Proceedings of the Standing Senate Committee on
National Finance
Issue No. 96 - Evidence - May 28, 2019 (morning meeting)
OTTAWA, Tuesday, May 28, 2019
The Standing Senate Committee on National Finance met this day, at 9:32 a.m., to study the subject matter of all of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures (support to Canadian journalism — Part 1(f)).
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, before we proceed with our scheduled study, I would like to let everyone know that, as of May 17, 2019, the Honourable Senator Jaffer is no longer a member of the committee.
Therefore, the deputy chair position she held is vacant. As chair of the Standing Senate Committee on National Finance, I am ready to receive nominations for the position of deputy chair of the Standing Senate Committee on National Finance.
[English]
Senator Eaton: I would like to nominate Senator Joe Day, who is a former chairman of this committee and did a terrific job. I think it would be great to have him back as deputy chair.
[Translation]
The Chair: Senator Eaton has moved that Senator Day be elected deputy chair of the Standing Senate Committee on National Finance.
Are there any further motions?
The Honourable Senator Eaton has moved that the Honourable Senator Day be elected the new deputy chair of the Standing Senate Committee on National Finance.
[English]
Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Chair: It is agreed.
Welcome, Senator Day, to your new responsibilities. With your experience, there’s no doubt that you will be a great addition to this committee.
Senator Day: Mr. Chairman, I’ll do my best to catch up to where you are now. Thank you all for the confidence you’ve shown in me.
The Chair: Thank you, Senator Day.
My name is Percy Mockler, senator from New Brunswick and chair of this committee.
[Translation]
I would like to welcome all those who are here today, as well as viewers across the country who are watching on television or online.
[English]
Also as a reminder to those watching the committee, hearings are open to the public and also available online at sencanada.ca.
I would now like to ask senators to introduce themselves.
Senator Klyne: Good morning. Marty Klyne, Saskatchewan.
Senator Duncan: Good morning. Pat Duncan, Yukon.
[Translation]
Senator Massicotte: I am Senator Paul Massicotte from the beautiful province of Quebec.
[English]
Senator M. Deacon: Marty Deacon, Ontario.
Senator Boehm: Peter Boehm, Ontario.
[Translation]
Senator Forest-Niesing: I am Josée Forest-Niesing from the other beautiful province, Ontario.
Senator Day: I am Joseph Day from the third beautiful province, New Brunswick.
[English]
Senator Eaton: Nicky Eaton from Ontario — the best.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
The Chair: I would also like to recognize the clerk of the committee, Gaëtane Lemay, and our two analysts, Alex Smith and Shaowei Pu, who team up to support the work of the committee.
[English]
Honourable senators and members of the viewing public, today we continue our consideration of the subject matter of Bill C-97, which was referred to the committee by the Senate of Canada on May 2, 2019. Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures is what we call a BIA, budget implementation act. This type of legislation is squarely in line with the National Finance Committee’s Order of Reference from the Senate of Canada.
Two weeks ago, we held three meetings to go over the entire bill with government officials, mainly from the Department of Finance. This morning, honourable senators, we will consider only Part 1(f) as listed in the summary of Bill C-97, “providing support for Canadian journalism;”
[Translation]
We will be hearing from two panels on the subject.
[English]
For the first part, we welcome from News Media Canada, Mr. John Hinds, President and Chief Executive Officer.
[Translation]
We also have with us Linda Lauzon, Executive Director of the Association de la presse francophone.
[English]
Finally, we welcome a former journalist and senior news executive, Mr. John Miller, Emeritus Professor, Ryerson University.
Thank you, witnesses, for accepting our invitation to share your opinions and answer questions from senators. I have been informed by the clerk that the first presenter will be Mr. Hinds, to be followed by Ms. Lauzon and Mr. Miller, and then we will have questions from senators.
Mr. Hinds, you have the floor.
John Hinds, President and Chief Executive Officer, News Media Canada: Good morning. News Media Canada represents over 700 daily and community newspapers across the country. I am here on behalf of our members to address measures in the 2019 federal budget aimed at supporting Canadian journalism.
The budget measures are very important to daily and community newspapers. They will help preserve newsrooms while we develop new business models. It is important to remember that people across the country still depend on newspapers. We do not have a readership problem; we have a revenue problem.
News Media Canada recently released a survey that found that 88 per cent of Canadians read newspapers in some form every week. This is a slight increase from previous years.
The Chair: Mr. Hinds, would you please slow down for our interpreters?
Mr. Hinds: Okay.
The Chair: Still within your five minutes.
Mr. Hinds: Unfortunately, the business issues remain challenging. The day after we released the study, employees at The Globe and Mail learned that the newspaper needs to reduce its labour costs by $10 million annually. The same day, Torstar released financial results that noted the company cut 32 positions during the first quarter of the year.
But it is in the smaller communities where we have really seen the impact of the disruption to the industry. Over the past two years, we have lost 150 newspapers in Canada. That is predominantly in small communities. For example, 20 per cent of the communities in Saskatchewan have closed or merged in the past two years. Those are communities that no longer have a voice.
Research has shown that losing a newspaper has a direct impact on the strength and vitality of those communities socially, economically and politically. Recently, research from the U.S. shows that when local newsrooms close, people don’t run for office, public expenditure rises and economic activity falls.
Canadian newspapers, large and small, are engaged in transforming their business models so that they continue to fulfill the key role that a free press must play in a healthy democracy.
However, these business models need time to develop. They include new features such as paid digital subscriptions and charitable donations. During the transition, we are finding it increasingly difficult to preserve our capacity to gather the news and information that our communities depend on.
The 25 per cent refundable labour tax credit for newsroom employees will allow newspapers to continue to cover their communities and actually increase their coverage. For example, the Winnipeg Free Press will hire 15 to 20 additional reporters and restore coverage of areas such as the public education system. The personal income tax credit for digital subscriptions will help boost the future base of our business — a paying digital audience. The possibility of some journalistic organizations receiving charitable donations that Canadians may claim as tax deductions establishes yet another source of support for news organizations that was unavailable in the past.
There has been the suggestion that the result of these budget measures will make newspapers beholden to the federal government, not independent, and more likely to give favourable coverage. If the current government had this plan when they announced the program last fall, I would have to say it has spectacularly failed.
I think we also have to take a step back and recognize that this is not actually about Ottawa. While we do have a strong and independent, though smaller, press gallery here, 99 per cent of the journalists in Canada are not on Parliament Hill and are not covering federal issues. They are in their communities from coast to coast to coast, writing about issues important to that local community. As legislators, I hope you will see this as an investment in those communities. While Canadians have the benefit of the press gallery here in Ottawa, we need to recognize that currently only three of our provincial legislatures have one. Many of our town councils and courthouses do not operate under the scrutiny and accountability that comes with media coverage.
I think we also have to recognize that this is not a new role for the federal government. Direct support for the newspaper industry predates Confederation and is still in place through the Canada Periodical Fund, which provides funding to over 300 newspapers. We certainly see government support for news in local radio and TV, as well as magazines and, of course, the public broadcaster.
Indeed, I have to commend this government, or any government, that would offer this kind of assistance to journalists. The role of any truly independent press is to expose and criticize. Any legitimate government helping the press is doing so in the interests of democracy, not in the hopes of getting good headlines.
The process outlined in the budget will ensure the program is independent and will certainly be under scrutiny, as it should be. We are encouraged that the federal government has moved to set up an independent panel of experts to assist in implementing the measures, including eligibility criteria. We cannot hire anyone or count on new funding until the panel has reported and the program is operating.
Many of our members have raised specific points about the budget measures and are anxious to express their views to the panel.
In conclusion, these budgets measures are welcomed by the daily and community newspapers that I am representing today. I look forward to your questions.
[Translation]
Linda Lauzon, Executive Director, Association de la presse francophone: Mr. Chair and honourable senators, good morning. As a representative of the Association de la presse francophone, or APF, I am here on behalf of the Consortium des médias communautaires de langues officielles, which serves francophone and anglophone minority communities across Canada.
Although the Budget 2019 measures announced by the government to support Canadian journalism do not help the members of the consortium of official language community media, the newspapers who belong to the APF and the Quebec Community Newspapers Association, or QCNA, were eagerly awaiting the tabling of the budget. Since 2016, the APF and QCNA have been making their expectations and, above all, needs clear to government, so that the newspapers serving official language minority communities can continue to protect democracy and serve the public interest within their respective communities.
