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EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 17, 1995

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[English]

The Chair: I do not want to hurt my knuckles, but I do not have a gavel and I want to bring the meeting to order. It's already 11:05 a.m. We'd like to get things started.

We continue our examination of Bill C-93. We have one further witness to hear from who has taken his seat, and then we will go clause-by-clause.

With us now is Ted Pietrzak. He is the executive director of the Arts Gallery of Hamilton, and chair of government and arts, the Canadian Art Museum Directors' Organization, better known as CAMDO.

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We also have in the room again, if we need his help, David Walden from the Department of Canadian Heritage.

Mr. Pietrzak, we will hear from you. If there are any questions, I am sure you will be more than willing to answer them. Go ahead please.

Mr. Ted Pietrzak (Executive Director of the Arts Gallery of Hamilton, and Chair of Government and Arts, Canadian Art Museum Directors' Organization): Thank you very much for this opportunity to make a presentation on a very important matter, as seen by the art museum community.

Let me start by indicating that the Canadian Art Museum Directors' Organization has been very concerned. It has been following these issues very carefully, and has had many opportunities to input.

One of the reasons we do not have a brief here today is because we submitted a brief to the Hon. Minister Dupuy on May 24, 1994, that actually spoke about the issues of appeals, which are cited in Bill C-93.

I would like to start by introducing myself and the organizations I represent, both the Canadian Art Museum Directors' Organization and the Arts Gallery of Hamilton, as I have been executive director there for three and a half years.

First I will speak about CAMDO. Some of you are aware of this organization. Its membership consists of 54 members from large to small museums from the National Gallery of Canada to the Kamloops Art Gallery, from the Cambridge Library and Gallery of Ontario to the Beaverbrook Art Gallery of New Brunswick.

Its intention is to organize professional development efforts for executive directors of those museums; to work closely with government and develop sound policies and support structures; to share information; and develop and maintain ethical standards in the field.

I have been chair of the government in our committee for approximately five years, and have worked very closely with elected officials as well as government staff, with regard to the Cultural Property Export Review Board.

On a professional note, I have been director of two museums for a total of approximately 14 to 15 years. I have been in the field for 25 years, working at five different public art galleries, and I use the terms ``museum'' and ``art gallery'' interchangeably.

I am thoroughly familiar with the Cultural Property Export Review Board Act because I have worked with the act through CAMDO, as well as at the museum I represent.

The Arts Gallery of Hamilton is - some of you will be surprised - the third-largest public art gallery in the province of Ontario, after the National Gallery and the Art Gallery of Ontario. It has a collection of 8,000 works of art. It has an annual operating budget of $1.7 million, and a staff of only 19.

To reinforce the things I will say later in my presentation, I would like to share with you that because of various cutbacks in revenue, we have had to cut our staff by one-third in the last three years. So I will reinforce the importance of this act to the art gallery and to the museum community overall.

CAMDO has been very involved as a sounding board for the act in its interpretation and its adjustment. It feels that there is a strong national commitment to this instrument. We have been involved in defining national significance, proposing improvements regarding evaluation methods, recommending changes in professional practices with the museums, and working toward the elimination of arbitrariness and vested interests. I believe we have taken a proactive approach to this rather than a reactive one.

I am here for two very specific reasons: one, to state the importance of the act to the people of Canada, present and future; and two, to reinforce the importance of the changes proposed in Bill C-93.

As I indicated to you, we have on file a detailed brief with the minister dated May 24, 1994, that detailed our concerns at that time. They stressed accountability, improvement in determining fair market value, an appeal process, support for an arm's length agency and determination of national significance.

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Our brief reiterated our strong support for the Canadian Cultural Property Export Review Board as an effective and important instrument of government policy to stimulate contributions to this country's patrimony.

CAMDO received full opportunity to suggest improvements. We've met on an ongoing basis with the current chair of the board and have had two meetings with the minister.

In our discussions, we have dealt with the issues you face here today. Bill C-93 looks at an appeal process. I will quote from our presentation to the minister at the time:

Since that time we have reached this stage.

I believe that an appeal process is important from a number of standpoints. Before I go into that, I would like to speak very briefly about the importance of the act to museums.

