Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 15 - Evidence
OTTAWA, Tuesday, April 16, 1997
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-32, to amend the Copyright Act, met this day at 6:09 p.m. to give consideration to the bill.
Senator Lise Bacon (Chair) in the Chair.
[Translation]
The Chair: We are sorry to have made you wait so long; we had to attend to our parliamentary duties. We have before us the Association littéraire et artistique canadienne, represented by Ms Claudette Fortier, the Canadian Copyright Institute, represented by Mr. Ron Thomson, and the Canadian Conference of the Arts, represented by Ms Mireille Gagné and Mr. Keith Kelly.
You have an hour and a half to express your views and I believe you have agreed amongst yourselves as to how you wish the time to be allocated to each group; afterwards, senators will have questions. You have the floor.
Ms Claudette Fortier, President, Association littéraire et artistique canadienne: Actually, we are the Canadian branch of the Association littéraire et artistique internationale. Our members are representatives of professional associations of creators and artists from all disciplines, as well as lawyers who work in the field of copyright.
Our position has always been that the rights of creators should be generally recognized, as a first principle, and there should be as few exceptions as possible.
The exercise of copyright and those rights known as neighbouring rights, the rights of performers and producers in the sound recording and audio-visual fields, as the audio-visual sector should now be covered by Bill C-32, must be governed by free negotiation between the parties and not be subjected to exceptions and limitations.
In its brief presented to the Standing Committee on Heritage, the ALAI strongly deplored this avenue taken in the initial bill, while recognizing, today, that improvements have been made to it as it went through its various stages, by the House of Commons. It could still be improved, we think, but we don't want to delay the passage and coming into effect of Bill C-32 in order not to further penalize those who have the right to fees that should have been granted or paid to them a long time ago.
We wish to see it passed without amendment. Usage will show, as has often been the case in the past, that voluntary negotiation and the granting of voluntary licenses is by far preferable to any legislative or regulatory yoke that causes more problems than it solves. Any exception or limitation will lead to a variety of interpretations or conflicts that will do a disservice to creators, artists, producers, as well as the users of works protected by copyright. Madam Chair, I want to thank you and to point out that I am the new president of ALAI Canada and that normally Mr. Ghislain Roussel would have made the presentation on behalf of ALAI but he was unavoidably detained in Quebec. Had he been able to be here, you would have had before you a prestigious lawyer instead of my humble self.
The Chair: You should never put yourself down. Congratulations on your appointment. Mr. Thomson.
[English]
Mr. Ron B. Thomson, Chairman, Canadian Copyright Institute: Madam Chair, the Canadian Copyright Institute is a group dedicated to the understanding and education of people in Canada about copyright and research into copyright. Its membership is made up of a large number of organizations, a dozen or two national organizations, representing, to a large degree, creators, producers and distributors of print materials, although we also include some people from the educational media associations. We also have individual fellows who belong to the institute, Canadians who are interested in copyright issues and who follow along with us and participate in our programs for the development of copyright initiatives.
Madam Chair, I have four things to say tonight. First, I wish to ask you to pass the bill without amendment. The reality of the political situation is that this is the only way the bill will be passed. This bill has been at least eight years in preparation. I have gone through at least one dry run with other colleagues of possible amendments which went nowhere.
It should also be remembered that there are some elements before you which have not been amended in the last 70 years. Many of the amendments in this bill are well overdue. We desperately need this bill passed because, without it, problems will become even greater in the near future.
Second, we are aware that there are many groups urging amendments, even at this late date. There are about 10 major topics covered in this bill; and on each of those topics there are probably three or four sides. Thus, you are being faced with a wide variety of groups with a wide variety of concerns and suggestions.
However, in many of the areas with which I am familiar, I find the opposite groups saying that particular clauses favour the other side. Users are saying that a particular clause favours the copyright owner. The copyright owner is saying that the same clause favours the users too much.
It appears to me that on many of these issues there is a political compromise here that many of people outside Parliament may not be used to making. Therefore, they are urging all or nothing. It seems to us, however, that in this very difficult field of copyright reform, this is a reasonable set of compromises.
Third, many of the criticisms of the bill are based on hypothetical scenarios that are often taken to the extreme. There are two things to remember about this. First, the hypothetical scenarios may never arise. Second, besides the legal constraints of copyright practice in Canada there are also economic, regulatory and administrative constraints. All the bad things that could possibly happen under this bill, legally, I suppose hypothetically, are often not possible in the real world. People who may seem to gain a legislative advantage from this bill would not exercise that advantage for purely administrative and economic reasons; it would not be worth their while to do so.
Many of the new elements in this bill have to be given time to work before we condemn them out of hand. We at the Canadian Copyright Institute certainly welcome the provision at the end of the bill that allows for a report, to be brought forward within five years, on the working of the bill and for Parliament to re-examine it.
We think that over the next few years we will gain a great deal of experience in working through the administrative details of the reforms presented in Bill C-32. After that, it might be appropriate to revisit some of these clauses. However, we think it is somewhat of a fruitless exercise to try to anticipate all of the ramifications now, particularly when the scenarios could be so diverse.
We urge you to keep that in mind in dealing with the criticisms of this bill that are coming forward. Much of this still must be worked out on the ground. There will be an opportunity within five years -- and it could be as early as in two or three years -- to make technical amendments to deal with text of the act which does not result in policies sought by the Canadian government. That is another reason for passing the bill now and getting on with it.
My final point refers back to the first point in that it has taken at least eight years to write these amendments and, in some cases, 70 years. These are the so-called Phase II amendments.
We who deal with copyright know that what is looming on the horizon is what we call the Phase III amendments, which is the digital and electronic area of copyright, in which it will be even more difficult to come up with workable rules for the benefit of both users and creators of copyright material. We think it is time to come to closure on Phase II.
I have spent a great deal of my personal life involved in this. I do not want to have to go through it again over the next eight years. As a country, we must move on to new and pressing issues in the areas of database, electronic rights, digital rights and the information highway. For this reason, we ask that this bill pass as it stands so that it can receive Royal Assent and we can move on and deal with the other issues, keeping in the back of our minds that where, for technical reasons, this bill fails, there will be a opportunity in the future to correct those failures.
We urge you, as a committee, to report the bill back as it stands. We hope that you will vote for it in the Senate at third reading for passage as soon as possible.
Ms Mireille Gagné, Canadian Conference of the Arts: On behalf of the Canadian Conference of the Arts, I should like to thank you and fellow senators for this opportunity to contribute to your study of Bill C-32. The CCA is Canada's oldest and largest arts advocacy organization which, through our membership of organizations and individuals, represents the interests of over 250,000 artists, creators and cultural workers in all disciplines and cultural industries.
[Translation]
Copyright reform has been a constant element in the presentations of the CCI to government in the 52 years of our existence. The CCI believes that the Copyright Act must defend and protect the economic and moral rights of creators and copyright holders and this is the point of view we have always put forward over the past nine years since Phase I of the reform began.
The reform of copyright is essential for the survival and growth of the creative arts community and of cultural industries.
[English]
The interests of the creators and the copyright owners should be paramount in the give and take of public policy makers dealing with this important issue. I say that because works of creators, like humans themselves, are the product of an expensive and difficult process of gestation and labour. The investment of imagination and effort which lies behind every successful artistic work is often overlooked in the current controversy surrounding the revision of the Canadian Copyright Act.
In the current parliamentary review of Bill C-32, the communities of interest who rely on the works of creators for their commerce have loudly protested the possibility that legislative amendments will increase the level of payments they must make to creators for the use of their works. They continue to plead with parliamentarians to absolve them of many of these payments due to the restrictive financial environment in which they are currently operating.
[Translation]
If broadcasters must pay higher fees to creators, they do have access to a large variety of options to help them meet these requirements. They can increase publicity costs, reduce operational costs, or turn to the CRTC to have their licence amended in order to increase their tariffs for rebroadcasting programs. Universities, libraries and other institutions have access to similar solutions.
[English]
Yet, what about the flexibility of creators? If creators are not paid for the investment of their time and talent through rights granted in the Copyright Act, there is no other mechanism available to them to compensate for lost income. A decade of spending cuts has meant that grants from public funders are smaller and more highly contested by a growing body of artists and creators. As self-employed individuals, they are not entitled to Employment Insurance benefits and often must turn to secondary employment, such as driving a cab or waiting on tables, to survive. How many university presidents or radio station managers would we find in a similar situation?
We have heard that Bill C-32 is flawed because it unfairly tips the balance of interests in the legislation to the creator and the copyright owner. This is at best a myth which has no basis in reality. Over the nine years of discussions and consultations which have culminated in this legislation, creators and copyright owners have been subjected to, and have accepted, demands for major compromises of their economic rights. The phase-in period for neighbouring rights, the permanent preferential tariff for radio broadcasters, the exemption of the first $1.25 million of advertising revenues from the neighbouring rights for all broadcasters, and the introduction of a considerable number of exemptions have exacted their toll on the economic interests of creators and copyright owners.
In fact, professional writers feel that the construction of the legislation represents more than a compromise of their interests, an expropriation of their economic rights. Please do not suggest to them that this legislation tips the balance in favour of the interests of creators.
It was for this reason that the CCA recommended to the Standing Committee on Canadian Heritage the adoption of an amendment which would have limited the exceptions in Bill C-32 to those areas where no collective exists and only until such time as a collective is formed.
We similarly pressed the Minister of Canadian Heritage, the Honourable Sheila Copps, to seek the endorsement of her cabinet colleagues for such an amendment. Despite her best efforts, both of these attempts met with failure.
[Translation]
The CCI is still of the opinion that such an amendment would greatly improve the treatment afforded creators in this legislation and would affirm the principle of the collective administration of rights as the cornerstone of the Canadian policy on copyright; it would give creators and copyright holders the unmitigated right to negotiate the terms under which their works are used on the public market, without any external interference.
[English]
However, today the CCA calls for the Senate to pass Bill C-32 without amendment. It is time to bring to a conclusion nine years of debate on this important legislation.
It is apparent that in what appears to be the final days of this Parliament before an election, we must consolidate the modest gains for creators and copyright owners. We do this in full appreciation of the losses for writers and other creators, and it is with considerable regret that we do so.
Bill C-32 includes provision for a mandatory review of the provisions of this legislation before five years. In passing Bill C-32 unamended, we call upon the Senate to ask the government to undertake this review after a period of two years. This will hopefully allow us once again to attempt to address the concerns of writers and will allow for both sides to work out the bugs in the legislation. While we regret the hardships this will impose on writers -- an additional burden for the period leading up to the review -- it is imperative that we bring an end to this marathon process so that we can begin Phase III of revisions to the Copyright Act.
Copyright is the sole instrument within the arsenal of federal policies which entitles creators to payment for the use of their work in the marketplace. Responsible copyright policy acknowledges that the investment of labour, talent and training by the creators adds inherent artistic and economic value to their work.
When the Senate gives Bill C-32 third reading, they will have an extraordinary opportunity to affirm the economic value of works of the imagination in our society. They will have to ensure that interests of user communities do not eclipse the fundamental principle that creators must be paid for the use of their work, thereby taking an important step to ensuring a healthy and vibrant cultural life in Canada.
Senator Roberge: It was quite clear that all three of you wish this bill passed without amendment, even though you feel that there are some flaws in the bill and that it could be improved upon. You have talked about some amendments which could eventually be part of a future review. Ms Gagné feels that the review period could be advanced from five years to two years.
I should like to hear your opinion. Should it be two years or three years, and what are the reasons for your choice?
[Translation]
Ms Fortier: If the period is modified, I would like to see work begin tomorrow morning on Phase III and we will very rapidly find out what the constraints are that have been created by the new provisions in the act. There are delays associated with the exceptions. After a certain number of days, users will have to either destroy or obtain licences for the works that are reproduced, so we will rapidly find out what isn't working.
The regulations will also have to be fine-tuned, because the law provides for regulations that will apply to posters in schools, libraries, et cetera. Will these regulations have to be worked on? Should they be in red or blue ink? These things will have to be determined because the law is not specific, but the Governor in Council has all the necessary latitude. So, I don't think the bill should be amended in any way, but we should as quickly as possible move forward in order to see what develops when Bill C-32 is applied.
[English]
Mr. Thomson: I think you have to allow a certain time for this to get working on the ground. As was just mentioned, we do have a number of regulations to be brought in in a number of areas, and I believe these are being worked on. Certainly some of the problems could be fixed by amending these regulations as opposed to changing the act.
The Copyright Board has a great deal of work to do to establish tariffs in a number of areas to determine if they will work, how they will be collected, and if they are fair. Sooner rather than later, you will have two or three years' experience -- the first year or two is actually sorting out the technical details of administering this -- to see what the economic and cultural impact of the various elements in the act are. In one sense, five years may be too long, but perhaps two years is too short. The act as it reads now says within five years, so the minister could begin within two years. Once that report is brought to Parliament, the appropriate parliamentary committee has another year to consider it. One does not choose a number at this point, I do not think.
Senator Roberge: Do you have a problem with clause 66.9(1) which pertains to the cabinet having unprecedented powers to establish policy in respect of royalties to be paid to a judicial body? Do you have any comments on that?
Senator Johnson: That is SOCAN.
Senator Roberge: I should like to hear his comments.
Mr. Thomson: When these transition rights came in several years ago, a similar clause was in place so that cabinet could set the criteria by which the Copyright Board would function. It seemed to me at that point that they set some fairly general guidelines. For example, they shall be fair and not prejudice small local groups and so on. I do not have any problem with this. In a sense, these are political decisions and it should be left to the political element of the government to make those decisions. They are not judicial decisions for the court. I do not have any particular problem with this.
I doubt if cabinet wants to get into the nitty-gritty of operating the Copyright Act, and I would doubt if the regulations they brought forward would be that specific. In all the discussions that I have had about this bill with a wide variety of groups, no one has ever focused on there being a problem in any sense.
Senator Adams: We heard from the teachers' association yesterday. We have heard of approximately 120 amendments from the House of Commons dealing with Bill C-32, and 70 amendments were passed in three hours. We could not determine who brought forward those 120 amendments, whether it was the civil servants or other people. However, the teachers wanted to have more amendments.
You have said today that you want to pass the bill without amendments. You have been working on the bill for eight years. There must be something that you can tell us. You have been working on the bill with the draftsmen. Did they draft the bill without consulting anyone?