One of the measures we recommended was a labour tax credit, so we were relieved to find out that, in its fall 2018 economic statement, the government committed to creating such a measure. Unfortunately, when Budget 2019 was tabled in March, some of the proposed measures to support Canadian journalism confirmed that, once again, the government had decided not to take account of Canada’s most vulnerable newspapers — those that serve official language minority communities across the country’s 10 provinces and three territories.
What’s more, once again, the government seems to have taken a one-size-fits-all approach, developing measures with no regard for its responsibilities under the Official Languages Act. It goes without saying that some of the criteria used to define an eligible newsroom employee are very detrimental to the publications we represent.
Government decisions over the past decade — especially, the federal government’s gradual withdrawal of advertising from not just our, but all, media publications — have forced the bulk of our newspapers to adopt an entirely different business and service delivery model. They have had to make staffing cuts and rely on external collaborators.
The government’s definition of an eligible newsroom employee includes the following criteria:
works, on average, a minimum of 26 hours per week throughout the portion of the taxation year…;
at any time in the taxation year, has been, or is reasonably expected to be, employed by the organization for a minimum period of 40 consecutive weeks….
These two requirements automatically rule out more than 80 per cent of our newspapers. That is a serious concern. I will give you a real-life example, without naming names. This is the typical staffing situation of a publication serving an official language minority community.
It employs a full-time editor who works 46 weeks, but because the editor takes part of the summer off, they aren’t 46 consecutive weeks in the year. It employs a full-time journalist, who works from January to June, takes the summer off and returns to work in the fall. The journalist doesn’t meet the consecutive week requirement either. Then, supporting the editor and journalist is a graphic designer, who works 20 hours a week. Therefore, none of the publication’s staff meet the eligibility criteria, as set out in the budget measure. That is a very serious concern.
According to those two criteria and several other subcriteria, no official language community publication would currently qualify for the tax credit.
What our members also find very troubling about the proposed measures is that what the government seems to be giving with one hand, it is taking away with the other. It is that unfair treatment that we are here to denounce.
The criteria clearly state that an organization does not qualify for the tax credit if it is already receiving an amount from the Aid to Publishers component of the Canada Periodical Fund, administered by the Department of Canadian Heritage. It is worth noting that the small publications serving official language minority communities are already competing with Canada’s major papers and magazines, and receive a minuscule share of program funding. The amounts they receive merely help them stay afloat.
As a result, a number of our publications are disqualified, not once, but twice because of the criteria. However, Part VII of the Official Languages Act requires federal institutions to establish program and service criteria that take account of the needs and circumstances of official language minority communities. Furthermore, the act requires that key community stakeholders be consulted before the criteria are set, which the government didn’t do, barely did or is doing retroactively.
History is repeating itself, and the government doesn’t seem to be in the habit of following the appropriate steps when it puts programs in place. Media organizations are crucial to the development and vitality of official language minority communities, especially community media organizations, which are often the only place minority language populations can turn for news and information in their language anywhere in the province or territory.
The Standing Committee on Canadian Heritage explained that eloquently in its June 2017 report. The Office of the Commissioner of Official Languages came to similar findings in its June 2017 report. We would be glad to forward the reports to the committee if it would be helpful.
At this stage in the game, the status quo is not an option. It would result in official language minority communities being further underserved, while keeping some of our publications so vulnerable that they may not make it.
The APF and QCNA were each invited to submit the name of a candidate to sit on the independent panel of experts tasked with examining the eligibility criteria over the coming months. The invitation came as quite a relief.
As always, we are ready and willing to work with the government to find win-win solutions, to help it fulfill its obligations under Part VII of the Official Languages Act so that official language community media can take full advantage of the positive measures to support journalism.
In the interim, it is paramount that the measures to support local journalism set out in Bill C-97 provide real support to publications that serve official language minority communities, in accordance with applicable legislation as well as Part VII of the Official Languages Act.
Mr. Chair and members of the committee, thank you for the opportunity to share our concerns.
[English]
John Miller, Emeritus Professor, Ryerson University, as an individual: Thank you for the chance to address this important legislation.
Bill C-97 runs to more than 106,000 words, and four of those words concern me. There are four words that I consider potentially very dangerous to journalism and dangerous to the public trust in what journalism provides: verified information that we need to be good, engaged citizens in a democracy.
I draw on 55 years of experience as a journalist and journalism educator. I’m trained to use words carefully, and I’m sorry to say that this constitutes one of the gravest threats to freedom of the press that I have seen in this country.
The four words I’m talking about refer to “qualified” or “registered” journalism organizations, which will be the only ones receiving federal support.
The journalist in me asks: Who qualifies journalists? Where are they registered? Who benefits? There are no answers to those questions in this bill.
Thankfully, the Senate of Canada knows about these issues. More than any other institution, you have studied the media and the public’s interest in seeing it function well. From Keith Davey in 1970 to Tom Kent’s royal commission in 1981, senators have proposed measures to safeguard a free and independent press.
Of course, little came of those proposals, because publishers and media owners for years rejected any intrusion into their newsrooms. Their reasons are worth noting. Russell Mills is a journalist I admire. He is a former publisher of the Ottawa Citizen. In 2003, he wrote an article in the Canadian Parliamentary Review where he looked back on the Kent commission. He made the very important point that independence is and always has been a core value of journalism, and he singled out independence from government as paramount because government controls so many of the levers that can limit or distort news about how we’re governed.
He said some of Kent’s proposals would have come close to bringing government into Canadian newsrooms. I fought this, along with all other senior people in the newspaper industry and, with the help of international press freedom organizations, the proposed newspaper act was shelved.
What, then, are we to make of the very different reaction of today’s publishers to what I regard as far more serious threats? What are we to make of the CEO of Canada’s largest newspaper chain, whose reaction to the budget measures was, “Everyone in journalism should be doing a victory lap around their building right now.”
I think that’s our answer to who benefits.
My old newspaper, the Toronto Star, still operates by a statement of principles that I’m proud to have helped write years ago. It says:
Freedom of expression and of the press must be defended against encroachment from any quarter, public or private.
Mr. Hinds’ organization, by the way, claims it operates by a similar principle.
To give you an idea what that means, let’s suppose a reporter was found to have accepted money from a source. That would be a firing offence. It’s a conflict of interest and undermines public trust in that news organization. Now we have publishers welcoming a proposal to have the government, a frequently cited source, pay for them to hire reporters and editors. I do not think that is either wise or professional.
Not only that, the Heritage Minister has already named eight journalism organizations to a so-called independent panel that will decide what qualifications should apply, but it is silent about who will actually vet and approve those qualifications. We have no news about this mysterious other panel that is being talked about or who will sit on it. Anyway, this bill sets limits on the power of the first group to decide who qualifies.
Why would anyone, even a cash-strapped publisher, think it’s a good thing to let government have a hand in defining what professional journalism is?
I respectfully urge you in the Senate to consider correcting two flaws in this legislation. First, I’m not opposed to government aid to news organizations, but never direct aid to the people who will report the news. That’s dangerous. There are better alternatives. Second, the approval process must be rethought and made transparent. It should be spelled out in detail as part of this legislation. This legislation spells out in detail two similar committees: one to oversee the RCMP’s management practices, and another to give advice about the licensing of immigration consultants.
Freedom of the press is too important to leave to chance.
Senator Marshall: Thank you to the witnesses for being here today. I did want to get into the issue of independence, which Mr. Miller eloquently spoke about, but I’d like to start off with Mr. Hinds. How were you notified that your organization would be one of the ones to decide who would be on the panel? Can you give us some insight into how you were contacted and what your understanding is of your mandate?
Mr. Hinds: For the panel?
Senator Marshall: Yes.
Mr. Hinds: The chair of the organization received a letter from the Minister of Heritage asking us to nominate a person to the panel and we were provided an outline of the mandate of the panel.
Senator Marshall: So has the mandate been defined?
Mr. Hinds: It has been defined.
Senator Marshall: And it’s defined in the letter?
Mr. Hinds: Yes.
Senator Marshall: Would we be able to get a copy of that letter?
Mr. Hinds: I assume so, yes.
Senator Marshall: Mr. Chair, that would be very interesting.
The Chair: Mr. Hinds, if you could provide that letter to the clerk, please.
Mr. Hinds: I don’t have it with me, but I could do it later on.
The Chair: Okay. Thank you.
Senator Marshall: Right now, you are under the impression that you’re going to have a certain degree of input or influence in establishing this panel, but is it well-defined? When you look in the budget book, the eligibility criteria has already been defined. So it’s giving the impression that you’re going to have some influence on the criteria, but the criteria has already been defined. Could you comment on that?
