initiative. The second panel will be the Alliance of Canadian Cinema, Television and Radio Artists, the Canadian Media Guild, and the Newspaper Guild of Canada. The third panel will be the Canadian Film and Television Production Association and the Canadian Independent Film Caucus.

So we'll start with the first panel.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): As a point of information, so that we all understand what rules we're working with here, is it your intention, as this is a two-hour period, that the panels will have approximately 40 minutes each?

The Chair: It's three hours.

Mr. Jim Abbott: I'm sorry. So one hour each.

• 0910

The Chair: We have three hours, so we'll have one hour for the first panel, including questions, and we'll split it in three groups.

Madame Gagnon.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): Mr. Chairman, I would like to ask you something.

The Chair: Yes.

Ms. Christiane Gagnon: You received a letter from me this week asking that a group of witnesses be heard as soon as possible. I would like to know why we hear only groups from English Canada and why French-speaking groups will be heard only after the month of May.

The Chair: I don't think it is a matter of Francophones or Anglophones. In many of these groups, there are Francophones. Mrs. Baillargeon, who is here today, is no more Anglophone than Francophone.

Ms. Christiane Gagnon: Yes, but I am talking about groups that are representative.

The Chair: We expected to organize our schedule by communicating with all these groups. We contacted all those groups. Of course, we could ask the researchers to be more flexible, to communicate with the groups, but there was no intent to put English-speaking groups in a way... We got in touch with all the groups and many of them didn't want to come here at the beginning.

Ms. Christiane Gagnon: Could we somehow adjust the schedule in order to be able to hear the group I was asking for?

The Chair: The researchers tell me that this group was quite happy to appear here in May. If these people themselves ask to appear sooner, we will be pleased to make the necessary changes. Several of these groups which were supposed to come at the beginning changed their minds because they didn't want to appear; they were not ready. Eventually, it becomes very difficult to establish the schedule. But if they do request to appear earlier, we will be happy to welcome them.

Ms. Christiane Gagnon: I did that through a letter which you should receive.

The Chair: You did? From them?

Ms. Christiane Gagnon: Yes.

The Chair: Very well. As soon as we receive it, we'll take the necessary steps.

[English]

The Chair: If there are no further questions, we'll open the meeting to the Canadian Television Fund, represented by Mr. Richard Stursberg, chairman of the board, and Madame Louise Baillargeon, vice-présidente, the Canadian Independent Film and Video Fund, Ms. Robin Jackson, executive director, and the Shaw Children's Programming Initiative, Mr. Alex Park, vice-president of programming and educational services.

Mr. Stursberg, would you like to start? As there are three groups, could you speak to your time, so that we leave enough time for questions by the members, please?

Mr. Richard Stursberg (Chairman of the Board, Canadian Television Fund): Thank you, Mr. Chairman.

[Translation]

I would like to introduce the people who are with me this morning. Louise Baillargeon is the Acting President of the Fund and in charge of Operations. There is also Janet Yale, who is the Vice-Chairperson of the Board and certainly the most important representative from the private sector regarding the public-private partnership in charge of the Fund.

[English]

I propose to do the presentation in English, if you agree, but we're happy to reply to any of your questions in French.

We have a little handout, and I hope everybody has it. I've given the speech to the clerk. I don't propose to read the speech to you—it's too dull for words. What I hope to do this morning is basically explain to you what the fund is, what it does, and why it does it.

I might just say by way of preparatory remarks, this fund is very large. It spends $230 million a year on the financing of Canadian television production in the areas of drama, children, documentary, and arts and variety. It is overwhelmingly the most important fund in the country and the most important source of subsidy to Canadian television programming.

On the first page of the presentation, it's very important for us to be clear as to what is Canadian television programming. The way people define Canadian television has historically been on the basis of a points system. This is the way the CRTC does it, and this is the way CAVCO, which is the Canadian Audio-Visual Certification Office, does it for the purpose of certifying programs for tax credits. They have a points system, it has 10 points, and each of the points you can see laid out there to show how the system works. There are some very slight variations between CAVCO and the CRTC, but that's the gist of it. To qualify as a Canadian program for those purposes, you must get a minimum of six points. That is not what we do at the fund. At the fund, to qualify for funding, you must get all 10 points, and moreover, you must hit the other three so-called essential requirements.

• 0915

First, the project must speak to Canadians about Canadian themes and subjects. Second, it must be shot and primarily set in Canada. And third, the underlying rights are significantly and meaningfully developed by Canadians. These have become known as the essential requirements, because at the fund we say that if you want to be financed by the fund, you must be distinctively Canadian. It's clear that if you were to simply hit six of the ten points, you could make programs that were not about Canada, but were made by Canadians. In fact, about two-thirds of all the programs in English Canada are made in that way, and they tend to be called industrial Canadian programming, as opposed to distinctively Canadian programming.

Industrial Canadian programmimg is extremely important. It is the programming that in fact, as I say, constitutes two-thirds of the total, and it is fundamental for keeping actors, writers, cameramen, directors employed and the whole infrastructure of the system working. But the other one-third, the distinctively Canadian, is the programming that is culturally important, in the sense that this is the programming made by and about Canadians for Canadians. So I make that distinction in the first instance.

If we turn the page, the question is, why do we subsidize Canadian television production? To understand the answer, we have to look really at the underlying economics of television production. You see this most dramatically in the English language markets, where the challenge is the most difficult. The French language market is very different, but let me concentrate for a moment on the English language markets.

If you make—and here let's just talk about drama for a moment—the most beautiful programs in the United States, programs like The West Wing or ER, they cost approximately $2.2 million to make per hour. You can buy them, if you're a Canadian English language broadcaster, for about $100,000 an episode. The reason the Americans, of course, can spend this amount of money is that they have a base of citizens, a population, that is dramatically larger than the base of English Canadians, so they can lay those costs off over a vast base. But because all the programs are available in Canada, either imported by Canadian broadcasters or coming in directly, Canadian programs have to compete with them for audiences. So Canadian programs must be at least roughly of the same quality.

Canadian programs typically return for an hour of drama between $65,000 and $90,000 an hour, and because they're distinctive, they get very little sale abroad. If that's all the money you could raise, there's no possible way you could make programming that would compete in quality with $2.2 million an hour. That's the reason it's subsidized. We subsidize it up to a maximum of about $1 million an hour, and Canadian private broadcasters pay more than they make on English Canadian programming. But it's very clear that if we did not do this, there would not be any English Canadian drama and other programming made, because of the economics of the situation.

• 0920

So how do we spend the money? Turn to page three. Last year, as I mentioned, we had about $210 million, this coming year we'll have about $230 million. We split off one per cent of the money for aboriginal language programming, and then the money that remains is split, one-third, two-thirds, French and English. These splits do not reflect population, they're slightly overweighted to the French side. We then spend the money for only four kinds of programming. We do not spend the money on news, we don't spend it on sports, we spend it only on drama, kids' programming, documentaries, and variety programming. The little box below shows you what percentages go to the various genres. We have changed it a little this coming year. It was overwhelmingly and predominately a drama fund, and it still is, but we have reduced the drama percentages a little to reflect changes in the market. We have increased the amount of money a little for documentaries and for kids.

How do we decide who gets the money? The way it works is that every year producers apply to the fund. For them to be considered, they must already have a deal with a television network to have their production shown, and they must hit the so-called essential requirements, which, as I mentioned earlier on, are that the programming must be distinctively Canadian, ten out of ten, shot and set in Canada, Canadian themes and stories. Once they get in and hit that threshold test they can then be considered, and there are two programs. There's a program called the equity investment program at Telefilm Canada, and there's a licence fee program, which simply tops up licence fees. They operate slightly differently, but fundamentally there are three or four kinds of issues that are considered, once they get in the door.

First, how much money from the private sector is being invested? What is the size of the licence fee being paid by a broadcaster? The higher the licence fee paid, the more likely the program is to get subsidized. The reason is that we want to stretch public money as far as possible, and also, we would like programs that are as broadly popular as possible.

Criterion two asks, is it even more Canadian? There are a series of other elements we call the visibly Canadian elements that add points.

Criterion three asks, is it made by small and medium-sized enterprises, is it made in areas other than Toronto and Montreal? If it is, it gets extra points for that as well.

Finally, on the Telefilm side, they look at the extent to which it has important creative elements and the extent to which it is likely to recoup money by way of giving money back to the government through foreign sales.

I'm going to take you to the next page. Where are we going with the fund? Over the course of the last little while—and I'm sure the committee's going to hear a great deal more about this—there have been some significant changes in the nature of the broadcasting system. The nature of demand is changing. Recently, there have been another 40 specialty channels launched in English Canada. Over the course of the last decade more and more specialty channels have been launched, so we're seeing a shift in the nature of demand for particular kinds of programming within the fund. As I mentioned earlier, we're seeing more demand for documentaries, more demand for children's programming, so we have shifted the split among the genres to begin to accommodate those changes in demand.

