Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 21 - Evidence - Meeting of June 5, 2008


OTTAWA, Thursday, June 5, 2008

The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:50 a.m. to consider Bill C-10, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non- resident trusts, and to provide for the bijural expression of the provisions of that act.

Senator Yoine Goldstein (Deputy Chair) in the chair.

[Traduction]

The Deputy Chair: Today we will be continuing our consideration of Bill C-10, An Act to amend the Income Tax Act, including amendments in relation to foreign investments and non-resident trusts, and to provide for the bijural expression of the provisions of that act.

The study has been ongoing since the end of November 2007. We have already heard a considerable number of witnesses.

[Français]

Bill C-10, as you know, had a previous life as Bill C-33 in the first session of this Parliament. It is known as the Income Tax Amendments Act, 2006. It was introduced in the House of Commons on November 22 by the Minister of Finance, but at that point, the bill died on the Order Paper with the dissolution of the first session and was, therefore, re-introduced in the second session as Bill C-10. The bill has been before this committee, as I said earlier, since the early winter of last year.

Our focus in this hour will be clause 120 of the bill. This clause would amend the section of the Income Tax Act that sets out the rules that apply for purposes of computing the Canadian film or video production tax credit. The proposed section 127.4(7) would require the Minister of Canadian Heritage to issue guidelines about the circumstances under which proposed conditions in the definition of Canadian film or video production certificate would be met. This definition, according to the statute, would be amended to provide that the Minister of Canadian Heritage would also certify that the public funding of the production would not be contrary to public policy. The terminology in French would be ``ordre public.''

The amendment would generally apply with respect to Canadian films or video productions for which certificates are issued by the Minister of Canadian Heritage subsequent to December 2002.

[Traduction]

To speak to Bill C-10, the honourable Mayor Gérald Tremblay from my own city, the City of Montreal, is appearing before us today.

[Français]

We also have the Honourable David Miller from the City of Toronto.

Before I ask you to speak, gentlemen, thank you for appearing and helping us in our deliberations. I will introduce the people around the table.

I am Yoine Goldstein from Quebec. I am deputy chair of the committee; I am filling in at the moment for David Angus, also from Montreal, who has been unavoidably detained in Montreal on important matters.

To my left is the clerk of the committee, Line Gravel. To my right are June Dewetering and Phillippe Bergevin from the Library of Parliament. Senator Fox from Montreal will be back here in a moment. Senator Dawson is from Quebec. Senator Harb is from Ontario; we will forgive him. Senator Eyton is from Ontario as well.

To my left is Senator Nolin from Quebec. We are trying to take over the committee, as you may have noticed. Senator Moore is from Nova Scotia. Senator Ringuette is from New Brunswick. Senator Massicotte is from Quebec. Senator Biron is from Quebec, and Senator Jaffer is from British Columbia.

We are televised, webcast and broadcast, so whatever we say here today will be seen and heard by many Canadians and, undoubtedly, dissected by many Canadians.

Senator Dawson, you had a quick observation before we start.

Senator Dawson: I do not want to delay the proceedings. We had Desjardins Group here last week and they said they had strong reservations about this bill. I read here that yesterday the chair of the committee said, ``There are no problems for Desjardins in the bill as drafted as long as the government proceeds to resolve them within that time frame.'' I have respect for Senator Angus but I would rather hear that from Desjardins and the Department of Finance.

The Deputy Chair: The department will appear on Thursday and you can ask the question then, Senator Dawson. The issue is important, you are right.

I prefer to hear from these gentlemen so they can go back to their important duties and if we have something to discuss, we can do so after.

[Traduction]

Gérald Tremblay, Mayor of the City of Montreal: Deputy Chair, with your permission, I will make my opening remarks in French, however, I will be happy to answer questions in French or in English.

Mr. Deputy Chair, allow me first to thank you for inviting the cities of Montreal and Toronto to speak to you about Bill C-10. The provision in the bill that we would like to speak about is section 120, which deals with tax credits for film production. It is a well-known fact that the cities of Toronto, Vancouver and Montreal are the major film and audiovisual production centres in Canada.

Film production also takes place in other cities in Canada, including Halifax. My colleague will give you a letter from Peter Kelly who would have liked to be able to join us today.

Over the years, the major centres have acquired international status. Therefore, it is first and foremost in these urban centres that the consequences of any regulatory or legislative change within this industry would be felt.

Furthermore, the population of Canada is now to a great extent concentrated in these cities and it is mainly in these centres that our country's economic competitiveness has grown and developed.

Allow me to include some history in my opening remarks. Montreal has been developing as a film and audiovisual production centre for more than 60 years now. In fact, one of the first important milestones of our arrival on the scene was the creation of the first commercial film production company in Quebec, Renaissance Films, in 1944. You will also recall that in 1956, the federal government moved the National Film Board of Canada from Ottawa to Montreal, because it is in our city that the film industry was in full swing.

Today I am accompanied by Michel Trudel, who is the co-owner of Cinéma Mel's, and he could expand further on this development. Over the years, our creators, whether they be filmmakers, directors or screenwriters, as well as all the craftspeople working in the more technical areas, have developed their talent and their expertise, and have put stories on the screen that have managed to seduce the people in Quebec and elsewhere. We are also accompanied by George Mihalka, from the Canadian Screenwriters' Guild. He is the national vice-chair of that guild.

This fact is clearly illustrated by our box office numbers and by the impressive number of film creators who are established in Montreal.

From our very humble beginnings, when we were producing what could be called rather naïve pieces, up until today, when works produced in Quebec enjoy international recognition, and are included in all major international festivals, one could say that a long road has been travelled and we have now earned our place on the world scene.

Thanks to our talented and innovative artists, our architecture, our unique landscape, our infrastructure which is at the leading edge of technology, we have been able to support the development of Quebec film production, as well as embrace foreign film production, often American film production, and international film production, often produced with European countries.

Over the past few years, the total annual production volume has always represented approximately $1.3 billion for Quebec as a whole.

However, we must point out that the large part of this sector, approximately 90 per cent, is active within the Montreal region. Furthermore, the Bureau du cinéma et de la télévision de la Ville de Montréal, whose representative, Daniel Bissonnette, is here today, deals with 500 film shootings per year, which require approximately 6,000 permits and authorizations.

An important fact to point out is that production activities in our centre depend mainly and especially on local production, which represents two-thirds of the total volume. The last third represents foreign film shootings and co- productions.

The local production, which is how our unique culture and language are expressed, is the key component of this sector. Allow me also to point out that the number of Quebec feature films that are produced each year, approximately 30, given the total population of Quebec, is one of the highest ratios in the world.

Strictly from an economic perspective, the Montreal metropolitan community, which includes the 82 cities of metropolitan Montreal, that I am the mayor of, has developed an economic development strategy based on the development of industrial clusters. This approach has proved its worth throughout the world. There are currently several clusters within metropolitan Montreal; you are very familiar with information and communication technology: that represents 110,000 jobs; the aerospace and life sciences represent 40,000 jobs each; and there is the film and audiovisual production cluster.

The latter cluster compares quite favourably to the others as it represents 35,000 full-time equivalents and 500 production and broadcasting companies. Mr. Hans Fraikin, from the Bureau du cinéma et de la télévision du Québec, holds the corporate seat of this cluster and is also with us today. During the period from 1994 to 2004, the economic rate of growth of this cluster was three times higher than the rate of growth of the Quebec economy in general, which means that it is a creator of wealth.

If you take a somewhat broader perspective of this sector, you will note that Montreal has achieved an enviable status as a creative centre in the audiovisual industry. It is also worthwhile pointing out that, beyond film and audiovisual production, Montrealers have created visual effects software that now serves as an international model for productions involving animation and visual effects, for example, Softimage. Montreal has also become recognized as a major centre for the development of video games, with international and local businesses such as Electronic Arts, Ubisoft, Eidos and A2M.

