HERI Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 4, 2001

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[English]

The Vice-Chair (Mr. Dennis J. Mills (Toronto—Danforth, Lib.)): Good morning, ladies and gentlemen. Obviously, the chair has run into some difficulty getting here this morning. He was to be here, so subject to my colleagues' approval, we should probably begin so we can maintain the pathway we're on this morning, because we have so many witnesses.

I don't see any objections, so we'll begin by welcoming today REAL Women of Canada, represented by Gwendolyn Landolt, Sophie Joannou, and Diane Watts. We also have MediaWatch, with Melanie Cishecki. We also have the Canadian Association of the Deaf. They are not here yet. As well, we have the Canadian Association of Black Journalists, Sam Donkoh. Also with us from the Canadian Broadcast Standards Council are Ronald Cohen and Ann Mainville Neeson.

The way we do it here is we usually have about ten minutes for each of the witnesses. We'll go through everyone, and then we'll have questions.

Gwendolyn, let's begin with you.

Ms. Gwendolyn Landolt (National Vice-President, REAL Women of Canada): Thank you, Mr. Chairman.

We're very pleased to be here to express our views as ordinary Canadians about the broadcasting system.

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The CRTC, in our view, has generally interpreted the Broadcasting Act to limit competition, favouring Canadian content, Canadian-produced programming, and limited access, regardless of whether the Canadian public actually wants such programming. The real wishes of the Canadian public are not given much consideration by the CRTC; consequently, most Canadians do not understand why they must purchase their service in packages that include channels they do not want.

Moreover, the CRTC has not been sufficiently diligent in ensuring that there is a balance of views in matters of public debate, as required under the Broadcasting Act. Broadcasters in Canada, both private and public, do not unequivocally provide balance, but instead promote the perspective apparently to the left of the fiscal and social perspective of most Canadians.

In short, the CRTC, with its $22 million budget, is deciding what is good and bad for Canadian viewers and has become an arbiter of what is considered acceptable good taste in Canada, again in disregard of what the viewers actually want to see.

Furthermore, the Canadian Association of Broadcasters' guidelines for sex roles, which have been approved by the CRTC, provide a statement of intent that programming and commercial messages shall strive to present an equitable representation of women and men in various social and occupational roles, at home and at work outside the home. However, in actual fact, broadcasters seldom portray women in any of the traditional roles, such as mother or homemaker, or the father as a provider and concerned parent, unless of course it is done in a less flattering manner.

The guidelines also provide that television and radio programming shall portray contemporary family structures. This apparently has been interpreted by the CRTC as ignoring the traditional family, which according to Statistics Canada is the safest, most secure, and healthiest place for men and women because there is less poverty and less breakup.

Sociologist Judith Wallerstein has stated, in a 25-year study of children of divorced parents, that there are long-lasting negative effects of divorce and separation. We have to look at Statistics Canada. The 1996 census shows that 74% of children live in the traditional family, with biological mothers and fathers. Only 13% of families are single-parent, the same incidentally as occurred in 1930, and only 14% of couples live in common-law arrangements. But you would never be aware of these facts when viewing Canadian television, where dysfunctional family portrayals are the order of the day.

No commentary on Canadian broadcasting can go by without our mentioning the CBC. The CBC, which was established in 1930 supposedly to nurture and develop the Canadian culture and identity, I'm afraid has massively failed its mission. Instead of promoting a national sense of unity and identity, the CBC has become a divisive element in Canadian society.

This is due to the fact that the CBC has become not a source of factual information, but rather a source of indoctrination for the left-of-centre political and social agenda. The CBC's constant parade of left-of-centre reporters, commentators, and guest speakers is very troubling and very damaging.

The CBC is quite remarkable in its determination to keep any conservative perspective out of the information loop. Even on those occasions when the CBC does include the views of conservative groups, according to a study by the Fraser Institute, it nonetheless labels conservative groups in such a way as to undermine their credibility, but at the same time provides labels for left-of-centre groups so as to legitimize them and their statements.

Of course, we also saw what happened in the ruling by the ombudsman for the CBC on September 19, when they had a focus group on national CBC dealing with the terrorism in New York. There were so many complaints that the ombudsman for the CBC, David Bazay, has agreed there simply is not a reflection of the ordinary people's views.

With the new digital universe, things must change and can change. While regulatory support for the industry has developed an environment with a limited number of channels—the analog channels—the current level of trade protection, content requirements, and industry micromanagement is simply no longer justifiable in the 200- to 500-channel universe, brought about by the digital television channels.

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The new reality is that a great number of channels available with the new technology can accommodate both an expanded choice of programming for the public while retaining sufficient protected access vis-à-vis content for the Canadian industry. An appropriate balance must be reached between what the public wants to view and the industry's objectives.

The act should also be interpreted in such a less restrictive manner as to reflect the tastes and interests of the viewing public and limit the imposition of force-fed channels with mandated packaging. Customers will continue to make their choices. At some point, though, we must accept the fact that some of the less popular programming in Canadian TV and broadcasting should be allowed to fail and exit the system rather than continue with the regulatory support from the CRTC.

The commission has now licensed a host of new specialty digital channels. Unfortunately, old habits die hard, and the commission extended its regulatory support for a very few selected members in the programming sector to shield them again from competition, and this is of grave concern to us.

In public notice CRTC 2000-6 of January 2000, the commission set out its licensing policy for new digital pay and specialty channels. They apparently did this based on the decisions of the programming sector, which generally emphasizes a need for regulatory support for new services. The distributors, on the other hand, generally favoured a more open-entry, market-based approach. Instead, they took the programmers' wishes, and they have decided there will be regulatory support for the new digital channels. They broke the new digital channels into category 1 and category 2, where a limited number of services are again protected in category 1.

In public notice 2000-171, the commission licensed 16 English and 5 French digital services for preferential treatment in category 1 out of over 272 applicants. This included a whopping seven-year protection and no gender competition for other digital services.

The English category 1 services were varied; examples are BookTelevision, a documentary channel, PrideVision, sports, and travel. All cable and satellite distributors were ordered to carry and package these category 1 services, but they could choose category 2 services they wished to provide.

The obvious question to any Canadian is, why did the commission pick these 16 category 1 services over the other 232 services that are now in category 2? Why, for example, pick PrideVision over EWTN? PrideVision is a service that caters to the gay community, while EWTN is a religious broadcaster. Why did the CRTC not pick the Horse, Book, Automobile, Nautical, or Jobs channels?

REAL Women is concerned about the selection of PrideVision, for example, and views this choice by the CRTC as yet another example of the arbitration of public taste that substitutes at best bureaucratic judgment for customer choice.

As outlined in public notice 2000-17, the selections were based on six different criteria: contributions to Canadian programming, attractiveness of the proposed service, contributions to diversity, reasonableness of the business plan, innovative use of the digital medium, and the cost of the proposed service to subscribers.

Clearly, criteria 2 and 3, attractiveness and contribution to diversity, are almost entirely subjective when one is considering a group of over 250 candidates. However, the evidence of demand can be a significant factor, depending on the quality of the evidence. Criteria 1, 4, and 6 are based upon quantitative data that, analyzed properly, could support the selection rationale. But they certainly seem to have been overcome by the subjective criteria rather than supported by the data.

The selection of PrideVision announced in CRTC 2000-456 on December 14 said the reason for the CRTC's selection of PrideVision was that it will add diversity. It would help the friends and families of the gay community. As to whether such a service is worthwhile, it says “it will have the potential to be a `bridging' service, creating understanding and thereby reducing stereotyping.”

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The commission also refers to the evidence presented by PrideVision. They said there is a lack of programming targeted to the gay and lesbian community. It said that it will meet the needs of millions of friends and that focus groups were clear in their demand. They said that for the rate of application, the licensee proposed a wholesale rate of 35¢ per subscriber and a six-month trial period.

However, even a very brief analysis of the evidence on the demand and the argument on diversity fails to support the commission's conclusion that an approval of PrideVision merits a category 1 service. For example, in the focus groups they used to back the type of demand, there were exactly 20 in the Vancouver group and 23 in Toronto. This small group was quoted as the source of information on the type of demand that would appeal to the “mainstream” gay and lesbian audience—nobody else.

As to the demand estimates, they stated that according to the documentation, PrideVision would fill the needs of millions of Canadians, millions of friends and families. The applicant said the size of the audience comes from demand estimates of 330,000 in the first year to 550,000 viewers in seven years. If PrideVision were offered as a stand-alone service, if bundled in a package—which has occurred—the audience would go from 1 million to 2.6 million in the same period.

These estimates show clearly that the higher number includes a captive audience that happened to buy the package of access to other services and not PrideVision. Moreover, the lower numbers may not be very realistic. Having obtained the licence and having revised the information on its original application, PrideVision announced its pricing strategy on November 13. It now estimates that it will need well over 100,000 subscribers to break even over three years. What happened to the millions of people they were supposedly trying to appeal to?

Any argument can be made on behalf of groups that are diverse and underrepresented. It is not appropriate to select any one group for regulatory support for that reason alone. The new digital channels have allowed the commission to license a number of diverse services in category 2 on the basis of ethnicity: Filipino, Jewish, Persian, Punjabi, etc. In fact, the commission itself has in the past made policy in religious programming to allow distribution of services with a different point of view on a discretionary basis.

For example in public notice CRTC 1993-74, the commission stated—I'm summarizing it—they would allow religious broadcasting to make single or limited-point-of-view religious services available only to those who wished to pay for it. In our view, to paraphrase the commission, services aimed at groups that are diverse and underrepresented, such as the gay and lesbian communities, could have their single or limited-point-of-view services available only to those who wish to pay, just as the religious groups have had to. At the same time, they could ensure the more widely available services continue to provide viewers with different views on matters of public concern, as set out in the Broadcasting Act.

In summary, the basis of the selection of PrideVision to the exclusion of all others does not stand up to scrutiny. The use of selection criteria gives the appearance but not the substance of a detailed close scrutiny, while the real basis for particular selection remains subjective at best. The bureaucrats have substituted their own judgment for real market demand. The lack of objectivity is apparent in the enthusiastic statement from the commission and its decision to give category 1 recognition to PrideVision. It says:

A channel devoted to this audience will be unique to the broadcasting system in Canada, among the first of such services world-wide. It will have the potential to be a “bridging” service, creating understanding and thereby reducing stereotyping.

That's heady stuff indeed. In the commission's judgment, PrideVision is therefore more unique in the world than the other 232 candidates.

In addition, the commission is of the view that PrideVision has the potential to serve a worthier social purpose than all the other candidates who applied for recognition—

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): Ms. Landolt, are you concluding?

Ms. Gwendolyn Landolt: Yes. I just want to make one more point.

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It seems that the CRTC is outdated and subjective, and one of the new changes we would recommend, Mr. Chairman, is that there be monitoring and enforcement. The role of the state is not to pick winners, but, as the CRTC Act and the Broadcasting Act are changed, it is very important that the CRTC get out of choosing the winners and get back to letting the marketplace decide.

If there is a role for the CRTC, it certainly is to preserve Canadian content, but it also has to monitor the performance. Often they give licences out and never enforce it with the CBC or CTV. Whatever happens, they just go about and change, regardless of the terms of licensing. They simply throw them out and ignore them afterwards.

So the CRTC must be able to enforce. The act is very weak in enforcement policies, and the time has come right now, with the new digital universe, to change the role of the CRTC.

Thank you very much, Mr. Chairman.

The Chair: Thank you very much.

Ms. Gwendolyn Landolt: I apologize for going over time.

The Chair: That's fine.

Ms. Cishecki.

Ms. Melanie Cishecki (Executive Director, MediaWatch): Thank you very much.

On behalf of MediaWatch, I'd like to express my appreciation for the opportunity to be here and also apologize in advance that my brief will focus on areas where we'd like to see change. I haven't really adequately recognized the strengths of our broadcasting system. I do apologize for that.

MediaWatch is a national feminist organization that seeks to transform the media environment from one in which women are either invisible or stereotyped to one in which women are realistically portrayed and equitably represented. Our work promotes gender equity with a goal to effecting long-term systemic change.

I will focus my remarks on the future directions of the Canadian broadcasting system, specifically on regulatory and policy issues.

MediaWatch commissioned Simon Fraser University to conduct research into and offer a comparative analysis of the self-regulatory systems of Canada, Great Britain, the United States, and New Zealand. This report, entitled Watching the Watchers—Gender Justice and Co-regulation in the New Media Marketplace, introduces the notion of co-regulation of media industries. This model of co-regulation advances the current model of self-regulation to a more democratic and publicly accountable model in which industry, government, the public, and civil society organizations all play a role.

Canada is recognized as an international leader in media regulation, and it's important that we retain our leadership role by ensuring that our system is responsive to challenges brought about by the rapid changes of the 21st century. I'd like to stress that MediaWatch does recognize the increasing importance of regulatory bodies, and we also recognize the need to balance social responsibility with the market objectives of the industry.

That said, let me give you some highlights of our findings. We used four criteria to assess the Canadian regulatory model. We looked at the mandate and legal authority; we looked at networks of accountability to government, industry, and the public; we conducted an appraisal of how the boards monitor the media and assess community values and tastes; and finally, we did an assessment of how each board informs the public of its right to complain.

Following are some very brief highlights from the report. We discovered there is a need to establish dialogue between consumer and advocacy groups and the regulatory boards. Civil society organizations are feeling alienated by the system. The complaints process requires public participation, yet there is no financial or legal support. At present, civil society organizations such as MediaWatch have few resources to participate in the regulatory process. We've been lobbying for intervener costs for several years, and we're very pleased to see that Bill S-7, sponsored by Senator Sheila Finestone, is currently before the Senate.

Civil society organizations report that the complaints system is confusing, time-consuming, and yields few results. There is also little attempt to monitor changing community standards and to have these reflected in the code revisions or board decisions. Despite the appearance of an open regulatory model, a close examination of how decisions are made, and by whom, shows that it's not such an open process.

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MediaWatch conducts polls, subject to budgetary restrictions, and this year we commissioned the Canadian Facts Consumer Opinion Centre to conduct a national poll of Canadians to assess public awareness of and attitudes to the regulatory process in Canada. The results of these polls indicate that a significant number of Canadians, about 39%, report offence with television material. We also found that more women than men report offence—45% of women versus 32% of men.

When they are offended, viewers report that they're offended by a lack of morals, 75%. They are offended by violence and sexualized depictions of women, 63%. Racism is also at 63%, and these are the top levels of offence.

When they are offended, 62% of viewers take action by switching the channel and 46% of them turn off the television set altogether. About 26% of them either boycott a product or service, but only 3% actually make a formal complaint. Offended viewers reported on an unaided basis. About 35% said they don't complain because they either feel it won't make a difference or they don't have time. A small amount, about 7%, say they have no idea to whom to complain.

We also found that awareness of violence codes was high at 72%. However, the awareness of gender codes was quite low, 21%, indicating a need for MediaWatch and probably the CBSC to address this in its public outreach programs.

We also found that 69% of respondents agreed that an independent agency is needed to monitor and uphold community standards and values. About 20% of our sample opposed this.

