[Recorded by Electronic Apparatus]
Wednesday, October 30, 1996
.1805 
[English]
The Chairman: Order.
The finance committee of the House of Commons is delighted to have with us this evening such a distinguished group of representatives from the fields of Canada's visual and performing arts and publishing - sectors that are just so important to our nation's future.
With us this evening - excuse me if I get this a bit mixed up - from, en français, l'Assemblée des centres culturels de l'Ontario is Jean-Pierre Cloutier. Here from the Canadian Film and Television Production Association is Elizabeth McDonald; from the Heritage Canada Foundation, Brian Anthony and Douglas Franklin; from the Alliance of Canadian Cinema, Television and Radio Artists, Alexander Crawley; from the Canadian Conference of the Arts, Keith Kelly; from the Canadian Museums Association, John McAvity; from the Association of Canadian Publishers, Jack Stoddart, Valerie Hussey and Paul Davidson; from the Professional Association of Canadian Theatre, Pat Bradley; and from the Cultural Human Resources Council, Jean-Philippe Tabet.
Have I missed anyone? I hope not. Oh, excuse me, Mr. Pilon. You are with, en français, Affaires publiques de -
Mr. Robert Pilon (Vice-President, Public Affairs, Association of Independent Record Producers of Quebec): I am the vice-president of public affairs with the ADISQ, which is the Association of Independent Record Producers of Quebec.
[Translation]
The Chairman: Thank you very much, Mr. Pilon.
Perhaps we could begin with a few brief comments, say three or four minutes long, from each witness and then move on to questions from the Members. I hope at the end we will be able to give you 30 seconds for a brief summing-up.
Mr. Cloutier, please.
Mr. Jean-Pierre Cloutier (Executive Director, Assemblée des centres culturels de l'Ontario): My name is Jean-Pierre Cloutier and I am Executive Director of the Assemblée des centres culturels de l'Ontario.
As you know, Ontario's cultural and community centres are being assaulted on all fronts by the accelerating withdrawal of all levels of government from the provision both of funding and of the human resources that governments have customarily made available to us.
Most of our members and our cultural and community centres are being systematically denied charitable organization status, which obviously deprives them of an essential tool for ensuring their financial and cultural survival.
Their vital role in the health and growth of linguistic minorities - and I want to point out that this is a role they share with the federal government - is seriously threatened by the current policies and the way in which this portion of the Income Tax Act is being administered.
In other words, not only are we seeing governments withdrawing their support from our official language community, we are also, and this is worse still, finding ourselves in a situation where francophones are being prevented from giving financial support to their own institutions.
To give you a clear idea of the context in which we find ourselves, I would like to describe very rapidly to you who we and our members are.
We are a comparatively new organization, founded in 1978 with the aim of bringing together cultural and community centres in Ontario and promoting their interests. There are about 40 such centres in Ontario's French-speaking community, and of these 24 belong to our organization.
Our primary role is to represent the interests of our community's cultural centres in dealings with government decision- makers and with community organizations and institutions in Ontario, but we also offer a variety of services to our members, designed to support them in their development and their ongoing activities.
.1810
Francophone cultural centres are a relatively young phenomenon in Ontario: the oldest date back to 1950, but most were established in the 1970s. Currently the centres reach about two-thirds of the province's French-speaking residents.
I want to point out that Ontario's francophones make up half of the population known as ``francophones outside Quebec''.
With regard to funding for our centres, to give you an idea of their economic importance in francophone Ontario, I will just note that their combined budgets total some $10 million a year, with significant economic spin-offs in both job creation and economic development for local and regional communities.
Contrary to what might be assumed, on a province-wide scale almost three-quarters of the centres' operating budgets come from non-government sources, i.e., activities and in some instances donations.
In addition, the value of the 70,000 hours of work invested every year by volunteers is estimated at $500,000. You are undoubtedly better at arithmetic than I am, and you will realize right away that this does not represent a very large amount per hour.
The perpetual anxiety about funding, more accute than ever these days, has already started to hinder the centres in carrying out their mission and to reduce the level of services available to francophones.
At present, a vast majority of the cultural centres do not have charitable organization status. We found out by asking 24 centres that 14 of them have what is commonly referred to as a charitable registration number, but they got them a long time ago, when it was much easier to do so. At least six centres have applied in the past two years and been turned down. In a minute we will take a look at the reasons for these refusals. At least one centre used to have charitable status and subsequently lost it.
The absence of an adequate definition of ``charitable'' and the narrow interpretation of the Act mean that technically no minority francophone organization will ever be able to obtain a registration number.
For example, one of the grounds given for a refusal was that the centre's activities were intended for francophone clients only, and not for the community as a whole. To meet the Act's current requirements in this regard, our centres' activities would have to be designed for the population at large, which seems to me an obvious absurdity.
Here is another example. Some of our activities may look purely social to an official who judges them as though they were taking place among a linguistic majority. But what they have to realize is that our situation is different.
I will go straight to our recommendations. We would like you to consider the possibility of making adjustments to the current definitions of promotion of education and other community purposes, as well as to the regulations, so that they reflect our reality more accurately. These changes would be transitional, until the government came up with a new policy. Our centres would then be in a better position to meet their funding requirements.
The Chairman: Thank you, Mr. Cloutier. Mr. Pilon, please.
Mr. Pilon: To start with, I would like to thank the Chairman and members of the Committee for hearing from us this evening. We believe that the work of a parliamentary committee like this one is vitally important in our parliamentary system and increases the democratic nature of the decision-making process.
ADISQ represents between 50 and 60 independent record producers in Canada, but I would also like to speak on behalf of my English-Canadian colleagues, who are represented by another organization, the Canadian Independent Record Production Association or CIRPA.
.1815
In Canada the recording industry is, like so many others, extremely polarized. At one end of the spectrum you have about 200 small companies that are owned by Canadians and produce almost exclusively the work of Canadian performers. At the other end you have the subsidiaries of huge multinational recording companies, whose main activity is the distribution on Canadian territory of big international stars like Madonna or Michael Jackson.
These subsidiaries of foreign companies are also involved in the production of recordings by Canadian performers, but 92 per cent of recordings of Canadian performers are made by very small Canadian companies.
According to the latest Statistics Canada data available, which unfortunately dates back to 1994, there are 200 independent record producers in Canada. On average each of them does $999,000 worth of business a year, or less than a million dollars.
This is important, because among the cultural industries as a whole it is probably in this sector that the largest number of really small companies is to be found.
In many of Canada's economic sectors, it is small business that plays the fundamental role in job creation and economic development. The same holds true for our sector.
In addition, there is the cultural dimension. Without these 200 very small companies, there would not be any Canadian popular music, in either French or English.
These companies are in a paradoxical situation. The recording industry is the youngest of all Canada's cultural industries. It has developed, essentially, over the past 15 years. It has all the characteristics of a young industry: very small and under-capitalized enterprises, with very little middle management but lots of energy.
In a sense, the development of the recording industry in Canada over the last 15 years can be called a success story. Many of the performers who today are under contract to a multinational were originally developed by some tiny Canadian company. Two examples on the French side are Rock Voisine and Céline Dion. The same is true on the English side.
Apart from the big names, there are hundreds and hundreds of Canadian performers, both French- and English-speaking, who have produced thousands of records over the past 15 years, essentially thanks to the infrastructure provided by all these small companies.
A great many of ADISQ's 50 members do a yearly business worth $250,000 or $300,000 or $400,000. They produce one, two, perhaps three albums a year. That doesn't sound like much, but when you add it all up, you see that over the past 10 years 150 to 200 albums of Québécois performers have been produced by these small companies.
So a contribution is being made to the economy, certainly, but there is also a sizeable cultural contribution being made.
On a global scale, the recording industry is immense. Last year, its volume of retail business was worth in the neighbourhood of $45 billion.
It is an industry dominated by half a dozen huge multinationals, which control 80 per cent of the world market. You know their names: Sony, PolyGram, MCA and so on. At the other end are the little companies like ours. This is true in Portugal, in Spain, in Italy, and it is also true in Canada.
The situation is a difficult one because the competition is right there. It is a sector that enjoys very little in the way of protection. Apart from content quotas on Canadian and French songs on the radio, there is virtually no protection.
It is a sector that receives minuscule financial support from government. Look at the statistics on funding for culture and communications (the most recent Statistics Canada report on this covers 1994-95) - out of $6.6 billion for culture and communications, only $9 million went to help record production, or 0.1 per cent of the total.
The Chairman: Could I ask...
[English]
Mr. Pilon: Am I talking too fast?
The Chairman: No.
[Translation]
You could perhaps describe to us the problems you are having with the government.
[English]
Mr. Pilon: I'm coming to that.
.1820
[Translation]
The Chairman: The problem is that we have a minimum of 11 witnesses to hear this evening. It will be very difficult to give the rest enough time. If the introduction could be limited to three or four minutes, you could submit a written text to us afterwards. All right?