I have with me statistics showing that a great number of museums rely on donations of art. Over 90% of the works entering their collections come in that form. During these times where, for instance, the acquisition budget of Hamilton's art gallery has been reduced from over $100,000 three years ago to zero this year, it is more important than ever to have the act in place to stimulate donations.

Mr. Hanrahan (Edmonton - Strathcona): I have a point of order, Mr. Chairman. Could the witness repeat that last sentence about the $100,000 to zero? I didn't catch the context.

Mr. Pietrzak: Approximately three years ago our acquisition budget at the Art Gallery of Hamilton was over $100,000.

Mr. Hanrahan: Okay.

Mr. Pietrzak: Moneys that were being donated to us or generated by us to acquire works of art were in the six digits. This year it is zero. It is zero because the moneys have been diverted to operations. As government grants decrease acquisition funds are relocated. This is very common in other museums and art galleries in the country.

There is also another very important reason for the act to be maintained. I know that it's not in debate here, but because of limited acquisition funds at the outset small to medium museums cannot afford significant purchases.

In the last ten years, the Art Gallery of Hamilton has purchased art work valued at $120,000, at $60,000 and at $40,000. These are sizeable purchases. So as acquisition funds decrease in certain cases, our opportunity to acquire important works of art becomes non-existent.

We have also found that the tax incentive has been a way of keeping works in this country. I know you've realized this as well.

I will go into the importance of an appeal process for the museum community and ourselves. I've read from our brief with regard to the CAMDO position of over a year ago.

We feel at this point that the appeal process corrects the oversight of the original legislation. It allows, in fact, something that should have been allowed earlier on and was overlooked. We feel it is a legitimate right not only of the owner but of the applicant to ask why a decision has been made, and to provide additional information should there be any.

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The appeal process also establishes a level of accountability for decision-making with the board. There has to be accountability for how decisions are made, not only to the donor and to the applicant but also to the Canadian public.

Finally, the appeal process allows for much more transparency with regard to the area of evaluation of art work, which is one of the biggest and most contentious issues the board and the community have faced.

In my mind, in the minds of those at the institution I represent, and in the minds of the Canadian Art Museum Directors' Organization, sometimes the questions aren't about the importance of the act. I think we all agree. I also believe we all agree the state has some responsibility for the nurturing and development of our heritage and our culture.

We may all agree in terms of the appeal process, but perhaps some of us don't agree with the nature of the act. Some see it as a loophole for the rich. I have taken the opportunity to check with colleagues across the country and I have found some remarkable facts.

I do not have quantifiable information for you because of the speed of the turnaround time from when I was originally contacted to make a presentation.

But I've checked with small and large museums from St. John's through to Calgary. I found that with some of these museums, such as the Art Gallery of Peterborough, three-quarters of their donations come from what they refer to as ``the average person''. We tried to define what average person was before we started making these phone calls. We said an average household income would be perhaps $75,000.

The director there described important works of art coming into their collection through teachers, volunteers and local business. A Varley drawing was contributed by a teacher who resided in the area. FitzGerald drawings were contributed by volunteers who were once part of the community.

This was not an isolated experience. I checked with the Memorial Art Gallery of Newfoundland and Labrador. The director there stated to me yesterday that an airport supervisor donated four contemporary paintings. Four contemporary prints were donated by a school teacher. A retired Anglican minister has donated work. The director claims that 80% of the donations that come to the Memorial Art Gallery are from average people. The total donations in one year were approximately 600 works.

I spoke to the registrar of the Winnipeg Art Gallery, who indicated that a large portion of the Inuit works donated are from people who have travelled up north, who are not necessarily wealthy. The registrar considers them average people who believe in the community and the institution. The registrar claims that 50% of their collection comes from such people. Last year, approximately 200 works were donated.

There is a significant body of work coming from artists. We know that many artists - the bulk of them - have been described as being part of one of the poorest socio-economic groups in the country. In many of the museums I checked with, artists have donated important art works, important to them and important to the museums that have accepted them. This has been a tax benefit for them.

The Nickle Art Museum has recently been offered a number of works by a local art dealer, who decided to give certain parts or pieces in the inventory because he was relocating. The same local art dealer also obtained a commitment from the area artists to give works the museum. Some important pieces have now entered the Nickle Art Museum or will in the near future. There are more sketch books entering through a local person who, although not looking for them, happened to come upon these things at an art auction.