Second, there's been considerable consolidation of the industry, which is often described as convergence. Broadcasters have been buying up production companies, wanting to get into production, wanting to get into distribution. You have cable companies buying specialty companies, telephone companies buying broadcasters, and so on and so forth. We have, in that context, two preoccupations. One is to make sure that the system evolves with the nature of these kinds of industrial strategies, so we have changed a bit this year to allow broadcasters, for the first time, to distribute television programs. But at the same time, we are preoccupied with making sure that small and medium-sized producers and distributors are not lost. We want to maintain a kind of industrial structure in the ecology of which there are not just large beasts, but a variety of beasts of different sizes, since we think the creativity and imagination of the system require that we have all those various kinds of beasts. So we have put in place measures recently to assist further small producers and small distributors.

• 0925

That's who we are and what we do. The last page shows how we're structured. This is quite unique. This shows you where the money comes from. The money comes principally from the government and the cable and satellite industries, mostly from the cable industry, because the satellite industry is smaller still. It's done on a basis of a tax essentially. They're taxed about 3% per year to the fund, and that amount of money has been growing very substantially over the course of the last number of years. When I started as chairman of the fund four years ago, it was about $55 million, it's now almost doubled. The rest of the money comes from the government, either through Telefilm Canada or directly from the Department of Heritage.

The board that runs and controls it is unique in the cultural sector. It is a public-private sector board. This shows you the composition of the board. Private broadcasters have the right to four seats, for which the Canadian Association of Broadcasters names people, the cable companies have a right to three seats, and so on. The board directs all the activities, it hires and fires the CEO, and it elects its chair. This is the genuine board, in the sense that it is the board that actually controls the corporation. I think it is fair to say that this is almost a unique public-private sector venture, and it has been, I think it's fair to say as well, an outstanding success.

Thank you very much for your attention.

The Chair: Thank you, Mr. Stursberg.

I'd like to turn the meeting over to Ms. Jackson.

[Translation]

Ms. Robin Jackson (Executive Director, Canadian Independent Film and Video Fund): Good morning. My name is Robin Jackson and I'm the Executive Director of the Canadian Independent Film and Video Fund.

[English]

the Canadian Independent Film and Video Fund, which is at the other extreme from the Canadian Television Fund. Our annual budget is $2.1 million a year, and many projects do not qualify for television.

The Canadian Independent Film and Video Fund was incorporated in 1991. It is dedicated to supporting the development of the non-theatrical industry through the creation of films, videos, and new media projects that promote lifelong learning and are produced by Canadian independent producers. The fund provides assistance to documentaries, educational and informational films, videos, and new media products, as well as instructional and some training projects. These are programs that are designed for the educational market, kindergarten to university, health services, libraries, business, educational specialty television, community groups, cultural and social services, home video, and the new media market.

We have a combination of public money, which comes from Canadian Heritage, for which we are very grateful, and money from Star Choice Communications, direct-to-home satellite, for which we are also extremely grateful. Our board of directors is a combination of public and private. We have the Department of Canadian Heritage and Telefilm on our board. We also have an interesting combination of producers, independent producers, Canadian non-theatrical distributors, and end-users, which means that we have librarians and some teachers on our board.

• 0930

In the 10 years of our existence we have funded 484 projects for a total of $9 million. We have processed 2,800 applications. We have a range of production, and it's fairly eclectic, from how to create flip book animation for children to projects on modern slavery, the holy Koran in Kosovo. The length of the projects ranges from six minute clips to feature-length documentaries, and we have assisted projects which have gone on to win some awards: In the Gutter and Other Good Places, which won the Genie award for best documentary in 1994: Made in China, which won the Canada award at the Geminis in October of this year; and À la recherche de Louis Archambault, which won the Prix Jutra for the best documentary in 2001. One of our alumni director-producers, Zacharias Kunuk, won the Golden Camera award at the Cannes Film Festival in this year.

Approximately two-thirds of CIFVF funding is designated to assist English language projects, and one-third of the funding is available to assist French language projects. We endeavour to target our funding so that one-fifth of the English language envelope is devoted to each of the regions, British Columbia, the Prairies, Ontario, Quebec, the Maritimes, which includes the north.

Based on a survey that was done by the Independent Film and Video Fund this summer, the following is a profile of our client producers. The most important factor to note is that 70% of the companies surveyed have revenues under $1 million. Twenty per cent of the companies have revenues between $1 million and $2 million dollars. Twenty per cent of the companies have one employee only, twenty-two per cent have two employees, and 12% have three employees.

All companies identified difficulties in securing funding for projects, along with the stiff competition for project funding. Every company interviewed spoke about cashflow difficulties experienced on an ongoing basis for the company, as well as the making of the individual projects. The majority of the owners of the companies expressed the opinion that much of their time is devoted to administration, as opposed to the creative content. Several owners lamented that they spend 75% of their time on administration and financing matters and only 25% on the creative side.

The companies surveyed reported on a number of strategies they employ in order to survive. They have small staffs, they hire freelancers on contract as needed, they maintain inexpensive office space or home offices. Most of the companies interviewed own their own camera and editing equipment. While the film and video companies may not be actively involved in the production of new media at the moment, they realize the importance of owning copyright in their projects, so that they can re-purpose the material in the future. Several of the French producers interviewed are producing in English to increase their market potential.

The value and necessity of relationship capital was noted by all respondents. In the Internet economy, increasingly, a company's success will depend less on the resources within its walls and more and more on the relationships it establishes with its suppliers and customers. One of the most important currencies of production companies of all sizes is the relationships they must develop and sustain, those with funding agencies, other producers, banks, distributors, and most importantly, broadcasters.

Our clients produce for niche markets, such as the specialty new digital channels. They seek funding from non-traditional sources, and they are prepared to cobble together a large number of funding sources in order to get projects produced. They look to co-ventures and co-productions as a way to make projects.

These producers also possess particular personal characteristics that help their survival strategies, an intellectual curiosity about the world, a passion to tell stories, Canadian stories, and in many cases a commitment to make the world a better place.

CIFVF client producers are the new and emerging producers who form the talent base for the renewal of the Canadian film and television industry in the future. Given the precarious financial environment in which these producers operate, it is imperative that government programs and support continue, including the Canadian content quota system, the points system, and funding to allow the production of Canadian programming.

The increasingly globalized communication environment calls for, at the very least, the maintenance, not abandonment, of government support in the creation of distinctively Canadian content. It is these producers who will tell the Canadian stories, mixing in their own perspective of cultural diversity. These stories, told in such a way, ensure that the cultural fabric of Canada referred to in the Broadcasting Act remains intact.

I would like to thank you very much for your time.

• 0935

The Chair: Thank you very much for your presentation.

Could I turn to Mr. Park, please?

Mr. Alex Park (Vice-President, Programming and Educational Services, Shaw Children's Programming Initiative): Good morning, committee members, and on behalf of the board of directors of the Shaw Children's Programming Initiative and Shaw Communications, we would like to offer our sincere thanks for the opportunity to address you this morning.

Since its inception in April 1994 the Shaw Children's Programming Initiative has provided crucial financing dollars for the development, production, multimedia adaptation, and versioning of some of the finest children's programs in Canada. These funds are available to independent production companies with projects licensed for Canadian private or public broadcast, specialty, and pay television networks. Special project grants for professional development activities have provided much-needed support to our creative community as well. As a major partner in the Canadian broadcasting system, Shaw welcomes its responsibility for ensuring that our children have access to Canadian programs that not only entertain, but also stimulate creativity, imagination, and learning.

Shaw's support for the production of children's programming has three major components. The first was the Shaw Fund, established in 1994. This public benefit commitment was for $10 million targeted to programming for children 7 to 12 years of age. Seventy projects were funded through equity participation, and an additional 50 groups received over $430,000 in grants and sponsorships. This commitment was completed in fiscal 1999.

The second element of Shaw support is the Dr. Geoffery R. Conway Fund. This public benefit commitment was established in 1996 and totals $17.5 million. It is focused on quality productions for children six years of age and younger. Projects receive funds for development, for production, for special projects, for language versioning, and for multimedia development. Funds are committed through an independent board of directors.

When we combine the investment of both of these funds to date, we see that over $23 million has been spent on a commitment of just over $27.5 million, and here's how that money has been spent.

Ninety per cent of the commitment has been spent on equity financing, 7% of that commitment on special projects, and 3% of that commitment on development loans and versioning. This investment has resulted in the production of 2,431 half-hour programs for broadcast on Canadian television. Approximately $4 million remains in this public benefit.

The third commitment of Shaw in the area of children's programming has been the recent creation of the Shaw Television Broadcast Fund. Created in 1998 as a certified independent production fund, it provides equity financing for productions serving children, youth, and family audiences. During the past three years this fund has directly contributed $15.9 million to the production of Canadian television programming, resulting in 91 projects and over 1,170 half-hour programs. To date the total value of the production programming budgets for these shows within our Canadian broadcasting system has exceeded $300 million. The fund is operated as a not-for-profit corporation, with an independent board of directors.

A quick look at funding commitments to date shows the following: 89% of the funds of the Shaw Television Broadcast Fund have been spent on drama; 5% have been spent on variety programs; 4% on documentaries; and 2% on magazine format programs. Our funding priorities are projects that promote positive role modelling, present cross-cultural representations, combine English, French, or aboriginal languages, and provide closed-captioning or described video.