Mr. Pilon: The next budget will decide the future of the cultural industries in Canada. This is true for all sectors of the cultural industries, and in particular for ours. We could come back to this during the question period.
In any event, I will leave the Committee a copy of this report by the Task Force on the Future of the Canadian Music Industry, which was published in March and which includes the main requests, especially with regard to tax credits and increasing the budget of the sound and recording development program.
We could come back to this during the questions.
The Chairman: Thank you very much, Mr. Pilon.
[English]
Ms McDonald.
Ms Elizabeth McDonald (President, Canadian Film and Television Production Association): Thank you, Mr. Chairman. First of all, on behalf of the Canadian Film and Television Production Association, I'd like to thank you for the opportunity to appear before this committee.
Just briefly, the CFTPA is a national trade association that represents the interests of over 350 members involved in all aspects of production and distribution of television programs and feature films. My members are active in every region of this country.
Over the past year, the Government of Canada has launched two key programs that have bolstered its commitment to this sector. On September 9 the Minister of Canadian Heritage introduced the Canada television and cable production fund, a $200-million initiative aimed at stimulating the creation of high-quality identifiably Canadian television programming. Earlier in the year, at the end of June, the government accepted changes to the Income Tax Act that included provisions to establish a refundable tax credit for independent production in Canada.
The adoption of both these measures represents a good business decision on the part of the government. One ensures that we will have a Canadian presence on our television screens. The other recognizes that investment in the independent production sector is good for the economy because it creates jobs very effectively.
In the past five years, between 1991-95, the total value of the independent production sector in Canada increased 100% in economic terms. During that same period, our record of job creation matched our economic growth. In 1991 the independent film and television sector created 15,000 jobs. In 1995 it created 30,000 jobs. Beyond the direct employment created by this sector, it also stimulates activity in related industries. In 1991 the production industry was responsible for creating 39,000 jobs in allied industries. In 1995 that number had risen to almost 80,000. Why is this? It's because the independent production industry is not a business focused on bricks and mortar. We are a job-intensive industry, with 42% of total budgets dedicated to labour.
For the reasons I have outlined, funding stability is critical to our continuing success. We are therefore here before your committee today asking that you reinforce the importance of ongoing support of these two programs - the refundable tax credit program for independent production and the Canada television and cable production fund - in the recommendations you make to the government in terms of the 1997 budget. We believe that together they will fuel continued growth in our sector.
Secondly, because we are such a labour-intensive industry, our association initiated a significant training and mentorship program with our members, in partnership with the Human Resources Development Canada, over the last three years. While there are a number of post-secondary institutions that provide the educational base for the independent production sector, the missing component was providing that important element of experience or on-the-job training. Initially, our training program was entirely funded by the federal government, but now our members pay more than 50% of the cost. The results have been impressive: a 100% success rate, as each CFTPA training program graduate has secured employment.
The training initiative fund that initially seeded our program has been replaced by a youth initiative and skills upgrading program. We are in discussions with Human Resources Development Canada now to see whether or not we can work together again. We urge you to support the allocation of funds to on-the-job training programs. It is the only way to ensure that the jobs that might be created by the federal government programs are jobs that can be sustained within the industry over a long period. The film and television industry is forever changing and requires up-to-date job training to accommodate these changes.
.1825
Finally, I would like to touch on a matter that is of great concern for this government: the CBC. As we know, there are some serious concerns related to the recently announced cuts to the CBC. Some state that they might spell its demise.
Our association cannot address the impact of these budget reductions on important institutions like CBC English radio and CBC French radio. We can say that we are willing to work with the CBC's English television network to develop the creative partnerships needed to allow public broadcasting to continue in this country. The new Canada television and cable production fund will certainly help to stimulate that partnership. In addition, while the CBC may have to do more with less, we would hope that we have reached the end of budget cuts to the CBC. The CBC must now be able to begin the critical process of redefining itself with the resources it has available.
In summary, we have shown you an industry that has strong growth potential and strong job creation capabilities. We encourage and applaud your continued support in maintaining funding in federal programs that benefit our industry. Thank you.
The Chairman: Thank you very much, Ms McDonald.
Doug Franklin and Brian Anthony.
Mr. Douglas Franklin (Director of Government and Public Affairs, Heritage Canada Foundation): Brian will present.
Mr. Brian Anthony (Executive Director, Heritage Canada Foundation): Mr. Chairman, committee members, thank you for the opportunity to appear before you again this year. If we can count on your support in obtaining the tax changes we'd like to see in the next budget, we promise not to come back next year, thereby giving you all a little more time and breathing space.
The Chairman: In that case, we will not do it. We like having you here.
Mr. Anthony: Mr. Chairman, I have already distributed the remarks that I intended to give, as well as background information related to the Heritage Canada Foundation. Rather than take up your time now, though, I'll recommend it for your bedtime reading list, and proceed directly to the point.
A central reason why the Minister of Indian Affairs and Northern Development, the Hon. Jean Chrétien, created Heritage Canada in 1973 was to enlist the active interest and participation of all Canadians who would like to share in the important task of preserving the nation's historic and natural heritage, and who would be glad to have an opportunity to contribute their services and money to this cause. It's with regard to our mandate that touches on the built heritage of the country, and to the tax treatment of the built heritage, that we're here to speak to you again this year.
Last year at this time we made a presentation on behalf of our organization pertaining directly to the tax treatment of the built heritage - and I have provided copies of the presentation that we made last year to the committee members for reference, Mr. Chairman. The subject was the federal Income Tax Act and the impediments in this act that work against heritage in Canada.
Once again we appear before you to make the point that federal legislation is severely compromising the ability of many Canadians to participate in preserving their heritage, and we would like you to help change that. In 1987, indeed, this committee recommended that the then Minister of Finance examine the entire question of income tax as it pertained to revenue producing property, and it supported our position on the tax treatment of heritage property. Regrettably, the Minister of Finance did not see fit to consider your recommendations at that time.
During the past ten years, there has been some progress in the favourable tax treatment of our heritage - notably, ecologically sensitive lands - and we applaud the Minister of Finance for actions taken in this regard in his two previous budgets. However, there has been no progress with regard to the tax treatment of our built heritage. As a result, there are still existing provisions in Canada's federal Income Tax Act that severely compromise the work of provincial, municipal and, indeed, federal governments in Canada to protect heritage property.
It is indeed an advantage for the owner of a revenue-producing designated heritage property to demolish it and take a loss on his tax statement. The terminal loss provision of the Income Tax Act is, in the estimation of the Heritage Canada Foundation, the greatest and most compelling argument against preserving a significant and highly visible class of heritage buildings. Currently, the federal government is sanctioning the destruction of heritage and is working against its own stated heritage policies and objectives. Frankly, we are frustrated by the contradiction that currently exists in a federal tax system encouraging some Canadians to preserve heritage, and others to destroy it. We're quite puzzled by the existence of one set of federal policies undermining another. We feel it's time to put the federal house in order and get rid of such anomalies and ironies.
Our built heritage is a highly visible part of the daily lives of Canadians, three-quarters of whom live in urban areas. Our built heritage also tells us about our past and who we are, and provides continuity for succeeding generations.
Heritage generates pride, but it also creates employment. The CMHC, as we mentioned last year, has shown that investment in the rehabilitation of heritage buildings creates twice as many jobs as new construction. There are other benefits as well, not the least of which is the easing of the environmental impact on our landfill sites. One-third of those are filled with rubble from the demolition of our older buildings. In the United States, where the government actively encourages preservation through tax incentives, the most active sector in this field is in affordable housing.
.1830
In closing, let me say, Mr. Chairman, that we're only too willing to work with you on a continuing basis to rid the federal tax regime of incentives for the demolition of our built heritage so as to replace them with more suitable measures.
The Chairman: Thank you, Brian Anthony.
Alexander Crawley.
Mr. Alexander Crawley (President, Alliance of Canadian Cinema, Television and Radio Artists): Thank you very much, Mr. Chair.
You may know our organization, the Alliance of Canadian Cinema, Television and Radio Artists, better by its acronym, ACTRA. It has a 54-year history in this country. At the moment, we represent approximately 10,000 professional performers and broadcast journalists working throughout the recorded and live broadcast media.
I don't have any written remarks to leave with you, unfortunately. We've been rather busy on some other files. But we certainly support the positions you've heard so far. I particularly commend the brief that's going to be coming at you next from the Canadian Conference of the Arts, which really does speak for the sector in a very measured and appropriate way.
We are happy to see some signs perhaps that this current government is recognizing that an across-the-board deficit reduction is not the appropriate approach once we gain certain ground, which I believe we have. I think I heard the Prime Minister say in another context that you squeeze something in order to save it. I think that is appropriate. We all recognize that deficit reduction has been a necessary and ongoing exercise.