That being said, it is important to point out that governments in almost all countries financially support their local film production, without which this industry would simply not exist, thereby making the expression of their unique cultural culture through film impossible. Countries such as Great Britain, France and Germany do this; Canada and Quebec are no exception to this government support. In fact, our country was a pioneer in the area of tax credits because it established this in the middle of the last decade.

Given this context, Quebec and Canadian film production depends to a great extent on financial frameworks that include funds from private and public sources. It is clear that these arrangements can only exist and last to the extent that all partners involved trust the reliability of these arrangements.

For example, banks providing funds within this framework cannot sustain an arrangement which could lead to public funds been withdrawn once the product has been produced. The testimony this committee has already heard on this issue clearly supports this statement.

After reading the bill, we can only note that the tax measures will introduce an element of uncertainty which will have a definite negative financial impact on the production of Quebec and Canadian films, because it will be possible for the minister to require that tax credits be paid back once a film has been produced.

This type of retroactive decision is totally incompatible with the type of film funding that currently exists in Quebec and Canada. Furthermore, foreign films shot in Canada would not be subject to the same provisions.

Consequently, and as approved by the Conseil municipal de Montréal on the 26 of May last, as well as by the mayors of the major Canadian cities at the last meeting of the Canadian Federation of Municipalities, the City of Montreal is opposed to the change in tax incentives related to Canadian films as outlined in Bill C-10; and recommends that the Canadian Parliament amend Bill C-10, following consultations with the film industry, in such a way as to eliminate any measure that would negatively affect the funding of film production.

This position reflects the commitments made at Rendez-vous November 2007 — Cultural Metropolis, that I had the honour of chairing, and at which all partners present, including the federal government, made the commitment to support a ten-year action plan that would, among other things, explicitly include ``consolidating Montreal as an international audiovisual production centre.''

[Français]

With your permission, I will read two paragraphs from the letter addressed to the Standing Senate Committee on Banking, Trade and Commerce on June 2, 2008, to represent the position of our colleague, the mayor of Vancouver, Sam Sullivan. It is brief.

Dear honourable senators:

As you know, the motion picture industry in Vancouver is part of a billion dollar province-wide industry, providing highly skilled, well-paying jobs for technicians, craftspeople and artists. Vancouver is the third busiest filming centre in North America, after Los Angeles and New York. The relationship between the film industry, City government and the citizens of Vancouver has been a very positive one, and has led to Vancouver becoming the most popular production centre in Canada, and the third most popular in the world. More than 25,000 British Columbians are employed in the film industry, and the economic spinoffs in other industries are equally important. Film and television productions offer a significant economic and cultural benefit to our city and we must ensure that Vancouver remains one of the most sought after locations for filming.

For these reasons, I am writing to confirm my support to the attached motion that was presented to the Big City Mayors' Caucus last week and adopted by FCM. I would like to confirm my opposition to the amendment regarding local fiscal incentives applicable to Canadian films included in Bill C-10 and recommend that the federal government amend Bill C-10 following consultations with the film industry, in order to eliminate any measure that would negatively impact on the financing of film productions.

[Traduction]

Ladies and gentlemen, thank you very much for your attention.

The Deputy Chair: It is we who thank you.

[Français]

Honourable senators, would you like to question Mayor Tremblay now or would you prefer to wait for Mayor Miller to make his presentation? I would prefer that.

Mr. Tremblay: I assume I do not have to table this letter.

The Deputy Chair: No, we have it in both official languages, as well as the resolution.

Senator Moore: I want clarification here that the resolution is attached. I do not think His Worship mentioned that. It is attached and will form part of the record.

The Deputy Chair: We have noticed the resolution of May 26 is attached and it does indeed form part of our record. Thank you for pointing that out, Senator Moore. Go ahead, Mr. Miller.

Mr. Tremblay: He is also an honourable mayor. He represents more people than I do.

The Deputy Chair: You will appreciate that I have a bias toward Montreal.

Mr. Tremblay: I appreciate that, but I would also like to recognize that he represents more people than I do.

David Miller, Mayor, City of Toronto: I also have a letter from Mayor Kelly of Halifax, who was hoping to join us today but was unable to. It is a bit longer than Mayor Sullivan's and I understand it is not translated, so I will read it into the record. May I do that at some point in my remarks?

The Deputy Chair: You can read it into the record but you cannot produce it. You can read it but it is not part of your presentation.

Mr. Miller: Perhaps at the end of my remarks, then.

My colleague and I appreciate the opportunity to be here today. As well as Mayor of Toronto, I am also Chair of the Toronto Film Board, which is an industry set up by the City of Toronto to promote the film and television and screen-based industries in the city of Toronto.

The comments I will make today are my own opinion, but they are also supported by a resolution of the Toronto Film Board, the Toronto City Council, the Big City Mayors' Caucus and the Federation of Canadian Municipalities. We have serious concerns about the effect of Bill C-10 on our cities and their economies.

Mayor Tremblay and I are not here alone. We are speaking on behalf of municipalities across this country, including the major film producing cities: Montreal, Toronto, Halifax and Vancouver. We share a concern not only about our economy but also about Canada's and Canadians' continued ability to tell our own stories to each other without fear of artistic and financial humiliation.

Our country is an incredible country of diversity, sounds and pictures. We cannot allow the people who capture and interpret our country for ourselves to be diminished. The Canadian film industry introduces us to ourselves and projects the modern Canadian diversity beyond our borders to the world. This industry is at the heart of the knowledge-based, creative economy that is growing so rapidly in Canadian cities in response to global recognition of what Canada has to offer the world. It is my view that the provision we are discussing today is an unwarranted attack on what makes us all Canadians. It undermines the efforts of a growing creative industry that is seeding the opportunity to make our liveable communities grow and prosper for each and every one of our residents.

In Toronto, the creative sector is one of the four cornerstones of our agenda for prosperity, which is the city's economic development strategy that was developed in partnership with the business community of Toronto, labour, the cultural communities and non-profit organizations. It has four simple pillars: Proactive Toronto, which means the city government must play its role; global Toronto, recognizing that Toronto must view itself internationally; creative Toronto; and one Toronto, which is for the benefit of all Torontonians.

Creativity is at the heart of our strategy. The film and television industry is the steel bar that gives that pillar strength. In 2006, production companies spent in excess of $700 million making movies and television in Canada's largest city. More than 35,000 Torontonians directly earn their living working on location, behind and around the cameras and on the sound stages. This industry is of incredible importance, obviously from those statistics, but its artistic and financial success is dependent upon the industry's ability to work in the field where the boundaries are well- defined, and political interference or censorship will not be tolerated.

The Criminal Code already ensures that Canadian film productions meet accepted standards of quality and decency. Under the legislation before you, however, made-in-Canada motion pictures would be subject to a post-production government review that can only be described as arbitrary. Only then would their eligibility for the appropriate tax credits be decided. Those productions that do not measure up to the currently unknown standard would lose funding they are depending on to build the kind of business that creates jobs and improves the economic well-being of our community. This proposal is unacceptable.

This proposal completely destabilizes the already difficult monetary terrain that film producers must navigate in their search for funding. Films are made often on tight budgets directly dependent on the tax credit that has been carefully designed to support Canadian productions. No financier will take the risk that their loans will not be repaid because of an after-the-fact cancellation of the tax credit. The storm of uncertainty stirred up by Bill C-10 would effectively end the film industry overnight — not only in Toronto, but in Vancouver, Montreal, Halifax and across this country. This proposal is unacceptable and must not come to pass.

Those of you who sit in this chamber of sober second thought have the opportunity to withhold final assent so that the federal government can also rethink the direction it is taking. I am confident that, given the opportunity for meaningful discussion with the film and television producers who have invested their lives in Canada, everyone in the House of Commons will see what a perilous path proposed Bill C-10 will put us on.