The report argues that the legal frame and debate needs to shift to human rights and away from portrayal issues to keep Canada in its leadership role. Portrayal has become anachronistic in the context of changes in the social climate of tastes, for example, related to sexual expression. This need for a shift to human rights, I think, will address the growing trend that concerns are expressed about ethics, about human rights and violence, and we are hoping that this shift would provide a tool to address systemic issues such as systemic sexism, racism, and homophobia. We made a number of recommendations in our report.

MediaWatch has argued that self-regulation is not an inclusive process. Only a small segment of the population is willing to make a complaint, and civil society organizations are frustrated by the system. There has been little research or evaluation of standards or of the regulatory process.

We are experiencing unprecedented change brought about by changes in the global marketplace. Feminism is undergoing a shift in philosophy, and we feel that codes should reflect the new feminism that addresses broader issues of gender equality in the context of human rights.

This report, “Watching the Watchers”, makes key recommendations for change to bring the Canadian regulatory system closer to a model of co-regulation.

Our recommendations for the CRTC: MediaWatch accepts CRTC's devolution of its powers to the CBSC if there is a regular review of the codes at least every ten years; that there is public disclosure about complaints by ownership groups of record; that public disclosure of information is an important tool to change behaviour. Licence renewal hearings must publish a review of all complaints, including those to the CBSC, as well as efforts of the licensee to train its employees and the public on equity issues under the human rights legislation.

We call this an equity audit, and the CRTC is the only public arena where third parties may be present. MediaWatch strongly advocates for the restoration of the media monitoring capacity of the system, which would include the allotment of at least $125,000 a year for a mediated, independent survey of standards of taste. This could involve a partnership between the CRTC, the CBSC, and other stakeholders. We feel that the appointment of commissioners needs to be a much more open process, in consultation with civil society organizations, industry, and the government.

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The complaints process must be more open to the public, with clear guidelines established for appealing a decision. The CRTC needs to conduct regular formal reviews of the CBSC involving the public, and the CRTC needs to support complaints. This could take the form of financial support, such as for intervener costs, as well as of advice that could be made available in an interactive format on the website.

For the CBSC, we make the following recommendations. The CBSC needs some form of sanctions to force compliance with codes. Other jurisdictions, such as New Zealand, have the power to force broadcasters to publish statements, to refrain from broadcasting for a period of time, or to order fines payable to the crown or individuals. Even minimal sanctions would put some teeth into our current system.

The appointment of public members must be an open process done in consultation with civil society organizations, and a formal process is required through which public members are justified. This could take the form of an annual appearance before a parliamentary committee, for example. The CBSC report, which is quite good, would be a stronger tool for civil society organizations with the inclusion of the nature of complaints by type, by broadcast group, and program title, and by making clear the incidence of complaints upheld or dismissed.

The codes need to have periodic formal reviews and be reworked to reflect contemporary social issues and values. Civil society organizations must be consulted and recognized as full partners in co-regulation to safeguard it as a democratic process. Finally, civil society organizations need government, industry, and academic researchers to collaborate on regular monitoring.

These are just some very brief highlights. I thank you, again, for an opportunity to air our views, and I'd be very happy to elaborate on any of these points later on this morning.

The Chair: Thank you very much, Ms. Cishecki. I'd like to turn to the Canadian Association of Black Journalists, Mr. Sam Donkoh.

Mr. Sam Donkoh (Vice-President, Canadian Association of Black Journalists): Mr. Chairman and members of the standing committee, on behalf of the CABJ—the Canadian Association of Black Journalists—I want to express our thanks to the committee for the opportunity to appear before you to present our views on the state of the Canadian media as it pertains to the depiction and reflection of Canada's diverse population.

Before I proceed with my remarks, Mr. Chairman, and with your indulgence, let me take a few minutes to tell you about myself and about the organization I represent. I came to Canada over 30 years ago as a journalist and have since worked in the community media in various capacities from reporter to editor. I reported and commented extensively on issues ranging from health to politics and education to business. I've been a member of the CABJ since its inception in 1995.

The CABJ is a national network of journalists and other communications professionals. We are dedicated to ensuring that the complete picture of the rich and varied mosaic of Canada is fully reflected in the landscape of media organizations. Our membership of 200 includes individuals from the African Canadian community and others who believe and share in our vision. In the six years the CABJ has been in existence, we have launched a number of initiatives, all designed to help or empower our members as they make their professional contributions in the nation's newsrooms.

Let me tell you about some of these. Our most recent initiative is the Fil Fraser lecture series on diversity in the media. As some of you may know, Fil Fraser is a retired president and CEO of Vision TV. He is the first Canadian of African heritage on Canadian airwaves, and he has written on human rights and diversity issues in some of the leading publications in Canada.

Another of our initiatives is the CABJ's mentorship program, which brings student members and professional members together. Under our educational alliance initiative, the Centennial College in Toronto is a training and educational partner with the CABJ. We sit on a number of the college's committees, including the professional advisory committee of the journalism program. We also have CABJ scholarship awards for student journalists.

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Significantly, we also have Diversity in Media Awards. Past recipients include the Toronto Star, Vision TV, CBC Radio for their Metro Morning and Outfront shows, and Chatelaine magazine.

Why do we have the Diversity in Media Awards? The CABJ is serious about encouraging the media to be reflective of the Canadian population, but our concern goes beyond pointing out the failures to reflect the diversity of Canadian society. We also believe in recognizing the efforts, modest or significant, of organizations to be more reflective and inclusive.

Our concerns are these.

The CABJ is concerned about the lack of diversity, especially in TV. The media in general have failed to live up to the intent and spirit of the Broadcasting Act and the issue of reflecting the multicultural and multi-racial diversity of Canadians. The Canadian Broadcasting Act, under “Broadcasting Policy for Canada”, declaration paragraph 3(1)(d), states that “the Canadian broadcasting system should”:

(iii) through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society

Although there are instances when people from different cultural backgrounds have appeared in the news, or in drama and entertainment, it is rare to see them in other than stereotypical roles, such as crime, entertainment, or sports. Rarely do we see them in positions of power. Ladies and gentlemen, in our African Canadian community, for example, we also have professionals in business, medicine, research, law, and education, to name a few. That is the reality we would like reflected on TV.

But our concern goes beyond who appears in front of the camera or microphone. We would like to see appropriate representation behind the scenes, where we know the real power lies.

Although the Broadcasting Act does not pertain to the newspaper industry, I believe it is significant to mention the findings of Ryerson University Professor John Miller in his 1994 study of the Canadian newspaper industry. Professor Miller reported that there were 2,620 professional jobs in 41 newsrooms, and only 67 were filled by people of colour, of which a mere 16 were African Canadians.

The report showed that the visible minority workforce in newspaper newsrooms in 1994 was 2.6% of the population, at a time when aboriginals and visible minorities made up 13% of the population. That situation has not improved much. As far as we know, there is no similar research of broadcast media. But from anecdotal information, we know the number of African Canadians working in Canada's TV newsrooms simply does not reflect the reality of their presence or contribution in the population.

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Our recommendations, Mr. Chairman, are these.

The CABJ would like to take this opportunity to call for a study of Canadian TV news organizations' depiction and reflection of this country's diverse population. The CABJ will welcome the opportunity to be a part of this study, although ours is a non-profit association that derives its funds entirely from the dues of its members.

We also applaud the recent “get tough” approach of the CRTC that forces broadcasters to be more accountable on diversity. However, the commission needs to do more if it is to be an effective policing body of the industry. We would like to see, among others, measures that mandate TV organizations to set goals and timetables for achieving diversity targets as part of licence applications and to make such milestones measurable and enforceable throughout the life of the licence instead of last-minute window-dressing efforts to impress the commission at licence renewal time.

The performance of TV organizations towards attaining diversity should also be reported regularly and widely. The commission should create opportunities for media ownership among minority communities. After all, Canada likes to boast that it is the most multicultural nation in the world. So why did it take Milestone 14 years to win a broadcast licence in the most culturally diverse city in Canada? Visible minorities need to be given a voice not only in their own communities but also in mainstream media.

What we are presenting today is not impossible. It is actually being undertaken in Britain through that country's cultural diversity network. One year ago all broadcasters in Britain set goals and timetables to better reflect that country's diversity. Last month they gave an update on their work, and what they had to say is significant.

In conclusion, the CABJ's vision of diversity in the media recognizes the differences that all Canadians have, be it in matters of race, gender, religion, sexual orientation, or ability. We also believe in an unfettered opportunity to celebrate and share our differences with other Canadians.

Finally, Mr. Chairman and members of the standing committee, I want to thank you on behalf of the Canadian Association of Black Journalists for this opportunity to present our views on the portrayal of diversity in Canada's media. Thank you.

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

I'd like to inform the members and the panel that Mr. Roots of the Canadian Association of the Deaf has now arrived, and we're going to give him the opportunity to be heard. He has to have an interpreter next to him.

You tell me when you're ready.

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Mr. James Roots (Executive Director, Canadian Association of the Deaf): I'm not used to using my voice. I just need a minute to set up.

The Chair: Take your time. Let me know when you're ready.

If Mr. Roots prefers to have some other organization go ahead of him, that's fine. He can make himself completely free to go now or later.

Mr. James Roots: I think I'm fine, as long as you can hear me. I can't hear myself, so tell me if you can't hear me.

The Chair: No, we hear you very well. Go ahead.

Mr. James Roots: Thank you for inviting me here. The last time I was here was in 1988, for your predecessor standing committee and the royal commission on the Broadcasting Act. That was a lot of fun. I was living in Toronto at that time, and you put me up at the Chateau Laurier, so I had no complaints.

I don't know if you've all read my presentation already, but I'll just point out some highlights for you.

I'm representing the Canadian Association of the Deaf. We are the national organization of deaf people, not just for them, but of them—everybody in our organization is deaf themselves. Our mandate is to promote and protect the rights, needs, and concerns of our deaf Canadians. This includes those who don't identify themselves as deaf, but as hard of hearing, because they use captioning the same as we do. They have the same problems we do.

We are completely controlled by and composed of the deaf consumers themselves. We're not a service agency but we are a consumer organization specializing in information, research, and community action.

Since we're deaf or hard of hearing, we can't follow the spoken words on television programming. Volume controls do nothing for us. We can't hear sound effects. If a show on TV has someone speaking off the screen, we don't know it. This applies to whatever is on the TV, whatever program is going on, whether it's a sitcom, a drama, a commercial, an emergency notice, a newscast—anything on TV. So in order to understand broadcast material, we have to have captioning.

Closed captioning is a written transcription of dialogue and sound effects. Usually it appears as white letters on a black background about two to four lines at a time. It cannot be seen unless the caption decoder is turned on; that's why it's called closed captioning. You can't see it unless you turn on the decoder.

The American Television Decoder Circuitry Act of 1990 required that all television sets with screens 13 inches or larger sold in the United States have a decoder chip installed in them. Of course, Canada benefited from that spillover effect, and as a result nearly all television sets already have the built-in capacity to decode captioning signals.

This is very important for us because up until 1991, the decoder box was an external box outside the satellite box or whatever, and had to be hooked up separately. You had to hook it up through your VCR, your TV, and all these wires were going around the back. It did not pass the CSA, the Canadian Standards Association, which meant you couldn't get insurance. If it caused a fire, you were out of insurance and out of luck. So we're happy the decoder chips are now included in other TVs.

Our membership represents about 350,000 profoundly deaf Canadians, but there are a total of about three million Canadians who have some degree of hearing loss. Studies have proven conclusively and repeatedly that captioning assists both children and adults in learning literacy skills and in developing second language skills. For example, if any of the anglophone MPs here want to polish up on their French, turn on the French captioning. That'll help you a lot.

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My estimate in 1987 was that one-third of the Canadian population could directly benefit from captioning. Now I think that's pretty conservative. I think it would be more than one-third.

You might assume that with such obvious benefits, everything broadcast on television would have captioning. Unfortunately, that's not the case.

Captioning was pioneered in Boston at the beginning of the 1970s by an organization that was responsible for bringing captioning to Canada. We had a long, hard struggle to do that. We spent almost ten years working with the old Department of Communications, the National Film Board, and what was at that time Health and Welfare Canada to carry out this pioneer program of sending captioned movies around the country. Why? To show there was an audience out there.

After ten years, we finally succeeded in convincing the National Film Board and the Department of Communications to set up the Canadian Captioning Development Agency in 1981 to start captioning film and TV in Canada. That agency is different now. There are more independent captioning agencies available now.

In the first few years of Canadian captioning, the technology was enormous, both physically and financially. The cost of producing a half hour of captioned programming was between $2,000 and $4,000. French-language captioning, because of the accents in the language, was far, far behind the English-language captioning.

Today a full hour of programming can be captioned for as low as $140. The technology is so compact you can carry it into a government conference and set it up as what they call online captioning. I'm sure you've seen that in some of your conferences.

French-language captioning is catching up to English-language captioning now. Unfortunately, neither the regulatory environment nor the broadcasting environment has kept pace.

For the first few years of captioning our organization and consumers were patient with the slow, incremental increase in the amount of captioned programming. We realized the technical and financial aspects were complex and expensive. As late as 1986, we accepted ten hours of captioned programming per week as a realistic maximum for only two broadcasters, the CBC and CTV.

By 1987, however, we were fed up. Six years after we had introduced captioning to Canada, the CRTC was asking CBC and CTV to increase their captioning at the rate of one more hour per year. Even if you're fond of the incremental method, that's ridiculous. That meant it would take 104 years to caption everything on CBC and CTV only.

Since that time the Canadian Association of the Deaf and its affiliated organizations have lobbied and intervened continuously for full captioning. The broadcasters have fought us every step of the way, even as they trumpeted their achievements in grudgingly providing us with a few more items of captioning.

The CRTC, for its part, persisted in merely encouraging—as distinct from requiring—broadcasters to provide minimal amounts of captioning.

It took the threat of lawsuits in British Columbia by the deaf community to goose the CRTC into setting more realistic minimal targets and using sterner language for captioning at its 1995 licence renewal hearings. In that proceeding, it set a minimum requirement of 90% captioned broadcasting by September 1998 for broadcasters with more than $10 million in annual revenue. Less prosperous broadcasters were “expected” to caption 85%, while the smallest broadcasters were “encouraged” to caption 80%. Incredibly, even before that 1995-1998 licensing period had expired, the broadcasters were coming to us asking us to support their request for an extension of the deadline because they couldn't meet those minimum requirements.

• 0935

CBC, in its own newsletter, noted that only 60% of their English-language programming and 51% of their French-language programming were captioned. It became apparent that instead of investing in more captioning hours, more captioning equipment, more training and recruitment of captioning personnel, and more development of the technology, broadcasters as a group had decided in 1995 to put all their eggs in one basket, namely, the great hope of voice recognition technology. Then they realized too late that voice recognition technology was still ten years away from being a feasible method of captioning. So they begged for extensions. Needless to say, the CRTC did not discipline any of them for failing to meet their licensing requirements.

