Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 20 - Evidence - Meeting of May 29, 2008
OTTAWA, Thursday, May 29, 2008
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-10, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that act, met this day at 10:50 a.m. to give consideration to the bill.
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: Good morning, colleagues. We continue our study this morning at the Standing Senate Committee on Banking, Trade and Commerce on Bill C-10.
Senator Tkachuk: Excuse me, witnesses, for one second.
We have been considering this bill for a long time, and we have heard numerous witnesses. We are getting toward the end of the session. I understand that the other side has some problems with this bill. We have not seen any amendments. It is already the end of May. With due deference, the stories are clear. There is no change. I have heard the same story each week. The point has been well made by the industry and by the opposition and well articulated by members of the Liberal Party.
The Chair: Are you referring to a particular section of this bill?
Senator Tkachuk: I am referring to the section that people seem to be the most excited about, which is movie tax credits and public policy.
We have had industry amendments proposed, but we have had no indication from members on the Liberal side here of what they want to do. Do they want to delete the passage? Do they want to amend it? If they want an amendment, why do we not just go to clause-by-clause, have them move the amendment, and deal with it? They have the majority here. I do not know what the problem is.
The Chair: I do not think there is a problem. If I hear you correctly, you are asking how much longer committee members want to deal with this bill.
Senator Tkachuk: We might even have some common cause. If the Liberals have an amendment, we have not seen it and have no idea what their intention is. We cannot just have a big gab fest. Perhaps their intention is something we can all agree on. I do not know that. I have not seen anything. All I have heard is their displeasure with the bill as it stands. I have heard no suggestion of an amendment they would like to make to the bill. This bill was before the House of Commons previously under the Liberal government as Bill C-33, I think it was. It was discussed there and passed unanimously. It died because of the election. This is not something new. That bill was passed unanimously in the House.
We have been discussing this since December in one way or another. If the Liberals want to make an amendment, maybe there is common cause and we can come to an agreement and do something together. However, if we do not know what it is, it is very difficult.
[Translation]
Senator Dawson: One of the reasons we have been hearing a series of witnesses is that the minister told us, when he appeared here a few weeks ago, that the industry was divided on this issue.
[English]
When the minister told us that the industry is very divided on this subject, I felt that we had to hear more witnesses to prove that the industry is not divided on this issue. They have a common cause and are debating it.
For me, this second series of witnesses is due to the fact that to a certain degree the minister misled the people listening to this committee.
Senator Goldstein: I have two observations to make. First, I request that we have some time after these witnesses testify to discuss this significant issue. It may be useful to hear these witnesses, because they are here and are waiting, and then have the discussion we want to have.
Second, it would be rather difficult to proceed to clause-by-clause consideration at this time. Without being presumptuous, I think there is a high probability that we would agree on something with respect to film and video productions, although perhaps we would not. All the witnesses thus far have suggested that film accreditation be denied where the content of the film is contrary to the Criminal Code. I do not know whether you would agree with that, Senator Tkachuk.
The second and more important issue is that there are a variety of tax issues, one of which we heard for the first time yesterday, which make it difficult to proceed to clause-by-clause consideration, because we need to hear more people, at least with respect to tax issues.
We have only two weeks left to hear witnesses, and my recollection is that, except for the mayors testifying next week about the possible impact of this provision on their respective cities, the bulk of the remaining witnesses deal with the tax aspects of the bill and not with the movie aspects.
That having been said, I suggest we should have the discussion that Senator Tkachuk has suggested immediately after these witnesses are heard.
Senator Tkachuk: I have no problem with that.
The Chair: We all agree. Thank you, senators, for bringing it up. We all need an idea of where we are headed.
The clerk and my office have made a list of all the witnesses we have heard so far on this bill. The clerk will give every senator a copy of it to aid in our reflection on how we want to proceed as we move to the summer recess.
[Translation]
I am Senator David Angus, I am a senator from Quebec and I live in Montreal. I am the Chair of the Standing Senate Committee on Banking, Trade and Commerce. On my right is Senator Yoine Goldstein, another senator from Quebec, who is the deputy chair of this committee, and on my right is another very well-known Quebecer, Senator Francis Fox.
[English]
From Alberta, well known in the industry that you people are well versed in, is Senator Tommy Banks. To his right, is a very happy agriculturist from Saskatchewan, Senator Gustafson. Senator David Tkachuk, from whom we have just heard, is also from Saskatchewan. Senator Trevor Eyton is from Toronto.
[Translation]
On my left is another Quebecer, Senator Dennis Dawson, and to his left, Senator Wilfred Moore, from Halifax, and finally, Senator Paul Massicotte, from Montreal, and Senator Michel Biron, both from the beautiful province of Quebec.
With no further delay we will move on to our consideration of Bill C-10, which has become fairly controversial. To date we have heard 65 witnesses. We are now ready to hear you.
Roger Frappier, Producer, Max Films Inc.: Mr. Chairman, thank you for having us here today in order to speak to Bill C-10. Allow me to introduce myself. I have been a producer for approximately 30 years, and my company, Max Films Inc., is 20 years old. I have produced approximately 30 feature films, two of my films were nominated for an Oscar — The Decline of the American Empire and Jesus of Montreal, by Denys Arcand—. I was the only Canadian producer honoured in Cannes in 1998, along with 10 other international producers, when the work of motion picture producers was given international recognition. Given my age, rather than be honoured for my sports achievements, I was honoured by being inducted, last week, into the Canadian Film and Television Hall of Fame. To be inducted you have to have worked in the industry for 25 years.
The Chair: Congratulations!
Mr. Frappier: Thank you. I would like to say from the very outset that I can only add my voice to those of the people who have already come before you, the directors and producers, to tell you how Bill C-10, by setting such strict tax credit criteria, will be harmful and catastrophic for our film industry, both from a national and an international perspective.
The criteria for a film to be eligible for feature film funding from Telefilm Canada includes the following:
A project must not contain any element of serious and gratuitous or explicit and excessive violence,... or any other sexual offence under the Criminal Code or any matter which is libellous, obscene or in any other way unlawful.
We are already subject to these criteria and to the others, which I think are even more important, in the Criminal Code. Why do more on top of the Criminal Code? The Criminal Code is something that is absolutely objective, whereas the committee which would be established by the Department of Canadian Heritage, will inevitably be subjective.
Allow me to tell you a brief related anecdote. Over the course of my life, I have often sat on juries for film events, for example, the World Film Festival, the international festivals in Chicago and Europe, and even within the world of film, we hold discussions on presenting awards. I might defend a film based on my opinion that it is a masterpiece but the person beside me might feel that the same film is rubbish and should never receive an award. So you can see how people's perceptions of the same piece can be so different, when you are using subjective criteria.
A good part of our funding comes from federal and provincial tax credits, tax credits that are given to us two years after a film has been produced, and the film is funded in the meanwhile by banks. Not a single producer will take the risk of losing their tax credit two years after their work has been produced. The consequences for the future of these companies would be serious. There is not a single bank that is going to take the financial risk of being involved in a project if they think that the subject matter is in any way contrary to public policy.
I just produced a film called Borderline, by Lyne Charlebois, that tells the story of a young woman on her birthdays, at 30 years old, 20 and 10 years old. At 20 years old, as the title, Borderline, suggests, her only relationship with the world was through sex and alcohol. This film received outstanding reviews in Quebec when it came out and it netted $1.3 million at the box office. In fact, during the first week in theatres, we were the number one movie, even if you include American blockbusters.
The film is based on two novels by Marie-Sissi Labrèche. If Bill C-10's criteria had been in effect at the time, I would never have acquired the filmmaking rights for these novels. Borderline would never have seen the light of day. That is the more insidious side to this bill, one that is quite related to what one could call censorship, a side that you cannot see, that is there when an idea is being born.
How many films would not have seen the light of day if producers, screenwriters and directors had not had the freedom to develop topics that spoke to them and touched them?
I could name several international films that would not have seen the light of day if they had been produced by Canadians under Bill C-10.
To name only a few, take Last Tango in Paris by Bernardo Bertolucci, with Marlon Brando and Maria Schneider, and Clockwork Orange by Stanley Kubrick.
In 2004, I co-produced with Luc Besson's Société EurepaCorp, the The Chinese Botanist's Daughters, by the Chinese filmmaker and novelist, Dai Sijie. This beautiful film, about the love story between two women, was hailed internationally. It was impossible to shoot this film in China, even though Dai Sijie wanted to, because the story was based on individuals he knew in China. Dai Sijie is an international novelist and filmmaker whose book, The Little Chinese Seamstress, won international awards.
We had to shoot the film in Vietnam because the Chinese committee turned down the screenplay. I cannot but see a link between the committee that the heritage department wants to establish for the purposes of determining, after the fact, whether or not a film is contrary to public policy, and the Chinese committee that decided before The Chinese Botanist's Daughters was produced that the film was contrary to public order.
If this bill were passed, it would have catastrophic consequences on the film industry. Freedom of expression and freedom of creation have no price. Bill C-10 truly is a threat to the Quebec and Canadian film industries. It is absolutely unnecessary because we already have all the provisions in the Criminal Code that we need to deal with abuse.
The Chair: Thank you very much, Mr. Frappier. We will move to senators' questions later. Ms. Robert, you now have the floor.
[English]
Denise Robert, President and Producer, Cinémaginaire: Never in my wildest dreams would I have thought that I would be invited to speak to the Standing Senate Committee on Banking, Trade and Commerce. I thank you for having me here.
Senator Fox: Success comes late sometimes.
The Chair: It is not that late in this case.
Ms. Robert: Let me give a brief introduction. I have also been a producer for the last 18 years. I have produced over 35 feature films, whether they are local productions or co-productions. Some have been honoured at the Cannes International Film Festival, the Venice Film Festival and the Oscars. I won an Oscar for The Barbarian Invasions that has been honouring Canada around the world. I am also one of the few Canadians — I think Mr. Frappier is also one — to be invited to become a member of the prestigious Academy of Motion Picture Arts and Sciences in the U.S., which boasts very few members. To be invited, you must be recognized as someone who pushes the art form of film to the limits of excellence. I am also a member of the British Academy of Film and Television Arts and Les César in France.
I join my voice with all my colleagues and friends in the film industry and beyond to television, books, theatre, dance and music. When we talk about censorship, it concerns every artist in this country.
There are two elements of this law that are worrisome for most of us. First, the effect of decisions being made retroactively would remove all financing possibilities. Most of our financing comes from bank loans.
I think you had bank representatives before this committee tell you that they would definitely not finance something that might, in the end, not be recognized as a work of art by the committee's guidelines.
[Translation]
Civil servants would be allowed to judge the moral character of a work of art. I think that over the decades, art is something that has made societies evolve. In Canada, we have the pleasure and good fortune of having several artists who have made us evolve as a society. As a result, we have become an inspiration for societies throughout the world.
We should not repeat history. In the 19th century, Gustave Flaubert, who wrote Madame Bovary, and Charles Baudelaire, who wrote Les fleurs du mal, were both brought before the courts on the grounds that their works were contrary to public order, just as Édouard Manet was, because of his painting, Déjeuner sur l'herbe, in which you can see three well-dressed men in their hats and one naked woman having a picnic on the grass. And yet, today these works are both inspirations and masterpieces.