In Toronto, the city and the province work together to assist the film industry. The provincial government has recently boosted domestic and foreign tax credits, provided tax relief for computer animators and invested considerably more money in promoting local production in the international marketplace. The Ontario government has put its support behind a cost-shared Green Screen initiative that has environmental sustainability as its goal. At city hall, we have introduced policies that are effectively reducing the film industry's property tax burden. We have brought in the tax increment equivalent grant to assist film companies with plans to build new facilities or retrofit existing ones. This program will be a boon to the new studio development on Toronto's eastern waterfront that is the largest purpose-built sound stage in the world.

Our bilateral partnership with the provincial government cannot be effective if the national government does not take the time to understand what is at stake. A majority of senators can cause their colleagues in the House of Commons to find the time to consult with all the stakeholders in this crucial sector before trying to pass legislation. The film industry has enough hurdles to jump already in Canada without this additional one.

We need the federal government to work with the film and television industry and not against it. All of you in this room can help make this change of attitude come about by refusing to put your stamp of approval on Bill C-10 in the form it was put before you late last year. Over the past three months, I know you have heard many representatives of the industry express their concern. You have heard from studio owners, producers, writers, directors, cinematographers and from a multitude of Canadians who support our industry because it enriches their lives and gives them a better understanding of the country in which we live.

I think the message is clear and I am pleased today to add my voice on behalf of the residents of Toronto to your deliberations.

I would now like to read Mayor Kelly's letter into the record. It states:

Dear Senator Angus and Members of the Committee:

I am writing today concerning Bill C-10 and the proposed changes to the Income Tax Act, specifically changes that apply to the administration of the Canadian Film or Video Production Tax Credit that would give the Minister of Heritage or her appointees discretion to deny film and video productions eligibility for tax credits for production deemed to be ``contrary to public policy.''

As Mayor of Halifax Regional Municipality (HRM), the fourth largest film production centre in Canada, I have grave concerns about the proposed changes, which I believe will have a significant negative impact on the film industry in Canada. My concerns are personal as well: as a proud citizen of a country that has produced wonderful art in the film genre, I find it alarming that future productions — potential works of art — are in great peril. Had these proposed changes existed in the past, much of the uniquely Canadian art of which we are so proud simply would not have made it our screens, to be viewed, admired and pondered by Canadians and others around the world.

I am aware you have received a great deal of testimony and information on this matter, so I will discuss briefly how I believe these changes will affect the film industry, particularly in my municipality. My main concerns are that these changes will cause enough uncertainty to negatively impact financing for productions, and that they could lead to an era of censorship that would devastate the industry and the creativity found within it.

First, a bit of background about the film industry in HRM (many of these statistics are for Nova Scotia; however, fully 98 per cent of all filming in Nova Scotia takes place in HRM, making the provincial and municipal statistics largely interchangeable):

The local film industry is key to Nova Scotia and HRM. Nova Scotia has the highest percentage of indigenous filming in Canada; in fact, 50-55 per cent of our total production is local. Our filmmakers have achieved significant national and international recognition for our gifted telling of our unique and compelling local stories. In fact, Nova Scotia productions garnered a total of 23 Gemini nominations and earned acclaim at film festivals in Germany, New York, Texas, Winnipeg and Toronto. Our smaller, local film productions would be greatly affected by proposed changes to Bill C-10.

HRM offers a stunning diversity to local, national and international filmmakers. We have the ability to look like New England, New York or San Francisco, a pastoral farm or a quaint fishing village. We can look like a small town, a suburb or a large city. We have modern buildings mixed with heritage properties, history combined with hipness. We have it all within the boundaries of our municipality.

Our film industry employs well over 2,000 people — experienced actors and excellent crews, who are ready to work and who work hard. They are devoted professionals who know the film business and the area. Our crews have worked on everything from feature films to movies of the week. Our infamous Maritime hospitality and our tenacious approach to life and work — and art — makes HRM an ideal place to work and produce films.

The local industry contributes over $100 million to the local economy each year. Along with support from the HRM Film Office, Film Nova Scotia, trade missions, the Atlantic Film Festival, equity funding, and awards and incentives, the film industry tax credit is a key contributor toward making our film industry one of the most competitive in Canada. Obviously, anything that would cause hardship to the local industry in financing its films would also have a negative impact on the local economy and community.

As mentioned previously, the proposed changes to Bill C-10 pose a serious threat to our entire film industry for two main reasons: economic uncertainty and censorship.

First, the changes have the potential to effectively destroy the economic capacity of small, medium and even large film productions to be made here. It would be very difficult for producers to arrange financing for their films because the proposed changes, if passed, would introduce a high degree of uncertainty. Filmmakers depend upon tax credits to help to secure funding. In general, a percentage of the budget is secured as an ``investment'' from a Crown corporation, such as Telefilm, after which interim financing is advanced from a commercial lender against the security of a tax credit.

As we understand it, should Bill C-10 become law with the proposed changes, the federal government could deny tax credits to a film — even a completed film that the same government had invested in up front. In essence, a film could lose its financial footing at any given time, based on the discretion of the Minister of Canadian Heritage or her designates. Tax credits, used as collateral and leverage for further financing, could simply be taken away arbitrarily. In reality, no fiscally responsible financial institution could feel comfortable offering interim or bridge financing to any film project under that level of uncertainty.

The content or subject matter of a film should not influence whether or not it receives a tax credit. (The exception, of course, would involve content such as pornography or extreme violence that is already handled in the legislation and by the Criminal Code.) The problem with the introduction of a caveat in Bill C-10 for productions deemed ``contrary to public policy,'' is that it introduces too great degree of subjectivity, leading to a possible future where individuals or governments could deny tax credits tax credits for productions that simply do not conform to their own ideals and preferences. This, of course, could lead to censorship that will threaten the creative expression of every artist in Canada. We simply must not let these happen.

It may make sense to some people to ensure that artistic endeavours represent our public policy. The problem is, who decides and how? When does a straightforward idea become a slippery slide down into censorship of the rankest kind? We already have laws in place to protect us from obscene films. Would films that deal with controversial yet compelling issues be able to be made in the future? Will satiric films that are critical of the governments of the day be permitted under the new guidelines? As it stands now, the public decides which films will succeed. But these films have to be made. We need our artistic community to keep pushing the limits and challenging us, provoking us. That is their job.

Many of you may be familiar with the concept of ``libel chill,'' when, for example, a media outlet avoids discussing a topic, or topics, for fear of being sued for libel. Instead of delving in and uncovering the truth, they are paralysed by fear of litigation. It only has to happen once for the chill to set in.

I can envision this scenario very quickly unfolding in the film industry as well if these proposed changes to the administration of tax credits are made; however, in this case it will be a ``censorship chill.'' Normally, a film's tax credits can be leveraged to obtain further funding from a financial institution. Then one day a film is completed but loses its tax credits because the government deems it inappropriate or ``contrary to public policy.'' The filmmakers then have difficulty repaying their other lenders. This scenario would only have to happen once before banks would begin to employ a level of scrutiny never seen before when deciding whether or not to fund artistic endeavours. Along with government censorship, filmmakers would face censorship from a financial industry that has been cooled by fear of financial uncertainty. It would not take long for that chill to become a deep freeze affecting the entire industry, and perhaps spilling over into other artistic industries that rely upon government financing.

We have many productions in HRM and Nova Scotia that we are all proud of that could very well have not been made had these changes been in place in the past: works like the Trailer Park Boys, Margaret's Museum, New Waterford Girl, The Hanging Garden, Three Needles, and Noah's Arc — even shows like This Hour Has 22 Minutes, with its witty yet sharp satirizing of every politician and government in Canada. We cannot risk seeing productions like these disappear from our future.

I offer a quote by John F. Kennedy: ``When power leads man towards arrogance, poetry reminds him of his limitations. When power narrows the areas of man's concerns, poetry reminds him of the richness and diversity of his existence. When power corrupts, poetry cleanses, for art establishes the basic human truths which must serve as the touchstone of our judgment.''

