THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, November 22, 2022
The Standing Senate Committee on Transport and Communications met this day at 9:00 a.m. [ET], with videoconference, to study Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
Senator Leo Housakos (Chair) in the chair.
[Translation]
The Chair: Good morning, honourable senators. I am Leo Housakos, senator from Quebec, and chair of this committee.
[English]
I would like my colleagues, starting on my left, to briefly introduce themselves.
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from the province of Quebec.
Senator Cormier: René Cormier, New Brunswick.
[English]
Senator Dasko: Donna Dasko, Ontario.
[Translation]
Senator Gagné: Raymonde Gagné, Manitoba.
Senator Dawson: Dennis Dawson, Quebec.
[English]
Senator Sorensen: Karen Sorensen, Alberta.
[Translation]
Senator Clement: Bernadette Clement, Ontario.
[English]
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Quinn: Jim Quinn, New Brunswick.
Senator Wallin: Pamela Wallin, Saskatchewan.
The Chair: Honourable senators, we are meeting to continue our study of Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
For the first hour, we have the pleasure of having with us the Honourable Pablo Rodriguez, Minister of Canadian Heritage.
[Translation]
Welcome, minister, your presence is much appreciated.
[English]
We also have with us Mr. Thomas Owen Ripley, Associate Assistant Deputy Minister from Canadian Heritage. Welcome to our committee, Mr. Ripley.
We will accord the minister opening remarks before we go to questions and answers.
Hon. Pablo Rodriguez, P.C., M.P., Minister of Canadian Heritage, Canadian Heritage: Good morning, honourable senators. I’m happy to be here to discuss the online streaming act. First of all, I want to thank you all for your hard work on this very important bill. As the chair said, I’m here today with Mr. Ripley from my department.
[Translation]
You know, the way we discover and share our stories has changed dramatically. Our world continues to change every day. Technology is transforming the way we connect with our friends and family. It’s changing the way we create and consume our culture. This is normal and we need to adapt.
For decades, the Broadcasting Act has played a fundamental role in protecting and promoting our culture, but we need to ensure that it adapts to today’s reality, a reality where technology increasingly influences what we watch and listen to.
[English]
A reality that continues to change every day. So, how do we do this? With Bill C-11, the goal is simple: It is to promote and protect our culture in the digital age. That’s it. We want to make sure that Canadian talent can succeed both here and abroad. Whether it’s our actors, singers or independent producers, we want them to continue doing what they do best, and we will support them.
I’ve heard concerns, as we all have, about social media and social media creators. To be clear, I love what they do; they are amazing, but this bill is not about them. Social media creators can continue to create and succeed, just as they do right now. As I’ve said multiple times before, when it comes to this bill, the platforms are in; the users are out. This bill is simply about platforms paying their fair share toward our culture.
[Translation]
I’ve been saying it since we introduced the bill: If you benefit from the system, you have to contribute to it. It’s a question of justice and equity.
Let me explain what I mean, because these are more than words. More and more Canadians are opting out of cable, and this is a reality that will continue to grow. Platforms like Netflix, Spotify, Amazon, Crave, and QUB are taking over, and that’s not a bad thing. What they are doing is amazing. I subscribe to almost all of these platforms, and I love it.
However, at the moment, they have no obligation. I repeat, everyone must contribute to our culture.
[English]
All the witnesses from every side of this issue agree with the fact that our cultural industry is absolutely amazing. Remember, Canada’s strong culture is no accident. We, as Canadians, made that decision. We made that call, we chose to be different from our neighbours to the south and we’re going to protect that difference. We made a choice to protect our culture and we keep making that choice every day. Why? Because our stories matter, our artists matter, and our creators matter.
With Bill C-11, we are giving them the chance to succeed in the digital age, here in Canada and all around the world. We want to make it easier for Canadians to see themselves in what they watch and what they listen to. As I’ve said from the start, we are open to discussion and we are open to criticism. That’s fine. We are open to changes, but we are not open to doing nothing, because the status quo is not an option. Again, if you benefit from the system, then you must contribute to the system. It’s that simple.
[Translation]
So what will Bill C-11 do? It will give consumers more choice: more choice of films, music, homegrown series, more diversity and more accessible content for all. It will strengthen the production of original French-language programming and meet the needs of official language minority communities.
[English]
It will help revitalize Indigenous languages. It will uplift Indigenous cultures. Senators, I could keep going on and on.
These updates are needed right now. They’re needed for the future of Canadian artists, broadcasters and producers, and for the future of our culture as Canadians. They are crucial to our economy, our diverse society, our identity and crucial to protect who we are collectively. We have a chance to make history here. Let’s do it together.
[Translation]
Thank you for the work you do. I am ready to answer your questions.
[English]
The Chair: Thank you, minister.
Colleagues, we only have the minister until ten o’clock, and I have a long list. I will be disciplined on the five minutes allotted to everyone.
Senator MacDonald: Thank you, minister, for being here with us today. The committee has heard from dozens of digital creators and platforms who have said that their user-generated content will be captured by this bill. Senator Simons told the CRTC commissioner last week there are all kinds of people who have legal advice that advises them to be seriously concerned that they will be captured by this section. The CRTC Chairperson said:
. . . we’re not interested in individual uploaded content. There is no purpose to regulating it. It would not be in the public interest. It would not contribute to the Canadian broadcasting system.
Minister, in light of that, will you support an amendment to eliminate the bill’s application to user-generated content?
Mr. Rodriguez: Senator, thank you for the question. I would say that the bill is quite simple. It’s about platforms, not about users. We saw that in 2.1. It’s not about them. We brought back 4.1 — remember it was taken out, but we brought it back. You have to look at it in a way that social media is out. Start from the principle that social media is out, with a few exceptions for commercial content. We can’t look at it the other way as social media is all in, and then we see who is excluded; it’s the opposite. They’re all out, only with the exception of commercial content with the criteria that would be caught by that.
There is no obligation for the creator. The obligation is only to the platform, not the creator.
Senator MacDonald: Minister, you didn’t answer my question, so I’ll go to another one. Why do you believe that it is in the greater public interest to elevate these limited exceptions, making them what is most important to the government, instead of giving ordinary Canadian creators the certainty they need, the certainty they require?
Mr. Rodriguez: Well, we’re there to support our creators. As I said, our digital creators are absolutely amazing. They’re fascinating. Sometimes they do a lot of stuff with very little means. Again, it’s not about them in the same way it’s not about our traditional artists. It’s not about Celine Dion or Drake at all. The only ones who have obligations are the platforms: obligations to invest in Canadian culture, to showcase our Canadian culture and to give information. But as for the social media creators, I don’t see what obligations they would have.
Senator MacDonald: Well, they seem to have a big issue.
Senator Wallin: Minister, I think we’ll try one more time here. Twice the commissioner of the CRTC has appeared before us, last time with his legal counsel. Both times, they confirmed that user-generated content is under the authority of this bill, but what they argued was that it wouldn’t be in anyone’s interest to do it, “so just trust us, we won’t regulate user-generated content.” But again, twice they confirmed they have actual regulatory authority to do that.
To my colleague’s point here, why don’t you just propose — if you don’t like any of the language that we might come up with — an amendment that would clarify that, period, full stop, once and for all? Speak to the CRTC Chairperson, make it clear and perhaps allow us to see the regulations that you want to put forward before all the votes are conducted on this bill.
Mr. Rodriguez: Thank you for the question, senator. As I said, we’re open to discussions, but I want to be clear, 4.1 was excluded at the time. We listened to the social media creators. We listened to them, we understood their concerns and we brought it back, with the exception of 4.2, which catches only commercial content with the three criteria. That’s it.
So if I am a creator, I have no responsibility because of the bill. Only the platform does. But that’s a huge difference. We really have to look at it, senator, from the start point where social media is excluded, and only the commercial content will be recuperated. But that doesn’t mean obligations for the creator; that means obligations for the platform.
Senator Wallin: But dozens upon dozens of content creators have looked at the three tests that would apply about whether they directly or indirectly generate revenue for themselves or somebody, and most of them do. That’s why they are in the business of creating content. They make money. They’re YouTubers. They’re TikTokers. They generate money for somebody. Therefore, they are within the regulatory fence proposed here.
Mr. Rodriguez: With respect, senator, they’re not, because the three criteria have to be taken into consideration by the CRTC. In that case, they’re not used to replace content that you would find in one of the streamers, in one of those platforms. For example, if I’m looking for Celine Dion, they will give me similar stuff to her, similar singers and songs, maybe Canadian women or this and that, but I will not get a TikToker doing other stuff. They’re not in competition. People sometimes think —
Senator Wallin: But that’s the discoverability issue. What I’m trying to get at here is that people who create content are ringed by this regulatory bill — the regulations included in this bill, we assume, because that’s what the language says — because it generates revenue. So it’s not about finding Celine Dion’s music or music that’s similar.
Mr. Rodriguez: But, senator, they have to take into consideration the three criteria. Revenue alone is not enough. Revenue is the first of the criteria, and then the second is if you are using this content, for example, on YouTube, to replace what you could have heard — exactly the same thing — on Spotify. That’s the second one. The third one is if there is a unique code for that song or content. It has to be the three criteria considered.