Our former president and Canada's first deaf barrister and solicitor, Henry Vlug, responded by filing a human rights complaint against the CBC for its long-term failure to provide captioning. In a landmark decision, the Canadian Human Rights Tribunal ruled on November 15, 2000, that the CBC had indeed discriminated on the basis of disability. They ordered the broadcaster to caption everything it broadcast—programming, public service announcements, commercials, newsbreaks, emergency reports, promos, everything—on the first reasonable occasion.

Typically enough, the CBC chose to challenge that. They filed an appeal, which is due to be heard in April. Its argument will be that the Canadian Human Rights Tribunal has no jurisdiction in the matter, because the CRTC is legally mandated to rule on broadcasting.

My association wrote to all of the broadcasters—that was a lot of letters, as you know how many broadcasters there are nowadays. We asked them their plans for implementation of the decision, and all of them responded that instead of acting, they were going to sit back and wait for the outcome of the CBC's appeal. In the meantime, virtually all of these broadcasters have made submissions to the CRTC's present hearings into its own operations and procedures. They all argue that the regulatory agency is obsolete and should not be dealing with matters of content, which includes captioning. In other words, the broadcasters want their industry to be exempt from the Canadian Human Rights Act and the Charter of Rights and Freedoms, and be made accountable for captioning only to the CRTC, which in turn they want to be stripped of the power to regulate or require captioning.

It should be noted for the record also that the national broadcasters exploit semantics to present a rosier picture of their captioning quantities than really exists. For example, the CTV network boasts that 100% of its national broadcasting is captioned now. The trick lies in the word “national” broadcasting. Fully national programming on the CTV comprises only about 40% of the broadcast day for any given CTV affiliate.

The depressing thing is that CBC and CTV are by far the best achievers among Canadian broadcasters as far as captioning is concerned. No other broadcaster, specialty channel, pay-TV or pay-per-view channel, satellite channel, or digital station comes even close to captioning as much of their programming as CTV and CBC.

As more and more narrowcasting and digital and online channels become available, the percentage of television programming that is accessible for deaf and hard of hearing Canadians shrinks exponentially. This situation causes a lot of anxiety. The standing committee here must keep that in mind. Never forget that you are responsible for the needs and rights of all Canadian citizens, not just the bottom-line dreams of the broadcast industry.

Regardless of the eventual outcome of the CBC's appeal of the Canadian Human Rights Tribunal's decision, the fact remains that the decision affirmed my association's position that the Canadian Charter of Rights and Freedoms protects the rights of deaf and hard of hearing people to full access of broadcast programming. Both the charter and the Human Rights Act uphold the rights of all Canadians to receive essential services, and that includes broadcast services. Not even the CBC disputes that. It merely disputes the Canadian Human Rights Tribunal's right to intervene into what it perceives to be an inappropriate regulatory area.

• 0940

Now let me give you a recent example of the discriminatory nature. Last weekend TV Ontario was broadcasting their venerable program, Saturday Night at the Movies. I'm sure some of you watch that when you're bored and stuck here in Ottawa. It's Saturday night, you turn on the movies, right? They were showing a movie called The Man Who Came to Dinner. This was a movie I had wanted to see for a long time. This was the first time it had ever been available with captioning, or so I thought. It was advertised as having captioning. Saturday Night at the Movies has a good track record for captioning.

I turned it on. There was nothing. There was no captioning. So I wrote an e-mail to TV Ontario and asked them what had happened. They said they received the captioning track separately from the movie track, and it was the wrong captioning for the wrong program. So they sent it back. They got a second captioning track. That was for the wrong programming too. So they sent that back. They went ahead and broadcast the movie without captioning.

Now I ask you, if it had been the audio track that was the wrong programming, would they have gone ahead and broadcast the movie with the wrong audio track? Would they? No, they wouldn't. But they didn't care about broadcasting without a captioning track.

In the case of Vlug v. CBC, the Canadian Human Rights Tribunal concluded from the CBC's own evidence that there exists no technological reason why all television broadcasting cannot be captioned effective immediately. The technology is not only capable of supplying the demand, it is also already in the hands of the broadcasters. Even community cable channels have access to captioning equipment at low or no cost. Nearly all broadcasters as far as I know have the equipment already on their premises.

The case also proved that the CBC not only wildly inflates the projected cost of providing full captioning, it also doesn't even know how it arrived at its own estimation. Its claims that a requirement of full captioning would cost $14 million a year were revealed to be utter fiction. The tribunal suggested the real cost would be closer to $1 million, and even that amount was speculative on the high side. Importantly, the tribunal pointed out that within the CBC's English-language budget of $417 million, even going by the CBC's own exaggerated cost estimate of full captioning, it would total only 0.6% or 0.72% of its annual budget—less than 1%.

A lack of trained captioners is another frequent excuse offered by the broadcasters for their refusal to caption all broadcasting material. Once again the tribunal examined the evidence submitted by the industry itself and concluded that the supply of captioners is adequate.

In summary, there is no valid reason whatever for broadcasters to continue refusing to provide fully captioned broadcasting days. They lack only the political and business will to do so and the regulatory rule to compel them to do so and to punish them for failing not to do so.

We ask the standing committee to make the following directions.

First, uphold and apply to all broadcasters the ruling of the Canadian Human Rights Tribunal in the case of Vlug v. CBC, which is that they shall caption all of their television programming from sign-on until sign-off.

Second, this must occur on the first reasonable occasion, and the term “first reasonable occasion” should be interpreted to mean six months in the case of current licensed broadcasters and two years in the case of new licensees. Why? Because they already have the equipment there. They have the financing. They have the people who do it. What's stopping them from doing it?

• 0945

The power of the Canadian Human Rights Commission and the Canadian Human Rights Tribunal to rule on complaints against broadcasters on grounds of discrimination must be explicitly confirmed in any new broadcasting act. Broadcasting cannot be retroactively permitted an unjustified exemption from the applicability of the Canadian Human Rights Act and the Canadian Charter of Rights and Freedoms.

The CRTC should retain the power and the right to issue licences for broadcasters. However, a new broadcasting act must explicitly instruct the commission to set rigorous requirements and enforcement mechanisms to eliminate discriminatory practices by broadcasters for the full 24-hour day. We discovered only recently, after all these years, that the CRTC interprets the term “broadcasting day” to mean from 6 a.m. until 12 midnight. What then? Are all deaf people supposed to go to bed at midnight? We're not allowed to stay up and watch a late movie? Who made that decision? Who said deaf people only live 18-hour days? We live 24-hour days like everybody else. We want 24-hour regulation of captioning.

A true mechanism must be established to empower and encourage the CRTC to enforce licence requirements. It's widely acknowledged that in its present incarnation, the CRTC is toothless and is unwilling to penalize licensees for their failure or refusal to meet licensing conditions. This kind of situation makes the CRTC bureaucratically pointless and ineffectual. It must be given the power and the political support to take aggressive action wherever necessary. That could include forcing broadcasters off the air, at least temporarily, if they violate the conditions of their licensing.

The efforts of broadcasters to implement the principles of diversity have effectively been limited to the on-screen presentation of visible minorities and women. There are no continuing on-screen presences with a disability, except possibly David Onley. I'm not sure where he's gone. A new broadcasting act should extensively set out minimal standards for inclusion of persons with disabilities in the broadcasting industry, both on screen and off.

As is clear from these recommendations, the Canadian Association of the Deaf values the CRTC. We do not support calls for its elimination. We are very deeply disappointed and disillusioned by its performance with respect to captioning, but we believe our recommendations can help to revive it and transform it into an effective regulatory body. Simply put, without the CRTC, who would have formal authority to mandate captioning? Consumers would be forced to resort the law courts on a case-by-case basis in order to obtain access to broadcast material. Few, if any, consumers or consumer groups have the financial resources to undertake legal battles with the broadcasters.

If you, the standing committee, determine to recommend the elimination or the disempowering of the CRTC, then I would like to ask you to recommend a federal government appropriation for the Canadian Association of the Deaf, as the premier body of Canadian captioning consumers, to provide us with the financial, legal, technical, and human resources to establish a centre for accessibility to broadcasting by deaf and hard of hearing persons. This centre would not only monitor the quantity and quality of captioning provided by the broadcasters, but it would also work in partnership with them to develop technologies to increase deaf and hard of hearing access to television and to provide training for the technicians.

To ensure that the broadcasters are motivated to take an active role in such a partnership, they should be required by the federal government as a condition of licence to provide 0.5% of their gross revenues to the centre, either in monetary form or in an in-kind contribution of technology and human resources.

I think that's enough.

The Chair: Thank you very much.

Mr. James Roots: Thank you for inviting me.

The Chair: We really appreciate your presentation. It certainly gives us a very important view of the problems faced by deaf people in Canada in regard to broadcasting.

• 0950

Mr. Cohen, representing the Canadian Broadcast Standards Council.

Mr. Ronald Cohen (National Chair, Canadian Broadcast Standards Council): Thank you, Mr. Chairman and members of the committee. Thanks very much for the invitation to appear before you today. My name, as the chairman indicated, is Ron Cohen. I'm the national chair of the Canadian Broadcast Standards Council. With me is Ann Mainville Neeson, who is executive director of the CBSC.

We originally did not file a presentation with the standing committee, Mr. Chairman. We're here pursuant to a very recent invitation of the clerk, pleased indeed to have the opportunity to tell you about the council. We won't be making recommendations, but rather we'll be trying to inform you of what it is we do.

We consider that the council is an extremely successful example of the self-regulatory process, which is fast becoming a method of choice in dealing with regulatory issues in many professional fields in western societies.

Originally conceived in 1986 by the Canadian Association of Broadcasters to encourage high standards and professional conduct on the part of Canada's private broadcasters, a concrete proposal was formulated two years later and presented to the CRTC with respect to the formation of a body, which became the CBSC. The CRTC accepted the proposal, noting in public notice 1988-159 that:

This voluntary action on the part of the CAB and its members reflects the sense of responsibility and maturity of the broadcasting industry in regard to social issues of public concern.

Then, in 1991, in public notice 1991-90, the CRTC advised broadcast licensees and members of the public of their endorsement of the CBSC to receive and adjudicate complaints from the public regarding programming on the CBSC's member stations.

The council's mandate is to oversee the administration of the Canadian private broadcaster codes, which include the CAB sex role portrayal code and the CAB violence code, both of which are conditions of licence for all broadcasters in Canada, private and public. The codes we administer also include the CAB code of ethics and the Radio and Television News Directors Association of Canada, RTNDA, code of journalistic ethics.

In the exercise of that mandate, the CBSC receives complaints, encourages their resolution by broadcaster dialogue with the complainants, and, where this does not lead to complainants' satisfaction, adjudicates those complaints.

The private broadcasters' self-regulatory process is open and public. It is predicated on full disclosure and the publicity of all decisions, whether they are for or against the broadcasters. Consequently, the press release announcing every decision is forwarded to the print media, to all broadcasters, and to any person and every person wishing to be on the recipient list for that information. All 215 decisions—and that includes the one released today, Mr. Chairman—rendered since mid-1993 are, with their full written reasons, posted on our website.

There are, as of today, 498 broadcaster members covering radio, television, and specialty service areas. Of these, 370 represent radio broadcasters, 94 are conventional television broadcasters, and 34 are specialty services.

All of our decisions are taken by adjudicating panels, which are made up of equal numbers of representatives of the public and representatives of the industry. There are five regional panels representing the Atlantic, Quebec, Ontario, prairie, and British Columbia regions; and two national panels, one representing the specialty services and one representing national conventional broadcasters. Biographies of every adjudicator are publicly posted on the CBSC website.

We have challenges indeed in what we do. One challenge relates to the legitimate public concern regarding the issue of censorship. Another relates to the regulation of content within the acceptable limits of freedom of expression.

• 0955

In its origins, the censor—for those of you who remember your classics—was one of the two magistrates in ancient Rome charged with the supervision of public morals. More recently, as the Oxford English Dictionary says, the censor is the

official whose duty it is to inspect books, journals, plays, etc., before publication, to secure that they shall contain nothing immoral, heretical, or offensive or injurious to the State.

In order for us to avoid any whiff of censorship, the CBSC does not initiate complaints or monitor programming in the absence of a complaint. We are reactive and responsive to public concerns. We do not presume those concerns.

The CBSC, by its nature, in the area of freedom of expression, faces challenges of two ideological sides. There are those who believe the principle of freedom of expression as enshrined in the charter should be viewed as absolute. There are those, on the other hand, who believe expression on the airwaves should be restricted so that all matters unpleasant and distasteful, and worse, should be prohibited.

The CBSC takes an intermediate position that, first, the underlying principle that should govern broadcast speech is that it should be free. The private broadcasters have, however, agreed among themselves that the interests of their audiences are better served by the imposition of professional standards to which all their members will adhere. To express these standards, they have created the codes that I mentioned to you above.

Second, the CBSC considers that the standards created by the broadcasters should balance the freedom of expression with other important societal values enshrined in those codes, and the CBSC has rendered many decisions, both with respect to individual programs and entire series, giving effect to such balancing of values.

Third in this regard, matters involving taste alone but no breach of actual code provision are considered to be best regulated by the intervention of the viewer or listener via the channel or station changer, or the on/off switch.

Fourth, in the codes we administer, there are extensive special provisions regarding programming intended for young children, defined in the code as being under 12 years of age.

Fifth, in order to assist watchers of television, and in accordance with the broadcaster codes, a watershed hour of 9 p.m. has been established, before which no programming intended for adults, whether by reason of violent, sexual, or other mature content, can be shown. Viewer advisories and classification icons are also required, even after the watershed, so that audiences may avoid programming that they do not consider appropriate for themselves and their families.

Sixth, there is a prohibition against gratuitous or glamorized violence on the airwaves at any hour of the day.

Since there are 215 decisions posted, there is a considerable body of jurisprudence, which has the effect of constituting a definition of what broadcasters can and cannot put on their airwaves.

While decisions relating to one-off programs or newscasts are as important as those relating to entire series, the latter tend to attract more attention. Among our more important decisions are the following.

One was the ruling, some may remember, in the Mighty Morphin Power Rangers decision, that ensured that programming intended for children that includes too much violence, violent acts without consequences, or violent acts that might encourage imitation by young children was unacceptable. Interestingly, this ground-breaking decision resulted from only two complaints, leading Maclean's magazine, in dealing with the issue, to entitle its article “Power to the People”.

In the rulings in the Howard Stern programs that, first, restricted the presence of the radio show to Montreal and Toronto, it should not be forgotten that many other cities contemplated bringing the show in at that time; secondly, our decision resulted in the editing of the program on an ongoing basis; and thirdly, it resulted in the disappearance of the radio show from the Montreal airwaves in 1998. Committee members may also be aware that the radio show is, as of last week, no longer on the air anywhere in Canada.

• 1000

Also, as a reflection of its awareness of and commitment to Canadian private broadcasters' standards, the broadcaster that had acquired the rights to the Howard Stern television show for Canada decided never to bring that program to the airwaves.

Our Jerry Springer decision resulted in the removal of the glamorized violence on that show from most of the major market stations in Canada, particularly during the afternoon time slot.

Our decisions relating to the Laura Schlessinger radio show resulted in—and this relates to what Melanie spoke of in terms of a concern of MediaWatch—the disappearance of abusively discriminatory commentary on the basis of sexual orientation from the show, not only in Canada but also in the United States. Such unduly discriminatory comment on the basis of sexual orientation never became a part of her short-lived television show either.

