HERI Committee Report

STEERING THE SYSTEM

Chapter 19
Governance and Accountability

A. Introduction

The 1991 Broadcasting Act spells out the key principles of Canadian broadcasting policy, identifies the main elements and establishes two public institutions: the CRTC and the CBC. However, as this report has noted on several occasions, there is no mechanism provided for regular evaluation of how well the objectives spelled out in the Act are actually met.

The challenge of understanding what the Broadcasting Act means, or intends, was raised by witnesses on many occasions. It was also raised in a background paper prepared for the Committee by Professor Richard Schultz, who describes the objectives for the system, when taken together, as a "policy morass."¹ This lack of precision about objectives is a governance issue, not a broadcasting issue, and is a thread that runs through much of the witness testimony and, not surprisingly, through much of this report.

This chapter begins with a brief discussion of how governance and accountability operate in a parliamentary democracy. It then describes a number of problems with the governance of the Canadian broadcasting system. Thereafter, it argues that the current "morass" has evolved over a long period of time, beginning with how the recommendations in the Aird report of 1929 were implemented. In response to these problems the chapter contains a suite of recommendations that if implemented would do much to resolve current inadequacies in governance and accountability in the Canadian broadcasting system.

B. Governance

Canadian citizens live within a governmental system described as a parliamentary democracy. It is also a federal system, where powers are shared with provinces and territories. The Crown (represented by the Governor General at the federal level) is the head of state. The Prime Minister is the head of the party that won the most seats. The Prime Minister chooses a Cabinet. Once sworn into office the Prime Minister and the Cabinet form the Executive of the government.

The Constitution lays out some of the roles and responsibilities of governments, but it is silent on many important points. For example, it does not mention premiers or the office of the prime minister. These and other terms that are not mentioned (e.g., "Cabinet") are elements in what is often referred to as the "unwritten constitution."

Government is linked to the idea of governance. The word "governance" comes from the Greek word kybernan, which means to direct the course of a ship, or to steer the ship. The Romans borrowed the word as gubernare and it eventually crossed the English Channel as "governor", a steerman or pilot. In French the rudder of a ship is called a gouvernail.²

Given this provenance, it is understandable that metaphors about sailing are often used in describing particular issues, which can be "on course," or "about to go off-course," and include references to "steering the Ship of State."

It is important to remember that governance can refer to a number of different notions:

These concepts of authority, direction and control are intimately related.⁴ In the case of Canadian broadcasting they deal with what various organizations are trying to do and must focus on setting goals, planning and developing policies to guide the system, monitoring performance and reporting to stakeholders (i.e., citizens, shareholders, trustees and others).

Once the government — through Parliament — agrees to a course of action (e.g., the objectives of the Broadcasting Act), it is the Executive (i.e., Cabinet, a particular minister and the relevant department) that is expected to engage in the activities required to meet the objectives spelled out in legislation. Indeed, "executive" is "derived from the Latin verb esequi, to follow through or carry out."⁵

In short, Parliament passes legislation, the Executive works to see that appropriate actions are taken, results are measured and the Executive reports back to Parliament. While this process is relatively easy to explain, the reality tends to be more complex. Situations change, resources are less than expected, new technologies present new demands, and costs are higher than estimated. Over time, the Executive has to respond to these changes and then report on a reality that may be completely different than that prevailing when the legislation was passed.

The Challenge of Governance

Governance, at the best of times, is difficult even when legislation is well framed, the focus is clear, and the Executive has the appropriate resources and is able to deliver a well-designed program. Much of the time things are more complicated. Indeed, the governance of the Canadian broadcasting system is possibly one of the most complicated instances of governance in Canada. There are a number of reasons for this:

Thus, while the 1991 Broadcasting Act may say that broadcasting is a "single system," this expectation is extremely difficult to realize. Indeed, there is nothing simple about the system and many of the important elements that drive the system are not within government control. As Professor Richard Schultz points out in his background paper:

It is not only broadcasting markets that are fragmented by the existence of more radio and television stations and vastly more cable channels than ever before, but there are more private networks and near networks and more distribution systems than just off-air broadcasting and cable systems. It is, of course, not the mere numbers of alternatives in the broadcasting system that signals the demise of the single system. It is the intense competition both within sectors — public vs. private networks, private vs. private networks, cable vs. satellite systems, conventional vs. specialty cable services — means that the sense of common purpose, whatever the words of the legislation no longer exists, if it ever really did, except when incumbents united in opposition to the threat of new entrants such as the public and private television networks opposition to cable systems or all the elements opposition to direct-to-home satellite systems.⁷

Of course, there is the Broadcasting Act that the Executive is required to implement; however, the Executive's ability to "steer" the Canadian broadcasting system is extremely limited. There are at least four reasons for this:

Further complexity is added to the system because responsibility is shared between at least two departments (Heritage and Industry), a broadcaster (the CBC), a regulatory agency (the CRTC), a funding agency (Telefilm Canada) and a producer (the National Film Board). In addition, two other agencies (the Copyright Board and the Competition Bureau) have important responsibilities — related to the enforcement of the Copyright Act and the Competition Act, respectively — that can impact on parts of the broadcasting system. At the same time, other legislation, including the Canadian Radio-television and Telecommunications Act, the Radiocommunications Act and the Telecommunications Act can have direct or indirect consequences on what happens in the Canadian broadcasting system. Finally, one of the most important funding sources, the Canadian Television Fund (CTF), is not an agent of the Crown, but a private-public partnership with its own board of directors that includes government representatives.