Nonetheless, we believe that with your growing understanding of the challenges ahead, the cultural sector is not an appropriate target for deficit reduction any longer. We believe this sector has been squeezed enough.
My members working in my jurisdiction are not reliant on the government for any kind of direct subsidy. We're the people on whom Elizabeth's members spend a portion of that 52% of their tax incentive money. This makes sure that there are fine professional performances on the screen, with voices, in multimedia, in live broadcasts, etc.
I'm really here just carrying a brief for the cultural sector in particular and also, in particular, for Patrimoine canadien, the ministry itself. I understand that there have been these across-the-board measures and that the phenomenon of something called a policy reserve is no more.
If there's one ministry in this government that needs to be able to have the flexibility to reach out to other ministries, it is the culture ministry. I believe that with some of the very progressive steps we see coming down the line, such as copyright reform, it's going to need resources in order to realize some of the principles that are finally being enshrined in law to recognize artists.
I think Copyright Board Canada in the future is going to need increased resources. Once we get Bill C-32 through, it will have more responsibility. The training Elizabeth alluded to - you'll hear more about that from my colleague, Mr. Philippe Tabet - needs ongoing support.
Some policy development has been very useful, but the resources have to be there in order to support this so that we haven't been wasting our time by coming to consult with the government and educating our political leaders and bureaucrats as to exactly what it is we need.
I think Keith will speak more eloquently on the reasons why the cultural sector is not a sinkhole, as some people seem to think. The public still seems to believe that we're always here with our hands out. I believe that we give back much more than we receive, and I hope you'll take that into consideration.
I'll pass to my colleague.
The Chairman: Thank you very much, Alexander Crawley.
Keith Kelly.
Mr. Keith Kelly (Executive Director, Canadian Conference of the Arts): I'll try to be as brief as possible.
Essentially, we think that if we want to continue the remarkable growth we've seen in the arts and cultural industries in terms of jobs and exports, which are priorities of the government and certainly of the Minister of Finance, then what we have to see in this budget is a commitment to some tax measures. That means creating greater incentives for investment in the cultural industries, and a greater and more generous treatment of gifts to the non-profit and charitable side.
We also have to see an end to the steady diet of cuts. We're certainly not unrealistic; we appreciate that there is a financial challenge. However, we would like to see the government honour its commitment for adequate, stable, multi-year funding for our national cultural institutions.
.1835
In our brief we make some proposals about how you can help us through some structural measures, some legislative reform that will give us greater self-sufficiency. I particularly draw your attention to the series of recommendations on the last page of our brief that, notably, amend the federal legislation to allow the arts community to run a national lottery. That will take a lot of the pressure off the programs and agencies seeking more money from Parliament.
Finally, we also want to ask the government to be prudent in its policy development, not just fiscal policy. We are currently facing a decision by cabinet tonight about a proposed ban on tobacco sponsorship, which, if it goes through, will cost arts organizations in this country $76 million a year. As for the challenge of replacing that in this economic environment, I don't need to begin to tell you. I won't go into greater detail.
I think the cultural sector is a winner. We want to be part of the solution, not part of the problem, and we are prepared to enter into imaginative and creative discussions to make some progress in this area.
Thank you.
The Chairman: Thank you very much, Keith Kelly.
John McAvity.
Mr. John McAvity (Executive Director, Canadian Museum Association): Thank you very much, Mr. Chairman. I'm very pleased to be here.
I'm here today to represent the museums and art galleries of Canada. We have more than 2,000 not-for-profit and charitable institutions across Canada that are phenomenally important to our society and to our economy. They attract more than 55 million visits per year to the various institutions. I think that figure demonstrates the importance they play in the tourism industry, as well as in the educational sector of Canada.
Regretfully - this sounds a bit like a variation on the theme - we are also suffering from a series of cutbacks. Today what I would like to do, in order to be very brief, is focus on a series of recommendations. I actually have eight in a document that you have not had a chance to receive yet. If this could be distributed, I would appreciate it. I will simply group those recommendations into two categories.
First, please stop the cuts. Our sector has suffered probably some of the worst of all cuts, at close to 60%. A number of programs have completely been eliminated. Simply, the museum sector as a reality has depended on government funds, and we are making an effort to become more independent. I'd be pleased to go over some of our strategies later.
Second, the other series of recommendations that I have for you are with respect to tax incentives that could be put into place to help us and other Canadians participate more significantly in our cultural activities.
I'll give you a couple of specific recommendations. One would be that all the museums and galleries in Canada would be afforded the status of agents of the Crown. Currently, that is available to some institutions and in some provinces. British Columbia, Alberta, and Ontario have recently given that status to museums, hospitals and other institutions. If you do not take action on it, the other provinces will follow suit, and this will eventually become a reality.
The second recommendation I would like to make in the tax area is that individuals should be encouraged to join and participate in their cultural activities. Their membership fees, such as the ones paid to the Art Gallery of Ontario or the Musée des Beaux-Arts de Montréal, should be made tax deductible. In the United States, the IRS passed that just a year ago. It would clear up a lot of present headaches over the administration of that issue. I think it sends a very positive message to ordinary Canadians.
A third area is one that was presented to you yesterday - I will echo it - by the Canadian Association of Gift Planners, CAGP. It is that appreciated property should be made tax-exempt from capital gains. We appreciate the steps that were brought in with the last budget. They were a very positive indication.
.1840
I'll be very brief in two other areas. In terms of introducing one indemnification of our trustees of our cultural institutions, these institutions currently have to buy insurance for directors and officers. We feel that it would be legitimate and in the public interest for the indemnity to be provided by the state.
Second is indemnity for travelling exhibitions. Canada has lost its insurance program, which has helped cover some of the costs of travelling exhibitions. Other nations of the world have an indemnity program. We are the only major nation in the world that does not have an indemnity program, and we will see a tremendous reduction because of this loss. I'm afraid about the number of exhibitions that Canadian museums and galleries are able to host. And, in turn, we will see a reduction in the ability to get to know the different cultural aspects.
The Chairman: Thanks very much, Mr. McAvity.
Next is the Association of Canadian Publishers, with Jack Stoddart.
Mr. Jack Stoddart (President, Association of Canadian Publishers): Thank you for the invitation again this year. Last year my five minutes took about fifteen, so I'm resigning myself to be off this paper in five minutes.
The Association of Canadian Publishers represents 125 Canadian-owned publishers. Between ourselves and ANEL, which is the French-language publishing association, I doubt that there's a member in this room who doesn't have one or more publishers in their area. It's very much a national and local question.
The publishing industry has had great success. We've created a national literature over the last fifteen or twenty years. Our authors today have a 25% market share. That's really quite incredible when you think of the competition we have from books from all around the world, whether they are English or French. In any cultural sector, a 25% market share is truly phenomenal.
Our exports in the last period of time have tripled and are now at $115 million a year, which is, again, a great success story. As everybody has seen this week, our authors include two nominees to the Booker. There was a Pulitzer prize last year, and on it goes.
Our authors are acclaimed both internationally and at home. We've had the great success story of our authors coming out from being ``just'' Canadian authors to being Canadian authors. We shouldn't forget what we've achieved.
Eighty percent of the books that are published by Canadian authors are published by our members plus the members of ANEL, the Canadian-owned sector in Quebec. We have only 30% of the market overall, but we have 80% of the authors and the books that are published by Canadians. I believe that we do represent the creators and the writing community across this country.
We have many challenges. We have the biggest marketplace for English language books in the world. We have American books readily available everywhere. There are no restrictions on entry. The British books come in and the French books come in. We have to compete in a totally open market. We've done so for as long as I can remember, and for many decades before that.
We had a weak Christmas in 1995. The effect of the referendum and other issues really did create a very poor retail climate. Unfortunately, in book publishing the publisher supplies the books to the retail community and if it doesn't sell it comes back to the publishers. The retailers had a difficult Christmas, but we had a disastrous Christmas.
The federal cuts that have been announced and put in place are over 50%. Including the recent restoration of the $5 million in the heritage ministry, we still have had a 50% cut in funding to the publishing industry in the last two years. Ontario has cut significantly. They've cut just about everything, and they're about to put six publishers out of business for a total debt of $1.2 million dollars from the loan guarantee program.
All of the publishers are affected. Whether they are the very smallest or the very largest in this country, there's a significant and serious problem. The heritage department was told this. They put noted economist Arthur Donner on it and he did a survey for them, which is about to be released. He has identified it as a real and urgent problem throughout the industry, a problem requiring immediate attention. It's not the industry that is saying there are structural problems; it is in fact an economist for the department.
.1845
We're recommending a three-point action plan. First, restore funding to the book publishing industry program to an adequate level. We understand the original levels at which this program was announced are not going to be achieved. We understand fiscal responsibility, but we think a 50% cut in those is unreasonable.