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In regard to the Kamloops Art Gallery, I found that 50% of its donations come from the so-called average person - artworks by artists such as Barbara Astman, Ann Kipling, and Ian Wallace, and artworks that have been held by collectors in the area - and they cite a number of doctors.

With the Art Gallery of Hamilton, I cite a number of examples. Our statistics show that approximately 30% of all artworks donated in 1993 came from this group of less-than-wealthy individuals, and it was 14.7% in 1994. There were approximately 220 works the one year, and 91 works the following year. We have received works form 25 artists, works that we believe will be part of an important holding of contemporary artwork in centuries to come. We've received artworks from tour guides, from volunteers, and from people who have heard we were having an exhibition by a said artist.

In the time I've been there, I've come to believe that the people who donate to the Art Gallery of Hamilton do not donate because of a tax receipt. I believe they donate because of a belief in the institution, a belief in what it is doing, and a belief that they're contributing to the greater good and are giving something to the Canadian public. There are people of wealth who believe this and there are people who are poor who believe this.

I have circulated a catalogue. Tagged with yellow sticky papers are two reproductions in that catalogue. These are two important works now travelling the continent. They come from the Art Gallery of Hamilton and are currently on display in New York. They were donated to us by a Mr. Roy Cole, in 1992. He did not know of the Cultural Property Export Review Board. He did not know there were such tax benefits and he did not particularly care, although he did welcome obtaining a receipt. He did not quibble about fair market value. As it has been for over four decades, his concern was to contribute important works of art to the collection of the art gallery.

Last night I celebrated something with this gentleman. We celebrated a donation made by him in 1967 to the Art Gallery of Hamilton in memory of his family. He bought, with cash, a $60,000 Tom Thomson canvas that is approximately three feet by four feet. He did not turn it around to make a huge profit; he bought it with hard cash at that time to donate it, right off, to the Art Gallery of Hamilton. He also donated these works, which he bought a very long time ago with less than a concern for the tax benefit.

I visited a retired woman who is 90, or maybe 93. She was a volunteer at the gallery for about 40 years. During that time she acquired works by important artists from the 1930s and 1940s through our art rental program. They were bought for $100 or $200 - the stickers are still on the backs of these works. She is donating them to us not because of the tax receipt but because she believes in the institution.

I believe, and my colleagues believe, that although the incentive of the original act and the adjustments will help museums, the bulk of donations coming to us are not motivated by a tax break. This can be debated and people can take different sides of the fence, but from my perspective, this is what's happening at the Art Gallery of Hamilton.

I would like to conclude by reinforcing the importance of Bill C-93 to CAMDO. The changes are not only fair, they are equitable and also strengthen the act.

I'd be happy to answer your questions.

The Chair: Thank you, sir.

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We will start our first round with Mr. Hanrahan, who has indicated he would like a couple or three questions.

Mr. Hanrahan: Thank you very much. I think we will split our time.

Thank you, sir, for a very good presentation. I would like to ask you a couple of questions that are more technical, as well as an opinion question.

We had a witness here on the previous Thursday who said there are 300 institutions in Canada that would be designated under this act in terms of giving the tax appeal, the break or whatever. Your organization includes 54 institutions. Why the distinction? Is there another body that does the same thing as you, or are they universities as opposed to museums?

Mr. Pietrzak: CAMDO specifically represents art museums, so it is but one group that has benefited by increasing its collections through the act. There are natural history museums and there are archives, and I believe they are all represented on the board.

Mr. Hanrahan: Is there an umbrella organization for all of these groups?

Mr. Pietrzak: Not for all of them at one time, but I believe there are umbrella organizations for archives, for instance.

Mr. Hanrahan: Okay. You said 80% of the works in Canada are given by average people. You also said it is your experience that the bulk at your museum in Hamilton is not donated by people who want tax breaks but by people who are simply interested in donating to Canada.

I guess there are two parts there. If the bulk is donated by people who do not really want tax breaks but are giving simply because they are interested in Canadian heritage and in passing it on, why do we have to have this whole appeal process? The other question I have is this: if 80% of the works is given by average people, which you put at $75,000, what's the value of the other 20%?