As Richard Schultz observed with respect to the CRTC, in his paper prepared for the Committee:

... there should be little doubt that the dominant policy-maker in the broadcasting sector in Canada, as well as for telecommunications, is indeed the Commission. Although efforts to do so date back more than twenty-five years, successive governments have not been successful in asserting political or governmental control over policy-making. Even the inclusion in the 1991 revision to the Broadcasting Act of a power for the Cabinet to issue policy directions, long sought by the designated ministers for the CRTC, has not fundamentally changed the policy-making relationship.

The problem is essentially two-fold. In the first place, in both 1968 and the 1991 versions of the Broadcasting Act, the Commission is given what is essentially a blank cheque and is thereby encouraged, indeed mandated, to be the de facto broadcasting policy-maker. Hortatory injunctions to "safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada ... "can hardly be said to structure or direct the Commission's decision making. The same can be said of the 1991 addition of a reference to the "maintenance and enhancement of ... cultural sovereignty".⁸

As Professor Schultz rightly notes, the CRTC is given an extremely broad mandate and, given the Commission's quasi-judicial status, the Executive of the government is extremely reluctant to be seen directing the Commission, except on very rare occasions.

While the desire to create agencies at arm's length from the day-to-day concerns of politics is understandable, the creation and evolution of such agencies in the absence of a coherent overall policy framework raises a serious issue of governance. That is, who is steering the ship? But this problem goes well beyond the fact that no one can directly be in charge. It also has to do with the reality that much of what is expected is undefined. Witnesses raised the issue of unclear definitions a number of times.⁹ They also raised questions about how the various parts of the system relate to each other.

These three problems (arm's-length agencies, important terms that are undefined and unclear relationships among elements of the system) create a fourth problem. Since it is not clear what is to be accomplished, performance is difficult to measure, or in many cases cannot be measured. As a result, the various agencies and the overall system remain unaccountable.

C. Accountability

Accountability is fundamental to our understanding of parliamentary democracy. Without accountability, there can be no governance and without governance there can be no accountability. As a special committee of the House of Commons pointed out in 1985, three key elements of responsibility form a cornerstone of governance and accountability:

Ministerial responsibility, along with the fusion of the executive and legislative branches, are distinguishing features of responsible government. The rules relating to these features are not set down in the Constitution. They are governed by convention, precedent and common sense.

First, there is the responsibility of a minister to the Queen or the Governor General ... Second, there is the individual responsibility of a minister to the House. ... The third responsibility is that of the ministry collectively to the House...¹⁰

Although there is often dispute about who is responsible for what, the underlying notion is clear enough as long as we understand that someone (perhaps a minister) is reporting on a particular situation (e.g., the workings of a government program). The essence of accountability is often summarized in questions about who can request information, when, from whom and about what.¹¹

Another important problem has to do with the absence of specified links between the various elements of the system. For example, while the CBC and the CRTC issue annual reports their reports do not explain how their actions over the past year (or years) have contributed to the goals established for the broadcasting system. The reports tend to focus on activities and outputs (e.g., this television series was presented in the case of the CBC or so many decisions were made in the case of the CRTC) without explaining how these "outputs" contributed to the goals of the broadcasting system.

This absence of specified links is coupled with the absence of a single focal point for governance. While the Executive is a focal point, it has never issued a report card on the broadcasting system and, as this report shows, will be unable to do so until a number of governance issues are sorted out. Furthermore, since there is no focal point for governance there is no overarching accountability framework. In the absence of an integrated policy, a single focal point for governance at the system level and accountability framework, it should not be surprising that there is an almost complete absence of reporting about the overall state of the broadcasting system. The absence of such a report, or a series of such reports, has made the work of the Committee much more difficult than it should have been.

This state of affairs, it must be emphasized, is a direct result of the fact that the governance of Canada's broadcasting was not a result of design but of evolution over the past 80 years. While there has been some recognition that there is a problem with governance of the system, little has been done about resolving governance issues.¹²

D. What the Committee Heard

Before proceeding, it is worth pausing to consider what witnesses told the Committee about the policy-making, regulatory and supervisory roles of government departments and the CRTC in the Canadian broadcasting system.

When Mr. Michael Wernick (then-Assistant Deputy Minister, Cultural Development, Department of Canadian Heritage) appeared before the Committee, he described the role of Canadian Heritage as follows:

It's basically a policy oversight role and cultural policy focus, very much about connecting Canadians to each other, the expression of Canadian choices, Canadian content, Canadian diversity, and projecting Canada into the world. We always look at broadcasting issues, like any cultural industry issue or cultural sector issue, from the cultural lens. It's not to say that there aren't economic and industrial or international implications and lenses that can be applied, but our job, first and foremost, is to focus on the cultural policy goals ...¹³

Mr. Wernick also explained that the Department advises the Minister "on policies from time to time" and in recent years has designed programs to support the production sector by "building ... public policy tools and instruments that support presentation and access to Canadian programming."¹⁴

As for the CRTC, Mr. David Colville (then-Acting Chairman,¹⁵ Canadian Radio-television and Telecommunications Commission) described his agency's role as follows:

The flexibility provided in the Broadcasting Act has allowed the [C]ommission to amend its policies and regulations to reflect the changing landscape. ... The [C]ommission has recently enunciated the strategic objectives that will guide its policy development and decision-making in broadcasting. At the core of the objectives is the continuing theme of choice and diversity for Canadians while maintaining a strong Canadian presence. The objectives call for the delivery of a broad range of services in both analog and digital and the promotion of services that reflect Canadian values.¹⁶