Mr. Keith Kelly, National Director, Canadian Conference of the Arts: First we must look at the much broader context in which Bill C-32 was developed over nine years of extensive consultations, debate, formal processes within the Department of Canadian Heritage, and certainly the lengthy hearings of the standing committee. In addition, it is fair to say that the members of the committee from all sides of the house were conscientious in meeting with representatives of both sides of the issue outside of the formal committee meetings.
When the amendments came forward, we saw the product of a fairly lengthy period of consultation and deliberation on the part of the committee members. The fact that it happened with the haste that appeared to take place was probably more related to the fact that the house was about to be adjourned for the Christmas break than any mischief or desire to pull the wool over anyone's eyes.
We consider the kind of amendments that emanated from the standing committee process to be more a product of the lengthy and comprehensive nature of the discussions and the involvement of the standing committee members in the study of Bill C-32 rather than any plot to subvert the will of Parliament.
Mr. Thomson: There were a great number of amendments. A number of those dealt with technical flaws which we saw immediately upon publication of the bill last May. There were instances of spelling mistakes and instances where the French did not match the English, and so on. There were a few changes in policy points, but the number of amendments also reflects the large number of technical changes and drafting errors or problems. It is a very complex bill touching on a wide variety of issues.
Senator Adams: House of Commons committees work differently from Senate committees. Often, a witness will tell us that in the other place they hold a bill for over a year. Bill C-32 has not been here for more than 10 days. We do our best, but most of the time the Senate committees do more than the house committees. When we study bills, we often hear from a minister and numerous witnesses. For example, we sat on Bill C-68 for over 30 days and the House of Commons Justice Committee only heard from 16 witnesses on that important bill. In one month, we heard from 63 witnesses in one of our committees. I wanted to let you know that when we say that we will do our best, we mean it.
This is a technical bill. Sometimes it is very difficult to understand, but I should like to find out more about why the teachers, your group, the writers, and so on, have different views. I think the teachers association wants to address photocopying. We did not find out exactly why they are opposed to the bill. There is one member opposite who would like to put forward an amendment. However, I am on the government side and I would like to see the bill passed.
You have been working on the bill for over eight years and have been adjusting it. We want to ensure that the bill is good for Canada and then we can pass it.
Mr. Thomson: I suggested several years ago that the bill be introduced to the Senate first. Because of the technical work needed on it, I thought this would be a better place to deal with that. However, my advice was not accepted by the government.
Second, you must remember that this bill grants exceptions. This bill does not limit exceptions; it grants them. It is not legal for a teacher to photocopy material in the classroom for public education. Private research is fine, but as soon as a teacher starts doing it within a classroom context, under an amendment in the present Copyright Act that is illegal and an infringement of the copyright.
In this bill we are not seeing a diminution of user's rights but an opening up of those rights, making legal practices in which we can see some justification. We see that it could also be an abuse. Therefore, we have offered alternatives such as collective administration and licences. That will minimize the administrative overhead, but at least we will return something to the creators of this material. It is the same in the use of material in libraries. Libraries were set up as repositories of materials and they are now turning into distributors of materials. At least its overhead is returned, if not something more. We think that something more should go to the creators of that material.
In looking at this, we see in this bill the legalization of a lot of illegal practices with either no or very minimal recompense for the creators and producers of that material.
Senator Adams: I am a native. I know two languages; English and Inuktitut. The bill is only concerned with two other languages; French and English.
Mr. Thomson: It covers every material. Copyright covers anything in any language.
Senator Adams: Is there any problem with translating printed material between English and French? Can you type in different languages?
I live in the territories. We have a lot of people who are becoming famous quite quickly such as writers and singers, and so on. Our small community is not the same as communities in the south. There are good songwriters, writers, and so on, in the north. The CBC has recorded some native songs, and so on.
When I was in Winnipeg, I saw a songwriter from Chesterfield Inlet. She is now living in Winnipeg and doing some carving. She told me that she wanted to record her songs but could not do so because she did not have any money to pay for that. This is affecting everyone. The CBC never used to ask how you wanted to record your music but they now say that if you want to sell your record, you have to put some money up front. Everything has changed now. You must pay before you record a song.
Most of the time, someone in the community would record it and did not charge anything. They just said, "I would like to make a tape of your song." Now, someone who knows the singer can walk away with that tape and, if it is a good song, they can copy it and make a fortune from it. My concern is that they will be able to make money on that.
Mr. Thomson: The law in place and the law as amended always gives the creator the right to claim the fruits of his labour. There are administrative problems, court costs, and so on, but this does not change at all.
Senator Anderson: When Bill C-32, An Act to amend the Copyright Act, was tabled on April 25, 1996, Ministers Copps and Manley released an open letter which noted that the bill as tabled "will achieve a fair balance between the rights of those who create works and the needs of those who use them."
Are the amendments that have been proposed by the parliamentary committee restoring this proper balance between the people who create the work and the people who use it?
Mr. Kelly: No, not entirely. That is what we have been saying. Certainly, from the perspective of the creator and the copyright owner, the ideal universe for copyright would be a full conferral of rights on the creator and copyright owner.
Have the amendments improved the balance? Somewhat, yes. That is why all of us have unanimously called for the passage of the bill without amendment; namely, to consolidate what we think is the best we can get out of a very difficult process.
Any piece of legislation can always be improved. After nine years of work with copyright, Bill C-32 appears to be able to improve every minute with every witness. There comes a point where we must say, "This has been a very lengthy process. If the creators are unhappy and the users are unhappy, well, that must be a balance of interest." The government and the Senate should congratulate themselves and pass the bill and find a nice comfortable chair in which to watch the election campaign.
[Translation]
Ms Fortier: If I might add a remark, I think that creators' representatives all came to tell you that we had made many compromises in Bill C-32. The users came to meet with you and put forward their points of view. I did not hear any questions from you to find out what it was they had obtained. All they stressed was what they had not obtained, and of course, they want more. Last December, among the amendments that were made, there was the introduction of two new exceptions to copyright, concerning ephemeral recordings and the authorization to transfer works to other media that had been requested by broadcasters. There is a clause concerning these two new exceptions that states that when a collective can provide a general licence for its repertory the exception does not apply, and when Ms Copps and Mr. Manley talked about balance in their release, they were probably referring to those two exceptions.
[English]
Mr. Thomson: The bill could always be approved in my favour. It could be approved in the favour of anyone in this room.
I wear a number of hats in life. I am both a producer and a user of copyright material. I run a university president. I write books. I create and produce copyright material. I am also a teacher and a researcher. In a sense, I have to access copyright material, both for my personal research in my historical studies, and in what I present for classroom use.
As a user, I do not see limitations on my work. Through the collective licences offered, I see a way in which the work I do reimburses the people who did the work upon which I create. Through the collective licensing system, through CANCOPY and similar collectors in other areas, my administrative problem of accessing copyright is virtually nil because there are general blanket licences, sampling licences, et cetera.
Neither as a historian nor a teacher do I not see anyone's work being compromised by this bill. The processes are in there. They are not being stopped.
A phrase which probably still applies is "freely accessible", which is not the same as "accessible for free". I am not excluded from walking into any grocery store to purchase something. If someone does not like my looks and tries to kick me out because I am the wrong colour or sex, there are laws that prevent that. I have free access. However, after I have made my selection from the shelf, I have to pay for those goods because the storekeeper, the manufacturer of those goods and the producer back at the farm-gate has to be paid.
The same holds true for intellectual material. It is freely accessible. Copyright is not being used to block access. However, once the selection is made, under this bill and under collective licensing, there is a mechanism to eventually give to the creator and producer of the material some return on his initial efforts.
[Translation]
Senator Poulin: Thank you for your excellent presentation. I am assuming that some of you may have been here last night. We had an extremely interesting experience because we had the opportunity of hearing and discussing things with the representatives of several groups of users. At one point during the evening, in the small room it was very hot and emotions ran high after several hours. My colleagues and I had the impression that some users thought that we have done nothing but see and listen to the representatives of various interest groups as a formality and that this whole process was a "scam", and I am quoting the expression that was used last night. I'd like to tell you that this is far from a "scam" and that we absolutely want to take the time to listen to all of the groups who have interests involved and clients affected by this extremely important legislation. I know that some of you have been participating in the evolution of this legislation for a number of years.
Are you convinced now, as my colleague Senator Anderson was saying, that the legislation as it stands, with its strengths and weaknesses, is the best we can devise for our country, at this time?
Ms Gagné: Yes, that is what we are advocating; that this bill be passed, because at this stage, in light of the complexity of things, it will help. It is all the more urgent that this bill be passed because some creators have been waiting for years to receive rights and it is high time something was done.
Also, by passing this copyright bill, I think the government will be sending a double message to creators that it thinks their rights are important and that it wants to recognize them. The adoption of the bill will also address a message to users. You know, copyright isn't something that is discussed at the convenience store, or while having a beer. It is discussed rather rarely.
So it is a concept, a principle that is not familiar even to professors, young people, students, anyone. So when you talk about it, it's as though you were talking Chinese, and it does not seem important. People don't want to pay for a photocopy, and the principle involved is very rapidly glossed over and forgotten.
Thus I believe it is important that the government show the population the importance of copyright and reaffirm those rights. Although the bill may not be perfect, there is room for improvements and I am sure that those will be made.
[English]
Mr. Thomson: Unless we get an eleventh commandment which states, "copyright shall be thus", this must be a balance of rights, a saw-off of rights and uses. In that sense, where the line gets drawn will always be somewhat arbitrary.
Looking at it from all sides, we have come up with a fairly reasonable compromise. Short of an eleventh commandment, not even the wisdom of Solomon will allow you to re-draw it elsewhere that will be any better.
[Translation]
Ms Fortier: If the debate around this bill is ongoing, it is because what creators have managed to preserve concerns them. So, we are here and I think that my colleagues said yesterday that they were happy not to be flooded like in the Saguenay. We are afraid that if the debate continues we will lose what we have acquired or managed to preserve and that is the bottom line; we want this to stop and we would like to see the bill passed now.
The Chair: Do you have any other comments to add before you leave? Your message is very clear. I thank you very much for your intervention which we have listened to with a great deal of interest. I greatly appreciated your co-operation tonight, and especially your great patience.
[English]
I should like to welcome the representatives from the Canadian Library Association --
[Translation]
...The Association pour l'avancement des sciences et des techniques de la documentation, the Canadian Association of Law Libraries, the Canadian Association of Research Libraries, l'Association des bibliothèques de recherche du Canada. I don't think I have forgotten any group. Is there another group? There is Mr. Larivière from the Special Libraries Association, l'Association des bibliothèques spécialisées.
You have no doubt agreed amongst yourselves on who would be speaking first; you have an hour for your presentation and the questions from senators that follow. You have the floor.
[English]
Mr. Jules Larivière, Association pour l'avancement des sciences et des techniques de la documentation: Good evening. Let me first introduce to you my colleagues who will present the librarians' point of view of Bill C-32 as passed by the House of Commons last March 20.
With me are Karen Adams, Executive Director, Canadian Library Association; Richard Ellis, Canadian Association of Research Libraries; Susan Merry, Special Library Association and John Tooth, Chair of the Copyright Committee of the Canadian Library Association.
[Translation]
And finally, allow me to introduce mysel. I represent l'Association pour l'avancement des sciences et des techniques de la documentation, better known as ASTED, as well as the Canadian Association of Law Libraries.
On behalf of my colleagues, I would like to thank you for giving us this opportunity to express our comments on the amendments that have been made to Bill C-32 since the presentation of our briefs to the Standing Committee on Canadian Heritage last November.
At the outset, we want to say that we are depending immensely on your wisdom to meet the enormous challenge which awaits you, which is to strike a fair balance between the legitimate rights of creators and those of the users of protected works, a balance which was unfortunately upset by Bill C-32 as passed by the House of Commons last March 20.
It is in this context that I would like, with your permission, to read you two excerpts from texts published recently which both shed light on the heavy responsibility your committee has now been entrusted with, that of having to study Bill C-32. The first text is taken from the Financial Post of March 29, and it states that...
[English]
... the senators now have the enormous responsibility of deciding what to do about Bill C-32. Will they pass it into law as is, study it until the election kills it, or earnestly try to amend it with the last-minute compromises that can be dealt with in the possibly short time remaining in the life of this Parliament. Senators will need all their wisdom to do the right thing in this case.
[Translation]
The second text is an excerpt from the Canadian Society of Copyright Consumer Newsletter of April 1997, which states that...
[English]
...if you were a senator and you awoke one morning to find that your committee had just been handed a bill amending the Copyright Act and that you would be required to review it, question witnesses and judge the merit of the legislation, what would you do; buy a book on copyright, request a transfer to another committee or call in sick?
[Translation]
Without knowing how assiduously members usually attend your committee, Madam Chair, perhaps you can now, if not necessarily approve absences, at least understand them.
Before raising certain specific aspects of Bill C-32 which we consider problematic for libraries in general, we would like to take advantage of this forum first of all to express our surprise, if not concern, at the rather hasty way in which such an incredible number of amendments were introduced at the last minute. We would also like to set certain facts straight and right certain statements which were made before this committee and before the House of Commons committee about libraries in general. They have been depicted as a group of exploitive institutions with no respect for the rights of creators, institutions who refuse to compensate authors, among others, for the use of their works. I think we need to cool our jets, as the expression has it. First, the House of Commons committee on Canadian Heritage introduced a long series of amendments on the last day of its hearings. Some of them were minor cosmetic changes but others were definitely of major importance and modified the very spirit of the bill, and the committee did not take the time to fully debate the proposed changes and analyze the consequences, since several of these amendments were tabled at the last minute.
To substantiate that statement, allow me to refer you to the minutes of the committee, where on the last day, at 1:25, a member complains that he received the amendments at 12:25 and asks to at least be allowed to examine them.
Far be it from me to call into question the competence of members who have to study bills that are often very complex, but as competent as they may be I don't think that one can analyze new amendments in such a short period of time and vote on them with full knowledge of the facts. That is just human nature; it's simply impossible.
Secondly, we think it important to let members of the committee know that we cannot accept statements such as those that were made to you in the joint brief of the Writers Union of Canada, the League of Canadian Poets, and the Playwrights Union of Canada, and I quote:
[English]
However, thousands of educators and librarians do not want to pay educators of intellectual property for the use of their work.
[Translation]
Nothing could be further from the truth. First, the documentation, in many forms, that is found in our libraries is purchased from and paid to publishers who have had to negotiate copyright payment contracts with those who created that documentation. And when the argument invoking the poverty of the vast majority of writers is raised, are people really attacking those who are truly responsible for that when they accuse libraries?