Mr. Pietrzak: The value of gifts?

Mr. Hanrahan: Yes, the value of the other 20%.

Mr. Pietrzak: That I do not have, but I would imagine some of the highest-priced works come from the most wealthy.

Mr. Hanrahan: So even though 80% of the works are given by average people, they may account for only 5% of the value that is donated.

Mr. Pietrzak: That's very possible.

Mr. Hanrahan: Okay.

I have one final question. In your opinion, are we dealing here with Canadian works of art only? For example, if I wanted to - if I could - donate a Renoir or a Rembrandt, should I fall under this?

Mr. Ianno (Trinity - Spadina): Your average.

Mr. Hanrahan: Yes, I have three or four in my basement.

Mr. Pietrzak: I will start by first mentioning that the unscientific survey I produced ranged from 80% from the average person, as said by the director, to 14.7%. For museums such as Peterborough, it was three-quarters, which is 66%. It was 80% from Newfoundland, and 50% from Winnipeg. The Nickle indicated a sizeable amount but could not give us specifics. In Kamloops, it was 50%.

The directors were responding to the question of where these donations come from. We then explored why they came and where the others came from. There's no question that some of the most sizeable gifts come from people who are extremely wealthy. Those works, such as the ones I have circulated in that catalogue, have been in their families for some time. They may have been purchased at a sizeable cost - such as the Tom Thomson that was purchased for $60,000 in the 1960s - at one point in time, or they could have been purchased at a lower expense.

Nonetheless, what has been reinforced for me is that the bulk of people donate because they believe in the museum, and there is some connection with the Art Gallery of Hamilton in this case. They could donate to many other museums. Many times their donation is reinforced by a benefit that comes from tax relief. Sometimes they are surprised by it, sometimes it becomes an important part. But I do not believe it's the most important part to these people. They could donate to other museums, but they have a certain attachment to this museum.

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I think the stimulation is still there for a small percentage of the public who may have very, very expensive art work and who have the choice to take it out of the country. We've seen this with non-Canadian artwork, so this is with regard to the question of my opinion.

We have artwork that has been donated and that has been non-Canadian. So we have pursued.... Last year, it was 150 photographs by Clarence Sinclair Bull, the MGM still photographer whose images of Greta Garbo and Clark Gable you've seen before. These are archival works; they're very, very important works, and they happen to be in this country at this time.

Mr. Hanrahan: But they are not Canadian art.

Mr. Pietrzak: I believe they are important to understanding our Canadian heritage. I think the relationship between Canada as a nation and the rest of the world is seen through the art produced, whether it be literature or visual art, theatre or dance. To understand Canadian abstract painting, one very much needs to understand what was happening in New York in the 1950s and 1960s. Though it is not a comfortable point to defend, I still defend it nonetheless with the acquisition of Voice of Fire. The ideas are universal.

Mr. Hanrahan: I'll turn it over to my colleague, if I may.

Mr. Solberg (Medicine Hat): How much time do I have, Mr. Chairman?

The Chair: You have a minute and ten seconds.

Mr. Solberg: I'll pass, then, and just go later on.

Mr. Hanrahan: Actually, if we have a minute and ten seconds -

The Chair: Seventy seconds.

Mr. Ianno: Forty, now.

Mr. Hanrahan: It's good to see you back, Tony.

Your acquisition budget went from $100,000 down to zero. The rest was diverted to operations. What I want to know is, what is the average museum doing to acquire funds either through donations, through entrepreneurial activities - like selling books such as you showed us or like seeking private corporation donations - and that kind of thing? Is that increasing as government funding goes down?

The Chair: I trust this will be a short answer because we're pretty well out of time on this round.

Mr. Pietrzak: Yes, it's increasing. The priority, however, is keeping the doors open to allow people to see collections that are in the possession of the museum. That's why the funds are being diverted. There are many creative ways being used by museums to generate revenue at this point, and I can share them with you on a one-to-one basis later.

Mr. Hanrahan: Thank you very much.

The Chair: Thank you.

Just before we turn to Mr. Ianno, I have a question.