Taking this point a step further, Ms. Andrée P. Wylie, Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission, noted:

During the past few years, the CRTC has used the flexibility in the [A]ct to undertake comprehensive reviews of all of its major policies and regulations covering distribution, radio and television. New policies covering areas from ethnic broadcasting to digital specialty services have also recently been introduced to reflect the changing demographics in Canadian society and technological change. The results are now taking hold and have produced positive effects.¹⁷

The above testimony suggests that Canadian Heritage considers itself to be a program manager and cultural policy oversight agent, whereas the CRTC sees itself as having the authority — through the flexibility it has found in the Act — to develop new broadcast policies, regulate broadcasters and enforce and promote Canada's cultural policy principles. That said, when Mr. Michael Helm, Director General, Telecommunications Policy Branch, Industry Canada, situated Industry Canada in the Canadian broadcasting system, his separation of Heritage and CRTC responsibilities was more precise. He said:

In terms of policies, Industry Canada has the responsibility in telecommunications and radio communications and ... Canadian Heritage has the policy responsibility in broadcasting. For regulation, of course, the CRTC regulates in both telecom and broadcasting and Industry Canada in radiocommunications. That's largely technical regulation to ensure the airwaves operate properly, without interference and so on; that's our area of regulation.¹⁸

Seen from this perspective, it is clear that the lines between Canadian Heritage and the CRTC have been left open to interpretation. This leaves us with two government departments, Canadian Heritage and Industry Canada — whose respective roles are loosely divided along cultural policy and industrial policy lines — and the CRTC, which has decided that the Act grants it the freedom to make policy, as required, as it oversees the public trust objectives found in the Act.¹⁹

At the same time, it is equally apparent that there are gaps in the structure, governance and oversight of our system. Indeed, under normal circumstances changes in policy are made through Parliament on the basis of proposals made by a lead department. In Canadian broadcasting, however, this situation seems to have evolved to such a point that the lead department — Canadian Heritage — has very little policy-making authority. Indeed, virtually all of the authority for broadcasting policy has been given to the regulator. For this reason, despite the many success stories of Canada's broadcasting system that have been highlighted throughout this report, it is clear that the governance and accountability of the Canadian broadcasting system needs to be fundamentally rethought.

E. Future Directions

Two of the most important steps taken to deal with governance issues and evolving technologies occurred in the late 1960s and early 1970s. In the late 1960s, the Government of Canada identified some of the likely impacts of the digital revolution and created a single department and regulator (the Department of Communications and the CRTC) in 1968. Having one department enabled those responsible for cultural, industrial and communications issues to work together to find common solutions for most of the important issues facing the broadcasting system. This arrangement worked quite well. Indeed, the Caplan-Sauvageau Task Force was carried out under the aegis of the Department of Communications and the 1991 revisions to the Broadcasting Act largely flowed from its work and support from the department's officials.

The Department of Communications was dismantled in 1993 as part of a reorganization of government. Unfortunately, the 1993 reorganization further divided the already fragmented governance of the Canadian broadcasting system. Thus, a crucial element in being able to deal with the forces unleashed by the digital transition (described in Chapter 12) is to recreate a department responsible for cultural industries, telecommunications and broadcasting. This is particularly important since the changes disrupting the broadcasting system today are also causing major upheaval in other parts of the cultural portfolio (e.g., book distribution, which this committee studied in 2000). Indeed, the Committee raised the importance of looking at the entire system in 1999 when it suggested in A Sense of Place, A Sense of Being that government needs to be able to deal with the full continuum from creation, to production and distribution, to marketing and audiences for all of the cultural endeavours in which Canadians engage.²⁰

The creation of one department, which was proposed by a number of witnesses, would have the added benefit that the Executive could then seriously address governance issues that are related to the broadcasting system as a whole. At present the Executive is seriously hampered in its ability to deal with governance issues. Accordingly,

Several witnesses also raised the importance of having one Act to deal with communications, broadcasting and the regulation of these activities. Canada was one of the first countries in the world to recognize the value of a single agency to regulate both broadcasting and telecommunications, but these sectors are still governed by separate pieces of legislation. New developments in technological convergence may require new regulatory arrangements, as current regulatory regimes and statutes are quickly becoming outmoded. Thus, one of the first activities of the new department should be to investigate the benefits to be gained from having one piece of legislation that covers communications, telecommunications, broadcasting and their regulation. Indeed, the Committee is of the view that there could be great benefits from having a comprehensive piece of legislation that deals with these areas. Therefore:

F. Policies, Definitions and Objectives

As noted earlier, a problem the Committee faced throughout its study was the extreme generality of the policy objectives set out in the Broadcasting Act. There is nothing wrong with general objectives as long as they are translated into more specific objectives, or sub-objectives, at some point in the system.²¹

A second problem was the absence of concrete definitions. For example, section 5(2) of the Broadcasting Act says the CRTC is expected to regulate the Canadian broadcasting system so that it takes into account "regional needs." Since the term "regional needs" is not defined in the Act, in policy documents produced by responsible departments or by the CRTC, it is not clear how one is to decide if these needs are being met.²²

A third problem was the number and complexity of the objectives set out in the Broadcasting Act. While it is understandable why they are so numerous (for example, the 1991 revisions were designed to close gaps and cover all players in the system by adding community, educational and Aboriginal broadcasting), the reality remains that we have a broadcasting system with some 20 objectives, not one of which is described as being more important than the others. As Professor Schultz pointed out in his paper prepared for the Committee:

While there are admittedly other more concrete policy objectives in s. 3 of the Broadcasting Act, they serve primarily to compound the problems as there is no ranking, no attempt to resolve inconsistencies, or ambiguities, or outright conflicts. In fact the doubling of the original ten policy to twenty objectives not only did nothing to clarify the policy morass or provide effective policy direction to the Commission, they reinforced the policy autonomy of the Commission.²³

Given this elasticity of mandate, it is little wonder that there has always been considerable dispute over how well the various trustees of the Canadian broadcasting system have fulfilled their responsibilities to the public interest.