• 0940

In the last eight years all funds under the Shaw umbrella have committed over $39 million in equity funding and provided financial support to over 380 projects. Our combined investment support through these funds has created a situation in children's programming in Canada where Shaw currently provides up to 25% of production financing for children's genre programming. The Shaw Television Broadcast Fund now provides over $5 million annually in investment funds to Canadian producers through the combined resources of Shaw Cable Systems, Star Choice Communications, and EastLink Communications.

Let's take a moment and look more closely at three projects that have generated great success for Canadian producers. The first project is Big Comfy Couch, now beginning its ninth season on YTV and Treehouse, as well as its sixth season on PBS in the United States. This wonderful kid's program is now the second highest rated preschool program on YTV and Treehouse and the fourth highest rated preschool program in the United States. Its retail success is a model for how our Canadian producers can export successful Canadian stories to other markets. Look at the numbers: over 2.25 million toys sold in the United States, 1.25 million videos sold, 850,000 books sold in the United States, this all over a four-year period, generating over $100 million U.S. in retail sales from one series program.

Another project, Incredible Story Studios, was voted the best children's program at the recent Gemini Awards, and was a silver medal winner in the New York International Children's Festival. This program, this Canadian program, is viewed in over 125 million homes in over 30 countries around the world. It is recognized as the most successful children's series sold in the international marketplace—one hundred per cent Canadian stories created by our Canadian children.

Toy Castle was recently sold to PBS in the United States and just completed its launch of a very interesting interactive website. It is now ranked the third highest overall program on Treehouse in Canada.

Canada's young viewers are our priority. With education and media literacy, television can be a positive and enriching experience. Through special project funding from the Shaw funds, and in conjunction with Concerned Children's Advertisers, TV and Me, a comprehensive media literacy and life skills workshop, was delivered to over 800 Alberta educators, touching the lives of over 74,000 students. Through funding from Corus Entertainment, this project is now being rolled out throughout Canada. The jury of peers hosted by the Banff Television Festival brings together student jurors from around the world to debate and discuss the festival's selection of award winning nominees. The Media Awareness Network is dedicated to education and media awareness on the Internet for teachers, children, and youth. All these projects are funded through the children's fund at Shaw.

We are proud to play an integral part in the financing of children's programs, and we are especially proud to support the best in education and entertainment programming for our young television viewing audience. The building of audiences for Canadian stories and for our experiences must begin with the production of quality children's programming if we are to achieve our goals in the Canadian broadcasting system. Only when we are successful in attracting the loyalty, the enthusiasm, and the imagination of our youngest viewers can we ever expect to maintain them as strong and supportive viewers of Canadian television in the years to come.

On behalf of the board of directors of the Shaw funds and Shaw Communications, we would like to thank you for this opportunity this morning.

The Chair: Thank you, Mr. Park.

We started at ten after nine, so we have 25 minutes for questions for this panel. So I hope we can confine ourselves to one question each.

I'll start with Ms. Hinton.

• 0945

Mrs. Betty Hinton (Kamloops, Thompson and Highland Valleys, Canadian Alliance): Thank you, Mr. Chairman.

First, I'd like to address Mr. Park. That was a very impressive litany you just read off to us. I've actually had the pleasure of watching Big Comfy Couch once with a little nephew, and he does love it. You seem to be very independent, so you're only looking at partial funding from the public, and the balance is coming from the industry itself—very commendable.

The other comment is to Mr. Stursberg. This is probably one of the best presentations I've ever seen, very easy to read, and I'm sure I'm going to refer to it many times over the next few months. I really do appreciate the way it was laid out. But I have questions about some of the comments that are in here.

You're talking about aboriginal programming. How many dialects would that include? There is certainly more than one aboriginal language.

Second, are your board of directors paid? I'd like to know how many there are and how much they're paid annually, if they are paid.

And then I go to Robin Jackson—I'll make this quite quick. Unless I misunderstood what's being said here, it sounds to me as if there were a number of companies supported by this fund that are single individuals or have one or two employees. Is it a hobbyist type of a group here?

Mr. Robin Jackson: No.

Mrs. Betty Hinton: No, these are producers. Okay.

I'll leave it at that, and just get the answers, if I could.

The Chair: Mr. Stursberg, would you like to start, please?

Mr. Richard Stursberg: Sure, thank you very much. Thank you for the compliment as well.

To be candid with you, I don't know how many different aboriginal language programs we have financed or how many different languages we have financed, but we'll find out for you and send a note back to the clerk.

As far as the board is concerned, there are eighteen board members, selected on the basis of the schedule I mentioned before. None of the board members is paid, and as I say, the board controls its own affairs, elects its chair, its vice-chair, the officers of the corporation, and is responsible for naming and hiring and dismissing, if necessary, the CEO.

The Chair: Ms. Jackson.

Ms. Robin Jackson: To reply to your question, the statistics I cited are people who are working full-time. Sometimes they have to get another job, but for the most part, these are people who want to be in the independent production community and are trying to earn their living full-time from the projects they're producing.

The Chair: Okay, we'll come back to you.

Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: Thank you, Mr. Chairman.

We are pleased to welcome you here today. I have many questions but I will try to limit myself to a few.

I would like to have some clarifications on the Canadian Television Fund. How is the CTF money distributed? More specifically, how much is spent according to the different languages: Aboriginal, English and French? When you look at the results concerning the various programs which are aired on English and French television, you can see that according to the type of programs, drama and other things, the audience rating for English television is 4 per cent. There are more people watching American series. When you allocate the various envelopes, is that included in your assesment criteria? We know that French television has much more listening time, that it is more profitable. There are also other positive aspects, but I won't mention them all. I would like you to explain how you allocate the funds and which the criteria you use.

Mr. Richard Stursberg: I will start and Louise will probably add a few comments later on.

Regarding the way the Fund is distributed between French Canada and English Canada, one third of the Fund goes to French Canada and two thirds to English Canada. This is the traditional way in which funds have been allocated for a long time, since the Fund was created. It seems to me that we normally have more or less the same shares for cultural industries and for the federal funding funds.

• 0950

As far as the markets are concerned, as I said earlier, those are totally different markets. The nature of the Francophone market is totally different because there is very little competition between the French-speaking market and the United States market. In English Canada, the problem is more severe because there is no language barrier protecting the market.

The distribution, in accordance with genre, of the third of the money earmarked for the French-speaking market is done in a slightly different way from the distribution on the Anglophone side. This illustrates both the historical situation and the differences between the markets.

Would you have some comments to add, Louise?

Ms. Louise Baillargeon (Vice-President, Canadian Television Fund): I don't have much to add. The distribution changes slightly according to the year or the market. In general, the sharing between the various programs is almost identical, with a few percentage points difference.

Ms. Christiane Gagnon: Is it true that a production on the English network costs more than a production on the French network? If that is the case, what is the reason? It seems to me that technology and manpower costs are about the same. For what reason? Is it more expensive to shoot in English Canada than in French in Quebec?

Ms. Louise Baillargeon: We did not say that it was more expensive to produce in English Canada than in Quebec. We said that the English-speaking market had to face much harder competition because of its proximity to the biggest market in the world.

Ms. Christiane Gagnon: I think it is because we deal with a unique content. If we have behaved in the same way towards our own production in Quebec, we wouldn't have watched our TV series as we did. The problem may be in the way the content is produced. If the content was more interesting or more relevant, we could probably reach another audience. And then the competition, not only with the American network, but even within the country... If you don't watch your own programs on TV, it may be because the product doesn't meet your expectations.

Ms. Louise Baillargeon: The Canadian Television Fund's objective is to help the industry produce Canadian programs which mirror Canadians and in which Canadians can see a reflection of themselves. I think that on the English-speaking side, there has been marked improvement in ratings regarding English distinctively Canadian programs since the beginning of the Fund.

Mr. Richard Stursberg: I would like to add something, if possible.

I just want to say that, except for serial dramas, the costs are more or less the same in both markets. The problem is the same for both markets: the costs have to be recovered. It is difficult to do because the markets are so small. The Francophone market is smaller than the Anglophone market. Since both markets are very small, we have to subsidize production in both markets to guarantee some level of quality on television.

[English]

The Chair: Mr. Mills.

Mr. Dennis Mills (Toronto—Danforth, Lib.): Thank you very much, Mr. Chairman.

When I started here 13 years ago—

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): Is it that long?

Mr. Dennis Mills: —I had a thousand families in my riding that were employed in the motion picture industry. Today I have over 5,000 families employed in this industry. So these witnesses here in front of our committee have very special meaning for me, and I wish we had time to be with them, listen to them, and do whatever we, as a committee, can do to support the trajectory of growth they're all on.

• 0955

I have one question, and it goes to Mr. Stursberg. On page 4, where you talk about the threshold test, one of the things you do is analyse the amount of private sector cash that goes into a specific project. As you know, right now the finance department in this town is looking very closely at shutting down the tax shelter mechanism that assists this industry in the up and coming budget. My concern is that this is going to have, if it's done, a tremendous adverse effect on this industry. My understanding, and I need you to clarify this for me, is that some of the cash that comes into the equation that allows you to give a go on a project comes from that tax shelter mechanism. Is that accurate?

Mr. Stursberg: Yes, that's completely accurate.

Mr. Dennis Mills: So if that is accurate, and if that loophole were closed, it could have an adverse effect on the production business in this country.