Senator Quinn: Thank you, minister, for being here and Mr. Ripley, thank you as well. I am going to continue down that stream. I had a different question, but this, I know, is a very controversial piece of the legislation. I think what we’re boiling it down to is that Canadians need to have clarity in their legislation. When we talked with the commissioner last week, my question to him was, “Do you agree there should be clarity?” And he said yes.
Would you be opposed to amendments that bring that clarity? It’s clear to you; you’re the minister. It should be clear to you. But for Canadians it may not be clear. It may be clear to those in the bureaucracy. We bureaucrats understand our legislation. But for the average Canadian in this particular legislation that touches all Canadians — as my colleague said, there have been numerous people and hundreds of emails coming in claiming that they have a lack of clarity. Would you oppose amendments that bring clarity to the bill?
Mr. Rodriguez: Thank you for the question, senator. First, the intent has always been clear, and the fact that we brought back 4.1 also means that we did listen to those concerns. I’m ready to listen. Of course, I’m ready to listen. I said it from the start, and I’ve had conversations with many of you, but the bill creates no obligations to either users — 2.1 — or social media creators.
Senator Quinn: Minister, you’ve said that, and I understand that. My question is a yes or no: Would you support amendments that bring clarity to the bill?
Mr. Rodriguez: If I don’t see the amendment, I cannot say yes or no to the amendment, of course. But I’m open to discussions, as always.
Senator Quinn: The other issue that people talked about is the power of the CRTC. In fact, the commissioner noted last week that he wished there was a clause that was in there, that he would like to have an amendment to give him more power. He’s the head of a regulatory agency. That’s his job.
I guess my question is this: We see in other bills methods that will bring checks and balances, and I’m looking to see your reaction to the concept of having regulations as they go through the Canada Gazette Part II process and also that upon that they come back to the House and to the Senate committees to look at the regulations, to see if they are consistent with what the then law would say and the policy direction. Would you be opposed to such a check and balance?
Mr. Rodriguez: Are you saying, senator, every time there is one regulation, it comes back to the House and Senate, every time they make one?
Senator Quinn: We’re not talking about licensing issues and things like that but about the policy issues we’re debating here. It’s really around those policy issues and it’s to provide a check and balance. We’ve had many witnesses talk about — we’ve had some who say CRTC is great, we’ve had some who say it’s terrible, and we’ve had a lot in the middle saying they’re really cautious about the powers being bestowed and already existing within the CRTC. It’s a bit of a check and balance. Would you be opposed to a check and balance?
Mr. Rodriguez: Never, but everything is going to be public and open to consultations. For example, when the government drafts the policy direction, there will be a consultation right away. Then we’ll adapt the policy direction based on that consultation. We send it to the CRTC. The CRTC makes a regulation. Boom, they go into consultation on the regulations and, of course, I hope all of you will have the chance to participate in that if you want. Then they adapt the regulation based on the consultation, and then they draft the final regulations and the implementation of —
Senator Quinn: I’m familiar with that. All I’m saying is that what I’m proposing exists in other acts, the Firearms Act, for example, and there are others. I’m just looking for checks and balances. I understand your answer.
Mr. Rodriguez: I just want to say that for every time the CRTC makes a regulation we come back to the —
Senator Quinn: I didn’t say every time. When it comes to the regulations around the policies — and we’ve been working in the absence of policy directions, but eventually they need to become transparent through what the law becomes. Canadians are saying, “How can we have a check and balance to give us confidence in what the government has dictated, for example, the big guy is in; the little guy is out?” You’ve said that. My colleagues exhaustively have said they have concerns. They’ve gotten legal advice, many of them, and they could be subject to the act. I know you’re saying “no,” but there are others outside who are saying you could be. So it’s that type of check and balance that I’m talking about.
Mr. Rodriguez: What I’m saying is platforms in, users out, but there will be consultation on the regulations — public — and then you can —
Senator Quinn: Yes, through the gazetting process.
Mr. Rodriguez: And, of course, you can participate —
The Chair: I hate to cut off discussion but I am the guardian of time.
[Translation]
Senator Dawson: Minister, as you know, we are committed and you are committed to bringing in all the necessary witnesses. We have been discussing this bill for two years. I often have to remind my colleagues that Bill C-10 was passed earlier and that hundreds of witnesses were heard. We promised to reach agreements and now we are on the verge of proposing amendments and examining how we can improve the bill. Everyone has said over and over again — as we will see again today — that we will accept amendments and we will see what kind of amendments they are. We cannot vote or say that we will accept such and such an amendment if it is a theoretical concept. We need to see the amendment in writing.
I ask you: Why is it urgent to act now and what are the consequences if for some reason the bill is not passed?
Mr. Rodriguez: Thank you for your question, senator.
The last time the Broadcasting Act was updated was in 1991. At that time, I had black hair and we listened to music on walkmans. Do you remember those days?
[English]
That’s how we listened to music. You would go to Blockbuster — remember that? — to rent videos.
[Translation]
That was the last time the Broadcasting Act was modernized. It was the very beginning of the Internet. There was the noise of the connection, so you couldn’t use your phone anymore. That was the reality at that time. Today we have Netflix, Disney, et cetera, which is wonderful. Today, you can take a phone and shoot a video, and edit it. You can use the phone as if it were a television. Our reality today is that the law no longer corresponds to this reality.
There are very important players who have no rules to follow. So we have huge challenges in terms of culture, production, creators and Canadian content. That’s why it’s important that we pass the bill quickly.
I ask you, please, ladies and gentlemen, to act now. I think that the Senate has worked extremely professionally. This bill has been before us for six months. The committee studied the bill for 42 hours and received 120 witnesses. You have done an extraordinary job and I congratulate you. However, it is really time that we finally adopt this bill for the cultural sector.
Senator Dawson: I have a follow-up question. The Argentina team lost yesterday and I understand that this may affect your mood. Apart from Argentina’s defeat, as the chair has pointed out a few times, we are trying to put a new system into an old system. We are trying to give the new rules applications derived from the traditional broadcasting system. How do you respond to that comment that has been made a few times here before this committee?
Mr. Rodriguez: You are giving me the opportunity to respond to the concerns that have been raised about this. The short answer is no. We want to bring the entire broadcasting system into the 21st century. Once again, I would point out that the law was amended in 1991. These rules no longer correspond to today’s reality.
I believe that, collectively, we want to be ambitious. You want to be ambitious, Mr. Chair. Our colleagues around this table want to be ambitious. We want to do it for the Canadian cultural sector. So, once again, let’s be ambitious together.
The Chair: Senator Dawson, I notice that when I ask a question, I am told I am partisan, whereas when you ask the same question, you are told you are independent.
Senator Dawson: I am very partisan; I am in favour of the bill.
Senator Miville-Dechêne: I have two short questions. First, I want to follow up on the exception to the exemption, proposed subsection 4.2(2). Would you be open to the possibility of eliminating the much-talked-about generated revenue consideration? At the end of the day, that’s not what it’s about. You are actually trying to capture commercial musical content, for instance, the fact that YouTube serves as a music platform. You are trying to capture professional musical content. What is the purpose of this financial consideration? As everyone knows, some musicians make very little money on YouTube, while others, namely professionals, make a lot. Why not stick to the fact that they are sound recordings that have been assigned an identifier and the fact that everything being captured is the work of music professionals, whether foreign or Canadian?
Mr. Rodriguez: Thank you for your question, senator. Revenue is one of the three factors, or matters, that the CRTC must consider, but no threshold has been set stipulating that the revenue be substantial, moderate or low. What’s more, music is not the only content we are trying to capture. After all, we don’t know what the next few years will bring. It’s been 30 years since the act was modernized, and I don’t know how long it will be until the next time. Therefore, the bill has to give the CRTC flexibility in anticipation of what the future holds. Music is a major focus today, but other sectors could require our attention now and in the future.
Senator Miville-Dechêne: A number of Canadian groups are fighting to have both Canadian and foreign companies subject to the same requirements when it comes to the use of cultural workers.
I refer you to new paragraph 3(1)(f.1). The government has chosen to impose different hiring requirements on Canadian companies and foreign companies. Canadian companies have to make maximum use of Canadian human resources, while foreign companies have to do what they can.
Can you tell us why you made that decision? A number of Canadian stakeholders are clearly not happy about it, broadcasters and musicians alike, and we’ve heard that from many of the groups we’ve met with.
Mr. Rodriguez: Again, thank you for your question. It’s safe to say that our industry is one of the best in the world, and so are our human resources. The bill will make the industry even stronger by bringing in more money and more productions and by creating more jobs.
At the same time, it’s important to recognize that the players we are bringing into the system are different. We are talking about online broadcasters currently operating wholly outside the system that are being brought into the system. They are multinational companies with productions all over the world and a system all their own. Those companies are not subject to any requirements today.
I understand the way you’re looking at it, senator. You’re saying that, instead of holding them to this standard, we’re only holding them to this standard down here. What we are saying is that, instead of those companies being down here, we’re going to bring them up here.
Senator Miville-Dechêne: Does it have to do with the free trade agreement? Are you worried about reprisals? What’s behind it?
Mr. Rodriguez: Yes, there are also concerns from a free trade standpoint.
Senator Miville-Dechêne: Can you be more specific? Since the beginning, we’ve been hearing about concerns in general terms. What are those concerns?