Freedom of expression is the essential tool in creating.
Allow me to quote Hamlet, in that ``art holds up the mirror to life.''
In life, there are pretty things, and less pretty things. We must be able to see everything. Violence is a part of our reality; we must be able to witness it in order to deal with it. A committee could decide if a scene is contrary to public order. Is extreme violence contrary to public order? It is obvious that we do not want violence in our lives, but we must accept that it is a part of our reality. I share the same concern as that expressed by all of my colleagues: allowing civil servants to set the rules disturbs me to the highest degree.
Allow me to share a few stories. A few years ago, a television fund was set up to finance totally Canadian productions. Television series projects were put forward, including Dans une galaxie près de chez vous. The characters from this series were from outer space. The greatest question being asked at the time was the following, ``wait a minute, is space a part of Canada?'' ``Are the space shuttles Canadian?'' In order to lend Canadian authenticity to this show, we had to include maple leaves and beavers. In the case of another show, Madame Croque-Cerise, the major question being asked by the committee was whether a cherry is indeed Canadian.
I am telling you these stories simply because they demonstrate that even when a committee is comprised of people who act in good faith, their subjectivity prevails. There is no law for that. Subjectivity is personal.
Our Criminal Code, generally speaking, properly addresses the problem of pornography. People working in our profession do not intend to run roughshod over the Criminal Code.
The Chair: Thank you very much, Ms. Robert, that was very interesting.
[English]
Senator Harb: To date, every witness from the arts or film production sector has told us the same thing: this is a bad clause because it will reduce freedom of expression. It amounts to a censorship; it is an invasion of our rights.
Would it be fair to say that should this committee and the government ultimately move along with or without your support, that the industry would challenge this in court on the basis that it violates the rights and the freedoms of expression? We have the Criminal Code, and this takes it beyond what we have in place.
Ms. Robert: I cannot presume what the future holds for us. Personally, I question this. Do we have examples from the past of people abusing the system and making films that are against public interest? I doubt it.
Usually laws are made to correct something that is not working well. This seems to be working. The Criminal Code has answered and has been doing its job in this respect.
Mr. Frappier: There is one aspect we never think of. More and more we work in co-productions. It will be difficult for us when we work with foreign co-producers to know whether we can continue such partnerships, because in two years we might not be able to fulfill our financial obligations. At an international level, Canada will be looked upon as being really backwards compared to what is happening currently to freedom of production and expression in the rest of the world.
In answer to your first question, censorship is very diluted. For many years in Spain under Franco, the cinema showed that filmmakers were not able to express themselves. It takes a great deal of courage for filmmakers to express themselves when there is a committee looking at films to decide whether they are contrary to the public interest.
[Translation]
I do not see why Canada needs this provision. Right now, things are fine. Laws and obligations provide a framework for investment companies both at the provincial and federal level. It is not as if something had occurred, some scandal! I just cannot fathom why all of a sudden we need to strike a committee in charge of viewing films two years after their conception to determine whether or not they should be granted a tax credit. How will the committee deal with foreign productions, or U.S. productions that film in Canada? They already receive tax credits and return to their home countries once filming is over. Those productions will not be examined by the committee. There is, therefore, a double standard. This would mean that foreign productions would be at a much greater advantage with respect to freedom of production and creation. I simply do not see any need whatsoever for the bill. Canada is a free country that is doing fine.
The film industry is a showcase for a country. Film travels very well. Recently, the Canadian film Blindness opened at the Cannes Film Festival and was competing side by side with Atom Egoyan's film. Filmmakers from across the world enter into competition with one another in Cannes. Filmmakers need this freedom of expression. Often, a filmmaker, or any other kind of creator, seeks to push the limits.
Fifty years ago, people were barely kissing on the big screen. Since then, society has changed. Films have changed society because artists have had the courage to push the limits. Cinema has taken things very far, but in comparison to other countries, Canada still has a long way to go. Freedom is essential to creating art.
[English]
Senator Harb: Are you aware of any democracy that has a tax credit regime in place similar to Canada's that has the same kind of restrictions in order to qualify?
Ms. Robert: France has a tax credit program and they use the Criminal Code.
Senator Harb: How does that equate?
Ms. Robert: It is the same as here in that it applies to pornography, child pornography and so on.
Senator Harb: Any one of those.
Ms. Robert: No committee will judge whether a film is for or against public interest. Actually, such judgment would never go over in Europe, where freedom of expression is one of the most priceless tools artists can use.
Senator Harb: A few years ago, someone said in a magazine that Canada was cool, hip and avant-garde, although I forget the name of the magazine. Is it your position that if we proceed with this discriminatory clause, as many of you have described it, it will make us look like the bad guys on the international scene?
Ms. Robert: It is already doing that. I was in Cannes recently and read in the U.S. trade papers that Canada is imitating China. We are being looked at as taking a backward step. It is unacceptable and it is being questioned. I am sure some of you have seen comments in the trades. People are looking at what will happen with this and thinking that this surely cannot be real.
The Chair: If I might clarify, we had evidence yesterday about Quebec having a provision, even though it is part of Canada, I believe.
Senator Harb: Would it be almost like a deterrent for production houses such as yours? If this were law, would that encourage you to set up shop in the United States or elsewhere so that this rule would not apply to you?
Ms. Robert: That is a very good question, but what feeds artists is the society around them.
[Translation]
The society in which we live inspires us, and we have no intention of leaving it. We like being here, and we are very grateful for the support the current government has given our industry. It is very important to us. We want to continue working here; we are proud of it. We will continue expressing our views, because we are free to say what we think.
You are intelligent and sensitive people, and I think you will understand that this is important to us. You are here to represent us, and to represent artists. You have the sensitivity to understand that. The intent of the bill is good, but I think the consequences are not. You will be able to recognize that, and allow us to practice our art here, because it would be a tragedy if Canada's major artists were forced to leave the country and work elsewhere to continue doing what is so important to them.
Mr. Frappier: There could also be some very particular situations, situations that are almost funny. For example, the last film I produced — Borderline — is based on two books. Suppose this committee is set up and I am denied tax credits two years after the fact, how far could that go — since there are also tax credits and government money put towards publication of the book? That means we would not be permitted to see what we would be permitted to read — or would a new committee be established to real all books and take away contributions to some of those? That chain could go on forever.
[English]
Senator Tkachuk: I have been listening now for quite some time to the film industry talk about freedom of expression. Is the state of the film industry now in Canada and the television industry at such a point that there are no films produced or television productions produced without state subsidies?
Ms. Robert: That is a reality around the world, with the exception of the U.S. Every country — Australia, New Zealand, France, Italy, everywhere — has government subsidies in different forms. Tax credits have been popular. The U.K. has a lottery fund, which has gone to finance productions.
Basically, the entertainment industry is governed and ruled by the Americans. They are good at it; they do great production. However, I think every country has decided that to know its own identity, it is important that our art forms express our identity, that our children see who we are on film, on television, in newspapers and in books. It is the same in France and in every other country.
Our productions have to compete against the Americans. Whether you are in France, Quebec or Vancouver, you compete against American films or American books or American television programs; you are competing against the best in the world.
That is fine and healthy, but it has been necessary to get public funding because the base of where you can sell this product is limited. In the U.S., there are over 200 million people. Commercially, it makes their production viable; in most countries, however, it is not commercially viable so you need the funds to help you. Some films or television series become viable and they do sell worldwide, but the industry is still in need of government help.
Mr. Frappier: If I may add one thing, this happens even in the United States. Now many states, like Michigan and New Orleans, have aggressive tax credits to keep productions from coming to Canada. That is why at the moment we are having a real problem with American productions. In Montreal the studios are empty; in Toronto it is the same. The Americans understand the problem now and, in many states, the tax credit given by the government is higher than what is given here in Canada.
Senator Tkachuk: We have the war of the taxpayers.
Ms. Robert: The arts industry, senator, is not the only one that gets government funding.
Senator Tkachuk: Yesterday, Mr. Gross said that India does not subsidize its films.
Ms. Robert: Films out of India, out of Bollywood, have money, but the rumours I hear, and I cannot confirm whether or not they are true, is that they have a different source of private money. India has a large population and they make films for their population. It is a very different story.
However, the arts are not the only ones that are funded by government. Companies in the aeronautics industry and others are financed; most industries are financed. Why? Because we are competing against the most powerful nations in the world and we are trying to survive and trying to create our own industries, of which we can be proud.
Senator Tkachuk: There are many businesses in Canada that are not subsidized by the taxpayers; the great majority of businesses are not funded by the taxpayers.
To follow up on the question of art and the civil population, the need to know stories and who makes the decisions, right now a number of provinces have similar types of public interest provisions, so obviously they are making decisions about what films are shown. When investors decide to invest money, they make decisions about what films are shown, and they have criteria in mind as to what kind of film will return an investment. Right now, the way almost all of the industry is talking, the banks make the decision. When you go to the bank, the bank decides what is in the public interest. Will this film make money? Will it qualify for a tax credit?
It is one group of bureaucrats or maybe a minister who is responsible to the people who may say that this film is not in the public interest. My view would be, because the law is there, there will be few times, if any, that it will have to be taken advantage of, where now the banks make that decision. Someone makes the decision of what is in the public interest, and they always do, including yourself.
Ms. Robert: The bank has never asked for the script of any film I have produced.
Senator Tkachuk: Because it is guaranteed by the tax credit.
Ms. Robert: Not necessarily; it is mostly the guidelines of Telefilm Canada and all the government agencies where they do read the script and where they do know the Criminal Code, and they know if something goes against the Criminal Code.
Senator Tkachuk: Does Telefilm Canada make a decision on the question of public interest?
Ms. Robert: They make a decision on content. They will read a script. If they feel there is child pornography, the script will be turned down.
Senator Tkachuk: Telefilm is a government agency.
Ms. Robert: Yes, it is a government agency; but they are specialized people and they will accept or turn down a film. If it is a bad script, they will turn it down. If it is a script that deals with something, such as child pornography, that is gratuitous and unacceptable, they will turn it down.
Senator Tkachuk: They have a public interest provision as well.
Ms. Robert: They have the Criminal Code.
[Translation]
Mr. Frappier: If we knew for certain which film would be a major success and catch on, of course we would make that film alone. I agree with you that there are far too many people in the film creation process in Canada. That is why we have not achieved the same level as many other countries internationally — because at every level we need some intervention, either by Telefilm Canada or by television and investors who want to see their part of the story in the film.
I think that the more freedom of creation we are given, the more Canadian film will be able to flourish and develop an international reputation.
We should add that in Canada and Quebec we have major filmmakers. We are in a period where the film schools in Toronto, Vancouver and Montreal showcase huge talent in scriptwriting, directing and technical services. The professionalism and talent in our film industry is now recognized. Why should we put the brakes on it?