Mr. Richard Stursberg: Yes, no question. That's right.

Mr. Dennis Mills: So I would need to know from you, Mr. Stursberg, because you control a $250 million fund, and it wouldn't just effect yours, it would effect Ms. Jackson's and Mr. Park's, do you not feel it would be a prudent approach if this committee supported the position that the finance department should in no way, shape, or form make any decisions in this coming budget that would have an adverse effect on the growth of this industry?

Mr. Richard Stursberg: I can tell you with the greatest confidence that—

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): That's a leading question.

Mr. Richard Stursberg: For your riding in English Canada, the fund supports about one-third of the total productions that are made, and of that one-third the fund is an important component and tax credits are an extremely important component. For the other two-thirds, where the fund is not, tax credits are, if anything, even more important.

Mr. Dennis Mills: Exactly.

Mr. Richard Stursberg: So I would certainly agree with you that if there were to be a significant diminution of value, let alone an abolition of the tax credits, in this area, it would be very bad for production.

Mr. Dennis Mills: Thank you, Mr. Chair.

The Chair: That's what you call an objective question, Mr. Mills.

Voices: Oh, oh!

Ms. Bulte.

Ms. Sarmite Bulte: Thank you very much, Mr. Chairman, and I'd like to thank all the witnesses for coming. I'm sorry we have so little time to ask questions.

I'm going to start with you, Mr. Stursberg. As you probably know, the Standing Committee on Finance came down with its recommendation yesterday, and one of those recommendations is to have the fund renewed on an ongoing basis. But one of the concerns from the finance minister that I have heard, and also from the Department of Finance itself, is that originally, this was supposed to be a temporary fund, that the private sector should continue to run it, and that the fund is probably coming to its end. Please help me with the argument as to why this should be an evergreen or a continuing fund. That's question number one.

I notice that you're now allowing the broadcasters to be eligible distributors, and I know that was some concern to the independent producers. Is this what they called self-dealing before?

For the third question, you'll hear from the Screen Actors Guild in the United States that in fact, our fund is helping the runaway productions prosper here in this country. So I would like you to address that for the record.

Mr. Richard Stursberg: The fund helps finance only distinctively Canadian programming, so there are no U.S. productions that are funded by it. They just wouldn't get through the threshold tests. In fact, as I mentioned earlier, it's very difficult to sell distinctively Canadian programming abroad, and that's one of the big financing challenges, unlike industrial programming, where you can get foreign pre-sales.

Second, on broadcasters as distributors, there were concerns raised about self-dealing issues. So what we have agreed upon among the producers and the broadcasters is a series of safeguards that have been listed out and are part and parcel of the arrangements that allow broadcasters to act as distributors, to ensure that they're dealing at arm's-length and there can't be that kind of self-dealing.

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Beyond that, as broadcasters tend to be members of large groups, they have greater financial resources at their disposal, so to ensure that small, unaffiliated distributors continue to be able to bid on projects and properties, we've set aside $3 million this year and $3 million next year to set up a program that will allow them to do this, essentially subsidizing property bids to guarantee that small distributors will continue to function.

Finally, as far as the fund is concerned, while that may have been the original intention, I would make three points.

First, the total number of broadcasters in the system has increased very substantially since the fund was originally set up. As I mentioned earlier, shortly after the fund was set up, there was the launch of the so-called third tier of channels in English Canada, and more recently, just two months ago, we saw the launch of another 40 channels, and there have been parallel launches in French Canada of more channels.

Second, it is true to say that costs, certainly for dramatic programs, have been going up substantially. In fact, at the fund we have increased the cap on the amount of money that can be put into a dramatic production to reflect the changes in cost structure, so that Canadian programs can maintain at least a fighting chance of having the same level of quality on the screen.

Finally, we have, through the course of the establishment of this fund, increased demand dramatically, with both broadcasters and audiences asking for more products.

So for these three reasons, I think it would be very unwise at this point to pull back on the government funding. I think it's fair to say that the government funding has been extremely important in accomplishing precisely what was being described earlier on, realizing cultural, as well as industrial, objectives.

The Chair: Ms. Lill, and then Mr. McNally.

Ms. Wendy Lill (Dartmouth, NDP): Thank you for coming.

Our goal here is to ensure that through a broadcasting system that is public, private, and community in nature, Canadian programming is created that enhances national identity. I'm tremendously in favour of public support for the arts, so that's where I'm coming from.

I'm very concerned about some figures I've heard from the Writers Guild of Canada, which represents the people who are creating Canadian programming in this country. Apparently, over the past three years there's been a decline in indigenous drama series, both hours and half-hours, and the figures are not high even in 1999. There were 12 hours of Canadian drama in 1999, this year there are five hours of Canadian drama.

Under the six out ten points benchmark used by the CRTC and CAVCO projects can meet their CanCon requirements by using Canadian directors, leaving them free to staff their story departments with non-Canadian writers. Twenty per cent of writing contracts on export series went to Canadian citizens resident in Canada, the rest are out of country, they're American writers. I'm very discouraged by that fact. We are putting in enormous amounts of money—you talk about over $200 million in the CTF—but we are not seeing Canadian writers doing the dramas. We are not seeing the Canadian content I believe Sheila Copps talks about all the time. She talks about the need for us to tell our own stories. Well, where are the writers who are telling the stories?

A final remark I heard from the Writers Guild was about the Canadian Film Centre. It's our major film school, it's training writers, but there are no jobs, and that's what they are saying. This is what the organization that represents the writers is saying. American writers are doing six out of ten content productions. So we've got a big problem here, and we're eager to solve that problem and make sure we're addressing it in our study. I'd like you to address it right now.

Mr. Richard Stursberg: I am happy to talk to that. I think it goes back to an issue I mentioned at the very beginning of my presentation. When people speak about Canadian programming, they mean one of two different things. They may mean Canadian programming that meets the CRTC and CAVCO tests, i.e., a minimum of six out of ten points. Those are listed for you on the first page. Screen writers, as you see, only attract two points, so you could easily make a Canadian program that doesn't have a Canadian screen writer and still hit the CRTC and CAVCO tests.

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In the case of the fund, that cannot happen. For the fund to finance something, the screenwriter must be Canadian. In fact, we've gone a little bit further with respect to this matter recently. We used to give bonus points if it was based on a Canadian novel or a Canadian book, and now, if it's an original Canadian screenplay by a Canadian writer, they get the bonus points as well.

The more important question I think is this. What we really have is a disconnection, because we have the CRTC with one system, and we have the Canadian Television Fund with another system. The commission recently, about two years ago, changed the rules, and they did so in such a way that we were a little concerned it would diminish demand for drama, particularly in English Canada, not in French Canada. The economics of the new rules worked in such a way that you would be better off in most circumstances, probably, not to do drama than you would have been previously, let alone to do distinctively Canadian drama. In fact, it is true to say that we have seen some fall-off with respect to demand for drama in English over the course of the last couple of years. Indeed, that's one of the reasons we've reoriented the envelopes to diminish the amount of money going into drama and increase the amount of money that going into documentaries and kids, along the lines I mentioned earlier on.

It is a fundamental question how we make sure we get these two things in sync. I don't want you to misunderstand me on this. I think industrial Canadian programming is extremely important, it has to be done. Distinctively Canadian programming is also extremely important, but the trick is to try to make sure the fit we get between what the commission makes by way of rules and the rules that are made at the fund makes sense for the system as a whole in both cultural and industrial terms.

The Chair: Mr. McNally.

Mr. Grant McNally (Dewdney—Alouette, PC/DR): Thank you, Mr. Chair.

Mr. Park, I'm going to have to confess that I'm not very familiar with the programs. I congratulate you on your success. Can you tell me if the programs that are doing so well in other countries are Canadian stories?

Mr. Alex Park: Yes, completely, particularly in the case of Incredible Story Studios. That's quite an interesting project, where the stories that are written and created actually come from discussions the producers have with students in schools across the country. They actually go out, and we fund workshops for the writers and producers to meet with kids across the country in schools. The stories that are generated out of that actually come directly from those students. So it's a very grassroots project.

Mr. Grant McNally: So we're doing well, with minimum subsidy and maximum impact in other countries, in selling Canadian stories, which I think flies in the face of Mr. Stursberg's argument that we need higher subsidies to compete against American drama in one regard. I guess what I'm asking is, how can we use that same model with Canadian drama to do better in international markets?

Mr. Richard Stursberg: They are very different genres actually. In many cases kids' programming, especially for very small children, is set in a non-specific environment that travels extremely well internationally. In fact, it's fair to say that Canadian kids' producers do do very well internationally.

That's not the case with Canadian drama, where it is a requirement of the fund that it be distinctively Canadian. Not surprisingly, if it's distinctively Canadian, people in other countries are not that interested in it. But that's true only of the one-third that is made from the fund, as I mentioned earlier. Many of the other two-thirds, the industrial productions, do travel very well internationally and get sold internationally, and indeed, the premise of their financing is in many cases foreign pre-sales. Those would be getting the six out of ten I was talking about earlier on. Industrial productions do well, and they're designed that way.