Is there much point in asking about the motivation behind art donation? After all, would-be donors cannot foist their works on a museum. Art criteria have to be met, rules have to be met. So what is the point of the exercise in trying to determine whether someone really wants to donate a work altruistically, philanthropically, or just perhaps to get a bit of a tax break? If it is a matter of business that is satisfying to both parties, does anything else have to be satisfied?

Mr. Pietrzak: Philosophically, no. But there is, I believe, a misconception there that this particular act is satisfying only those who have personal concerns.

The Chair: Personal concerns?

Mr. Pietrzak: Personal financial interests. I believe, from the donors I'm familiar with and from the institutions I have worked with, there is a commitment to the patrimony of this country and the future citizens of this country.

The Chair: But if these donations, sir, are sort of a godsend to museums, I guess we'd better be thankful that a lot of people out there have personal concerns.

Mr. Pietrzak: Yes.

The Chair: Mr. Ianno, you have up to eight minutes.

Mr. Ianno: Thank you, Mr. Chairman.

When you were doing the stats, I became curious about different museums and percentages, etc. Were those percentages percentages of pieces of work or of the value of work?

Mr. Pietrzak: They were percentages of pieces of work.

Mr. Ianno: What would be the percentage of value of work?

Mr. Pietrzak: We do not have that.

Mr. Ianno: Why wouldn't you have that?

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Mr. Pietrzak: Because it was a telephone survey that was conducted rather quickly in order to get a sense of the community out there and what was happening.

Mr. Ianno: I'm going to go back to Mr. Hanrahan's perspective. I'm just curious. I'm new to this side of it, and of course we strongly support the museums and our heritage, etc. But I am also concerned because you used the terms ``poor'' - the poor are very happy about it - and ``hard cash'', and I'll get into that in a second.

I just want to know the difference between $1,000 of hard cash and $1,000 of tax credit. I guess it's the old story about what weighs more, 1,000 pounds of feathers or 1,000 pounds of lead. I'm curious that you are trying to put stats in front of us to convince us of a certain position, but when I ask the other question about the value side, you don't have that information. Why would you gather just the pieces of work if you're trying to show that the average home with $75,000 income is donating to the museum because people feel an attachment?

I don't know whether my question should be raised under revenue or wherever, but in order to make it fair so everyone contributes to the community, should the number $75,000 - should a certain value be chosen in terms of where the tax credit should be allowed and then the rest...? How does that work? As you said, most of the people you're in contact with give from the goodness of their hearts and because of their attachment to their community and the museum that is close to them, yet someone in your field informs them about the tax credit.

From my limited exposure to people with money, they generally have very good accountants and very good lawyers to advise them on all aspects of how to protect their money. I'm getting a different sense from you.

The other question along with that is, in your opinion, why was the appeals process in 1991 left out? When the review board determines the assessment of the piece, if the tax credit part is so minimal in terms of a concern - not for everyone of course - then what is the motivation on that side? I'm curious in terms of your approach.

Mr. Pietrzak: With regard to the stats, they are very unscientific. This was a telephone survey to get a pulse on the community, to get a sense of it. There were several things that made it incomplete, and the time was one thing. Most museums are surviving now, and it takes a tremendous amount of time to break down even categories of art - Canadian versus other values - so this was very difficult to do. I was interested in a perception out there that only the wealthy are donating.

Mr. Ianno: So the perception, then, is the value, and you don't have any stats on the value?

Mr. Pietrzak: No, it's the perception of the income level of the people who are donating.

Mr. Ianno: Yes, but as Mr. Hanrahan said - and you didn't say he was wrong - if 80% of average Canadians are donating 80% of the works to museums, but it's only a value of 5%, and 20% are donating 95% of the value, then I guess I'm not getting it from your stats. That's all I'm saying.

Mr. Pietrzak: There is no question, as I mentioned, that some of the highest-priced work is owned by the most wealthy. I think that is definitely coming to us as well. It's coming from both the wealthy and from the people who do not have that level of wealth. I think both are important.

I think you're right that the value of artwork coming from the wealthy is probably much higher, although I don't know to what degree, but it's coming from both. What I'm trying to say is that it's not only the wealthy who are supporting and getting the benefit, even though it's a smaller benefit to the average person.