Thomas Owen Ripley, Associate Assistant Deputy Minister, Canadian Heritage: Thank you for your question, senator. The bill was drafted to take into account our obligations as far as discrimination is concerned. We can’t be seen in any way to be discriminating against foreign services.
As the minister mentioned, for them, it’s about more than producing content just for the Canadian market.
[English]
Senator Miville-Dechêne: But how would it be a discrimination if it is a level playing field between Canadian enterprises and foreign enterprises?
[Translation]
Mr. Ripley: It’s not only about discrimination. We also have to consider whether we have any rules requiring companies to do certain things here, in Canada, that aren’t allowed under the free trade agreement. We have to find a balance. Those companies are ready to make a contribution, and we didn’t want to craft the bill in such a way that, right off the bat, they would want to launch a court challenge. The objective is twofold: to be ambitious while respecting the fact that these companies have a different business model than Canadian companies operating here, in Canada.
Mr. Rodriguez: At the end of the day, the bill will mean more opportunities and more jobs for Canadians.
[English]
Senator Simons: I want to turn now to the question of sections 7(7), 34.5 and 34.995, which seem to take powers that have traditionally rested with the independent arm’s-length quasi-judicial CRTC and give many of them instead, or in addition to, to the Governor-in-Council. I’m wondering if you can explain to us what the decision-making process was to take those powers that traditionally rested primarily with the CRTC and give them to cabinet.
People have concerns about if there is political interference in what has traditionally been an arm’s-length quasi-judicial tribunal process.
Mr. Rodriguez: Thank you for the question, senator. Trust me, I want to avoid political interference like crazy. I want to stay away as much as possible. Bill C-18, which will come soon, when you finish your study on this one, demonstrates that too. We have to stay — more fun, right — as far as possible from those decisions.
I’m not sure how to interpret that debate because, if you look at 7(1) in the act, it clearly states that the policy direction can only include orders of general application; that’s the first thing. That means that it cannot impose orders targeted at individual platforms. That has to be clear too, because I’ve heard those discussions. Bill C-11 doesn’t change that. No new powers are being granted to the government. No new powers are being granted to cabinet at all.
Do you want to be more detailed?
Senator Simons: That is not the interpretation we have heard now from a number of different lawyers and advocates, including Ian Scott.
Mr. Rodriguez: Well, it does. You have to interpret that with 7(1).
Do you want to add something on this one?
Senator Simons: I’m looking at 7(7).
Mr. Rodriguez: Yes, but 7(7) comes from 7(1). And 7(1) clearly states that the policy direction can only include orders of general application. So there is no intervention on something specific. It doesn’t give any supplementary powers to the government.
Senator Simons: But, in fact, it does. It says:
(7) For greater certainty, an order may be made under subsection (1) with respect to orders made under subsection 9.1(1) or 11.1(2) or regulations made under subsection 10(1) or 11.1(1).
So it adds all of these other branches to the powers.
Mr. Ripley: Thank you, senator. The government’s position would be that 7(7) is a subparagraph of 7, and it has to be interpreted in light of the fact that the starting point is that any policy direction must be of general application. You cannot overrule that starting principle in a subparagraph.
The origin of this provision was on the House side, where there were concerns that had been raised by stakeholders about seeking clarity that the government could use the policy direction in an appropriate way, still at the level of general application, but that could give direction to the CRTC on how it was to use those new tools that it has been given under Bill C-11. It was to specify because, obviously, the policy direction right now is in the licensing context. It was put there to clarify that, for example, with 9.1 and 11.1, it would be appropriate for the government to give the CRTC direction — still at general application but with implications for how it uses those new regulatory tools that it has been given.
Senator Simons: We have been told by others that if you left these powers to the CRTC, there might be a complaint under the Canada-United States-Mexico Agreement, or CUSMA. I’ve never understood that argument.
Mr. Ripley: I would not say that the origins of 7(7) are related to trade concerns. Again, I think it was particularly because certain stakeholders were seeking to understand how the proposed system of government oversight of the CRTC would work in this new model where some of these tools are changing. They were looking for reassurance that it would still, for example, be appropriate for the government to say to the CRTC that there is an expectation that there be a certain level of investment in programs of national interest, such as kids’ programming, documentaries and drama, which is obviously an issue that has frequently come up in CRTC proceedings.
The origin of this is to be clear that, again, while it’s still general application — we’re not talking about individual decisions targeting individual companies — the government could give the CRTC that kind of direction.
Senator Simons: My next question will be about 9.1(1)(h) and carriage.
The Chair: Minister, I’ve never seen a piece of legislation looked at by the same eyes and be interpreted in such vastly different ways. I have heard you very carefully reiterate this morning what you have said many times. You are saying that social media content creators are not going to be regulated by this bill; the platforms will be. We have heard it time and again. But the truth of the matter is — and this is where the sticking point is — these platforms, whether it’s YouTube or TikTok, are nothing. They are just a platform, they’re a shell. If it weren’t for the social media content creators, those platforms wouldn’t even exist. That is really the issue.
If I can break it down even more simply, when I listen to you, minister, you’re saying clearly that actors and/or anchors from CBC and CTV are not and will not be regulated, but the networks will be. That’s the concern of the content creators and the concern of some of us around this table.
We’ve seen over the last few months that the CRTC has regulated a big broadcasting agent, Radio-Canada. We saw it in relation to an issue in regard to a word, where they clearly regulated to the point where the anchor lost her job; she was pulled off the air by Radio-Canada. We have also clearly had the chair of the CRTC and a number of former chairs come before our committee and reiterate that the current Broadcasting Act as it stands gives the power to the CRTC to regulate content.
When you put all of these facts together on the table, I understand where the concern is coming from with the content creators. The clarity still isn’t there, minister. Can you tell us one more time how you can regulate CBC and CTV but not the anchors and the actors? How will you regulate the platforms but not those who dress the platforms?
[Translation]
Mr. Rodriguez: Thank you for your question, Mr. Chair. Whenever the word “regulate” is used, it’s important to be very clear. The requirements are on the platforms. Why? First, they are being made to contribute financially to the creation of Canadian content. That’s one obligation. Second, it’s about making it easier to find Canadian content, Canadian songs, films and so on. Third, it’s about distributing the information or content.
Creators are not the ones doing that. When you call the platforms shells, it’s important to keep in mind that they are also hugely profitable companies. Depending on their revenue, they will be contributing a share or percentage to the production of Canadian content. We’ll have to see since it will work on a case-by-case basis because the bill is flexible. Similarly, the platforms will be sitting down with the CRTC to figure out how they can promote more music or television content, because each of them has their own flexibility in terms of how that can be done.
When all of that is happening, the content creator has no involvement. This isn’t about saying that what they do has value or doesn’t. That’s not at all the case, so I hope that’s clear. These are requirements that are tied to the platforms directly.
The Chair: With all due respect, minister, despite your answer, my sense is that it will include content creators.
[English]
I guess we will agree to disagree on that.
Minister, I have also heard you on a number of occasions say that there are three criteria in 4.2 that protect against the inclusion of user-generated content. We’ve heard that.
Mr. Rodriguez: Three criteria that need to be considered by the CRTC.
The Chair: Right, but if you look carefully at the bill, it says they will be considered. They are not binding. Again, that further creates the discomfort on the part of content generators, minister.
To the question of a number of my colleagues, these are some of the loose bolts that this committee, as well as those of us who have concerns, would like to tighten up. When we hear all of the witnesses who came in front of this committee, both those in favour and those against the bill, I don’t recall one saying they don’t want substantive changes. The question is how open the government is to what I believe, if we listen to the exhaustive witnesses we had before us, will be substantive changes to the structure of this bill.
[Translation]
Mr. Rodriguez: Thank you for your question. Once again, I want to say that I have always been open to discussions, and that’s been the case since the beginning. I’ve spoken to stakeholders on both sides, representatives of online broadcasting services, people at YouTube and others. It’s important to hear everyone’s views. We are open to having those discussions.
The bill says that the CRTC must consider the three factors, but it gives the commission flexibility because it doesn’t set a revenue threshold. A decision can’t be based on only one factor. All three factors have to be taken into account.
Senator Cormier: Welcome, minister and Mr. Ripley. My question is about Canadian content. At the National Culture Summit back in May, you said that the definition of Canadian content needed to be reviewed and that you were consulting with ministers of other countries on the issue. As you are no doubt aware, producers and other members of the industry have been clear that, under the definition, intellectual property must stay in Canadian hands and the use of Canadian human resources cannot be less than what is already set out in the definition.
Where in the process of reviewing the definition are you? When will you issue an order giving direction to the CRTC?
Mr. Rodriguez: Thank you for your question, senator. I was glad to see you at the summit, by the way. We had people from all over Canada, and I think it was a pivotal moment for the cultural sector.
A huge number of conversations were had about the future of the arts and culture sector. You were involved in some of them. Bill C-11 was the focus of much discussion. A lot of questions came up. How should the broadcasting system be modernized? How can the system better reflect what the country looks like today? What should an updated definition of “Canadian content” look like? The definition goes back to 1984, so it has gone unmodernized even longer than the broadcasting system, even though the fabric of Canadian society — what we see and how we live — has changed tremendously.