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For the distinctively Canadian stuff, you do get to a real tension. If you say, we really want it to reflect the country, inevitably, you're saying, we're going minimize the likelihood of making foreign sales. And if you maximize the likelihood of making foreign sales, inevitably, you make the product more anodyne.

Mr. Grant McNally: I have a last question, Mr. Chair, to challenge that assumption somewhat, in that high—

Ms. Louise Baillargeon: Can I answer...?

Mr. Grant McNally: No, I'm going to ask a question first, and then you can answer.

Ms. Louise Baillargeon: Well, it's just about this—

Mr. Grant McNally: Just one more question, and then you can answer.

I want to challenge that assumption a little bit, in that I think high-quality programming is watched by individuals in the international market more than maybe ever before. You disagree with me. If we're going to continue to fund at high levels a program that has a harder time competing with American programming that has huge input, I'm asking you to convince us why we should continue with that.

Mr. Richard Stursberg: I'll just start, and then ask Louise to comment.

First, I think it's a misunderstanding to believe the Americans import a lot of foreign cultural product. They don't. It doesn't matter what you're talking about, French or Italian or Greek or Canadian or Turkish, they don't watch foreign television programs, they don't watch foreign films. The American market is the biggest and most natural market for English language products from Canada, because we speak with a comparable dialect. The American market is, I think it's fair to say, a relatively parochial market in its taste for mass-market products. That's why, if you want to penetrate that market, you very often have to make productions that are more industrial in character and appear to be set in the United States or in some never-never science fiction land. That's the first point.

The second point is that we've seen international sales of dramatic programming falling off over the course of the last couple of years beyond the United States markets. There are a number of reasons for that, but they have become more difficult to sell internationally.

Louise, do you want add something?

Ms. Louise Baillargeon: I just would like to add that with most programs financed by Shaw, we're very happy to be alongside them in the financial structuring of the program also. Shaw is not the only one involved in the children's financing, we're there also.

Mr. Richard Stursberg: I dare say we're in pretty well every one of them, right, Alex?

Mr. Alex Park: Yes, I think probably 90% to 95% of the projects actually have some form of CTF funding as well.

Maybe I could make another comment particularly on children's programming, because it is a very specific genre, and there are things that happen in children's programming and the way that programming is produced that actually enable it to sell much more effectively in international markets. As an example, take the amount of animation programming that's currently being produced in this country. We're one of the best animation production industries in the world. That product travels very well internationally because it's relatively easy to version and the stories generally tend to travel quite well. So some of it is just a result of the type of content and the type of production that's actually being done. And that's actually increasing quite dramatically, the amount of full animation programming for children.

The Chair: I will close up with brief questions from Mr. Harvard and Mr. Bonwick.

Mr. John Harvard: I have only one question. It's for Mr. Park.

Mr. Park, you were mentioning in your presentation that your funding priorities in children's programming include positive role modelling and cross-cultural representation. What I want to know is how you measure your successes. In other words, are we actually, as a result of your kind of programming, raising a whole different kind of generation of children?

Mr. Alex Park: Two of the main tenets of both of the funds, the Shaw Television Broadcast Fund and the Geoffrey R. Conway Fund, are laid out very clearly in the guidelines on how we fund those projects. We make it very clear in all of those that we will not fund projects where we do not believe adequate role modelling is actually being lived through in the characters or the story lines. Again, our independent board of directors take a very active role in truly looking at something as simple as what actually moves a protagonist in a story to do something. What are the motivations behind that, and are they appropriate? Are they appropriate in respect of sex stereotyping, the amount of violence?

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Our belief is that the two main Shaw funds currently are focused on producing programming that absolutely touches Canadian children in a very specific way and Canadian families in a very specific way, and our board of directors focus very clearly on making decisions, both at the storyline level and at the production level, to ensure that those values are clearly on the screen.

Mr. John Harvard: Mr. Chairman, maybe I could put much the same question to Mr. Stursberg. I don't mean this in the negative, but when I listen to Mr. Park, I hear him saying these measurements are carried out even before the program goes to air. I would be more interested in measurement of the impact on the children after they have been watching these programs for a number of years. What would you have to say about this, Mr. Stursberg?

Mr. Richard Stursberg: We don't involve ourselves in those kinds of decisions or measures. Essentially, the broadcaster triggers the fund. A producer has a project and takes it to the broadcaster; the broadcaster says yes, I will sign up for that, pay the licence fee to you to get it; and then they come to the fund. So we don't involve ourselves in judgments about the content of these products; that we leave to the broadcasters.

The Chair: Mr. Bonwick.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): This is to Mr. Stursberg, and I'll go to Mr. Park right afterwards.

Mr. Stursberg, are there any requests from the industry to change the structure or the funding formula to better accommodate the industry, when you're looking at the funding formula, rather than looking at hard dollars, perhaps in-kind service from the private sector, anything that would make it more viable in the private sector?

Mr. Park, I enjoyed your presentation, and I want to thank you for the commitment your organization has made. Are there any conditions applied in your funding formula to dictate that Shaw or any of its affiliates must be used as the delivery mechanism when supporting these children's programs?

Finally, Mrs. Jackson, do you monitor the success of your funding, for example when you talk about one-person employers, two-person employers? Is there any way of monitoring whether or not they incurred financial and perhaps employee success, increasing the size of their operation?

Mr. Richard Stursberg: We get requests all the time for people to throw soft stuff into the financial structure, and our answer is no. It must be cash.

Second, what we try to do, as I mentioned at the beginning, is to structure the decision-making apparatus in such a way that we maximize the amount of private cash coming into each production. And we want to do that for a couple of reasons. One is that we think it's a useful market test—do other people really believe in it?

Mr. Paul Bonwick: Perhaps you didn't catch my question. I wasn't talking about soft stuff.

Mr. Richard Stursberg: Okay.

Mr. Paul Bonwick: I simply used it as an example. What I asked you was, are there any requests from the industry that suggest your funding formula should be different?

Mr. Richard Stursberg: Sure, absolutely. We get millions of requests all the time.

Mr. Paul Bonwick: Is there one that would be of use for the committee?

Mr. Richard Stursberg: Yes, sure. We've had a lot of requests to change the genre structures. Documentary producers prefer to have more money in documentaries than drama producers do. We've had some discussions about how to deal with interactivity, and so we've made some changes to allow people to put websites in as part and parcel of the production, so long as they're not there just for promotional purposes, but are actually integrated in the story line. We get suggestions with respect to financial structure, all aspects of financial structure, and how we look at it, how we count it up. We get proposals with respect to changing the definition of the genres.

We're awash in these proposals all the time, and the way we deal with it is that every year we redo the guidelines that determine how the fund works. We attempt to do two things. One is to take stock of what worked and what didn't work the previous year, and the other is to take stock of what we've heard from the industry. Then we try to make changes that would be sensible under the circumstances.

The Chair: Ms. Jackson, I think you were asked a question.

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Ms. Robin Jackson: Our contract stipulates that for two years after the completion of a program the producer must report to us on distribution revenues and copies distributed, and also prizes won, because that's always a very significant factor.

As for the growth of the companies, no; you're looking at 50% of the staff right now, and it's very difficult. We did a survey this summer, which we submitted to you, about the growth patterns, but we don't have the ability to do that on a regular basis. I know you don't want to get into it, but it's a difficult situation for small companies to make the next jump into another area. That's a whole other area of discussion. Trying to go from small to a larger size of small is quite difficult.

The Chair: Mr. Park, briefly.

Mr. Alex Park: I did just want to respond to the question.

When we look at the Geoffrey R. Conway Fund, the genre for that is programming for pre-school children. So we obviously fund projects with any broadcaster that actually is in the business of producing and distributing children's programming in that particular genre. When you look at the Canadian broadcasting system, in many instances that gets limited simply by the number of television stations licensed to broadcast that type of program. I won't say a majority, but a number of the programs we fund air on a number of channels. In many cases it does happen to be YTV and Treehouse, because they're actually licensed to broadcast and produce and distribute children's programming.

On the Shaw Television Broadcast Fund side, we are actually licensing programming and projects for all Canadian specialty and broadcast licences. Our only request would be that we be inundated with requests for funding for the production of children's programming in this country. We would welcome those coming from any segment of the Canadian broadcasting industry.

Mr. Dennis Mills: Mr. Chair, on a point of order, I wonder if, in light of this testimony we have listened to this morning, we could put a motion on the floor to suggest that you write a letter to the Minister of Finance urging that he maintain the status quo with all instruments that affect this sector until our study is complete. I wonder if there would be anybody who wouldn't support that.

The Chair: Mr. Mills, we need unanimous consent now to have the motion taken today. Is that what you're asking for?

Mr. Dennis Mills: Well, if there's not unanimous consent, I'll give the 48-hours notice, and we can deal with it from there.

The Chair: All right.

Is there unanimous consent for this to be looked at today, or do members prefer to have the usual delay?

Mr. Dennis Mills: We're running out of time.

The Chair: Mr. Bonwick.

Mr. Paul Bonwick: With all due respect, Mr. Chair, I think what we're doing is circumventing the agenda at this point in time. This is a lengthy debate issue Mr. Mills is proposing. We're suggesting that the minister respectfully leave Heritage alone because the committee has undertaken a certain responsibility. Well, every committee could do that and tie his hands. I'm suggesting it would be a lengthy debate on whether or not we should be moving in that direction. I certainly wouldn't support it on 30 seconds notice.