On a day-to-day basis, the 25 to 45 formal decisions rendered every year help to shape the parameters of acceptable content on an ongoing basis, whether in the talk show, news, dramatic, traffic, or other areas.

The CBSC works very hard to ensure that the results of its decisions are known to all who are affected by them. Its volunteer adjudicators on the public and industry side are dedicated to the emergence of a set of principles that will fairly circumscribe public expectations. It is a mark of the thoughtfulness and impartiality of the adjudicators, both public and industry, that with the exception of three of that body of 215 decisions, all our decisions have been rendered unanimously, whether in favour of or against the broadcasters.

I thank you very much for your time and attention. Ann and I are available, of course, to answer any of your questions.

The Chair: Thank you for your very clear presentation.

I will now open the floor to questions. We'll start with Mrs. Hinton.

Mrs. Betty Hinton (Kamloops, Thompson and Highland Valleys, Canadian Alliance): First I'd like to begin by thanking everyone who has come today as a witness. I guess one of my remarks would have to be that I have never been to a meeting regarding the CRTC hearings and the Broadcasting Act that I haven't found to be completely interesting, and today is no exception.

I may not agree with a lot of the comments that have been made, but I certainly agree with the philosophy behind them. All of you who have appeared today have chosen to light a candle rather than curse the darkness on issues that are important to you, and I think that's always a commendable action.

There are two or three things I want to touch on here. Specifically, I want to ask Mr. Roots two questions: What percentage of Canadians are deaf; and also, in his opinion, does the American closed-captioning system appear to be better than the Canadian one?

The other comment I would make with that is that I support closed-captioning very strongly. Not only does it benefit deaf people, but it also teaches younger people to read—and I've seen this by example. It's also of benefit to the elderly.

So, Mr. Roots, I would tell you to take heart. There are more and more elderly Canadians coming along on a daily basis, and you will have more and more support as time goes by.

Those are my two questions for Mr. Roots. I would also like to say that I agree with some of the comments that were made here today that freedom of expression should and must be upheld. But the question we are faced with here is whether it's right to have taxpayers pay for it, and I think that's what has been expressed by Gwendolyn Landolt today and a few other people who have appeared. It's a question of who pays for this.

So I'll just stop there, and I'd like to have Mr. Roots respond to my questions.

Mr. James Roots: To respond to the first question, we've traditionally said that about 10% of the population has some form of hearing loss, but we've found in the last census that it's 15%.

On your second question, closed-captioning in the United States is far advanced compared to Canada. Part of the reason for that is because they have a federal Department of Education that provides an awful lot of the funding for captioning itself.

• 1005

To answer that and your third question, in Canada it is not really the taxpayers who are paying for this. The broadcasters are paying for it from their revenues. If you're a cable subscriber, some of what you are paying your cable company will go toward providing some captioning. They also have advertisers and sponsorships. For example, if you watch the news on CJOH at 6 o'clock, you will see that a funeral home, of all places, sponsors the captioning of the newscast everyday. So that's private money going to a private broadcaster.

Does that answer your question?

Mrs. Betty Hinton: Yes, it does.

I should clarify something for you. I wasn't referring to the captioning when I talked about whether taxpayers should be paying for services. I was referring to the programming that had been discussed earlier by other witnesses.

That helps me, considerably.

One other comment I would make is that both my colleague Mr. Abbott and I were in the United States this past weekend for the “Canada Loves New York” promotion, which was tremendous, by the way. There were 20,000 Canadians present. The one thing that struck me very clearly was that in the United States they celebrate their oneness more than their uniqueness. I think uniqueness is great. Multiculturalism is what makes up Canada, and we need to protect that. But in the United States this weekend it was very clear to me that, first and foremost, they are Americans, and then the diversity comes afterwards. I think that is something we could emulate in a positive way.

The Chair: Thank you, Ms. Hinton.

[Translation]

Ms. Gagnon.

Ms. Christiane Gagnon (Québec, BQ): Thank you. We have a lot of questions to ask this morning. I find this very interesting. According to those who observed the scene, there are contradictory opinions. I would like to ask Ms. Cishecki of Media Watch a question.

You mentioned a survey on quality and content. First of all, could we get a copy of the survey? You said some relatively significant things about standards, the application of these standards and criticism with respect to content. Could we have access to this survey to see the sampling and establish what public you were targeting during the course of this survey?

[English]

Ms. Melanie Cishecki: Some of the results are highlighted in our report. However, I would be very happy to provide the tables that were provided by the polling company. I'll get the contact information and forward it to the committee.

The Chair: Just send it to the clerk of the committee. Ms. Fisher will give you the address.

Ms. Melanie Cishecki: Sure.

[Translation]

Ms. Christiane Gagnon: Secondly, there is the Canadian Broadcast Standards Council, which states that it is a very permanent fixture, and which appears, at any rate, to be paying attention to all of the criticism with respect to content and the quality of this content.

Don't you think that this council is playing the role that you would like to have in controlling Canadian content?

The Chair: To whom are you directing the question, Ms. Gagnon?

Ms. Christiane Gagnon: Ms. Cishecki.

[English]

Ms. Melanie Cishecki: Certainly, the CBSC is listening to and responding to the complaints of the public.

As I mentioned at the beginning of my comments, I did apologize for not focusing on the strengths of the CBSC, which includes the jurisprudence that Mr. Cohen referred to in terms of putting together a body of evidence to give weight behind their decisions.

What we're asking for is to strengthen their response. The CBSC is a fairly small organization, from what I understand. As we saw with the Howard Stern situation, they were deluged with complaints.

One of the criticisms I raised was the length of time it takes for a response and the fact that from the point of view of civil society organizations, the system is convoluted. First, we need to make a complaint to the broadcaster and wait for a response. If we're not satisfied, the complaint then goes to the CBSC. We need to wait for their council to meet and then wait for a decision, which can often take several months.

• 1010

So from the point of view of civil society organizations, it's convoluted and time-consuming, and it seems that the wait is too long for people to feel satisfied by the process and the decision.

The Chair: Do you want to intervene, Mrs. Landolt?

Ms. Gwendolyn Landolt: Yes. I'd like to make a comment about the Canadian Broadcast Standards Council. In the name of diversity, for those who have a different view, we find that the broadcast council is biased and prejudicial. It does not reflect the vast majority of Canadians. They are more for special interest groups. All it does is protect the industry. It doesn't protect the Canadian public.

Mr. Cohen has given the example of the Howard Stern case, but there are many Canadians who object most emphatically to its abuse of Laura Schlessinger and how they treated that case. They said they were protecting sexual orientation. They were not. They were protecting a special interest group but not the Canadian public. If anyone has to control broadcasting in Canada, it should not be the self-interest of the group itself. Thank you very much.

The Chair: Mr. Cohen, we don't want to launch into a debate here, but—

[Translation]

Ms. Christiane Gagnon: That is interesting because we have both of them.

[English]

The Chair: —now that one point of view has been heard, I think it's fair that you be given a chance to give your point of view. Mr. Cohen.

[Translation]

Mr. Ronald Cohen: Thank you.

First of all, if I could answer that... Indeed, there are two questions here. There is the question raised by Ms. Gagnon and there is the response from REAL Women of Canada, which goes in the opposite direction.

Melanie Cishecki talked about how long it took to render a decision. It is true that, from time to time, this does take time because we have to follow a process. We need to allow time for dialogue, which is very important, between the complainants and the broadcasters that wish to respond to the complaints. This all takes a little bit of time. In the case of Howard Stern, for example, which occurred in Montreal on September 2, 1997, the CBSC decision was made two months and nine days after the program first aired. I think that this was very fast. There was some urgency. We had an opportunity to respond quickly. At any rate, the impact of our decisions is, to some extent, eternal, because the decisions serve as examples of what is and what is not allowed on programs in the future.

[English]

Insofar as the comment from the representative of REAL Women is concerned, Mr. Chairman, I think it's interesting to see that there seems to be a selective approval, in a sense, of what it is this group of broadcast and public representatives has said. The Stern decision was apparently one that was satisfactory, but when the same group of people made a decision with regard to Laura Schlessinger in order to defend the rights of gays and lesbians, it doesn't work for REAL Women.

I think it's important to note that was not a decision taken in the interest of broadcasters, as is suggested. Had the decision been taken in the interest of broadcasters, then nothing would have been done to the program. Broadcasters, you might assume, would be happier having a program that they don't have to touch or edit and that they can run as they receive it.

In this case it forced a radical change in the show, and one, I'm pleased to say, that was implemented both in the United States and Canada. It is a reflection, in any event, of the human rights legislation in this country. It's a reflection of the charter and of the Egan decision and of everything we believe in this country.

[Translation]

The Chair: Ms. Gagnon.

Ms. Christiane Gagnon: How easy is it for you to intervene, for example, in the case of criticisms and even lawsuits involving radio announcers who destroy reputations, people who are homophobic and who are very hard on certain women as well, who ridicule them and then resign? We have one announcer in Quebec City who is currently resigning, but will be rehired elsewhere. I find that this is painting an image, it's getting people used to hearing this type of... Society doesn't need that in order to progress. I find this dangerous. We have a few of these announcers in Quebec and there are probably others in Canada. We listen to them and we find it horrifying because they have a public. They're very much in demand because one day they focus on one issue and then, the next day, it's something else. There is no ideology behind that. They can lash out at anybody. How can you put an end to a career like that?

• 1015

Mr. Ronald Cohen: Needless to say, we are not authorized to end a career. All that we can do is render decisions, and we are very confident that the broadcasters in question will ultimately comply with our decisions. Nor do we get involved in any civil matters. For example, we do not have anything to do with lawsuits pertaining to character assassination.

But as far as broadcasting is concerned, if a radio host leaves one radio station and finds employment in another, that means, for one thing, that somebody at the management level of the company in question has decided that the services of this person are no longer required, perhaps because of what he or she said. It's difficult. We cannot put an end to someone's career, but generally speaking—I would even say nearly always—the broadcasters comply with what we are saying in our decisions.

The Chair: Mr. Cohen, I would like some brief clarification. Can you intervene directly or do you intervene only when there has been a complaint?

Mr. Ronald Cohen: That is an excellent question, Mr. Chairman. We intervene once a complaint has been filed. We cannot take the initiative.

The Chair: Fine.

[English]

Mr. Harvard and Mrs. Bulte—yes, Ms. Cishecki, briefly.

Ms. Melanie Cishecki: I will maybe comment that Madame Gagnon has raised an important point from MediaWatch's perspective, which is the lack of clarity about an appeals process. If someone is not happy with a decision, it's not clear what action can be taken, and this is a problem. I believe there's a lawsuit against the CRTC partly based on this.

Secondly, some of the issues she is addressing are not covered by the codes. They have to do with the tone of a program or with systemic issues, and we would really like to see a way to address some of the systemic issues raised. Thank you.

The Chair: Thank you.

Mr. Harvard, Mrs. Bulte.

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): How much time do I have, Mr. Chairman?

The Chair: Just the usual.

Mr. John Harvard: Thank you. I'm sorry I was late. I was at another meeting this morning.

I want to ask Mrs. Landolt a couple of questions. Sorry, I didn't hear your presentation, but I did read some sections of your brief under the heading of the CBC. Maybe you should know, Mrs. Landolt, that I spent many years at the CBC. I also worked in private radio and television as well, but I did spend 18 years at the CBC, so I want to declare the conflict if there is such a thing. I've been away from there for 14 years.

Anyway, in your written brief you actually accuse the CBC of being “a source of indoctrination for the left-of-centre political and social agenda”. I find that interesting because in your presentation you make no mention of the open-line shows in this country from coast to coast that in my opinion are an absolute hotbed of right-wing commentators, certainly anti-government, which spells anti-liberal. If you include, which is not part of our study, the newspapers in this country, they are a plethora of right-wing sources of information. So I think if you think there's some unfairness here to conservatives, you're picking on a pretty small bunch who I don't think are anywhere in comparison that influential against other media sources.

• 1020

But before you answer my question, I think one of the reasons why the CBC is attacked the way it is by say a group like yours is because the CBC is open to a wide range of opinions. The CBC is not beholden to just conservative views or just traditional views; it gives the full range of opinion, and, yes, some of it is going to be upsetting to conservatives and some of it is also upsetting to people who are described as left of centre.

So given the fact that you've picked on this small strain of political thought in the country and not touched on the other, maybe you can offer an explanation.

Ms. Gwendolyn Landolt: Thank you, Mr. Harvard. One of the problems is, and the broader picture is, that the media in Canada is—and we're narrowing it down to the broadcast—not a reflection of the Canadian public, and nobody seems to care what Jane Q. Citizen thinks. The broadcasters, the distributors, are simply being protected by the CRTC; the CBC is protected, and they do not give a public discussion and a broad one. I know you are an NDP member, so therefore—

Mr. John Harvard: No, I'm not. Hardly.

Some hon. members: Oh, oh!

Ms. Gwendolyn Landolt: Sorry. I know you would have a different view, but the point is that as an ordinary citizen listening to the CBC news, for example, on the radio, I know I'm getting the spin.... I can give you a prime example, Mr. Harvard. At the Quebec Summit of the Americas, I heard all about, on the CBC, how globalization was terrible. I thought, as an ordinary Canadian, why can't I hear a balance of views? That's one example. I did not get a balance on the CBC, or the other broadcasts on the APEC situation in 1997.

Those are examples of major Canadian interest on which we're not getting a complete picture.

I know you have another point of view. You say it's all right-wing. But I'm saying that as an ordinary woman, a mother, a wife, and a lawyer, I am a perfectly intelligent individual, so why is the media so restricted as to give only one perspective? I get a spin, and all I want are the facts, as a relatively intelligent person.

You mentioned the CBC hotline programs—

Mr. John Harvard: Not CBC, just private radio hotline programs, whether it's Adler in Winnipeg, Rutherford in Calgary, Rafe Mair in British Columbia, or Lowell Green in Ottawa. It's a constant stream of anti-government rhetoric.

Ms. Gwendolyn Landolt: But don't you think it's a reflection of the Canadian public?

Mr. John Harvard: You don't mind that then?

Ms. Gwendolyn Landolt: Then they have an outlet the people want. But if you go on CBC—

Mr. John Harvard: Who does the CBC represent? Somebody from Mars? Aren't they Canadians as well?

Ms. Gwendolyn Landolt: Mr. Harvard, I want to go onto the CBC hotline. You cannot get onto that cross-Canada program on Sundays. You have to say what your position is, and if you don't have the position of the moderator then you don't get on. The hotline—

Mr. John Harvard: I think Rex Murphy would be very surprised to be accused of being a left-wing agent.

Some hon. members: Oh, oh!

Ms. Gwendolyn Landolt: All I know is as a public person who has been involved and as an ordinary citizen, we cannot get our voice heard on the CBC hotline. Maybe for these Canadians across the country, whose opinions you object to, that's the only outlet they have to express their anger at how the media, broadcasting, is so controlled in Canada, protecting the industry. That's what seems to be the problem; it's not letting Canadians express their views.