Proposed subsection 10(1.1) calls on the CRTC to come up with a new definition. The bill already provides for certain considerations, including whether Canadians have copyrights, whether Canadians hold key creative positions such as director or screenwriter, and whether the content furthers Canadian cultural expression — our stories. The CRTC has to take all of those factors into account. Equally important, honourable senators, are public consultations. The CRTC is also going to consult Canadians. Each of you will get the chance to have your say during the consultation process.
Senator Cormier: I’d like your view on something. I want some reassurance, and I want you to reassure those who have concerns about this process. The factors relating to intellectual property and the maximum use of Canadian human resources should be central to the definition, for both Canadian broadcasting undertakings and foreign undertakings.
Mr. Rodriguez: Both of those factors are important and are at the heart of the discussion. Intellectual property is a fundamental factor. It adds considerable value. As for human resources, I had an opportunity to address that earlier. As you know, senator, there are no requirements right now. Going forward, there will be a lot more requirements. You can see the glass as half-full or half-empty. I have an optimistic outlook, so I see it as a good thing. Bill C-11 is going to mean a lot more jobs for Canadian technicians, who are excellent at what they do, by the way. It’s no wonder that investments are already being made. Bill C-11 isn’t starting from square one. Many companies are investing in Canada. Why are they coming to Canada? Because they are smart and because we have excellent workers, excellent studios, excellent directors, excellent actors and so on. The bill is going to bring us even more.
Senator Cormier: I have some technical questions on that subject. I find the bill gives the CRTC a lot in the way of options, depending on the type of service provided and the type of undertaking. All kinds of measures are possible. That’s why I don’t understand the reason for the distinction. I wondered whether the distinction was made elsewhere in the bill. Do other provisions distinguish between Canadian broadcasting undertakings and foreign undertakings?
Mr. Rodriguez: Obviously, the provisions are different. What we did was ensure that these companies, which weren’t covered by the system, had requirements that they didn’t have previously.
Mr. Ripley: I have to check, senator, but I think that’s the only time the bill makes that distinction.
Senator Cormier: I’ll keep my next question for the second round. I would appreciate it if you could check and get back to me then.
[English]
Senator Klyne: Thank you and welcome, minister. It is good to see you here. Thank you for being here, along with your colleague.
My question is one of frustration with the debate around this bill, which has been the focus on the concept of discoverability. For me, an equally important aspect of promoting Canadian content is making it sought after, not just making it discoverable.
My question is what percentage of revenues will be directed to the production and distribution of good or sought-after Canadian content.
Mr. Rodriguez: Thank you for the question, senator.
It’s not determined yet. But you’re right. I think we do extraordinary things. We can probably do better, like any other country. But even if we do even better, if no one can see it, if it is not showcased, how do people have access to that? That’s the challenge. We’re working on both sides.
Senator Klyne: I don’t disagree with that.
I’m just wondering if it is an intent that there will be some of those revenues directed toward not just the creation but the distribution of good Canadian content.
Mr. Rodriguez: Well, we have to look at this bill as part of a global effort, not in a silo. This will bring more money to the system. This will help Canadian content to be showcased. But there are many other elements, for example, modernizing our institutions — the Canada Media Fund, or CMF, Telefilm and others — which will also help in that effort.
Senator Klyne: Maybe another way of asking this: Will a sizable portion be incrementally sent to the Canada Media Fund, for instance, to help create these new productions and distributions?
Mr. Rodriguez: Well, that we’ll know eventually but, yes, a sizable amount will be available for Canadian independent producers, if that is the question. There will be —
Senator Klyne: Well, you have some influence over this. I am just wondering if it was your intent to influence that this happens.
Mr. Rodriguez: Well, in my mandate, there is also the mandate to increase CMF funds, which we will do.
Senator Klyne: Thank you.
The other concern I have is in determining the nationality of content. I have a concern with the current point system. You were just having a discussion on that. I have another question to follow that.
Canadian production is based on criteria that have been around in one form or another since the 1920s. There are still residues of that. Canadian program certification, as you alluded to — that point system — was adopted in 1984.
From my perspective, there is not enough or zero weight given to the value of contributions made by Canadians working in jobs below the line, including the production designer, the editor, the director of photography, the grips, the others who are, for all intents and purposes, critical to giving life to what the above-the-line jobs are doing. If we want to have those jobs stay in Canada, we need to also recognize the below-the-line jobs and make sure that they are getting substantial funding, training and education there.
I know in Saskatchewan, when we got rid of the tax credit, we leaked off all those jobs to Vancouver. That can similarly happen with Canadian below-the-line jobs going south.
I am wondering if, when they do modernize that point system, some influence could come that says you need to include and recognize these valued contributions below the line.
Mr. Rodriguez: I don’t disagree with you at all, senator. I think that has to be considered.
Senator Klyne: Thank you.
Senator Dasko: Thank you, minister, for being with us today.
You asked earlier, if you were looking for Celine Dion, where you would find her. Las Vegas is where you would find her.
I wanted to pursue the line of questioning started by Senator Simons on clause 7(7), the one that has been described as a subclause of the first clause that is supposed to provide greater certainty and clarity. I still don’t quite get this. My question is this: If this clause were removed, would it change anything or not?
Mr. Rodriguez: That’s a very good question. Probably not much. I don’t know. Owen?
Mr. Ripley: It is a for-greater-certainty clause, senator. So in that effect, it was meant to, again, provide some clarity about how that policy direction power could be used vis-à-vis those new powers that were being implemented. The practical effect of a for-greater-certainty clause is not all that significant.
Senator Dasko: We have been hearing from certain witnesses — a number of people, a number of witnesses who have sent us submissions — saying that this truly does give the government the power to do all kinds of things that it currently doesn’t have in the bill. This is where we’re getting really a different interpretation.
You’re saying that maybe if it were taken out, it really wouldn’t have an impact.
Mr. Rodriguez: I do disagree, senator, with the fact that it gives more power to cabinet or the government; in my opinion, it doesn’t at all. Again, it is for greater certainty. It is something that is used, as you know, quite often in bills. You will find it here, or you may find it in two or three different places.
Senator Dasko: If I were to continue the line of questioning that we just had from Senators Cormier and Klyne about Canadian content, the point system and how it might change, let’s take this as an example. This is an important part of what the CRTC does, very important for Canadian content, creators, broadcasters and everyone in the Canadian system.
What would this clause give to the government — what power would it give to the government, to the Governor-in-Council to deal with, let’s say, changes in the point system?
Mr. Rodriguez: You mean 7(7)?
Senator Dasko: 7(7), yes.
Mr. Rodriguez: Again, I don’t see any new power given to cabinet. It’s just for greater certainty.
Mr. Ripley: One of the things —
Senator Dasko: It invokes all these other clauses that Senator Simons has read out.
Mr. Ripley: Specifically to your question, we know that the CRTC will have to engage in a process given the new regulatory power that has been put in place to define Canadian program and the factors that are listed in there. So the policy direction could hypothetically be used, for example, by the government to ask the CRTC to consider certain things in doing that process.
Senator Dasko: That’s a broad policy direction. That’s what the CRTC has now. But under this, doesn’t it have the ability to do more than just provide broad policy direction?
Mr. Rodriguez: If you mean to give specific targeted direction —
Senator Dasko: Potentially.
Mr. Rodriguez: — the answer is no. It’s still under the broad policy directions.
Senator Dasko: Okay. Anyway, as I said, we keep hearing from people who are saying this gives unique, special, comprehensive powers to the government.
Mr. Rodriguez: We disagree.
Senator Dasko: Okay. Thank you.
The Chair: Very briefly on second round, minister. I know we have limited time because you need to leave at 10 a.m. sharp. To my question you answered that the government is open to conversation when I asked you how open the government is to substantive amendments. I guess what we would like to have clarity on is if you are open to conversation or if you are open to have an open mind in looking at the substantive amendments that I believe, listening to the testimony and the debate at this committee, will be coming forth.
Mr. Rodriguez: I was born with an open mind, senator, so, of course, I have an open mind on this. I cannot say at this moment I would agree or disagree, technically speaking, with an amendment that I have not read. You understand that I cannot do that. On the general principle, we are open to that, but this bill comes after lots of consultation on the previous bill, Bill C-10, that was discussed here too. Now Bill C-11 has been discussed and consulted across the country. You have had about 120 witnesses, which is amazing. You did amazing work here. We think it’s the right balance, but, of course, we’re ready to look at the amendments.
Senator MacDonald: Minister, I want to pick up on what Senator Klyne was speaking about in regard to discoverability and algorithm manipulation. Section 9.1(8) of the bill states:
The Commission shall not make an order under paragraph (1)(e) that would require the use of a specific computer algorithm or source code.
However, the CRTC commissioner has told our committee quite clearly that this will be accomplished indirectly. He said:
. . . we will say, “This is the outcome we want. . . . I don’t want to manipulate your algorithm. I want you to manipulate it to produce a particular outcome.”
We have been told by many witnesses that if this is done or indirectly required, it will have a very negative impact for many Canadian creators. In light of that, why wouldn’t you support an amendment to prevent this when it comes to discoverability?
Mr. Rodriguez: Discoverability is key, as you know, senator, so we can see our music, our films, our content. As you said, the CRTC can’t mandate the use of specific algorithms. What we want is outcomes. We want more movies, more music, more television, more of our stories, and then it’s up to the platforms to decide how to do that. They may decide to touch their algorithms, but that would be their own decision. They could have playlists. They can have filters. For example, in the filters you enter “Canadian songs.” They can advertise. They can advertise on their web page when you go there. Or — I’m sure those who use YouTube — I do — you listen to a song or something, and then an advertisement comes in, and that could be advertising Canadian content. So there are different options.
