Canadian Heritage Committee on Nov. 3rd, 2009

[The Chair, Conservative, Gary Schellenberger]

I am calling to order meeting 34 of the Standing Committee on Canadian Heritage, pursuant to Standing Order 108(2), a study on the management of grants to cultural organizations by the Department of Canadian Heritage.

This morning we have with us, from the Department of Canadian Heritage, Jean-Pierre Blais, assistant deputy minister, cultural affairs, and Pablo Sobrino, assistant deputy minister, planning and corporate affairs.

Welcome, gentlemen.

Yes, Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I have a bit of housekeeping.

We've had I don't know how many changes to the agenda for today. My understanding was that we were going to be dealing with some of our committee business. Now I understand that it is being held off until Thursday.

Is that the case?

[The Chair, Conservative, Gary Schellenberger]

That is correct.

[Charlie Angus, NDP, Timmins—James Bay, ON]

My only concern is that we have to address the committee report on cuts to musical diversity. It had been raised at one of our earlier meetings that meetings are at a premium. I'm concerned about us losing time. We're going to have to have another planning meeting. We're going to have to deal with the musical diversity cuts report. Then all the other work we want to do will start to get backed up.

I'd like to just put on the record that I'll go along with the wisdom of the chair and the clerk at this point, but we have to make better use of our time.

[The Chair, Conservative, Gary Schellenberger]

We have a two-hour meeting on Thursday. It will be on business, and we can talk about those issues at that particular time.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Okay. Thank you.

[The Chair, Conservative, Gary Schellenberger]

Go ahead, please, Mr. Blais.

[Jean-Pierre Blais, Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage]

Thank you, Mr. Chair.

I am pleased to be here this morning to provide you with information on the arts and culture grants and contributions process in the department. With me is my colleague, Pablo Sobrino.

Pablo is the assistant deputy minister of planning and corporate affairs, so he has a broader picture of all grants and contributions within the department.

For my part, I cover most of the arts and culture funding programs--not all of them, but most of them--in the department.

Between the two of us, we hope to be able to provide you with answers to most of your questions.

You have in front of you a nine-page deck. I know that time is at a premium. We will speak to the deck

in order to leave as much time for questions and to speed up the process, Mr. Chair, I will move to page 2.

Since you are all members of this committee, I presume that you already understand the importance of culture for Canada's social and economic development, as well as the various programs and tools in place. I will therefore immediately give the floor to Mr. Sobrino.

[Pablo Sobrino, Assistant Deputy Minister, Planning and Corporate Affairs, Department of Canadian Heritage]

Thank you, Jean-Pierre.

First of all, I would like to say that our department is responsible for the grants and contributions. Canadian Heritage provides close to $1.1 billion a year in grants and contributions.

We have a total of 39 programs with 43 subcomponents to those programs to administer, programs that vary from the arts and culture programs to heritage to aboriginal youth through to sport. There were 7,800 grants and contributions that we approved in 2008-09, the last fiscal year, and over 4,000 of those were approved by either the minister or the minister of state responsible for the programs.

We also administer some programs, and one of them is the Celebrate Canada files. These are files that are less than $3,000. We processed 1,400. Those are for the Canada Day celebrations.

Then our director general of sport processes the athlete assistance program cheques, which are contributions to individual athletes, carded athletes, high-performance athletes. We processed about 2,300 of those.

Our approach to managing programs is to balance both delivering on program objectives of the government while ensuring proper accountability, due diligence, and managing our risk appropriately.

Turning to page 4, there's a very brief outline of the framework that we operate under. There are three elements to it. One is the legislative framework with a number of statutes for which we are responsible that dictate the accountability regime we've put in place.

There is a policy framework that is established by the Treasury Board Secretariat. The most important policy in this business is the Treasury Board policy on transfer payments. It dictates how we are to manage transfer payments for programs.

Finally, there is a risk management framework. This is how we organize ourselves to balance risks as we process individual applications.

Much of what we're changing in terms of grants and contributions follows from the recommendations of the blue ribbon panel on grant and contribution programs. This panel met in 2007 and delivered a report, which the government then implemented in 2008 in the form of an action plan. Canadian Heritage was one of six departments that were known as vanguard departments. The six departments were asked to lead in the development of action plans.