Mr. John Harvard: Let me ask you one more question. You say in your written brief, again, “The CBC's constant parade of left-of-centre reporters, commentators and guest speakers is almost laughable”. Who are these people? I'd like to meet them.

Ms. Gwendolyn Landolt: You'll meet them on the CBC national news all the time. When there are any comments—

Mr. John Harvard: Starting with Mansbridge, I suppose? Starting with Peter? Surely not Peter.

Ms. Gwendolyn Landolt: First of all, Mr. Harvard, when an issue comes up on a decision of the Supreme Court, or a decision of the government, you do not find that any conservative group is called to comment. You'll find that the radical feminist woman lawyer will be called on. When a decision—

Mr. John Harvard: I think I've seen Gwen Landolt on CBC.

Ms. Gwendolyn Landolt: Very rarely, because I don't have the politically correct opinion. It's not open to the public, and the difficulty is that very often these journalists often don't even know. They just see this world as they want to. Why do the programmers or the producers of the programs not have a broader approach? I don't think they even understand that sometimes they're not even representing the public.

All we ask is that there be a neutral stating of the facts. As a member of the public, I'm saying there just isn't that. We're all for control of the industry, protecting them. I know there has to be protection with regard to Canadian content. If we didn't have that we'd never hear what our Prime Minister is doing, so we do need it wide open, but we do need some protection. Our concern is simply that the public's voice, what their preferences are, are not being put forward because of the control. This old-fashioned CRTC was all right in 1968, but not in the year 2001.

• 1025

The Chair: One last question, Mr. Harvard.

Mr. John Harvard: But are you really suggesting then, Mrs. Landolt, that we politicians—because I don't think we're very qualified to do it—should be going into places like the CBC and telling them exactly what to program and what sort of journalistic rules and ethics they should follow? If that's the case, that's getting awfully dangerous, in my opinion.

Ms. Gwendolyn Landolt: Obviously not. Of course not. We wouldn't be—

Mr. John Harvard: Then you have to leave it to their discretion and to their professional judgment, do you not?

Ms. Gwendolyn Landolt: Why don't we leave it to the marketplace? Why do we give a licence to the CBC and it doesn't even honour the terms? For example, they were supposed to cut down on sports. A month ago they bought a $60 million contract with Hockey Night in Canada. They were told not to.

What in fact is going on is the marketplace; stop this restriction, and if people don't want to watch it, they'll turn it off. But the taxpayer shouldn't be paying for the CBC. It's divisive. Who has confidence in the CBC? Who watches it? Stop paying it. Get out of it.

Certainly I would totally agree with you that politicians shouldn't get into it. Let the marketplace answer. If there's pornography, if there's this, go to court over it. Let it be a civil action. Let it be controlled by the marketplace and let it be a civil action, but certainly not a decision for the politicians and certainly not for the CRTC, which is badly outdated.

Mr. John Harvard: Thank you.

The Chair: Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you, Mr. Chairman. I'm gathering my thoughts here.

Ms. Landolt asked who watched the CBC. For the record, I do, and I'm a big supporter of the CBC. I think it's important that we have a public broadcaster and a national broadcaster that binds us from coast to coast to coast. That's one thing I'd like to say for the record.

Secondly, for the record I'd also like to say that I am a woman, I'm married, I have three children, and I too am a lawyer.

Now that we know who we are, Mr. Cohen, let me start with you. I want to tell you that your organization does a tremendous amount of good. I also want to compliment you on the materials you send out to parliamentarians to let our constituents know about your council and how to access it. I think it's extremely well done. It is very useful and it's a wonderful tool in my riding, and I want to thank you for that.

Mr. Ronald Cohen: Thank you very kindly.

Ms. Sarmite Bulte: Ms. Cishecki, your recommendations in the summary weren't the same or didn't follow exactly what you said as you were going through them. So tell me specifically, when you talked about all the changes you wanted to make to the CRTC, how would we do that? Would you do it via regulation, amendments to the act?

We're looking at the Broadcasting Act. We're looking at how to fine-tune it. We don't want to get into what works and what doesn't work. We don't want to get into micro-managing the whole system, so maybe you could help me there. That's one question.

The second question is this. While you say the Broadcast Standards Council does good work, you were also concerned about the length of time, but again, what is the alternative? What about Mr. Roots, who has had to go to the Canadian Human Rights Commission and now it's under appeal. If you go through the litigation process, a few months doesn't seem that long to me in the grand scheme of things. What is the alternative? How would you make the system better?

Ms. Melanie Cishecki: I'll start with your second point first. I don't know the CBC well enough to know the configurations within their office. My guess is that the length of decisions has to do with resources available to the CBSC. My understanding is it's probably a four- or five-person organization. So given the level of detail and the thought they put into their decisions—the fact that they do refer back to previous decisions to build this body of jurisprudence—I expect that would take a long time, and perhaps they need more people qualified to work on this. So it's probably a resource issue in terms of the time.

• 1030

With regard to how to make changes to the CRTC, I think what we probably need to do is go back to previous workings of the CRTC. They have devolved, and we've heard criticism across the table here in terms of the CRTC's role and the fact that they have devolved a lot of their power and authority. I think we need to have more consultation and more input from the public before I can answer that question specifically, because we are feeling shut out of having input into the decisions with regard to the regulatory system.

Ms. Sarmite Bulte: One of the things the CRTC does and has been doing almost borders on policy issues, where its statutory role is to supervise and regulate. Yet at the same time, when we had our assistant deputy minister, Michael Wernick appear before us, he felt that one of the good things the CRTC does is hold these hearings, as they did about the CBC a few years ago, for example, to get people's input. That was a sign of transparency and openness.

Could you not participate in something...? Does that serve its purpose? Is that a good thing they do?

Ms. Melanie Cishecki: I think it is a good thing. My understanding is that is also, like this particular process, by invitation. I think we need to have close scrutiny as to how people can come to the table and how they can air their views to ensure it is open enough that people from a spectrum of opinions are able to bring their views forward.

Ms. Sarmite Bulte: Okay. Thank you.

Thank you, Mr. Chairman.

The Chair: I should mention, Ms. Cishecki, although it is by invitation, we have no restrictions at all. If people want to come and are associated with the broadcasting industry...we welcome the input of as many people as possible. We've tried to advertise it very extensively on the web and so forth, so if there are any organizations you know that have not been invited to appear, all they have to do is get in touch with the clerk.

Ms. Melanie Cishecki: Thank you.

The Chair: Ms. Lill.

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

I want to thank everyone who came here today to see us. I think it's an amazing cross-section of views, and I would love to hear a panel another time of you exchanging your views with one another, and see what would come out of it.

I'd like to make a couple of comments. I can't resist the CBC as well. I would just like to let you know, Gwendolyn—and I am a member of the New Democratic Party—that I also despair at the lack of voices on the CBC that reflect my views. I would say it's been a long time, if ever, since the CBC has been this hotbed of left-wing rhetoric, and I know it's a mess.

The Chair: Mrs. Lill, do you think the CBC is right-wing?

Ms. Wendy Lill: I think the CBC is incredibly right-wing.

I love the CBC. I fight for the CBC, and I'll retract that and say that I see a limiting of the range of voices on the CBC—as I do throughout the media. And that's one of the things I am concerned about.

For example, in terms of the coverage we are now getting regarding the war on terrorism, I see a very narrow range of views on that. I do not hear a good discussion amongst people who believe in the peace movement, either internationally or nationally. I do not hear from Muslim Canadians, Arabic-speaking Canadians. I do not hear many voices on what we should be doing now in the world around the global issues. That makes me very nervous, and I feel deprived of what I feel should be on our national broadcaster.

What I find here, though, is that everybody is saying the same thing, that we want fairness and balance, and we want the reality of our lives reflected back to us. If I lived in Preston—I represent the Prestons in Nova Scotia, a proud black Nova Scotian community—I would want to see the reality of my life being reflected back. I would never see it at this point in time. It's a semi-rural area, in many ways a very poor area with a high unemployment rate, but incredibly cultured, incredibly faith driven and family oriented. I don't see that on TV.

• 1035

If I were disabled, I certainly would not see the reality of my life on TV. I remember several years ago there was a show about a young man with Down's syndrome, and I loved that show. I happened to have someone in my life who was disabled and it meant a lot to me to be able to watch that show. But that was just the one show, and it's gone now.

If I were an evangelical Christian.... I am not, but my sister is, and I know she despairs at not being able to get enough of what reflects and sustains her life on TV.

If I were gay, I would also feel the same way, that I would not get what I need to feel that my life is meaningful and validated.

So I guess we're all here talking about the same thing. We really do need to somehow make sure the Broadcasting Act—which says all kinds of grand things about diversity, about reflecting the views of the disabled, of aboriginal people, and people of multicultural views—is being carried through. We're not seeing that. So I am glad we are hearing very clearly from each one of your groups and reflecting that.

In terms of my questions, I have to say the captioning situation is very disturbing to me. I think the fact that the CBC is appealing the decision on the captioning is a disgrace. The federal government has a major role to play in clearly protecting the citizenship rights of persons with disabilities in this country. So this is an issue I'm very glad we are hearing about, and it is one we have to go after.

I would be interested in knowing from you, Mr. Donkoh, whether you feel the impact of media concentration in the last eight to ten years has had a negative effect on getting black voices, black journalists, in positions of news creation and delivery. I don't know the answer to that, and I'm interested in knowing if you've seen any trends.

We were just discussing Madam Bulte's comments about how she welcomes your material from the Canadian Broadcast Standards Council, and I have to say I don't have a real sense of that in my community. I would almost like to see a 1-800 number on my TV once in a while, every 15 minutes, saying if you're having a problem with what you're seeing, this is who you call. You might be swamped. But I don't have any sense of who it is I would talk to, or what to do if I'm really cheesed off with what I'm seeing on TV.

Anyway, I'd appreciate comments from any of you on my reflections, but specifically on those couple of things.

Mr. Sam Donkoh: Thank you, Ms. Lill.

The situation for journalists of African Canadian background is getting worse. Look at the Globe and Mail, for example, which is now owned by a company that also has TV holdings and so on. Look at CTV, also owned by the Bell Media. They are proposing using the same sources. What is happening is the few opportunities we have access to are dwindling.

Increasingly, you find young black people training to be journalists, but they're not getting employment. So more and more of them are going to the U.S. That, we think, is sad, because these people have invested thousands of dollars in their training, and Canadian governments have subsidized the training of these people. When they come to the table, there's nothing for them. They end up taking their training to the U.S. That is something we would like to see addressed.

• 1040

The Chair: Ms. Cishecki.

Ms. Melanie Cishecki: I'd like to just respond to Ms. Lill's comments. The comments you raised I think really highlight the need for ongoing and systematic monitoring of the media.

We're all sitting here at this table feeling alienated, feeling as though everybody else's views are being reflected but not our own, but we don't really know. We don't know how gays and lesbians are being portrayed, or the Christian groups, or we don't really have detailed information about portrayal issues related to women, for example.

I'd really like to bring back the point that the CRTC has done this in the past and has stopped doing it. I'd really like to emphasize the need for ongoing and systematic research so that we can be informed in terms of our position and know where action needs to be taken.

The Chair: Yes, Mrs. Landolt.

Ms. Gwendolyn Landolt: I'd like to emphasize again that it should not be the broadcasters themselves moderating it—that's the Standards Council. Again, I'm not an evangelical Christian, but I know that with the religious broadcasts seen in Canada, every time they put a complaint in about an attack on the Christian faith, the Standards Council simply brushes them off, again and again. I get letters from our members who are brushed off saying, “Those people have an agenda”—which is to promote a particular aspect.

It should not be the broadcasters. If we all want to be reflected, it shouldn't be self-regulatory. That is the problem. Ordinary Canadians, Christian or not, are feeling that they have been shut out of the process because the Standards Council has its own views, its own perspective, and someone who has a complaint about an attack on the Christian or the Muslim or the Jewish faith—well, certainly the Christians, specifically—is usually disposed of by saying “Oh, it's fair comment; there was nothing in this....”

I've rarely ever—in fact, I've never—actually seen any correspondence from the Standards Council that ever found the attack on Christian faith appalling or objectionable. Maybe they have, but I've never seen it. Our members send us letters all the time that say: “What use is it? They're self-regulatory, and we don't want them to monitor.”

Now, there has to be some process other than the self-regulation of the industry.

The Chair: Do you want to comment briefly, Mr. Cohen?

Mr. Ronald Cohen: Yes, if I may, Mr. Chairman. There were a number of points made with respect to us. Ms. Lill raised the very important issue about publicity, relating to what it is we do in her part of the country.

May I say, first of all, that all private broadcasters in the country who are members of the CBSC are required in fact to broadcast public service announcements on a run-of-schedule basis three times a week, and that's fairly standard. It would be nice to be out there every 15 minutes, as you suggest—I know you weren't being serious about that—but this is done on an ongoing basis on radio and television, and I expect people do have an opportunity, in that sense, to find us.

We're hoping next year in fact to have a new revitalized PSA.

We also have a new brochure, which, I'm sorry to say, because of printing problems was not available for today, but it will likely be available later this very week, and I think you would find it very interesting. It is very colourful in its presentation and represents diversity in a very significant way, in terms of pictures and so on in it.

In terms of publicity, as Ms. Bulte said, we do produce our decisions and send them out to everybody. If, for example, you or any members of your constituency are not on the list to receive information about these, please let us know. We'd be glad to put you on.

We have a website that is very effective, very accessible, very easy to navigate, and of course available 24/7, as it is said. Even the MediaWatch poll, which is cited in the study, indicates, as I recall, a 66% recognition—I guess on a transnational basis—of the CBSC.

• 1045

Of course, more people are familiar with the results of our decisions perhaps than with us. Anything sent to the CRTC that relates to private broadcasters comes to us in any event. So even if a member of your constituency sent something to the CRTC, it would get to us and be resolved by us.

The Chair: Mr. Cohen, maybe you could let the clerk know information about your website so that we can circulate it to the members, please.

I would remind the members that at eleven o'clock we have witnesses from the Department of Finance. We have 15 minutes left. I have Mr. McNally, who hasn't asked a question. In the second round I have Mr. Mills, Mr. Harvard, and Mr. Abbott. Mr. Mills hasn't asked questions before, so we'll give him pride of place after Mr. McNally. Then there will be brief questions from Mr. Harvard and Mr. Abbott.

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

Thanks for your presentations. I want to begin by agreeing with Mr. Roots that I don't think there's any excuse for not having all programming closed-captioned and that we should do something about that.

I would suggest to both our public broadcaster and to the Canadian Association of Broadcasters that they could do that proactively—initiate it, provide a positive service to the deaf and hearing-impaired, and also for their own good have a win, because I think the vast majority of Canadians would agree it would be a good thing. I'm wondering why it hasn't happened and would hope it would. If those two groups don't initiate it, this committee should.

First of all, I think all of us have an agenda. Let's be honest, we all have particular frames of reference, things we believe. It's interesting to hear that the CBC is left and right and everything in between. I'm not going to wade in on that one. I watch the CBC all the time. I watch The National and CTV National News almost every night and enjoy both broadcasts, although I listen to the CBC first.