Two, create a national loan-loss reserve program that will not cost a cent more to the government. The use of $5 million a year now being used for loans, if it's used as loan guarantees on a leverage basis, will get us $20 million, $30 million or $40 million in loan activity to the publishing industry. This would be a great boon and would cost nothing additional to the government.
Third, as was suggested in both the red book and ongoing statements last weekend, we recommend a long-term structural measure having to do with tax measures to put a structural ability into the industry to continue and survive successfully.
We have the continuing GST question. I do urge people to say that the announcement last week was a very partial part of it. We appreciate the schools and institutions not paying for it, but that is hardly the answer.
As well, we support the government's policies on cultural initiatives.
I'm about to wrap up, but I must say one thing. If in the questions -
The Chairman: There will be lots of questions.
Mr. Stoddart: - anyone wants to ask about McGill University, we will come back to it.
Thank you, Mr. Chairman.
The Chairman: I will give you all adequate time later to spend in any areas we haven't allowed you to go into. Thanks very much, Mr. Stoddart. It's a great industry.
Pat Bradley, please.
Ms Pat Bradley (Executive Director, Professional Association of Canadian Theatres): Thank you, Mr. Chairman and members of the committee, for the invitation to appear today. I'm executive director of the Professional Association of Canadian Theatres, a national association representing professional theatres in every province and one territory in the country in the English language. Our members range in size from the Stratford Festival at $24 million to Theatre WUM at $86,000 a year.
I'm speaking to the CCA's brief rather than presenting my own. I just want to reiterate some of the points it makes. When you have a chance to look at it you'll see the data very clearly on cultural industries - and specifically I'm concerned with arts funding - shows the decrease in the Canada Council budget. That decrease has been amplified in most provincial and municipal jurisdictions, leading to a drastic decline in government funding for the performing arts. Gee, what a novel idea. However, performing arts organizations, theatre companies, dance companies, symphony companies, orchestras, symphony orchestras and opera companies have made great strides in increasing their earned revenues, in increasing their corporate sponsorship and in increasing their private donations.
We have as a subsector become considerably more self-sufficient than we were, and within that restructuring, performing arts organizations have managed to avoid major downsizing or job losses. We are a major employer, as the CCA's brief will tell you.
I would urge you to consider the recommendations on the final page of the CCA brief. I'm not sure how much further performing arts organizations can cut without actually having an effect on the arts and the artists in the communities across the country. The three are on the last page. I would direct your attention to one you've heard before - adequate, stable, multi-year financing of national cultural institutions, particularly the Canada Council, which is the federal government's prime support mechanism for individual artists and the not-for-profit arts organizations, and a more favourable tax treatment of donations to arts organizations and other charities; in particular, gifts of less than $200, the backbone of many smaller and mid-sized performing arts organizations.
Finally, the government's potential proposals for a complete ban of tobacco sponsorship threatens the very corporate partnerships that performing arts organizations and festivals have painstakingly built, partly at the behest of government, during the years of declining public funding.
Thank you very much.
The Chairman: Pat, you got it all in within three minutes.
Ms Bradley: Yes, but nobody heard me, probably, because I talk too fast.
The Chairman: No, it was very clear. Thank you very much.
[Translation]
Mr. Jean-Philippe Tabet, please.
Mr. Jean-Philippe Tabet (Director of Training, Cultural Human Resources Council): Hello, and thank you for giving the Cultural Human Resources Council this opportunity to appear before you today for the first time.
We support the brief presented to you by the Canadian Conference of the Arts, and I will just add the elements that are required to understand our unique features.
.1850
[English]
In the national context, artists and cultural workers are vital to the economic health of the nation. Furthermore, they are susceptible to major environmental changes such as globalization, new technology and changes in public policy.
The cultural workforce is preparing itself to grow and change. As you will note in the brief put forward to you by the CCA, more than 700,000 Canadians are employed or self-employed in the cultural sector. Its growth over the past 10 years was double that of the total labour force during the same period.
Direct and indirect economic impact of the arts and cultural industries are estimated at $29 billion and $13 billion a year, respectively. So we are not talking about an insignificant sector but a growing sector for the wealth of Canada.
The Cultural Human Resources Council has developed a coordinated approach in terms of labour force adjustment. This is what I'm going to talk about now.
CHRC, as it is known -
[Translation]
- unfortunately ``CHRCH'' does not translate into ``Église'' in French -
[English]
- is a non-government agency, but it represents employers, employees, the self-employed and training institutions in the cultural sector.
[Translation]
Our Council's partners include a significant number of organizations like ACTRA, the Canadian Museums Association,
[English]
the Canadian Film Centre, the Canadian Arts Presenters Association, the National Ballet School, Canadian Actors' Equity Association, PACT and others around this table, including the CFTPA.
CHRC is developing strategic approaches and programs that address the most pressing professional development needs of artists and cultural workers in Canada. This includes training Canadians, artists and cultural workers in business skills, advanced cultural skills, marketing skills and new technological skills.
To give you an example, under its transition initiatives program referred to earlier, the Cultural Human Resources Council, with the support of Human Resources Development Canada, has trained more than 4,000 self-employed active cultural workers and artists since 1992. But this program has involved a financial contribution from the cultural sector, both in kind and in cash.
The new challenges we are facing now are of two sorts. First is the question of the nationally essential professional training initiatives and organization. I have a brief here. You can read through it. It states the problem very well.
All these national training institutions - the National Theatre School, the National Ballet School, the National Circus School, the Dancer Transition Centre, etc. - are providing training that is available to Canadians, offering courses of high calibre, meeting national and international standards. Each of these organizations has received significant ongoing support from the federal government in recognition of the excellence and effectiveness of their work.
Now, however, funding to these organizations is being drastically reduced or removed. In a comprehensive brief sent to Ministers Copps and Young, and to Minister Pettigrew, we outline a rational strategy to support the critical level of training needed for these national training organizations.
The second point is the support for a new framework for Canadian human resources in the cultural sector. The strategic initiative we have taken includes a skills upgrading component, a youth internship component and a comprehensive new other initiative. It's in our brief, and you may want to read about it.
In conclusion, I would have to say the cultural sector is an engine in the knowledge-based economy of today. Professional development and support for it is a fuel that makes the engine go. The self-employed workers of the cultural sector are the model for the growing and vibrant workforce for the future. Investment by the federal government in this sector will create new jobs and yield an excellent return.
Thank you.
.1855
[Translation]
The Chairman: Thank you very much, Mr. Tabet.
Mr. Bachand. Welcome to our Committee.
Mr. Bachand (Saint-Jean): I don't quite know to whom I should address my question.Mr. Kelly, perhaps, would be the one, since he seems to have been the pivot and the reference point for quite a few people in terms of the brief he presented.
First of all, I share your opinion on the importance of culture. You are aware that Quebec's performers, of whom I am one, are still asking the provincial government for at least 1 per cent of the total funding it gives culture.
You also said that culture is extremely important, that it creates jobs and so on.
I don't often attend the meetings of the Standing Committee on Finance, but I have the impression that all the witnesses who appear before it invariably say, ``Our sector of activity is crucial for the economy and that's very important.''
The difficulties facing this country's public finances are well known. Today I've heard two things from you: either that subsidies should keep being paid or that tax exemptions should be granted, or preserved.
Mr. Kelly, are cultural enterprises as a whole attempting to make up for the drop in government subsidies by asking a little more from their customers? Some of the people, who are overtaxed already, have reached the point of asking if they are going to go to the theatre or put bread on the table. The people who have the means to pay for cultural activities should perhaps have to pay a little more for them.
When it comes to Canadian publishers, I have a more specific question that I put, actually, to Mr. Grubel. Are you calling for an exemption from the GST for all books sold anywhere in Canada, and do you regard the GST on books as in the end a tax on culture?
The Chairman: Who would like to answer that? Mr. Kelly.
[English]
Mr. Kelly: I'll reply to the first one, which I believe is about whether we are doing what we can to extract payment from people who actually use. Absolutely. However, we're also aware that Canadian culture belongs to everyone. We have seen some remarkable developments in the country with the development of commercial theatre, for example, which is touring - Livent, the Mirvishes - and addressing the high end of the market with tickets that can cost $95 or $100 for an evening. So there's certainly that. On the other side are the smaller theatres, which are trying to survive and offer competitive prices. This isn't a matter of if you really value it, you'll pay anything we ask. It's a value judgment. This is discretionary income that we're asking Canadians to spend on the arts. If we put the true value on the tickets, books and records, it would be out of the reach of almost all Canadians.
So we're looking at partnerships with the corporate sector to try to bring in new sources of revenue. We're doing different activities. The museums have an excellent catalogue that is promoting sales of materials available in the gift shops right across the country. Almost everyone in the cultural sector is looking for new opportunities to enter into partnership. But let's be plain: this is a very large country with a very small population and we are north of the United States, which is one of the largest producers of cultural materials in the world. If we're going to survive, if we're going to have a national identity, it's imperative that the state play a role in the sustenance, promotion and protection of Canadian arts and cultural industries.