Mr. Hinds: Yes, there are issues around — and I think Ms. Lauzon talked about them — this requirement to have two full-time journalists as part of a qualified organization, and I think that’s a real concern. I think part of the role that we see is to look at some of those criteria to make sure that they actually reflect the newsrooms of the country and to ensure that they are adequate to do the job that the tax credit is intended to do.
You raise “defined,” and there is a definition in the budget document about what is a newsroom. I think that’s where the expert panel will come forward to say what a newsroom is and what the tasks are in the newsroom that the tax credit will look at.
Senator Marshall: What about the administrative panel. Do you have any influence there? You are indicating no.
You’re under the impression right now that you’re going to have some influence, control or input into how this is going to all work, but when you read the budget document it sounds like the government already has it pretty well laid out.
Mr. Hinds: I think it does, and there are some things in the budget document that are of concern. Obviously, the budget document was written by the Department of Finance officials. They are not journalists and they are not people who have expertise in the newsroom. I think the role of the panel, as we see it, is to provide expert advice on what constitutes a newsroom and what is appropriate for a subsidy by the tax credit.
Senator Marshall: Mr. Miller spoke about the independence of the press. Even from the first step it seems like your independence — if you feel you are independent — is already impaired because the government has taken a big step forward in defining what the criteria are going to be. You may have no control at all over the administrative panel. It seems to me that that would be an area of concern for you with regard to your independence, even from step one.
Mr. Hinds: I don’t think we see it as a question of independence. We see it as defining the criteria to ensure that this is an effective program that does what it is intended to do, which is to allow newspapers and newsrooms to continue to cover the stories that they do. I don’t think we see this in any way changing how they function or changing the content. It’s really about making sure the program is effective.
Senator Marshall: But the government has already defined the criteria. I can probably bring Ms. Lauzon into this. My understanding from your opening remarks is that you don’t like some of the criteria, so you may get to the point where you are at loggerheads with the government: They want those criteria and you don’t like them.
Ms. Lauzon: We are clearly being very cautious going into that process because the criteria don’t meet what our sector needs and what we have been asking for at all. It’s putting us aside.
Yes, we are a little concerned that it’s already in the budget and has already been set out. The message we received from our talks with the minister’s office is that the panel will not be able to overturn these criteria, but mostly will be able to add some nuance to some of the criteria for some groups and will be able to expand. That’s why we are happy we were asked to nominate somebody to sit on that expert panel.
Senator Marshall: Have you considered the possibility that the government is just using you to promote one of their own programs?
Ms. Lauzon: Not at this point. I have to share that we were not supposed to be on that panel at the beginning. They were supposed to be nominated by the minister and the people, and we were supposed to be completely out of the process.
I know that we, News Media Canada and many other groups said, “No, we want to be part of the process. If you are going to talk about us, let’s have some people who know how we work and how we function on the panel.”
Senator Marshall: Thank you.
The Chair: Please, let’s try to limit ourselves to four or five minutes so we can all have the opportunity to ask questions.
[Translation]
Senator Massicotte: Thanks to all three of you for being here this morning. Your participation is very important.
[English]
We all come here on different paths. To me, what’s important is I’m always hesitant when you see government getting involved in meeting some demand of the population. Usually the demand is warped, and 20 years from now we’ll say, “Why did this occur?” I’m always hesitant to see government money trying to find a purpose.
The only one that rings loudly for me is the democratic argument and the need for different opinions and accurate information. When you travel around Africa, you find out that when governments control the media democracy suffers immensely. That’s the most important one for me.
Mr. Miller, I’m trying to get to your point, which I gather bothers you a lot, is the potential risk of going offside. There are three forms of financing proposed in this budget. I gather that in particular you don’t like the one that finances the news people and part of the newsroom. I presume you have no difficulty with the donation aspect because it’s very generic. I presume you have no problem with the credit for electronic subscription. Am I correct that it’s the funding of salaries that bothers you in particular?
Mr. Miller: Yes. Over the years, most reputable news organizations have had this figurative wall between the editorial and revenue functions. That’s for a very good reason. I’ve been in newsrooms where big advertisers exert enormous influence over news judgment. It happens even in the best of places. So I would like the government aid to be on the revenue side and not on the newsroom side. It’s a very simple principle.
For instance, say I’m a reporter on a story about some scandal in government and for various reasons it’s not there and I back off. If one of my readers finds out about that, how will I defend myself when a reader says it’s because I am getting money from government, even if I’ve turned the story down for legitimate reasons? That’s why there should be a wall. There are plenty of opportunities to fund news organizations on the revenue side without directly affecting reporters.
Senator Massicotte: Here we are talking about federal funding. What’s the expectation of the industry relative to provincial funding? As you know, many provinces automatically jump in and merge their laws, for instance, regarding donation receipts. Do you expect the provinces do to do the same as the federal government is doing?
Mr. Hinds: We expect they will.
Senator Massicotte: Should we be concerned if they did that? Donations get approximately 50 per cent credit, so it therefore costs 50 per cent less to the donor. Are you not concerned that these amounts could become so significant that you are living off the taxpayers as opposed to initially trying to identify the democratic deficit issue and the concern we have about getting good information? It could grow significantly to where that is the dominant focus of your efforts and the future existence of a newspaper.
Mr. Hinds: I think the reality is that in many markets, the current competitor to newspapers is the public broadcaster, which is essentially publicly funded. If you look at the projections on donation funding, the growth is pretty limited. There are certain areas that groups like La Presse are looking at, but I don’t think it is something we will see rolled out in every newspaper.
Senator Massicotte: Thank you.
Senator Eaton: Thank you. A long time ago I worked in a newsroom for five years, so I feel very sad about what I’m seeing. I see this as a giant mouse trap with a big piece of cheese called $600 million, begging you to come and taste it.
What bothers me is this government-established body is going to determine who is a qualified Canadian journalistic organization. I would be more comfortable if news organizations themselves decided who was going to sit on this body as opposed to the government nominating people.
As a Conservative senator, for instance, I feel badly that something like Unifor, which has declared war on the Conservative Party, is going to have a place on your panel. I know they represent journalists as a union, but I would just as soon see the dean of journalism from some university sit on the panel who can really define what journalism is, as opposed to the head of Unifor. Unifor probably knows more about your working hours than journalism, to be fair.
Could the three of you comment on that? How do you feel about such bias sitting on the board that will determine what is a fair, journalistic organization?
Mr. Miller: It politicizes the process, no doubt. It’s unfortunate that the union started its political campaign at roughly the same time as it was named to the panel. There are other big unions representing news workers that do not take political positions that could have sat on the panel. I think it’s awkward.
Ms. Lauzon: For our part, we are very apolitical. It’s a sector that has been working with the governments that are there and working very closely with them in collaboration. It could be the previous government or this one. To me, it’s a place where we can be heard.
I totally value your comment about having a university professor like Mr. Miller on a panel like that. I think there would be space for that. I totally value that but, for us, it was very important because of the nature of our sector, to be sitting there.
Senator Eaton: I can see why you are sitting there if you have been nominated by a non-governmental panel.
Mr. Hinds: We hope that the people whom the organizers appoint to that panel will have real expertise and will bring working knowledge of the newsrooms of the country to be able to craft a program. It is The Canadian Association of Journalists and it is us. It’s really about who is appointed there and the skills they bring to that discussion.
Senator Eaton: I have one last question. Have you looked, or do you know — I’m sure all of you do — if other English-speaking countries, like the U.S., Australia and the U.K., are under the same kinds of pressures that Canadian journalism seems to be under?
Mr. Hinds: Absolutely. Interestingly enough, I just read this morning that the government of New Zealand just announced a program where they would hire, through the public broadcaster, journalists to work in the newsrooms in the country to provide content. The U.K. also has a program where they have hired —
Senator Eaton: I’m not thinking so much of the BBC or the CBC, because they are government-funded anyway. It’s more independent organizations.
Mr. Hinds: Regarding the programs in Australia, they have provided support to the regional press to hire reporters and to create content.
Senator Eaton: In the same way?
Mr. Hinds: In a similar way. In the U.K., the Cairncross commission has reported recently. It’s looking at ways of increasing the funding. The government in the U.K. required the BBC to fund positions in newspapers; that’s how they’re running it.
They are all looking at programs like this.
[Translation]
Senator Forest-Niesing: Thanks to the three of you for being here and raising your concerns, which I share.
My question is for Ms. Lauzon. You mentioned a one-size-fits-all solution. We realize that official language community media face very different challenges and may need solutions specifically tailored to their needs.
I was alarmed to hear you say that 80 per cent of the workers these measures are meant to support would be excluded under the criteria. Would eliminating the consecutive weeks of service requirement, for example, remedy the problem you flagged? Is it necessary to go further and establish an entire exception for papers that serve official language minority communities?