Limiting our artists — in this case film artists — economically or creatively, will, indeed, lead us toward arrogance, tunnel vision and corruption. We must remember our limitations, be aware of our richness and diversity, and give voice to the basic human truths that art portrays. Only then will our judgment be in the best interest of our nation's future.

To manipulate a comment made by Pierre Elliott Trudeau in 1968, there's no place for the state on the movie screens of the nation.

I hope the Senate will use its collective wisdom, experience and good judgment to stop the proposed changes in Bill C-10 that affect the administration of the Canadian Film or Video Production Tax Credit before we slip down that slippery slope toward censorship and economic destruction of an industry that is one of the best in the world.

Respectfully, I remain

Peter J. Kelly

Mayor,

Halifax Regional Municipality

Thank you for your attention and time. It is appreciated.

The Deputy Chair: We thank Mayor Kelly for testifying in writing.

I assume, gentlemen, that you will have time to take questions?

Mr. Tremblay: Of course.

[Traduction]

Senator Massicotte: Thank you to these mayors for coming to discuss this bill. We have heard considerable testimony that has included not only Bill C-10. People have told us about the difficulties of the Canadian industry that are due to the high value of the dollar and the fact that the United States have considerably increased their tax credits. Some spoke about a certain percentage of tax credits. Several witnesses have told us that what we have is inadequate and that as a consequence, in Canada, we are losing our market share for the production of films here. Is that true? Is that reality?

Mr. Tremblay: Without a doubt competition is becoming stronger and stronger. The Canadian dollar has definitely had an impact, but more and more countries are providing better tax advantages than those that we currently have. That is why, for example, the Government of Quebec recently increased its tax credits from approximately 11 per cent to 25 per cent.

Despite this, Michel Trudel, the co-owner of Cinéma Mel's will tell you that the film production that we had every year, which represents economic benefits in the order of $1.3 billion, is becoming more and more difficult to attract to Montreal. That is why I will be going with him, to Los Angeles, to explain Montreal's advantages, as other colleagues regularly do and as the mayor of New York does.

It is obvious that the content of the bill we are discussing today is fundamental. As elected officials, we have made significant efforts to create wealth. We have an industry that creates a great deal of wealth.

And now we are going to create uncertainty that will penalize the industry without understanding the consequences. Given all the efforts that have been made in Montreal since 1944, it seems to me that there needs to be some acknowledgement and people need to be told that solutions are being sought. However, before such solutions are implemented, people need to be told that they will be consulted. Hence we really appreciate the opportunity that you have given us, not to educate you, since you already have a great deal of information, but to at least explain our frame of mind. This is what we are talking about.

When you are a businessperson, and you know about this, senator, since you are a businessman, you need to have clear rules. When financial institutions tell us very succinctly, whether it be the Banque Nationale, the Royal Bank, the mouvement Desjardins: there is a problem here, because we cannot provide financing for productions when there is insecurity and uncertainty, then there is a problem. Consequently, it is our responsibility to explain the importance of our industry to you. A thank you to Canada and to the Government of Quebec for providing tax incentives. However, we do not control the macro-economy of the world, particularly currency fluctuations and measures taken by other states to encourage this sector. This is self-defence.

We are here to tell you: Please, when something is working well, why jeopardize a job-creating industry by making it insecure? We know how important this issue is, because we want to reduce the unemployment rate in the greater region of Montreal, that is one of our objectives.

The Deputy Chair: Before we resume, I believe that Mr. Miller would like to speak as well.

[Français]

Mr. Miller: Thank you for your question, senator. I will answer in English.

You have raised an important point. I concur with everything my colleague said. The film and television production industry in Canada has two parts, the domestic part and what I call the export or foreign part. My colleague referred to the co-productions, which are important as well.

The American productions are suffering a challenge at the moment because of the high dollar, akin to the challenge in the manufacturing industry. There is also a challenge because of the Screen Actors Guild issues in the United States, and until they are sorted out, American productions will not come here.

The Canadian part of the industry is important for several reasons. First, as I said in my remarks, it allows us to tell our stories about who we are to ourselves. We have seen terrific movies made in Montreal, for example, about the stories in Quebec. That is critical.

A second economic issue is that the Canadian industry allows stability and also ensures that we keep the talent, particularly the talent behind the scenes, in Toronto, Montreal, Vancouver and Halifax. That is important.

What this bill does at the worst possible time is create the financial uncertainty that my colleague was talking about, and I think was presented to you by the FilmOntario submission. I urge you to look at it again when you consider your deliberations. Royal Bank of Canada and City Finance both said this bill will compromise their ability to finance movies.

Thus, we have the challenge with the foreign productions because of the dollar and other issues. If we have a challenge to the Canadian industry, the effect truly could be devastating. Once we lose the talent, films can go anywhere. It is not like an auto plant. We are challenged that way.

Our concern is made even stronger because of the other issues facing the industry as a whole. If the domestic industry part faces additional challenges, the consequences can be serious.

Senator Massicotte: I will be mischievous a little bit. I direct my question to the mayor of Toronto. I buy into the fact that you need certainty, and there is the issue of fairness. I buy into the fact that in our modern society we do not want censorship. It is an inappropriate application of our values.

You are obviously involved in the film industry. The Ontario Film and Television Tax Credit, OFTTC, has a regulation in Ontario where under condition xii, it talks about excluded production, ``a production for which the public financial support would, in the opinion of the Minister of Canadian Heritage, be contrary to public policy.'' If the mayor of Halifax were here, he would also say the same thing.

We have these loosey-goosey words in Ontario, Nova Scotia and in other provinces. It is a bit what this bill is also intended to do, to give discretion to the politicians. The good news is that they never use it. This issue is so important that maybe your own efforts should also be concentrated toward changing the law in Ontario and in other provinces to ensure that we do not face censorship in any way. Why is it not relevant in your case but it is in the federal case?

Mr. Miller: Thank you for raising that issue. I have several comments. First, that is in a regulation. What is proposed in Bill C-10 frankly can only be described as arbitrary. It is something that is not a statutory instrument. It has been a long time since I have practiced law. I cannot say what the technicalities mean if it is not a statutory instrument, but I assume it means it does not have the force of law. They are arbitrary guidelines to guide discretion. That situation troubles me enormously as an elected official.

Unfortunately, we have only the Quebec film industry with us. I did not bring Toronto, because they have already deputed before you, but I do not believe that provision has ever been used. In this case, we are looking at something that is part of the Income Tax Act that is arbitrary, and creates the uncertainty and the economic challenges that have been spoken about. The best way to deal with this problem is to amend the legislation to take it out. We will work with the Ontario government to deal with our problems in Ontario.

Senator Jaffer: I have a question on the issue of being contrary to public policy. You mentioned, Your Worship, telling stories about ourselves. We have heard from people who are concerned about violence or sexual matters. I have a bigger concern, especially in your two cities where we have diverse communities. People may have stories to tell that the people watching may think are against public policy, but they are stories of people in your region. We have not had anyone testify as to what would happen to those stories. Those stories need to be told. Who would judge those stories?

As an extreme example, it could be young Muslim boys wanting to tell their reality and the Minister of Canadian Heritage might find this reality against public policy. This situation has not previously been canvassed.

Mr. Miller: I agree with you entirely. Nobody around this table, and I do not believe anyone in this country, certainly not 2.6 million Canadians, could agree on what ``contrary to public policy'' is. That is not possible. In the end, it becomes defined at the whim of the minister.

For me, I do not like violent films. I find them extremely offensive. I turn them off. There is a button on the television. You can turn them off. I do not go to movies much any more because of my duties. My children do not watch them. The impact of violence on children concerns me greatly.

For others, sexuality is an issue. I was at the YWCA's awards for women recently. Deepa Mehta was one of the award winners. One could see her films, which had been protested in India, and involved difficult issues of racialized sexuality, being deemed to be against public policy. I can see that happening directly. She is a wonderful example of a modern Canadian. When she spoke she said, ``When I go to India, I feel Indian; when I come to Canada, I feel Canadian,'' except in customs, but that is her story to tell, not mine. Her films express that.