The Chairman: Mr. Stoddart on the GST.
Mr. Stoddart: Yes, we clearly believe the GST should be off books, to answer the one question specifically. Yes, it's a cultural issue, but I think it's far more important. It's also a matter of literacy and learning. Reading is fundamental to today's life. Whether it's working with computers or reading for pleasure, reading as an activity is critical to Canadians' and everyone's ability to develop in this world.
.1900
So I think it is clearly cultural, but it is much broader than culture and it has to do with literacy and the ability of people to learn in today's society.
The Chairman: Mr. Grubel, please.
Mr. Grubel (Capilano - Howe Sound): I'd like to address a question to Ms McDonald and Mr. Stoddart. I can understand your coming here and asking for more subsidies. Everybody would love to have some more tax breaks or whatever. But I'm trying to understand what has happened as a result of the cuts you have suffered. For this reason I'd like to have an objective number, which should be easy. What are the total sales of the members of your organizations for the last two years? You told us in your introductions how prosperous, wonderful and great are the contributions your industries have been making to the economy. How big have they been? By how much did they go up from 1994 to 1995, for example?
Ms McDonald: First of all, I didn't ask for more. I thanked this government for introducing a fund at a very critical time, a time when other funds were going down. I did not ask for more. I asked for two programs to continue and to consider flexibility in the guidelines that would govern some of the training programs. So that's the first point.
A concern about stable funding for the CBC.... I've been travelling across the country today for people involved in television production. The Canadian Association of Broadcasters was in Edmonton, so I was there. I can tell you that in 1991 our economic activity represented about $1.5 billion, and in 1995 it was about $3 billion in terms of the economic activity directly related and some of the indirect impact.
Mr. Grubel: Okay. You probably don't have these numbers, especially the other crucial number that I have. I would sincerely love to have from you the following information. By how much did sales in this industry grow? It doubled in one year. What happened? What proportion of those sales...? Let me put it differently. It is possible to estimate the value of the tax concession made through the refundable credit. I would like to know approximately what percentage of the total these refundable credits represented in 1994 and 1995.
Ms McDonald: I couldn't tell you that right now because in 1994 and 1995 the film and television industry was governed by the CCA, the capital cost allowance, and that's a totally different program.
The refundable tax credit program is one geared at more culturally relevant programs, and I can tell you today, because I was talking to people from Revenue Canada, that not a cent has flowed to one Canadian producer from that. It's just a program that got through legislation in June. The guidelines came out later than that.
There's an Ernst and Young study that can tell you what we think it might be, and that's been around for a while. I'll be better prepared to answer that next year, but it's impossible for us to answer it now.
Mr. Grubel: Let me tell you what my concern is. I hear a wonderful success story. I know that capital represents a relatively small input because you told me it's a very labour-intensive industry. So the subsidy element, either capital cost allowance or refundable tax credit, cannot be anything but a tiny fraction of the total. This has either stayed constant or gone down. So I'm asking myself how essential the subsidy is to your industry. I've asked the same question of the book publishers. How important is it? What has happened since your subsidies have been cut by 50%?
.1905
Ms McDonald: May I address this?
Mr. Grubel: Sure.
Ms McDonald: I think part of the issue is whether we want to control Canadian product in Canada. This is what happens in the independent film and television production sector. As a subsidy disappears, to find the rest of the financing the producer must go to foreign market. When you go to a foreign market to get the rest of the financing as the Canadian financing decreases, the element of the story becomes less Canadian and it becomes more homogeneous. Then there are demands to use talent from that country, particularly the United States. Then you lose creative control. The Canadian producers, the artists and Sandy's members they employ become controlled by non-Canadian entities and become itinerant. They become totally captured by what the level of the Canadian dollar is. This foreign or U.S. industry will move at any time if the dollar goes up.
The more we can control it in Canada, the more we can create our own product. The less often the Canadian producer has to go outside Canada and get this money, the more likely we can create the product, sell it in the market, gain the money ourselves and bring it to Canada. Then we do not just become a people who are working for American interests and who get paid a salary, and we do not have a situation where the majority of the money goes to another country, the United States, primarily for English-language producers.
Mr. Grubel: I find it really quite astounding that in one year your output can double and the subsidy stays the same.
Ms McDonald: No. Sir, I've said it was over five years, from 1991 to 1995.
Mr. Grubel: Even so, this is a dramatic growth rate. Are you telling me there has been a dramatic decrease? What is Canada getting per dollar of subsidies? How essential are the subsidies in your industry? I'm not persuaded.
Ms McDonald: I can provide you with proof. Clearly you are not persuaded. Partly, what you get is -
Mr. Grubel: It is intangible. Are you telling me -
Ms McDonald: Yes, it's tangible. It is certainly tangible in terms of a tax credit. For the tax credit in Ontario, for example, for every $1 of financing put in the return is $1.23. In Alberta, for every $1 put in the return is $1.56 to the government.
Is there a return? Yes, and this is why the government chose to go the tax credit rate as opposed to a subsidy rate in terms of this.
Mr. Grubel: Clearly, when we have a financial crisis, could the reason why subsidies to cultural industries have been cut be because there is not enough money? If you're telling me the budget situation improves by giving subsidies to the industry, I am surprised.
Mr. Crawley: If I can just underline something for a minute, there is also something qualitative here. I don't expect to argue the intrinsic value of Canadian culture with you. But in a sense, we will survive. Artists and producers are the most disciplined entrepreneurs you will meet in any sector anywhere. We will survive. We will do what we need to do to survive. As Elizabeth said, we'll go to another jurisdiction if we have to. We will cook cotton candy for you. If you won't make sure we can make good pemmican, we'll live on cotton candy. If this is what you want, we can go this way. But she is quite correct: we're actually increasing tax revenue. Those tax incentives increase tax revenue.
The Chairman: Mr. Grubel, I think Mr. Stoddart wanted to say something.
Mr. Grubel: I have a comment. Let me tell you I'm skeptical. I'd like to see the proof of this. But Mr. Stoddart has some numbers. I'm trying to understand how much we're spending as a proportion of the increase in sales that has taken place in industries we are subsidizing.
Mr. Stoddart: I'd be happy to answer this. The numbers are more from memory, so don't hold me to them 100%, although I think they're fairly accurate.
The book market in Canada is about $1.2 billion. Canadian books are somewhere in the neighbourhood of $300 million a year. The subsidy to both English and French-language publishers was $17 million last year. Half went to English and half went to French. If you take half of$17 million, you can get the number for either part of the country as far as the language group is concerned.
.1910
The Department of Heritage analysis, the Donner report, indicates that in the English language sector there's a net loss for all the publishers. As I said, that report will be made available very shortly, probably next week.
I talked about the great success we've had, and that's in developing product, writers and material that the people appreciate and buy. What I didn't tell you is that we're all losing money and that the grant cut has gone from $45 million to $17 million in two years. I can tell you if that grant had not been cut, the publishers would have been on the right side of the ledger instead of the wrong side of the ledger. It is absolutely critical.
The book industry has decreased in total volume in the last five to seven years. There has been essentially no price increase in English-language books. I can't speak for the French-language price changes. In fact our business as an industry has gone down in that timeframe.
In spite of it going down, Canadian-authored books have doubled in that timeframe. I would submit that is directly related to some of the incentive programs that have been put in place by different governments across the country to make the publishers more successful, not necessarily in a financial sense. Publishers, by nature, have turned that around and published more books.
Perhaps we're reaching a stage where there has to be another avenue in those programs, but clearly the funding that has come to the book publishing area has been very successful. There are some very negative sides to it, though.
Mr. Grubel: So you've gone from subsidies representing approximately 10% of your sales to now, when they're down to about 6%?
Mr. Stoddart: Well, the problem is you have to take it on a company-by-company basis. I can only tell you of my own company, which is a larger one in the field. The most grants we got were in the 5% range, and I think we're down to 2%. That's of Canadian sales, not total sales.
Mr. Grubel: What about book sales in the United States? Aren't they down also?
Mr. Stoddart: No. In the last five years the book business has compounded by 8% to 9%. That's since 1990. We've been tracing it. Since the GST was put in place, the industry has not had an increase in the sale of books in Canada, and in the United States they've had between 8% and 9% annual increase. When you compound that, it's a huge increase in business.
Mr. Grubel: Well, we've had a stagnant economy, not a growing economy.
Thank you.
Ms Valerie Hussey (Government Relations Committee, Association of Canadian Publishers): With the reductions in funding and the need this industry has for a very strong and consistent policy, when there were such severe reductions at a point when publishers had already made major capital investments for development and toward the goal of creating a stronger capital base, it weakened the overall infrastructure of many companies. The detrimental impact of the reductions was far greater than anyone could have anticipated.
When we surveyed the industry, we discovered that the program, which was going into its third year, was in fact succeeding. It was going as we had projected. Obviously we ran head-on into an economy that could not sustain it, but the kind of capitalization we were hoping for in fact was beginning to happen.