Senator MacDonald: But there is still manipulation. When Mr. Scott appeared before our committee, he said there are many ways to promote the discoverability of Canadian content without engaging in algorithm manipulation. He referenced advertising, helping creators produce content, using promotional reels, using commercial time, putting up billboards, et cetera. So Mr. Scott is saying that algorithm manipulation is not necessary for ensuring discoverability. Why does it need to be in the bill?
Mr. Rodriguez: We’re not saying the platform has to do that. It’s a choice. It’s very flexible, senator. The CRTC will sit down with the different platforms because platforms have different audiences, different technology, different ways of doing things, different business models, and based on those conversations and with the outcome we want — more Canadian films, more Canadian music, more Canadian production — then the platforms will decide themselves, based on their technology or the business model, how they will do it. It’s up to them.
The Chair: Thank you.
Senator Simons: As promised, this is about carriage. We’ve heard a lot from the 9.1(1)(h) carriers about APTN, The Weather Network and other public interest broadcasters who have mandatory carriage now that they’re worried that as conventional broadcasters themselves move to streaming, they will lose that preferential access. We have also heard from someone like Brad Danks from OUTtv, who is concerned that there is no obligation for streamers who are aggregators to carry Canadian services such as his.
I’m wondering, minister, if you can tell us what supports in this bill your office is prepared to give to those public interest broadcasters, and whether or not, as we have been told, the reason they can’t be included in the act is for CUSMA.
Mr. Rodriguez: Thank you for the question, senator. We recognize the importance of those services. I remember being at APTN giving interviews. CPAC, I don’t know how many interviews I gave there, and probably many of you. They bring an important contribution to working in the broadcasting system. But Bill C-11 at this moment already creates powers for the CRTC to mandate the carriage of the services under section 9.1(1)(h). We’re looking at maybe different ways to help them with the funding. For example, the money that we could get from the bill, the contribution from the platforms, maybe some can go to a fund. Maybe part of that fund can go to and help those important players. So that’s an option. We’re looking at different options.
Senator Simons: The problem is that under 9.1(1)(h) there is mandatory carriage on broadcasting. If we evolve to a point, probably in the not-too-distant future, when conventional broadcasters are moving their offerings online — and then to my second question: What about a service like OUTtv to require some kind of fair dealing regulation to ensure that aggregators who are international have to give fair carriage?
Mr. Rodriguez: I think there was something under 9.1(1)(i).
Mr. Ripley: Yes. Senator, the CRTC will have the power to require the distribution of programming services — so channels — on online services. For example, a service like Amazon channels could be required to carry Canadian services. The distinction is what 9.1(1)(i) does not permit is for the CRTC to determine the commercial arrangement between those services. But 9.1(1)(i) does actually create an opportunity for the CRTC to think very differently about carriage because there is not the same degree, I would argue, of scarcity. So for example, I think there is a real opportunity to think more broadly and differently about what services have to be carried in light of that power under 9.1(1)(i).
Senator Simons: Can you shed any light, because every time we ask a question about this, we’re told it’s CUSMA? Yet when we had representatives from Global Affairs, they could not elucidate for us what the CUSMA issue is. Mr. Ripley, maybe you can give us a hand.
Mr. Ripley: Thank you. I think there are two things. There is our specific obligation in CUSMA, and this goes a little to Senator Miville-Dechêne’s question earlier, that obviously we have been very mindful about questions of discrimination. The other piece that we are mindful about has been just a good trading relationship and the sensitivity, I would say, around the degree of economic regulatory tools that you give to the CRTC and how interventionist they are in the context.
Because there are new opportunities here, I think it’s a question about whether the CRTC should be granted exactly those same tools that they’ve had in the Canadian context. It has been a closed market with highly vertically integrated companies where there is potential for abuse of position in the Canadian context.
The Chair: Thank you, Mr. Ripley. It is ten o’clock, and I know the minister had a sharp deadline.
Mr. Rodriguez: Yes, I have a cabinet meeting. The Prime Minister is chairing a meeting. I have to go.
The Chair: That is important, but we do appreciate your dedicating your time this morning. On behalf of all my colleagues, thank you very much.
Mr. Rodriguez: Thank you very much, senators. Let’s change history together. Let’s be ambitious.
The Chair: Honourable senators, for the second hour and our last panel on this study of Bill C-11, we have again with us Mr. Thomas Owen Ripley, Associate Assistant Deputy Minister. Thank you for indulging us for a second hour. He has with him Amy Awad, Senior Director, Marketplace and Legislative Policy; and Charles Kouri, Policy and Research Analyst, Marketplace and Legislative Policy. Thank you to all three of you for being with us.
Colleagues, they are forfeiting an opening statement. I think everything that the department can say has been said, and they will continue to say more throughout our question-and-answer period.
Senator Wallin: Just a quick clarification to begin. The minister said that “to regulate,” the phrase as it is used in English, might be misinterpreted. Is there some other way to understand “regulate”?
Mr. Ripley: I’m sorry, senator; I’m not entirely sure of the context in which he said that.
Senator Wallin: He said it a moment ago when questioned by, I think, Senator Klyne. I also caught Senator Miville-Dechêne’s eyes on that when he said, “to regulate, as it is used in English, may not be clear.”
Mr. Ripley: I can’t speak for the minister. I would characterize it as such, for the purposes of this bill, that the focus is on online services or streaming services making a contribution to the broadcasting system. The way that would come about is regulatory obligations being placed on them to do certain things. That’s the question of being regulated.
Senator Wallin: That’s a question mark, so I’m raising it for you.
The other question I want to follow up on — and it’s not a section 3-point anything or 7-point anything — concerns when you were clarifying responses, I think, to Senator Simons and also to Senator MacDonald.
It’s not so much that CUSMA is going to break down over this, but it’s the message this bill sends to other countries and organizations. You’ve said that interventionist government interference might be perceived in a certain way. Are you concerned that it might actually provoke retaliation?
Mr. Ripley: We’ve crafted the bill in a way that respects our international obligations. We have had good, open communication with the main big streaming services. I think they understand the objectives of the bill. They obviously have a deep economic relationship with Canada. They understand the intention behind the bill. The message we have from them is that they will be constructive as the bill is implemented.
Senator Wallin: Yesterday, I had a conversation with a young successful person who is running an economic advice website, et cetera. She’s on Twitter. She’s here, she’s there, she’s everywhere. She had asked me about this bill, and we were getting into a conversation. Her response, completely unprovoked, after about 10 minutes, was, “Well, I think what I should do is simply move the base of the company to the U.S.” She can continue to live and operate here, but she will move there so that she is not subject to what is, as I think you’ve heard today, extremely confused, unclear legislation, the outcome of which we really don’t know because we haven’t even seen the regulatory side of it.
Mr. Ripley: Thank you, senator. For the purposes of clarity, there is no instance where an individual using a social media service is subject to CRTC regulation.
That is very clearly precluded in section 2, subparagraph 2.1, which says individuals, whether it’s a business —
Senator Wallin: Sorry, I just want to pre-empt you because she does generate revenue, both for herself and the site. The content is replayed and reused on traditional broadcasters, as is she, et cetera. I’m assuming there would be a unique identifier therefore. So she is very much in this category, and her answer is to move her operation to the U.S. She would not be the only person in this country getting ready to do that.
Mr. Ripley: Even in an instance of somebody uploading commercial content to a social media service — and again, the prime example that we’ve been using are record labels that are uploading sound recordings to a service like YouTube and using it for distribution. For the record label, the individual company using YouTube, there is no question of them being subject to any kind of obligation by the CRTC. That is precluded in section 2, subparagraph 2.1. The question is what obligations YouTube may have with respect to commercial content that is uploaded to its service. But there is no possibility for an individual company using that service to be treated as a broadcaster.
Senator Wallin: But by the minister’s own words and yours, if you meet the test, you are theoretically subject to regulation and the extraction of funds.
Mr. Ripley: The streaming service, the social media service, such as YouTube, for example, would have obligations. The individuals or the companies uploading the content to the service do not and would not, because it is clearly precluded at section 2, subparagraph 2.1.
Senator Wallin: It would be helpful if that were said throughout the bill. Again, we’ll discuss that in the context of amendment. Thank you.
[Translation]
Senator Miville-Dechêne: I’m going to stay on the same topic for a moment.
If the platforms are taxed or if they are required to pay money or make a contribution because record labels are uploading content to the platform, obviously the platforms will pass that cost on to the company, so it comes down to the same thing. If you require the platform to pay a given amount, but the platform knows the amount is based on the musical content, it comes down to the same thing. The label — Sony, say — will be the one who gets the bill. Am I way off base, here, or not?
Mr. Ripley: I believe that, in most cases, social media sites make their distribution service available for free. Most of the time, there isn’t a two-way exchange of value. The value the social media service derives is based on its advertising revenue. There is value in making this type of content available for distribution because, once again, many Canadians use YouTube as a music streaming service.
Senator Miville-Dechêne: I want to turn to a topic covered in proposed paragraph 3(1)(r). It refers to “programming [that] generates results allowing its discovery.” The term “discovery” — Do you see where I am? It’s at the very end of page 8 in the PDF version of the bill.