Ms. Lauzon: We’ve done a preliminary analysis, and we came to the conclusion that an exemption or an exception would basically be necessary. Too many factors have an impact on our newspapers. The two criteria I brought to your attention are glaring, but, unfortunately, there are other small things that make a difference as well.
That’s what we tried to tell the Department of Canadian Heritage, the Official Languages Branch and others. We tried to make clear that the current models in use require some flexibility, and an exemption is therefore needed. I don’t want to call it an accommodation, but there has to be some understanding of the reality and the approach has to be adapted for our newspapers.
The government has already done that, on a smaller scale, with the Aid to Publishers program. That means some relief has been made available to official language newspapers, based on their circulation, to ensure readers still have access to them. Given that our newspapers don’t enjoy the readership of major publications, clearly, the government provided for some relief measures and adjustments, but they are merely directives.
With respect to the independent panel of experts, we hope to have some influence over the process and to highlight the need for an exemption and criteria adapted to our needs.
Senator Forest-Niesing: Would you agree that Part VII of the Official Languages Act would justify your request for adapted criteria?
Ms. Lauzon: We’ve already expressed that to Minister Rodriguez, and we published an open letter in all our papers, so English-language publications in Quebec and French-language publications in the rest of the country.
Senator Forest-Niesing: Thank you.
[English]
Senator Klyne: Good morning, and welcome to our panel. I have a number of questions.
First of all, I look at this in the context of talking about upholding democracy and hard news that enlightens and engages audiences. On the independent newsroom side there’s a bright red line between the publisher/CEO and the editor or managing editor. I want to get some clarity on this. Is it your sense that this bright red line will to fade away because of this? I have always thought in the bottom right-hand drawer of every editor is their resignation letter. I don’t see that being jeopardized.
Ms. Lauzon: From our side, absolutely not. Half of our newspapers are getting government funding right now from Official Languages or from Canadian Heritage. This has no impact in the newsroom and has no impact on decisions in the newsroom. It never did. Our members are very adamant about keeping that independence. From our sector, there’s no impact.
Mr. Miller: I’m reading from the statement of principles of News Media Canada:
The newspaper’s primary obligation is fidelity to the public good. It should pay the costs of gathering the news. . . . The newspaper should guard its independence from government, commercial and other interests seeking to subvert content for their own purposes.
I have great faith in journalists respecting their independence. What I do not know is what the government — not this government, necessarily, but another government — would do with how it defines who a professional journalist is and how they could take it away, since tax credits are an easily removable perk. I’m concerned about what it could do with that, and what a less principled publisher might do if presented with the work of journalists they find jeopardizing this funding.
Senator Klyne: We’ll come back to tax credits later. I think editors are principled and would hold the line on that.
The second question is around the funding of salaries and where that should go. Advertising has always paid for the newsrooms. That’s the bread and butter. To oversimplify the model, newsroom content creates audiences. Those audiences are rented to advertisers. That model is broken on the back end of that, and advertisers have a plethora of opportunities, particularly on the social media side and online.
It seems to me that it needs to go to the newsroom, not to the advertising or marketing side. If you have a comment to suggest otherwise, I would like to hear that.
Mr. Miller: One of the goals of this funding is to allow newspapers to innovate and survive this or find a new business model. Otherwise, it’s just a bailout for past practices. The criteria we have seen so far seem to mitigate against a lot of the smaller organizations, the digital start-ups, the investigative journalism start-ups, that are doing the real innovation. They will be at the table. They will not have a bite of that cheese.
Senator Klyne: Wouldn’t they be reinventing themselves to what others may be? Thank you.
Senator Andreychuk: I think some of my concerns and questions have already been answered. My concern is that you will be on a panel where the criteria have already been dictated to you. Your role will be what? To respond? You have no guarantee or assurance that those changes will be accepted. The reason I say this is you are the barrier. You are the protector of all those principles that Mr. Miller talks about. Why would you be on a panel if you will not receive any assurances that your voice will be heard? You will run back to hoping that the government is listening.
There is entirely too much consulting going on in present-day governments and voices are not heard. “We checked with the panel and the panel gave us advice. We took it into account, but. . .”
With your integrity, can you sit there if you haven’t had assurances that your voice will be heard beyond simply being taken into account?
Mr. Hinds: I think we have an assurance that they are looking for input on this. They have been very clear that they want to hear from experts about the mechanisms. I think the reality is that they want to be able to define a newsroom so that they support the aims of the credit. Things like the two journalists rule, I think we have a good understanding that they are interested in input on it. Obviously, we have to go into this in good faith. I assume that the recommendations of the panel will be public and they will be reported on for people like senators to weigh in on. I guess we have to operate in good faith.
Senator Andreychuk: Will you go back to your own associations to gain their points of view, or will you be on the panel feeling confident that you understand the dimensions of this country and the difficulties in this country to speak for all of the disparate voices?
Mr. Hinds: One thing about newspapers is that they are not shy about speaking up in terms of their needs, wants and issues. We will name a person to this panel, and will engage with our membership in a consultation to find out what our members are looking for to ensure that our position reflects what members need and want across the country.
Senator Andreychuk: One area that concerns me is that the entire freedom of the press issue has reemerged again in different ways. More and more, the blending internationally is between governments, big business and reporters. It’s taking very different forms. This is not a new issue, as we know. This is an age-old issue for journalism, with the idea of the government coming closer and closer to the news and selecting what parts it will support.
Minister Freeland has said that she is very worried about democratic values and the freedom of the press around the world and has pointed out countries where oligarchs and businesses are intruding not only on government but owning the very essence and survival of journalism. I see a crack now coming in our system that justifies what the others are doing. When you are sitting on the panel, how can we be assured that Mr. Miller’s comment is seriously taken into account; that we are picking winners and losers? Freedom of the press means there shouldn’t be winners or losers. All voices should be heard.
Mr. Hinds: I think we have to be clear on this. The winners and losers argument, I think the difference is between providing real, quality journalism or providing articles about kittens and Kardashians. Those are the definitions we are looking at to make sure this program actually delivers so journalists can cover real news and address that democratic deficit. The reality in this country today is that, with the exception of Ontario, Quebec and B.C., there is no press gallery at any legislature. This program will hopefully address things like that.
The Chair: Thank you. Senators, I have to move on. The second panel is also about journalism, so some of your questions may be posed there. It will be impossible to have a second round with this panel.
Senator Duncan: Thank you. I appreciate the opportunity. Before I launch into my question, I have to correct Mr. Hinds. The Yukon has a very active press gallery in our legislature and covering our city councils. We have two newspapers as well as three public broadcasters.
Mr. Hinds: A dedicated legislative reporter is what I’m talking about.
Senator Duncan: Including dedicated legislative reporters. The sad fact is that the problem comes when Southern Canada comes to cover our news.
I have watched these media and been a part of the media for more than 50 years in the Yukon. I heard Mr. Miller refer to cash-strapped publishers, and I also heard him say “alternatives” in his presentation. Having witnessed these cash-strapped publishers, print publishers in particular, I’m curious if you could outline the alternatives to what’s been proposed.
Mr. Miller: The government actually commissioned the public policy forum to study this, and they did a lot of consultation. It’s a very good report that spells out how the government could aid newspapers. It’s very well documented. One of the things it warned against was the tax credit, which is a principal part of this measure. They said that, for various reasons, they really trashed it as an idea. My information is that the publishers fought very strongly for it, and that’s what the government succeeded in doing.
The danger here is the government has power over news organizations, and it is now defining who is a professional organization. That’s my worry. It could be as simple as increasing advertising. The government used to be the biggest advertiser in newspapers, and there was no problem with that. I have no problem with that. It could even set a threshold of a certain percentage. It would only give it to news organizations that spend a certain percentage on their editorial department. It’s very simple.
Senator M. Deacon: Thank you. With your permission, I’ll convert a question to an observation. It might work back into a question. A lot has been brought up today on parts I was looking at. Thank you all for being here.
Three things are floating around in my mind. One was the panel, and I think the questions have been asked: the establishment of the panel, what the ultimate goal of the panel is, who is selecting, who is making decisions and how this will best operate to provide for the continuous improvement of journalism in this country. I am still working through some of the questions that I’ve heard asked this morning. That is floating out there.
The other piece is sitting down with the CEO and the COO of our biggest newspaper quite by design last week for 30 minutes and asking: What does this mean to your world and your work? The response was from what would our biggest journalism folks in the country, whose work worlds are very different than others.