I would also like to say that filmmaking might be the most profitable commercial activity from an investment standpoint. For every dollar invested in film, economic studies have shown that $4.50 are returned to society. When I produce a $7 million film in Canada, I create some 300 jobs, and the seven million are spent completely in Montreal society. We rent cars, trucks, we buy clothes, we put people up in hotels, we go to wood yards to obtain lumber and build sets, and we pay the city for the use of streets. Economically, it is the most profitable kind of investment for a government.
[English]
Ms. Robert: I have a little anecdote. I was on a flight to Europe during The Barbarian Invasions, when we were doing the tour around the world, winning honours all over. A businessman came up to me and said, ``Congratulations. You guys have succeeded, in one year, to get everyone around the world talking about Canada. I am from Bombardier, and we have been working for 12 years to try to get certain recognition. You did that in one year.''
We are all proud of films that travel and give us the honours. It is publicity that you could not buy even if you dreamt of buying that kind of publicity.
Senator Tkachuk: I want to ensure there is no misconception. No one here wants to hurt the film industry.
One thing during these hearings that has made an impression on me is the question of the financing. We are looking for a way to defend the public interest, which is our responsibility, and to allow artists the freedom to make their movies and to satisfy the interests of the bank. Maybe the only way is the Criminal Code.
We are surprised that this guideline has been around for a long time. The idea that it would become an act has been around since 2002. We are talking about seven years now. There had been no great commotion about it up to this point.
Actually, Bill C-33, which had the same provision, was adopted unanimously, I believe, by the House of Commons. The House was prorogued and it was brought in again under Bill C-10. No one in your industry in all these years alerted anyone to this provision and said it was a problem.
Now it has passed again. Here we are in the Senate, with the House of Commons — the elected people — unanimously passing this provision twice. All political parties passed it twice. You can plead ignorance once, but it is hard to plead ignorance twice. That is why we are taking our time in having a look at this.
You understand our dilemma and how all this has taken place. I do not want to leave any misconception whatsoever that we are not interested in the film industry. We simply find this whole situation rather bizarre.
Ms. Robert: This is the first time I have been invited to come and speak about this. Why were we not invited in 2002, when it was on the table?
Senator Tkachuk: The industry never wrote us a letter or anything until just lately.
Ms. Robert: There you are. It is not your fault. It is a document of 560 pages. It says, for example:
[Translation]
An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bi-jural expression of the provisions of that act.
[English]
I am sorry. I am very ``blond.'' I would not have read this.
Senator Tkachuk: I agree, Ms. Robert. We all feel the same way.
You have industry associations, Ms. Robert, whose only job is to protect your interests.
Ms. Robert: Yes.
Senator Tkachuk: If I received a bill and I read it and it said ``tax credits, movies,'' I would be right there.
Mr. Frappier: This is the first time that any committee was established to try to define what is between the Criminal Code and the rules of Telefilm Canada, to define what exists in our society. It is the first time. That is why we are here. We are not the only ones.
Senator Tkachuk: I think I made my point, Mr. Chair.
The Chair: You always do.
Ms. Robert: You are so right, senator. At the same time, that is why I am confident that you will do the right thing. We really count on all of you to support our industry and to support the freedom that we have enjoyed for so many years. You have entrusted us with it and we will never disappoint you.
Mr. Frappier: We have asked the minister if the Canadian tax credit could be calculated the same way as Quebec calculates its tax credit. If it was, without changing anything, from east to west, from Nova Scotia to Vancouver, we could have tomorrow $12 million more in cinematographic production.
All the studies have shown that this dollar costs only 20 cents to the federal government. Nothing has been made in cinema since this government has been in power; not a penny has been added.
The only thing is that this rule is now coming. There will be a committee that will judge our films. We have done many representations concerning our sector of activity. You are more experts in the economy than I am, so perhaps you would want to look at this. It has been said that just by changing the way of calculating the tax credit, if it were applied the same way Quebec applies its tax credit, $12 million tomorrow would be injected into our cinematography industry.
Senator Moore: Ms. Robert, when you read through the title of the statute, there is no mention there about tax credits regarding the film industry or guidelines being established.
In all fairness, Senator Tkachuk, how would one know?
Senator Tkachuk: It is a tax bill.
Senator Moore: It does not say anything about the film industry or guidelines. I do not think that is a fair comment.
The Chair: I would like to make my own point. You are indicating how the studios in Montreal and elsewhere have been pretty empty. Some of our witnesses have suggested there are reasons other than this bill. For example, I understand that the level of the Canadian dollar has driven many filmmakers to other places. Is that true?
Ms. Robert: It is true. It is an economic calculation. The devaluation of the American dollar has made it unattractive for them to come to Montreal, Vancouver or wherever. Basically, I think it is that. Many of the states have voted on a high, strong tax credit to keep local production in their community. It is a disaster.
Right now, I am preparing for a film that we will be shooting this summer. I am at Mel's Cité du Cinéma studio. Usually it is full and we have a hard time parking. Now it is empty.
The Chair: My nephew is a film producer in Hollywood. We would see him every month at the Hotel Le St-James making another movie in Montreal.
[Translation]
They all disappeared. I asked why. It was not because of the value of the dollar, tax credits or anything like that.
[English]
Ms. Robert: It is dramatic. It is also worse because our buying power has gone down against the euro and we are trying to do co-production. There is a lot of work to be done in updating the co-production rules and regulations to modernize and to make us competitive. Right now, we are also losing that battleground. It really is disastrous.
The Chair: It is tough times.
Ms. Robert: Yes.
Senator Banks: I would like you to respond to the following, please: You and many of your colleagues who have preceded you from the industry have used the word ``censorship,'' but this is not censorship. There is nothing in this bill that says you cannot make that movie. You could make the movie if you found money elsewhere. What is the problem?
Mr. Frappier: The problem is simple. If I think that I will not have the tax credit in two years, I cannot make that film, and to me this is censorship. It is as simple as that. To produce a movie, we need everything from television, distribution, production money, tax credit, Telefilm Canada and provincial agencies. If we do not have all of them, we cannot produce a movie.
The subject does not have to be only sexual. It could be political one year. Let us say that I want to produce a movie on the October Crisis, and the committee thinks it is against the public order. A committee can look at your film and two years later decide that because of certain things you have in the movie, they are taking away the tax credit. That is a chance I will not take. If that happens, I will be closing my company.
It is difficult for producers. I have had staff with me for over 15 years. We put a lot of money into development to find material, to develop it, to put it in writing and, after that, to be able to finance and produce it. It takes a period of two or three years. The movie I am producing at the moment is over a period of six years. We put a lot of investment into a film. With all those years in mind, if I think that at the end, when the movie is made, a committee somewhere can say no, they are taking the tax credit away, then there is no way I will do that at the starting line. It will not be only me thinking that; the screenwriter too will be thinking he or she cannot write this because it will not pass before the committee.
This way of doing things has been well observed in Spain and in other countries where you do not have the freedom to express yourself. In Russia, for many years, only movies that were approved by the state could be made. The other filmmakers could not do anything. Now you see a lot of great Russian filmmakers coming out. In China, it is the same thing. In China, more and more filmmakers are pushing the limits of censorship to be able to express themselves.
It is something that grows, because it has a very subjective meaning. A committee of people will decide yes or no. It is absolutely not objective.
Senator Banks: They would be deciding yes or no on a specific amount of money. You talked about a $7-million film. I guess the tax credit for that would be somewhere between $1 million to $1.5 million. If a developer is doing any other business and making a project, whatever it is, that costs $7 million and finds out one source is shaky, that person will go out and find $1 million or $1.5 million someplace else.
Mr. Frappier: The $1.5 million is the tax credit, but you will also have the Telefilm money and everything. It is more than that.
Ms. Robert: Senator, if there were funds available from other sources, we definitely would be at their doors. When I leave today, I would be at their doors.
When Denys Arcand went to Hollywood when he was honoured for The Decline of the American Empire, Steven Spielberg looked at him and said, ``You are so lucky.` Denys looked at him and said, ``What do you mean, I am lucky?'' Spielberg said, ``You are making films.'' Denys Arcand answered, ``What do you think you are making?'' He said, ``We are making money, not films.''
To me, it is revelatory of what we do. We do films. We are in an art form. We are expressing ourselves and who we are through films. We are not doing Indiana Jones with a $200-million budget for special effects. That is the American way of doing things. We are expressing ourselves through our stories and so on and showing who we are, and that is what we call the art of filmmaking. The art of filmmaking is an art.
Look at the symphonies and orchestras having a hard time all across this country. Why? Classical musical is important in our lives. It is a quality of life for our mind, food for the mind. Any art form, whether theatre or music, needs the financing.
When you talk about censorship, you are right. As soon as we talk about a committee that will decide on the criteria, those decisions can only be subjective. What might be offensive to me might not be offensive to Mr. Frappier or to you. That leads to a personal judgment, and I think that is unacceptable in deciding whether a work of art should exist or not. The Criminal Code should come into the decision, but otherwise, when it comes to personal feelings or whatever, it is not acceptable.
Senator Banks: Senator Tkachuk has referred to many businesses in the country that do not receive subsidies, and I assume you employ many people who also do not receive direct government subsidies — carpenters, set builders, painters. They do not receive direct government subsidies, but they would not be employed, would they, unless you were making the films? They would all be out of business.
Ms. Robert: We create the jobs.
Senator Banks: I am anxious that Senator Tkachuk give us an example of an industrial sector as opposed to businesses in Canada that do not receive government subsidies. I do not think there is one.
[Translation]
Senator Dawson: I will be brief. Ms. Robert and Mr. Frappier made their comments clear. Ms. Robert said that in certain circles, Canada was being compared to China, in terms of censorship. Can you give us the reference?
Ms. Robert: I do not have it with me, but I read it in U.S. trade publications. It was mentioned in all industry publications; people were truly interested in Bill C-10's rationale and what it implies in terms of censorship in Canada.
Senator Dawson: From time to time, the Government of Quebec sets up criteria for tax credits. Since the act came into effect 17 or 18 years ago, have any cases arisen and did the Government of Quebec make any attempts to censor material?
Ms. Robert: Never, and there was never a committee in charge of assessing whether something was in the public interest.
[English]
Senator Dawson: Senator Tkachuk, because of this committee's work in December, your minister came here and admitted that the bill was badly written, and they had a letter of agreement with the industry saying you guys were good at what you were doing because you noticed there were flaws in this bill. Even if it went in front of the House twice or three times, two wrongs do not make a right. This committee corrected a wrong. We were told yesterday there might be a great injustice towards the Desjardins Group because one of the clauses in the bill leans toward the banks and does not take care of the fact that in Quebec we have an industry called Desjardins that might be threatened by a badly written clause in this bill. That is what we do. We are a chamber of sober second thought. I do not feel uncomfortable with the fact. Even if it was badly written under the Liberals 10 years ago and passed in front of a Parliament that had a Liberal majority, if it was badly written then and this committee has now arrived at the conclusion that we can improve this bill, we should be proud of the fact that that is what we are mandated to do.
Senator Tkachuk: I do not feel uncomfortable with this.
The Chair: We think you should make a movie about this.
Senator Dawson: Not with that side of the script.