What is Toronto? More than 50 per cent of Torontonians are first-generation immigrants, including me; I am an immigrant boy from England. About 50 per cent of Torontonians are from non-Caucasian backgrounds. It is not the same 50 per cent either.

What are those stories? Perhaps some could be controversial. You mentioned Muslim boys; maybe one of the boys who was arrested and then let off in the alleged terrorist incident would want to make a film about that experience. Could that be contrary to public policy? I do not know.

The deputy chair has run this committee terrifically and I do not think he knows. That is what is so dangerous about this issue.

The flip side of that issue is, think of what we have to offer to the world. What we can say to the world through those movies, from a country and cities that have such diversity, is extraordinary. Excuse me for the long answer but I think the question came from the right place.

[Traduction]

Mr. Tremblay: That is an excellent question. Foreign productions and co-productions that benefit from tax credits and that do not come under Bill C-10 could suffer the same impact. Why have two classes of citizens, Canadian citizens and foreign production citizens or co-productions? You should ask yourself this question. We cannot have two classes of citizens. In Montreal and in Quebec we have opted for immigration. Nearly 75 per cent of the 55,000 immigrants who come to Quebec settle in Montreal. There are 120 communities of various origins in this city. Our success lies in the fact that we allow these people to share their traditions, values, history and culture with us. We do everything that is humanly and financially possible to accompany them. This is a source of wealth.

So I do not have any problems allowing these people to express themselves. Moreover, the film Shalom is a wonderful example of this. We are learning to better understand and appreciate people who come from different backgrounds but who contribute so much to the future of Quebec's metropolis. The only real problem I have is that we will be treating Canadians differently, other producers and productions will benefit from the same tax credits, but they may not as generous. So there will be a double standard. As a Canadian and mayor of Montreal, I find that unacceptable.

[Français]

Senator Jaffer: You were speaking about Ms. Mehta, who had great difficulty finishing her movie in India. In the end, she had to finish it in Sri Lanka. The concern with legislation like Bill C-10 is that people can take things into their own hands and stop people from producing films depicting the realities of other people in their communities.

The minister suggested that she would set up a committee to develop guidelines and administrative procedures. My concern is, who would those stakeholders be in the committee? As you said, all of us here probably think different things are contrary to public policy. What do you think of her idea of setting up a committee for guidelines?

Mr. Miller: If the legislation is amended to delete this provision — given Royal Assent entirely without this provision — and the minister then goes back and involves the film industry representatives from designated organizations, including organizations like the Toronto Film Board, and discusses the real issues — frankly, I do not know what the real issues they are concerned about are — it may well be there is an opportunity to provide new legislation and bring it through the normal process.

However, I would be extremely concerned about this legislation being passed and then saying there will be a process, because the legislation gives virtually unfettered discretion.

To look at other issues, Toronto was the place where the first same-sex marriage was legal in the world. That issue, some would say perhaps, should not be discussed in films; others would say it is a human rights issue. Who decides? That is always the problem.

If that is the minister's approach, and I know she has said she wishes to do that, I think the appropriate way to proceed would be to remove the provision from the legislation, allow her to do her consultation with the appropriate representatives from the industry — representatives that the industry also chooses, not only the minister — and then see where we go.

Mr. Tremblay: The process would bypass the fundamental role of elected representatives of the House of Commons. To amend the Criminal Code and put in place new guidelines, it is the responsibility of the people that have the confidence of their citizens to discuss openly, in a transparent way, these guidelines to find the best way possible.

I do not think anyone will question the importance of having these guidelines. The public concern is legitimate, but processes are in place presently. Elected representatives have that responsibility. That is why we say, do not vote for legislation and then wait for one year to establish the guidelines.

Aside from the fact that it has a major impact on the film industry and on the people that invest in those industries — I think we have made the case on that point — there is another case that is important. I do not want the process to bypass the fundamental role of elected representatives of the House of Commons, and the role that you have as senators, to ensure that the public interest is taken into consideration prior to adopting legislation and not after.

[Traduction]

Senator Fox: I would like to thank Mayor Tremblay and Mayor Miller for accepting our invitation to appear before our committee today. I would like to thank them for their very detailed presentations which demonstrate an in-depth knowledge of the problem arising from this bill.

We are all proud of the success of the film industry throughout all the regions of Canada. Over the years, this success has been built thanks to the collaboration and partnership between the Government of Canada, the National Film Board, Telefilm Canada and the big municipalities and provinces, who have their own agencies, on the one hand, and the private sector, on the other hand. This entire system is based on the tremendous creativity of the Canadian film industry. This has been a success. And the question for us today should be:

[Français]

How can we make a successful industry even more successful? Instead of that, we have a number of items put forward that threaten to destroy it at its base.

[Traduction]

We have heard a great deal of evidence. You referred to the three sectors where there are doubts, serious concerns — the economic, cultural and civil liberty sectors. We heard from the Canadian Civil Liberties Association which studied the bill and noted in this legislation some very clear attacks against freedom of expression in Canada, as well as censorship.

I would like to go back to the economic issue. Mr. Tremblay, you talked about a double standard.

A union appeared before us and raised some concerns that they had about this double standard whereby Canadian filmmakers would be penalized under this legislation compared to American filmmakers who would be making their films here. God knows how much effort has been made by everyone in Montreal, by Michel Trudel, Daniel Bissonnette, and Mr. Mihalka, among others, in order to bring productions to Montreal. Should these regulations come into effect and apply to Canadian productions, do you really think that we could avoid having the same principle apply to American productions?

Indeed, it is a matter of public interest to state that some films can be decertified by the minister as she sees fit. How do you justify to the Canadian public that this same principle does not apply to productions from here? In other words, right now a Canadian production could be decertified and another American film, which may deal with the same topic but which would not be covered by this policy, would be certified. So you have a double standard.

The Canadian union fears that, eventually, this same principle would be extended to include American productions. This would have a negative impact on your efforts to attract foreign productions, recognizing nonetheless that two- thirds of the productions are local, in Montreal, with all of the ensuing economic spinoffs.

You referred to co-productions and last week we heard from Roger Frappier and Denise Robert. These are two eminent producers who have won all kinds of awards internationally, including an Oscar for Ms. Robert. They told us that it would be very difficult, in the future, to find a foreign co-producer in order to do a co-production here as the situation was not as attractive for foreign producers because of the uncertainty referred to by Mayor Miller and yourself.

It appears that instead of going to Montreal, Toronto, Vancouver or Halifax, the most attractive cities for foreign productions and co-productions involving the two nationalities, this may have a very significant negative impact that would damage economic activity in this sector throughout Canada.

Mr. Tremblay: Hence our presence here today. I believe that Senator Fox had an opportunity to attend Rendez- vous November 2007 — Montréal, Cultural Metropolis, where all of the partners, including the Minister of Heritage, Ms. Josée Verner and the Minister responsible for Montreal, Michael Fortier, ministers from the Government of Quebec, Raymond Bachand and Christine Saint-Pierre, as well as representatives from both the private sector and the City of Montreal, all agreed on the elements that are essential to create a favourable environment. Our responsibility is to create a favourable environment that will enable producers and filmmakers to develop, showcase their talents and produce films.

The action plan for 2007-2017 even contains a conclusion to consolidate Montreal as an international centre for audiovisual production. What we are seeing today is a decision that may very well jeopardize this unanimous desire. We are now speaking with one voice with respect to culture, as Toronto is doing moreover. We are speaking with one voice because we have managed to come to an agreement amongst ourselves.

The comments made by Senator Fox are directly linked to our reason for being here, because what people came to tell you in person, they are telling us in Montreal, whether it be at city hall or in meetings that we have held. So let us try, to the extent possible, to get rid of this uncertainty and instability which is starting to take root, not only amongst producers but also amongst the financial institutions.