Second, when usage justifies it, libraries frequently purchase several copies of protected works and pay the full price to publishers.
Third, when a work is no longer available on the regular market, libraries turn to the used books market before considering reproduction as a last resort.
Fourth, as my colleagues will be demonstrating eloquently with figures to support their claims based on serious and objectives studies, systematic, large-scale reproduction of protected works by libraries is a myth.
Fifth, from the moment of their creation, we have always supported collective societies and have always been willing to co-operate with them to ensure that authors are fairly compensated for the use of their works. We often wonder why some people seem so intent pitting authors and libraries against each other.
And, finally, any additional payment to collectives will have an impact on our acquisition budgets, an important part of which is used to purchase Canadian works and pay copyright fees on them. The pie principle comes into play here: the more people want a piece of the pie, the smaller the portion each one will receive.
[English]
I should now like to put on my hat for the Canadian Association of Law Libraries and present you with our comments on Bill C-32 as passed.
The Canadian Association of Law Libraries represents the wide variety of law library interests across Canada. It provides a forum for the exchange of information and ideas among members and fosters cooperation among law libraries.
For the Canadian Association of Law Libraries, Bill C-32 creates a dangerous precedent which restricts access to legal materials. To gain the full benefit of the library exemption, Bill C-32 forces libraries to enter into a transaction or an agreement with a copyright society.
These amendments of the originally tabled versions of Bill C-32 do not preserve the stated goal of the original version, which was to create a balance between the rights of creators and the rights of users. Furthermore, these amendments create a dangerous precedent for future Copyright Act amendments. Forcing parties to enter into a licensing arrangement, suggests that contract takes precedence over a legislative exemption. The limitation also provides a very strong bargaining position for the collective societies when negotiating these licences.
The Canadian Association of Law Libraries also believes that access to the law requires an exemption to produce legal materials. We are concerned, based on the precedent established by Bill C-32, that a collective society such as CANCOPY will attempt to control the reproduction of legal materials by licenced agreement. Often the only access to legal material is through the works of legal publishers.
The underlying works in these legal publications are often the full text of statutes, regulations, reasons for judgments and the decisions of administrative boards.
Access to the law is a right which requires special protection in copyright reform. The permitted purposes in the Copyright Act for the use of legal resource material, judicial and tribunal decisions and reports, statutes, legal commentaries, extracts from treaties and articles including summaries, head notes, formatting and other mandatory regulations thereof, should expressly include copying for the purposes of research, review, private study and submission to a court, tribunal, government or other public authority.
Since libraries remain the primary mechanisms by which Canadian citizens access the law, all libraries, including public, private and government libraries, should be permitted to reproduce and provide a single copy of legal resource material upon request to any person for the purpose of research, review, private study and submission to a court, tribunal, government or other public authority.
The issue which determines whether the use is fair or not is not who makes the copy but the purpose for which the copy is made.
[Translation]
In conclusion, Madam Chair, I want to state that the Canadian Federation of Law Societies of Canada fully supports the principles I have just discussed in this brief, as indicated by its president Mr. Donald M. Little in a letter he sent to us dated April 9.
[English]
Mr. John Tooth, Chairman, Canadian Library Association, Copyright Committee: Honourable senators, I spend a lot of my unreal life doing copyright work related to legislation. Whenever I get back to work to do the things for which I am paid, I am a librarian for the Department of Education in Manitoba.
I wish to talk briefly about the Canadian Library Association and what it is and then review our version of the history of copyright -- only the last 10 years -- and how we got to where we are today.
The Canadian Library Association was founded in 1946 as a national association dedicated to the provision of leadership in library and information services in Canada for the benefit of association members, the profession and Canadian society. Its members comprise personal institutional members from public school, university, college, government and special libraries, as well as commercial members from the information industry. Its mission is to provide leadership in the promotion, development and support of library and information services in Canada for the benefit of members and Canadians. There are nearly 4,000 members in our association.
The CLA believes that copyright law is a matter of establishing a balance between the interests of the copyright holder and the rights of the user of copyright materials. The association has been a participant in the government's consultations on copyright for many years. In 1987-88, members were disappointed that the Phase I reforms dealt only with the interests of copyright holders by legitimizing the establishment of collectives, with clarification of the rights of users being left to Phase II, originally intended to follow immediately. Obviously, there are different concepts of the meaning of the word "immediately". Here we are today dealing with Bill C-32 ten years later.
In spite of their misgivings over the lack of clarity about the rights of users, CLA members have been active in working with the collective CANCOPY to begin licensing educational institutions. The CLA also began educational programs on copyright for its members, which ultimately are the answer to all of these questions.
Members were reassured by the government's assurances that Phase II would restore the balance to the law and that libraries would be eligible for limited exceptions that would enable people working in libraries and library users to make single copies as long as the creator's economic interests around the sale of those products were not damaged.
When Bill C-32 was originally tabled, we were reassured to see that libraries would be protected from liability for what patrons copy on self-service machines. We were reassured that the making of a single copy of a work would be permitted in certain circumstances, including where a work is not commercially available. While we did not support all of the elements of Bill C-32, the CLA viewed it as a step in the right direction to restoring a balance between the rights of users and the rights of creators. However, dramatic changes imposed in haste by the Standing Committee on Canadian Heritage last December destroyed the fragile balance. Worse, they destroyed the very concept of exceptions by linking them to collective licensing.
An exception is not an exception if it must be bought from a collective. That is what we presently have. We buy exceptions from CANCOPY now. You cannot give them to us in legislation; we are already doing that.
It is clear that some of these changes, hasty as they were, were not well thought out and did not reflect the elements of certain situations in libraries. As a result of this flawed possess, both ASTED and the Canadian Library Association are respectfully requesting the Standing Senate Committee on Transport and Communications to make the necessary amendments to restore Bill C-32 to its original state.
The specific amendments that we are talking about are to be found in our presentation, which I believe you have. Several speakers after myself will be dealing with various issues, but I should like to speak to one which has been around for the last two years but has been more dramatically stated in recent days. It is an attempt to link author poverty to libraries.
An article in The Globe and Mail of April 13 said that a survey states that magazine writers are ill paid. They indicate that the salary of an author belonging to the Canadian Periodical Writers' Association is about $26,000. I am sure many Canadian writers are earning a lot less than $26,000. Canadian libraries are respectful of and sympathize with Canadian writers. We wish they did earn more money. Canadian libraries need Canadian writers to produce books and periodicals, the creativity of which we use in libraries all the time.
In terms of the way libraries provide authors with money, my colleague spoke a few minutes ago of us buying books and publishers then paying authors for that right. If there is a problem with authors not receiving sufficient remuneration, we should be talking to publishers, not to libraries.
There is also a great deal of talk in the press about authors taking publishers to court as a result of the further use of the electronic rights of published material. Publishers are simply putting it up on their on-line systems. People are paying to use it, and the authors are not receiving money. That is where we should be looking for author poverty.
Canadian libraries also pay money to creators through copyright collectives -- this is largely CANCOPY -- for the use of materials being copied on photocopiers. These CANCOPY agreements result in a huge outflow of funds from libraries, educational institutions, governments and an occasional business.
Where is this money going? There is an interesting item that CANCOPY uses to present information to its licencees which describes what it is doing. There is a chart at the back of our brief describing revenues, at which I should like you to look. It shows that in the year 1995-96, CANCOPY brought in revenues of $13 million from non-profit organizations such as libraries and educational institutions to provide money to authors and publishers.
Back at work, part of my job is to negotiate licences in Manitoba for the schools. I chair a committee of educators, and a licence was arrived at after years and years of negotiation. It is ongoing and never ending. The end result is that we do get the right to copy materials, beyond what is allowed in the copyright law, for a sum of money.
Remember, this is $13 million that CANCOPY is bringing in from across the sectors.
This year in Manitoba, from the schools alone, there will be $400,000 leaving the province to pay CANCOPY for the right to copy materials, mainly in multiple copies. That means $2 a student. Last year, it was $1 a student or $200,000.
The licence for Ontario schools, with 2 million students, translates this year to $4 million. Last year it translated to $2 million. Thus, the increase in funding going to CANCOPY from two provinces for one sector, which is schools, this year will amount to a $2.2 million increase in funding.
Why would you belong to CANCOPY? If all of the money being raised through collectives does not result in an increase in your salary, then what is this all about? We are giving these moneys to improve the lot of authors so that we can use their creativity. However, this money does seem to have any impact on what authors are earning.
Karen Adams will now speak further on this issue.
Ms Karen Adams, Executive Director, Canadian Library Association: Honourable senators, I wish to speak to a couple of points dealing with public libraries, in particular small public libraries, which the majority of libraries in Canada are. Before I do that, however, I have two comments to make about information provided yesterday.
Someone asked yesterday if there had ever been a consensus among the writers and users on copyright. Someone responded that they did not think so. In fact, there was. It took place in 1988 in a room rented by the Department of Communications. Those were among the early consultations while the Phase I legislation was being passed, and I was there.
Since that time, libraries have been asking for the compromise we achieved in that room. We, as librarians, were bargaining in good faith. We were shattered when some months later we discovered that others who had contributed to the consensus had abandoned it. Yes, there was once a consensus, and successive governments made a commitment to it. The original version of Bill C-32 was pretty close to it.
Someone suggested yesterday that the North York Public Library was selling writers' works without permission and without payment to the writers. I should like to clarify what is actually happening at that library, because it is not uncommon.
North York Public Library subscribes to databases published by commercial companies, many of them in the United States. These databases charge for each transaction. If you want to look up Canadian copyright law on the database, they charge you a certain sum per hour or per citation they retrieve for you.
We understand that the periodical writers have an issue with those people. It is not, however, our issue. We pay for these materials, and the companies selling us the materials tell us that they have clear copyright.
I have here an invoice to the North York Public Library from the Dynamic Information Corporation. The retrieval fee for nine documents is $121; the copyright charges are $20.50. The library has paid those fees. Is not clear to me and to many people in my community why the writers are not reaping the benefits.
To give you a sense of the volume, the library spends about $31,000 a year on this and gets back about $12,000 from their users. The library is not selling information, it is merely passing on charges that it incurs in the logical course of doing business.
I wish to move now to the issue of public libraries in general and, in particular, the many small libraries in Canada.
Bill C-32, as originally put forward, provided libraries with protection from liability for what users copied on self-serve machines. In other words, the staff were not expected to stand by the machines to make sure people were complying.
The idea was that signs would be placed where our users could see them. CANCOPY sponsored a study last year, the report of which is entitled, "Photocopying in Public Libraries in Canada: Report of the 1996 survey." The Canadian Library Association published that study.
The study determined that the average number of pages copied by a user on a photocopier is 4.4. This will give you a clear sense that whole books are not being copied. No substantial damage is being done to the economic interest of the copyright holder.
That was in the original version of Bill C-32 and we thought that was reasonable. It was what we had been promised since 1987. The Standing Committee on Canadian Heritage amended this provision so that now the protection would only be available if you already have a licence with a collective. Of course, as Mr. Tooth said, if you are already licensing the photocopier, this is not an exception; it is a clause in your agreement with CANCOPY.
This is like the amendment to "commercially available"; it destroys the principle of exceptions and puts Canadian libraries and, by extension, Canadian researchers, students and other citizens, at a disadvantage compared to the nations from which we import information.
The data on page five comes from the study which CANCOPY conducted. I invite you to think about the volumes involved. Of every 100 pages copied in a Canadian public library, 77 are not from public works at all; they are peoples' personal papers, essays and such. The Copyright Act does not apply to those pages. That means that of every 100 pages copied, 23 pages are covered by the Copyright Act. Of the 23 pages that are covered by the Copyright Act, 11 are from Canadian works. That means every time 100 pages are copied, 11 are of Canadian works. Of those 11 pages, four are from non-fiction books such as an encyclopaedia, a history and that sort of material. One page will be from a periodical or magazine. One and a half pages will be from a newspaper. Two pages will be from a government document.
The way government exercises copyright is different from other rights holders. One half page will be from the work of a Canadian writer such as Margaret Atwood, a work of fiction, drama or poetry. One half will be from a source of informative material such as a phone book or directory.
These average data for public libraries remind us that less than half of what is being copied is the work of Canadians. In fact, the estimate from Canadian colleges and universities will be less than that.
This means that when libraries pay for the 100 pages of copying that is being done, 54 cents of every dollar will go out of the country and 46 cents will stay for the Canadian rights holders. That is a very inefficient way to get 46 cents to Canadian rights holders. We will be sending money to the United States. Libraries in the United States do not pay for these activities. We will pay them; they do not pay themselves; they will not pay us.
We are seeking an amendment to this unfair provision which damages Canada's small public libraries with only one photocopier. On average, people in the smaller libraries copy fewer copyright pages than the figures I have just given you. It is frequently the only photocopier in town, so people are more likely to be copying their own documents or other materials to which the act does not even apply. If the libraries want to be protected from lawsuits, they have to buy a licence with the collective, no matter how much or how little copying of copyright materials takes place.
I looked up your website and discovered that the mandate of this committee does include balance of trade. I hope you will pay sincere attention to the fact that Canada is an importer of information and entertainment. Paying American rights holders for activities that they do not pay themselves for, let alone Canadian creators, does not make sense.
Mr. Richard Ellis, Canadian Association of Research Libraries: I should like to thank the committee for its indulgence in listening to the presentation.
The Canadian Association of Research Libraries was established in 1976 and consists of 27 university libraries, the National Library of Canada and CISTI-NRC. The membership is institutional and is open primarily to libraries of Canadian universities which have doctoral programs in both the arts and sciences. Combined collections of member libraries form the largest and in many respects the most comprehensive library resource for study and research in Canada.
Our view is that the purpose of Bill C-32 was to modernize Canada's copyright legislation, bring it into harmony with other developed countries, strengthen protection for Canadian creators and bring a major balance between the interests of copyright holders and the users of information.
CARL supported Bill C-32 as originally tabled in April 1996, as a compromise. There has been much said today about compromise. It has been averred that compromise is impossible, but the Canadian Association of Research Libraries felt that the compromise achieved over eight years of negotiations with the introduction of Bill C-32 was reasonable.
However, subsequent amendments, and I have heard tonight numbers of 120 and 60 in three days, have altered the balance, shifting it in favour of publishers and collectives at the expense of Canadian scholars, researchers and students.