[Translation]
Senator Fox: Thank you for appearing before us and sharing your vast experience; one that has been based on extraordinary success stories of which everyone is proud here and abroad.
I would like to go back to Senator Tkachuk's questions. I got the impression that we were trying to blame the industry for not having realized what was in the bill, when everyone knows perfectly well that none of the opposition parties in the House were paying attention to this subject. Perhaps it is because the Minister of Finance never mentioned this in his speech during second reading or the minister responsible did not speak about this in her speech in the House. This would have been one way of warning the industry.
This is the first time there are public hearings on this subject. It is good that you are appearing before this committee to convey your opinion. There were never any other opportunities for you to speak in a public forum.
To my mind, this bill has three extremely important aspects that include freedom of expression. My colleague, Senator Harb partially raised this point this morning. The Canadian Civil Liberties Association appeared before this committee and shared with us their fears and concerns. Among them, certain elements of freedom of expression, as guaranteed by the Charter, are being encroached upon. We spoke at length about the Criminal Code.
Nonetheless, there is the Canadian Charter of Rights and Freedoms which protects freedom of expression. Professor Pierre Trudel from the University of Montreal wrote in the newspaper Le Devoir citing some of these same fears. There are legitimate fears over the loss of freedom of expression. I'm not seeking your opinion on this subject because you are not experts on the Charter, even though you are more than welcome to make remarks on it.
But this brings me to my question about the economy. In Canada the industry is worth $5 billion, and generates 126,000 jobs; in Quebec, the industry is worth $1.2 billion and generates between 25,000 to 30,000 jobs.
We have to deal with the economic situation as it is. The Canadian dollar is high. We have before us a bill that must be understood within a global context. You talked about new tax credits in the United States. Let us mention the 40 per cent credit available in the State of Michigan. People without deep roots in Canada are seeking to move to Plattsburgh, and obtain American nationality so that their companies can produce films for Canada.
Indeed, if you take into account the high value of the Canadian dollar, the situation in Michigan, the effect of this bill on the Canadian dollar, what will be the effect on the film industry in Canada?
Ms. Robert: Would you be willing to welcome another senator into your ranks?
Senator Fox: Do you wish to reply? Do you have a comment?
Ms. Robert: We will be closing down.
Senator Fox: You see, there is their answer, Mr. Chair. They are closing down as a result of this bill being proposed by your government.
This morning, you talked at length about the guidelines contained in the Criminal Code. Let us be clear and honest: When the minister came before our committee, she replied that the Criminal Code was not an adequate benchmark, and that pornography was not an adequate benchmark. Canadians have the right to know that the government is not funding certain films even if they do not run counter to the Criminal Code, even if they are not pornographic, it is subject to discretion. The government is not intending to make the Criminal Code the benchmark.
That is the position of the government. I seek your opinion on the government's position, not on that of certain senators whose position is much more liberal than the one the minister set out before this committee.
Mr. Frappier: Allow me to respond. I just got back from the Cannes Film Festival where I viewed almost every film that was entered into the competition. I spoke extensively with Gilles Jacob, the president of the festival, and his programmer. The two of them spoke about the competition and why there were no Quebec films in this year's contest. They mentioned the fact that they were placing more emphasis on topics. It seems that globally, what is significant right now are very powerful topics.
There were two Italian films in the competition and they won the jury's special prize as well as the jury's prize. The first film, Il Divo, directed by Paolo Sorrentino is a film about the relationship between Giulio Andreotti, and the Italian mafia, and all of the journalists who wrote about this and died, as well as Judge Falcone, who presided over the matter. Sorrentino took many risks with the mafia; he enjoyed great freedom, and was financed by Italian financiers. Would such a film have been possible in Canada if we stated that we would be making a film about an event taken from Canadian political history? I will not mention any in particular, but judging from some of the stories which have appeared in the newspapers in the last two or three years, there is a lot to draw from to make a film.
Would the Heritage Minister's attitude be, with her committee, if she were to view a film two years later, to say: This affects my government and former members of my government; therefore I am withdrawing the credits. Censorship can go very far, and this is not provided for in the Criminal Code.
The two Italian films drew a lot of attention from the international press, and were hailed as the renewal of Italian cinema. All of a sudden, despite the fact that these films were very hard on some Italian politicians, there was respect for this type of cinematography and a possibility of making other films.
Senator Fox: I have the economic report on cinematographic and television production in Canada. There are many statistics on official cinematographic productions. Last year, the total volume was approximately $300 million in official coproductions.
Do you think that the legislation will affect official co-productions if it goes ahead? If you are approached by a foreign co-producer, are tax credits an important issue?
Ms. Robert: Very important, in that they are our way of responding and becoming a viable partner in the co- production. If the film has to be submitted to a committee and it might be refused for any number or reasons that cannot be identified in advance, we will obviously be eliminated as potential partners in co-productions. When you do a film, there is already a huge amount of risk. A huge amount of money is involved. It costs millions of dollars and so we will no longer be brought in as partners in co-productions. Foreign partners will take their $350 million elsewhere and look for other partners. That will mean enormous job losses in the industry.
Senator Goldstein: I have two questions. The first is whether the opinion that you have just expressed, which is similar to what we have heard from the other witnesses we have heard up to now, is shared by everyone in the industry or whether some people feel that this part of the bill would not have a negative impart on the industry. Is this a unanimous opinion?
Ms. Robert: The artist and film people we work with have expressed grave concerns about this bill, and they are totally against it. I believe it is unanimous.
Mr. Frappier: I am working on a film right now, and even the technicians have come to tell me that this makes no sense. I cannot speak for anyone else, but everyone that I have spoken to since this has been made public is speaking with one voice.
Senator Goldstein: Have you heard anyone express a different view?
Ms. Robert: I have seen different views expressed in western newspapers, especially religious ones, to the effect that there is finally legislation that would prevent us from seeing homosexuals on the screen. I was stunned when I saw that in the paper.
Senator Goldstein: Would limiting the minister's discretion to aspects covered by the Criminal Code for the granting of tax credits possibly be detrimental to the industry, or can you live with having the Criminal Code as the only determining criterion?
Ms. Robert: We currently deal with the Criminal Code, which we find to be adequate, well expressed and based on concrete laws that are debated in the courts, where competent people are able to argue the legal points.
Senator Goldstein: So you would be satisfied if we added that the only criterion for determining the eligibility for tax credits would be the Criminal Code?
Mr. Frappier: The Criminal Code governs society as a whole and not just the film industry. We are all subject to the Criminal Code in our daily lives, at least in our society. I personally do not see a need to add a link to the Criminal Code. My life as a citizen is clearly governed by the Criminal Code.
Senator Goldstein: It does not even need to be mentioned.
Mr. Frappier: It does not need to be mentioned because it exists.
[English]
Senator Banks: I would like to make a point of clarification. Ms. Robert, you said you had heard a voice from the West that was in favour of this modification. Was it from a Western filmmaker?
Ms. Robert: No, it was from a priest.
Senator Moore: Mr. Frappier, you mentioned the suggested committee that could be formed under this proposed legislation that would interpret and enforce the rules or guidelines. As I have done with other witnesses, I will read it to both of you. This is section 20 in this bill. It states:
The Minister of Canadian Heritage shall issue guidelines respecting the circumstances under which the conditions in paragraphs (a) and (b) of the definition of ``Canadian film or video production certificate'' in (1) are satisfied.
The minister shall issue the guidelines. This is the key part:
For greater certainty, these guidelines are not statutory instruments as defined in the Statutory Instruments Act.
That means that the guidelines are not reviewable by the Standing Joint Committee for the Scrutiny of Regulations, made up of members of the House of Commons and the Senate. The guidelines would not be reviewable by the House of Commons and they would not be reviewable by the Senate of Canada. The minister could change those guidelines, could delete or could add without anyone's notice. How do you feel about that?
Ms. Robert: That is totally unacceptable. It is worse than I thought.
[Translation]
Mr. Frappier: You are giving us one more reason to be against this bill. It gives absolute power to one person. It means giving the power to this committee and this minister to establish the guidelines in accordance, I would say, with the particular mood at the time.
Once again, I do not know where this need comes from. When a committee is set up, it is because there is a genuine problem. I do not know where the problems in the Canadian film industry are that would require a committee to be established to come up with guidelines for determining whether a given film is in line with public order. It is so vague and open to interpretation and subjectivity that I do not understand where it comes from. Have there been any threats? The reasoning escapes me. The creation of mechanisms to determine whether artistic works comply with certain norms has generally coincided in history with the rise of totalitarian governments. This has been the case in the past in Russia, Spain and Germany. It has always been totalitarian governments that have created these kinds of committees in order to be able to regulate culture.
If you apply that to other areas, such as literature and even painting, a committee might decide that Dali definitely violated the public order and that his paintings were so ugly to look at that they should not exist. Some people think that, but it does not in any way affect his place in the history of world culture.
The same applies to film. There have been many films that go against the current and push limits, and they are now considered beacons in general culture and filmmaking. I do not see a need right now to set up this committee. Why would it need to be hidden away in a bill of over 500 pages on tax credits? I do not know.
The Chair: You have tried to understand the rationale for all this. There are witnesses from Canadian Heritage who said that they were discussing these provisions with members of your profession to explore the reasoning behind it. Have both of you been involved in any way in that?
Ms. Robert: Never, even though we are both very active in the industry.
Mr. Frappier: No.
The Chair: That is what the witnesses told us. To this point, you have not had any discussion with departmental officials?
Ms. Robert: No.
Senator Biron: If the bill were to be adopted as it is — speaking hypothetically — who do you think should be on the committee that would evaluate the content of films to see whether they met the public order criterion? Should the committee be made up of members of the Canadian Audio-Visual Certification Office? The Department of Justice, or representatives from the Police Association, or judges? What do you think?
Ms. Robert: None of those, since we are talking about a committee where decisions become subjective. We might find today that everyone admires the morality of something, but when committee members are replaced by others with a different sense of morality, the rules will change as the people change. As the senator said earlier, the rules are not subject to any control. They can change from one day to the next. People wake up one morning and change the rules because they feel like it. In two years from now, a new minister can change things yet again.
That is why the Criminal Code works well. Everyone complies with it. It resolves all these issues. There is consensus around it. When there is no consensus, the issue is discussed with competent people who have legal training and other relevant backgrounds.
I do not think that anyone can sit down and define morality. What do we mean today by morality and the public interest? Take, for example, the film Léolo which competed at Cannes and was a great success for Canada, in which a young boy discovers sexuality and masturbates with a piece of liver. Imagine if someone tried to decide whether or not that scene was acceptable? When I describe a young child with a piece of liver, it is clearly unacceptable, shameful and terrible, but if you see the film, it is magnificent. It is an example of internationally acclaimed artistic expression.
Mr. Frappier: Vegetarians did not like it.
The Chair: Ms. Robert, Mr. Frappier, thank you. You are internationally acclaimed for your work. You have shown excellence in your field. It is a privilege for us to have heard from you on a very important public policy.
Ms. Robert: Thank you for your generosity and your attention.
Mr. Frappier: I would urge you to go and see Canadian and Quebec films. We would be very pleased to send you DVDs, if you have time to watch them, so that you can see the superb creativity in the films being made right now.