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You've said a few other things. You asked why the appeal process was left out. I don't know. I think possibly because they felt the tax court could do the job of the appeal process.

Mr. Ianno: And have they been?

Mr. Pietrzak: I've heard of one very significant case with the Art Gallery of Ontario that I'm sure was extremely costly for all concerned. I believe it's cheaper and more economical to have an appeal process at the review board itself. There's a simple explanation. Have experts look at the related material and make a decision. I think that kind of explanation will be forthcoming as a result of this.

The Chair: There's a very simple answer to that, Mr. Ianno. There was a legislative change in 1991 transferring the business of determination from Revenue Canada to the review board and the appeal process was simply left out. It was an inadvertent measure. The purpose of this act or this amendment is to simply undo that mistake. That's all.

Mr. Ianno: Did that piece of legislation not go to the committee?

The Chair: I guess it did, but for some reason it wasn't done. We're simply correcting a mistake made four years ago.

Is that it?

Mr. Pietrzak: Could I follow up the last question? I believe you asked why the tax credit is important to some of the wealthy people.

Mr. Ianno: No. That wasn't the question.

Mr. Pietrzak: Okay. Maybe I could reinforce and improve the answer I provided to the first question.

One of the major sources of gifts to art galleries now are contempory Canadian artists who, over a long period of time, have had modest incomes and who may have blips in their income if they're highly successful in one particular year.

This work is becoming so expensive for museums that artists obviously see the advantage of donating it to a museum that collects similar work. They can reap the benefit, yet they are not part of that wealthier group of Canadians. This is an important benefit not only for the artist. With decreased acquisition funds we would not be able to afford some of these works, and neither would other museums across the country.

The Chair: Mr. Solberg. This is a five-minute round.

Mr. Solberg: Thank you very much, Mr. Chairman. I have a couple of questions.

First, before 1977 when this particular legislation came into place, people were donating to museums without this legislation. At least at that point museums had survived quite successfully for a long time. My question is about your comments on the great majority of people donating for altruistic reasons. Why is this necessary, particularly when this type of tax break is designed in a unique fashion to benefit people with the highest incomes in the country? It's certainly not designed like any of the other tax breaks where there's a limit on the amount you can claim against your income. Can you answer that?

Mr. Pietrzak: I still believe - and evidence has shown - that works have left the country, important works that should have stayed in this country. I and others in the museum community believe those works were important to our society and our future. They're gone because the incentive wasn't there. There are people who believe that incentive is still necessary.

Mr. Solberg: You could make a regime that is so rich none would ever leave. It's a question of degree, isn't it?

That's sort of an arbitrary argument, though, because there has to be a certain amount of leakage that will occur unless we say we'll pay any price for any work of art that might leave the country.

Mr. Pietrzak: There will be leakage, but there are people who will donate because of this additional incentive. It is an additional incentive to them. They feel strongly about the institution. They feel maybe begrudging about, let's say, the evaluation process in the past. We've seen leakage and would like to minimize that leakage. Where the controls are placed, are they within the institution itself to allow for a work to be included in a museum or not?

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Mr. Solberg: Do you know how many donations were made annually to museums before 1977?

Mr. Pietrzak: I have no idea.

Mr. Solberg: I think that's a rather important piece of information to have, don't you? I'd be curious to know whether or not this legislation has had any positive effect, other than for people who have been using it to some degree to avoid their taxes.

Mr. Pietrzak: There are a number of things that would colour that. In 1977 I would image that the art activity was smaller than it is now, as a result of the emphasis in the educational system and the increased infrastructure in commercial galleries. So things have changed significantly. I believe more is being produced nowadays.

Mr. Solberg: Sure. But it would still be good to have those numbers. It would be very interesting to do the comparison.

With respect to the appeal process, my understanding is that the tax courts are backed up tremendously right now. There's a backlog of something like 6,000 cases, from what we hear, and there are 22 tax court judges across the country. So if this appeal to Revenue Canada ends up in the tax courts, obviously these things could be backlogged for a long time. Do you have any comments on that?