Fundamentally, the action plan—we have 21 initiatives that I could go through, if you wish—is about communicating better with our clients, managing the risk, and improving our processes in terms of moving files through the system.

In terms of communicating better, one of the issues on which a question has come up many times has to do with the service standards, the length of time it takes to put a file through the process from application to delivery of a first payment. On April 1, 2010, we expect to be posting on our website service standards for all our programs so that our performance can be measured against those standards.

I'm just going to turn to page 6 and go back to Jean-Pierre, who will speak to the arts and culture programming specifically.

[Jean-Pierre Blais]

As my colleague has indicated, we support a wide range of activities, programs, individuals and recipient associations throughout the department, in particular in the field of arts and culture.

This vast diversity of clients goes from very small not-for-profit art and heritage organizations to much larger for-profit businesses in the cultural industries, book publishers, periodical publishers, music. So our clientele is very vast and varied.

We also have a diversity of the types of clients. We have very small, less sophisticated organizations where you sometimes have one volunteer who is involved in dealing with things like applying for grants and contributions to very large corporations that have significant internal capacity.

Because of that broad diversity and taking into account the diversity of objectives that programs have, we have designed programs to meet, on the one hand, the service needs of our clients while maintaining the accountability or proper stewardship of the money.

I thought it would be useful to present you with two case studies to explain what it means in practical terms, on the ground, to create a structure for programs that have a number of objectives.

The first I will talk about is

The Canada Arts Presentation Fund was created in 2001 to give Canadians direct access to a wide variety of professional artistic experience in their communities. This fund provides financial assistance to not-for-profit organizations that professionally present arts festivals or performing arts series, as well as their support organizations. To support them, we have both grants and contributions.

I'll stop a moment here; perhaps not everyone understands the difference between contributions and grants.

From a paperwork perspective, the more heavy aspect is a contribution. It's actually a contract. It's a detailed contract that is signed, on the one hand, by the crown or the federal government, and by, on the other hand, whoever is getting the recipient money. It has detailed payment schedules. It has reporting, sometimes monthly, and accounting. Oftentimes we require audited financial statements. It's a very complex system.

That is appropriate in certain circumstances, but not in all circumstances. In other cases, we use grants. Grants basically take the form of much less paperwork. There is a letter granting the amount of money. A cheque is cut, usually one single payment rather than a whole series of payments over time in exchange for reports. In the end, there's a final report that is broad in scope.

Pablo mentioned earlier that we do a risk-based analysis. In certain cases, because of the history we've had with clients or because of the amount at play, we take a risk-based analysis and go towards a grant approach rather than a contribution approach. In other cases, because of the scope, complexity, nature of the program, or the track history, we go towards the higher contribution, which administratively takes the more complex process of a contribution agreement. They're both appropriate, but one has to have the right dose in each one of them.

From the client's perspective, it's a lot easier to be in a grants situation.

The grant mechanism is much simpler. The analysis process is similar, but ultimately, recipients receive their funding faster. Their reporting requirements are lighter.

The assistance provided through the Canada Arts Presentation Fund is distributed as follows: 46% to festivals, 38% to series presenters and 11% for a combination of festivals and presenters. The average level of support is about 12% of eligible expenses.

The average amount is about $49,000 per applicant, but the medium amount is about $25,000. You can see that it's a relatively small amount of money for most of them.

Of the approximately 550 folks we deal with, 60% are dealt with through a grants process, even though that only represents 20% of the overall budget. That's much easier for the clients to deal with because it's that lower amount. From our perspective, it's the appropriate risk balance.

On contributions, however, we do about 240 of those 549. About 40%, in terms of the volume, are contributions, but that represents about 80% of the money.

Year to year, we try to improve that mix of grants versus contributions. For instance, in 2006-07, the Canada Arts Presentation Fund did 40% grants. In 2008 that number was nearly 60%. Next year we expect that the number will grow. We're trying to adapt to the burden that contributions create for people.

By the same token, we've also adapted by having multi-year contracts. Even when we go to contributions, there's a way of doing it in a multi-year process, which means that the client deals with us one time. We analyze the application.

Thereafter, a multi-year contribution agreement is reached. That is also a way to reduce reporting requirements.