The Chair: That makes it clear.

Mr. Dennis Mills: Mr. Chair, for clarification, members should know that the finance department right now is threatening to shut down the tax shelters that affect 80% of the motion picture industry in Canada. I think we should know that if we don't stand up and speak for this sector right, it's in jeopardy of being affected in an adverse way. We can discuss it at another time, but I think everyone should be aware that on December 10, if that happens, we're all going to get one hell of a shock.

Thank you.

The Chair: Mrs. Lill—we don't want a long debate now.

Ms. Wendy Lill: No.

The Chair: We've got—

Ms. Wendy Lill: I actually have another issue. I'm sorry. I'd like this member to finish, and I will say something then.

The Chair: Well, I think he is finished.

Ms. Wendy Lill: There's just one request I would make to the CTF. I am concerned about the fact that we are seeing a reduction in Canadian drama. I'd like to see if we could follow that. I'd like you to provide us with some numbers on how much of your $200 million fund is going into these hours of Canadian drama, and something on why it is that we're not seeing more than five hours of Canadian drama this year.

Mr. Richard Stursberg: I can tell you precisely how much money.

The Chair: We won't have time now. If you could just provide the figures to the committee through the clerk. Is that possible?

Mr. Richard Stursberg: Sure.

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The Chair: Because we won't have time right now. So if by any chance—

Mr. Richard Stursberg: I was just going say it's right here on page 3.

The Chair: Does that satisfy you, Ms. Lill?

Mr. Richard Stursberg: I'll explain it, and we'll send it to the clerk in detail.

The Chair: Yes, okay.

In regard to Mr. Mills' suggestion of a motion, is there unanimous consent to take this motion right now, or would members prefer to have the usual delay of 48 hours before it is discussed? What is your choice? Let's move on. Is there unanimous consent?

[Translation]

Ms. Christiane Gagnon: No, Mr. Chairman. We are coming back this afternoon and we could discuss it then.

The Chair: We will not be able to discuss it this afternoon because that meeting is only for the estimates.

Ms. Christiane Gagnon: When the majority presents a motion here, it is automatically adopted.

The Chair: No, no, Ms. Gagnon. I was explaining that you have the right to ask that we respect the 48 hours' notice. If you don't give your consent, there will be a 48 hours' delay.

Ms. Christiane Gagnon: Very well, I'd rather wait 48 hours.

The Chair: Agreed.

[English]

Mr. Mills, it will be debated.

I would like to thank the panel very much for appearing. It's been extremely useful to us. Thank you.

I now call on the Alliance of Canadian Cinema, Television and Radio Artists, ACTRA, the Canadian Media Guild, and the Newspaper Guild of Canada. Mr. Gary Neil is a policy adviser for ACTRA.

[Translation]

Ms. Lise Lareau is the President of the Canadian Media Guild and Mr. Arnold Amber is the Director of the Newspaper Guild of Canada.

[English]

Mr. Neil, the floor is yours.

Mr. Gary Neil (Policy Advisor, Alliance of Canadian Cinema, Television and Radio Artists): Thank you very much, Mr. Chairman, members of the committee.

I'm delighted to be here on behalf of ACTRA. ACTRA is a union that represents professional performers, 18,000 members who work in films, television, sound recordings, and other programs that entertain, educate, and inform Canadians and global audiences. Members of ACTRA work in every province of the country, in every region, and work primarily in the English language.

We're delighted to be here today, and we know it's a propitious time for this committee to be undertaking its work, but we share some of the concern about the urgency of making some decisions, because there are a number of trends in this industry that are very worrisome, which I will outline in a minute, and I think it is appropriate for this committee to be getting on with its review of the broadcasting system.

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We note that there are a significant number of issues before you, technology, convergence, ownership, CRTC rules and regulations, the Broadcasting Act, and so on. ACTRA is obviously prepared to work with you on all these issues, but today I want to make three points, if I could. First, I want to talk about the trends in production. I thank Mr. Stursberg for very delicately raising some of the issues that perhaps I'm going to raise in a more direct fashion.

Foreign service production in Canada in English between 1999 and 2000 increased about 35%. The average annual increase in foreign service production has been over 8% for close to the last decade. Canadian content production in English declined between 1999 and 2000 by close to 11%. The decline continues. In absolute terms, foreign service work in the year ending March 31, 2000, accounted for roughly $1.5 billion. Canadian content work in English was only at $1.2 billion. Of course—and this is partly what Mr. Stursberg was referring to—some of what we call Canadian content production, some of that $1.2 billion work, is actually service work masquerading as Canadian. Because of the 6 out of 10 points requirement, there are some productions that can easily achieve that level and thus qualify as Canadian content and obtain the necessary benefits and CRTC recognition as Canadian, but really everyone in the industry knows they are driven creatively and financially from south of the border. So the real figure and the real balance as between Canadian content work on the one hand and foreign service work on the other hand is actually much different from what those figures would indicate.

But more worrisome is the trend line—and this is where I think Ms. Lill's point is very significant. Our colleagues in the Writers Guild of Canada liken themselves to canaries in the mine, because what they're working on today is what the members of ACTRA will be working on next year or the year after that. Their members are working at the moment on substantially fewer drama productions than they were working on two years ago. So the decline in production that we already see is merely continuing.

Now I have a few words about drama. Drama is the most culturally significant programming. It's the most watched form of television programming, it's the most culturally significant form of television programming, and that's an area of vital concern to the members of ACTRA, even though the members of ACTRA work in all genres of production. So when Richard Stursberg talks about how they have decreased their commitment to drama production as a result of the changes in the market, that's a very significant statement, highlighting the significant decline in drama production.

So what do we do about this? In ACTRA's view there are two things. First, we need a continuing commitment to public support for Canadian content production. Second, we believe it's time that we move to a system in which we redefine a Canadian program as being one that is fully produced, created, written, performed, and directed by Canadians. In ACTRA's view, it doesn't have to be thematically Canadian—Canadians ought to be able to tell whatever stories they want—but it has to be created, performed, and directed by Canadians. The Canadian Television Fund is already there. ACTRA's view is that it's time we shifted the other support measures in a similar direction over time, not tomorrow, but gradually.

I want to talk as well briefly about the World Trade Organization—and I thank Mr. Stursberg for highlighting what I call the Canadian cultural dilemma. One of the members of the committee asked why the CTF needs to be permanent. Well, of course, it is because there is a permanent imbalance in the industry in Canada as compared to our neighbour to the south. He highlighted the fact that it costs $2.2 million an episode to create The West Wing, and yet Canadians enjoy access to The West Wing. We're the most open market in the world for the cultural products of other people. If we're to compete with that, we have to find ways to level the playing field, begin to approach the production values that are achieved by the very high-budget U.S. productions.

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In the feature film industry—I realize we're talking about broadcasting, but feature films are a very important component of this—one U.S. blockbuster movie has a budget greater than all the Canadian-content English language movies produced in Canada. The promotional budget, for God's sake, for Harry Potter and the Philosopher's Stone is probably approaching the complete budget of all the English language movies in Canada. That's why it has to be permanent. That's what I call the Canadian cultural dilemma. It's not just in broadcasting, it's not just in film, it's in all the cultural industries. The same argument exists for the book publishing industry, for the magazine industry, for the sound recording industry.

So we need public programs, but our ability to maintain those public programs, as I think all of us would have to grant, has been under attack by the trade agreements Canada has been signing over the years. We lost our magazine case before the World Trade Organization a few years ago. We had the case of Country Music Television and New Country Network, where the U.S. basically forced us to back away from the CRTC rules and regulations as a consequence of our bilateral agreements.

What happened two weeks ago in Doha, Qatar, concerns me greatly. I was there. The WTO has decided to launch a new round of trade negotiations, and their agenda is a very extensive one that will have a negative impact on our continuing ability to develop, implement, and maintain cultural programs and policies. We know that the so-called built-in agenda from the Uruguay round involved new discussions under the General Agreement on Trade in Services, new discussions under the Trade-Related Aspects of Intellectual Property Rights, TRIPS, agreement, and there are elements in there that concern the cultural community. But more significantly, the WTO is launching new negotiations on investments and competition policy, and I want to talk just very briefly about investment.

I think many of you might remember the concerns the cultural community and others had about the so-called multilateral agreement on investment that was being negotiated in 1998-1999 at the OECD. What we have with the WTO decision of two weeks ago is the rebirth of the multilateral agreement on investment. It's merely been shifted over to the WTO. The WTO is launching new negotiations on investment. If the multilateral agreement on investment that was publicly released in about 1999 had been implemented, it would have had devastating consequences on our ability to support cultural policy. Frankly, your work would be irrelevant if that agreement had moved forward. There are no parameters set for the WTO's launch of investment negotiations. We could easily see all those elements from that proposed treaty moving forward at the WTO level. I think that's a matter all of us in the cultural sector—and I think this committee as well—need to be aware of, need to begin to research and investigate, so that we can attempt to inject the cultural concerns into the negotiations.

With those three points, Mr. Chairman, I thank you, and I'm obviously prepared to answer any questions you might have.