Mr. Pietrzak: I don't believe that the appeal process to the tax courts will increase dramatically. I really believe it will stay within the board. I say that because of a concern for the donor to commit to deposit the artwork, which is required before there is an appeal at the tax court level. I believe if there's such an issue he or she will examine it without that commitment initially.

Mr. Solberg: So this legislation is really more for the exceptions than for the rule. Would that be correct?

Mr. Pietrzak: Whether it is for the exceptions or for the rule, it is hard to say who would be concerned. Years may go by when there are no appeals and in other years there may be many appeals because of the process, or because of new information. I believe the appeal process does send a signal out there that we are open to reviewing our decision on the grounds of our determination. Here is what we looked at and this is how we came to our decision. I think that kind of openness is important from a number of perspectives, as I articulated.

The Chair: We're out of time. I think Ms Gaffney indicated she has a question.

Mrs. Gaffney (Nepean): I want to thank you for coming and appearing before this committee. I'm most impressed with your presentation here. Unfortunately, I have not read the report you sent to the minister in May 1994, but maybe the parliamentary secretary would make that available to us.

You've obviously researched the topic well. I think you probably even read the minutes of the last meeting. You've really responded to all the types of questions we were asking around the table when the officials were here from the museums.

There is one area I would still like to hear your comments on. You're saying that now it's the average person who's donating, that the wealthy are not the main beneficiaries of this. I still can't totally agree with that, and I believe Revenue Canada is concerned about it too. What is to stop someone who has a few bucks from buying something of national historical importance that the museum would really like and donating it to the museum for tax purposes only, and not for philanthropic reasons?

If Revenue Canada is concerned about this, what are you and others within the museum community doing to monitor that kind of situation?

Mr. Pietrzak: When we first became aware of this manipulation, if we can use the term, the organization CAMDO caucused in terms of some action independent of requests from government or government staff. We had a meeting of directors from across the country to represent their viewpoints, and tabled a discussion paper that was discussed in detail with staff of the Canadian Cultural Property Export Review Board. In the discussion paper, we made some recommendations that would propose some control over things that we had no control over.

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We recommended that museums, art galleries, understand who the owner of artwork is - not the donor, the owner - because on occasion it has been indicated to us that in fact it is an agent for a would-be donor who is interested in this. This brings to the forefront more information about the intentions of the people or individuals in the transaction. These concerns, and others, are being proposed at a meeting of CAMDO in Vancouver at the end of the month.

Further, we are exploring and will be developing a code of ethics with regard to the acceptance of donation proposals and gifts. So the museum community is acting in those two ways currently.

The Chair: Mr. Ianno has a question.

Mr. Ianno: I'm curious. You indicated that when people travel to the north...50% are bought by average Canadians and then they're donated to the museum. I'm just curious about the process.

Suppose I went up north and paid $1,000 for a piece of art and all of a sudden I wanted to donate it to the museum; but it might be worth $10,000 or $20,000. Since I travelled, I carried it, so the postage cost me a bit, or the plane did, and now I claim it to be $20,000 worth of value, because I happened to find it somewhere, how does it get evaluated?

Mr. Pietrzak: First of all, maybe the statement was not clear. It's people who have spent time in the north that was indicated to me. So it's not people who have travelled up to the north to acquire work.

Mr. Ianno: Okay.

Mr. Pietrzak: And it's 50% overall for the collections, for the numbers of acquisitions, not necessarily just Inuit work.

For instance, it goes through a control process. First of all, there is a proposal made to the museum, and if it were felt to be of the quality and of relevance to the museum's collection, then the museum director, curator, or a combination would propose it to an acquisition committee. That is the check and balance for that person within the museum. Once approved, it would go for evaluation.

The evaluation process is one that varies in different institutions. Many times, many institutions will not allow their own staff to evaluate works of art; for instance, the Art Gallery of Hamilton. Even though legally we could evaluate things under a certain price range, and I believe that's $10,000, we always go out. We avoid having agents or vested interested parties evaluate artwork. Many times we work with the Professional Art Dealers Association of Canada, but not necessarily. We've also gone to Europe and to the United States, depending on the specific artwork.

We then receive that, and the next check and balance for that would be the Cultural Property Export Review Board. They would inspect the information, if it were to go to the board, and they would say, what do our experts say with regard to the value? They have information available to them, they have resource people available to them, and they sometimes come in at a lower value, sometimes, I understand, a higher value, sometimes an equal value.