Senator Jean-Robert Gauthier raised this point when he appeared before the Committee to discuss the CRTC's denial of an application made by TFO (Ontario's French-language educational broadcaster) to have its services carried on cable in Quebec. As Senator Gauthier explained:

It would also be appropriate for this committee to clarify the concept of public interest. ... I tried to ask the CRTC what they meant by "public interest". I was told that they did not have a definition. I pointed out to them that they had used that point as their final argument in the TFO case. They said that it was not in the public interest to approve this TFO application ... I told them that I didn't understand ... So I told them that it was up to them to define public interest since ... the chief, the big boss as we say, the CRTC, had used that as an argument. I asked them to define what they meant for me. I understand what is meant by "national interest", but I do not understand what is meant by "public interest".²⁴

In short, it seems that certain objectives for Canadian broadcasting have been deliberately left open for interpretation, whereas others simply do not lend themselves to precise definition. The Committee believes that it makes little sense that our broadcasting system is regulated and supervised on the basis of core principles that lack definition. It recognizes, however, that there is a fine line that must be struck between loose definitions that provide needed flexibility and strict definitions and criteria that lead to excessive micromanagement. Accordingly, the Committee is of the view that one of the first and most important tasks of the new department of communications, or alternately the existing Department of Canadian Heritage, should be to develop and promulgate a new broadcasting policy statement that is sufficiently precise that interested citizens and trustees can understand what is expected of the system.

G. The Mandate of Key Agencies

Another area where there is a pressing need for more precise objectives is in the mandate and responsibilities of the agencies involved in the broadcasting system (e.g., CBC, Telefilm, the NFB, the CTF and the CRTC). For example, the mandate of the CRTC could be spelled out with much more precision than at present; the CRTC could be required to report on specific aspects of its contribution to the "system" in more specific terms than it does at present. Similarly (and as noted in Chapter 5), the overlapping roles of the CTF and Telefilm need clarification. If mandates were clarified, then the roles of the boards of the agencies would be more specific. Another benefit would be a reduction in the administrative burden faced by broadcasters and independent producers.

Similar points can be made about the CBC. Its mandate is very general; it is not clear how the Corporation's mandate relates to the objectives set out in the Broadcasting Act and citizens are hard pressed to know whether the CBC is contributing to expected objectives. A related problem is that some witnesses expect the CBC to do a great many things when it — quite clearly — does not have the resources to do everything that everyone expects. Moreover, there are many broadcasters — some not-for-profit and some for-profit (e.g., APTN, Vision, or Bravo) — that provide programming that meets traditional expectations of a public broadcaster. If other broadcasters provide suitable programming that educates, informs and entertains, why should the CBC be expected to produce similar material without regard to what else is being done within the system?

For these reasons, the Committee is of the view that the mandates of the key agencies in the Canadian broadcasting system need to be clarified. Therefore, in light of the recommendations made in chapters 5 and 6:

H. The Mandate of the Regulator

A theme that emerged during the Committee's study was that the CRTC needs to use the tools at its disposal more effectively. It should be an agent rather than an actor (i.e., an executor rather than a maker of public policy). Indeed, some of its functions remain absolutely critical to the ongoing development of the system. For example, the public hearing process that the Commission employs offers some transparency and, as such, helps provide people and institutions some insight into how the policy principles of the Act are upheld.

That being said, few witnesses voiced praise for the CRTC. In fact, one of the very few exceptions to this was Mr. Gary Farmer, President, Aboriginal Voices Radio Inc., who noted:

I'm thankful [for] the CRTC. They've been our biggest supporter. I know there are a lot of things said about them, but as far as native broadcasting goes, they have really brought us to the table here. It is only because of them that we are actually here today to speak before you, through their contributions ... I want to acknowledge the CRTC.²⁷

Similarly, Mr. Jacques Bensimon, Government Film Commissioner and Chairperson, National Film Board, congratulated the CRTC for its support for Aboriginal programming, namely the Aboriginal People's Television Network, during his appearance before the Committee, when he observed: "Thanks to the CRTC, we do have APTN on basic cable."²⁸

However, apart from lukewarm words of support for the CRTC from witnesses representing the independent television production sector and some unions and artists associations, most comments concerning the Commission ran the full gamut of frustrations, with too many complaints and examples to count concerning inconsistent policy positions, weak enforcement,²⁹ heavy-handed decision making, inefficient practices, and stringent expectations. Thus, in much the same way the Davey Committee in 1970 labelled "sniping at the CBC ... a national pastime,"³⁰ it seems that our system's regulator has become the easiest target to blame for many of the problems facing Canadian broadcasting.