The Chair: Madame Lareau.

Ms. Lise Lareau (President, Canadian Media Guild): Like Gary, I'm here on behalf of a union, a union of producers and reporters, primarily at the Canadian Broadcasting Corporation, some at TVOntario, the provincial public broadcaster in Ontario. Most of what you see and hear on the CBC, and on TVO for that matter, is programming created by our membership. We represent people dedicated to public broadcasting in this country.

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We submitted a brief to you before the beginning of the in-person hearings called “Public Broadcasting in a Private Age”. I trust you've seen it. We sponsored a national forum on that topic in January to explore how public broadcasting should be faring in light of all the changes you're examining over the next year and a half.

To my right is Arnold Amber, who is the head of the Newspaper Guild of Canada, a union with which we're affiliated. We did the brief jointly. We're here together to show you new ways to think about public broadcasting in this milieu that you're studying, and frankly, at the same time to show you how the fund you've been hearing about should be fine-tuned to enable it to, in our view, better serve Canadians, provide more Canadian programming. And we'll get to that.

The fact is that while the big private companies are merging and converging—and you're hearing a lot about that at this committee and in the media—and while specialty channels are coming on board by the dozens—and you're hearing a lot about that here too—it's easy to lose sight of public broadcasting in this environment. But we're here to tell you it's back. It's renewing itself around the world. At our forum earlier in the year we heard from the management consultants McKinsey, an international consulting firm, which did a study of public broadcasters around the world. It found that internationally, there are two ways to promote cultural content, which Gary Neil spoke about and which you're all dealing with here.

There are two ways to promote cultural content in any country like this. One is to regulate the private sector, we've seen that. The other is to fund and promote a strong, healthy, and efficient public broadcaster. McKinsey found that there's an actual correlation between a strong public broadcaster and the quality of the broadcasting in the overall system in each country it examined. It examined dozens of western European countries and nations around the world. Those findings, by the way, are in our brief.

I would say too that the need for a public broadcaster in this environment is twice as great now, with all the new channels, than when the public broadcaster in Canada was founded. With all the noise about all the channels, the public broadcaster is the one place where programming can be created not because it's profitable, not because it sells more commercials, but because it meets a cultural need, because it provides a cultural meeting place, because it's in the public interest. There needs to be a single place—we would argue that single place should have several platforms, but that's a bit separate from this discussion. There need to be really several places that serve Canadians and not advertisers, not company bottom lines, where you can develop new trends in programming and work in the interest of Canadians.

I would also add that it's more important now, because of the media mergers you've been seeing. Now in this country we're dominated by three corporate families that have a lock on points of view in the news media. We need a service now that is national, that is independent of specific interests, and more importantly, is a place where there can be a voice of diversity in the cultural domain, and not the commercial domain.

What McKinsey and others have shown us from around the world is that most cultures, when faced with the influx of programming we've been hearing about this morning, have invested heavily in public broadcasting as a means to give a voice to their people and to protect their own culture, a direct means to do these things. You'll hear from my colleague Arnold Amber that in Canada over the past decade the focus of the funding, the focus of all the rules we've been talking about today has not been on the public broadcaster, and we believe this has hurt programming overall.

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With that, I will turn it over to my colleague Arnold Amber.

Mr. Arnold Amber (Director, Newspaper Guild of Canada): Thank you very much.

One of the values of getting old, besides having faced the alternative, is that you don't have to study the history, you actually have lived it. With television in Canada, I've lived it all. I remember very well, in those first days of television in Montreal you put your nose up to a store window where they let the sound come out beyond the window and you saw these murky little pictures. Of course, at that time one had Radio Canada or the CBC in Montreal, and for many years there was no doubt that this was about “public broadcasting”, although it was a public broadcasting one of whose main tasks was to broadcast American programming.

Over the years things have changed. With committee study, I am reminded, again having lived through it, of the Fowler commission back in the sixties. I remember—and I paraphrase it—that one of the points of the Fowler commission was that broadcasting policy should be all about the programs, while the rest is merely housekeeping. I wish he were here today to find out that it's all about the housekeeping, the money, the deals, the funds, and very little discussion is engaged about the broadcasting.

My colleague said we are interested in public broadcasting. I have been producing television programs at the CBC for a long time. In addition, I am the chair of the Committee on Public Broadcasting of the International Federation of Journalists, an association around the world of 450,000 people. So for me, public broadcasting is the central issue about broadcasting and about television and radio.

I think the issue your committee must be faced with is that of a national public broadcaster. Our problem now is that the pendulum from those early days I experienced in Montreal has swung too far. When we consider the rewriting of a Broadcasting Act that should serve us well during this generation and this century, one of our recommendations, amongst three fundamental recommendations we made in our brief—and I would like to draw your attention to it—is that the act must state that CBC-Radio Canada must remain a fundamental and significant player within the Canadian broadcasting system as it evolves. We are very concerned that in the mass of other players, whether they be independent producers or giant broadcast owners, even if they are not really broadcasters, such as Bell Canada, which now owns CTV, at the core there be an institution that is committed solely to a furtherance of the culture of this country. As the zillion-channel universe exists, this is very important.

Second, we recommend that all funding mechanisms, because so much about the business now is business, be revised, reviewed, and analysed by this committee to determine whether they are the best use of public money for the intended good. I was surprised and upset yesterday when I read the National Post. There was a story about the recent shift by one of our major producers, Alliance Atlantis. As you know, a couple of weeks ago, I think it was, or maybe last week, Alliance decided it would cut down on drama spending.

The Chair: May I interrupt for just a minute, Mr. Amber, to advise members that there's a vote call. It's a 30-minute bell, so there'll be a vote 30 minutes from now. It will be at about 11:20, so I guess around 11:15 we'll have to leave the room.

Sadly, I would advise the last panel that it looks as if we are going to be in the House for the vote right through to very close to 12 o'clock. So unfortunately, we'll have to reschedule your appearance. I'm very sorry, but these are events we can't predict—they happen to us in parliamentary life.

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Mr. Amber, you can resume now.

Mr. Arnold Amber: If I may make a comment, for many years I was the producer of CBC news specials, and while you were watching your important hockey game or whatever, suddenly it said, we stop this program for a special news coverage—that was me doing that. So it's only fair that as I'm in the middle of my speech, I am suddenly cut off by events.

As I was saying, the funding mechanisms must be reviewed. Yesterday there was a story in the National Post following up on the story that Alliance Atlantis was cutting back on drama programming. It seems to me that this is at the heart of the issue about public broadcasting and public money that goes to private interests. The story in the National Post, both times, said that the company was shifting its aim, it was getting into other forms of securing licences and going into straight broadcasting, rather than production of drama.

Right now, the way things are set up, the CBC, as the national public broadcaster, relies exclusively on independent private producers to make the programs that exist in drama, entertainment and variety, and some children's. We think it's incumbent on this committee, and for the act, to take another look at how the best use of money is made to achieve the cultural goal. I think there has to be a separation between the cultural aims of Canadians and the industrial aims of Canadians.

Third, I would like to say that one thing that never gets mentioned around the table is CBC Radio. It is surprising that in the Broadcasting Act there is no mention, explicit note, of the special role of CBC Radio. Just as Dennis Mills wants an immediate motion made to the finance minister, I think at the same time there is ample reason to believe there would be unanimity on the idea of securing a place in the act for that special role CBC Radio and Radio Canada make to our country.

Finally, because of the recent history of the CRTC, the act must include a provision that CBC-Radio Canada be allowed to grow as the spectrum of programming grows in this country. It was one thing, when there were very few broadcasters in television, broadcasters who only appeared over the air for the CBC, to basically have one network. You heard about 40 digitals, you know there are another 30 specialties. Right now the position at the CRTC says CBC-Radio Canada, by and large, is not entitled to, will not be granted, any licence to grow. I tell you, ladies and gentlemen, throughout the world, every major public broadcaster in his or her own country is allowed to grow as the spectrum grows. So if there are specialty cable channels, the national public broadcaster is allowed to be there. If there are digital channels, they are allowed to be there. It seems to me that this is another issue we must be able to act upon if the Canadian Broadcasting Corporation, the national public broadcaster, is to maintain that fundamental role.

Let me go to the issue of funding. As you heard from the people who dispense the money today, there are many rules and regulations about the fund. The rules and regulations about the funding for programming continually change. It is our view that if CBC-Radio Canada are to remain integral to the broadcasting system, to be foundation markers in the broadcasting system, they must be not only the deliverers, the distributors of programming, they must also be able to produce their own programming. Right now, under the conditions of the fund, the CBC in many respects is hampered. Let me give you an example.

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What do you do when Alliance Atlantis decides it is going to cut back on drama? If you do not have the capability in house to make your own dramas, what do you do? How do you meet your mandate if you are relying solely on outside sources to make the programming you want? For example, one of our most successful programmings, both in English and French, on Radio Canada and CBC, has been the recent history project. This was made with internal money, because nobody else would take the risk to do it. Every study of public broadcasters around the world says one of the roles of the public broadcaster, because it is not motivated by bottom line, is to take the risk on broadcasting, to take the risk on programs broadcasters believe people want, need, and will watch.

