Canadian Heritage Committee on May 8th, 2007

[Sheila Fraser]

In general, strategic planning is absolutely essential to provide direction for corporations that will be facing challenges or changes. With all the changes it must face, whether they be technological changes, new types of media, or greater fragmentation of the market, the CBC must create a plan that clearly sets out the likely changes and challenges for the coming years. It must also indicate what strategy it will adopt to face them.

A number of these changes, for example new technologies, will require additional funds. The corporation must identify them and start to look at how it will obtain these funds and over what period of time. It must even hold discussions with government in order to warn it about what is coming and how to prepare. This planning will help manage these issues properly as they come up, rather than in a panic.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

As legislators, we should expect that when CBC representatives appear before this committee, they will present a three- or five-year plan. We should be in a position to know what financial resources have been allocated in terms of human resources to meet the corporation's objectives and how much it will cost. I do not know whether I am going too far, but I would add that the corporation should perhaps also have deadlines for meeting these objectives.

[Sheila Fraser]

I agree overall, but for some more long-term objectives, it would be hard to have very detailed plans. Still, the CBC would at least have identified the changes to come and their effects.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

This would make it possible to compare from one year to the next.

[Sheila Fraser]

Yes. As well, there should be a good discussion on the likely changes and the resources that will be required as a result. It should also be determined whether there will be a change of direction in some sectors. There needs to be a discussion about the major impacts and the main strategies to counter them.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I am changing the subject a little, but it is still on the topic of the CBC.

Ms. Fraser, some witnesses said that the corporation's board of directors did not have the power to appoint or dismiss the president and CEO, evaluate his performance, which still falls somewhat within the area of strategic planning, or determine his salary. Some people thought that accountability would be improved if the board had this power.

What do you think?

[Sheila Fraser]

Under the current system, the president is appointed by the governor in council. We are not questioning the government's prerogative to appoint presidents of crown corporations. However, we believe that the board of directors should clearly play a very important role in choosing the president and evaluating his performance. In the private sector, the president reports directly to the board.

We do not really have any comment to make on this, but we believe that the board must play a very important role.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you very much.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Abbott.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you, Mr. Chair.

Thank you for being here today.

I have a question for you as to a position the CBC took for an extended period of time relative to the question of access to information. If I understand correctly, they were pretty consistently saying to me, as the opposition critic on heritage, that if the CBC were to come under access to information as a crown corporation, that would end up potentially compromising their commercial competitiveness with private broadcasters. I wonder if you would comment on that in that it's a done deal now they are going to be covered, but I wonder if we could have your perspective on that particular question as we move forward.

[Sheila Fraser]

I'm afraid, Mr. Chair, I'm not very much of an expert on access to information, but I do believe that the Access to Information Act does allow exclusions from releasing material that would be potentially harmful to the corporation and many of the crown corporations would use that provision if they believed information is going out that would be commercially sensitive, for example. I believe they also have an exclusion for anything that could be considered journalistic. There's a protection, as well, around some of the material that should be protected.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

In the context of your role as Auditor General and the kinds of audits you do on corporations like the CBC, and specifically the CBC, would you like to comment with respect to the number of times the corporation ends up in a competitive situation with commercial competitors? I'm thinking of the Olympics, curling, and hockey. Do you have any comment on that?

[Sheila Fraser]

No. That is strictly a decision of the corporation, and it is permitted under their act. It's really the way they manage the corporation.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you very much.

[The Chair, Conservative, Gary Schellenberger]

Ms. Fry.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you very much.

I realize the question I am about to ask you is possibly going to be outside your mandate, but I'm asking it anyway, because it is a huge problem—and you've mentioned it in paragraphs 29 and 30, and at the back on page 45. It has to do with the conflict between the CBC's mandate to be a public broadcaster and to have quality Canadian programming, and its need to be competitive and therefore to buy advertising. It is obvious that the CBC has to go out for advertising, since it doesn't have the funds it needs from the public sector or government. So there is a conflict there.