On page 8, you have the Canada Book Fund—formerly known as the Book Publishing Industry Development Program, PBIDP—with an annual budget of approximately $37 million.

More specifically, it's helped to foster a strong Canadian-owned industry that delivers world-class Canadian books to readers across the country and around the world.

Now, this program has three delivery mechanisms. About 66% of the amount of money associated with the program is delivered through a formula based on the sales of the previous years. An amount then is calculated to provide it. To do that calculation across the industry takes a certain amount of time, but once you have all the information, the calculation is actually quite easy to make. This works, because you have a homogeneous group of recipients and it rewards success, but it's also very predictable. The applicants have a sense of how they will come out in it.

There are other parts of the $37-million program that are project-funded. This is more of a selective process. Applicants will come in with a marketing project, for instance, or a professional development project, or a technological improvement project. In those cases, of course, the analysis has to be done to see how and if indeed--there's always a limited number of funds--we allot the money to the most meritorious cases.

The third example is third party delivery. We have in Canada the Association for the Export of Canadian Books, an expert group that for years has been involved in marketing books on the international stage. We use their facilities to deliver that program because they do it quite well, and it's highly specialized.

When we're balancing, as Pablo was mentioning earlier, the need for an efficient delivery, on the one hand, with proper stewardship, we try to tailor-make the various delivery mechanisms to deal with this. We're always trying to improve the service to clients.

I now give the floor to Mr. Sobrino.

[Pablo Sobrino]

I know that the committee has discussed the problems we've had. There's no question there are problems, and we recognize that. We're moving forward with this action plan in response to the blue ribbon panel. We are reviewing our processes. We are striving to be more efficient and more effective.

We are also working to ensure that the arts and culture programs respond to clients' needs and expectations and that we are able to meet the program objectives of the government.

Without further ado, I'll pass it over to you, Mr. Chair.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much for that presentation.

Our first questioner is Mr. Rodriguez, please.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you, Mr. Chairman.

Thank you to both of you. I am happy to know that I am not the only Pablo in town; it is rare to meet one.

[A voice]

There was another one, Pablo Picasso.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Yes, but he does not live here!

It is interesting to be given an overview of what Canadian Heritage does. However, today's meeting deals more specifically with the management of grants and to problems of disbursement and delays, in certain cases, among other things. I had the opportunity to tour Canada this summer on the issue of culture and I met with organizations from right across the country. There were serious problems. I have in mind certain festivals or programs in Montreal where the money arrived after the event or perhaps in the week preceding it. It is impossible to plan under such circumstances, and that puts certain events at risk.

Do you have any general comments to make on that?

[Jean-Pierre Blais]

You are quite right to say that in some cases, there were glitches. As far as festivals are concerned, one of the problems is that funds are allocated in February or in March and the program must be delivered the following summer. Most festivals take place during the summer. We could avoid these problems by negotiating agreements covering several years. In that way, the planning cycle would be longer. Rather than starting the cycle one or two months before the summer, which is festival time, we can begin earlier.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

How are the multi-year agreements coming along?

[Jean-Pierre Blais]

Within the framework of our action plan on the delivery of grants and contributions, it is one of the vectors through which we can improve the quality of service. It will vary from program to program.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Are some programs more problematic than others?

[Jean-Pierre Blais]

It is risk-based. We cannot say that we will negotiate multi-year agreements for 25% or 30% of cases throughout the department. We try to do so where it makes sense. We have clients who are regulars. Therefore, we know them and we know that they are able to provide their reports on time. From the perspective of risk assessment, it is in these kinds of cases that it is completely appropriate to negotiate such agreements, and we are attempting to do so more often. Furthermore, that also frees up departmental staff, who can then concentrate on other activities.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Is it also a problem...

Mr. Sobrino, you wanted to say something.

[Pablo Sobrino]

I just wanted to add that last year, in 2008-2009, we increased the number of multi-year contributions by 10%. It was a pilot project. We did so for nine programs, including one for the arts and one for book publishing. We launched a program to increase the number of... It is currently underway.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

It was to increase the number of multi-year agreements.

In the case of organizations that you know well and with whom you have a long-standing relationship, could there by multi-year agreements or disbursements at the beginning of the year, or something of that nature?

[Jean-Pierre Blais]

Yes.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

It is possible?