Mr. Ianno: Say I travelled and it was a $1,000 piece and it fit into the Peterborough museum or anywhere else and I thought it was worth $20,000. You went through the process, you liked the piece and then had an independent person evaluate it. They came in with, say, $12,000. Then you sent it to the Cultural Property Export Review Board, and they said it was worth maybe $10,500 - in other words, from that $1,000 to $10,500, and it took maybe five hours of travel to get it from up there to down here. Is there a capital gain, and I then get the tax credit of $5,000 for having transported it?

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In other words, it went from $1,000 to $10,500, and that took maybe five hours of travel to get it from up there to down here. Is there a capital gain, and do I then get a tax credit of $5,000 for having transported it? Is that how it works?

Mr. Pietrzak: Well, actually, if you get certification there is no capital gain. Apparently the Friedberg case, I believe it was, set the precedent for the notion that the purchase price is not necessarily the fair market value.

Mr. Ianno: Even though I bought it five hours ago.

Mr. Pietrzak: That's correct.

This was a hotly contested issue. I know the legal implications, but the courts have expressed their opinion about this and they have indicated that the purchase value is not necessarily the fair market value.

Mr. Ianno: In your opinion, what would be fair for Canadians to give tax credit...? What limit do you think is fair? Canadians are subsidizing this process, I gather.

Mr. Pietrzak: I don't know if it's a question of fairness. I think it's a question of the value the artwork will contribute to this country. If that value is in the millions of dollars and it will contribute for hundreds of years to come, then it's not a question of an upper limit.

Mr. Ianno: So there should be no upper limit, to your mind.

Mr. Pietrzak: I believe there should be upper limits in other activities, but not necessarily this one.

Mr. Ianno: So if somehow in one year, I guess - let's be ridiculous for a moment - billions of dollars of artwork were donated and somehow the Canadian government forwent the tax that would be forthcoming, and somehow we had to do major cuts and lots of people in need were not able to achieve their living standard, as low as that may be, that would still make it a fair system.

Mr. Pietrzak: I do not believe that would ever happen, for a number of reasons: the level of absorption possibilities in the museum field, the work available out there.... I see that - in fact, I have spoken to colleagues - the potential for accepting donations is shrinking, so museums are going to be far more critical about what they accept.

Mr. Hanrahan: I have a follow-up to Mr. Ianno's question. It's a quick one, and it's basically yes or no. In the evaluation of a piece, does the original purchase price have to be revealed?

Mr. Pietrzak: No.

The Chairman: Okay. Thank you very much for coming. We appreciate your presentation.

Colleagues, we'll move into clause-by-clause now. Mr. Walden, from Canadian Heritage, is in the room in the event we have any questions.

I want to take this opportunity to welcome Mr. Serré to the committee. He's here on a permanent basis, I understand.

Thank you for coming, Ben. I wish you well. I look forward to your contributions.

Mr. Hanrahan: Can we have a two-minute break?

The Chairman: Mr. Hanrahan has asked for a two-minute break, and we'll grant it.

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PAUSE

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The Chair: Order.

Mr. Hanrahan hasn't returned to the room, but I think we should take our seats so we can go clause by clause. This stage might be completed very quickly. We actually took this break for the sake of Mr. Hanrahan, who has not returned.

If you look at the second page of your white sheets, that's how we will go clause-by-clause. However, let me simply point out, as a means of expediting this process, that if no one has the intention of moving a formal amendment, then I can simply ask the question, calling all clauses at one time. That's only if there are no formal amendments.

I see Mr. Hanrahan coming through the door. Colleagues, we will now go into clause-by-clause consideration.

I will call clause 1. I want you to take note that Mr. Walden is here, just in case you have a question or two.

Does anyone intend to move any amendments? I see none.

Clauses 1 to 10 inclusive agreed to on division

The Chair: Shall the title of the bill carry?

Some hon. members: Agreed.

The Chair: Shall the bill carry?

Some hon. members: Agreed on division.

The Chair: Shall I report the bill to the House?

Some hon. members: Agreed.

The Chair: If there is no further business, this meeting stands adjourned.

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