CARL therefore respectfully requests the committee redress the balance of Bill C-32 by removing all restrictions subsequently imposed on the educational and library exceptions.
I should like to bring three specific matters to the attention of the committee. First, to lay a context, in the bill there are a number of clauses where the matter of commercial availability is key. These instances have one thing in common.
It is some sort of guidance in the law for the libraries when the material they wish to copy is no longer commercially available because the publisher has not made copies available, it has gone out of print, or for some other reason. They are in a different context. Basically, it is the case that, for a very limited reason, copying is permitted when the material is no longer commercially available.
At the last hour, the "commercially available" definition was changed to include "or if a licence from a collective is in place".
The responsibility of the rights holder which existed in the first instance was to keep the material on the market, and to make an effort in order that the works of the creators be available. If that effort was made by the publisher, the libraries had no recourse, nor did they seek any, but to buy it. It was only when the commercial firm made a commercial decision that they no longer wished to invest in keeping the writers' work available that the libraries sought recourse in narrow areas to make copies outside of the copyright law as it was in 1988.
This seems to be a reasonable balance: Both sides have responsibilities; both sides are willing to accept those responsibilities, except that with the revisions suddenly the publisher no longer has a responsibility. Now if a licence can be obtained, all the responsibility is on the library.
Much has been made of periodical authors this afternoon. I should like to point out that journal authors that form the basis of our concerns are at unlike the members of the group of Canadian periodical writers.
First, as my colleague has pointed out, we are net importers of information. In the fields of science and technology, Canada probably contributes less than 5 per cent to the world's literature. We are consistently importing works from other jurisdictions. We pay for that. We pay considerably. I have the horror list. For example, one physics journal went from an annual cost of $6,136 to $12,096 in three years, and this at a time when the Canadian cost of living was going up by about 2 per cent. Such instances abound.
What we are paying for in this instance is not for the work of Canadian authors. We are paying for the work, by and large, of American and European authors who themselves see very little or no return because they are publishing in the academic world for purposes of promotion and tenure and to disseminate the results of their research. None of the people for whom we pay these hideous prices make a living from the journals, yet these are the materials that we are being asked to support through our CANCOPY licence. I assume that the money is going out of the country; I do not know where it is going.
I wish to make one final point on the matter of Canadian writers. We buy their books, as do all libraries. We buy the journals in which they publish. We often buy their papers and manuscripts to put in our archives, and we make arrangements so that after a prescribed number of years we acquire additional papers. Of these three ways of supporting our Canadian writers in only one of them do I make a cheque out to the authors, and that is when I buy their manuscripts. I am quite pleased to do that. The rest of the time I and members of the Canadian Association of Research Libraries are making out cheques to publishers. We have no way of knowing whether the publishers are passing on a large amount, a small amount, or any amount at all to the authors. This matter has been brought up before and it will probably surface again.
We are pleased to support the authors. They are necessary. In fact, universities are often almost marketing arms for them. We conduct classes related to them; we teach history courses that make use of the work of non-fiction writers; we have bookstores on campuses that sell to the audience. We are a vital part of the support of Canadian culture. We should remember that the compromise which was achieved with the introduction of Bill C-32 should be recognized and implemented.
Ms Susan Merry, Chair of Government Relations Committee, Special Libraries Association: Honourable senators, I am the happiest person in the world today because this issue is of real importance to me. We have all been waiting a long time for this bill.
I was the chief librarian for the Secretary of State a long time ago, I have worked in the academic sector, and I am now in the corporate sector, but today I am wearing the hat of chair of the government relations committee for the Special Libraries Association. That is the context in which I should like to talk to you.
Briefly, the Special Libraries Association is international. It represents the interests of information professionals in 60 countries. I believe it is the second largest library association in the world. Special librarians are information resource experts dedicated to putting knowledge to work to attain the goals of their parent organizations. They are employed most frequently by corporations, private businesses, government agencies, museums, colleges, hospitals, associations and information-management consulting firms.
SLA currently represents 1,400 information professionals in Canada, and approximately half of us are in the private, for-profit sector.
Bill C-32 defines "libraries" so as to exclude libraries in the for-profit sector. That is, all of our business, technical, scientific and industrial research information centres are not covered or protected by this bill. This is an extraordinary position for Canada. It is more stringent than the copyright regimes in the United States or the United Kingdom, where commercial libraries are recognized and entitled to specific exemptions in the name of fair use, research or private study.
Canada has an estimated 3,000 libraries and this bill disenfranchises 25 per cent of them. That is, 750 libraries operating in the Canadian information network are not entitled to the same library exemptions as all other libraries in the country. In our view, good legislation should not disenfranchise part of the population it is supposed to serve. Perhaps it was an oversight and the important role made by our sector was not considered at the time of drafting the bill.
Let me describe to you what a corporate library is and what it does today, because there are myths abounding about what we do which may contribute to the lack of information that people have about the differences in libraries.
The corporate library does not charge for information for internal use. It does not in any way directly profit or gain commercially from the reproduction or distribution of the information it holds. It most certainly will open its resources to unaffiliated researchers where its subject holdings warrant attention by those researchers. It acts as an agent for research staff in its organization to a very large degree.
From the 1987 study of photocopying in Canadian libraries, the special library acts as agent for 82 per cent of the photocopying that goes on in most organizations. Weigh that against the library average of 59 per cent. The information professional in the private sector is an extremely important person in the research process in the private sector.
Let us look at the resources that we use. Single copies are the norm in 84 per cent of all transactions. Only between 10 and 25 per cent of what we use is Canadian. Approximately 79 per cent of the articles that are copied are published in the last year against a library average of 65 per cent. Current information is obviously key for research and learning.
In terms of the resources we have, we are not in a position to support Canada's creative community. We are not dealing with fictional literary works; we are dealing with scientific, technical and scholarly material -- factual material such as statistics, financial reports, corporate reports, government and academic studies, corporate directories and yearbooks. All of this material is corporately, not personally, authored. The publishers who put together these resources are not doing so at the same time as they are looking for royalty payments for the use of the material.
Periodicals that we use are largely foreign, the result of the fact that there is so little indigenous Canadian publishing. That is the case and has been addressed by my colleagues.
Bill C-32's message to the 750 corporate libraries is: "We do not need you. We will not include you as a `library' in the definition." I am not sure what we are supposed to call our ourselves if we are not libraries. We are not entitled to any of the exemptions under this copyright bill, and we cannot act as agents for the research population that we exist to support. All the research transactions must now be paid for, raising the cost of research across the entire private sector.
I should like to quote again from the brief that you received tonight.
The impact of Bill C-32 is to raise the cost of research across the private sector by not permitting any of the exemptions, e.g. the photocopying of single copies of scientific, technical or scholarly journal articles for research purposes, by the researcher directly, or his/her agent, the information professional.
That means us.
We find this particularly unjustified when one considers the huge growth in private funding of research in Canada, where historically such funding was the domain of the federal government. Canada's economic and industrial research is dependent on and definable in terms like "collaborative", "public-private partnerships" and "university-industry synergy". As the private sector assumes a leading role in the funding of research, a step welcomed by the public sector, then surely the private sector deserves the same playing field; equal access to information with the public sector. The present bill denies this.
Where are we? We have no fair dealing. We do not have single copy exemptions. The materials we use all have to be paid for, and the revenue will flow outside the country. As my colleagues have indicated, this is a tragedy because both the U.S. and the U.K. recognize the role of the commercial library. Fair use, fair dealing and single-copy exemptions are permitted in those jurisdictions. Why can Canada not achieve the same level playing field? As Ms Adams has said, the money that flows out of this country will not be reciprocated by those principle trading partners because they are not collecting the same revenues to send back to Canada.
It is not a win-win situation; it is a lose-lose situation. We must reinstate the definition of "library" to include the corporate library in this country. The only request we make of you is to help us in that regard.
[Translation]
Mr. Larivière: I would like to conclude by putting on my last hat as representative of the ASTED, which is the Association pour l'avancement des sciences et des techniques de la documentation, is a national scientific and professional non-profit organization.
It is made up of documentation professionals who work in libraries and documentation centres in universities, colleges and schools, as well as federal, provincial and municipal government organizations, and businesses.
Its mandate is to bring about greater recognition of the services provided by libraries and of the usefulness of documentation in our society.
The ASTED has always supported creators' rights to fair and reasonable compensation for the use of their works. It is in that context that it actively participated in setting up the Public Lending Right Commission, a federal organization that compensates authors for the free availability of their works in Canadian libraries.
The ASTED also supported the creation of collectives to allow copyright holders to better control the use of their works. It has also always encouraged its members through awareness-raising campaigns to respect the rights of authors and avoid putting in place policies that do not control the reproduction of works protected by the Copyright Act.
The ASTED has also often organized information and training workshops at its annual conventions in order to better inform its members about the whole issue of copyright and libraries.
In this debate, ASTED is not defending anyone's monetary interests; its sole purpose is to make documentation available to the clients of libraries without undue constraints.
I would like to conclude by saying a few words about the notion of accessibility on the commercial market which we referred to earlier.
For more than 10 years now, the government has claimed that any copyright reform must strike a fair balance between the legitimate rights of creators and the equally justifiable needs of users.
Our two associations, the Canadian Library Association and the ASTED, have always subscribed to that principle and have maintained that that objective could be achieved through fair and reasonable exceptions.
It is in that context that the ASTED and the Canadian Library Association supported the original principle of Bill C-32 to the effect that works available on the market could not be granted an exception for reproduction purposes.
But the major amendment passed at the last minute by the Canadian Heritage Committee concerning the definition of availability on the market creates an imbalance that we find deplorable, and must speak out against.
We feel that if works that are part of the repertory of collectives are considered to be accessible on the market, this mean that the situations referred to in clause 30.1(1) can no longer be considered exceptions. Indeed, by forcing libraries to negotiate licences with those collectives, you will be destroying the very essence of the notion of copyright exceptions.
On the topic of balance, we feel that if libraries are forced to pay rights to collectives when they reproduce a work for conservation purposes or to make it available to their users, that balance is upset.
In conclusion, we sincerely hope that our user's presentation this evening was as satisfactory to you as the one you heard last night.
Please be assured that if we took the trouble to come here tonight, it is because we are convinced that you can do something.
Senator Roberge: Mr. Larivière, you made certain comments about a multitude of amendments that were introduced at the last minute in the other place, which members did not have time to analyze and improve, and you felt that the process was not satisfactory, if I understood you correctly.
We have a procedure in the Senate that is similar to the one in the House of Commons. We began studying Bill C-32 on Monday, April 14, and we have five days to examine it. We are supposed to hear from approximately 50 different groups who all hope, ideally, to amend the bill, which might necessitate 150 amendments.
You are no doubt aware that we are pressed for time because of the possibility of elections being called. If we make amendments to the bill for one group, we must do so for others. If amendments are made, there is no chance that Bill C-32 will come back to the Senate in time to be passed before the election. We may have other opportunities to try to accelerate the revision process, or shorten it.
Would you choose to have Bill C-32 amended, knowing that it cannot then be passed into law?
Mr. Larivière: You mean Bill C-32 in its original version?
Senator Roberge: The bill such as it is before us today.
Mr. Larivière: We have a lot of difficulty accepting the bill as it is worded and as it was passed March 20, 1997, in particular the definition of the word "availability".
Senator Roberge: What would you choose if you could choose between having the bill as it stands passed, subject to a review in the future, perhaps in a shorter period of time than anticipated, and letting it die on the Order Paper?
Mr. Larivière: We have lived for so long with copyright reform that it is frightening to hear that this act might be reviewed later.
Senator Roberge: There is a clause in the bill that says that this might be done in five years' time. Would you prefer that the bill die on the Order Paper or to see it passed and improved in the relatively near future?
Mr. Larivière: If I came here tonight it is because I thought that the Senate could correct what appears to us to be an imbalance.
Senator Roberge: If I tell you that it is impossible to make amendments and have the bill returned to the Senate before the House is prorogued and that the bill will die on the Order Paper, you have the choice between that and --
Mr. Larivière: I don't have to make that choice. If you decide to let the bill die on the Order Paper --
Senator Roberge: I am not asking you to make that choice, I am asking for your opinion.
The Chair: If we accepted your amendments and sent the bill back to the House of Commons, and this is what Senator Roberge is saying, there is a risk that it might not be sent back to us before the end of the session, and when that happens the bill dies on the Order Paper. Would you prefer that to having the bill passed without amendments? What is your opinion?
Mr. Larivière: I think we would be better off with the previous Act rather than living with this bill as it stands, because it would constrain libraries at all levels. Collective societies are being given a power that upsets the balance between the rights of creators and the rights of users.
The Chair: Mr. Larivière, we were told that everyone had to accept compromises. There were negotiations, meetings and consultations; everyone had to water down their demands considerably. In spite of that, we were told that a certain balance had been struck between users and creators. You don't seem to agree with that at all.
Mr. Larivière: Well, there is a basic balance, but what concerns us enormously, and by us I mean the Canadian Association of Law Libraries as well as all of the other organizations, are the precedents that have been created by the last amendments that were introduced by the committee. That is what is difficult for us to accept. If those amendments are considered a part of the law and are seen as principles that will guide and direct the Copyright Act, with everything that is coming, electronic documentation and access, there will be an imbalance and users will pay the price, as well as students in universities and citizens using public libraries.
As I said, we have no pecuniary interest in this exercise. We have acquisition budgets, we purchase documentation and if we begin to fragment our acquisition budgets, that means that we will be buying fewer books and fewer documents for our libraries.
The Chair: Are you afraid of the third phase? If the bill were passed as is, would you be afraid of the third phase?
Mr. Larivière: We certainly would be! If Phase III is guided by the principles in Bill C-32 as amended, there might be worse things in life, but I think that this will cause serious problems.
Senator Roberge: When you talk about the old act, are you talking about Bill C-32 as tabled initially?
Mr. Larivière: Bill C-32 as presented initially.
Senator Roberge: Without the amendments.
Mr. Larivière: You were talking about watering down demands; before Bill C-32 was introduced, we had already put a lot of water in our wine. Bill C-32 did not satisfy us completely but seemed to be an acceptable compromise that we could live with. But the last-minute amendments and the principles these amendments introduced which will now guide the Copyright Act concern us, because they give collective societies enormous powers. As John mentioned about collectives, I think their income justifies helping authors, who seem to be experiencing major financial difficulties.