We have been very fortunate that over the years, despite the economic restraints on the CBC-Radio Canada, they have “Canadianized” their agenda as much as possible. But the issue is that the present rules of the funding limit the ability of the CBC to do this, because they have to find people to make the kinds of programs they want to have in their schedule.

Another issue that is very fundamental to them is that the way the funds are set up, there is no money and no ability now for the CBC to restore in-house production, to do its own productions. We think there should be adequate funding to do that. And that turns me to the next point.

Funding for the CBC must be in the act. It must be stated in the act that funding for the CBC must correspond to its mandate. The CBC has the widest mandate of any broadcaster in this country, but there's no sense in writing up mandates if you don't supply the funds to fulfil them. There must be something done on that area.

Finally, let me turn to the issue of governance. Mr. Stursberg, when he was here this morning, talked about how well his board works. And you notice that he said the board members meet together, they select their officers, they select their CEO; he even used the expression, they hire and fire their CEO. Just as Fowler may have been right in the sixties that it was about broadcasting, the rest was housekeeping, and just as I am right now to say, no, it's about broadcasting, housekeeping, and money, I think the process whereby Governor in Council, the government, appoints somebody to be the CEO of this corporation, and people are selected for the CRTC in various ways that one doesn't quite understand—certainly there is not an open method of selection—must come to an end.

If we are talking about an industry that employs 5,000 constituents in Dennis Mills' riding, an industry that has billions of dollars, the regulatory body, the CRTC, must be selected in an open manner. I recommend that you read our brief. We go to great lengths in discussing governance, the way governance should be set up for the CRTC, and the way governance should be set up for Radio Canada. It's the least we owe the Canadian people to say that to defend your culture in this country, the regulatory body will be selected by an open method. We also owe it to them to say that in this country, for your national public broadcaster, the people who run and make policy will be selected in an open fashion as well.

Thank you very much.

The Chair: Thank you very much, Mr. Amber.

I would like to mention to members that for the last panel, both institutions came in from Toronto. We can have this room till 1 o'clock, and rather than reschedule them, in fairness to the witnesses who have come a long way, I was wondering if members would agree to come back after the vote so that we can hear the panel.

Mr. Dennis Mills: Mr. Chairman, some of us have conflicts with other meetings, and we'd have to cancel them as well. Is there some way we could have the witnesses now on the record and submit questions of them in writing and get them back?

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The Chair: As there's just barely 15 minutes left, it wouldn't be fair.

Ms. Lill.

Ms. Wendy Lill: Just to make things a bit more complicated, what we have right here are the representatives from the major Canadian content creators in the country. So we really want to question them at length, listen to them, and absorb what they have to say, and we can't do that with those bells ringing—we have 15 minutes. So I guess I'm saying we have a couple of things we have to do now. We have to somehow reschedule this event, and we have to figure out how we can hear the other group as well.

The Chair: There are two choices. We can come back at 1 o'clock, and I understand that members have got commitments and there wouldn't be enough to come back. If we reschedule, we'll just have to see if we can fit it in one other day of the week. It will have to be so. The schedule is so crammed up that it will have to be a Wednesday or something like that, we have no choice.

Ms. Wendy Lill: I'm willing to come back after the votes.

The Chair: I think there are a great number who can't come back after the votes, unfortunately.

We've got 15 minutes now, and we can just start the questions to these members.

We'll start with Mr. Abbott, and we'll adjourn at 1:15 sharp.

Mr. Jim Abbott: I'd like first to thank the witnesses for being here today, and I'd like to find two pieces of common ground.

First, I agree with the general thrust of what Mr. Amber was saying about the governance issue. I think that's very important for this committee to look at, and from my understanding of what you were saying, I think I'm in agreement with that.

Second, I would also like to make note of the two comments, I believe, about CBC radio, French and English, cherished services, as on page 25 of your submission. The Canadian Alliance is fully in support of continued 100% public funding of CBC radio. We're referring specifically to CBC Radio One, we want to take a look at Radio Two, but we're also specifically referring to Radio Canada International. We think there are some issues in the governance of Radio Canada International that are just begging to be looked at at this particular point.

That having been said, I'd like to go the areas where I believe we have some significant disagreement. We're looking at the fact that well over $900 million is appropriated from Canadian taxpayers' pockets in support of the CBC. If we deduct approximately $250 million dollars for CBC radio, that means that something like $700 million of Canadian taxpayers' money is presently going into CBC television. Is it not true that people are making choices of what they want to watch? What service does CBC television provide that is not provided in a multichannel universe by Bravo, by Showcase, by the History Channel, by the Discovery Channel? What are you doing that isn't already being covered within the broad spectrum of information that is available to people, particularly in light of the fact that people are making choices?

Ms. Lise Lareau: One of the reasons we're here today is that the CBC is hampered from doing much of anything. I don't know if Arnold had time, because of the bells and everything else, to go into this, but for the CBC to tap into the Canadian Television Fund, the primary funder of programming in this country, it has to commission an independent producer to do it. Right there you're losing a little bit of control over your project. You produce the show together with this independent producer, and possibly a multitude of other clients and partners, in order to get enough money to put on something that is palatable to the Canadian public, given that we're saturated with American-style TV. You do that, and the CBC, at the end of the day, under the CTF rules, does not own the copyright to that program. The CBC cannot resell it, it doesn't own it for foreign sales.

So that's a small example of how the rules have, as Arnold mentioned, have been skewed against the public broadcaster. It's public money. The rules over the disbursement of public money have been skewed against the public broadcaster. So you're right in a sense.

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What is on the air? Well, it's been a crippled corporation for a long time, and Canadians are speaking about that. But I will say it is still the only place where the prime time schedule is Canadian. From 7 to 11 every night it's Canadian, and that is something that is not the case on the other channels. I would hope it is a goal of this committee to foster that.

Mr. Jim Abbott: But I happen to agree with the majority of Canadians who think that $700 million is an awful lot of money, and from what I can understand from Mr. Amber, he's saying he would like to see more. I don't know that there's a big appetite on the part of Canadians even to continue the $700 million, much less give more.

Mr. Arnold Amber: Well, first, I would like to answer you as it pertains to Bravo, Showcase, History, the channels you mentioned. Pick any night of the week you want during prime time, add up all their numbers, and you'd have to multiply by three or four to see how many people are watching whatever the CBC has on at the time, and with whatever Radio Canada has, add another couple of hundred thousand people. The actual figures for the specialty channels are very low. Sometimes they don't even register. The new digital world is even worse off.

But the issue you bring up is also fundamental. When I talked about ensuring that there be money, it was in concert with the idea of reviewing where all this public money goes now. Mr. Mills talked about the tax credit—there's a portion of public money. And there's another big portion. People come in here and talk about all the various funds created by the cable industry. That's why I get a notice every December telling me my cable rates are going up. After all, it's a static operation. They don't come and put in a new cable every week. It's the same cable buried in the same ground, attached to my home, but it goes up every year, and of course, that's a form of tax. In fact, Mr. Stursberg used the word: there's a tax on the cable companies for his fund. Well, I've got news for you, that tax comes right down to the person who is sitting at the other end of the cable.

Let me go on. What we said and what we believe is that one has to take a look at all the public money that goes either to the CBC or to all the other ways television is financed in this country. We're not asking for more money to be put into the system, we're asking for maybe one of two things: that the CBC be guaranteed, as it was in the past, a certain percentage of the money of the fund Mr. Stursberg runs, or that part of the money that is earmarked for the CBC allow it to go back into production, production of not just “distinctive” Canadian programs, but two other kinds of Canadian program.

First, there are ones that will not have to worry about being sold abroad. They will be financed by somebody, because whether it's in French for French-speaking people or in English for English-speaking people, this is about their stories, this is about their variety, this is about their life in Canada. That is one point.

The other point is that it is quite possible that if the CBC returns to being a producer, it will again do what it did in the past, set a much higher level, as public broadcasters do across the world—and of course, the most famous one is the BBC—set criteria. The McKinsey report Lise referred to earlier said one of the important functions of the public broadcaster is to set the criteria and the standard by which the other broadcasters in that country function.

We did the history project. I can tell you, there'll be many history projects—

The Chair: If I may interrupt you, I'm terribly sorry, we'll have to adjourn for a vote. I think you've made your point.

We have to adjourn, and sadly, we'll have to reschedule the last participants. If you agree to also come back for questioning by the members—

Mr. Dennis Mills: Please.

The Chair: —I think it would be really important to continue.

Mr. Dennis Mills: Yes.

The Chair: I'm very sorry it has to be that way, but we can't avoid it.

Mr. Arnold Amber: We will be happy to come back, and we hope there will be no bells.

The Chair: Right.

Yes, Ms. Bulte.

Ms. Sarmite Bulte: I know we keep changing the schedule, but I think what we're finding is that we're putting too much into one of these meetings.

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The Chair: Yes, I agree.

Ms. Sarmite Bulte: If it means we're going to have to go another half a year, so be it, because I think it's just not fair. Cut down the number of presenters. It's just not fair to the committee, it's not fair to the people, and there's too much.

The Chair: I agree.

Ms. Sarmite Bulte: Let's take another half year to complete the study.

The Chair: Mrs. Bulte, I've told exactly the same thing to the researchers.

The meeting is adjourned.