[English]
Senator Tkachuk: I ask Mr. Frappier to send those DVDs after the vote.
The Chair: We now have with us, honourable senators, three further distinguished representatives of the film industry. From Seven24 Films, we have Mr. Tom Cox, Producer; from Panacea Entertainment, Mr. Josh Miller, President, and from The Halifax Film Company, Mr. Michael Donovan, President.
You have a good idea of how we have been proceeding. There is no need to delve into Bill C-10 in any detail in my opening remarks. I will simply say we are delighted you could be here.
Michael Donovan, President, The Halifax Film Company: Thank you very much for inviting us. I am pleased to be able to be here. I will comment briefly on who I am. I have been making films and television in Canada for 30 years. I have made thousands of hours of both television and movies. I have many awards, one of which is an Academy Award, and I also have done this from the city of Halifax. There are two places in the world that begin with the letter ``H` that are important in film. One is Hollywood and the other one is Halifax. There the comparison ends.
I am an active member of the Nova Scotia and Halifax community. I am chair of the Nova Scotia College of Art and Design, which has a film department. It is amongst the best in Canada, in my opinion.
Each of us will talk about a different area that is of concern. Hopefully, our remarks will connect in the end.
Although the committee is very aware, I suspect, of the intricacies of the black art of film finance — in fact, much more aware than I suspect you probably wish to be — for the record I will briefly summarize how this initiative affects film finance, at least from my point of view. There are many ways in which films are financed around the world. I believe that we are collectively familiar with most of them. One thing that is important is that every country, even including the United States, provides both direct and indirect governmental support for film, and Canada provides both direct and indirect support.
Tax credits based on the hiring of film workers — that is, labour-based tax credits — are a Canadian invention and have been replicated in many countries, partly because they are perceived to be an effective and efficient indirect government policy that works. This is because you get two for the price of one; the result is both a cultural benefit and an industrial one.
However, the key point about the tax credits is that they are not paid until the film is complete and audited and the industrial benefit made clear. Only then are they paid, which can take up to two years. In the meantime, money needs to be spent to make the film to create this benefit, and that comes, as you know, from the banks. In Canada, it is two banks in particular: the Royal Bank of Canada and the National Bank of Canada. For example, right now our company has a $70-million line of credit with the Royal Bank of Canada for this purpose, at what I think is a fair and reasonable rate.
One thing about the banks is that they are 100 per cent risk-averse, as they should be. Because the system as it is now is clear and precise, there is no risk. There is no pricing in of risk for the possibility that the tax credits will arbitrarily not be awarded. The introduction of the public policy qualifier, this broad clause — simple, few words, but very broad — introduces a huge element of unpredictability and arbitrariness, and therefore increases the risk rather significantly.
In the best-case scenario, the banks will stay in this business, but no matter what, the cost of finance will rise because the risk has risen. This is in the best interests, in my opinion, of no one, not the taxpayers, who ultimately bear this risk, not the government, not the filmmakers and not the overall policy goals. At worst, the banks will cease financing, as some have stated in fact they will do. Actually, the most likely outcome is that the banks will continue financing most films at a higher price, but anything that is remotely risky, anything that is not Anne of Green Gables, runs the risk of not getting bank financing. If bank financing does not happen for these tax credits, in Canada these projects will not happen; that is it.
This, therefore, seems to me to be backdoor censorship, and worse, it seems that that might be the intention of this clause. My number one concern is this: I have been involved in the making of political films and television. For example, our company makes the television series This Hour Has 22 Minutes. Also, I am the producer of the film Bowling for Columbine, the film for which I received the Academy Award. These projects, although they are satirical, are also political. If, for example, I made a satirical film about our Prime Minister and called it ``Young People with Hidden Agendas,'' I suspect I would not get bank financing. Of course, if I changed it to ``Middle-Aged People Governing without Adequate Transparency,'' maybe that would change it.
My key point here is that I can guarantee that if the subject matter is controversial, even for political reasons, the banks in Canada, acting reasonably and responsibly, will not advance bank financing, in which case these projects will not happen.
From time to time in the history of our country, there are moments when artists must do and say controversial and, most importantly, unpopular things, things that most Canadians will not agree with at that time, in fact will deeply disagree with. However, that is the foundation of this country and what I personally hold dear and what I think most Canadians hold dear, at least theoretically.
Not only do we have those freedoms to express unpopular things, most importantly, it does not work; this freedom has no meaning unless we have the means. That is why this measure, this seemingly innocuous initiative of this government, is deserving of this focused debate and I think needs to be changed.
The Chair: Thank you very much, sir.
Tom Cox, Producer, Seven24 Films: I am president of Seven24 Films, based in Calgary. I serve on the board of directors of the Alberta Motion Picture Industries Association and the board of the Canadian Film and Television Production Association, CFTPA. I am the past chair of the National Screen Institute's board of directors.
Thank you for inviting me to speak here today. I will be brief. I know you have heard all of this before. I simply hope to add a regional voice from that bastion of conservatism, Alberta.
I have been producing films and television projects in Alberta since 1990. I am very proud of the projects I have been involved in. My television credits include The Ray Bradbury Theatre, North of 60, The Walter Gretzky Story, Mayerthorpe and the current CBC family drama series Heartland. Most of the projects I have produced have been for national and international broadcast and would not be considered at odds with public policy, even under the strictest review. A few have been slightly controversial and might have received a passing nod under Bill C-10 if it were to go forward. As I and my company begin to develop more feature projects, we have become aware that the content of our projects might well be not just scrutinized under Bill C-10, passed unaltered, but could be refused their tax credits.
We are now developing a project — a true story — that fictionalizes a modern-day Bonnie and Clyde. We are also developing a story that looks at the fight against child Internet pornography. Are these tough films? Absolutely. Will they make certain viewers uncomfortable and perhaps make people not want to watch? Absolutely. Are they prurient or exploitative? Do they advocate or support the behaviours that they examine? Absolutely not. Are they worthy of public support through film and television tax credits? Of course they are, unless we are turning our backs on our cinematic tradition of reality and inquiry leading to the illumination of the human condition. That, in my view, would absolutely be a crime.
One of the projects I have had the distinct honour to be part of is Brokeback Mountain. My company was able to produce Brokeback Mountain based on our production expertise and Alberta's world-class crews and wonderful locations, and more importantly because of our ability to bring to the table crucial financing through provincial and federal tax credits.
Being involved in the making of Brokeback Mountain remains one of my career highlights and was certainly a defining benchmark of excellence for everyone involved. There were upwards of 500 Albertans involved directly in that project and thousands who were affected as we shot all over southern Alberta in small towns like Fort Macleod.
The relevance of Brokeback Mountain to this current debate seems obvious at first, but in fact it is highly ironic. Because we were in co-production with a U.S. company, Focus Features in New York, a country where there is no treaty, we would have been exempt from Bill C-10 and its language and would have been under no risk of having our tax credits removed after the fact.
What is the lesson here? This is a highly controversial film that certainly upset certain interest groups. I believe *The Western Voice, which Ms. Robert mentioned, at one point referenced this film. It would have made it through when less controversial Canadian films would have not been financed because of the threat of having their financing pulled later.
The likely consequence of enacting Bill C-10 without amendments will be to silence Canadians' cinematic voices if they are the slightest bit controversial, to cripple an already fragile interest because of the threat of withdrawal of public funding, while continuing to support service work and non-treaty co-productions. That strikes me as rather fatuous, unless, of course, those non-treaty projects and service works contravene the Criminal Code.
It is certainly not my intent to foster further examination of Bill C-10 in an effort to tighten the loopholes yet again. My intent is to show the ill-conceived nature of this one portion of an otherwise serviceable bill and to promote the same fair and objective treatment of Canadian films that we are offering foreign films.
I strongly urge the Senate to recommend the amendments to Bill C-10 as proposed by the CFTPA relating to the public policy provision of the Canadian Film or Video Production Tax Credit. The simple clarification provided by the CFTPA's proposed amendments is absolutely vital to the financial health of our industry, and I believe it offers an essential degree of objectivity in the implementation of public policy.
We have adequate safeguards within the Criminal Code to prevent the inappropriate use of government funding for film and television. We must now defend against the inappropriate use of law to create the very real potential for draconian cultural policy.
The Chair: Thank you very much, Mr. Cox.
Josh Miller, President, Panacea Entertainment: Thank you for the opportunity to speak to you today. I am an independent producer based in Edmonton, Alberta. My company, Panacea Entertainment, produces theatrical feature films, documentary programs and television series.
Born in Edmonton, I studied and worked in New York and Los Angeles for many years before returning home in 1990. I have been in the film and TV industry for 27 years, first as a writer, then as a broadcaster and now as a producer.
I currently sit on the board of the Canadian Film and Television Production Association, who have already appeared before you regarding Bill C-10. I also sit on the board of the Alberta Motion Picture Industries Association, and for many years I sat on the board of the Alberta Foundation for the Arts, which provides financial support to the arts and artists in Alberta.
My comments today will focus on aspects of Bill C-10 from a regional perspective. In our industry, the regions are defined as areas situated outside of Toronto, Montreal or Vancouver, although many producers in Vancouver feel that they also qualify as a region. This is because generally all of the licensing decisions for Canadian films and television programs are made in Toronto for English-speaking Canada and in Montreal for French-speaking Canada.
The Broadcast Act requires that Canadian productions be produced in all regions of Canada. This is so that Canadian audiences can learn about each other and benefit from the perspectives that emerge from every area of our country. To know each other may or may not be to love each other, but it certainly helps us to understand each other a little better.
In the transcripts from your May 14 hearing, Senator Massicotte noted, and I paraphrase, that a significant portion of public funding for Canadian productions comes from the provinces. This is true. It comes in the form of labour tax credits or their equivalents and, in some jurisdictions, also by way of direct equity investments.
Senator Massicotte noted that there is significant discretion and pre-approval of films by provincial decision makers which is based on artistic and factual discretion. He wondered why, if this was acceptable at a provincial level, it would not also be acceptable at the federal level.
Before attempting a response to this question, I decided to undertake some research. First let me say that I am not a certified researcher and that my investigations were less than scientific. I simply reviewed online the programs and criteria that have been implemented to support film and TV production in each province and territory of Canada. In some instances, the provincial legislation underpinning these programs and criteria was also available online.
I have compiled all of this information into a document entitled Provincial Film and Television Production Incentives, and I would be happy to make a copy available to interested parties.
The Chair: If you file it with the clerk, we will make it part of the record of these proceedings. That will be very interesting for us.
Mr. Miller: In brief, all of the provinces, with the exception of Prince Edward Island, which has a technology credit, have a dedicated production incentive program. Of the territories, the Yukon is the only one with such a dedicated film and television production incentive program.
Before I go further into the results of my research, it is important to note that for those provinces that invest equity into productions, there will always be a subjective process of evaluation because, like any equity investor, the province expects to recoup its investment and share in the profit from the exploitation of the production as it is sold both inside and outside of Canada.