I want to ask a question about the notion—and maybe this could be a bit of a solution concerning the choices about what viewers watch—of paying as a consumer for individual channels versus a grouping, where you say, “Okay, we get this package, but we get these other 17 stations we never watch”, versus the idea of being able to select every channel. If we were able to do that, would we not see a diminishing, I would say, of some of these other issues of choice?

Basically, I think I'm hearing people saying, “We don't want to see that on the television” being told “Well, you can turn it off”. But I think your issue was that you have to pay for it too.

Is that a way to go about it? How do we do that while still balancing other smaller programmers that really need some support to get going, such as the aboriginal channel and others like that? Would there be a way to balance that out? I'll throw that out.

One other question I would have is following up on what Ms. Lill was saying. Are there tags that we see on TV occasionally like, “If you have concerns with this program...”?

Okay, I thought I saw them occasionally. Do we know how often those are on, or what the frequency is of those?

Mr. Ronald Cohen: They're required to be aired three times a week on a run-of-schedule basis—of course, only on the private broadcasters, because we don't represent complainants about the public system.

Mr. Grant McNally: So there's nothing that would indicate to people watching the CBC that if they have a complaint they should lodge a complaint with the CRTC. There's nothing like that with the public broadcaster?

Mr. Ronald Cohen: We're not aware of it.

Mr. Grant McNally: Okay.

I just throw that other question out about choices.

The Chair: Just hang on a minute. Hold it a minute, Ms. Landolt.

Are you finished, Mr. McNally?

Mr. Grant McNally: Yes.

The Chair: Okay.

Ms. Gwendolyn Landolt: First of all, concerning your recommendation that there would not be bundles of packages, it's unacceptable in the year 2001-02 that we have to pay for things we don't want. If I want to watch whatever channel—aboriginal—I should pay for it. If I want to watch Playboy, I should pay for it. But I do not want to be forced to have programs on when my children can see them, and, for example, I have them on mine because I bought that particular bundle; I have to have it on. That would go a long way.

• 1050

The other problem is with monitoring things that are on. No one who has my frame of mind or my sort of agenda, if you want to call it that, is happy with the CBSC, the standards council. They feel it's frustrating and useless. They get supercilious, almost derogatory, letters. I just read one yesterday. They're not comfortable. As Mr. Cohen has already said, nearly all their decisions but three are unanimous. So it's controlled by people of a mindset. There has to be some other process of monitoring, and it should be, if anything, the CRTC.

Now, the CRTC has lots of problems too. It's out of date and all that, but the CRTC has a broader agenda and is open to the different perspectives. If we could feel comfortable that our voices would be heard with the standards council.... Anyone with my view knows it's a waste of time. I get letter after letter complaining about them.

The CRTC as a government agency may monitor it, but it seems to me that the Canadian public has been cut out of the loop of what they want to see, what they want. All we hear is management of the industry by those in the industry. Of any point I can make today, I want to make that clear. Stop the bundling of specialty channels.

The Chair: Mr. McNally, briefly.

Mr. Grant McNally: I want to make a last point, if I could. I forgot to mention it. I was going to ask Ms. Cishecki if she's based out of SFU or not, because I know this document we had was out of SFU.

Ms. Melanie Cishecki: No, we actually commissioned them to conduct the review for us. It was independent.

Mr. Grant McNally: That was my alma mater, so I just wanted to throw you a bouquet of roses if that were the case. I agree with you that the appointment of commissioners needs to be a more open and transparent process too. I think we're hearing that from others who are appearing before the group. In the interests of time, I'll just limit it to that.

The Chair: Thank you, Mr. McNally.

Mr. Mills.

Mr. Dennis Mills: Mr. Chairman, thank you very much.

First I would like to say, along with all of my colleagues here today, that I think it's sad that an organization like the CBC, which all of us have supported so passionately in the last two years, is challenging the Canadian Association of the Deaf on captioning. I think we shouldn't wait for our study to end before we take action on this particular intervention that was brought to us today by Mr. Roots.

I'd like to go to Ms. Landolt.

The Chair: She's very popular.

Mr. Dennis Mills: First of all, Mrs. Landolt, how many members are in REAL Women?

Ms. Gwendolyn Landolt: There have been about 55,000 across the country. I want to make the point that we're not government subsidized; we have no money from the government.

Mr. Dennis Mills: That's fine.

Ms. Gwendolyn Landolt: It's 55,000.

Mr. Dennis Mills: By the way, what does REAL stand for?

Ms. Gwendolyn Landolt: R is for realistic, E is for equal—we believe in the equality of women—A is for active, and L is for life.

Mr. Dennis Mills: Okay. Well, I must tell you that I thoroughly enjoyed your presentation today, and quite frankly I agreed with most of it. I agreed with most of what you said about the CBC. I am a passionate supporter of the CBC.

Mr. John Harvard: You're supposed to be a Liberal.

Mr. Dennis Mills: No, I'm a passionate supporter of the CBC. Let me explain.

I believe it is our role as parliamentarians to speak. We respect the advantaged in our community, but I believe the essence of our life as parliamentarians is to speak for those who do not have a voice. For myself, I represent a riding in downtown Toronto, and I find that the people like Rex Murphy, Michael Enright, and Andy Barrie are constantly reminding me that we are here and government is here to really represent and pay attention to those people who do not have a voice.

Over the last number of years we've become a culture that has essentially been dominated by the advantaged in this country. The voice of those who are disadvantaged has really had a difficult time getting a message through. I think the CBC does a magnificent job of speaking for those people.

• 1055

Coincidentally, a lot of us who love the CBC love it because we think they are very left of centre. Quite frankly, that's part of their job as a national broadcaster. I think they do a great job of going into remote regions of the country that have little or no voice.

So as far as I'm concerned, your description of the CBC has hit the nail right on the head of where their mandate should be. Thank you.

Ms. Gwendolyn Landolt: Thank you.

The Chair: Thank you, Mr. Mills.

Mr. Harvard and Mr. Abbott, briefly, because we have another panel coming in.

Mr. Dennis Mills: I cut my time short, John, just so you could have more.

Mr. John Harvard: Oh, I think you came around at the end, making some sense. It took you a little while, though.

I just have one observation and then two short questions for Mr. Donkoh.

I'm one who supports using cable fees for these specialty channels. I think our country in the main is far too conservative, and if we left it just to the so-called justice of the marketplace, media like the aboriginal channel and others would never see the light of day. We have to use some kind of democratic coercion to do this. I'm just glad that we do it.

Mr. Grant McNally: That's an oxymoron.

Mr. John Harvard: Yes, I know that's an oxymoron, but anyway....

I have two questions for Mr. Donkoh. I think you did touch on this in your remarks. If there are broadcast systems in the world that do a better job of reflecting diversity, just tell me which ones—the premier one, anyway—and how it's done.

The other thing is that you don't believe in a quota system for black journalists, and I would agree. In place of a quota, what sort of a strategy do we need to give people of your group more jobs in the media?

Mr. Sam Donkoh: The organization I referred to is the Cultural Diversity Network. That's in Britain. It's been around just about a year. If you want information on that organization, I can get it to you as soon as I get back to Toronto.

On the question of quotas, we don't support quotas. We are talking about ability. If people are qualified, they do a good job when they get the opportunity. As it is, the bus is leaving—in fact, the bus has left—and we're not even riding on top of the bus. We don't have the opportunity.

Mr. John Harvard: How do you get that opportunity then?

Mr. Sam Donkoh: We did say that diversity should be a part of the licence application. There should be clearly spelled out actions to address the various sections of community. They should be measurable, enforceable, with timelines. Those who fail, let them be exposed. That is what we're calling for.

Somebody said at the beginning of this session that we should celebrate the oneness of this society and that diversity can come later. Well, our people have been here since as early as the earliest European settlers. Our people have fought in all the wars. Our people have helped construct this country. We've been right there in the building of Canada. So we are not asking to be treated any differently from anybody else. We are simply asking that our presence in Canada be acknowledged and that we be given a fair opportunity to build this great country of ours.

• 1100

Ms. Melanie Cishecki: MediaWatch is suggesting that broadcasters, as part of their condition of licence, be required to conduct an equity audit where they're forced to publish their efforts to train, hire, and retain people from different groups. So we're advocating that this be part of the licence renewal and condition of licence.

The Chair: Mr. Abbott, Madame Gagnon, and then we'll close.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): I would suggest that if we were looking for a totally, absolutely disadvantaged group of people in Canada in terms of their reflection on television anywhere, on any channel, it would be evangelical Christians being handled in a sensitive and realistic way. There are no programs of any type in the form of entertainment that give anything of a sympathetic view. I want to put that on the record. I look forward to being challenged on that.

I would like to make a suggestion to the committee. I don't know the most appropriate way to do this. I would be prepared to move a motion, recognizing that we need 48 hours' notice, or I would be prepared to make a suggestion.

I think there is a strong consensus of opinion about the concerns raised by Mr. Roots. Perhaps we could find some appropriate procedural way to request that our chair immediately write a letter to the chair of the CBC and ask for a response within one week by writing to the committee members about the position of the CBC so that we can hear the other side of the story.

Following that, obviously, the next step would be that if we were not satisfied with the position declared by the CBC, then we would move a motion in support of Mr. Roots.

So whatever the most appropriate way to handle that would be, I want to handle this on a....

Ms. Sarmite Bulte: I would like to refer to Mr. Abbott's point.

I concur with Mr. McNally. I think the feeling here is that Mr. Roots' recommendation should not wait until this study is concluded. However, from a legal point of view, how realistic is it? Right now they are in the matter of an appeal. Their lawyers are not going to comment. We're not going to get anywhere.

I would like to find another way, then, a recommendation of some sort asking the CBC to outline its position. We can get copies of briefs if we need to.

Realistically, Mr. Abbott, what's going to happen is they're going to come back and say, we're in the middle of litigation. That's going to be their advice. That doesn't accomplish what you want.

Mr. Jim Abbott: No.

Ms. Sarmite Bulte: I think realistically that's the response we're going to get, Jim. It's going to be a waste of time.

So I'd rather find a way. Perhaps we could discuss this. Either we move a motion or strongly endorse Mr. Roots' position.

The Chair: Could I make a suggestion to the members, please?

Mr. Jim Abbott: Please.

The Chair: On the sixth we have a planning meeting strictly for business. Perhaps we could find a way. We could reflect on how we can do this and discuss it then to see what the best way to do it is.

Mr. Dennis Mills: Agreed.

Ms. Sarmite Bulte: Agreed.

The Chair: If we really decide, after looking at all sides and the fact that it's under appeal, that we should have a resolution, I'm sure we can find unanimous consent to go ahead.

Mr. Jim Abbott: I have one last comment to the CBSC. I find it very interesting that the CBSC takes the position that the actions taken against Dr. Laura were appropriate, when on the other side of the coin the actions taken against the now dearly departed Howard Stern were also appropriate.

While Howard Stern's most egregious, most fundamentally objectionable utterances were edited out, nonetheless his constant, ongoing, never-ending pornographic attack on the women of Canada, which is the entire content of the bile that he spews on the air, was permitted to continue for an extended period of time.

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The position that Dr. Laura took on the homosexual community, which was based on her faith, was found to be objectionable and therefore excluded. I find it rather interesting that there was not the same aggressive attempt taken toward Mr. Stern's very objectionable characterization and objectification of women in Canada.

Mr. Ronald Cohen: In response, first of all, Mr. Abbott may or may not be aware of the fact that there were six issues raised by the complainant against Laura Schlessinger. We sided with Laura Schlessinger on four of those issues. We sided with her with respect to comments that she made that the admittedly gay complainant had been concerned about. We did not side with her on two of the issues.

With respect to Howard Stern, I have with me a file that contains the edit logs that I received every day for a very long period of time. The position we took against the Stern show was no different in its nature from the position that was taken against the Schlessinger show.

With respect to what he said about women, we were consistently very strong...about that issue. That's acknowledged in the MediaWatch document, and I see no inconsistency between the two, because we do not take an ideological position. The position we take is against abusively or unduly discriminatory comments made with respect to any identifiable group.

The Chair: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: Thank you.

As regards captioning, you know that our colleague Caroline St-Hilaire, tabled a bill on this issue. The bill was tabled and I had asked the Heritage Minister whether or not she was receptive to it. She said she was. We will see just how open-minded she is, but a private member's bill has been tabled. We are hoping, at any rate, to at least have the support of the members of the committee, because there seems to be some interest in striving for more fairness as regards captioning.

I would like to go back to Bill C-7. We supported the bill with respect to the covering of expenses so that small associations would be compensated for their travel. If we want greater equity, if we want to have control over Canadian content and show respect for the diversity of opinions, the public has to have its say in the matter as do small organizations, who are often closer to citizens.

Ms. Cishecki, you stated that greater transparency is needed and we have, to some extent, lost control over the quality of diversity, among other things, and content, that the CRTC no longer has this control. What do you think about the transparency of the board of directors? I do not know who is sitting on the board. I asked for the names of the members of the CRTC board of directors. We know that someone has just recently been appointed, but we should have waited to find out what direction the committee would be taking so as to have greater transparency with respect to the board of directors. Are there, for example, any members sitting on the board who come from the public or a consumer association. More and more often, I have observed that it is the public that is paying through its taxes, because we are giving subsidies, financial support to television broadcasters, and we are also paying for the service. Consequently it is absolutely essential that associations be part of the big decision-making process so that we can determine the impact of the content and the diversity of opinions.

Do you have anything to say on this matter?

[English]

Ms. Melanie Cishecki: I agree with what you're saying. As far as we know, there are no public members on the CRTC. There is no public accounting for who is selected, on what basis. As far as we know, there's no formal directive to ensure that there is a diversity in the way the CBSC does on their council to ensure gender balance, a balance in terms of philosophical points of views, and regional and linguistic balance.

We strongly feel there is a need, if those things exist, that it be part of the public record and that there be some justification for the way commissioners are selected. That's very important to us, yes.

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The Chair: I would like to express our thanks to all the panellists today. I think it was a really interesting session and there was a lot of interaction. I really appreciate your input. Thank you for coming.

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The Chair: Could I ask the meeting to come to order, please. We have some witnesses.

Could I ask the officials from the Department of Finance to come forward, please.

Barge your way in; that's the only way.

Mr. Dennis Mills: Those guys in the Department of Finance are shy.

On a point of order, Mr. Chairman, first of all, I want to thank the committee and especially the clerk for, in less than 24 hours, bringing the senior officials from the Department of Finance here. This was something I asked for at the last meeting.

I know we're running behind here today and I know members have other commitments, but I want to go back to the point I made. The purpose of the meeting today is not to talk so much about the tax credit as the tax shelter, which is reputed to have developed into some kind of a scam in the motion picture industry.

Mr. Chairman, I am hoping Mr. Farber could perhaps in his presentation put more of his emphasis on that part of the system that works out of the Department of Finance, which is under review by the department and the minister at this time.

The Chair: Mr. Farber, the floor is yours. Thank you for coming on short notice. We appreciate it

Mr. Len L. Farber (Director General, Legislation, Tax Policy Branch, Department of Finance): We're pleased to be here.