Mr. Grubel: Thank you.
The Chairman: Ms Whelan, please.
Ms Whelan (Essex - Windsor): Thank you, Mr. Chairman.
I want to ask a couple of questions to Mr. Stoddart about his response on removing the GST from reading material.
Could you define for us what you mean by reading material in the removal of GST?
Mr. Paul Davidson (Executive Director, Association of Canadian Publishers): The Association of Canadian Publishers is a participant in the Don't Tax Reading Coalition, which is encouraging the government to live up to its promise to remove the tax from reading materials. It's the stated position of the Liberal Party of Canada, unanimously adopted. It's also the public position over half the Liberal caucus.
Last week's move we see as a partial step toward fulfilling that promise. We're able to see that there will be an enhanced rebate for institutional buyers.
With regard to your specific question on a definition of reading materials, we acknowledge that it is hard in a society with so many media, but having said that, newspapers, magazines, books, periodicals and related reading materials should be included in that.
.1915
Ms Whelan: Including magazines such as Playboy and Playgirl and CD-ROMs. There's really no place to draw the line.
Mr. Davidson: No. We are part of a broadly based coalition that's called on the Liberal Party to follow up on its stated commitments from its time in opposition.
I understand defining those materials has been an issue with previous ministers of Finance and previous finance committees, but we believe that when the political will is there to define the matter, it can be defined.
Ms Whelan: I was asking what your definition was.
Mr. Stoddart mentioned a few minutes ago that the amount of money in the industry was $1.2 billion, of which $300 million was Canadian. So what percentage of Americans would benefit from the removal of GST on reading materials?
Mr. Stoddart: I don't think Americans, the British, or French or are going to particularly benefit. I think it's the consumers, it's the people of Canada. We're not arguing for the corporations.
We don't gain a whole lot. We would hope that the sale of books will increase if the GST is off. We consider it a tax on reading, as opposed to a corporate tax or an incentive to the publishing industry.
As to your other question about whether it should be on Playboy or not, as opposed to something else, I don't know how you discriminate against one type of reading or another in the application of tax. I think there's a lot of very important and laudable Canadian materials that should not be taxed, and I'm not saying others should be, but to say I don't like this so it should be taxed...as a publishing organization we obviously can't take that position.
Ms Whelan: Mr. Stoddart, I'm asking you the question. You're the expert here. The reason I'm asking is that I have a four-and-a-half-year-old niece, and anything to her is reading material in the sense of the way she recognizes words on boxes and labels.
How far do we go? How far do we take it? That's my question.
Also, we've heard about cuts to subsidies here. Do you know what the cost would be to the government to zero-rate it, and where will we get it from?
Mr. Stoddart: Well, I believe the finance minister is on record as saying it is $140 million. I haven't seen any substantiation of that figure. I find it incredibly high, and I don't know what it applies to.
You have to segment it too, because the question I was asked by the gentleman who has now left was about books. The cost on books would be different from the cost on all reading materials, and that's a decision somebody's going to have to make.
The minister made the decision this week to take the tax off not reading materials but books in an educational.... So it depends how far you go with what. We're part of a coalition that says don't tax reading, but it's somebody else's decision on how far it's going to go.
Ms Whelan: Thank you.
The Chairman: Mr. Benoit, please.
Mr. Benoit (Vegreville): Good evening, ladies and gentlemen. I'm going to ask a question. I'm not going to get into one line of questioning, but I'm going to jump around a little bit.
First of all, I think at least three of you talked about the difficulty in carrying out your business so close to this huge English-speaking country, which is the United States. You talked about the competition that results from being so close to this large population of English-speaking people.
I would like to ask you about the flip side of that, which is the potential in your industries for taking advantage of the huge opportunity that large market offers. I know at least three of you talked about the problems, but wouldn't there be a big positive side to this huge potential market if we could get free movement back and forth? Who would like to tackle that?
Mr. Kelly: I certainly would say that every one of us is interested in developing wider foreign audiences for Canadian cultural materials. There's no question about that.
You asked a very specific question about the United States, and I'm going to give you a very specific answer. They are a very chauvinistic nation. They are not interested in the cultural materials of other countries. It is a very hard sell to establish a major toehold in the American market place for most of our cultural products.
.1920
We have, in Canada, far more access to cultural materials from around the world than they do in the United States. That's not to say we're not up for the challenge. Obviously we are and great efforts are being made. But the system is a lot more challenging than the Canadian system in many respects...to establish a presence in the American market.
We also have the cultural exemption, which protects our cultural interests from being taken over by the Americans. When you ask for free play, you have to be able to compete against a nation whose entertainment industry has the deepest pockets in the world.
Canadian cultural interests don't have those deep pockets, as you've heard. We're at a very good point in our development, but there's no question, if the Canadian cultural sector had to take on the mass entertainment industry in the United States, of who would win. It wouldn't be us.
Mr. Benoit: I'd like to ask anyone who would like to answer how exports to the United States have changed in your particular industries in the past few years.
Ms McDonald: Unfortunately, I don't have the data with me. It has certainly, particularly in the television market, increased in the independent production sector and where you see it most significantly is in the U.S. cable market, which is what we would call specialty services. Certainly you see more Canadian product going there, so there are opportunities.
However, there's a price to take advantage of those opportunities, and the price is the control of the product. To sell to that market, it becomes a very homogeneous product and has certain demands that reflect a very U.S.-dominated market in terms of the look, who will be able to appear - the Americans are very strong on their star system, so that means we will not develop Canadian stars - and who the writers will be.
There is money to make, and I say it is being exploited very well. At the same time, to be able to have a Canadian industry you have to have producers who can do Canadian content, you have to have Canadian performers who have an opportunity to be part of it, and you have to have Canadian writers. You go through the whole....
Mr. Benoit: But you have Canadians in other industries who have competed very well against the Americans by finding their very specific part of the market, which they do well in. I think we've seen it with some television programs, and probably in the other industries as well, where Canadians have in fact produced a Canadian product that is quite different from the American product and yet has sold very well. I'm not -
Ms McDonald: There are very few examples of that when you get down to the television product. Perhaps one of the few is Road to Avonlea. That is because Kevin Sullivan had enough stature to be able to do it with Disney, but to do it he had to relinquish opportunities for some Canadian performers. Certainly the money fuelled Avonlea's going on. That was an unusual situation, targeted to a very specific market, but the more you want to get to an adult market and away from the family market, it affects the look of it.
The other issue is very specifically related to our dollar. The point was made that we are trying, but the U.S. market, from an entertainment point of view, is hard to get into. They just are not interested in anything that reflects a foreign value. They don't even understand it. They don't understand policemen who don't carry guns. They don't understand our legal system.
The degree to which a Canadian product has to be changed to look like it was done in Chicago - the one that was very clever was Due South, and for a whole lot of reasons it has not been able to continue. It was very clever, and it was interesting to have that Canadian a product; yet for two years Alliance had to wait to find out whether CBS would pick it up, where it would schedule it, and whether indeed, once the deal had been made with the Canadian broadcaster to maximize the revenue, those scheduling opportunities could be lined up. And after last year it just couldn't happen.
.1925
Mr. Benoit: I think you're selling yourselves short as a group. I think you have the capability of Canadianizing those Americans, getting into the American market, and competing very well. I think you really are selling yourselves -
Ms McDonald: Well, I would suggest you go to L.A. and find out just how interested they are in doing that. I think you'll find not. I would remind you that the entertainment industry is the second-largest industry in the United States, after their defence industry. In fact, it may overtake it.
Ms Hussey: The nature of culture is that which reflects who and what we are. You have to accept that as a fundamental premise. I think the cultural sector has been phenomenally successful at exporting, but what has been said here is not a matter of selling ourselves short, it's recognizing the nature of that particular market place. The Canadian marketplace is a much more open market. It's much more welcoming of diversity. That's the nature of our nation. That's the nature of the Canadian psyche. The American marketplace isn't. If you go and look at the homogeneity of its very own culture, you'll see that reflected.
When we do export, we become very, very adept at defining what will travel. I think all of us have recognized that we need to create those materials that will travel that help to support, underwrite, and subsidize those works that won't, those works that are addressing a very small market on a population basis, a very vast country on a physical basis, where the economies of scale that exist in the U.S. don't exist here, where the costing and pricing structures that exist in the U.S. can't be duplicated here, and yet pricing and costing expectations are often mirrored from the U.S. Canadian books are priced to meet the American standard. They're not priced to meet the actual economics and economies of publishing in Canada. We can't price our books in line with the actual cost, or our books would be $10 to $20 more than the American imports. Yet the very principle of an open marketplace is fundamental to this industry. We believe the marketplace should be open; we believe the borders must be open. That's the whole fundamental philosophy of a publisher and access to information and knowledge.