[English]
Senator Spivak: With all due respect to my colleagues and the questions that they are posing, I think we are not here to accept bad law, although I am not suggesting that this is bad. You are giving us your presentation and I think the choice is ours. I do not think it is impossible to make amendments. It is simply inconvenient and may not be worth the risk. That is a different question. In other words, if we make these amendments, what could happen? There could be an election; the bill could be reintroduced, although perhaps it may not have to start from the beginning. It may be the same thing all over again, that is all. I do not think you would have to repeat process of 10 years.
However, that is a momentous decision and that is why my colleagues are asking this question. I do not happen to share the view that we should be saying, "What do you think we should do one way or the other", because I think that is our choice.
There are some things here that bother me. Basically, you are suggesting that what is at issue here, in particular, is the fact that the principle of exception is has been put aside or damaged by these amendments so that it is no longer an exception. You are denied the exception.
On this particular issue, you are suggesting that if you go forward from Phase II into Phase III with the principle that you cannot have commercially available exemptions or exceptions in this area, then this is a handicap that cannot be corrected by Phase III, regardless of whether or not it deals with electronic reproductions. Is that what you are saying? It will be a totally different world if we have only digital equipment. We will not be using a Xerox machine.
Mr. Larivière: The principle will be the same. What is frightening us right now is that if, on one hand, we are told, "You will have exceptions. You have been trying to get exceptions. Here they are." On the other hand, those exceptions will not exist anymore unless --
Senator Spivak: They cannot be exercised as exemptions. That means you do not have the exemption really.
Mr. Larivière: If the principle that whenever there is an exception is incorporated into law, then if there is a collective it does not apply.
Senator Spivak: This might be all right, in a sense, it seems to me. What you are saying is: Where is this money going in the collective? If it is going to huge publishing companies, or if it is going to foreign countries, then what is the point? If it were really going to the authors, we could say to you, "Most of you are publicly funded. Therefore, we as taxpayers have to ante up more money so that authors can get the benefit of this money." What you are saying is that the authors are not getting the return. So what is the point of these collectives if the authors are not getting the return? Or is it the fact that so little of the material is Canadian so that most of it is going out of the country?
Do you have any figures? Can you document this? Can you say that, in Canada, in 1996, there was so much money that the educational institutions and libraries paid and, of that money, such and such a percentage went to authors and such and such a percentage went to foreign countries? That would be very important information.
Mr. Tooth: That is privileged information. Andrew Martin of CANCOPY would be the one to divulge or not to divulge that information. They are a non-profit organization which administers that money. They would know how much money is going out of the country. They would know the formula upon which the money is being divvied up and handed out to authors.
Senator Spivak: Is this not public information?
Mr. Tooth: I do not know.
Mr. Richard Ellis, Canadian Association of Research Libraires: The situation is that there is a law. On top of the law there is a series of contracts. There are contracts between publishers and authors. There are contracts that the copyright collective makes. The law undergirds these or sets a level playing field, if you will, or at least a playing field -- there will be discussions about whether it is level.
The contracts are private documents. It is not the responsibility of anyone around this end of the table, or of the associations we represent, to ask any publisher what split they make with their authors. Nor can we ask CANCOPY how much they are sending to the publishers and how much is actually getting to the author. All we know is that it is going out and the authors continue to say that they are not getting any.
Senator Spivak: You know what percentage of your work goes to foreign countries. We could have those figures because you know that. That is a function of someone else.
The Chair: If you do not have them here, that is fine.
Senator Spivak: I am not asking for them immediately.
The Chair: You can furnish us with the information.
Senator Spivak: We are talking about a balance. It is not a balance if the people who are creators are not getting the money. I could live with you people paying more money. What has to happen is that more money has to come from the taxpayers and the public sector to support this. We have exploration oil allowances. Why can we not have more money for books and education?
If you are saying to me that this is not going to the authors, then I say to you this is not a balance and that all this talk of balance is not accurate from what you are saying.
Mr. Tooth: I think it is important for you to know that the system is getting no new money.
Senator Spivak: I know that.
Mr. Tooth: In Manitoba, this $400,000 we are now paying is taken right off the grants to schools. This is money that we promised them and now we are taking it back to pay CANCOPY. It is the same everywhere.
Basically, it is a case of libraries and educational institutions paying an additional charge to do business, a charge which we are all agreeing to pay, but for which we are not being funded. Every dollar I have to spend on copyright is a dollar I do not spend on buying a book.
Senator Spivak: I understand that. The solution is not to take more money away from the authors. The solution is to put more money into the system. I understand what you are saying. However, as a matter of public policy, we have to advocate that. I do not know what other way to express to you what I mean. The point is that authors should get more money. They are not making a lot of money and they are not getting public funding whereas, in a sense, you are. This is not to say that I dismiss your situation and your complaints. I understand them. I am trying to understand the situation of the balance.
Furthermore, what bothers me is that we hear continually that the original bill was balanced and these 150 amendments are unbalanced. We keep hearing that, even though there has been some suggestion that this is not the case.
[Translation]
Mr. Larivière: We have to be very clear. We are not saying that all of the amendments created an imbalance between creators and users. What we are saying is that some major amendments, for instance the definition of availability on the market, created this imbalance. We agree entirely that the vast majority of amendments were minor, technical ones, and we have no problem with them at all. We do have difficulty accepting the major amendments.
Senator Spivak: There are two of those. The rest of them are not substantive.
Mr. Larivière: We are not saying that all 120 amendments were substantive.
[English]
I should like to add that we also want to see the authors receive more money. We will be the happiest professionals in the world if authors receive more money.
I hope that in our presentation tonight we have been able to show you that we are not as bad as we have been characterized.
[Translation]
Senator Grimard: Mr. Larivière, thank you very much for your presentation and that of your colleagues. But I don't think you should insist too much on the not-for-profit aspect of your groups. People who work in libraries are paid. I don't think we are talking about welfare and charity. It is an important point because I don't think you should insist on that aspect.
Often, representations are made here and we are told that people are speaking on behalf of non-profit organizations. I am not going to cry over that, I must admit.
Were you present, Mr. Larivière, when the amendments were passed at the last meeting of the committee?
Mr. Larivière: No, but I read the proceedings of the meetings on the Parliamentary Internet, those of December 10 and 11, December 11 in particular.
Senator Grimard: Mr. Larivière, you should know that those amendments which may have been introduced at the last minute followed discussions and meetings, and had for the most part been suggested by other organizations representing creators or users. I would like to hear your comments on that.
Mr. Larivière: I would have two things to say; first, when I referred to a non-profit organization, I was speaking about the Association des sciences et techniques de documentation. I don't claim that these are all non-profit organizations.
Senator Grimard: I hope so. I don't think you can say that about libraries; they cannot be called non-profit organizations.
Mr. Larivière: Even though I love my work, you can be sure I will stop going to work if I am no longer paid there. As for the amendments, they were suggested by organizations or public servants who had themselves heard representations. I have no problem with that, nor with the process. I was not a part of it and I have nothing to say about it. What I do note when I read the minutes or the proceedings of the meeting of December 11 is that there is a member who complained that he received amendments at 12:25 and that at 1:35 he was asked to discuss them and vote on them; he asked to be given a chance to read them. I feel there is a problem there, or perhaps there is not. I think there may have been a problem.
Senator Grimard: Mr. Larivière, we are working on the bill that is before us. Monday, we will be expected to suggest amendments. It will be exactly the same problem. You will voice the same criticism because we are very pressed for time and you are going to criticize us for this just as you are complaining about the House of Commons process.
Mr. Larivière: I didn't complain about anything; it was a member who complained, not me.
Senator Grimard: This is a complaint we have heard over and over again, almost from the beginning. The major criticism levelled at the bill is that there were last minute amendments. You are not the fist one to say this. It is an argument that all of the witnesses like to serve up. As I said, we may be forced to do the same thing and you will criticize us for the same reason.
Mr. Larivière: I never criticized anything; it was the member. What I said was that the process seemed a bit hasty to us and the proof of this is that there was a member who complained about that fact. I haven't complained about the amendments, I was not there.
Senator Grimard: Are you complaining about last-minute amendments made in the other place?
Mr. Larivière: I told you we did not agree with the definition of commercial availability. This was something that took us by surprise. Discussions about reforming the Copyright Act have been going on for ten years. There have been a multitude of meetings with all of the public servants and ministries involved. This notion of including collectives as commercially available was introduced suddenly, without warning. When I am told that when a collective can obtain a licence, something is available on the market, I cannot agree with that. I cannot agree with the definition, nor with the consequences it would have.
Senator Grimard: I will repeat the question put to you by my colleague Senator Roberge. Would you be willing to bury the bill if we cannot amend it, since it seems imperfect to you? I understand your reasons. I agree with you that nothing is perfect in this world.
Mr. Larivière: What we are saying is that we came here to try and convince you to seriously consider amending the bill. If you cannot do so, of course, that is no longer our responsibility. It will be the responsibility of those who voted for the bill and everyone will have to shoulder their responsibilities. For our part, we will have done what we could to have the bill amended up to the last minute. We maintain that bill C-32 as originally tabled was a better bill than the one that was passed.
[English]
Ms Adams: I cannot stand that the information is not available to the committee. These are the proceedings of the day in question. I will give them to your clerk. There are 46 pages. Up to page 13, it is a regular committee process. Amendments are tabled and read into the record. As you read it, it becomes clear that there are three sources of the amendments. Two of the sources are the two departments responsible, Industry Canada and Canadian Heritage. It is clear that some of these amendments are the result of legitimate negotiations between the two departments. They are brought forward and it is a regular process.
After page 13, the process gets fuzzy. One gets the sense that some of the amendments have come from Heritage officials and were clearly not agreed to by the Industry officials. Some of them came --
The Chair: I must stop this discussion and refer to Beauchesne's, which says that the Speaker must cautioned members to exercise great care in making statements about persons who are outside the House and unable to reply. People from the House of Commons are not here to comment on your comments and, although I am sorry, I think I have to stop you there. I should have stopped other groups as well. I am sorry to have to do stop you tonight but found this in Beauchesne's.
We have been talking about the House of Commons. We always say that we are autonomous and we can deal with this bill without referring to what happened in the House of Commons.
Senator Spivak: I do not believe that this is meant to be a personal attack on any member of the house. It is merely an explanation of what went on in committee. The minister will be coming back before us and we can call all kinds of officials back.
The Chair: We do not have to go through all the notes.
Senator Spivak: If you cut off this information, which is one of the most important things we have heard today, will not have all the information.
The Chair: It is not necessary to read all the debates of the House of Commons.
Senator Spivak: No one is suggesting we do. That is not the issue here, I do not think.
The Chair: The issue is the bill we have before us. If members wish, I will let Ms Adams go on reading the minutes. I am in your hands, but I must tell you that according to Beauchesne's we are not to discuss what they did in the House of Commons. If Beauchesne's is wrong, let me know.
Senator Adams: Did the witnesses who are here tonight appear before the House of Commons committee and make a similar presentation about Bill C-32?
Mr. Larivière: Yes. We did make a presentation, but it is interesting to note that we did not comment in the house committee on the definition of "commercially available" because we agreed with it at that time.
We are not complaining, but we are saying that we do not agree with the changed definition. While we did not comment on it, the original bill was satisfactory.
[Translation]
The Chair: It is not that I want to prevent you from speaking. We have before us a bill passed by the House of Commons. I know my colleagues' reaction when the Senate is discussed in the House of Commons. The Senate finds what is sometimes heard in the House of Commons about the Senate unacceptable. I think we cannot turn around and do the same thing. It isn't done. I will quote Beauchesne.
Mr. Larivière: I want to be very clear on the comments made by my colleagues and myself.
The Chair: I am talking about quoting the minutes. We cannot start going over all of the minutes.
Mr. Larivière: I agree with you entirely. We were not commenting on what people said. We were commenting on the process and more specifically the way in which the amendments were introduced at the last minute. We were simply making that comment.
The Chair: Well, let us say you have made it, then. We heard you.
Mr. Larivière: I was questioned about that, and so I replied.
The Chair: I know.
[English]
Senator Adams: How do you think all the new technology will affect libraries across Canada?
Mr. Tooth: Certainly libraries regard the Internet and electronic information as a major tool in our arsenal of tools to provide information. We do not regard them as a panacea, but they are certainly a new source of information which until now has been largely restricted to the academic community.
There are about 17,500 libraries in Canada when you include school libraries. We do have CANCOPY agreements now. We have been paying our hearts and souls since 1992 for the right to use copyrighted material.
We have been asking for something in return so that we can strike a balance between paying the collectives for the use of their material and the right of the public of Canada to use libraries and to use the copyrighted material.
The copyrighted material was not created out of the blue. It was created to create wealth. We have already agreed that libraries are licensed. They work with CANCOPY. Libraries and educational institutions are funding CANCOPY right now. We do not know where that money is going. CANCOPY will tell you that when you ask them.
We see the CANCOPY agreements as a normal part of doing business. You said that in 1988 when you passed the first phase of legislation. You told libraries that we had to join collectives, so we did.
Since 1992, when we started paying, we have been paying for everything. I helped negotiate this agreement. I am not necessarily proud of, but I had to negotiate because of the law of the land. It basically says that we do not know what exceptions exist for libraries. We agree that at the moment no one knows.
The Chair: Is this confidential or can you table it?
Mr. Tooth: You can have this. CANCOPY has now created a template agreement and we all basically go with that template. Through it, we buy everything.
We were talking about commercially available. First, we have to prove that the book is not available in Canada. Second, we have to go to CANCOPY to get a licence to copy it. We have been paying for that until now. You cannot give us an exception. We are already paying for it. Keep your exception, if this is what is it a amounts to. We do not need it.
In effect, we are already buying from CANCOPY the right to use self-service copy machines. You cannot give us an exception from liability because we are already getting that from CANCOPY. They more or less said that they would look after us and our copy machines if someone takes us to court over our use of it. Do not give it to us as an exception. We are already paying for it.
If you want to give it to us as an exception, do not involve CANCOPY, because they are already involved. We are already licensed with CANCOPY to do all these things you are trying to give us as exceptions as long as we join. We have already joined.
This is the nonsense we are trying to describe to you. What started out as reasonable exceptions that we were given have now been angled around so that they do not make sense anymore. We have already joined collectives; we are already paying. How can you give it to us when we are already paying? It is a non-deal.
Senator Adams: You mentioned school libraries. Where do they get their books? Do they buy books from you?