[Français]

Mr. Miller: I have a small addition to my colleague's reply. These BlackBerry phones are helpful. Members of the Toronto film industry are sending me things to say while I am here. However, the following comment is not what they have sent me.

I wanted to mention that the Toronto International Film Festival, which is not affected directly by this provision, generally is believed within the industry to be the number one film festival in the world for two reasons, one of which is that the audience is real. It is made up of citizens and residents, and not only film industry members seeking to purchase films. The second reason is the timing in the cycle. It is believed, although it is impossible to prove, that more business is conducted there than at Cannes. That is an asset for Canada.

My colleague was talking about the co-productions in Montreal and the strategy internationally. The film festival is an asset to Canada. I believe that if this legislation passes, it will become discussed in the film industry around the world as a negative measure. As the senator said, it would be an embarrassment to Canada. That could well have an impact on things like the Toronto International Film Festival, as these things do. We should be careful when we consider those kinds of issues about that impact.

Senator Fox's comment made it a convenient point to mention that impact.

The Deputy Chair: Before giving you your last question, Senator Fox, I understand that Senator Ringuette had a supplementary question on your previous one.

[Traduction]

Senator Ringuette: Mayor Tremblay, this is the second time in your presentation that you have mentioned a 10-year action plan. You talked about compromises and the support resulting from Rendez-vous November 2007 — Montréal, Cultural Metropolis. Ministers Verner and Fortier were there to support the industry, but today we are waking up with such a bill.

Could you submit a copy of this action plan and its commitments to the committee?

Mr. Tremblay: I would be pleased to do so. All you have to do is visit the City of Montreal Internet site: www.ville.montreal.qc.ca/culture and you will obtain all of the required information. Naturally, as soon as I get back, we can send you a copy. Thank you for asking this question because, indeed, this was quite a significant undertaking carried out over several decades, but we are now talking with one voice. I must say that ministers Josée Verner and Michael Fortier played a significant role in accompanying us in this endeavour. They are partners with whom we meet on a regular basis because we have a follow-up committee for the action plan.

Senator Ringuette: How do you reconcile this formal commitment made by the two ministers and the current government with the fact that we have before us Bill C-10 which, essentially, eliminates your ability to plan for the future of the industry and the future of your city?

Mr. Tremblay: To answer, all that I can say is that I have had an opportunity to discuss my comments to you because I advised the Minister responsible for Montreal, Michael Fortier, that I would be coming here and I told him about the comments that I would be making regarding the economic aspect of the issue. I also told Minister Josée Verner and I have had an opportunity to discuss the matter with the Prime Minister of Canada. So these individuals have been advised about the purpose of my attendance here and, in particular of our demands with respect to Bill C-10.

The Deputy Chair: Mr. Mayor, I would suggest that you forward everything to the clerk who is very conscientious and will ensure that the documents are quickly disseminated to the committee members.

Senator Massicotte: When did you talk to the Prime Minister about your concerns with respect to Bill C-10 and what was his response?

Mr. Tremblay: Let us say that he took some good notes regarding my comments. If you know the Prime Minister well, you will know that when he goes to the trouble of picking up some paper and taking notes, it is because he realizes that there may be a little or big problem, depending on perception. We are honestly hoping that the meetings that we held and organized went beyond any political partisanship. We did so in the interest of our cities and in particular in the interest of an industry that is growing in importance to Canada, and in my case to Quebec and Montreal.

The Deputy Chair: Mr. Tremblay, you are both a mayor and a diplomat. Senator Fox has the floor.

[Français]

Senator Fox: My last question is for Mayor Miller. We have had a succession of witnesses in front of us, for example, the Association des producteurs de films et de télévision du Quebec, APFTQ; the Canadian Film and Television Production Association, CFTPA; and the Alliance of Canadian Cinema, Televison and Radio Artists, ACTRA. We have had eloquent comments made to us by actors such as Sarah Polley and Wendy Crewson; Susan Swan, from the Writers' Union of Canada; the Canadian Civil Liberties Association, and a whole series of people. They said we should do away with the discretion given to the minister to withdraw a tax credit retroactively because that discretion will kill the industry. Unanimous in that recommendation was that the only limits that should be imposed on tax credits are that they ought not to be used for pornography. That limit is already dealt with under the income tax regulations. They cannot obtain public monies to fund a pornographic film. They can find monies elsewhere, if they can, but they cannot access public money for pornography. I think we all agree with that.

The other parameter should be the Criminal Code of Canada. Witnesses tell us that we should amend this legislation to indicate clearly that the only limits should be pornographic material, including juvenile material. No one anywhere that I know, who is in their right mind, would suggest that public funding should go to those areas. Do you agree with those two parameters?

Mr. Miller: Yes.

Senator Dawson: Mr. Miller, you talked about outrage. Denise Robert came here a few weeks ago and spoke of the fact that the trade papers compared Canada to China on a censorship issue like this. They said that having this kind of censorship available to the politicians is equivalent to being in China. You are allowed to be outraged by it.

[Traduction]

I would like to thank Mr. Tremblay because he is rather modest. Hearing him talk about industrial clusters harks back to quite some time ago, in 1988, when the Minister of Industry and Trade of the Province of Quebec was innovative in being the first government in North America to grant tax credits. The minister was serving at the height of the period of industrial clusters; and there was a cultural cluster. Gérard D. Lévesque implemented tax credits. I believe that this contributed to the industry's success in Montreal, and that alone is proof that the tax credits were justified.

The following comment may surprise my two colleagues from the government. I thank the government for having opened the debate on Bill C-10, because it has provided the industry with an opportunity to underscore the significance of the filmmaking industry in Canada, not only how its serves as a cultural weapon, a promoter of Canadian products, but also how it generate jobs in Toronto, Vancouver, Halifax and Montreal.

I think you can count on us. I cannot speak on behalf of other senators, but as far as we are concerned, we are going to fight to make sure that the bill is amended so that your interests, and the interests of all Canadians are defended. I had remarks to make, rather than a question to ask.

Mr. Tremblay: Earlier, there were questions asked concerning the impact of the value of the Canadian dollar and competition. One must recall that at the time, we were going through a period of economic downturn. We had to innovate in order to create wealth and jobs. That is what we are doing now. Look at the situation. We cannot jeopardize all the efforts made in recent decades. Perhaps there are other ways to achieve the same results. No one is challenging the importance of public policy. However, this must be discussed calmly in order to put forward acceptable criteria for society as a whole.

[Français]

Mr. Miller: I have two brief points. In the city of Toronto, if you broaden the film industry to the creative industry — media, information and communication technologies, ICT, and research — there are more people employed in the industry than in manufacturing. That is how significant this industry is. I know Mr. Tremblay's great work as minister in the past has helped to create this industry, and we know it is that essential to the economy.

Further to your first comment about the impression around the world, in some ways the bill is misnumbered. It should not be Bill C-10; it should be Bill C-1984. That is how it feels sometimes.

Senator Dawson: We will quote you on that.

The Deputy Chair: Thank you for that. We occasionally need good humour.

Senator Eyton: Thank you, mayors, for coming here today. It is a remarkable thing for this committee. It is the Banking Committee. We heard from cities across the country, Halifax, Toronto — so ably represented by my mayor, Mayor Miller — and Montreal, so well represented by Mayor Tremblay. It underlines the importance and significance of it all.

You know these proceedings have been going on for a while. For two or three months now, we have heard from many people. It is essentially about four little words, ``contrary to public policy.'' Never has so much been said about so few words with such energy and passion. We have covered this subject well. It is important that you heavy hitters come to the committee and give us the opinion that represents a certain national urban view of the issue.