Successful recoupment depends on many factors, among them the track record of the producer, the quality of the script, the marquee level of the cast, the skill of the director and the overall commercial appeal of the property. In order to maximize recoupment, a subjective assessment is generally made regarding these elements, and it would be unusual if it were otherwise.
Tax credits, on the other hand, are a tool to achieve specific results, which include fostering economic activity, increasing employment, building infrastructure, assisting in capitalizing companies and expanding the tax base. There are additional benefits, such as developing expertise in new media and other emerging digital technologies.
Since none of these goals would seem to be in contravention of public policy, I confess that I assumed that, with regard to provincial tax credits or their equivalents, there would be few restrictions on content other than the appropriate exclusions for non-priority programming, pornography and content prohibited by the Criminal Code, such as hate propaganda.
The results were surprising. With regard to provincial tax credits or their equivalents, as expected, I could find no subjective criteria in British Columbia, Saskatchewan, Quebec or the Yukon Territory. However, the same could not be said for Manitoba, Ontario, Newfoundland and Labrador, and Nova Scotia, all of whom have clauses that state that they could, at their discretion, disqualify productions that they deem to contravene public policy.
Alberta, perhaps not surprisingly, went even further, as the minister in my home province can arbitrarily disqualify any project deemed unacceptable even if it conforms to all of the program guidelines. New Brunswick was somewhat different in that its minister could disqualify a project that did not ``enhance the image of the film industry in New Brunswick.''
This was a bit of a revelation, and producers in those provinces — myself — will have to get to work to get that changed. While my research showed that some of the provinces have this option to disqualify a project that would otherwise qualify, to my knowledge, none of them has ever invoked it.
Why is this? There are probably many reasons, but I choose to believe that we, as a people, deeply understand that to employ censorship to quash unpopular social, political or religious views while advancing others would ultimately be more profane than any film or television program could ever aspire to be.
In closing, regardless of whether we live in Peggy's Cove or in Point Grey, and regardless of where we reside on the political spectrum, we should all consider carefully why we would want to legislate something that, were it ever invoked, would signal a fundamental shift from a country that celebrates tolerance and freedom of expression to a place where these rare and splendid things would, shamefully, begin to have less and less value.
The Chair: Thank you very much, Mr. Miller.
Senator Massicotte: Thank you for being with us today. I greatly appreciate your participation. We have heard many people from Central Canada, and we are now hearing from people from the West and the East. It is important to ensure that we hear the views of everyone. I am glad that you are here as an expert in the field, but also because you reside in one of those regions.
You mentioned, Mr. Cox, that you come from Western Canada, and you may represent more conservative values — at least that is the stereotype of Western Canada. I am not sure that Senator Tkachuk would be an example of that.
The intent of the three or four pertinent words that we are discussing is that the government can, in conjunction with the committee, establish measures whereby films that propagate hate, are too violent or whatever, would not get tax credits. As a representative of your region, do you think that it is appropriate for the government to go that far? Should the government be involved in that kind of criteria of selection at all?
Mr. Cox: At the level being contemplated, absolutely not. The government is already involved in making those decisions through the Criminal Code. That is the appropriate platform for any further change to be contemplated. The change contemplated in Bill C-10 is, in my view, absolutely inappropriate. The kind of power being contemplated in the hands of the minister of the day or a committee appointed by the minister is, in my view, completely unacceptable.
Senator Massicotte: I am not espousing the views of the minister, but I want to be very clear. The minister and others argue that taxpayers should not be funding or subsidizing films that are highly violent or have heinous views. Do you accept that argument?
Mr. Cox: I certainly do not accept that being the rationale for the proposed language. I am not aiming this at the current minister. Any minister, any government, should not have the power to arbitrarily decide what has been decided in courts of law on behalf of the entire nation. The Criminal Code speaks to the appropriate exclusions already. I do not believe we need to go any further.
Senator Massicotte: Mr. Donovan, what are your thoughts on the same matter from your part of the country?
Mr. Donovan: I have been at this for a long time. My understanding of the history and the way this normally works is that there is an iterative back and forth between the industry and government attempting to find the language that creates a boundary. Canadians expect boundaries, and I support that.
That iterative process did not happen here. Earlier I heard a senator ask the previous speakers if they were invited into any process and the answer was no. Was I or anyone invited? No.
We were aware there was a plan to have guidelines and an intention to have discussions. We were waiting for those discussions. Then, all of a sudden someone noticed, already in third reading, that a nuclear bomb of a proposal was under way without guidelines. That is what is bad about this. This is what has alarmed our industry. This snuck up on everyone and was outside the normal process that we are all familiar with, which is what Canadians expect.
On the argument of whether taxpayers should fund pornography, who can disagree with that? However, what happened here was something much more sinister, in my opinion.
Senator Massicotte: That is probably the case. However, since then, the minister has said that in light of those concerns, we will set up a committee representative of your industry. We will create guidelines to determine what is fair and not fair. Now that it is proposed, do you not accept that?
Mr. Donovan: No, because now there is no trust from our industry, to be perfectly honest. Where were you before?
We were waiting for the call. I have to earn a living. I would say everyone in our industry is prepared to get on a plane and go to the boring meetings needed because this is such an important thing. That did not happen.
Let us make that happen first. Let us debate and understand the guidelines through a transparent process. Then, let us proceed to the legislation, and the minister may decide what to include.
Senator Massicotte: Mr. Miller, you made a good summary. I tried to do the same thing in my office to obtain a summary of what other provinces and other countries are doing to determine the level of discretion. You note there are four or five provinces that have wording on funding that effectively allows the government not to give credits retroactively to the expenses for a production.
There are a couple significant arguments in this debate. First is the issue of certainty. The words are vague and the minister could decide after the fact — maybe a year afterwards — that you do not get your tax credit. The poor producer relied upon it to get his financing and the bank used it as collateral to provide financing. The financial issue is obvious to all of us
Second is the moral argument about how far you go. In the four or five provinces that have this funny wording, irrespective of the fact it has not been executed, I presume producers like you get financing based on the provincial tax credit. Alberta does not have any provincial tax credit, if I am correct.
Mr. Miller: To address the Alberta situation, that is why I used the qualifier ``or its equivalent'' in my presentation. Alberta has a program in the form of a grant. It works similarly to the tax credits with some differences. One of them is that the rebate is on all expenses expended on a production.
Senator Massicotte: Is it a percentage of costs where the government has no discretion regarding the application whether they like it or not?
Mr. Miller: As I read the regulations, there is a clause where the government does have that discretion. To my knowledge, it has never been applied. It has never been applied to any of my projects.
Senator Massicotte: Do you get financing of that tax credit when you arrange for your film productions?
Mr. Miller: The banks typically will finance most of the tax credits. They like to leave about 10 per cent in case your estimates vary. At one time, because the Alberta incentive was a grant and not a tax credit, they were providing interim financing of 100 per cent. Therefore, there was even higher confidence.
Senator Massicotte: Are you getting financing of the federal and provincial tax credit or equivalency?
Mr. Miller: Yes.
Senator Massicotte: In spite of that wording, you are still getting the financing.
Mr. Miller: That wording has varied and it is not on the application form. It is nowhere in the general criteria. You have to drill down to find it. When I looked and found it there, I thought this might be where this clause bubbled up from, because the wording was similar in those provinces.
Senator Massicotte: I have been involved in financing for much of my life and I know that if one province ever used that clause to withdraw funding, you would have major problems getting financing from that time forward. These hearings may have caused the banks to be alerted to this risk, and no one likes risk.
Mr. Miller: That is exactly right. It will take only one province or the federal government to invoke it once and that will be it.
Senator Harb: Obviously, you would prefer to be working rather than stuck here in a committee trying to convince a bunch of politicians on what you believe is the right thing to do. You make your point extremely well.
I want to ask a question about the public policy clauses that you mentioned in the provinces. You indicate that they have rarely or never been invoked. Is it your view that if such a clause were introduced into federal legislation, such as is proposed now, that might create a situation where provinces would start to invoke their public policy clauses?
Mr. Miller: I do not think so. I think the opposite would happen. If the government removes this clause from the bill, we would have a good reason to go back to the provinces and ask them to do the same.
History has shown that sometimes a federal government takes the lead on things that are important for all Canadians and regions. Hopefully, we will line up behind them.
Mr. Cox: I believe that if the federal government enacts Bill C-10 as presented and if it were invoked on even one project, it would legitimize every province to invoke their own wording. Therefore, I think that is a significant danger.
Senator Harb: My second question deals with the tax credit. You are all in the film industry. Obviously, if you are not making money, you will not be in it. A good businessperson would make a business case that if you are not making a profit, you will get out.
The bottom line is a question of balancing. Compare the tax credit you receive from the federal government once your film is produced against the tax that the government collects on your profits plus the tax collected on the employment created. Do you think there is sufficient benefit to the government to continue with the tax credit?
Mr. Cox: I have not done the specific research with respect to the federal credit. However, the organization that Mr. Miller and I sit on the board of has done specific research based on the return of investment provincially, as has the Alberta government.
The direct return on investment for the province, with no multipliers, is positive. It is somewhere between 105 per cent and 110 per cent return on the investment. The province receives that money before they ever have to expend what they promised at the beginning of production. As you know, tax credits are not made until a year to 18 months after production. By that time, the production has taken place, money has been spent and taxes have been paid.
In effect, the government has been repaid on its investment prior to ever having made it. At least on a provincial level, it is hugely beneficial without taking into account any multipliers, any creative benefit, any tourist benefit, or any of the other benefits, which are significant. I have to believe that the same math can be applied to the federal credits and to the benefits received at a federal level.
Senator Harb: My final question is this: Are you of the view that this clause, if it goes through, will become the movie-killer clause that will shut the industry down or have it moving south of the border?
Mr. Cox: Having had blunt discussions with bankers and private financiers, I think that is safe to say. They are risk- averse and only take the tax credits as collateral on the basis that they are automatic. Once the tax credits become subjective, they are no longer valuable collateral. Quite frankly, they are such a significant part of our financing that we would not be able to offer significant enough collateral to be able to interim finance. Therefore, yes, it is effectively a killer.
Senator Tkachuk: I want to reassure some of the members that I, as a second-generation Canadian whose grandparents came from a totalitarian state, grew up in the riding of John Diefenbaker and became a strong supporter of the present government. I do not need any lessons in freedom of speech. This is not a freedom of speech issue. We have a problem in the bill. We have had problems on RRSPs, but that does not mean there was a conspiracy against the banks on RRSPs. These were problems that existed in this huge omnibus bill.
This piece of proposed legislation has been around a long time. The industry received a discussion paper in 2001. I brought this up before and I will bring it up again. The industry was mailed a discussion paper on the contrary-to- public-policy framework that the government was planning to initiate. Then it was in the bill in 2006 and 2007, and it was passed unanimously in the House. It was not that the industry was unaware of it. It was not that the banks were unaware of it, unless everyone was blind to all of these papers running around. In the House they all say they were unaware of it until the industry finally figured it out after seven years and started saying, ``We have a problem here.'' Now, they want to change their minds, and we want to help them change their minds. We want this place to take a positive point of view. At the beginning of the meeting today we had the discussion about moving on and trying to get some amendments to deal with this issue.