I'll introduce my colleague, Mr. Ed Short, who is a senior tax policy officer with the tax legislation division.

We were asked to appear here this morning to answer different questions on tax shelters and the incentive measures available for film production in Canada.

Let me try, by way of background, to put the issue in context so that perhaps we can better understand what the measures are all about.

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I would say, Mr. Chairman, to lead off, that we certainly don't consider any of the tax shelter aspects to be in the context of a sham or something of this nature. The issue actually is that there was no government program in and by itself that could use tax shelter investment financing for film financing.

Tax shelter financing was available in the system prior to 1996. In the lead-up to the removal of tax shelter financing...and historically it had been available, Mr. Chairman, over the last 25 years in a number of different areas. It was available for rental accommodation, boats, scientific research—all these kinds of aspects. Over time the federal government moved to close down each one of those tax shelters and deal with any stimulus or any incentive measure it may have used to stimulate a particular industry on a direct basis.

So in closing down tax shelters generally back in 1996, discussions with the industry took place at that time with a view to seeing what type of measure could be instituted in order to benefit directly the creation of a film product in Canada. Almost on a negotiated basis—although I hate to use this terminology—the intention was to sustain the creation of film product in Canada. We had, over a 25-year period, enhanced film production in Canada, so much so that we have built up a fairly substantial infrastructure in Canada. We had some very talented people, studios right across the country, and we were creating some very good product.

In taking out the shelter, one wanted to replace it with a mechanism where, rather than share the benefit—which historically on tax shelters was shared one-third to the promoters, one-third to the producers, and one-third to the studios.... In this way we were actually cutting out those people who weren't directly involved in the creation of the films.

On a negotiated basis we put in a refundable film tax credit based on the labour component that was 11% of the production budgets of four films that were produced in Canada, based on a labour component estimated at this time to be approximately 50% of the production budgets. In essence this was about a 5.5% direct film tax credit for the labour component of the production of any particular film, whether it was a feature film, a movie of the week, animation, a TV series, any type of film produced in Canada, based on the labour component.

Now at that time, when this 11% tax credit was put in place, I would remind you, Mr. Chairman and members of the committee, that there was no other incentive in place. This was the replacement for the tax shelter mechanism that had been used before this time.

In the aftermath of that, and as it started to be used, the provinces piggybacked onto this particular incentive and in most cases either at least matched the incentive or in some instances enhanced it. So not only was there the 11%-of-the-cost-of-labour federal tax incentive, there was a provincial incentive on top of it as well that virtually doubled the level of support for the creation of film products in Canada.

On top of this, Mr. Chairman, while one doesn't promote it as any type of an incentive, at this time the Canadian dollar was at 73 cents. So in the aftermath of this, as the dollar fell, the value of the incentive for the production of films in Canada increased even more.

So when one couples all these aspects, including the infrastructure that had been built up in Canada over a period of about 25 years, there has been a tremendous incentive for the production of film product in Canada. And these incentives have been very successful. We've attracted a lot of films to this country and we have a talent pool. We have state-of-the-art studios and an entire infrastructure that's been built around this, as well as Canadian companies who are competing very effectively in the industry.

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At no point in time—until the rumour mill started about the shelters—was there ever any notion that the 11% production services tax credit was inadequate to support production in Canada.

On September 18, the Minister of Finance issued a press release indicating that the matchable expenditure rules, which had been taken advantage of by the industry.... And not just the film industry, because the matchable expenditure rules, Mr. Chairman, were rules of general application. Anybody who wanted to market a particular thing where expenditures related to a right to receive income could have used this mechanism. Quite frankly, there were mechanisms being developed in other industries where they were starting to explore the field as to how they could use these mechanisms to gain tax shelter advantages for investors.

So on September 18, the department issued a press release announcing that the shelter type of investments would be stopped. In the aftermath of this we have met with industry representatives to see how it would be possible to transition or to grandfather those productions that were already at various stages of commencement so they can follow an orderly procedure from their commencement before the announcement to an orderly completion.

We issued a letter of comfort to the industry with regard to the announcement on September 18, to deal with the myriad of film productions that had already commenced so they could continue on to orderly completion. All these films would be completed by the end of March 2002. This was something that again we felt would be accommodating with regard to what was already in the pipeline, and it was very readily accepted by the industry as fair and equitable, particularly in the context of those film productions that had commenced before September 18.

That, Mr. Chairman, is just a bit of background on how this began, what has been in place since at least 1997 with regard to aiding the industry and creating the productions here in Canada. While there have been certain press reports about tax shelter investments as a government program, there never was such a program.

There was the ingenuity of the tax professional community using rules of general application in a manner that was not contemplated by the government when we introduced the matchable expenditure rules, tax professionals who were taking advantage of those rules of general application in what was regarded to be an inappropriate manner.

The Chair: Thank you very much, Mr. Farber. Thank you again for coming to see us on short notice.

We'll now turn the meeting over to questions.

Mr. Dennis Mills: Thank you very much, Mr. Chairman, and I will be very brief.

First of all, it's very important that we acknowledge the fact that the credit issue was cleared up last week in our committee meeting, so we wanted to move right on to the matchable expenditure rules.

Now, Mr. Farber, the one thing you said...and first of all, you have to know I represent over 5,000 men and women who are employed in the motion picture industry in my riding alone, with over 2 1/2 million square feet of motion picture studio space. You can well imagine that, if I seem more passionate, it's like a colleague who might have a Ford plant in his riding. This issue is a big thing for me.

You said you met with the industry representatives, you talked with them, and of course the grandfathering.... If I heard you correctly or accurately, it's your feeling that they were satisfied with this sort of sunset arrangement where those films completed by the end of March would be eligible and that would be the end of it.

Is my understanding accurate here? Did you feel the industry representatives were satisfied with this point that you made?

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Mr. Len Farber: Mr. Chairman, the industry representatives, who represent not just the promoters but the studios as well, were very satisfied with the transition of the grandfathering arrangement. That is not to suggest at all that they would be satisfied with the removal of something they felt they had grown to rely on, but in terms of the transitional arrangements, absolutely, I think we accommodated every possible situation where it was reasonable to assume that there were circumstances that related to a pre-September 18 commencement.

This is against a background, Mr. Chairman, of an industry that doesn't operate under written contracts. This is an industry that actually does the papering of whatever it is they're doing well after the fact.

We had to be very imaginative and work very closely with them in order to ensure that the indices of commencement we put into the press release—or comfort letter—were real, could actually be audited, and could be sustained. We achieved that, and I certainly think we did it to the satisfaction of the industry.

Mr. Dennis Mills: Let the record show—and I'm finished, Mr. Chairman—that industry representatives have come to me and that they did not say what Mr. Farber is saying. So I guess they're trying to...I will get to the bottom of this. I don't understand why they'd say one thing to you and another thing to me. Of course, their big hit on me is that this is going to have an adverse effect on the trajectory of motion picture development that is happening in our country right now. What else can I say? We're getting two different stories here.

Thank you.

Mr. Len Farber: Mr. Chairman, if I may, I'd just like to clarify something. I think you might be alluding to two different things. On the transition, I don't think there's any question. I have not heard one comment from an industry representative that the transition was not adequate to accommodate the myriad of film development projects that were in the pipeline.

It may be a very different thing as to whether or not they believe the current incentive, which is a tax credit incentive, is adequate to meet their needs—what they believe their needs are. That is a different issue.

The Vice-Chair (Mr. Dennis Mills): Mr. Farber, I just want to end; I don't want to hog the time. Mr. Abbott is here.

What they're all telling me is that even though there are some flaws in this particular approach, we shouldn't throw that out until an alternative mechanism is in place, one the industry can work with. Without an alternative mechanism, we risk hurting a sector of our economy right now whose trajectory, as you stated so accurately, has been magnificent, especially for the last seven or eight years.

And they're saying...and I appeal to you. I know you have influence with the minister. I have appealed to him directly to the effect that until our study is finished and until we have an alternative idea in place, I don't think it should be touched.

Anyway...Mr. Abbott.

Mr. Jim Abbott: Mr. Farber, you've come to us in good faith, and my comments here are not to the contrary. My difficulty is with you or with any person I might chose to help me with the excessive taxes I pay on my meagre income—the tax adviser. I find the verbiage you folks get into to be exceptionally difficult for me to follow, so I'm going to leave that alone. As I say, I find it very difficult as an ordinary person without any tax background or accounting background to follow what you're saying.

So let me ask you this in a broader sense. Let's talk about this specific issue.

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The finance department, when it makes determinations that it's going to do things, has intended consequences in mind. I wonder if you, without being exhaustive in your list, can give us an idea of what your intended consequences of this action were. Perhaps you could describe to us how it has the potential to save x millions of dollars or whatever. What are the intended consequences of the action?

Second, which is at least equally important, does the finance department aggressively analyse the unintended consequences? In other words, is there any cost-benefit analysis done by the department in a case like this, where your intended consequences are to save x millions of dollars but where the unintended consequences may very well be, as Mr. Mills has suggested, the slowing of the rapidly rising trajectory of the motion picture industry? Do you actually analyse those unintended consequences, or are you purely reactive after the fact?

Mr. Len Farber: Mr. Chairman, let me first deal with the intended consequences of the press release of September 18.

The intended consequences were to halt an abuse of a rule of general application, one that was available not just to the film industry but was available to any industry that wanted to market interests to the general public, where expenditures would be incurred and where a stream of revenue was only earned over a longer period of time.

In other words, create losses through the investment, those losses to be claimed against other unrelated sources of income like your salary or your professional income, and only get an income stream over time and a disposition of that unit of investment after the given period of time at the capital gains rate—an arbitrage of income rates versus capital gains rates. That was the abuse, so our intention—or the government's intention—was to stop that kind of abuse.

One of the unintended consequences, to the extent that there are unintended consequences.... I have to go back to some of my opening comments, Mr. Chairman, and that is, in order to stimulate this kind of investment in foreign film production in Canada, we put in a particular incentive measure back in 1996, effective January 1, 1997. That was an incentive measure designed as an industrial incentive for the labour component of foreign film production in Canada. That competes somewhat with the Canadian productions, and I think you heard from my colleagues at Heritage last week that the incentive is at the rate of 25% of the Canadian labour component of Canadian certified films.

That was the measure that had been put in place at that point in time to sustain and to enhance the trajectory, Mr. Chairman, you were referring to, to ensure that the level of foreign film production in Canada was not just sustained but was enhanced. At that point in time, that was the only measure that was going to be available for the industry to replace the previous tax shelter type of financing instruments.

Since that time, the provinces have piggybacked and a number of different things have happened, so much so that the rate of incentive actually moved from something that was intended to be approximately 5.5% to approximately 13% of the productions. That, quite frankly, was unexpected for both the industry that was utilizing it and the governments who were putting forward tax incentives to attract investment to Canada.

Those are both the intended and unintended consequences. We thought we had a pretty good handle on what was necessary to stimulate film investment in Canada, and it had moved along at a fairly good pace over the last five or six years to result in an industry that's very substantial in this country.

Mr. Jim Abbott: I appreciate your answer very much. Thank you.

I'm still trying to get through my mind, though, if the old “100% of nothing is still nothing” kind of approach...if 5.5% of whatever...let's say 5.5% of $100 million is the number you were talking about. If the trajectory in fact was taking that $100 million and, for the sake of argument, making it $400 million, have you gone through the numbers? In other words, yes, it has been 13% of a very significantly larger number? Have you actually taken a look at the absolute dollar loss, if in fact there is a dollar loss? I'm not sure I'm making my point clear.

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The Vice-Chair (Mr. Dennis Mills): Do you mean the treasury cost?

Mr. Jim Abbott: It's the cost to the treasury, in other words. Have you taken a look? I'm not suggesting these are the numbers, but, for example, if there was a $5.5-million loss to the treasury on $100 million, if there was now $400 million, 13% of that is actually a smaller amount than the 5.5%.

Mr. Len Farber: I do understand the question. In terms of the numbers, as I'm sure you can appreciate, those are gathered by Canada Customs and Revenue Agency from tax returns. The only published number that I know of, as of this point in time, is the number for the sales of these tax shelter investments, which have to be registered with Canada Customs and Revenue Agency, which for 2000 was $2.7 billion.

The Vice-Chair (Mr. Dennis Mills): Is that film-specific?

Mr. Len Farber: That is for the matchable expenditure tax shelter registrations that they knew about. It may not necessarily be entirely film-specific.

The Vice-Chair (Mr. Dennis Mills): But that's a key point.

Mr. Len Farber: That's a very key point. But they aggregate those numbers based on what is submitted. My guess would be that the vast majority of that would be in film.

Mr. Ed Short (Senior Tax Policy Officer, Tax Policy Branch, Department of Finance): Excuse me, that is for film tax shelters. Whether or not it's for film production is not certain. It could be for other kinds of expenditures.

The Vice-Chair (Mr. Dennis Mills): Could you give us an example?

Mr. Ed Short: It could be for post-production, for print and edit deals, marketing costs. Those are the kinds of costs that could be rolled up into those tax shelters, but we don't have a breakdown of that.

The Vice-Chair (Mr. Dennis Mills): But they're all related to the sector.

Mr. Ed Short: They're all related to film.

Mr. Jim Abbott: I promise I will now conclude, but with the greatest respect, it just strikes me that your answer belies the fact that although the finance department takes these actions with certain intended consequences in mind, they are not monitoring the unintended consequences. I suggest, with the greatest respect, that while Revenue Canada is taking a look at this, there's some loose analysis by the finance department of what the net effect of this is, what the unintended consequences are, but the finance department clearly has specifically in mind its intended consequences, and that is a concern to me, as a member of Parliament.

Mr. Len Farber: Mr. Chairman, if I may—

[Translation]

Ms. Christiane Gagnon: I am sorry, Mr. Chairman. Usually, there is an order—

The Vice-Chair (Mr. Dennis Mills): One moment, Christiane, there is a problem.

Ms. Christiane Gagnon: All right.

[English]

Mr. Len Farber: I just want to say, Mr. Chairman, while the revenue agency is charged with aggregating the numbers and whatnot, it is very clear—I think it's an almost incontrovertible statement—that when you have an expenditure program to stimulate a particular industry and all those dollars go directly into the industry, as a tax credit mechanism does, you're getting your biggest bang for your buck.

When you look at a tax shelter type of investment, as I said in my earlier comments, on the dollars that are attributable to those tax shelter investments, you need a return to the investor, a return to the promoter, and what's left over goes to the studio. So if you're spending a dollar, you're only getting one-third of that dollar going into actual production in the country. You're getting two-thirds of that dollar going to others who—

The Vice-Chair (Mr. Dennis Mills): So it's a scam.

Mr. Len Farber: —while they have something to do with the film, they have nothing to do with directly producing the film. That's clear and incontrovertible, which is why, over time, we have moved away from these types of tax shelter investments, because you want to get a bigger bang for your buck. So for whatever money you want to put into a particular industry, you're always better off putting it directly into the industry and not spreading it out over the marketers, the promoters, and everybody else who has a piece of the action in marketing that particular investment.

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[Translation]

The Vice-Chair (Mr. Dennis Mills): Ms. Gagnon.