By way of illustration, several witnesses noted that local programming was severely hurt when the Commission lifted its long-standing requirement that each television facility produce a fixed number of hours of local non-news programming each week. As Mr. Arthur Simmonds, National Representative, Communications, Energy and Paperworkers Union of Canada, told the Committee:

Within a few years of that decision, most television stations had eliminated local production other than news and, as a result, were able to get rid of production workers not required for news programs.³¹

Another witness, Professor Bruce Wark, Associate Professor of Journalism, University of King's College, echoed this perspective and shed further light on the plight of local radio programming. He explained that:

In deregulating privately owned radio stations, the CRTC dropped most of its news and community service requirements. Private radio's obligation was limited to playing Canadian music. Stations here responded by eliminating news reporting and current affairs programming, and this left CBC Radio to do the more expensive news and current affairs programming at taxpayers' expense. At the same time, CBC Radio budgets were slashed, and as a result CBC Radio spends much of its time broadcasting the happenings in and around Halifax and Sydney to the rest of the province.³²

Another area of concern for some witnesses was a CRTC decision made in the late 1990s to remove expenditure rules for prime-time programming. According to Mr. Mark Laing, Chairperson, Directors Guild of Canada this statement:

... has had the consequence of having broadcasters funnelling more time into cheaper, cheaper, and cheaper shows, more reality-based shows and fewer difficult shows, Canadian dramas, things that are culturally much more important to us... That was a mistake...³³

Along a similar vein, Ms. Maureen Parker, Executive Director, Writers Guild of Canada, noted that:

As dozens of new specialty channels have been introduced and as audiences have fragmented, broadcasters are increasingly resorting to low-budget, magazine-style documentary series for content. A number of factors have contributed to this decline in our dramas and POV documentaries. One important factor was the CRTC's 1999 television policy. While the CRTC's new policy set a prime-time quota of Canadian priority programming of eight hours a week, it expanded its definition of priority programming to include much cheaper genres of programming, such as regional programs and entertainment magazine shows.³⁴

Mr. Armand Dubois, TVA Network Journalist in Montréal, Provincial Council for the Communications Sector, Canadian Union of Public Employees, argued that recent CRTC decisions on the ownership and operation of community broadcasters had hurt community programming. He noted that:

The law recognizes that our broadcasting system is made up of public, private and community components. [The CRTC's] latest decisions have certainly not helped solidify the community component or ensure its ability to survive. The CRTC has proven to be incapable of reinforcing cultural diversity, which is one of Canada's essential constituent values. ... [D]iversity of content, forms and ideas can really be articulated in a creative way ... in the community sector. Yet what do we see happening currently? Community TV everywhere is on its deathbed, if it is not already dead.³⁵

For other witnesses, concerns such as those listed above are merely a sign of the changing times. As Ms. Susan Peacock, Vice-President, Canadian Motion Pictures Distributors Association, explained:

Current broadcasting policy, insofar as it applies to the more conventional or traditional technologies, was based on spectrum scarcity and the high cost of producing and distributing content with mass appeal. ... Whatever the basis for ... broadcast regulations, many of the concerns that gave rise to them are no longer true.³⁶

For example:

Some ... concerns will be alleviated ... [by] new technologies [that] will provide unlimited shelf space, dramatically lower the cost of delivery, dramatically reduce the cost of producing attractive and imaginative content, and therefore make it commercially feasible to produce and deliver content of extremely narrow interest, either geographically or accordingly to subject matter. This could result in much more variety than today's broadcasting system with its reliance on mass audience for scheduled viewing appointments.³⁷

Taking this perspective a step further, Ms. Sheridan Scott, Chief Regulatory Officer, Bell Canada, noted that:

In today's context of accelerated, ongoing change in the communications industry, procedural or structural reform of the CRTC should be considered. It should be carried out so that the CRTC is structured in a manner that encourages the development and application of a coherent national broadcasting policy, allowing it to operate in a more effective and efficient manner.³⁸

With this in mind, BCE recommended that the CRTC's mandate be clarified:

... with respect to competition issues, either by cabinet direction or legislative amendment; and finally, harmonize the powers and procedures available to the commission for broadcasting and telecommunications matters.³⁹

Proposed Solutions

Setting aside the CRTC's support for Aboriginal broadcasters — something for which the Commission should be strongly commended — it can be seen that most witnesses were to varying degrees frustrated with the CRTC and its practices. In fact, four of the most frequently mentioned problems were triggered by recent CRTC policy decisions. First, the Commission seems to have created a great deal of confusion in the area of community broadcasting. Second, it seems to have arbitrarily changed definitions of priority programming in such a way that local news and prime-time drama have been reduced in importance. Third, recent decisions on cross-media ownership transactions have endorsed corporate concentration. Fourth, the CRTC seems to have lost sight of its cultural objectives.

It is equally apparent from the above testimony — and from some of the issues raised during Committee site visits — that the Commission is imposing an unreasonable regulatory burden (or "administrative burden" to use the words of section 5 of the Broadcasting Act) on some of the system's stakeholders. The four types of burdens that were most frequently mentioned included:

The Role of the Regulator

As noted above, section 5 of the Broadcasting Act states that the system is to be "regulated and supervised in a flexible manner that ... is sensitive to the administrative burden that ... may be imposed on persons carrying on broadcast undertakings." In light of the evidence, it is the Committee's view that the time has come to overhaul the CRTC and provide it with a new mandate focused on its cultural objectives. It should not be given such a broad mandate that it is the system's de facto policy maker. Nor should it micromanage the business of the system's trustees. In short, it should focus exclusively on supervision and regulation through a cultural lens. That said, for this to have any chance of success, the objectives of the Canadian broadcasting system need to be spelled out with clarity and there needs to be a system of accountability that makes sense of the notions of trusteeship and system oversight. Thus:

Furthermore, given the various issues involved in governance and accountability, the Committee is concerned that there is no formal link between the policy development process within government and the development of regulations by the CRTC. This is perhaps one of the most obscure and least transparent processes in the governance of the Canadian broadcasting system. Accordingly:

Indeed this practice is consistent with that of other regulators. In the Committee's view this would highlight the paramount importance of parliamentary oversight.