All right. The term “discovery” is not defined anywhere in the bill, either in English or in French, and it appears only once. That’s rather strange. Another term, “discoverability,” appears more often but isn’t defined either. As you can surely understand, that’s one reason why people are somewhat anxious about what discoverability means. The same is true of generating results. What results? What is being referred to?
What’s more, in relation to proposed paragraph 3(1)(r), I heard the minister say that the platforms could decide whether or not to use their algorithms to generate the results in question. However, that’s not quite what you say here. In the proposed paragraph, you say online undertakings must “ensure that any means of control of the programming generates results.” The provision says indirectly that algorithms have to be used as well. Do you see where I am in the bill? It contains no definition of discovery and no definition regarding results, and it contains a provision that seems to say that online undertakings can use any means possible, including algorithms, to generate results that are unknown but that will amount to a quota of sorts.
Mr. Ripley: Thank you for your question. First, proposed paragraph 3(1)(r) refers to a policy objective, not a specific power of the CRTC. In my view, the CRTC’s key discoverability power is addressed in subsections 9.1(1) and 9.1(2). I would refer you to this provision, in particular:
(e) the presentation of programs and programming services for selection by the public, including the showcasing and the discoverability of Canadian programs and programming services . . . .
That is really the CRTC power that goes to the heart of the discoverability requirements. You’re right that the notion of discoverability or showcasing isn’t defined in the bill. That is so the concept can evolve over time as new content promotion tools are developed. The tools we have today are not the tools we had five years ago, and I would say that, in five years’ time, online streaming services will have other tools at their disposal to promote content. The idea is that the concept will be able to evolve.
Senator Miville-Dechêne: What about the term “discovery,” which appears only once?
Mr. Ripley: I would say that it ties in with the notion of discoverability.
Senator Miville-Dechêne: Thank you.
[English]
Senator Simons: I wanted to ask about something other than 4.2(2), but I have to circle back because I feel there has been a profound misunderstanding in what the minister said and what you have said today, Mr. Ripley. The issue isn’t, as I understand it, that the digital creators are concerned that they have to pay into a fund. They are concerned that YouTube will be required to institute discoverability guidelines that will prejudice their chances of being seen. That is the concern.
I think it is a straw man to say they don’t have to worry because we won’t be asking them to pay into the Canadian broadcast fund and we’re not going to be asking them to prove their Canadian bona fides. The concern is that the host platform, specifically YouTube, will be required to engage in activities that may prove prejudicial to those Canadians being able to reach their audiences.
Mr. Ripley: Thank you, senator. I was doing my best to reply to Senator Wallin in terms of what I understood her question to be.
I agree with your characterization about the concerns that have been brought forward by digital-first creators in terms of a concern about how the two systems are going to work together in a context where YouTube is being used essentially as a substitute for another type of streaming service, which is the way that YouTube is used, versus when we’re using YouTube to search for organic creator content, for example.
The goal is to do that in a way that does not disrupt the livelihoods and the business models of these digital-first creators who have very successful business models. They bring value to the creative sector and they bring value to Canada. This is not intended to result in negative impacts for them.
The challenge will be for the CRTC, for industry, for digital-first creators and for the traditional creative industries to work through what those details look like when those regulations under 4.2 are put in place.
Senator Simons: I put it to you that the challenge would be minimized if we had clear language in 4.2(2) about scoping. It’s fine for the minister to say it’s additive, that you have to consider all three things, this and this and this. That’s not the way the bill is written. The very first category is about whether it creates any revenue, directly or indirectly. That captures almost everything.
I’m going to get to my actual question, which is about the Statutory Instruments Act. The Statutory Instruments Act does not apply in sections 9 and 11, and I want to better understand. Senator Wallin and I have been having a sidebar on Twitter DM about this.
What is the effect of the non-application of the Statutory Instruments Act in these sections, and should that be a concern vis-à-vis the powers of the CRTC?
Mr. Ripley: Thank you for the question. The Statutory Instruments Act contains specific obligations with respect to the making of regulations, et cetera. The exemption here is being provided because the CRTC is being provided a degree of flexibility in terms of how it publishes those regulations and orders.
I would say the way that the bill is structured is it is exempted from certain obligations under the Statutory Instruments Act, but the bill is clear that those regulations and orders must be published on its website, which has the effect of making sure that they are known and folks know where to go to find that information.
Senator Simons: This is a concern. It seems a trivial concern in the context of all this, but it is a real one for me as a former journalist.
We have heard again and again that the CRTC’s practice of posting its decisions is opaque and that things are not posted proactively. You have to go and search for them. When you do search for them, you don’t get a proper accounting of everything that happened.
I’m concerned that if you eliminate the oversight of the Statutory Instruments Act, we may, in fact, increase a problem. This should not be a big fix, but I’m worried that if we’re moving backwards, that doesn’t take us to the right place.
Mr. Ripley: The intention, senator, is to strike the right balance between making sure that the CRTC can do things in an efficient and effective manner — you likely have heard a desire to make sure that the CRTC does not get caught up in a heavy degree of burden — and, to your point, making sure that everyone has clarity around what those obligations are and that they can easily find them.
The balance we’ve tried to strike is to make sure that we are meeting that desire for clarity while making sure, again, that the CRTC does have a degree of manoeuvrability, so to speak, to make sure that the process doesn’t get too bogged down.
[Translation]
Senator Cormier: I’d like to go back to paragraphs 3(1)(f) and 3(1)f.1, on the distinction between Canadian and foreign undertakings.
I’d like to have a clearer understanding of something. If we trust the bill, it has sufficiently clear provisions that would allow the CRTC to take the nature of the services provided into consideration. I would draw your attention to paragraph 3(1)(a), according to which the CRTC adjusts the contribution of each broadcasting undertaking to Canada’s broadcasting policy on the basis of the nature of the services it provides.
Paragraphs 5(2)a.1 and 5(2)a.2 specify that in its regulatory and supervisory powers, the CRTC will have to give consideration to the nature and diversity of the services provided by the broadcasting undertakings, including their size and their impact on the Canadian creation and production industry. It will also have to ensure that any broadcasting undertaking that cannot make maximum or predominant use of Canadian creative and other human resources in the creation, production and presentation of programming contributes to those Canadian resources in an equitable manner.
It strikes me that the CRTC would have all the tools it needs, and that these make no distinction between foreign and Canadian undertakings, to modulate the requirements for them to contribute to Canadian programming or to the use of human resources.
Getting back to my question, why is it necessary to make this distinction? In Canada’s agreements with its partner countries, can it not clearly explain that the bill has provisions that require taking these distinctions into consideration? I’d like to understand, because it’s a real concern, and I see it as relating to our vision of how we pursue our cultural policy in Canada.
We need to make sure that Canadians are working and yet it applies only to Canadian programming, and not to all of the productions that will be made by foreign undertakings. I’d like further details.
Mr. Ripley: Thank you, senator. We did our homework in September. It’s true that paragraph 3(1)f.1 is more or less the only place where the distinction between Canadian and non-Canadian companies is made, apart from paragraph 3(1)(a), which provides the wording on Canadian control and ownership. It also refers to the fact that foreign services operating in Canada are now included, making this paragraph another place where the distinction is made.
You’re right. The bill acknowledges that we are currently living in a context in which there are many broadcasting services with different service models, and the intent is to create some flexibility in determining the best contribution that each service is able to provide. It’s not a single model, and therefore this flexibility is needed. Of course, when we’re talking about our counterparts in the United States, we specify this to reassure them that the system will operate on the business model used by major streaming services that operate here in Canada.
At the same time, it’s important to acknowledge that we are making this transition on the basis of a model that was completely closed to foreign companies. So as the minister explained, we tried to strike a balance; we are acknowledging that yes, we want to be ambitious, but we also want to challenge these businesses to do the best they can.
Senator Cormier: Is the Canadian government receiving clear signals from its United States partners to the effect that they are very worried about this, or are we being too cautious about pushing the Canadian human resources issue?
Mr. Ripley: The difference between paragraphs 3(1)(f) and 3(1)f.1 is that in paragraph 3(1)(f) the starting point is maximum use, and in no case less than predominant use. There is an exception in paragraph 3(1)(f), but only for specialty services, meaning a specialized format for use in a language other than French or English. The challenge is that it’s altogether possible to expect that we will have streaming services operating here in Canada on an international business model, that the services will not be specialized, and that even so, perhaps because of a mandate, will not be forced to invest predominantly.
The wording of paragraph 3(1)f.1 was designed to ensure that to the greatest extent possible… We acknowledge that yes, we want to be ambitious with respect to these services and expect that they will do everything they can. You also underscored the fact that there is a second factor in paragraph 3(1)f.1 requiring that the contribution be equitable.
[English]
Senator Klyne: Welcome to our guests. The act is intended to bring online broadcasters under similar rules and requirements as our traditional broadcasters. Legislation would ensure that online streaming services showcase Canadian music and stories and support our creators and producers. Further, it would make programs by talented artists in both official languages and Indigenous languages more accessible to Canadians. Finally, streaming platforms that broadcast commercial programs would be required to contribute to the creation of Canadian series, music and movies and would make sure that programs are showcased to Canadians. Is all of this something Canadians are asking for, or is all of this intuitive, something someone thinks a majority of Canadians want?