All of us here want the industry to flourish. There is no desire to hurt or harm it in any way. I also want to assure you that there is no hidden agenda. Random remarks are made from time to time pretending that this is a hidden agenda; there is none at all. More than that, the issue is not a partisan one. This committee and the government want to get it right. We need to get it right. Last, it is not a new issue. Again, in spite of random comments here and there, it has been kicking around in one form or another under different governments from 1995 to the present. It is also reflected in some of the provincial requirements; I think five provinces have similar requirements that look to be the same and raise the same issue. This bill, Bill C-10, was considered and passed by the House of Commons unanimously late last year. It suddenly became an important issue.

My first question, which is more background and curiosity, is when did you two, representing your marvellous cities, first become aware of the issue? When and how did you first become aware of it?

Mr. Miller: I am aware that the industry had expressed concerns to the previous government when previous legislation that was similar had been tabled. That legislation went away, I believe in 2004. Mayor Tremblay is more privy to the details of that legislation.

Because this provision was buried, in nontechnical language, in the bill, the film industry in Toronto and the Toronto Film Board were not aware until late in the parliamentary proceedings. I was aware, if not right before it passed, fairly soon after, and that is when the industry, from Toronto at least, began to speak up. I cannot give you the precise dates, but if it is important, I can go back through my records and tell you. We have been debating this issue at the Toronto Film Board for quite a while. Perhaps I will receive a BlackBerry message with the exact date from someone.

Mr. Tremblay: I assure you that I and the people I represent never thought there was a hidden agenda and that the intent was not a noble one. The previous government had the same intent. No one questions that at all. Public order is fundamental in our society and we, individually and collectively, have a responsibility to put in place the best guidelines possible to make sure that we honour that commitment for the future of our country.

Having said that, it is only when we realize the consequences that we start asking questions, not about the intent but the consequence of the intent.

I do not know if I need to table this item, but on March 23, 2004, the Directors Guild of Canada sent a letter to Robert L. Soucy, the director of the Canadian Audio-Visual Certification Office, and a letter was sent to Senator David Angus on April 14, 2008, which you must have, referring to the letter.

The Deputy Chair: We have it.

Mr. Tremblay: I want to remind the members of the Senate committee that this issue was questioned in the past in a precise way. As a result, in our case it was only when the people from our industry started to evaluate the consequences. When their banker tells them it will be difficult to finance their production, for the following reason, then there is a problem. In my case, I do not go back years, I go back only for the past six months when some people started to address that issue and gave a caveat: Be careful. As a result, I started to ask, for example, Société générale de financement that has invested $200 million in some production industries. As a result, we have started now to see the consequence. We prepared ourselves to come and meet with you to express the concern of our industry and of certain people who have addressed this issue with us.

Mr. Miller: If I could add, senator, in November or December, whenever the concerns first started to be raised, everywhere I went where the film industry or its representatives were present in Toronto, the issue was raised with me with exceptional passion. They had serious concerns. I spoke to producers, financiers, everyone, and they shared the same opinion. There was no diversity of opinion.

Given that Toronto is the head office of five of Canada's six major banks, we also care about that side of the industry. We want the banking industry to be successful.

I personally heard it from all aspects of the industry. I think it is fair to say the concerns arose later in the process, not at the beginning. That is the nature of a complex piece of legislation, when the concern is one paragraph.

Senator Eyton: Coming out of that concern, what we heard in all the evidence given to the committee is that there is a general acceptance that there should be a standard, and I think general agreement, as well, that the standard must be clear and reliable so that people can obtain financing and carry on with the production and investment in the film product, whatever that product may be.

We have had a fair amount of evidence saying that the standard that is suitable is the Criminal Code. I think your testimony suggests that you support a standard. Can you accept that there could be a standard higher than the Criminal Code — or, if you like, higher than staying out of jail? Can you accept that idea?

Mr. Miller: I suppose, in theory, it is possible; but the difficult question is, what is it and who decides? I think that question is unanswerable. We had the Ontario Film Review Board when I first practised law and it was shut down by the provincial government. I think it was because that question is unanswerable — what is the standard?

My view is that one of the reasons the industry supports the Criminal Code as the standard is that there is clear precedence on what it means. These issues have been litigated; some have gone to the Supreme Court of Canada. We know what the standard means.

The banks, for example, who do not want to take undue risks, know the risks they will take if the Criminal Code is the standard. If it is the government's wish — and I have not heard the government articulate clearly what they are trying to do here — to advance a new standard, I repeat my earlier comments that a new standard should be arrived at through a broad consultation, and then legislation brought in with the standard in it.

I do not think it should be created through a mechanism like this bill. If there is not consensus, the minister can do what she wants after a year. I find that concerning.

My default position is that we have the Criminal Code and the standards established within it about pornography and extreme violence. If there is to be a change to that legislation, then you should start with a separate process and separate legislation. I believe that is consistent with the view of those witnesses you heard from Ontario.

Mr. Tremblay: Briefly, our society evolves; and it evolves sometimes because, unfortunately, either there is a crisis or an incident happens. However, if you want to question the Criminal Code or you want to question Telefilm Canada, let us talk about that. We do not need to address it in Bill C-10.

If you want a national debate on public order and what the new standards will be, then I fully agree with my colleague, David Miller; let us have an open, transparent, public debate about that issue. However, let us not jeopardize in the meantime, because of the uncertainty, industries that we were instrumental in developing. When I say we, it is an inclusive we; it is the Canadian government, the provinces, the territories and the cities. We have worked so hard, why do we need this? Like some people say, if it ain't broke, why fix it?

Our industries face immense challenges. If another debate must take place, let us do it in the formal way, as representatives of our citizens.

Senator Eyton: As has already been mentioned, the Minister of Canadian Heritage has made a commitment before this committee to suspend those provisions within Bill C-10, and to take a 12-month hiatus where she would sit with industry representatives and try to establish a standard. It would not be a certainty, but it would be an effort to establish a standard different than the Criminal Code.

That seems to be consistent with the resolution that was tabled with us today from Vancouver, where part of the resolution from the Big City Mayors' Caucus reads that they ``recommend that the federal government amend Bill C- 10 following consultations with the film industry in order to eliminate any measure that would negatively impact on the financing of film productions.''

That resolution seems to feed into the offer by the Minister of Canadian Heritage to sit with the industry and try to work out another standard. Do you agree?

Mr. Miller: With respect, senator, no; that is not what the resolution means — and it is from Vancouver, Toronto, Montreal and Halifax. What it means is that the legislation should not proceed in its current form.

Speaking on behalf of the Toronto Film Board, we would welcome to be involved in consultations with the minister, but that should lead to some other form of legislation. I do not believe — and I believe this strongly — that it is appropriate to proceed in this forum; have consultations that we do not know what the outcome will be and then leave the minister with unfettered discretion in something that is not even regulated by law because it is not a statutory instrument. If the option is to take out the provision and bring back an amendment later, following consultations, I think that is the intent of that resolution.

Mr. Tremblay: Same answer.

The Deputy Chair: Senator Eyton, do you have anything further?

Senator Eyton: No, thank you, chair.

Senator Moore: I have had the pleasure of serving on Halifax city council, and I was deputy mayor of the city, so I appreciate Mayor Miller reading Mayor Kelly's letter and commercial for my hometown.

Mayor Tremblay, you said if it ain't broke, why fix it? I suggested that to Minister Verner in the first hearing — that this bill proposes a solution to a problem that does not exist.

However, the issue goes beyond that. Mayor Miller, you talked about your former experience practising law and you spoke about the statutory instrument provision of clause 120 of this bill. In it, you said, I guess it means it does not have the force of law. What that section says is that these guidelines are not statutory instruments within the meaning of the Statutory Instruments Act.

That means that those guidelines are not — which comes back to your comment, Mayor Tremblay, about the role of House of Commons and the Senate — reviewable by the Standing Joint Committee for the Scrutiny of Regulations, which is made up of members of both Houses. The guidelines are not reviewable by the House of Commons or the Senate, and they can be changed — amended or deleted — at any time without notice to any of those bodies or the public.

Now that you know that, which is the opposite of what you thought it meant, how do you feel about that situation?