The second part is about its need to keep up and compete in terms of technology, in terms of digital media. It really needs to move forward, if it's going to be truly competitive. To do that, it needs money.

The third part, of course, is how does it get on those platforms and move forward?

So we have the issue of competitiveness and advertising and how the CBC can perform properly in terms of achieving its mandate while trying to do that. It begs the question of, should the CBC be freed of its reliance on an advertising budget? How would that change the structure and the mandate and the reporting of the CBC, its governance, etc.? Would it necessarily do so?

[Sheila Fraser]

That's a very interesting question, which is outside our mandate. We of course do these audits in the context of the mandate that is given to the CBC, and we are expressly precluded from commenting on the mandate.

We do note, though, the challenge for the corporation of reconciling the fact that it is competing with private broadcasters and its public policy role. Some people can view these as being in conflict, and we're stating in here—as we actually say to many crown corporations—that it is very important that they clearly outline how they interpret their public policy role and how they reconcile it with any transactions they do that are more commercial in nature. The CBC is probably one of the most significant crown corporations carrying out more commercial activities, so it is important that they define it. But I would say this really goes back to the mandate given to the CBC. At this point, it is perfectly permissible for them to do these kinds of activities, and I would suspect they view these as important in generating revenue to allow them to face many of the challenges they have.

So, would it change? I don't know. It wouldn't change the governance structure. It would still be like any other crown corporation; you would still have to have people on the board who were familiar with the industry, irrespective of how that happened. It would obviously have a much different mandate and obviously a much different financing arrangement.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Have you seen, in your own measurement of their performance, that they have had a difficult time achieving the performance required of them, in terms of their mandate, because they have had to rely so much on advertising and to compete so much with the private sector? Has it impaired their ability to perform as well as they could?

[Sheila Fraser]

Well, I think that comes back to the whole issue, as I mentioned earlier, of performance measures and objectives, and how they define their role as a public broadcaster, and the various strategic objectives they set for themselves. In programming, they have measures for that and are able to demonstrate, to a certain degree, what they're doing there; but in the others, they don't have those measures and are currently working on them. So it really is a case of defining concretely what is meant by a public policy role, and then how to measure that.

[The Chair, Conservative, Gary Schellenberger]

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I'd like to go back briefly to the issue of the ombudsman. Paragraphs 117 to 121 deal with journalistic practices, but they don't actually get into the role of the ombudsman, specifically. There was at least one witness who appeared before us during the mandate review who suggested that the mandate of the ombudsman should be expanded to include a specific reference to ensuring that journalistic balance is maintained, because, as you might expect, there are Canadians who believe the CBC doesn't necessarily present a balanced view. Now, that's probably a minority view, but we do have Canadians who hold that perspective. It was suggested that the role of the ombudsman could be expanded to ensure that not only are good journalistic practices being followed, but also that there is journalistic balance, in terms of the programming that occurs.

[Sheila Fraser]

We would not have looked at questions like that. We simply noted the fact that there were ombudsmen there, and discussed with them and looked at their reports. We would not have gone into any kind of analysis of their mandate.

[Ed Fast, Conservative, Abbotsford, BC]

Is that something you could see yourself doing in a future review--looking a little more closely at the role of the ombudsman?

[Sheila Fraser]

To be quite honest, probably not. It really is almost getting into areas of policy within the CBC itself. In a special examination like this, we are really focusing on the much more strategic high-level kinds of issues in a corporation this size. I sincerely doubt we would look at that.

[Ed Fast, Conservative, Abbotsford, BC]

Let me deal with the management of program rights. Some of the testimony before this committee came from the producers of content, the creators of content. They complained that the CBC wasn't acting fairly in how they negotiated and managed the rights. Some of these creators said they were being cut out of rights for other media platforms. They were perhaps being compensated for the traditional broadcasting platform, but not for the new media.

Did you hear any of those complaints during your review? Do you have any comments?