Mr. Ripley: Thank you, for the question, senator. When you look at public opinion research, Canadians value finding Canadian stories and music. That is something that we value as society, and the bill is designed to make sure that as our consumption habits change and as we migrate the way we consume those things, we continue to find those stories on these new platforms.
Senator Klyne: You’re telling me there is empirical evidence that supports it. Is that something you can share?
Mr. Ripley: We can provide the results of the public opinion research.
Senator Klyne: Thank you. It has been related that this act will bear $900 million in incrementally new revenue, and I doubt that this will come off willingly from shareholders of the online broadcasters’ streaming services and platforms. In that scenario, the revenue is likely to come on the backs of Canadian subscribers — or are there some provisions of policy and regulations that say otherwise?
Mr. Ripley: It relates a little to your previous question to the minister. The bulk of the modelling behind that had those what we will call “expenditure requirements,” so that’s an expectation that streaming services invest a certain amount of money on an annual basis in the production of Canadian programs.
It’s not a “pay all that money into a fund,” for example, which I agree with you would have a direct flow-through effect to consumers. But this starts from a premise that many of these streaming services already have a deep production footprint in Canada. They are producing a variety of programs here, and the bill is fundamentally about saying to them in that production footprint moving forward, we expect a portion of that to be Canadian programs, where you use Canadian creative talent and tell Canadian stories. That relates to the discussion we were having about the definition of what Canadian program will be moving forward.
Senator Klyne: That will be an incremental investment or expense on their part to play in the Canadian sandbox.
Mr. Ripley: No, it will not be all incremental expense. Many of these streaming services are already investing billions of dollars in production. I always characterize it as being about a spectrum of that and challenging them to move a portion of that investment into what Canadian program is once we work through what that new definition will be. It’s about saying, “It’s great that you do so much business here.” Yes, there will continue to be foreign location shooting that happens in Canada, but for big streaming services with a big production footprint in Canada, it will also be about challenging them to invest a percentage of their production budget in Canadian programs. That $900 million is not on top of what they are already doing. It’s about shifting the ambition around their production here in Canada.
Senator Klyne: Essentially recognizing it.
Senator Quinn: A very brief follow-up to Senator Klyne: As revenues accrue, will there be any offsets from departmental budgets? As new revenues accrue, the funds that you may be accruing from streamers, will there be offsets in other areas of the department to balance that?
Mr. Ripley: With respect to expenditure requirements, that money is never transferred. An expenditure requirement stays within the company. It’s essentially an investment obligation on their part to invest that in Canadian production, but they still retain control in the decision making over how they will do that.
We do expect some services, because they may not have a big production footprint here or otherwise, that their contribution may look more like what we know now for cable and satellite companies, which is a contribution to a cultural production fund, such as the Canada Media Fund. Those revenues, though, do not go to the department. That transfer is overseen by the CRTC, and that money is remitted directly to the Canada Media Fund, for example.
Senator Quinn: Does the department make contributions to those areas that you have just mentioned?
Mr. Ripley: The department does make contributions to the Canada Media Fund, so right now the Canada Media Fund is a public-private partnership in that their budget constitutes a contribution from the federal government as well as those regulatory contributions.
Senator Quinn: So there would be no reduction to that allocated from the department to that fund.
I am coming back to the question of checks and balances, and we talked about the gazetting process. Because of the gazetting process, this government doesn’t have to react to that. Your colleague from the Department of Justice said last week that we have scrutiny of regulations. Well, that’s after regulations come into force. A lot of the concerns we’ve heard here had to do with the powers of the CRTC and certainly the regulations, proposing that it may be helpful for them to come back before Parliament, because that is where the law emanates from, to see that the law and the regulations are consistent with the directions that the government is going in. Why wouldn’t we consider that?
Mr. Ripley: The model that has been put on the table is a common model in the sense of the Canada Gazette Part I and Part II being quite standard across a variety of regulatory spheres. I do understand, based on your intervention, there are different models that exist perhaps in different fields.
The intention on the government’s part is to be transparent about the direction and ensure that all interested stakeholders have the opportunity to participate in those proceedings. I think the CRTC proceedings have been in place for a long time. Canadian industry and Canadian stakeholders who participate in those proceedings understand how they work, and, at the end of the day, the CRTC is a quasi-judicial tribunal that can only make decisions based on the public record. The CRTC cannot make decisions other than what is put on the public record before them.
Senator Quinn: On the question of clarity, we’ve heard that there are areas of the bill that aren’t clear. Isn’t it in the best interests of the government and the department to produce clear legislation so that Canadians clearly understand what the legislation is trying to achieve? Wouldn’t that be a good thing? Isn’t that something that should be embraced and make those incremental changes that people are talking about so Canadians can understand exactly what this act is trying to achieve?
Mr. Ripley: The existing Broadcasting Act is structured in a way that the policy objectives at the front end set out Parliament’s desire for what the system is supposed to achieve. The CRTC is then given certain regulatory tools and it has the job of putting into effect those policy objectives.
The government has been clear in this particular process, given that we are in a huge transition to a new model, that there is intended to be that interim step of issuing that policy direction so that there is greater clarity to the CRTC in terms of the expectation on how it brings into effect the revised policy objectives that are being put in place.
Bill C-11 builds on that existing structure. It doesn’t seek a change to that structure.
Senator MacDonald: I want to go back to the trade implications. This bill provides the CRTC with the power to make regulations requiring undertakings to make expenditures and contributions to funds, such as the Canada Media Fund, for the production of Canadian content.
But the former CRTC commissioner, Konrad von Finckenstein, has argued that entitlement to the benefits from such expenditures should not be limited to Canadian ownership, control of producers or Canadian ownership of intellectual property rights because of potential retaliatory action under the Canada-United States-Mexico Trade Agreement. This is his quote; he says, “Since most streamers are U.S.-based, you can expect that to happen.” You don’t seem to be too concerned about it. The minister doesn’t seem to be too concerned about it.
I have been on the Canada-United States Inter-Parliamentary Group for 13 years. I have been a chair of the Senate for years. I know how the Americans operate. I think this would invite retaliatory measures from the U.S. unless this bill is altered. American officials have raised this. Mr. von Finckenstein has raised this. Why are you so unconcerned? Why is the ministry and your department so unconcerned about this? I think it’s a real threat.
Mr. Ripley: Thank you for the question. I would start by saying we have carefully considered the relationship with the United States throughout this process. We have had regular, ongoing communication with American officials as the bill has moved forward. We sought to respond to their questions. I think we have taken that very seriously.
At the services level, the bill will apply in a nondiscriminatory way. Obviously, yes, there are big American services that operate here in Canada. But this is not giving the Canadian services that do exist, like Crave, CueMusic or others, a free pass.
The expectation is that both Canadian and non-Canadian services make a meaningful contribution. That’s the starting point at the services level.
Senator MacDonald: I will make the point that American officials are not Congress. Congress operates on a much different level. If they push, the American officials will give way.
Mr. von Finckenstein also said that one way to avoid potential trade retaliation as a result of Bill C-11 is to permit platforms paying into a fund to then be eligible to benefit from that same fund. The principle would be, “If you pay, you can play.” Was this considered by the department and, if so, why wasn’t it incorporated?
Witnesses have also commented that payments made by platforms to funds under the terms of this bill should be paid directly to the Canadian digital creators who use those same platforms. Was this considered and why wasn’t it incorporated?
Mr. Ripley: It goes a little bit to Senator Klyne’s question. The working assumption of the department in terms of how the bill will be implemented for the big streaming services is that they would be subject to similar types of requirements that our big Canadian broadcasting ownership groups are subject to. For those businesses that are in the business of production and commissioning content, right now that takes the form of an expenditure requirement. It’s not a question of them paying into a fund, but it really is a question of an investment obligation on their part. That harnesses and creates a degree of flexibility for them to use their market intelligence and what they’re very good at in terms of making those commissioning decisions.
Again, there certainly is a possibility that, for some services, that will not be the appropriate form of contribution for them, and we may be looking at a question of them paying into something like the Canada Media Fund. The parameters of the Canada Media Fund aren’t set out in legislation. It’s a departmental program that oversees that.
You are right that as Bill C-11 gets implemented, we may need to look at the policy framework for the Canada Media Fund and consider questions such as those. There has been no decision taken on them as of now.
The Chair: I have some comments, questions and a direct follow-up to Senator MacDonald’s point.
Let me understand correctly. The government created a bill for streamers and internet platforms to pay more into a particular structure, like the Canada Media Fund; it set certain obligations for them.
It seems to me that the only people who have been regulated here to be put in line in order to conform to traditional broadcasting are the streamers. There has been no modernization for the traditional broadcasters from what I see in this act.
Back to the point that Senator Dawson made for me that, yes, this chair on a number of occasions has pointed out that this bill is an attempt to take modern ways of communication and bring them into line into traditional broadcasting rules and guidelines that we have in Canada. For me, the analogy is like taking a horse and a buggy and trying to align it with a Lamborghini. Now, they both provide forms of transportation; they just do it in a different way.
We’ve taken the horse and buggy — guess what that is, traditional broadcasters — and we have the Lamborghini, which is streamers and digital internet platforms, and you’re creating a maintenance and operating manual for both of them.