Mr. Miller: First, senator, I assumed it meant something like that. If I said it did not have the force of law, I meant that there was no legal way to regulate it because it is not reviewable. I did not realize the detail it meant; that concerns me even more. If it was a statutory instrument, there would be a procedure for people to have input.

I believe it reinforces my earlier remark that the minister has unfettered discretion to decide what films are financed, which will mean, in the end, what films Canadians can see. It reinforces our concerns. I do not think Canadians should rely on the judgment of the minister in this matter; they should rely on their own judgment, subject to the provision Criminal Code about pornography.

When I saw that provision, it concerned me because it seemed anomalous to take it out of a normal procedure and a normal instrument. Your comments reinforce what my colleague and I have said today.

Senator Moore: Anything further on that question, Mr. Tremblay?

Mr. Tremblay: Who will influence the minister on the new guidelines? We are talking about reviewing guidelines that do not have force of law. My question is more, on what will it be based, and who will influence the minister? I do not question the good faith of the minister at all. The consequences are important. We have a responsibility to put in place the mechanisms to ensure that the best decision is taken for public order and that the decision does not have negative impact on an industry that deserves to continue to prosper. That is the question I have.

Regarding technical matters, I think lawyers will try to find the best way possible, if there is political will, to follow up on the representations that have been made not only by us as mayors but also, in particular, by members of the industry.

[Traduction]

Senator Nolin: Thank you to our two mayors. Because you are both mayors of the two largest Canadian cities, two large urban areas that can certainly not be identified as monolithic, your testimonies are greatly appreciated.

We received a suggestion, one that is certainly isolated. Nonetheless, that suggestion is worth exploring. The suggestion is this: Any taxpayer who is opposed to using tax dollars to subsidize an audiovisual production that goes against his values, and by extension his conscience, could withhold his tax contribution in the amount equivalent to the subsidy in question. This measure would not touch upon any potential transgression of the provisions of the Criminal Code. This would concern cases of extreme violence, that do not fall within the realm of pornography, sexual exploitation that goes beyond accepted standards, as interpreted by those taxpayers.

I assume that as mayors of two large cities, you are sometimes confronted by minority groups who claim, for reasons of conscience, to be against the decisions you make in your capacity as mayor.

This occurred in Montreal, where there are several types of industries. I recall a group of Montreal citizens who were against the fact that Montreal served as a headquarter for military and defence industries. Mr. Tremblay, you will recall that we have already had this debate, which is entirely usual in a free and democratic society, such as ours. What do you think of such a suggestion?

Mr. Tremblay: That would set a significant precedent. Take, for example, someone who says: ``I do not agree with certain decisions made by the mayor or city council; I therefore refuse to pay my share of taxes.'' Firstly, the law forbids this because decision-makers rely on taxpayers to pay their share of taxes, and secondly, there are normal processes to challenge political decisions within a legitimate institution. Citizens who live in a cosmopolitan society cannot all of a sudden decide to challenge the will of the majority just because it does not suit them. There are mechanisms in place to allow everyone to express their views freely. In municipal government, there are many mechanisms. We even have an ombudsman who listens attentively to anyone's representations. However, to create a precedent and allow a person to impose their personal values before those of a non-monolithic society is something that would have to be seriously considered, because such a precedent could have significant consequences on the future of a society.

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Senator Nolin: Mayor Miller, do you have a similar opinion?

Mr. Miller: Mr. Tremblay and I share all opinions. It is the Toronto and Montreal alliance. Yes, I concur with my colleague's comments.

Senator Ringuette: Mr. Miller and Mr. Tremblay, you are welcome to have input, but I would like to make a statement. I am pleased to see that the four of you — there is also the Mayor of Vancouver and the Mayor of Halifax — although within this country you are competing for the industry dollars for your cities, are here today with a unified presentation. You have rallied together in support of the industry; of the jobs and of the economy of your cities.

Mr. Miller, you indicated in your statement a few minutes ago in response to Senator Eyton that everyone you have met in the last few months spoke unanimously and passionately about their opposition to the amendments proposed in Bill C-10. This committee started receiving witnesses on this issue on April 2. A month later, on April 30, the Minister of Finance, Mr. Flaherty, came before this committee and said that he had spoken to many people involved in the industry and that there was no unanimity among them. We offered Minister Flaherty an opportunity to have these people from the industry, whom he indicated had a different view, to come before us in this committee. Unfortunately, a month later, we have not received any of the names — at least, from what I know; perhaps the clerk or the chair can concur — of those people who Minister Flaherty said are not in agreement with the industry.

Mayor Miller, can you identify for us people who you may think would not be in agreement with the industry? This committee would like to listen to all the different voices. If there is a different voice, I would like to know who it is. Please, send their names to us because Minister Flaherty is not sending them.

Mr. Miller: Within the Toronto film industry, I have not heard one dissenting voice. As Chair of the Toronto Film Board, it is my duty to work with the industry. We set up the film board at the request of the industry. I have recently been to a preopening of the new Filmport studio — and, if I am to do advertisements for Halifax, perhaps I can do one for Toronto — which is not only the largest purpose-built sound stage in the world but also a sound stage that is located on city-owned land. It is leased and it is a terrific new project. Representatives from all over North America were there and this issue was the topic of conversation with the Los Angeles-based producers as well. However, I cannot speak on their behalf; I do not represent Los Angeles.

I have not heard a single voice from the financing sector, the production sector, the unions, the trade organizations — from anyone — say anything but that this piece of legislation is poorly thought out, and it should be deleted from Bill C-10. If the government wishes to find a role for public policy beyond the Criminal Code, it should start over, articulate its public policy goals in legislation, consult with people and then see whether those goals are acceptable. I suspect it is impossible to do that in a way that is acceptable, but I have not heard a dissenting voice.

One thing I have not done is share the passion of the industry. People are extremely concerned. This argument is not simply an academic one. At a time when the industry is suffering financial pressures, which we discussed earlier, from such variables as the Canadian dollar, strikes and labour disputes in the U.S., they are extremely concerned that this legislation will disrupt the Canadian industry. What the minister has said, and I am sure in good faith, is the worst possible outcome. To pass this proposed legislation and then have a year on consultation on films that might take a year and a half to produce could put a freeze on financing.

The fact that, in a modern 21st century Canada that people come to from around the world for hope and opportunity, we would re-introduce, through a completely arbitrary provision that can be amended at a minister's whim, what is, in effect, censorship, does not meet the modern Canada that I represent in Toronto, for sure, and that others represent across the country.

People have a choice: They can turn the programming off or they do not need to go to see the film. People already have that opportunity and do not need this legislation to make their decision.

Mr. Tremblay: I want to add to that. Yes, you have heard from four mayors today but we speak as one voice for the 22 mayors of the big cities in Canada as well as more than 1,000 mayors that are members of the Federation of Canadian Municipalities. This discussion was public. It was discussed at the general meeting in Quebec City of the Federation of Canadian Municipalities in the presence of media. If someone had had an objection, it would not have been a unanimous decision.

The City of Toronto voted unanimously on a resolution that was publicized. The City of Montreal voted unanimously on a resolution that was publicized. Ideally, in politics, we look for consensus. It seems to me in this instance that we are talking about unanimity.

To ensure that unanimity, I turned around to the four representatives of the industry and I asked. They said, yes. It is not a question of a consensus or a large consensus. This issue has been publicized. The industry knows we are here; everyone knows we are here. I can only speak for myself but I have not heard one comment that does not reflect the strong message that we send here today.

The Deputy Chair: Gentlemen, on behalf of the committee I thank you very much for your fascinating interventions and openness in responding to questions. We will not adjourn the meeting because Senator Dawson wants to raise a point.

Senator Dawson: I am satisfied with the answer from the clerk of the committee.

The Deputy Chair: If there is no other business, we will adjourn until next Wednesday at 4 p.m. when the Senate rises.

The committee adjourned.