But perhaps more importantly, each senator has their own narrative. I’m in the Waterloo area and I work with 31 news-type, media-type people; I have for the last 20 years. Of those 31, 2 are the biggies, 2 to 20 people, but the other 28 to 29 are 1 or 2 bodies or less, 0.5 of an FTE with a closet as an office. In my deeper discussions with them, they also work on piggybacking or partner well with these larger locals, which is a good thing. They need to do that piggybacking for their survival, and there is a good collaboration.
So my question or comment that I’m painfully getting to is the dynamic of that relationship. These folks still have to report, grow, improve and innovate, but the ability for the larger — plus twos — and the smaller ones, I’m wondering what your thoughts are on the impact of that working relationship. Is it status quo, no change or should we be worried? If you could share your perspective in that way at all, I’d appreciate it.
Mr. Miller: I have come from a community that lost its daily paper after 150 years. There are a number of start-ups. They’re not collaborating with the biggies. They’re in competition with them. They would not qualify. None of the 11 would qualify for this program, and they will go out of business. That’s all.
Ms. Lauzon: From the official languages side, it’s the same. They’re isolated in a majority community, so it’s very difficult. They try, and sometimes it happens, but it’s very difficult and complicated. So yes, they would not be able to continue.
Mr. Hinds: I think it really depends on the communities. I think we see examples, such as in the Waterloo area, where there is a lot of collaboration and others where there isn’t. It really depends on what the marketplace is.
The Chair: Thank you. As we end the first panel, I will mention that the Province of New Brunswick is the only official bilingual province in Canada.
Ms. Lauzon, you sent a letter to the minister with respect to your concerns with the Official Languages Act. Could you please table that document with the clerk so that it will be part of a public document of the Senate of Canada?
Thank you very much.
[Translation]
We now continue with our second panel. Joining us by video conference from Quebec City is Pascal St-Onge, President of the Fédération nationale des communications. We also have Guy Crevier, editor of La Presse, and Colette Brin, Professor and Director of the Centre d’études sur les médias at Université Laval.
Thank you all for accepting our invitation and answering the senators’ questions regarding Bill C-97.
Now, without further ado, we will hear from Ms. St-Onge, followed by Mr. Crevier and, then, Ms. Brin.
Pascale St-Onge, President, Fédération nationale des communications: Members of the Standing Senate Committee on National Finance, on behalf of the Fédération nationale des communications and its 6,000 members, who work in Quebec’s, New Brunswick’s and Ontario’s media and culture sector, I’d like to thank you for the opportunity to share our views and recommendations with respect to Bill C-97, Budget Implementation Act, 2019, No. 1.
My comments will focus on the measures for print media organizations. First of all, our federation welcomes this new program, which will lend a much-needed helping hand to a sector that has been struggling for over a decade, since the so-called web giants came on the scene.
Strictly speaking, the measures will not remedy the fiscal, regulatory and structural imbalance that gives foreign platforms that distribute content an unfair advantage. Our hope, however, is that they will provide corporations that produce daily and weekly print publications with some flexibility as many of them struggle with major cash flow problems.
In our view, the government has chosen the right measures to ensure media independence, given that recognized corporations, subscribers and donors have access to the tax credits. The tax measures are based on objective criteria that will prevent favouritism towards an editorial policy, an owner or a business model.
It is our view that the total funding envelope — $595 million over five years — is commensurate with the need, and will help to protect jobs as well as print and digital publications that are still operating in Canada.
However, our analysis reveals that it is nearly impossible to exhaust the amounts allocated to the digital news subscription tax credit and the charitable donation tax credit.
Furthermore, the maximum amount that journalism organizations can receive under the labour tax credit is much too low and out of step with the employment reality, especially in major cities. The average unionized newsroom employee in Quebec makes $76,000. The amount goes up when management personnel are factored in, because they, too, contribute to news content.
It is also safe to assume that wages are higher in major cities like Toronto, Calgary, Ottawa and Montreal. It would be unfortunate if the current iteration of the program did not achieve the intended objective: Protecting the businesses and employees who ensure Canadians have access to high-quality professional journalistic content.
We therefore recommend the following amendments: first, that the government decrease its $235-million estimate for the digital news subscription tax credit and incentive to encourage charitable donations; second, that the government increase the eligible wage cap for the labour tax credit to $90,000; and, third, that the government extend the labour tax credit to non-newsroom employees. That would bring the per-employee limit to $22,500, rather than $13,750, and the labour tax credit to 35 per cent, rather than 25 per cent.
The reasons for these amendments are many. To begin with, the major publications in Canada that rely on fee-based subscriptions and are actually successful are The Globe and Mail and Le Devoir. Given that content is widely available online for free, fewer taxpayers are in the habit of paying for their news online. In addition, a digital subscription costs less than the print publication. For instance, a digital subscription to Le Devoir costs $213 per year, and $323.88 per year in the case of The Globe and Mail.
According to Statistics Canada, in 2016, Canadian households spent an average of $15 on newspaper subscriptions a year. That amount is low given how many households do not have subscriptions. The trends we are seeing suggest that the estimated expense is now $14 per household, for a total of $196 million in subscription spending by all Canadian households. Assuming that 40 per cent of that spending is for digital subscriptions, we estimate the total amount for all Canadian households to be $70.4 million.
If every household with a digital subscription claimed the tax credit, the total cost would be $11.7 million per year. However, the assumption that every eligible taxpayer would make use of the tax credit artificially inflates the real cost that can reasonably be expected.
It is practically impossible for the measure to cost $59 million over five years. That would leave $176 million over five years for the charitable donation credit, which is currently 15 per cent for the first $200 and 29 per cent for the next $500. As of now, only two national papers would qualify to issue donation receipts by virtue of being set up as trusts or foundations: Le Devoir and La Presse.
They would have to take in a staggering amount in donations in order to exhaust the amount allocated for the measure. What’s more, we consider it unlikely that many newspapers will adopt a new business model in the next five years in order to be able to issue donation receipts.
At the end of the day, the goal is to keep alive media organizations that have been hard hit by the significant loss in advertising revenue and whose market is now being sucked up by foreign companies that benefit from preferential tax and regulatory treatment. Such unfair competition should not be tolerated in any market. It jeopardizes our democratic underpinnings in the journalistic information sector. As we wait for that disparity to be corrected, let us at least make sure that support measures for print media organizations are sufficient to help them weather the coming years so that they can perform their role to the fullest. Journalism is an asset that serves the public good and should be treated as such. It is the expression of freedom of the press, a fundamental right under both charters.
Thank you for listening, and I would be pleased to answer any questions you have.
The Chair: Thank you very much, madam. It is now Mr. Crevier’s turn. You may go ahead.
Guy Crevier, Editor, La Presse: Honourable senators, as you know, print media organizations are facing an unprecedented crisis that threatens their very existence. Essentially, big American players are the cause, as they have literally siphoned off the traditional revenue sources of print media. A whopping 80 per cent of online ad revenue now goes to two U.S. giants, Google and Facebook. The crisis has reached global proportions.
Over the past 15 years, nearly 1,800 newspapers have gone out of business, leaving whole regions with nowhere to turn for credible news and information.
Dailies in Canada have lost roughly 60 per cent of their ad revenue over the past seven years. During that same time, about a third of the country’s journalist positions have basically disappeared.
In the face of this acute crisis, government measures to support print media organizations must give rise to long-term solutions that will ensure their survival.
As with any government initiative, it’s important to distinguish between what the program is meant to do — its objective — and what it actually does — its implementation.
A glimmer of hope emerged when the government issued its fall 2018 economic statement. That was when the Trudeau government acknowledged the acute crisis and committed to establishing a universal media support program. The initiative is to be commended.
That glimmer of hope grew when the government tabled its budget in March. It was clear that industry and the Trudeau government agreed on the importance of meaningful action and the need for some $600 million in funding over five years. When the government released the details of the program, however, it was akin to throwing cold water on the industry. The way the program works, it merely sprinkles a bit of funding here and there without addressing the industry’s foremost requirement: long-term support for transformation.
The program contains three measures: a tax credit directly tied to newsroom labour costs, a tax incentive for charitable donations and a tax credit for digital subscriptions.
In a nutshell, the most meaningful of the three, the labour tax credit for newsroom employees, is underfunded, while the other two are overfunded. They do not reflect the reality at all. With a wage cap of $55,000 and a tax credit of 25 per cent, the program significantly reduces the funding available to major newsrooms across the country and considerably limits their capacity to adapt to the new market conditions.
As far as the other two measures are concerned, let me take a moment to demonstrate how inappropriate one of them is. That will suffice.