You’re saying to the Lamborghini, “Well, you’d better adapt to the horse and buggy.” Where the truth of the matter is, in today’s era, the horse and buggy — unless you go to a museum or to some movie set — they are not very relevant in 2022. The Lamborghini is.
That is the issue I have with the bill. I believe it sums up, after months of study, what I have been seeing here as an attempt with this bill.
Now, in answer to the question about the projected $900 million of new revenue, again, it’s revenue you are taking out of an industry that exists — the internet digital-content creators and platforms that are investing a historic amount, based on what witnesses have said before our committee; I suspect that it will be reflected in our report — and we have a historic number of investments in Canadian arts, movies, culture and all the rest of it.
We’re saying to those particular individuals, “It’s not a question of paying your fair share. We want you to pay into that traditional mainstream broadcasting industry that’s suffering and bleeding.” It’s a feeble attempt on the part of the government and Parliament to save that industry.
If those comments don’t make sense, I would like to give the opportunity to the officials to correct me, and correct me with specific examples, because I have heard a lot of testimony in the last few months, and it all correlates and aligns to the views I just shared.
Mr. Ripley: On the question of what the implications for traditional Canadian broadcasters are, there will be a huge transition for them.
What the bill will do is, right now, each of their obligations is baked into their licence. For the most part, it’s a bespoke model where, when their licence comes up for renewal, the CRTC looks at it and considers what specifically that company should have to do.
Just as the obligations for streaming services will be based in new regulatory instruments of orders or regulations, the broadcasters will migrate to that model as well. That provides an opportunity for the CRTC to make sure that it is looking at the treatment of comparable business models in an equitable and comparable way.
Right now, our Canadian broadcasters face a competitive disadvantage in the sense that they are subject to supporting Canadian cultural objectives, whereas streaming services are not. That is why one of the objectives is to make sure that there is a more level playing field in Canada where all services operating here are expected to contribute.
To your point, senator, obviously the market will continue to be competitive. To the extent that Canadian services succeed in the future, they will have to continue to rise to the occasion of offering services to Canadians that Canadians want to use.
On your second question, the $900 million is not money coming out of the system. It is about how that money is to be used in the system. This is not taking $900 million away from those streaming services and saying the government is now going to use that for alternate purposes. In the modelling, the vast majority of that are expenditure requirements where those companies will continue to have decision-making power over how that is used with the understanding that those investments go into Canadian programs because that’s what this bill is about — making sure that those streaming services are investing in television, film and music that involves Canadian creators and tells Canadian stories. It’s about, as I kind of characterized, shifting the ambition on their investment footprint here in Canada and making sure that an important part of it goes toward those objectives.
The Chair: We should have kept in mind when we put the bill together that all traditional broadcasters are rushing to go digital. I haven’t seen anyone from the internet or digital platforms rushing to emulate Canadian broadcasters.
Senator Dasko: This is an important topic, and I don’t want to spend much more time on it, but can I read into what you are saying to say that down the road the online streamers might be able to access funds from the Canada Media Fund or some similar arrangement? Is that what I can read into what you have said?
Mr. Ripley: The governance model of the Canada Media Fund right now is built on that public-private partnership that I described where the contributors are Canada’s cable and satellite companies, and in order to access the fund, a producer has to have an agreement in place with a Canadian broadcaster. That’s what we call the trigger.
Depending on how Bill C-11 gets implemented and the various contributions that players may be asked to provide, we may need to relook at that governance model and assess. That is a big policy decision because direct government support is one of the biggest levers you have around questions, for example, of Canadian intellectual property and making sure that those investments stay in Canada.
What I am saying is that I think we will have to have that debate, and it will obviously be something that we’re going to be looking at. I’m not putting my foot on the scale one way or the other, other than to acknowledge that it is an important discussion to be had.
Senator Dasko: My other question deals with the fact that, right now, the commission has the authority to resolve disputes between distribution undertakings and programming services, but this authority does not extend to disputes involving online distribution. Was that left out and not extended to arrangements in the online environment intentionally? Is this part of the bill something that was intended, or was it something that might have been left out?
Mr. Ripley: It was intended in the sense that — and this relates to the discussion I was having with Senator Simons about the distinction between the traditional regulatory power versus 9.1(1)(h) services and the new one that is at 9.1(1)(i). The regulatory powers that the CRTC has right now is really grounded in a context where we have a consolidated Canadian industry with heavily vertically integrated companies that control both programming and distribution assets.
As we now include these global streaming and distribution services in the Canadian context, it is going to give an opportunity for there to be new kinds of business arrangements and new business partners to work with. The assessment was that you do not need the same degree of economic regulatory tools that existed in that Canadian context in the new one. I appreciate that some stakeholders disagree with that, but that’s the government’s position.
Senator Dasko: Surely, it should encompass the online environment and platforms in the ability for the CRTC to be involved, to settle and to be involved in disputes among these players. Wouldn’t it seem not quite right to have it as it is in the bill without that power or without that ability to be part of the decision-making process when there are disputes?
Mr. Ripley: Right now, the Canadian system is a closed system. There are a limited number of business partners. The challenge has always been that if you are an independent programming service or an independent TV channel and you want a distribution network, you have to do business with one of the big cable or satellite companies, who may be competing because, again, they are vertically integrated. They may own a programming asset that looks very similar to yours.
The regulatory tools that the CRTC currently has are designed to make sure that consolidation in these vertically integrated companies is not abused, that there continue to be opportunities for independent programming services to have distribution and, for example, for independent cable or satellite companies in smaller regional markets to make sure that they are able to access programming that’s owned by those big vertically integrated companies so they have a competitive offering. Those tools are very much grounded in that context.
Moving forward, you will have different business partners. The idea is, because we’re recognizing that global services now operate in Canada, that you don’t have the closed ownership restrictions that have in part given rise to that consolidated business environment in the Canadian context.
Senator Dasko: So you think that it is fine as it is, not including the online platforms in this mechanism.
Mr. Ripley: Yes, the intention is that the CRTC does not have the same economic tools that it currently has. There have been intentional decisions made about which one should be extended, which one should look slightly different, and which one should not exist at all in the new online environment.
Senator Wallin: I want to formally ask you to please table with us your public polling or your consultations. You and the minister have both said that your results showed that Canadians want to protect and find more discoverable access to music and art, but the issues that we’re talking about here really have to do with the tens of thousands of content creators who talk about financial issues, political issues and their educational services. There are companies that testified here that did that.
I want to read into the record that Ryerson, now operating as Toronto Metropolitan University, did a study that found there are 160,000 Canadian content creators. The number of YouTube channels making $100,000 or more in annual revenue is up 35% year over year. In Canada, 550 channels have over 1 million subscribers, which grew 20% over the last year. In 2021, YouTube’s creative ecosystem contributed $1.1 billion to Canada’s GDP.
This is serious stuff. I want to know what you think and, obviously, what you’re basing your policies and direction on, and whether Canadians are concerned about the future of these businesses that are generating hundreds of millions of dollars for themselves and for the economy.
You have also said in response to several comments and to the chair as well that you’re not taking that $900 million out of the system, but if you tell companies how they have to spend it, then you’re not only taking control of their business model, you’re actually taking it out of their control. How is this not — we’ll use the word that everyone is using — manipulating the platforms, including, as you’ve said again here in this hour, force ad placements on screens? This sounds very much like you want to run these companies through regulation.
Mr. Ripley: Senator Wallin, I think it’s fantastic, the creator economy that has developed in Canada.
The government’s position is that those two things can coexist. My hope is that the creator economy you describe continues to grow. I agree that it brings a lot of —
Senator Wallin: But they fear that they’re going to be impacted by your decisions to pick winners and to promote some things at their expense.
Mr. Ripley: A platform like YouTube is very sophisticated. The challenge for us with respect to this bill is that it plays two functions. It hosts that organic creator community, and YouTube has told us that approximately 50% of watch time on YouTube is that. The other 50% is what we would characterize as commercial content. Again, YouTube can be an important substitute for another type of streaming service.
The way forward, just as YouTube is doing right now, is finding a way for those two communities to exist; and, with respect to the commercial content that YouTube is distributing, an expectation that they contribute to the system, just as other streaming services are going to be asked to contribute.
Senator Wallin: Again, we’ve had this discussion. It’s not about them contributing to the system. Everything we’ve heard from them is, “We’re happy. Just tell us what format to do that.” What they are saying is, “Please stay out of our successful business model and please stay out of the business of choosing what it is that consumers get to see, watch and listen to.”
The Chair: Senator Wallin, we’re past eleven o’clock. I know the associate assistant deputy minister has an appointment as well, so we had a sharp time to finish.
To the department: On behalf of the committee, thank you for being before us today. As you can see, this bill has generated a lot of questions and debate and elicited a lot of interest. I have another half-dozen senators on second round who could have taken up another hour of your time. But I suspect that, after months of study, we’ve all come to certain conclusions.
Thank you again. I hope that at the end of this process, the Senate’s contribution to this bill will have been helpful.
Mr. Ripley: Thank you, chair. It’s a pleasure. I am going to dash out of the room because I’m due for clause by clause on Bill C-18.
The Chair: We’ll see you back on that one somewhere down the line.
Colleagues, the next few meetings are organized for clause by clause, so we look forward to that process.
(The committee adjourned.)