On the one hand we support the idea, the notion of opening the doors, but we do it to our own detriment. Yet that's not a principle we're going to give up.
[Translation]
Mr. Tabet: I would like to say that there is at least one area where Canadians are managing very well. The skills of Canadian workers in the cultural sector are widely recognized and admired by our neighbours to the south.
The training infrastructure that Canada has developed and in which it has invested so much over the past 50 years is recognized all over the world. We get people coming to Canada in search of an especially well-trained labour force. To undermine the infrastructure needed to develop a productive labour force for the cultural industries would in my opinion be stupid. Look at the Cirque du Soleil - it has been successful, but it has been successful primarily because of some training initiatives that are now the envy of the whole world.
From the perspective that concerns us at the CHRC, we think that the training infrastructure in Canada is a very valuable asset that will enable us to go far. It is not an infrastructure that should be undermined.
The Chairman: Thank you, Mr. Tabet.
[English]
Mr. Crawley.
Mr. Crawley: I really welcome your question, Mr. Benoit. You're quite right; we can compete, and we do compete, and we succeed very well.
.1930
Our artists are as good as those anywhere in the world, and if they want to play in that big dynamic commercial game, sometimes that's where they go. Nobody begrudges a Martin Short, Leslie Nielsen, or Kate Nelligan who goes off and becomes a star of the stage in Britain or in films or television.
Think, for example, of R.H. Thomson or Sonja Smits. If the CBC hadn't had the money and the imagination to do Street Legal a few years ago, Sonja Smits wouldn't have become the star she is now in Traders. If Sonja and R.H. didn't have the desire as cultural artists to stay in this country and tell stories they want to tell.... These people have had offers to go off and become.... R.H. at one point was offered a regular part in Moonlighting, which was a hit a few years ago. He didn't want to. He wanted to come back here and work as a Canadian.
We've built a very competitive industry, really against odds, because successive governments have recognized the need to do it - for a political imperative as much as for an economic and cultural one. We've got to have our own identity. People will go. We can compete anywhere in the world. You know, Kiss of the Spider Woman originated in Canada and became a big hit. You've got to have the structural support here to make sure that you have an industry to begin with.
Mr. Benoit: Are you sure that your industry would not be much better off if the government had been less involved and you hadn't been limited in terms of guidelines, red tape, and so on?
Mr. Crawley: I'll tell you -
Mr. Benoit: There's a little bit of background to that question, and I think it must -
Mr. Crawley: No, let me answer you. If the Right Honourable R.B. Bennett hadn't started the CBC, we wouldn't have an industry.
Mr. Benoit: I was reading about -
Mr. Crawley: We would not have an industry.
Mr. Benoit: I want to give a little bit of background information.
Mr. Grubel: Why do we have to take your word for it?
Mr. Benoit: I'll ask a specific question about that, if I could, in a minute.
In The Montreal Gazette yesterday, I believe, an economist from Atlantic Canada was saying that economic development programs had killed jobs and killed the economy in Atlantic Canada. His study showed that Atlantic Canada would have been much better off without a penny of equalization payments. This was very interesting to me. He said it was partly because the money that came from government had strings attached - in fact, the boundaries were set not necessarily in the place they should have been - so the trade with the United States was killed as a result of the way this money was spent.
I'm wondering if in fact your industry wouldn't be better off. Specifically about CBC, I'd like to get an answer from you on that.
I think it was Elizabeth who said CBC needs stable funding. I absolutely agree. That's why we're saying that CBC television should be privatized, because it isn't going to get stable funding from government; that has become quite apparent. We've also said, by the way, that CBC radio should remain publicly funded and should be well funded.
Ms McDonald: Could I just address something?
[Translation]
The Chairman: Mr. Pilon, please.
[English]
Mr. Pilon: You're raising a very interesting debate here, Mr. Benoit. I should have a couple of members of my association with me tonight, because they would find it very interesting. Those guys are typical small entrepreneurs. They hate government, they hate bureaucracy. They're street fighters. They love competition, they want competition.
The problem here, when we're talking about competition with the huge U.S. multinationals, is that we're talking about unfair competition. I mean, we love free market, but we're not talking about free market here. When you look at the level of the annual revenues of the members of my association, I think the largest company would have $3 million annual revenue, and his direct competitor would be Warner, which has $3 billion to $5 billion. Those huge U.S. multinationals.... I'm talking about music. I could talk about film, TV; I could talk about Disney, Viacom Inc., or whatever.
If we were to go back and look at the history, we could take hours. It's a situation that developed between the two wars, and especially after World War II. It happened for many different reasons. Our neighbour developed huge control of the entertainment business all over the occidental world. It happened.
So the problem we have here in Canada is not specific to Canada. Talk to Portuguese, Italians, and Swedes; they have the same problem. It might be worse in Canada, because we're closer to them, but a fact of life that has developed during the last 50 years is that there's a huge dominance of the cultural industry all over the western world by the Americans.
.1935
The question now is for Canadians, for Portuguese and Swedes, and even people without the English language. The Irish people have just adopted a quota on the radio for their music. The Australians are thinking of doing the same thing. It's not only a question of different languages; it's also a question of huge dominant multinationals wanting to dominate more of this business.
We're talking here about unfair competition, so we're asking the government to help us not because we are against the market but because we believe in free market. This market is not a free market, because it's an unfair market.
The Chairman: Thank you, Mr. Pilon.
Mr. McAvity, please.
Mr. McAvity: I'd like to respond, because I'll respond from a slightly different perspective. You've got two different types of interest groups sitting here at the table: one is the industrial type and the other is the charitable or not-for-profit type. I would just like to speak from our perspective. Frankly, I want to reiterate much of what has been said, and I'll do it through a practical example.
We, because of the cuts, developed this mail order catalogue. I'd be delighted to pass out copies and invite you to purchase things of Canadian cultural material from our museums. We tried doing a blanket mailing in the United States. We thought this would be just great, that there was a huge market and we should go for it. So we tried it. Americans were not interested. They were not interested in Canadian products. Furthermore, our tax system, the GST, and the problems at the border made a bigger problem for us. If I had taken -
The Chairman: Just a second. You don't pay the GST on exports.
Mr. McAvity: I'm sorry, no, but it was mostly the border problems of shipping and handling, and so on. If I had taken ``Canada'' and the reference to our cultural institutions off that catalogue, and if I had opened a warehouse in Plattsburg, New York, and put in a phone number, I would have done well.
Mr. Grubel: Why didn't you?
Mr. McAvity: Well, it's not a closed story and we're kind of tempted by it, because we are hurting a great deal by the cuts, but I'm a proud Canadian and I would not like to take the name off.
The second aspect I'd like to bring to your attention is to focus it not on the United States but on other countries. One of the things we do have in this country is a tremendous amount of built-up expertise, at least in my industry and I'm sure in others as well. We have found that there are opportunities in certain foreign nations; for example, the Ontario Science Centre has produced exhibitions, which it has been able to export to developing countries, where essentially they've been able to replicate science centres based on the Canadian example. We have expertise on conservation, and this is why the Department of Foreign Affairs' cultural policy is really so incredibly helpful and needs to be encouraged and supported more. I think there's an opportunity there.
The Chairman: Mr. Stoddart, please.
Thank you, Mr. McAvity.
Mr. Stoddart: I'd like to answer very directly on that issue. Our company, General Publishing, has been a family business, and I've been in it for a long time. We built the business in the family from $115,000 a year to $30 million a year. We've lost some of the big international companies, such as Simon & Schuster, over the years. We've rebuilt it and rebuilt it and rebuilt it.
In 1984, when I bought the company from others, we did $1 million a year in Canadian material. We do $10 million a year now in Canadian material. What I'm saying is that we as a company and an industry are not afraid of competition. We've done it, we've changed, we've had to do it. The interesting thing is that one of our biggest revenue areas is rights sales and sales of books internationally. I do more in Germany in rights sales and English-language sales than I do in the United States, not because we aren't good in the United States but because the U.S. publishers aren't interested in Canadian cultural things.
If you have Margaret Atwood, you can sell the rights, no problem. With Carol Shields you might be able to; it's there now after she became a significant player. We and several other publishers have in the last year started to say ``The hell with them. If the Americans aren't going to look at our children's books, which we're wonderfully efficient and good at, if they're not going to look at our poetry books, our literature, etc., we're going to take them into the U.S.''
We are starting to build business, but to look at the U.S. infrastructure for book selling, to do it through the publishers and the sale of rights.... I'm sorry, but New York looks at New York. London looks internationally, Tokyo looks internationally, Paris looks internationally, and New York looks at New York.
.1940
That's the problem most of the people around this table face. If you don't take it in yourself, it's a really difficult sell. If you take it in yourself, you're dealing in a high market with a lot of gambles. There aren't many Canadian companies that have the reserves to take the losses sometimes necessary to develop that market. We among others are trying to do it currently, and quite honestly we couldn't have done it without the grant system for the development of our publishing programs.