Mr. Tooth: School libraries buy all their material from publishers who give a portion of that revenue to the author which the author uses to survive. All materials in school, public or university libraries are purchased from the local book store, a company out of Toronto or a wholesaler who handles many different types of books. They are bought from various sources.
It does not matter what type of library you are working in, you always have a certain amount of money to buy things. My library has $100,000 to buy materials and that is what I use every year to buy books, periodicals and the like. However, coming out of that is a chunk that I pay for my CANCOPY licence.
I am prepared to do that. I have no problem with that. I support writers as you support writers. It would be ridiculous for libraries not to support writers because writers create what we use in libraries. However, we are saying that the public of Canada also has some rights here. They have the right to go into a library and use a photocopier and not have to pay.
We are not asking for a $1 million, $10 million or $20 million exemption here. Clearly there is very little money involved here. Much of this is pure principle. These self-service photocopiers will not cost anyone any money. That is just philosophically unacceptable.
When a library wants to replace a book, it must buy it locally and, in order to copy it, it must pay CANCOPY. Five years later, after we have paid twice, we might replace the book. It just does not make any sense to force us to do that.
This is not a $1 million activity. This is just plain silly.
[Translation]
Senator Poulin: Thank you for the excellent presentation made by yourself and your colleagues, it was greatly appreciated. Earlier, the representative of the Canadian Copyright Institute compared the purchase or the privilege we have in Canada of having access to ideas and documents to the privilege we also have in Canada of going into a grocery store and choosing what we are going to eat just as easily. Before leaving the grocery store, we go to the cash. Things are not quite so clear where ideas are concerned. They have always been very readily accessible. I was very happy to hear the library representatives say that it is very important to compensate writers and thinkers for their writings and their thoughts.
There is one thing I do not understand, however; I was under the impression that there had not been any increase CANCOPY in licence fees in Ontario schools in two years. Earlier, you said there had been a very large increase for schools and public libraries.
Did I misunderstand? The information you gave us contradicts what we heard from CANCOPY.
[English]
Mr. Tooth: There was a hiatus in the agreements in Ontario for about a year or a year and a half. Ontario basically said, "We will not pay. You are asking for too much money." During that period of time, CANCOPY and the Ontario Department of Education tried to negotiate a way out of what CANCOPY was asking for. They eventually came up with an agreement. Ontario is now back in.
During that period of time, there was anarchy in Ontario because it required every board, every division, every group, to seek a licence. Some schools could copy, others could not. Some could copy one chapter, others could copy five pages. It was a mishmash of agreements. Eventually, Ontario and CANCOPY got back together to create a licence.
Senator Poulin: How much does an average library pay to CANCOPY per year?
Mr. Tooth: CANCOPY organizes its business according to sectors. For example, there is a school sector, a secondary education sector and a corporate sector. They are working on all these sectors. Eventually, everyone will be covered and everyone will be paying.
Within the school sector, one is paying for both the photocopier in the school library and also the photocopier in the office. You add those two together and you come up with the amount of money.
Many school divisions in Manitoba have taken all of that funding because they are saying that this is resource-based learning. They are saying that this is a teacher using all types of copyrighted material in their classroom so that it can be a more exciting, more current, more up-to-date classroom. Resource-based learning means you have to use not only books, but also periodicals. Often, a teacher wants to hand out 25 copies of a Maclean's article.
We cannot separate out the two bits. The self-serve photocopier in the school library as well as the copiers in the office are put together and a sum of money is arrived at. Many schools and school divisions have taken all this money out of the library account because they are viewing it as just another version of a library acquisition. In other words, rather than buying 25 copies of Maclean's, which no school would or could do, you will make 25 copies of an article. Therefore, you have a CANCOPY agreement that covers the making of those 25 copies of the article.
Bringing the bits together and then arriving at a number is a complex and convoluted formula.
In Manitoba, we have a deal under which we pay only $2 per student. CANCOPY convinced us to agree to that.
CANCOPY does sampling on photocopiers. They can tell how many copies and whose work is being copied. Is it Farley Mowat or Margaret Laurence? They know that information.
When they appear before you later on in your hearings, you might want to ask them that information.
Senator Poulin: That would be $2 per student per year?
Mr. Tooth: Yes. In Manitoba, we are talking $400,000. In Ontario, we are talking $4 million. Saskatchewan has about 200,000 kids. There is another $400,000. In Alberta, it is probably around $600,000, because there are more kids.
These dollars are significant. They are coming right out of school budgets. Often, this money is coming out of the library budget within the school.
Senator Poulin: Do you not find it interesting that it is $2 per student yet it amounts to only a penny per author?
Mr. Tooth: You need to ask CANCOPY where the money is going. We do not have that information. All we know is that there is a lot of money being collected and no one is getting rich.
[Translation]
Mr. Larivière: I'd like to add something, if I could, on this matter of photocopies in schools and university libraries, that would also serve to prove that we negotiated in good faith when librarians and library associations negotiated with CANCOPY. I am convinced that 95 per cent of photocopies in our libraries can be defended on the basis of equitable use. CANCOPY does not accept that but we are convinced of that fact.
There is a possibility in the act, under the equitable use provision, pursuant to which an individual can for private study and research make strictly personal copies. The suggestion is being made that libraries are making a huge number of photocopies, multiple copies, which is absolutely false. Individuals will take a book off the shelves and make personal copies for their assignments or research, and keep that copy. They don't sell it to colleagues. We did not manage to agree with CANCOPY on that topic. The figure of $2 per student was suggested and for universities the figure was higher, it was $2.50. Libraries have shown good will toward collectives.
That is why we aren't very pleased to hear the plans for collective societies.
Senator Poulin: I realize, having been deputy minister and having worked with the previous Copyright Act when I was a producer 25 years ago with Radio-Canada, that the problem is not the legislation, nor even the changes being made to the current law. It is the regulations that are to follow. During the next phases, you may have to accept the responsibility of simplifying the system, because the real cost is not in dollars, it is in person-time, in the implementation of the legislation.
Mr. Larivière: There's also the matter of negotiations between the publishers and the authors which we did not participate in. I refer you again to the example of the Canadian Conference of the Arts; they drew a parallel with grocery shopping.
I'd like to say that when we go to bookstores to purchase books, we don't steal them. When we leave the grocery store, our basket is full of food. In bookstores, we leave with a number of books. Just as we pay for our food when we leave the grocery store, we also pay for our books when we leave the bookstore. The example should apply to us as well, in exactly the same way.
Senator Poulin: The difference is that the box of cereal you bring home will eventually be empty, whereas the book will not. You have to buy a new box of cereal.
Mr. Larivière: Yes, perhaps, but when new editions are published, we buy those. And when copies of books disappear, we buy new ones.
The Chair: Would you have any comments to make, in closing?
Mr. Larivière: No.
[English]
The Chair: Colleagues, we have application for budget authorization for the fiscal year ending March 31, 1998 for the subcommittee on communications. The total amount is $51,700. I think some of you have had a chance to look through the budget.
Senator Poulin: I think we have been very reasonable and realistic, trusting that it will be sufficient for us to do the research that we would like to do.
Senator Forrestall: I move the adoption of the report.
The Chair: Is that agreed, senators?
Hon. Senators: Agreed.
The Chair: We have before us now the Canadian Recording Media Association and the Consumers' Association of Canada.
[Translation]
I want to say to the representatives of the Consumers' Association of Canada that you have an hour and 15 minutes to make your presentation and answer questions. You are all familiar with this type of committee. I would like you to introduce your members as you begin. You have no doubt decided who would speak first and who would follow. Would someone like to begin?
Ms Gail Lacombe, President, Consumers' Association of Canada: Madam Chair, the Consumers' Association of Canada thanks you for giving us this opportunity to express our views on Bill C-32, a bill to amend the Copyright Act.
I am the volunteer President of the Consumers' Association of Canada. With me is Marnie McCall, Director of Policy Research and Acting Executive Director.
CAC is a national volunteer-based organization founded in 1947. Our mandate, which we have discharged over the past 50 years, is to represent the interests of consumers in the marketplace with governments, industries and business, and to inform consumers of their rights and responsibilities.
You will find more information about CAC on the fact sheets we have just handed out. Without further ado, I will now ask our director, Ms Marnie McCall, to present to you a summary of CAC's comments on Bill C-32.
[English]
Ms Marnie McCall, Director, Policy Research, Consumers' Association of Canada: Good evening, ladies and gentlemen. Our comments today will address only the proposal to place a levy on the sale of blank recording media.
I should like to state clearly for the record that the Consumers' Association of Canada supports efforts to strengthen Canada's cultural industries, a major purpose of this bill. On many occasions, we have urged the federal government to support the creative industries directly, in a transparent manner, and in ways that do not restrict consumer choice.
While we support a vibrant Canadian culture, CAC is opposed to this levy. We believe the proposal is flawed. The aim of the government to strengthen Canada's cultural industries is to be commended and CAC supports and endorses that goal. However, attempting to reach it by means of an invisible tax structured in a way that penalizes the law-abiding as well as the copyright infringing audio tape consumer distorts the market and discriminates between groups of authors, performers and producers on the basis of their medium of expression is, in our view, no way to go about it.
Our reasons for this conclusion are described in detail in our brief and I will just touch on a few points here.
A fundamental assumption underlying this proposal is that the vast majority of blank tape is purchased for the purpose of engaging in illegal copying. This committee has no doubt heard the estimate that 39 million of 44 million tapes sold in Canada in a recent year were used for "home copying" of copyrighted pre-recorded material and were therefore illegal copying.
Common sense suggests that this estimate is not likely to be correct. As described in our brief, standard-sized cassette tapes can be used for a wide variety of perfectly legal uses: newsgathering, education, legal proceedings, research and writing, rehearsal, professional recording, personal communication, and certainly for us here today. In many instances, these minutes are recorded on tape -- you are also users of blank tape.
In addition to these uses, blank tape is used by radio stations for meeting CRTC requirements, by Parliament and legislatures, as I just suggested, by air traffic control services, and by police and emergency services. Although some of this recording may be done on reel-to-reel tape or computer tape, the volume of cassette tapes used by the legal system alone in Canada suggests that the figures noted above should be treated with a great deal of scepticism.
This is important because if this assumption that almost 90 per cent of blank tape is purchased for "illegal" copying is incorrect, as we believe it to be, the basis for this levy is seriously undermined. Lumping the wholly innocent, non-infringing tape consumer in with the "thieves" is an unacceptable basis for policy.
This brings me to the next objection, which is actually the first one in the brief. The levy -- since it catches all tape consumers alike, regardless of what they use the tape for -- is actually a tax. We all pay income taxes whether or not we use all the services our tax money provides. In this case, everyone who purchases blank recording media will pay the levy no matter what they use it for.
Not only is this levy really a tax -- at least in the way it behaves -- it is an invisible tax. Assessed at the point of import or manufacture, the levy becomes embedded in the price. This is just like the former manufacturers sales tax. The GST and PST will be paid not only on the price of the tape but also on that levy that is included in the price. This is tax on top of tax. It is like paying interest on your interest if you do not pay your credit cards off every month. It just keeps adding on.
What does this mean to the average consumer? The current average price of a 60-minute blank audio tape is approximately $1. One of the figures I saw today suggested 90 cents. If the levy is 37 or 38 cents, as has been suggested, you add that together with the GST and the PST. In Ontario, you are now talking about $1.57 to $1.60 for that tape -- that is, assuming that the levy is added at the retail level. In fact, the levy is added at the import or manufacturer's level. The more hands it passes through, the more GST and PST it will accumulate on the way. The consumer who buys that blank tape will pay the total amount.
It is an increase of at least 60 per cent over the average retail price of a basic tape. If the tape is $1 and you pay 37 or 38 cents in the levy, and on top of that you add the GST and the PST, you are at about $1.57 or $1.58. That is approximately a 60 per cent increase at the retail level.
Senator Roberge: Is the GST only on the 37 cents?
Ms McCall: I am giving you an example, if you added the 37 cents at the retail level.
Senator Roberge: That does not include the GST?
Ms McCall: That is correct. It is $1 without any tax. It is $1, plus the levy, plus the tax. That amounts to $1.60, but the levy will be put on earlier. If it goes through an importer, then a wholesaler, then a distributor and then a retailer, the GST and PST will accumulate along the way.
Senator Forrestall:We will ask you to walk us through this later.
Ms McCall: The minister has herself acknowledged that this levy would cost consumers about $12 million a year, without any assurance whatsoever that this money will actually reach Canadian artists.
You have already heard -- and, if you have not, you will be hearing -- about the potential consequences in terms of cross-border shopping, smuggling and grey market sales of blank tape in order to avoid the levy. We also discussed this in our brief, so I will not go into it here except to say that a 60 per cent increase -- if you accept my figure -- in the retail price of anything is a pretty good incentive to try to get it some cheaper way.
Turning to the impact of this proposal on the cultural industries, one must ask why, if a levy on recording media was seen to be an appropriate way of assisting Canadians who work in these industries, the proposed levy does not also apply to video recording media and soon to computer recording media. You have already heard some of the very complicated ways this proposal discriminates among artists and we also describe some of these ways if our brief. A compensation system based on how your rights are infringed and not on whether your rights are infringed makes no sense.
The levy, regardless of the rate, may also be damaging to the recording industry itself. If the levy increases the retail price of a blank tape by at least 60 per cent, it probably raises the wholesale rate about 100 per cent because you are adding the 37- or 38-cent levy to the wholesale price of the tape.
Recording studios and tape duplicators purchase tape wholesale on which to record performances. Their product is a pre-recorded sound recording. Since there is no equivalent to the GST input tax credit, the levy would still be paid on this tape, even though it will be transformed into pre-recorded material and will not be used for illegal copying of that material.
The increased price of tape may put first recordings out of the range of new artists and may in fact put some small studios out of business altogether. Surely, if the intent is to aid the cultural sector, this will not achieve that end.
To summarize, the Consumers' Association of Canada is opposed to this levy because it is structured as an invisible tax; it penalizes the law-abiding as well as the copyright-infringing consumer; it has the potential to seriously distort the market; and, importantly for an measure which purports to aid Canadian artists, it discriminates between groups of authors, performers and producers on the basis of their medium of expression.
On behalf of CAC, Canadian consumers and Canadian cultural industries, we urge you not to adopt this proposal. Thank you for your attention and we look forward to your questions later.