Role of the Competition Bureau

The Competition Bureau is an independent law enforcement agency that ensures all Canadians enjoy the benefits of a competitive economy, low prices, product choice and quality service. The Commissioner of Competition oversees the application of the Competition Act, as well as several other pieces of federal legislation that deal with business practices in Canada. According to the Bureau's Web site:

The basic operating assumption of the Competition Bureau is that competition is good for both business and consumers.

Fair competition makes the economy work more efficiently; strengthens businesses' ability to adapt and compete in global markets; gives small and medium businesses an equitable chance to compete and participate in the economy; provides consumers with competitive prices, product choices and the information they need to make informed purchasing decisions; and balances the interests of consumers and producers, wholesalers and retailers, dominant players and minor players, the public interest and the private interest.⁴⁰

In his testimony before the Committee, Mr. Konrad von Finckenstein, Commissioner of Competition, Competition Bureau, observed:

The CRTC should not review broadcasting transactions from the perspective of commercial viability. The CRTC's review should be focused solely on the impact the proposed merger would have on the attainment of the core cultural objective — namely, the production and distribution of Canadian content. According to us, its logical corollary is the maintenance of diversity of voices.⁴¹

The Committee agrees with this observation. Indeed, it notes that a concern raised by witnesses was that the CRTC and the Competition Bureau are often at odds when media mergers, acquisitions or take-overs are proposed. A recent example was Astral's desire to purchase radio stations, which was accepted by the CRTC but questioned by the Competition Bureau; subsequently, Astral decided not to proceed with the acquisition. Accordingly:

The Committee is well aware that it is outside its jurisdiction to comment on the roles and responsibilities of the Competition Bureau. Nevertheless, it is of the view that both agencies (the CRTC and the Competition Bureau) must have sufficient resources to carry out their respective responsibilities within the Government of Canada. For this reason:

Regulating the National Public Broadcaster

While the Committee is aware of the longstanding debate about how the CBC should be regulated, it is of the view that the regulator should not be charged with determining the roles and responsibilities of the national broadcaster. Moreover, given that the CBC is accountable to Parliament, it believes that it makes little sense that the CRTC has the same supervisory authority over the CBC that it has over other broadcasters.

A number of witnesses questioned the CRTC's attempts to micromanage the CBC. That there is a serious problem of micromanagement can be illustrated by looking at a recent decision made by the Commission concerning CBC English television. As already noted, the 1958 revisions to the Broadcasting Act specifically separated the management of the CBC from the system's regulator; in other words, the CRTC is not the national public broadcaster and is not charged with its management. Notwithstanding this separation (which was maintained with the 1968 and 1991 Acts), the CRTC's 6 January 2000 renewal for CBC English-language television (Decision CRTC 2000-1) commented:

The Commission strongly encourages the CBC to plan for more production resources and greater authority to regional management... (Paragraph 17)⁴²

... The Commission therefore imposes a condition of licence requiring the CBC to broadcast on its English-language television network during peak viewing periods, in each year of the licence term, certain minimum hours of priority programming for which the principal photography occurs more than 150 kilometres away from Toronto. (Paragraph 24)

... The Commission therefore expects ... a decrease in 120 hours per year in professional sports programming, by the end of the end of the licence term; an increase of 60 hours per year in amateur sports programming, starting in the first year of the new licence term; and to review all professional sports contracts as they come up for renewal. (Paragraph 51)

The most interesting aspect of these comments and conditions of licence is that they are all responsibilities that should be assumed by the Board and management of the CBC. Indeed, it makes very little sense that Canada's broadcast regulator is micromanaging the nation's public broadcaster by telling it where principal photography should occur, what the budget allocations and responsibilities of regional managers should be, or how much and what type of sports programming should be aired.⁴³

The Committee is concerned that there is excessive uncertainty about the division of the roles and responsibilities between the Board of the CBC and the CRTC. The Committee is aware that this problem is long-standing, with no easy solution. There are, however, two possible approaches that the Committee has considered.

While removing the CBC from the regulatory authority would have its advantages, it would likely reduce the Corporation's arm's-length relationship with government, since it would then be accountable only to Parliament. The Committee recognizes, as well, that removing the CBC from the direct regulatory supervision of the CRTC raises some key questions. For example, who would handle the CBC's requests for licences, and by what process? If the CBC reports only to Parliament, would a standing committee have the resources to determine how well the CBC is meeting its mandate?

At the same time, much of this report has focused on the need to clarify mandates, roles and responsibilities and reporting relationships. If the Committee's recommendations on these issues were implemented, then the Committee's concerns about the current circumstances would be substantially reduced. That being said, two main concerns would still remain: the CRTC's power to attach conditions of licence and its micromanagement of CBC programming decisions.

For these reasons, the Committee has concluded that the CRTC's power to attach conditions of licence to the CBC should be eliminated. Given that the Broadcasting Act provides the CBC's mandate, and that the majority of its funds are approved by Parliament, the Committee believes that it makes little sense for the CRTC to oversee the decision making of the CBC's President and Board of Directors. Accordingly:

With this latter point in mind, Figure 19.1 shows CBC licence applications for new television services that were denied by the CRTC in recent years. Given that all of these proposed services suit the mandate of a public broadcaster, the Committee cannot understand why the Corporation was denied these services by the CRTC. Indeed, cable and satellite subscription fees would have supported all of these services; as such, the Corporation would not have required any increase in its parliamentary appropriation.