Thank you.
Ms Hussey: May I quickly add one thing to what Jack has said?
We've actually had meetings with the key reviewers of one of the biggest journals in the U.S. for children's books, School Library Journal. It's the single most important journal. The editor of School Library Journal has sat across the table from us and said there are too many foreign books in this country, we're not interested, we're not going to give you review space. They've said it straight.
The Chairman: Thank you very much for raising an interesting issue and an important one.
Are there any of you who feel we haven't given you adequate time to express your concerns to us tonight, either directly or through the question-and-answer period?
Mr. Pilon: My question is very short.
Mr. Bouchard - it's too bad he has left - raised an interesting question about user-pay. Instead of having government giving subsidies, why don't we explore other avenues?
Let me talk about Bill C-32, the copyright bill. It's a sad reality that some opposition parties have not given support to the government on Bill C-32, which is a very great initiative to have the user pay for the intellectual property.
The problem is that Bill C-32 is great in principle, but there are so many exemptions in it the user will pay very little. It's a good principle inasmuch as the user really pays. Maybe the government will pay less and the user pay more.
The Chairman: That's a very good point.
I was going to suggest that each of you take thirty seconds to sum up, but I know you will use artistic licence and expand, so I suggest that everybody take five seconds to sum up what is the single most important point you want to leave with our committee tonight.
[Translation]
Mr. Jean-Philippe Tabet.
Mr. Tabet: We have a real asset in Canada, a particularly well-trained labour force, but one that lacks certain business skills. We have a labour force that is extremely focused on working independently.
I would like to leave the Committee with this message: the skill-levels of this cultural labour force cannot be diminished without risking very serious consequences. That is why it is vital not to undermine the training infrastructure in Canada.
[English]
The Chairman: Pat Bradley.
Ms Bradley: I just want remind you there's not - I was going to say ``civilized'', but perhaps that's a tactless word - a developed country in the world where the government does not provide extraordinary levels of support to the arts and the development of an indigenous culture. Sometimes, as in Europe, they do it through grants; sometimes, as in the United States, they do it through tax incentives.
Our free-trading neighbour down south in some ways is far more supportive of the arts than is this country. We're betwixt and between, and because of budget cutting we're trying to cut one thing off without putting the other thing in place. It's very dangerous and we're going to lose some of our culture.
The Chairman: Thanks, Pat Bradley.
Valerie Hussey, please.
Ms Hussey: I would like to reiterate what everyone else is saying: recognize the necessity for and a commitment to a very strong and consistent cultural policy.
The Chairman: Thank you.
Paul Davidson.
Mr. Davidson: I would just remind members that the ACP has put forward a three-part action plan that involves restoring and renewing funding to the book publishing industry development program, creating a new loan loss reserve program at no additional expense to government, and introducing long-term structural measures in keeping with the red book commitments.
The Chairman: Thank you.
Jack Stoddart.
Mr. Stoddart: I opened a newspaper this morning and this fell out. It reads, ``Commitments are only as strong as our will to fulfil them.'' I hope the government's commitment to culture is there. Thank you.
The Chairman: Thank you, Mr. Stoddart.
Mr. McAvity.
Mr. McAvity: My birthday wish is for stability in funding and for tax incentives. We've outlined a number of those.
The Chairman: Thank you very much, and happy birthday.
Mr. McAvity: Thank you very much.
The Chairman: Keith Kelly.
.1945
Mr. Kelly: I would like to say that the cultural sector, both the arts and cultural industries, are willing partners with government in finding new ways to sustain the growth and vitality of the cultural sector. We've identified some of those recommendations to you. The key one is stability and a coherent federal cultural policy.
The Chairman: Thank you, Mr. Kelly.
Mr. Crawley.
Mr. Crawley: Structural support to the cultural sector will always return, both economically and culturally, more than you're putting into it. One of the things mentioned in the CCA brief, and it's been alluded to a couple of times, is this brilliant idea that culture is the third pillar of our foreign relations.
All of our industries are making more from exports than we ever have before - along with the questions Mr. Benoit was asking - and we need to keep going in that direction, but you need the domestic polices in order to achieve it.
The Chairman: Thank you, Mr. Crawley.
Brian Anthony.
Mr. Anthony: Thank you, Mr. Chairman. Last year we made a presentation to you that included a shopping list. I would refer you and your committee colleagues to that list.
I would also refer you to a recent issue of our Heritage Canada magazine, which contains an article - you have it in your kits - entitled ``Taxing Heritage''. It also contains much of our shopping list, and we will be writing to you and your committee colleagues in the near future to go into further detail.
I would like to remind you that as our nation frets about its future and its identity, our heritage is central to our identity, and that includes our cultural heritage. I say this in support of my colleagues around the table, who would like to thank you for your consideration of our interventions tonight.
The Chairman: And the older that John McAvity and I get, the more we appreciate what you just said.
Douglas Franklin.
Mr. Franklin: Just to strengthen something Mr. Anthony said, we would revel at the thought that we had a level playing field in Canada, as far as tax is concerned, to protect our heritage.
Thank you.
The Chairman: Thank you.
Elizabeth McDonald.
Ms McDonald: I would like to reiterate that in 1996 the government made two very wise decisions in terms of the allowing the refundable tax credit for our industry to go forward, and for creating the Canada television and cable production fund. We believe those will bring growth to our sector and return to the economy. But they require stability and a commitment, so we would ask that we have that stability and commitment from this government.
The Chairman: Thanks, Ms McDonald.
Mr. Pilon.
Mr. Pilon: I think I said everything.
The Chairman: Good. Félicitations.
Mr. Cloutier.
[Translation]
Mr. Cloutier: We hope the government will find some means to facilitate our obtaining charitable organization status, for the simple reason that this is the only way for our francophone communities to have access to all the cultural products people have been talking about, and in particular those in the French language.
[English]
The Chairman: Merci beaucoup.
Brenda Chamberlain.
Mrs. Chamberlain (Guelph - Wellington): Thank you.
I just want to say that I'm really pleased you came tonight to present to us. I think this sector of the population is very important to Canada.
I'm sure everyone of you understands our budget constraints and the things we're trying to work around. I would feel badly to have you go away and not at least comment on something Mr. Crawley said, which was that the sector he represents will sell cotton candy to survive if it has to, and it will survive. I believe that's true of all the people I've known - artists, musicians, the Stratford Festival, the Drayton Festival - I'm a frequent attendee at those places. Those people show tremendous entrepreneurship and will to survive and do anything they have to to perform their craft and put something back into Canada.
So even though we have a lot of problems in trying to work around it, we do recognize it and hope we can do some things and continue to support the arts. I think it's very important.
The Chairman: Thank you Brenda, that was.... I think you speak for all of us at this table.
We have before us people representing radio, television, film, records, video, tapes, books, theatre, symphony, opera, dance, les centres culturels d'Ontario, the artists, the publishers, museums and heritage. I don't know what I forgot - les écoles nationales, the National Ballet School and the National Theatre School, the groups representing the artists, the actors. Millions of Canadians are directly involved in what is before us around this table, and even more indirectly.
.1950
We know that the arts and culture.... As you said, it doesn't take a lot of money to have an artist working. We've heard that it doesn't take a great deal of money and support to have publications continuing to go out, but they're fragile. It's a very fragile industry. I wouldn't want to be an investor if I were concerned only about money. But what you people have done for us, apart from the jobs....
It was Alexander Crawley who talked about the intrinsic merits of culture. We didn't get into that because you probably felt we didn't have time, but I know every one of you could wax eloquent about what it means to you and to Canadians as a whole. And I know that every Canadian, when they think about it, takes great pride in the cultural achievements Canadians have had, and some of the cultural experiences they have had, and wouldn't want to do without them.
Ultimately, the culture we adopt helps define us as a people. And who knows but the Canadian culture is not always as strong as we would wish. Maybe this is because we have not nurtured our cultures to the extent we should have.
You make a very compelling case for us. You've accepted the fact that cutbacks are necessary in terms of grants and in terms of the overall scheme of things, and you've come to us asking for.... Well, if you can't do it through grants, and maybe we need some small grants in certain areas, then at least give us the tools to go out and raise some money, give us the tax breaks, give us the level playing fields, give us the opportunity, based on our performance and who we can attract to us, to make things happen.
You've talked about a number of these tax breaks. As we pushed last year on this committee, I propose that this year we make recommendations for tax cuts of a greater order that will assist you to do the things we are no longer doing but which we did in the past. I've heard you loud and clear. You need adequate, stable, multi-year funding and a coherent cultural policy. We are a very large country with a very small population and we have to compete with those to the south of us - that wasMr. Kelly. We are so lucky to be Canadians. Let us exalt in that through our cultural industries.
Thank you very much.
Some voices: Hear, hear.
The Chairman: This meeting is adjourned to the call of the chair.