Mr. Paul Weber, Chair, Canadian Recording Media Association: I will be brief in my opening comments in order to leave as much time as possible for questioning. We have provided committee members with a detailed written brief, and from that brief it will be seen that the interests of our association are restricted to the private copying proposals in Bill C-32. Simply stated, we are here in the hope and expectation that this committee, to paraphrase Sir John A. Macdonald, will apply an independent mind to Bill C-32 and will calmly consider the legislation, preventing any hasty or ill-considered provisions.
If honourable senators do this, it will be the first such consideration that has been given to the interests of the CRMA.
You have been told by others that Bill C-32 was a result of years of negotiation and compromise. This is not accurate and I urge you to consider the fact that the members of the CRMA were never consulted during this process even though we are the companies that will be directly and seriously affected if Bill C-32 is enacted.
The Minister of Canadian Heritage told you that every single phrase in this legislation is the result of negotiations and compromise. We know of no such negotiation and we were never given the opportunity to compromise. I would also urge this committee to consider that there was no debate at all when the private copying provisions were considered, as you say, by the other place.
For some unknown reason, the Canadian Heritage Committee rushed the bill through before Christmas in a session accurately described by a fellow committee member as total chaos. This is the first time that we have had a close-up view of a law being made, and as citizens and taxpayers we were shocked by the process.
Canadians simply do not know about the proposed private copying provisions in Bill C-32. They do not know that the Minister of Canadian Heritage describes them as criminals when they record their favourite selections from a CD on to a cassette.
When the Minister of Canadian Heritage told you she was surprised that there was not a greater public outcry against the blank tape levy, you might have asked her what she and her department have done to tell Canadians about it. The answer is nothing. When they were informed, as we attempted to do late last year, Canadians reacted overwhelmingly in opposition to the levy proposals. Our public information campaign included an 800 telephone number and resulted in over 700 calls being received in just two weeks. We taped these calls in which Canadians from every part of the country overwhelmingly opposed the levy provision. In November, over six hours of these taped messages were delivered to the office of the Minister of Canadian Heritage. There is no popular mandate for a private copying levy; in fact, the opposite is true.
Home copying is not an illegal act and Canadians understandably believe they should be able to continue reasonable and customary home recording practices for reasons such as "place shifting"; for example, copying selections from CDs on to a cassette tape to play in a car. This practice has been accepted in the United States and elsewhere throughout the world. Canadians also believe they should not have to pay the levy when they record material which is not copyright, such as students taping their lectures, legislators taping their proceedings, religious groups taping devotional services and so on. I can tell that as a taxpayer I was outraged that my tax dollars will be used to pay a levy on the purchase of tapes to be used to record the proceedings of Parliament.
As will be seen from a reading of our brief, the private copying provisions in Bill C-32 are deeply flawed. With respect to the underlying rationale, a private copying levy will not generate money for struggling artists. The vast majority of money collected through the levy will go to successful feature artists or to the multinational music publishing and recording companies which have required artists to assign all of their rights. Moreover, the levy scheme is designed to exclude artists from the United States and give rise to another trade dispute between the United States and Canada.
In the annual report of the United States trade representative released a couple of weeks ago, she expressed her very deep concern with the private copying levy provisions in Bill C-32.
Unfortunately, Heritage Canada officials and the music publishing and recording lobby have not focused on the amount of copyright royalties Canadians consumers already pay for sound recordings. While we can only estimate based on estimates from the recording industry, it can be concluded that Canadian consumers already pay well in excess of $168 million per year in copyright royalties through their purchase of sound recordings, of which a minimum of $33 million goes to Canadian companies and artists.
In addition, the Canadian music industry can expect to receive approximately $10 million in federal and provincial funding through various programs funded by our tax dollars now. Canadians are now being asked to pay even more regardless of whether they record copyrighted materials and in the absence of any evidence that home recording results in a loss of revenues to artists and producers of music. The total gross revenues of the CRMA are less than $40 million per year and declining by about 15 per cent a year. Compare this to gross sales for the Canadian sound recording industry of over $700 million and increasing, with profits that are more than triple our gross revenues.
There are many more exemptions to the proposed levy which are needed to ensure that the large number of individuals and organizations who use tape for private purposes would not be caught up in any sort of payment scheme.
One simple way to address some of the most significant problems would be to amend the definition of "audio recording media" and "blank audio recording medium" in clause 79 to exclude blank analogue audio cassettes and have it apply to only to digital. If such an amendment were made, it would save the current, and declining, analogue audio cassette business of the CRMA members and the jobs they provide. It would also mean that Bill C-32 would be forward-looking and would address the real issues that will come with digital technology.
We are especially alarmed about the retroactive effect of the levy provisions. In summary, if the bill is passed by the Senate next week, a levy will accrue starting January 1, 1998. However, the amount of the levy must be established by the Copyright Board and, based upon past experience, it will take up to two years to approve the new tariffs that will establish the amount of the levy. As a consequence, levies of an unknown amount will accrue in the two years during which the Copyright Board is making its decision. It will be impossible for CRMA members to pass along the levy to its customers and ultimately to consumers, as is intended by the bill, during this initial two-year period. The uncertainty as to the amount of the liability for the levies will likely drive some, perhaps all, of our member companies out of the blank audio recording media business in Canada. The bill must be amended to provide that the levy is only applicable to sales which occur after the date of the Copyright Board decision.
It remains our submission that, if legislated, any levy should be imposed at the retail level. This will best ensure; first, that the levy is passed along to the consumer who is the presumed private copier; second, that the levy is not compounded by additional transaction and sales tax could costs and; third, that the activities of grey marketeers and black marketeers can be minimized.
A suggested text for all of these amendments has been provided to the committee clerk for your consideration.
This committee appearance is our last resort to persuade you not to pass a law that will harm consumers and lead to more members shutting down their blank audio recording media businesses. This is not a threat. Rather, it is a prediction made with the benefit of the accumulated experience of the members and is an early warning of what will happen. Please mark my words; it will happen if Bill C-32 passes.
We welcome your questions.
Senator Forrestall: We have been told, by some people who are usually reliable, something quite different from what you have just suggested. We had better get a clearer understanding of your view.
It was suggested to us that probably 90 per cent of 40 million tapes, give or take a few, are utilized in the grey or black area illegally. You referred to tapes used in the legal and other professions. Could you flesh that out a little bit? Let us start with 40 million and say that 10 million are used legitimately.
Ms McCall: I am afraid I cannot give you the figures for the number of blank tapes that are used in courts across Canada.
I know from my own experience that in court you go through seven or eight tapes in a single day. If you multiply that by all the courtrooms in the country, you are talking about a lot of tape.
Senator Forrestall: Let us back up to the total sum sold for whatever purpose.
Ms McCall: I do not have independent numbers. I am quite willing to take that figure of 44 million and the estimate of 39 million. My difficulty is that whatever the total number is, I simply cannot comprehend that 90 per cent of it is used to infringe copyright. That is simply not a sensible conclusion considering all of the other uses which can be made of blank tape. It defies common sense.
Senator Forrestall: I should be careful. I did not mean to imply that they were used intentionally or deliberately, but were, one way or the other, used in committing an act or doing something that in fact is illegal, whether they had knowledge of it or not. If there are only 4 or 5 million of these, you will appreciate that the creators of the article are being short-changed significantly.
Ms McCall: That is if you assume that a levy on blank recording media is a better way of putting money in the hands of artists than handing the money directly to them.
Senator Forrestall: Is it?
Ms McCall: This assumes that it is, and our position is that that assumption has not been proven. If that is the purpose for this, there should be some demonstration that other methods such as direct subsidy of artists or increasing contributions to granting agencies will not get as much money into the hands of individual artists as will this levy. I do not think anyone has attempted to demonstrate that this is the best of a number of mechanisms. It appears to us, for a variety of reasons, that it is almost impossible that it could be.
Senator Forrestall: You suggested the courts use them.
Ms McCall: The courts use them to record legal proceedings. Air traffic control for all of the airports is recorded on tape. All radio stations are required to --
Senator Forrestall: I am sorry. I am confused. I am thinking about these little cassette boxes. We know them as cassette tapes. The tapes that we saw in the Edmonton control centre were enormous, and indeed they will soon no longer be using tapes.
Ms McCall: Many services such as 911 or air traffic control use reel-to-reel bulk tape, but the levy will also apply to that. It is all blank recording media. For all government uses of blank tape, the government purchasing department will have to pay the levy. It will be included in the price at which they purchase the tape, for whatever purpose the tape is purchased.
I am a lawyer. I know that the courts use cassette tapes in their recording. Some of the newer systems use reel-to-reel, but many of them use a tape recorder on a desk with a clerk changing the cassettes right in the court. Just on the basis of that, the 90 per cent figure in my view simply cannot be correct.
Senator Roberge: Are the tapes which are used by lawyers thrown away or erased and reused?
Ms McCall: In the court, they must be retained for a long period after any possibility for appeals have expired. The tapes that are used in lawyers' offices, for example, in a dictaphone, are reused, so there is some saving there. In the court system, you are talking about a lengthy cycle time, if they are cycled at all.
Senator Roberge: Could you break down for us the different types of tapes and quantities used yearly?
Mr. Rick Bourrier, Canadian Recording Media Association: If I could interject for a second, even if we assume that 100 per cent of the tapes being sold are used for recording copyright materials, there are several major problems which we feel must be addressed.
Our understanding is that when tapes are being used to record copyright materials they are used for the purpose of play shifting. That means that a person who has already purchased a recorded work and paid the royalties involved makes a copy to play it in another spot in his home or in his car.
Senator Roberge: Or for a friend.
Mr. Bourrier: Possibly, but many people would have a CD player as a primary source and a cassette player in the car. They may not be able to afford a CD player for their car and want to enjoy their music there. That is what the large majority of the tapes being purchased are used for. Our position is the royalty has already been paid and that it is not appropriate that it be paid a second time.
Senator Forrestall: In terms of tax, I am a little surprised. Using $1 as the wholesale price, we add a levy of 40 cents, which takes it to $1.40. We then add the PST, which brings the price to $1.61.
That is a rip-off. We have all been ripped off by governments over the years. I wish governments would restrain themselves. I think they probably have so much money hidden away in their cash registers now that they do not know what to do it with it.
Who is that 40 cents paid to? Can you give me a post office box number and a name?
Mr. Bourrier: If we could take a step back, we are having a discussion under the assumption that the levy is collectable and will work. At this stage, the way the legislation is set out, it will not work, and you have just pointed out the reason it will not work. The amount of the levy in relation to the cost of the goods is significant. If we are selling product at 90 cents with a 37 cent levy or tax on it, there is a huge differential between the cost of the goods and the amount of tax. When those kinds of situations develop, grey markets or black markets start to develop. That became apparent when tobacco tax went up. People were running cigarettes across the river and that kind of thing. Those were illegal activities. Those people were doing that to profit because of the differential in the cost of the goods and the tax. They were willing to risk criminal activities to make a buck.
In the current situation, people would be able to do this in a completely legal manner. There is nothing stopping anyone from bringing any quantity of tapes across the border and selling them and bypassing the levy. We do not know how much the levy would be, and we would be handing the business directly to the grey marketeers for a period of two years.
Senator Forrestall:Let us go one step at a time. What happens to the 21 cents? What if the wholesaler says that he will take that 21 cents out of the 40?
Mr. Bourrier: What 21 cents?
Senator Forrestall: I am referring to the 21 cents out of the levy. It has been taxed, and he has to give that to the government. Perhaps he wants it back. How do you protect against that?
With regard to the 40 cents, can you explain which 40 cents we are talking about? The tape is a buck and the levy is 40 cents. We are at $1.40. Then the government comes along and taxes it at 15 per cent. That takes it up to $1.61.
Mr. Bourrier: Correct.
Senator Forrestall: How much money do I turn over to the collector of the levy?
Mr. Bourrier: The way the legislation is written, the importers and resellers of blank tapes submit the levy to a collective society. It would be paid based on our reporting to a collective society.
Senator Forrestall: What if I run a big ad and I have a tax free day?
Mr. Weber: But you are a retailer. You are not collecting. In Bill C-32, you are not collecting from the importers and manufacturers of this product. Ninety per cent of all the tape in this country is sold by the five of us at this table. There are five players. There used to be seven. There is no money in it. 3M got out of it. Analogue tape is a dying business. We have about three or four years left with blank analogue tape. Bill C-32 should be looking at protecting Canadian artists and looking to the future. You say to your friends that no one is taking blank audio tapes and taping off a CD to give to someone for 99 cents.
If you go into a music store, senator, and you will see that 70 per cent of everything is CD; 30 per cent is cassette. Some music is not even available on cassette, and you are telling the Canadian consumer that he cannot make this copy. He has purchased this product for the last 20 years. There is not one person in the room who has not bought for either a friend, a family member or themselves some sort of boom box that has two cassette bays. Cassettes are not available today; CDs are the thing.
As a group, we would like to be part of this but have never been informed about it. We are quite willing to sit down. Be smart. Look to the future; look to digital. Analogue tape is a dead issue.
Senator Roberge: Why not make a recommendation? I will give you an example. If we assume that 50 per cent of the tapes you are talking about are used to copy, the artists that are being copied do not get a dime.
Mr. Weber: They were paid $700 million by the record companies in 1996. Our business of selling tapes is $40 million.
Senator Forrestall: Are you speaking of Canadian artists?
Senator Roberge: You are talking about the big names.
Mr. Weber: It is $700 million for artists. Ten years ago, senator, you had a legitimate argument. Today, with a few years left in analogue tape, it does not make any difference.
Senator Roberge: Why are you in that business if it will die three years from today?
Mr. Weber: We are in it because there is still that demand, but the demand is dropping. The five companies that do 90 per cent of the business in this country are selling less than 30 million cassettes per year. Five years ago it was triple that. Massive amounts were sold 20 years ago, but we were getting $10 or $15 for a cassette. Today, it is 88 cents. We make 10 cents margin, maximum, on this one audio cassette. If just one cent is put on as a levy, that is 10 per cent of our margin. I assure you all sitting here that we will be out of this business by January 1, 1998. As companies, we cannot afford a 37 cent levy.
Blank audio tape has increased artists' revenues and artists' business. Blank audio tape has done that for at least the last dozen years.
If you are an opera lover and you download or record one song to listen to in your car, you may say, "I like that. I think I will go and buy that CD or LP." That increases their business; it does not decrease their business.