Ms. Christiane Gagnon: That is more or less the type of clarification that I wanted to have, because you were talking about the problem created by the abuse of this tax shelter and I wanted you to provide me with a concrete example of someone... So this would be an individual who would use this tax shelter, if I understood correctly, because he was making some kind of an investment in a film production, but there would be no return for the producer per se and other activity sectors within the film production.

I do not know whether or not I have understood correctly, but this is more or less the message that I'm decoding from this financial language.

[English]

Mr. Ed Short: If I understand correctly, what you are asking is who is it that was taking advantage of this program—pardon me, taking advantage of the tax shelters, which, as Mr. Farber said, was not a government program.

The deals would be set up by promoters.

The Vice-Chair (Mr. Dennis Mills): Who's a promoter?

Mr. Ed Short: A promoter is somebody who arranges a deal between a film studio and an investor, that is, the promoter goes looking for investors to invest in the film....

Mr. John Harvard: Would you like a producer?

Mr. Ed Short: The studio is going to produce the film. The promoter will also set up the tax deal. An investor will put in their money. They will receive a tax benefit back from the government. The money that's put in by the investor will be sliced up. A portion will go to the promoter and a portion will go to the studio. In the end, as Mr. Farber said, the benefit that the government effectively puts in through the tax deductions that are available to the investor is split up: one-third to the studio, one-third to the promoter, and one-third is retained by the tax shelter investor.

The Vice-Chair (Mr. Dennis Mills): The paper pushers are the winners.

Mr. Ed Short: Just on the numbers and the question of the government doing projections, when the matchable expenditure rule was introduced, given the level of foreign production in Canada at that time, which was announced when the replacement production services tax credit was brought in, the cost estimate to the government was $55 million.

That number was selected, that is, the rate of the credit was selected in such a way so that the producers would receive the same level of assistance that they were receiving under the tax shelters. If you took the one-third benefit that they were receiving at that time, the production services tax credit was designed in such a way so that they would receive that amount again through the tax credit.

What happened subsequent to the introduction of the federal tax credit is that the provinces came on board—most of them—and most of them at least matched the federal credit, whereas under a tax shelter deal the net provincial contribution is approximately one-third of the total tax benefit.

In the case of the production services tax credit, most provinces, at the very least, matched the federal credit, and some of them have gone way past what the federal credit is. There's actually more benefit now to the producers through the tax credit as a percentage of their production cost than there was under the tax shelters.

What happened since 1997 was that the tax shelter promoters found an exception to the matchable expenditure rules. Again, this would not just be in respect of films, but it could apply to any industry. They checked with the Canada Customs and Revenue Agency to see if it was legal. After quite a time of trial and error, they managed to put together deals that the Canada Customs and Revenue Agency said would not be in contravention of the matchable expenditure rule. After that time, the promoters started to arrange tax shelter schemes again.

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In coming out with the new rule to close down this exception so that it can't be taken advantage of—

Mr. John Harvard: Loophole.

Mr. Ed Short: Loophole, if you like. To close down this loophole, the government has done what it could to try to do an estimate of the cost. When it comes to the tax shelters, it's very difficult to do a final calculation of what the cost is going to be. In a pure world, what you would have to do is wait ten years until all the rights to the films have expired, and then go back for the investors' tax returns for ten years, calculate what their tax benefit was, and then you would find the final cost. So the best you can do is a projection.

In closing down this loophole, there have not been any discussions of a replacement mechanism. The replacement mechanism was put in place four years ago, and there was never any question up to this time as to whether or not the production services tax credit was adequate. What has happened since the production services tax credit was introduced is that there has been additional cost to the government to the extent that these promoters have been putting together these tax shelter deals contrary to the original intent of the matchable expenditure rule.

The Vice-Chair (Mr. Dennis Mills): Ms. Bulte.

Ms. Sarmite Bulte: Thank you.

I received information claiming that the benefit of the shelter was that it was countervail duty proof, as opposed to the production services tax credit. I'd like you to comment on that, number one. I think I know the answer, but I just want to hear yours.

Secondly, is it not a fact that what has now happened is that the producers are saying the tax credit is not adequate? The production services tax credit is there to encourage hiring of Canadian labour. Is it not true that part of the reason it may not be adequate is that the percentage of Canadian labour that the foreign producers actually employ is less than it was years ago?

Mr. Ed Short: On the question of the countervailing duty, you would have to check the fine print of the deal before you sign it. It would all be between you as an investor and the promoter and the studio as to whether or not the studio could ask for additional money from you or from the promoter in compensation to them for some countervailing duty that the United States may or may not impose on the transfer of production services out of Canada to the United States. Actually, I don't see that there would be any difference whether it was done through a tax shelter or with a tax credit.

What was the second question?

Ms. Sarmite Bulte: The production services tax credit is not adequate any more. One of the reasons may be that the foreign producers are actually hiring less Canadian labour than they were when it was put in, therefore bringing it lower than what it was. The whole idea of the production services tax credit was to encourage both foreign and domestic companies to hire Canadians.

Mr. Ed Short: When the credit was introduced, we asked the industry to tell us what the ratio was of Canadian labour to the total production costs so that we could come up with the magic number, which would give them exactly the same benefit they received under the old tax shelters. The number they gave us was 50%. They have not suggested, until now, that there was anything wrong with that number. In the course of the discussions of the grandfathering, it's come up, but actually I don't think we've received a formal representation from the industry. What we have heard is the suggestion that Canadian labour is more along the lines of 30%, at least in the case of feature films.

Since then we've done a little bit of digging. I can't say we have good numbers on this as yet, but the suggestion seems to be that for television production or for movies of the week, the ratio is more like 50%. For feature film production, most of the development cost is incurred in California and most of the post-production cost, if not all of it, is incurred in California. So if you talk about what is being done in Canada compared to the overall cost of the film, the ratio of Canadian labour is lower. Now, whether or not we should address that by upping the rate, I guess we'll just have to wait and see.

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Ms. Sarmite Bulte: Is that something you're going to negotiate with them? Is that subject to negotiation?

Mr. Len Farber: Well, it's not a question of being subject to negotiation. It's a point that has been brought to our attention. Over a period of time, the five and a half years or so that this has been in place, the ratio has dropped, as Mr. Short has just indicated. By the way, it has dropped as a percentage of overall budgets because the costs for the Hollywood stars have proportionally gone up as well, and we don't give any credit for that, for very obvious reasons. So it's not hard to see how that actually happens.

In fact, I'm meeting this afternoon with the Directors Guild, who want to commence at least some discussions on exactly this point, to bring some statistics to our attention and to explore what avenues may be available for dealing with what they suggest is an issue where they want to possibly expand the ambit of the credit to include other things. We're certainly open to discussions, and this will be the first of a number of meetings. We're always interested in getting as much information as we possibly can. It's only in that way that we can give the right kind of advice and the right kind of information to the minister.

Ms. Sarmite Bulte: I have a very quick question.

The industry had originally asked for an extension until September. I'm going back to what Mr. Abbott was saying about the unintended consequences. Until this tax credit was reviewed.... Is there any possibility or is there any thought about extending the March deadline to September?

Mr. Len Farber: Quite frankly, Mr. Chairman, I would say categorically that the industry did not ask for that when we were dealing with the transitional rules. We had developed a mechanism to allow everything that was in the pipeline that had commenced prior to September 18. The basic rule of thumb is that if somebody is relying on a certain provision of the act in order to do something, they ought to be able to use that to completion. So everything that was in the pipeline we believe has been grandfathered.

Hypothetically, if one were to consider extending the rule to September, I'm not sure what else one would accommodate, unless one were to move off the commencement date. If you commence before September 18, it's almost inconceivable that it would take you until September to complete what you had commenced. The way these films begin, they have to begin and carry on almost on a daily basis to completion. Otherwise they really get behind budget.

We were told that going to the end of March was more than adequate to cover off everything that was in the pipeline.

Ms. Sarmite Bulte: Thank you very much.

The Vice-Chair (Mr. Dennis Mills): Mr. McNally.

Oh, Ms. Lill. I'm sorry.

Ms. Wendy Lill: That's all right. Thank you.

I'm just interested in the comments about Canadian content, in terms of Canadian labour and what percentage of Canadian labour is involved in the film industry right now. I just have some basic questions. How much of the industry is Canadian? Do you track that?

We have had many people come before us; people from ACTRA have come to us, and they are very interested in 100% Canadian talent production workers on a film. I'm maybe asking you about oranges when you deal with apples, but my concern as a member of this committee is that we strengthen the Canadian film industry. I don't simply mean Canadian film companies that are headquartered in Los Angeles.

Do you have a breakdown of the industry in terms of who is still essentially 100% Canadian? I know it's getting to be a rare bird, but I think we need to understand what percentage of our industry is Canadian. That would help me a great deal.

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Mr. Len Farber: Mr. Chairman, you had representatives before this committee last week. Those people who run CAVCO, the Canadian Audiovisual Certification Office, and other members of the department are the ones who are best placed to give you those kinds of numbers. They're the ones who best understand the Canadian criteria for qualification and how they certify and what those numbers are.

Ms. Wendy Lill: Just to clarify, you're obviously well tuned into the people who are making applications for the tax credits.

The Vice-Chair (Mr. Dennis Mills): Tax shelters.

Ms. Wendy Lill: But then, as you say, the tax community has managed to metamorphose the gains they got through the tax credits, if I understand correctly. They've found an additional way to get more benefit than you as the tax agency had anticipated.

How do you track the tax shelter loophole? Do you track it in terms of the ownership of the company where the investment is coming from? You certainly do track the tax credit in terms of whether they are meeting their responsibilities for the labour content, because that's what it was built on. But what about the amount of Canadian ownership of the film industry? Is that not something the tax agency also tracks?

Mr. Ed Short: The Canadian credit has separate rules from the production services tax credit. For Canadian content films for Canadian-owned production corporations, the federal credit rate is 25% of labour costs, as opposed to the production services tax credit, which doesn't have any ownership requirement. That is 11%. So the Canadian credit is an enhanced credit.

In the rules for the Canadian credit there is a provision that prevents any possibility of there being a tax shelter associated with the production. So to the extent that Canadian companies are involved in Canadian content productions, things that would be certified by the Canadian Audiovisual Certification Office, they are not involved in the tax shelters.

The Canada Customs and Revenue Agency does track the overall numbers for claims made for the Canadian credit, as opposed to the production services tax credit. Generally speaking, you could say that for the Canadian producers involved in the Canadian content productions, they would be represented by the Canadian film or video production tax credit; that is, the Canadian content credit. For any other kind of work they do on behalf of foreign studios or for any work the foreign studios do on their own here, that would be represented in the production services tax credit.

The Vice-Chair (Mr. Dennis Mills): We'll now go to Mr. McNally.

Mr. Grant McNally: Thanks, Mr. Chair.

I share many of your concerns. While I don't have 5,000 people involved in the industry, I have several hundred who are involved in the industry working in Vancouver. My riding neighbours Vancouver. I also have Virtue Studio Ranch in my riding, which produced Neon Rider and Nothing Too Good for a Cowboy, which were CBC productions. The border town set is in my riding as well. So there are lots of people who are going to be impacted by any decisions made.

I think I'm getting a handle on this now, given the previous explanations.

Obviously, in closing the tax shelter, it's basically the promoter side that's being cut out of the equation, in a nutshell. Is that correct?

Mr. Ed Short: And the investor.

Mr. Grant McNally: Okay.

Potentially, there are going to be less people out there actively looking for sources of income to produce films in Canada, so there is obviously going to be an impact on our industry. I think we all want our industry to remain strong and competitive.

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I want to make sure I have this right. The production services tax credit is 11% and that's mainly to do with the labour side. Then there's the 25% Canadian-owned credit as well. Is that on top of that 11% or is that included in that? How does it work?

Mr. Len Farber: They're for two separate types of film productions. The 11% is the labour aspect for the foreign films. The 25% is only for Canadian content that meets fairly rigid criteria in terms of the number of Canadian actors, producers, etc., all having to be certified through the Canadian Audiovisual Certification Office. They are two independent credits and they can't apply, for example, for the same film.

Mr. Grant McNally: Okay, so they would get one or the other.

Let's say we had a $1 million production. Would you be able to walk us through the numbers of what the impact would be in closing the tax shelter? I guess that would be hard, based on what you said earlier about the way those are applied. If someone is investing the $1 million under the old system, how would that impact now versus somebody investing the $1 million with the tax shelter side of it closed, in terms of the impact on the ability to raise capital to enhance the industry?

I'm not sure if that's doable.

Mr. Ed Short: Actually, we do that kind of thing.

Mr. Grant McNally: Oh, great. Obviously, I don't.

The Vice-Chair (Mr. Dennis Mills): We need a householder on this from the Department of Finance to explain these three different pieces.

Mr. Ed Short: This is in respect of tax shelters or production services tax credits. If, for instance, there were a $2 million film being produced in British Columbia, and if 50% of the cost were for Canadian labour in British Columbia, then whether or not you have a tax shelter involved with that or, if you like, before or after the closing of this loophole, as it was described, there would be a British Columbia production services tax credit. It works out to $110,000, being 11% of the labour.

There are specific mechanics of the calculation for the federal portion of the credit, and it's for that reason that it's slightly less than 11% of the overall labour cost. That would be $97,900. So just for the tax credits, and this is for a $2 million film—again, that's not Canadian content, it's not Canadian owned—that's $207,900, or about 10.5%.

What would typically happen in a film that takes advantage of the tax shelter benefit as well...they would take the expenditures other than the Canadian labour, other than that which qualifies for the production services tax credit, and run that through a tax shelter partnership. So there would be $1 million going through that partnership.

What the film studios say is that when they slice up the tax benefit, their one-third share comes to about 6%. That means on that $1 million, that's $60,000, and that represents the difference, for them, between having the shelter and not having the shelter.

Mr. Len Farber: Mr. Chairman, when you take an example and you put forward numbers, it sounds fairly easy, and it sounds like there's about a 3.5 percentage point difference. One caveat in all of that is this. The example that was put to you is one where they actually meet the 50% labour content. What the studios are saying, particularly with regard to feature film production, is that the Canadian labour content doesn't go up to 50%. It may be more in the order of 30%. So that's where it would actually be less and the shelter component might be more, because it may relate to other unrelated expenditures.

That's a very general example.

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The Vice-Chair (Mr. Dennis Mills): Sam.

Ms. Sarmite Bulte: My question was answered.

The Vice-Chair (Mr. Dennis Mills): Well, Mr. Farber, I don't represent the promoters, and throughout my parliamentary life I've been trying passionately to shut down unaccountable tax preferences and loopholes. So, philosophically, I don't agree with any of these things. I think if we're going to help people, it should be done on a direct basis, where it's totally transparent.

But I must say to the both of you, I hope and I pray that your analysis of this is accurate and that this in no way, shape, or form has an adverse effect on the men and women who are the lens grinders, the costume makers, the set designers, all the people who are on the shop floor, in the factory, who make these films. I personally don't mind if these promoters get put into a more balanced approach, but if those men and women who are on the shop floor are hurt by this, there's going to be hell to pay around here.

This meeting is adjourned.