For 2020-21 alone, the government has allocated $25 million to the charitable tax incentive. For the measure to cost that much, print media organizations would have to collect nearly $110 million in donations from businesses and individuals that year, which would be impossible. If we could manage to collect $110 million worth of donations, our sector’s problems would be solved.
First of all, in year one, few print media organizations will be able to qualify to issue tax receipts for donations. Second of all, fostering a culture that encourages taxpayers to make charitable donations in support of quality journalistic information is a lengthy process. It will take years and years to gain momentum and bear fruit. Consider this. The Guardian, a daily newspaper in England, took years to set up its structure. The same inconsistencies apply to the digital subscription tax credit.
We’ve more or less come to the same conclusion as the Fédération nationale des communications. In our view, the $595 million funding envelope over five years does not represent half of what will actually be spent.
Now, I’d like to draw your attention to the reality newspapers face, using La Presse as an example. La Presse is among North America’s leading dailies that have taken bold and innovative action to change their business models. We no longer publish a paper-based newspaper. Our content is housed strictly on tablets and cell phones, a change that cost the organization a fortune. We spent $40 million to develop the necessary IT systems. We changed all of our operating systems, which was a colossal task. We cut spending by $60 million. We revisited all of our collective agreements, and we went from 910 employees to 525. La Presse+ is a resounding success. Readers on nearly 270,000 tablets access our content every day, and we’ve been able to capture a much younger audience.
People spend an average of 30 to 35 minutes per tablet accessing our content every day. That is quite a triumph. We’ve also been able to capture a good chunk of the digital ad revenue in our small market. Despite all of that, though, we are on shaky ground and our future remains at risk, like every other Canadian paper.
In the search for a new model, innovation remains the best way, if not the only way, to ensure the viability of major newspapers, which play a fundamental role in the vitality of democracy in Canada. To do that, newspapers must be able to rely on adequate funding, which cannot be provided without a structuring government program. As members of the Senate, you have played an important role in the media evolution in Canada by considering issues such as the protection of journalistic sources, and we really appreciate that.
Today, you have an opportunity to change a program’s rules to ensure the sustainability of print media in Canada, without increasing the planned budget envelope of $595 million over five years. The solutions that must be implemented are simple, and I think they are essentially summarized in what the Fédération nationale des communications presented: broaden the definition of eligible expenses to reflect the reality of major Canadian newspapers; set the salary cap at $95,000; and, finally, increase the tax credit rate from 25 per cent to 35 per cent.
We must also remember that, in the 1960s, Canada managed to implement a vision that helped develop a strong cultural system, despite the closeness of the U.S. giant. We did that successfully thanks to politicians and people who ran various organizations, such as CBC/Radio-Canada, the NFB, as well as financing funds. We successfully implemented a fantastic system, despite the fact that we live close to the biggest producer of cultural content in the world.
Today, we are facing the same challenge. We have to think about the way to save Canadian print media, which are crucial to the vitality of democracy. So I invite you to give a great deal of thought to this issue, which I think is fundamental to the future of democracy in Canada. Thank you.
Colette Brin, Professor, Director of the Centre d’études sur les médias, Laval University, as an individual: Thank you very much for your invitation. I am speaking today on behalf of the Centre d’études sur les médias, which is a research NPO founded in 1992. Generally, we feel that the measures in the bill are well thought-out and consistent with the objectives. We think it is first a matter of supporting an essential need for all Canadians much more than providing support to a struggling industry or profession, even if it is the greatest profession in the world.
Over these past few years, our media ecosystem has been impacted to such an extent that we feel government support to journalism will without a doubt be necessary over the long term. The government can do for the media sector the same thing it is doing for the arts. Why not simply let the market operate as it will? Economic theory provides an answer to that question.
Information is considered a public good, an exception. The classic example of a public good is the lighthouse. Everyone can benefit freely from its light without having to pay to use it. That market failure is amplified in the new digital economy, where the flow of information products is increasingly out of their producers’ hands. They can no longer capture the economic value of their product that is circulating on networks. More importantly, the imbalance between digital giants, GAFA, and traditional media on the digital advertising market is such that the very survival of the latter is in jeopardy. In Canada, three-quarters of online advertising spending goes to two businesses: Google and Facebook.
Print media are the hardest hit by that transformation. Advertising spending for daily and weekly newspapers dropped by more than 60 per cent from 2000 to 2017. Their difficulties are not explained by a lack of readers, as newspaper readership, on all platforms combined, is growing. However, print media no longer have the advantage of providing a bundled product, as the traditional assembly of media content is broken up in the digital space.
The weakening of media ecosystems has real consequences for democratic life. A recent U.S. study establishes a connection between the disappearance of newspapers and the drop in the rate of participation in local elections, both in terms of the vote and in terms of candidates for elected office. In Canada, the volume of coverage of public affairs in local media has decreased by 36 per cent according to a study conducted by the Public Policy Forum.
Professors April Lindgren and Jon Corbett have documented 231 closures and 44 media mergers since 2008, and those have affected a total of 197 communities in the country. New media are not enough to fill the void left by those service cuts, and neither is citizen journalism or local initiatives on social media. To survive, print media are increasingly turning to information consumers, through the implementation of pay walls and philanthropic strategies. Tax incentives for donations and tax credits for subscriptions to digital publications will strengthen and increase readers’ contributions. However, those kinds of habits are far from being entrenched.
According to the latest Digital News Report survey, which was carried out in early 2018, just 9 per cent of Canadians pay in one way or another for the information products they consume online. Only 18 per cent of them are thinking about making a donation to media, but that figure goes up to 28 per cent for respondents under the age of 35.
Over the next few weeks, a committee will identify the criteria for an eligible Canadian journalism organization and will determine what newsroom employees will be able to benefit from refundable tax credits for labour costs. It will also have to issue recommendations to strike another committee, which would be in charge of administering corporate demands.
The eligibility criteria will have to ensure the diversity and quality of journalism while protecting the independence of newsrooms. We feel that this is entirely possible. After all, no one has ever questioned the independence of magazines that have been receiving assistance from the Canada Periodical Fund for 20 years.
All the measures must be applied as transparently as possible with a focus on fairness for smaller players, new media and the most under-served communities in terms of local and regional information.
We also recommend that all levels of government commit to purchasing advertising space in local news media and that municipalities publish their public notices there, which is a form of indirect support. These are simple, neutral and inexpensive measures.
Lastly, it would be useful to develop tools to evaluate the effectiveness of measures in achieving their objectives, which are to support a diversity of strong and independent media.
Thank you for your attention. I will be pleased to answer your questions.
The Chair: Thank you very much, Ms. Brin. Before giving the floor to the senators for a question period, I would like to ask you for the purpose of transcribing the committee’s proceedings, to explain the acronym you used, GAFA. What does it mean?
Ms. Brin: It’s an acronym that’s used often to designate the giants of the digital industry: Google, Apple, Facebook and Amazon. We could add Microsoft to that, and perhaps others.
The Chair: Thank you very much, Ms. Brin.
[English]
Senator Marshall: Thank you very much for being here today.
I was interested in the independence of the program, because you’re effectively being asked to define the criteria for a program of which you will be the primary beneficiaries. But that’s not my overall question.
When you look at the budget book, you’re being asked to define criteria, but in the budget there’s a full page there and the criteria have already been defined. You’re being asked to define criteria, but the government already has the criteria there. There will also be an administrative body established that will administer the criteria, but we know nothing at all about this administrative body.
The program is half a billion dollars. Have you considered that you’re so happy to see that half a billion dollars there that you may not have fully read the fine print in the budget book?
The impression I get when I read it is that you’re being asked to participate in this program. Really, the first half has been laid out and the government has already decided, but we don’t know anything about the second half and the administrative panel. We don’t know who will be on it and they’re the ones who will be doling out the money. Maybe this is not such a great thing after all.
Have you given any thought to the fact that this may go off the rails when you look at the details in the budget book now? Or do you think this will be one smooth program delivery? Could you speak to that? When I read the budget book, if I were you, I think I would be concerned about what’s in the fine print. Could you respond to that?
[Translation]
Ms. St-Onge: First, I must make a clarification. The FNC has been chosen to sit on the committee or to delegate someone to sit on the committee, but our organization will not benefit from these funds. We represent people who work in the media, but the FNC does not benefit from it. We represent employees from all newsrooms, both on the Quebec side, including La Presse, the Journal de Montréal and Le Devoir, and we represent independent journalists who also work in community media and smaller media. Our concern is democracy, to ensure that professional journalists will be able to continue to provide this service to the public. That is how we have always approached the idea that the government must support the media here, as is done throughout Europe. All over Europe, the print media are supported by public funds; Canada was an exception. At the moment, the market no longer supports these media. What we asked for was support from the government; we were in favour of the government deciding on all the criteria, because, in our opinion, they are administrative criteria. Tax credit criteria are administrative criteria, not qualitative. It’s not subjective. This is the case in the film industry and in the new technologies industry. There are a lot of industries that are supported by tax credits. There are already payroll tax credit programs in place in Quebec to specifically support jobs related to the technological development of media companies. There is a consensus in Quebec; the criteria are administrative; some have expressed reservations, but this has been done correctly. The government has chosen to appoint committees. We will participate in the search for a consensus, but for us, tax credits were already a good way to support media independence.