Given these considerations:

The Need for a Strong Regulator

The above discussion has also exposed an urgent need to decide whether the present-day functioning of the regulator is a warning sign that the public policy objectives for Canadian broadcasting will become unenforceable due to ongoing changes taking place in broadcasting worldwide. Otherwise, the same legislation that has facilitated the development of a Canadian-made alternative through which our cultural norms, values and ideals are communicated will continue to unravel, thereby undermining any pursuit or fulfilment of cultural objectives through the broadcasting system. Accordingly, the Committee reaffirms the need for a strong, independent regulatory agency to oversee the carrying out of Canada's broadcasting policy and to supervise the Canadian broadcasting system.

In the Committee's view the regulator needs to have more power. Part of the problem is that the Commission's power to revoke licences is too drastic to be useful and the fines that it can impose — which range from $25,000 for an individual to $500,000 for a corporation per offence — are too small to make an impression on large conglomerates or multinational corporations. As one witness pointed out, the current situation leaves the CRTC in the uncomfortable situation of either revoking a licence or giving non-compliant broadcasters a modest fine.⁴⁴

A more subtle form of compliance used by the regulator is to have offending broadcasters subjected to additional hearings. The costs to smaller companies of preparing for hearings can be substantial. For large conglomerates these costs are little more than a drop in the bucket. In the Committee's view, the Commission needs more effective tools. It therefore suggests that the CRTC have a ladder of penalties at its disposal with the top of the ladder being a fine of $2 million per offence for corporations and $50,000 for individuals.⁴⁵

Furthermore:

This flexibility should include the ability to establish appropriate salary levels for senior staff of the Commission.

I. Reporting and Measurement

Reporting

While it would be beneficial to clarify objectives and define core terms, a significant problem would still remain: Canada has never had an organization or body mandated to regularly evaluate and assess how well its trustees have been meeting the public policy objectives of the Broadcasting Act. In fact, neither Canadian Heritage, nor the CRTC has issued a report card or evaluation of the broadcasting system since the passage of the 1991 Act.⁴⁶

Given the high expectations expressed in the Act, this latter point comes as a surprise. After all, if a summary report or evaluation were carried out and reported to Parliament on a regular basis, it would quickly become a valuable tool for our broadcasting system's policy-makers, legislators and trustees.⁴⁷

Thus, just as there is a need to define terms that are used in discussions of the broadcasting system it is equally important to agree on what should be reported, by whom and when. In simple terms, there must be a set of coherent rules that govern reporting. Within that agreement there is also a need to decide what should be measured and how it should be measured.

During the course of the Committee's work, members asked many different questions to which witnesses were often unable to provide any answers. In part, this may be because witnesses themselves are not neutral, but vibrant participants in the system. A larger reason, however, is that the information required to answer the question is not collected. This would be understandable if the government's involvement in the broadcasting system was a recent phenomenon, but this is not the case. In short, there is little or no reporting on many topics of relevance to the functioning of the Canadian broadcasting system.

Reporting is the crucial element of accountability. As a Canadian textbook on accountability points out:

The term "reporting" connotes much more than the physical act of making a report. It involves the conceptual framework underlying reports: the determination of the audience and that audience's needs; the decisions of what should be reported, how, and how frequently: and consideration of what must be done to obtain the information reports will contain. Reporting on performance can and should be distinguished from measuring it. ... Performance entails accomplishments as related to efforts or capabilities and intent.⁴⁸

One might hope that the situation would be better when talking about the work of the individual organizations in the system (e.g., the CBC, the CRTC and the CTF), but it is not. The annual reports of these groups tend to focus on activities, rather than governance or accountability. Thus, while there is some measure of outputs there is little serious measurement or reporting of outcomes. This is coupled with inconsistent and inadequate reporting on performance that is often characterized by a relative lack of necessary information, little or no focus and an absence of quality. Indeed, the Committee notes that annual reports seem designed to cast organizations in the best possible light but provide little information on how well they are meeting their mandates or contributing to the overall goals of the broadcasting system.

The absence of such information prompted many of the questions posed by members of the Committee to witnesses during Committee hearings. For example, when asked if the CTF measured the impact of the programs it supports Mr. Richard Stursberg (then Chair of the Fund) said:

We don't involve ourselves in those kinds of decisions or measures. Essentially, the broadcaster triggers the fund ... So we don't involve ourselves in judgments about the content of these products; that we leave to the broadcasters.⁴⁹

In summary, one can say that the Canadian broadcasting system has evolved in such a way that there is no agreement for reporting on performance. This means the Executive cannot expect coherent reports without re-examining the very structure and mandate of the agencies that make up the system. As the Honourable Flora MacDonald commented, in the late 1980s:

While conceding regulatory agencies including the CRTC require considerable independence, reluctantly it is the government which must bear the responsibility for the actions of the CRTC. The CRTC's independence cannot be so great that it is accountable to no one.⁵⁰

Measurement

Whatever approach is taken to improve reporting, the question of measuring outcomes remains. One characteristic of the evolution of Canada's broadcasting system as a cultural system is an extreme vagueness in the terms used. A second characteristic is the very loose link between goals and the agencies that are to support the goals. A third characteristic is an almost complete absence of a common set of measurement processes and the requisite tools to determine how well we are doing.