One of you had said earlier that you were a member of one of these industry associations. This discussion paper was sent in 2001 to 33 industry stakeholders explaining the contrary-to-public-policy issue. In 2006 the bill received all- party support as Bill C-33, and this particular piece was in it. I find it impossible to believe that no one picked up on it and addressed it then.
Mr. Donovan: What happened in between 2001 and 2008 is interesting — deadening silence. Nothing happened.
Senator Tkachuk: It was silence by the industry that was asked to respond. Only some of them responded.
Mr. Donovan: That is right. There was a discussion. There was an expectation of much more discussion. There is a quality of these things, at least in my experience. As you get closer to the day in which it will appear in legislation, the discussion becomes much more public. That did not happen here. It went silent. That could be accident, and it most likely is.
Senator Tkachuk: I am sure it is.
Mr. Donovan: There is a risk that that is not what it was and that there was a degree of intentionality. That is what alarms me and others.
Senator Tkachuk: There is no question that they wanted to have a public policy protection of some kind. The problem is the interpretation of that. You claim that it should be simply the Criminal Code. I have many concerns about that because risqué movies that might cross the line a bit are being made with taxpayers' money. It is possible that governments may pass more laws under the Criminal Codes. It is easy to pass laws to get rid of something you do not like. It is more important that it is exposed to the public. In that way, when a minister makes a decision, he or she has 364 other members of Parliament screaming and yelling that it is the wrong decision. To me, that affords greater protection than the Criminal Code. However, if you want the Criminal Code, we will have a look at it and maybe some other matters. I would be concerned about that if I were you.
Mr. Cox: I am far less concerned about the scrutiny that must be undertaken to change the Criminal Code of Canada than I am about the discretionary powers of a single minister or a ministerial committee. I do not view this as being problematic and, in fact, I view it to be absolutely the appropriate platform for any discussion of publicly sanctioned and understood censorship.
Senator Tkachuk: I disagree with you, because there is a lot of public scrutiny about someone who left a piece of paper at a girlfriend's house. Parliament is very effective. I am sure that if a minister or a committee were acting inappropriately, it would be a huge public problem, mostly for members of the same party who would be appalled by censorship.
Mr. Cox: Unfortunately, in the event that this were to go through and the minister of the day, whoever that might be, used their discretionary powers to kill a project, it might then be too late to save the industry as well as the project. Therefore, the debate would have been too late.
Senator Tkachuk: For me, your strongest argument to date is the business argument. We do not want to hurt the industry. The industry has been successful even though subsidized. Nonetheless, everyone here wants to solve the business problem to ensure that you get the funding. I know how difficult it would be to have this under threat.
Mr. Cox: Predictability.
Senator Tkachuk: Predictability is everything.
Mr. Cox: Consistency is everything.
Senator Tkachuk: I agree with you there, and we are trying to find a way out.
Mr. Cox: The simple, additional language proposed by the CFTPA answers that quite simply and eloquently.
Senator Eyton: I will repeat what Senator Tkachuk said that this is not about censorship. From the evidence we have heard in our hearings, we can say that there is no hidden agenda or purpose. It is by happenstance. It has been on the books and on the way for seven or eight years. There is no change in government attitude. Everyone is proud of the work that your industry does and wants it to succeed in every possible way.
The question we are talking about is whether there should be criteria for what amounts to taxpayer investment in film from time to time. We have heard general agreement that there should be criteria. The question is then is what are they. What standard should we apply?
We heard from Paul Gross yesterday that the first filter, as he referred to it, is directors and producers — the industry itself — looking at a product to determine whether the project should go forward. The second criterion we heard about was the banks, whereby one individual or a committee or a panel at a bank looks at the submitted project or script and says yes or no. Those are hidden criteria; we do not quite know what they are. As well, the industry applies criteria to remain in compliance with the Criminal Code, which will rely on the decision of an individual or a panel. We heard that Telefilm Canada has individuals or a panel with their criteria.
Many people opine on any particular film project. The question in follow-up to Senator Tkachuk is this: Do you not think it is possible that the taxpayers could also have a set of criteria? Is it not possible that you could create a set of criteria somewhat higher than the Criminal Code standard, which after all is really the lowest possible standard? The Criminal Code is the standard where if you do it and you infringe, you could go to jail. I suspect that most Canadians would say they are not sure that the Criminal Code standard is appropriate for investing their money.
The minister has already committed that she would be prepared to suspend the offending provision, the one we are talking about now, for 12 months and to work with the industry to establish some criteria that would be different from the Criminal Code. To my way of thinking, that seems to be at least a noble effort and the right approach. Can you comment on that, please?
Mr. Miller: I would say a couple of things quickly, because you have said things as premises for your statements. The banks do not read the scripts, although they might now if this were invoked. They look at their security — that is it. They do not make a judgment on content. They look at their security — that is all that is important to them — and their risk. Therefore, that does not apply, in my view.
Regarding the agencies that you mentioned, let us take Telefilm, for instance; they are a cultural investor. They look at a number of things. Obviously, it is important that the content they look at is Canadian content. That is what is important and that is how they feel that the taxpayer should be getting some value for their dollars. They also look at means and ways to make sure that those projects that move forward have the best chance to be exposed to the Canadian public, whether through television or film distribution.
Senator Eyton: We have heard testimony that they also looked at the script.
Mr. Miller: Of course, because they are a cultural investor; as an investor, they invest equity. As I mentioned in my remarks, they would scrutinize material based on their hope for recoupment. They are looking at the commercial viability and at the artistic quality of a project.
I just wanted to address those two points.
Senator Eyton: My base point was there are lots of criteria out there, so why should the taxpayers not have one, too.
Mr. Miller: I think the taxpayers do; that is my point.
Mr. Donovan: I agree that those who contribute to the films should have an understanding of what those boundaries are. As I stated earlier, I do not think anyone is against there being boundaries. I think the vast majority of Canadians expect there to be boundaries. Now we need to arrive at a process for those boundaries — obviously not this particular forum.
Something should have started three or four years ago — in 2004, and 2005 — and become intense just before this legislation. That is what should have happened, but it did not. Now we need to go back and review what those boundaries are.
They need to be precise. They need to not be arbitrary, because arbitrary will run the risk of a deeply unpopular film — one that goes against the grain of Canada at that point in time but is vital to this issue of freedom — being simply censored.
For example, there is a columnist, according to a recent headline in Quebec, who made scandalous remarks about the Governor General. Most Canadians, perhaps all Canadians, are offended by those remarks; yet if a film were made and sought credits where the guidelines were not clear that making unpopular remarks still qualify, the minister at the time might come under unbearable pressure from the whole population to say this is deeply offensive to public policy. Even though I disagree with those remarks to the bottom of my soul, I will defend with my life the right to make those remarks, provided they are within the boundaries of the Criminal Code.
If you cannot make a film, then the film will not get made.
Senator Eyton: I am trying to find some standard a little higher than the Criminal Code.
Mr. Cox: I think it is the discretionary power that is inherent in the process, as set out currently in Bill C-10 in that one clause, that alarms us. Certainly I am sorry not to have seen it years ago and raised the cry then. We go back to the Criminal Code because it seems to be an established and more objective way of addressing this.
Whether or not the offer is accepted or the process is undertaken to create a dialogue over the next year in order to establish criteria beyond the Criminal Code, if those criteria and those guidelines are then able to be subjectively interpreted by an individual or a small committee, that, to me, is fraught with all kinds of problems that we do not need to endure in our modern society. Therefore, I think we grasp on to the Criminal Code. There certainly could be other criteria, or the Criminal Code could be strengthened, but in our view it does not really need to be.
Senator Eyton: I take your base point that you need and you really deserve certainty and precision as you go forward. The argument then is what criteria should be used and how do we establish them.
Senator Tkachuk: Without the public interest provision, do you think that groups that would disagree with a particular film would take a film to the Human Rights Commission, much like Mark Steyn and Ezra Levant have been taken? I have not heard much from the film community about that particular problem. Nonetheless, do you think that is a possibility?
Mr. Donovan: There are a number of mechanisms in Canada for challenging and bringing these subjects that are deeply felt by Canadians to the public arena and addressing them — the courts, the tribunals and things like that. Canadians support this, in my opinion — at least the Canadians I talk to. However, the arbitrariness here is counter to what Canadians want. I think Canadians do not want government to be in a position to act arbitrarily, and we need guidelines here.
What I am most upset about is the lack of process here. There needed to be a process and there was not. To repeat one of my earlier comments, there is a conversation in this country that this particular government has a hidden agenda, and I saw this as, at least, a possibility here. That is my view; that is my opinion.
Senator Tkachuk: That is your conversation and your opinion. There is no question about that. I do not know about it either. If you could let me know what it is, I would be happy to hear it.
Senator Banks: I am so reassured to learn, again, of Senator Tkachuk's avid support for the creative arts in this country, and I hope that reflects his government as well. I am doubly reassured to learn that he will hit the barricades in the threat of censorship, and I know you would, senator.
Senator Tkachuk: I definitely am concerned about Ezra Levant and Mark Steyn and the Human Rights Commission. I am waiting to hear from others who would be just as concerned about freedom of speech.
Senator Banks: They have not shown up in a tax bill yet.
Senator Tkachuk: If that is what it takes in your world.
Senator Banks: I would like to ask my first question of Mr. Cox and Mr. Miller. The provincial tax credits to which you have referred are production tax credits, and I presume that they are labour based, are they?
Mr. Cox: With the exception of Alberta, where they are all Alberta expenditures.
Senator Banks: That is even broader, but in the other provinces that have similar provisions having respect to public policy, they are objective criteria — accountants determine what the tax credit is. However, all of the provinces you named have similar provisions as the one proposed here. Some of them are even more draconian than the provisions in the present bill. They have not yet caused a problem.
Will you please tell us exactly what the problem is? It has not been a problem yet. Why is it a problem?
Mr. Miller: I asked myself that question when I went through this information. I thought that here is a law or rule that has never been applied, and that begs the question, if that is the case, why.
Senator Banks: It is there in those provinces to which you referred. Is it possible that all we are hearing here is ``the sky is falling, the sky is falling,'' and the sky is not really falling?
Mr. Miller: The sky has not fallen yet. As we said earlier, were this provision ever to be invoked or were there a threat of its being invoked, we would see a real problem with our issues of certainty and predictability with regard to interim financing for our productions.
As I said, the moment I read that I felt that this hearing on this bill is a good thing in the sense that it has raised our awareness of something that needs to be dealt with both provincially and federally.
Mr. Donovan: There is a great deal of competition amongst the provinces. If one province invoked this, filmmakers in that province would be unable to obtain bank financing. Therefore, the risks are way too high. The film industry would be dead, particularly in the smaller provinces.
The Chair: You had better look at the Quebec one read out to us yesterday. It goes farther than the federal one. It says ``anything that is against government policy.`
Mr. Cox: Historically, I think there are many lessons to be learned about whether to remain silent until the sky falls or whether to be proactive and find ways to prop the sky up. I truly believe that the provinces that have these credits are, if the current people in power are even aware of the language, choosing to ignore it in favour of growing their provincial industries. However, if the federal government were to take the lead with respect to this kind of language, it would certainly open the door to its being invoked in any of the provinces, certainly ours.