Mr. Crevier: I would like to correct one of your statements. All the analyses show that the program will not cost $595 million; there should be no more than $350 million in expenditures. When you look at all the amounts that are allocated for both digital subscriptions and charitable donations, it makes no sense. There is a misallocation in the program. There is a consensus in the industry on this issue. The mistake is when we try to implement a program that is universal. I was editor of the Voix de l’Est in Granby at the age of 29; I worked in the regions. I think there are two realities in Canada. The first is the small newspapers; they play an essential role in covering the regions and informing people about their communities. The major newspapers have an investigative and research role, and cover major issues. When the salary cap is limited to $55,000 for major newspapers, it has no value. It isn’t with the amount allocated to La Presse that it will be able to continue its transformation; we are the ones who must transform; we will have to invest in platforms to face Google and Facebook. So I find that the program, as a whole, misallocates funds.
[English]
Senator Marshall: Could I speak to one comment? The budget for the program is $594 million, and it’s in the budget book. It’s spread over five years. I want to clarify that.
[Translation]
Mr. Crevier: I understand. When we look at the allocation of funds from one year to the next, it’s wrong to say that the program will cost $25 million in tax credits for charitable donations in 2020-21. It’s impossible.
The Chair: Thank you, Mr. Crevier.
[English]
The fact is that we are dealing with the figure that we have in the budget of Canada.
[Translation]
Ms. Brin: I won’t participate on this committee. The members will be appointed by eight organizations that represent Canadian journalists, for the most part. I find that this is an interesting precaution because it allows us to establish a distance with the rules set by the government. As Ms. St-Onge said, this committee will have to work on a consensus. There are very different realities between the various ways of working or workforce management in different types of businesses. I wanted to highlight the issue of equity, namely, that this program does not exist for a particular type of newspaper. We want the program to be universal and general. Questions can be asked about this committee: How will it work? Will they find serene solutions to these difficulties in a fairly short period of time? For now, I prefer to trust them. We must try, because the crisis is such that we cannot do nothing. With regard to the establishment of the second committee, the first committee shall make recommendations for the establishment of the second committee. Things are uncertain, but let’s say I’ll give it a chance.
Senator Boehm: Thank you to our guests for being here and for very relevant comments. I have just a few quick questions about local newspapers and the overall trend.
[English]
In the work that you have done — looking particularly at you, Professor Brin, because you were involved in the public policy study called The Shattered Mirror, which is an arresting term because you wonder if you can pick up the shattered pieces and put something together — I wonder whether you looked at other jurisdictions. This is a global phenomenon, the erosion of community papers. In particular, it’s also a demographic problem in that younger people are not getting their news from newspapers or even online from traditional sources. You mentioned, of course, the online giants.
As we look at countries that are geographically large, Australia is an example, or those that are in a way multi-ethnic — I’m thinking of Belgium with its various local papers as well — are we learning anything from what is happening globally? And where is this trend line going?
[Translation]
Ms. Brin: Internationally, this supports the arguments I have put forward, that the market does not offer a commercial solution in the medium term. The initiatives that I consider to be interesting were mentioned by Mr. Hinds during the first panel. These are initiatives that come from public broadcasters such as the BBC or the ABC in Australia. There is no solution, there is no miracle formula to save regional and local media that would come from technological innovation. Technological innovation is necessary, but I don’t think it will save newspapers. I also don’t believe that this program will save newspapers, but it is a measure that seems necessary to me, and it seems to me to be relatively neutral and fair.
Senator Boehm: Mr. Crevier, do you have any comments to share?
Mr. Crevier: It’s more of a reflection. I hear a lot of comments that information is said to be a public good. As you know, at La Presse, we now follow an NPO model. We state loud and clear that all the money we receive will be spent on a single mission: to produce quality information. With the evolution of society today, if we consider information as a public good, why not favour models such as La Presse, in other words, a non-paying model? We join 63 per cent of the French-speaking population in Quebec; we have an influence, people write to us, we read readers’ letters. Look at the New York Times, it’s fantastic the work it does to influence American politics, but it only reaches 4 per cent of the American population. Why is it a public good? Why should quality information be accessible to the rich? In the past, people who had access to quality information were people who could afford La Presse, The Globe and Mail, MacLean’s, L’actualité and New York Times.
Today, when we look at the challenges facing our society, particularly with regard to the environment, politics, ethics and equality between people, it is important that quality information be free. The government should support media such as La Presse, which have adopted a non-profit status.
Ms. St-Onge: On the international issue, a few studies have been done that show that there are well-established traditions in European countries in terms of providing financial assistance to print media. There is press support in France and Finland. The assistance granted per citizen is about $92 a year per capita. So these are well-established traditions that in no way threaten democracy and the independence of these media.
It is extremely important to ensure that the public has a right of access to information that is protected. This requires a diversity of media and a diversity of voices. This guarantees freedom of the press and freedom of expression, and guarantees the public’s right to information. What we have seen in Canada in recent years are dozens of dailies and hundreds of weeklies that have closed. This creates media deserts in those regions where public rights are being violated. Freedom of the press is recognized in our charters. The government has an obligation and responsibility to ensure that press freedom can be expressed in reality. At the moment, it is this freedom that is at risk.
We have been asking for government assistance to do this for several years. Now, is there a perfect solution? No, but the solution that the only media revenue comes from advertising wasn’t either. In my work, I have seen companies cancel advertising contracts because their company had been the subject of unfavourable coverage. So, to be able to produce information, you need money. Information must come from the big newsrooms. This requires a lot of time, energy and money.
If the advertising market can no longer meet the needs of these media and the population, the government has a duty to find alternatives. That’s what it does now.
Senator Eaton: Thank you all for your interventions.
[English]
I’m very concerned with this government-appointed panel — I’m thinking of freedom of the press — of which one of the members is Unifor. Why wouldn’t a panel be appointed by journalists to determine who is qualified for tax breaks? That’s my first question.
La Presse has changed itself, as you say, by innovation and becoming a digital newspaper. One wonders whether perhaps other people should follow suit. You were talking about a grand new plan to support culture the way it was in the 1960s when we created the Film Board, et cetera. How would you suggest the government handle such a delicate an object as the freedom of the press? How should they support it without infringing on your freedom?
[Translation]
Mr. Crevier: The whole Unifor file is a highly political file that is difficult to comment on. My only criticism of the committee is that I find that media representation is low. I agree with Ms. Brin that diversity and equity are needed. It is still a problem facing the media today, which requires a lot of analysis of financial statements, and I think these analyses have been done by large organizations and research centres. I am not convinced that a press council or other people will necessarily be able to properly assess the problem. As for the independence of newspapers, in the major newspapers, we have collective agreements and codes of ethics. We subscribe to the principles of the federation and the general rules, we subscribe to the rules of the Press Council. The independence of newspapers is not threatened. Look at the political debate and the role that Maclean’s played in it. Just because they have access to the Canada Periodical Fund does not mean that they have been prevented from publishing files that are harmful to the government. I don’t fear for the independence of newspapers. What is fundamental to me, when we look at the political aspect and whether we like it or not, is that some of Canada’s major newspapers are owned by the richest families in the country.
Look at The Globe and Mail, which belongs to the Thompsons, the richest family in Canada. Before it was a non-profit organization, La Presse belonged to the Desmarais family. How can a government justify giving money to media that belong to wealthy or entitled families? I find that the model for helping non-profit newspapers ensures that no funds can come out of the company because all the money is used only to produce quality information. I think it’s a model for the future for a government that wants to support newspapers. It’s not that it doesn’t want to support others. I think there should be exemptions or special bonuses for non-profit newspapers.
Ms. Brin: I understand your concern about freedom of the press. Caution should be exercised in the administration of this program. Unfortunately, we haven’t yet seen any results. We will have to judge how useful it is, but I also believe that, in what has been put forward so far, there are precautions that have been taken in the creation of the first committee — and the second, I hope — that will make it possible to avoid this risk. Of course, as already mentioned, the fact that tax credits can be removed or adjusted means that a risk will always persist. I think we can ensure that all this is done in a way that respects the mission of the media. The media can be relied on to monitor this program, as they have done to date. As for the question of the NPO model, it is a solution to the problem of the public good. The formula is completely compatible. I don’t believe that this should be the only formula, but it is consistent with the goals of the program.