Between the 1930s and the 1980s, measuring how well the system was doing was not that difficult and citizens were probably content to see that there was a Canadian presence. Indeed, even as late as the Caplan-Sauvageau Task Force of the mid-1980s, it was relatively easy to measure what was being done. But the authors of the Caplan-Sauveageau could not possibly have imagined the impact of changes in technology and the way the Canadian broadcasting system would respond to the fragmentation of audiences.

For example, no one has ever measured the number of programs that might reasonably be thought of as "educational and informative" or tracked the channels that offer such programming. Furthermore, witnesses who appeared before the Committee tended to assume that prime time (7:00 — 11:00 p.m.) is the only part of the viewing day of importance, and that viewing to a particular channel tells us about the value of what is offered.

In effect, most of the measures currently in place report on a set of administrative and commercial categories developed many years before the 1991 revisions to the Act. As noted in chapter 4, these categories are not those that artists would use, nor are they categories that a committee interested in cultural affairs might find useful. As it stands, existing audience share measures are categories designed to gauge audience viewing habits for the purposes of advertisers.

In other words, even though Canadian taxpayers contribute more than a billion dollars to the broadcasting system every year, there is no way to determine how well the system is doing in meeting the objectives set for it in legislation. Furthermore, since no one is responsible for data collection or reporting, this information is not available for those who should be steering the system.

Proposed Solutions

In the mid-1970s the Government of Canada started to refine the reporting system designed to measure the effectiveness and efficiency of government programs. Two important initiatives were the creation of the Office of the Comptroller General, followed by the Treasury Board's Guide on Program Evaluation.

In 1981, the government committed itself to provide Parliament with expanded information in its Part III Estimates. Despite modest improvements to the system (program evaluation results were added to Part III Estimates in 1983) the Auditor General reported in 1992 that departmental reporting did not provide the "breadth of information needed."⁵¹

Over the past 10 years the Treasury Board Secretariat, the Auditor General and the Canadian Comprehensive Audit Foundation (CCAF) have undertaken considerable work to improve performance reporting. The Auditor General has identified the following five performance criteria for reporting:

Meanwhile, the Treasury Board Secretariat has identified the following principles for performance reports:

The Auditor General notes that the Treasury Board's six principles are consistent with its own performance criteria. That said, very little information that meets these principles and criteria is produced by the federally funded organizations involved in the broadcasting system. Indeed, the Committee cannot help but conclude that the CBC, Telefilm, the National Film Board, the CRTC, the responsible departments (Industry and Heritage) and the CTF do not produce reports that meet the criteria and principles of the Auditor General or the Treasury Board. Therefore:

While the overall system for performance measurement and reporting on performance can best be described as inadequate, the Committee would like to commend the Canadian Film and Video Production Television Agency (CFTPA) for its 2003 Industry Profile, which represents a substantial contribution to the presentation of useful information about the production of film and video. The Committee also recognizes the work the CRTC has carried out in the first three Broadcasting Monitoring Reports that it has prepared. While eager to recognize these important initiatives the Committee remains convinced that there is still a great need for improvement. Accordingly:

Accurate and Timely Information

One concern expressed by members of the Committee is the absence of accurate and timely information that would allow one to compare how Canada's broadcasting system compares to other countries. The absence of this information goes to the heart of the governance challenge that faces Canada's broadcasting system. Indeed, departments, boards and agencies need such information to fulfill their responsibilities; know what constitutes reasonable information for good governance; be able to act on the information; and report on the organization's effectiveness.⁵² However, because these groups are arm's length from government, they need to establish a mechanism whereby they can agree as to how they should define, collect and share information on an ongoing basis. Accordingly:

This system should include a detailed specification of the responsibilities of each of the agencies for providing information to each other and for reporting on their contributions to the broadcasting system. Moreover:

J. Monitoring the Canadian Broadcasting System

An overarching question is how well the institutions charged with implementing the Act have carried out their public trust and whether the spirit of the Act is being adhered to. The Committee is convinced that some of the goals of the Act have not been properly implemented and enforced. A main point, however, is that there is now no mechanism in place to allow Parliament to determine whether the objectives of the Act are being met. The problems uncovered by the Committee's study demonstrate that the Act needs to be regularly monitored.

One way to do this would be to create a Canadian broadcasting monitor. The monitor's job (bolstered by an office that has a small staff and a reasonable budget to commission independent studies) would be to report annually to Parliament and to the Heritage Committee about the health of the broadcasting system, based on the objectives spelled out in the Broadcasting Act. The monitor's office would act as an early warning system — identifying problems, raising issues and asking tough questions. It would play a role that is similar to that of Status of Women Canada, the Office of the Information Commissioner, or the Office of the Privacy Commissioner.

The monitor would be responsible for monitoring and reporting on the extent to which department and agencies have implemented plans and met objectives established by the Broadcasting Act, or related legislation. This would include appraising the quality and appropriateness of reporting, measurement and evaluation systems established by relevant departments and agencies.

For a variety of reasons, the Committee is convinced that the most sensible arrangement would be to locate the monitor within the Office of the Auditor General. The monitor could function along the lines of the Commissioner for the Environment and Sustainable Development (see inset), which operates within the purview of the Auditor General's office. The Committee feels that the level of resources required need not be greater than that of the Environment and Sustainable Development Commission ($2-3 million per year) and that the monitor would benefit from existing expertise within the Office of the Auditor General. The Committee believes strongly that the creation of a Canadian broadcasting monitor would go a long way to resolving many of the problems of governance and accountability as identified in this report. With this in mind:

Endnotes