Mr. Bourrier: Everyone agrees with what started out as a very good objective. Unfortunately, the mechanism is such that rather than reaching the objective, it will provide no benefit to anyone. No levy can be collected under the current scheme. In addition, it will force us out of that business as of January 1, 1998, because we will not be in a position to protect ourselves against an unknown amount of levy two years down the line on the product. There is no business case to be made for continuing to sell the product. That is the reality, unfortunately, the way this legislation is set out.
We are stuck; there is no way out. If we raise the price of the product, the grey market accelerates. We cannot afford to cover the cost of the levy ourselves because the levy could be easily several times our gross margin on the product. There is no way we could continue in business under this current legislation.
Mr. Weber: Senator, cassettes still will be available in this country. They will be available either from my company, or TDK or Maxell of Fuji, but they will not come from Canadian companies who are paying business taxes and employing people here. They will be brought in by black or grey markets. The product will be in this country, but it will not be brought in by the five businesses from which you want to collect this money. You will not be able to collect from those companies. You will be collecting from numbered companies that are in business one day and out of business the next week under another numbered company.
Senator Roberge: What is the percentage of cassettes versus CDs?
Mr. Weber: It is 30 per cent.
Senator Roberge: It is 30 per cent cassettes to CDs?
Mr. Weber: Yes, and falling 15 per cent per year.
We are the people you want the money from and who know this industry better than anyone, yet we were not involved in the development of this legislation. We can tell you where it is going in the future. We can also tell you how we can help Canadian artists.
Senator Roberge: You were not invited to sit in the Commons committee?
Mr. Bourrier: Yes, we were.
Senator Roberge: You did appear?
Mr. Weber: Yes, but that was after the bill was tabled. We have been a part of this for only nine months. These five companies were informed after second reading. This has been going on for five years, and none of the five companies have been involved.
Ladies and gentlemen, this is a dying business, and Bill C-32 will kill it within two years.
Senator Grimard: In your presentation, you said that you were not consulted by the government. I was also under the impression that you were never consulted, but I think that you mean prior to the drafting of the bill. Is that right?
Mr. Weber: Prior to when it was tabled in the House.
Senator Grimard:I have a letter here which says that you were not consulted at all by the government or government officials prior to the drafting of Bill C-32.
Mr. Weber: That is correct.
Senator Grimard: A large number of meetings were held with officials in both Heritage Canada and Industry Canada. Is that true or not true? You made the statement that you were never consulted and I am telling you now that you had many meetings with Heritage Canada.
Mr. Gregory Kane, Legal Counsel, Canadian Recording Media Association: What letter are you referring to?
Senator Grimard: Yours.
Mr. Kane: We are saying in that letter that the CRMA was not consulted prior to the introduction of Bill C-32 in the House of Commons.
Senator Grimard: I read that.
Mr. Kane: After the bill was tabled in the House of Commons, and after it passed second reading, we had meetings with --
The Chair: We are not in a court. All Senator Grimard wants is some answers.
Mr. Kane: With respect, we are trying to answer. I simply wanted to know which letter he was referring to. I think we are entitled to that.
Senator Grimard: You gave my colleague Senator Roberge the impression that you never had meetings. In fact, it is not true. You discussed your problem. You had the opportunity to explain your problem.
Mr. Kane: Senator, with great respect, if there is any misunderstanding, let me correct it. There were no meetings prior to the bill being introduced in the House of Commons. There were meetings after the bill received second reading.
Senator Grimard: That is what I wanted to know.
Mr. Kane: At that point, the government was committed to it, the bill had been debated and was policy, and the opportunity to change the bill was minimal.
Senator Grimard: That means you had the opportunity to explain everything that you are saying to us now.
Mr. Kane: After second reading in the House of Commons, yes.
Senator Grimard: That is what I wanted to know. That is not what the witness said. He said that they had never been called upon to explain their situation.
Mr. Weber: Senator, I have been involved in this for nine months. I have come to Ottawa three or four times to defend my company and my industry and the employees who work in it, because of something in which I do not believe. I have come here and I have been able speak to some people, but I can assure you that we sent out many letters trying to get more meetings and to make our point more forcefully that this is what will happen if this bill goes through. I have been involved for nine months. A tremendous amount of money has been spent by this organization in trying to inform the government that it is making a mistake on blank audiotape.
Perhaps you misinterpreted me when I told you I have not spoken to enough people. I feel I am right. Maybe you feel you are right, too, but that is the situation.
Senator Grimard: Thank you.
Senator Poulin: When did the CRMA start its operations?
Ms McCall: After the bill was tabled in the House of Commons.
Mr. Bourrier: It was in May or June of last year. We found out about this as anyone else might have, via news services. We realized we had a major problem. We formed an association to take this on.
The Chair: We find that hard to understand, because this bill has been in the making for 10 years. It is hard to understand that no one from your organization was ever consulted. You have never been consulted over the last 10 years by any government?
Mr. Weber: No, Madam Chair, I have not.
Ms McCall: If I might, the idea of a levy has been discussed over a period of years but it was always discussed in terms of a levy at the retail level, not at import or manufacture and not at wholesale.
The Chair: So part of it was discussed but not all of it?
Ms McCall: That is correct. However, if it was at retail, these people would have no reason to be concerned.
Senator Spivak: Why would a government introduce a levy on analogue tape alone? Everyone knows that analogue tape is on the way out. Why would they not include any sort of recording medium, including digital, audiotape, CD or whatever? I cannot understand that. It seems elementary.
Mr. Bourrier: Currently, the legislation reads along the lines of blank audio recording media normally used by a consumer for that purpose. It is quite all-encompassing. The distinct problem that causes us is that the levy ostensibly would be collected on blank audio recording media. The market is declining rapidly. It is relatively low-price, and there is a huge differential between the price of the product and the price that we would need to collect in order to cover the levy. That in itself is destructive. It will push the business outside of our membership and into the hands of people who would not be reporting and paying levies.
That is very detrimental to everyone concerned. The levy will not be paid.
Senator Spivak: Would this apply to digital audio tape, or is that dead? There is another format for CDs coming up.
Mr. Bourrier: There are a number of digital formats available now. In North America, none have yet been adopted wholeheartedly by the consumer. That will come fairly within the next few years. At this time, they are relatively high-priced products that could sustain some amount of levy and also give consumers and our industry some time to adjust. However, applying it right across the board will be very difficult.
Senator Roberge: Do you manufacture the tapes?
Mr. Weber: Yes, I do.
Senator Roberge: In Canada?
Mr. Weber: No.
Senator Roberge: Do you pay an import duty?
Mr. Weber: Absolutely.
Senator Roberge: What is it?
Mr. Weber: It is a 6.9 per cent paid at the border on every cassette that is brought into this country.
Mr. Bourrier: That depends on whether the product qualifies for NAFTA or not. Some members' products do and are duty-free. Some products do not qualify for NAFTA, depending on the member company and where the product is produced.
Senator Roberge: Some tapes do qualify and others do not?
Mr. Bourrier: As far as the duty exemption goes, that is true.
Senator Roberge: What about the massive number of tapes you utilize, the smallest ones?
Mr. Weber: Those would be analogue tapes.
Senator Roberge: Are those the majority?
Mr. Weber: It depends on which country the tape is made in. If it is part of the NAFTA agreement, there is no duty. If it is a finished product made in either the U.S. or Mexico, there is no duty.
Senator Roberge: Where are yours made?
Mr. Weber: In my particular case, they are made in China.
Mr. Bourrier: I think it is safe to say that duty is paid on the majority of tapes imported into Canada by our membership.
Senator Forrestall: Do you buy wholesale or are you a participant in the company that manufactures them?
Mr. Weber: It is our factory.
Senator Forrestall: But you have gone offshore.
I would like to come back to the levy which you think will kill you in May.
How would you suggest we replace this cash flow for the creators? What is another way of doing this?
Mr. Weber: The committee does not have enough time to discuss the options tonight.
Senator Forrestall:We have enough time for you to tell us that.
Mr. Weber: I cannot give you an answer on that tonight. I can, however, discuss amendments to Bill C-32.
Senator Forrestall: I am sure you want amendments to the bill, but do you have any ideas?
Mr. Bourrier: You made the suggestion of replacing the cash flow. We are not talking about replacing cash flow, we are talking about increasing cash flow. Currently that cash flow does not go in.
Senator Forrestall: Do not play games. It is 10 o'clock at night and I started this morning at 7:30.
Mr. Bourrier: I apologize. I did not mean to play games. The bottom line is, whatever we do has to be something that can work.
Senator Forrestall: I am talking about money that will flow. How do you suggest that be replaced?
Mr. Weber: Get all interested parties together.
Senator Forrestall: That is an idea.
Mr. Weber: Heritage Canada would do much better if they looked at the electronics industry as a whole and consulted with the people who know where this industry is going.
Senator Forrestall: We have had a non-answer. I want to know if any of the other witnesses have an answer. Maybe they do not.
Ms McCall: The Consumers' Association of Canada supports transparency. If it is seen as desirable to increase the money that goes to Canadian artists, then we suggest that be done in as direct a fashion as possible, either by increasing the amount of money that is given to the granting agencies, like the Canada Council, and, if there are gaps in that system, filling in those gaps so that all creative people can apply for assistance. Perhaps we could give a larger tax deduction for expenses incurred in creation or give a direct tax incentive back to creative people.
There are a variety of ways that are more direct and will not involve the administrative or distributing body of a collection agency but possibly publishing companies or recording companies that have got the artist to sign over their rights. If you wish the money to get to the artist, give it to the artists directly, and there are a variety of ways of doing that.
Senator Forrestall: Do any of the other witnesses have an answer? Is there any easy answer to it?
I cannot understand how, over a 10-year period, someone would not have fallen over one of you if they wanted to know anything about your industry at all. It is patently obvious that they did not or they would have found you. It is also patently obvious that if you had had any concerns you would have found them.
Mr. Weber: If there were any concerns, we would have found them, but it was our belief that it would be done at the retail level, leaving it up to the consumer to make the decision.
Senator Forrestall: You said that.
Mr. Weber: The tire tax is collected at the consumer level. The air conditioner tax is collected at the consumer level. It is up to the consumer to say, "I will pay that" or "I will not buy that product."
[Translation]
The Chair: Ms McCall, I'd like to get back to the levy. You mention 37 or 38 cents on the dollar, but how can you quote a price, or set one, when it will be up to the Copyright Board to set the levy, after having consulted all of the stakeholders. I am very surprised to hear you mention a figure such as 37 or 38 cents on the dollar, when we also heard a figure of 25 cents. It won't necessarily be 38 cents. That was mentioned as a possible maximum. It is striking when it is added to a dollar; I'd like to know how it can be added to the dollar?
I'd like to know how anyone can quote a figure for the levy now when it must be set by the Copyright Board with all of the parties involved. We are not going to set the rate of the levy, nor will you. It is the Board that will be setting those rates.
[English]
Ms McCall: I understand that it is necessary to go through the Copyright Board. I used that figure because that was the figure the minister gave in the fall. This is a number which has been bandied about for several years now.
Obviously, if it is 5 cents, it is a different result, and maybe people have different feelings about it. It could as easily be 50 cents. We do not know what the Copyright Board will do, we just know they intend to take a long time to do it.
The Chair: However, they would fix it after consultation.
Ms McCall: They would set it, yes.
The Chair: They will set it after consultation.
Senator Anderson: It is my understanding that 32 countries have a similar levy on blank analogue tapes. Is that your understanding?
Mr. Bourrier: Most European countries have some levy on blank analogue tapes.
During the course of the proceedings at the House of Commons, a member from the European agency presented in a brief essentially outlining the difficulties we are having.
A number of European countries have adopted a levy and have either not implemented it or abandoned it for the reasons we have brought forward here today: It is very difficult to have a positive net result.
In Canada, the situation is further exacerbated by the fact that we are next door to the U.S. which has no levy. There is currently very free passage of goods between the U.S. and Canada. There is no regulation to protect against that passage of goods.
It is always a very difficult situation in the U.S.; it is our feeling that it will put us in an impossible situation in Canada.
[Translation]
Senator Roberge: Ms Lacombe, I am trying to see whom you represent. A few weeks ago, we were studying Bill C-216 and we heard another Quebec consumers' association that expounded a position which was completely different from yours when you had come the previous time. Is your association strictly based in the rest of Canada or does it also include Quebec?
Ms Lacombe: No, I am the President of the Consumers' Association of Canada and we have a local branch in the province of Quebec. The other group who came here was the Quebec consumers' association, l'Association des consommateurs du Québec.
The only thought that comes to mind about their different position is that we work at the national level, whereas in Quebec we are protected against negative option billing in practically every area, except telecommunications because that is governed by a federal act.
Senator Roberge: How many members do you have in Quebec?
Ms Lacombe: Our provincial office?
Senator Roberge: No, how many members does the Canadian association have? I am not talking about the Quebec consumers' association.
Ms Lacombe: You're talking about the Consumers' Association of Canada, throughout Canada?
Senator Roberge: No, in Quebec. Because the other association told us that it was not a part of your association.
Ms Lacombe: No, that's a fact.
Senator Roberge: Do you have any members in Quebec?
Ms Lacombe: I am trying to understand. I represent the Consumers' Association of Canada, which is the only national group. We are not associated with any Quebec groups. We have provincial offices in each province that represent the national organization known as the Consumers' Association of Canada.
The Chair: You are a Canadian national association? The word national is often used to refer to Quebecers.
Ms Lacombe: Yes, that's true.
The Chair: You have members everywhere throughout Canada?
Ms Lacombe: Yes.
The Chair: Are they independent associations?
Ms Lacombe: No, they are affiliated with our national organization.
The Chair: But the one in Quebec does not belong to your organization?
Ms Lacombe: We have an association in the province of Quebec, which is called the Consumers' Association of Canada in Quebec. That is not to be confused with the other group that came here on behalf of the Association des consommateurs du Québec, which is strictly provincial organization.
Senator Roberge: They have members. Do you have members?
Ms Lacombe: Of course we have members. Throughout Canada, or in Quebec?
Senator Grimard: Throughout Canada.
[English]
Ms McCall: In Canada, it is approximately 12,000 at the moment. I believe about 2,500 of those would reside in the province of Quebec.
In addition, we have about the same number of people who are regular contributors, financial supporters of the organization, but who are not members. Approximately 5,000 people in Quebec support the goals of our organization.
[Translation]
Senator Grimard: I wonder why I am not a member, since my wife is the top consumer in Quebec.
[English]
The Chair: Thank you very much for your presentation and your comments. The members of the committee will consider them.
The committee adjourned.