Ms. St-Onge: On the issue of Unifor and with regard to the FNC-CSN, I would like to make it clear that, on our side, we are non-partisan trade union organizations. The FNC will occasionally take a position on media or cultural issues. The people we represent can take a stand on policies or ideas, but never against or in favour of a political party. It is well-rooted in our union traditions. With regard to the composition of the committee, I understand that there may be some criticism. I find that very healthy. We are wondering about how to proceed and many other things, but there are significant time constraints.
Dozens of dailies and hundreds of weeklies have closed. Other daily and weekly newspapers are now threatened with closure. What we are saying is this: Let’s proceed and see what we come up with in this committee. The important thing is that administrative, not subjective criteria, be established, regardless of who sits on the committee or establishes those criteria. Ultimately, those are the criteria we are looking for. In terms of the second issue, in the long term, other solutions will have to be found. The tax credit is a band-aid, it is not a solution that will resolve the issue of the future of information. One day, we will have to tackle the root of the problem, which is to involve those who earn money with our content in financing information. That’s what happened with Canada’s television industry in the 1990s when the Canada Media Fund was created. We’ll also have to do something about that. The people who are making money right now with our content are Internet service providers and dissemination platforms such as Facebook, Google and others.
Senator Massicotte: My thanks to you three for being with us this morning. We appreciate the importance of the press in our democracy. That argument affects us the most. It is not the entertainment or information aspect, because there are many ways to be informed, but the fundamental aspect of all this is democracy.
That being said, we know that the market as such is relatively effective and that the product meets a need. What I really like about the proposed formula is that there is a significant amount of donations. They are seeking support in the community, which is a direct way to confirm that newspapers meet a public need.
Mr. Crevier, if you remove the donation portion and increase the direct subsidy portion through the wage increase, it goes somewhat against my principles, but it should be temporary. You say it takes years to establish a system of donations and support. Even if your argument is strong enough, perhaps it should all be done gradually. In other words, the salary portion may be higher, but within five to 10 years, you could go back to the proposed formula, with the donation portion being more substantial than you are proposing. Do you agree with that?
Mr. Crevier: Let me come back to what I said earlier. I understand that, when you study the budget, you do so using figures provided by the government, but it is impossible for the amount allocated to be surpassed by the donation portion.
Think of La Presse, which currently wants to boost voluntary contributions by collecting donations. If we take The Guardian as an example, it will take years to convince people that donations are needed to support a high-quality press. We will do it, but this clearly is a matter of education.
You are right to say that the part dealing with public contributions and engagement is extremely important. However, the amounts in the budget are not realistic. They will not be exceeded in the first few years. In our recommendations and those of the CBC, we actually mention that, even if the salary cap were increased to $95,000 and the contribution increased from 25 per cent to 35 per cent, the program would still cost $595 million. The donation portion will take longer to take root, and the same will apply to digital subscriptions. When I look at the calculation for digital subscriptions, I see that there would be almost 1.4 million digital subscriptions in Canada in the first year. That’s simply not realistic.
Senator Massicotte: That is not realistic. We must realize that all this is connected to public support and that it is not just grants. Perhaps that will be the case in five or seven years. However, we can say that the program should pay more attention to the donations component, not just direct grants.
Mr. Crevier: What’s truly important to remember is that, whatever the amount spent, it would be very damaging to spend $300 million or $400 million without first addressing the issue with the structure. That is why I am calling on the government to create a structured program. Let us not forget one thing. Newspapers have a major impact on democracy. This has not been stressed enough. For example, at La Presse, even though we are French-speaking and produce quality information, we are the second most quoted daily newspaper in Canadian media. The information we publish every morning feeds radio and television channels. In addition to making people open 270,000 tablets every morning, we can say that, with our various content, we reach 63 per cent of the population.
Senator Massicotte: Ms. St-Onge, how can we put in place a structure that does not depend on the state, that would have a direct impact on the community and that would receive constant support from those who consume your product?
Ms. St-Onge: Personally, I agree that we need to get readers interested and invite them to participate in financing the information content. We are not against the principles set out in this budget, on the contrary.
As Mr. Crevier said, there is a problem with the amounts. However, I have some reservations.
Philanthropy in Canada has its limits, and the areas that leading philanthropists support the most today are health and education. All the others, including culture, are far behind.
I still have some reservations. I do not think that, overnight, people will start making massive donations to all the news media. National media such as La Presse or Le Devoir, which are located in major centres, more easily attract major donors. Those corporations will need to work hard, but it will still be easier.
Furthermore, in the case of regional or local newspapers, it is far-fetched to think that they will be supported through philanthropy. That will not happen. The small newspaper in Saguenay will have difficulty collecting donations. It is utopian to believe that this will become a universal model that will work for everyone.
However, we have to encourage it. In that sense, the idea is not to create media that are completely dependent on the state, but to give them the time to find workable solutions for the industry. The government has an indispensable role to play, such as to distribute the wealth properly, and, at the moment, that is not being done. Currently, those who are making money with content are not sharing any of it to fund the media aspect. That is the problem.
Nothing is happening at the moment, either with copyright or royalties or taxes. The requests we are making today about tax credits are because nothing happened in 1998, when Google was born and in 2004, when Facebook started. That is the situation we face today.
[English]
Senator Klyne: Just to go back to the donations and tax credits, I’m thinking less about the individual Canadian taxpayer who is going to make a donation through a digital subscription and more about large donations from charitable organizations that might receive donations from Canadian or foreign agencies that could be champions for various causes, movements or agendas. Just to think about that for a moment, how many not-for-profit charitable or registered papers are there out there and how many might convert to or adopt a not-for-profit model?
[Translation]
Mr. Crevier: Today, only Le Devoir and La Presse qualify under the definition in the program. That’s two dailies. Am I looking out for my own interests? Perhaps. My impression is that most newspapers, at some point, will transform themselves into not-for-profit organizations, or similar, if ever the government decides to make it easier to fund a model of that kind. If that were an eligibility criterion for structural grants from the government, my opinion is that most newspapers would agree to adopt models like that. We know that newspapers today are not profitable and their owners are basically losing money.
[English]
Senator Klyne: Is there a concern about large Canadian or foreign agencies funnelling money through charitable organizations that can donate to the papers? Charitable organizations now have the latitude to make donations.
[Translation]
Mr. Crevier: I think that is in the criteria that the government has developed. Some transparency is assured in drawing up an activity report, which we publish in our papers each year. Gifts that are not identified will not be accepted. So I think that the newspapers play quite an important role.
Ms. Brin: I would like to add one point about the governance of not-for-profit media like La Presse. It is also very important to have a governance structure that ensures independence, and I feel that you have already taken the necessary precautions. It is also important for that independence to be protected transparently, simply in order to keep the public’s trust. We can have major donors, while keeping them at a distance at the same time. Clearly, some donors will be tempted to put pressure on the content, but it is possible to maintain a governance structure that protects the independence.
The Chair: Ms. St-Onge, do you have any comments?
Ms. St-Onge: Yes. I would like to bring things back to the basics of journalism. Being in the media has always implied being in a fight for freedom of mind and thought. Journalists have always been in that fight in order to keep their independence. Yes, we will have to fight to keep our independence in the face of the influence that some major donors may bring to bear. It has been just as difficult to keep our independence and our freedom of thought in the face of major advertisers with commercial interests. Freedom of the press is never taken for granted. There will always be a fight to keep it and we will always have to be careful. As I said at the outset, what we must protect in that situation is diversity, by providing a variety of voices. Media keep an eye on each other too. So we have to preserve the entire mechanism, as well as the diversity. I repeat, freedom of the press will never be taken for granted.
The Chair: Thank you, Ms. St-Onge.
[English]
Senator Marshall: I realize it is now 11:30. Perhaps the witnesses could respond in writing.
How would you measure the success of the program? It is quite an expensive program, so at the end of five years what changes would you like to see? If I could just read that, and perhaps they could get back to us.
[Translation]
The Chair: Mr. Crevier, Ms. Brin and Ms. St-Onge, thank you for participating. If you could provide an answer to the final question to the clerk, we would very much appreciate it.
As you see, this topic raises a lot of interest. Please be assured that we are here to listen to you, and to make recommendations.
[English]
Honourable senators, our next meeting will be in the same place at 1:30 this afternoon.
(The committee adjourned.)