Senator Banks: All of your colleagues who appeared before us have said in answer to a similar question about a committee that it would be virtually impossible for a committee, even one comprised entirely of people from the film industry, to come up with a completely objective set of criteria that would do what the minister has said she wants to do, which is to raise, as Senator Eyton has said, the bar above the Criminal Code.
However, you are more concerned with the process and the order in which these things happen. Putting aside the question of the process, you seem to think that such a committee could come up with objective criteria that could work. Do you think that?
Mr. Donovan: My thoughts, which may not be the industry average, are that there are many acts of Parliament that have an ``et cetera clause'' — whatever the minister decides. It is not uncommon. At the provincial level, it is almost universal. At the federal level, it is general.
At some level, the government is entitled to throw an et cetera clause in here. However, this is an area of great danger. Those are dangerous words. In my personal experience, when new policies come into place in the government, there is a prolonged discussion.
There was a general discussion in the late 1990s around this. Nobody saw it as in any way alarming. At the odd meetings I heard or read about, you could see that eventually it would come to a conclusion. One expected guidelines. Then, all of a sudden, it went silent, so it seemed to be of no interest to government.
Then, all of a sudden, it appeared on a third reading. When I first read that, I thought that a terrible mistake had been made and that the government would immediately acknowledge it and withdraw it and indicate that it did not understand the danger.
Then I hear about various lobbies that had secretly been lobbying for this for the last couple of years. Something has gone wrong here. It is an excellent thing that this committee has decided to pay attention to it, and I really appreciate being heard on it.
That is what I want to emphasize. The government is entitled to come up with boundaries and rules. Our industry group has advocated the Criminal Code. It is an extreme one. It is possible there are other ones.
Let us go back to the beginning and start again. Let us not take the word of a government that says, ``Trust us. In a year we will come up with guidelines, but let us have the draconian measure now.'' No.
Senator Moore: Gentlemen, thank you all for being here. I will be brief. I have one question to ask and I have put it to other witnesses who have appeared before us. I would like a response from you in connection with the regions you represent.
This bill says the minister ``shall'' issue guidelines. In another clause, it says, ``For greater certainty, these guidelines are not statutory instruments as defined in the Statutory Instruments Act.'' That means those guidelines are not subject to review by the Standing Joint Committee for the Scrutiny of Regulations, made up of members of the House of Commons and the Senate. It means that the guidelines could be changed, deleted, amended or added to without knowledge of the public. I would like to know how you feel about that.
Mr. Cox: It is a horrifying thought, quite frankly.
Senator Moore: You were not aware that this was in here.
Mr. Cox: I heard you ask it of the two previous witnesses. It was shocking to hear. It certainly speaks to your statement that there would be very public debate if anything were to be enacted.
It is clear that allows a minister or ministerial committee to enact something without any debate, without anyone's former knowledge or input. That is an astonishing and very serious thing to be contemplating. It is yet again reason not to go forward with this bill as presented.
Senator Moore: Would anyone else like to respond?
Just a moment, please. I have asked for a response from the different regions. You had your turn and we have to be in the Senate at 1:30 p.m. When the gentlemen are finished, we can go. Thank you.
Mr. Miller: I will be very brief. In our productions, when we deal with government, we deal with the bureaucracy. I do not know your experience, but bureaucracy tends to be cautious. I would be concerned that, if there were a set of regulations, they would always err on the side of caution and that would have a huge impact on the selection of content.
Mr. Donovan: I agree with my colleagues.
Senator Goldstein: Telefilm Canada has a variety of criteria that deal with content. In fact, I understand that Telefilm reviews content. Has that not been a problem for you in the past? If it has not been, as I understand it has not been, why would you say that this will be a problem?
Mr. Donovan: Let me speak to that. In my remarks, I made a distinction between direct and indirect investment by government. Canada invented the indirect approach. It is copied now throughout the world because it works; it is reliable, and you can bank it.
It is a tragedy that Canada is potentially about to undo this without apparent awareness. That is why, again, we have taken this so seriously. However, there is an acceptance everywhere that, for direct investment, there needs to be a set of clear, subjective criteria.
Mr. Cox: We expect any equity investor to have a say in the creative content, given that they hope to recoup through its exploitation.
Senator Goldstein: You have given an answer. Thank you.
Senator Fox: All my questions have been answered. I will not be putting a real question to you. I want to thank you for coming. It has been an illuminating presentation. I thought we had heard it all, but the angle you have taken and some of the new information you have brought about the provincial tax credits and this distinction between equity investment and the other types of investment has been useful to the committee. I thank you very much.
The Chair: I would like to thank you very much. You have added new dimensions.
We did agree at the beginning of this morning's session that Senator Eyton wanted to speak. Senator Eyton, did you have something you wanted to say?
Senator Eyton: We started on this yesterday. I make the observation that we have heard a tremendous amount of testimony, particularly on the contrary-to-public-policy provisions. I suspect that we all have our opinions, and I think we are coming to a place now where we have learned as much —
The Chair: These gentlemen are dismissed. We are trying to have a discussion here.
Senator Tkachuk: If they wish to stay and listen, it is an open meeting.
The Chair: We are all conscious that the Senate bells are ringing. You raised a point earlier, and Senator Eyton was speaking to it. He is the sponsor of the bill.
Senator Eyton: I am dealing particularly with the contrary-to-public-policy provisions. It seems to me that we have heard all the evidence we need to hear to understand and to take our individual positions, and going beyond that and hearing more and more about that particular provision is really a waste of our time, when our time is limited and we should be getting on. I say it as well in the context where the Liberal part of this committee are a clear majority and clearly have some strong views and hopefully some suggestions on amendments they might propose. In the interest of getting on with it, I would ask all the committee members to consider bringing it to a head. Senator Tkachuk talked about clause-by-clause consideration, which I guess is premature because we are still hearing witnesses dealing with other parts of this omnibus bill, but I would like to put behind us and try to eliminate other witnesses appearing on the issue of contrary to public policy because it has been so thoroughly canvassed.
Senator Goldstein: I agree. It seems to me, by and large, that opinions have been formed. It appears that the bulk of the industry, with which I think we all agree, would want to see the sole criterion be Criminal Code.
The Chair: If anything.
Senator Goldstein: If anything, and I am certainly prepared, if you agree, to try my hand at an amendment, but it is premature to pass it because we have to deal with the entire bill.
Senator Tkachuk: We would like to be able to see it so that we could have time to study it and not just have an amendment popped out during clause-by-clause consideration.
Senator Goldstein: I am speaking only for myself, because we certainly have not discussed it.
Senator Moore: Chair, it seems to me that what is taking place here is what should be taking place in the steering committee. The chamber sits at 1:30. I have to speak, so I have to go now. We could meet next week in the steering committee and discuss this.
Senator Eyton: I am not on the steering committee, and I wanted to table the point. It seems to me we should try to deal with it, whether in the steering committee or the committee as a whole, but the steering committee is accountable to this committee anyway.
Senator Tkachuk: That is right, it is.
Senator Fox: What about the other witnesses who were supposed to appear before us?
Senator Goldstein: The bulk of the rest of the hearing, except for one Quebec union, all deals with other aspects, the tax aspects of the bill. We have now heard a number of people who have dealt with new tax aspects, including what we heard yesterday, and we cannot terminate without giving the Department of Finance a chance to respond to that.
The Chair: Senator Goldstein has made his point. I asked Senator Massicotte to stay. He will make a statement.
Senator Massicotte: I think we have all heard enough to develop an opinion, but I do acknowledge that there are politics going on. That is the nature of our institution, and personally I would say unfortunately so, because I think we should be much more non-partisan than we too often are, in my opinion. I think that is what is going on, which is maybe okay. How much longer do we need? We cannot refuse people who have accepted an invitation, but can we agree how much longer we will have the discussion regarding these three or four words? Is it one week or two weeks? What are we anticipating?
Senator Goldstein: We have witnesses for the rest of the two weeks, two additional weeks, with one spot that is still available and not yet filled, if my memory serves me. Is that now filled? We have to find one hour for the ministry to respond to the tax issues.
Senator Massicotte: We need to discuss the tax issue and get on with it, but the purpose of this discussion is those three or four words on the film industry, so we have another two or three witnesses on the film industry.
The Chair: We do not need to have it if this committee decides.
Senator Goldstein: Next Wednesday, for the first hour, starting at four o'clock, we have tax people and only tax people, as well as the second hour; so Wednesday is filled with tax. Thursday is all mayors, and we have invited them, so we cannot disinvite them. That leaves only the week of June 9, and on that Wednesday we have film people.
Senator Massicotte: We are here until June 20.
Senator Goldstein: Who knows? Thursday we have tax people. Senator Massicotte, I agree with Senator Eyton. We have heard enough on the film industry to be able to form an opinion, but we cannot eliminate the people we have invited. I think we should wrap it up in the two weeks we know we have for sure.
Senator Massicotte: As the deputy chair and representing the opinion that wants amendments, are you in a position to recommend those amendments before we leave for the summer?
Senator Goldstein: I would like to try to do that.
Senator Massicotte: In all respects, tax and whatever else?
Senator Goldstein: I have to hear from the ministry. I have two areas where we have had an opinion from people who are involved, without the opportunity for the minister to answer, so I cannot draft anything now unless I hear from the minister and see what their position is. I think we can deal with everything, including the tax issues, the moment the minister testifies. I do not think we need any more witnesses.
Senator Massicotte: You want to hear the Minister of Finance?
Senator Goldstein: That makes no sense. It could be the Department of Finance.
Senator Massicotte: How about the film issue? Do you want the minister to come back?
Senator Goldstein: No. Do we want to come back on the film issue?
Senator Massicotte: Could we see your amendments before we leave?
Senator Goldstein: I hope so.
The Chair: When you say his amendments, we anticipate, and that is what Senator Tkachuk and Senator Eyton were —
Senator Goldstein: They said they want to see something. I will try.
Senator Massicotte: If anyone is to propose something, we need to know what they are proposing.
Senator Tkachuk: If there is nothing being proposed, why are we having all these witnesses come?
Senator Goldstein: You heard me. I will have to find time.
The Chair: Too many people are talking at once.
Senator Massicotte: Thank you, chair. I am happy we got some parameters for this discussion.
The Chair: Would anyone else like to say anything?
Senator Banks: I understand the desire for alacrity, but I point out that at the last meeting and at this one, we heard new wrinkles on both questions.
The Chair: Are there any other comments? My point here, for what it is worth as the last word, is that this evidence that we have heard is very compelling. There has been a lot of evidence, and it is very clear that the Liberals, with the majority, can have whatever they want. The amendments will pass, as they will in the chamber. If you want to deal with the film issue in a timely way, I would get on with it. That would be my commentary, and that is why Senator Tkachuk mentioned clause-by-clause consideration. We do not need to hear any more witnesses on anything. You know that. We do not.
The committee adjourned.