Canadian Heritage Committee on Nov. 4th, 2010

[Roger Pomerleau, Bloc, Drummond, QC]

I'd like to ask Ms. Kopak a brief question.

You said at the very start of your presentation that your students come from around the world, that they have different backgrounds. You also said they did not find it very hard to work together.

Do the people who study at your institution have to have special training?

[Jeannette Kopak]

No. They need an undergraduate degree and they need to have good marks. They need to be able to communicate in English, but they get along very well. We had a team last year that had an Israeli, an Iranian, a Korean, and a couple of Canadians working together. I used to joke and say that if the world could work like this, just imagine how much better the world would be.

But the training is all undergraduate, and they need a desire to make a difference.

[Roger Pomerleau, Bloc, Drummond, QC]

It's Silicon Valley up North.

[The Chair, Conservative, Michael Chong]

It's Silicon Valley North.

Thank you very much.

Merci, Monsieur Pomerleau.

Thank you very much, members of the committee. I want to thank our two witnesses, Madam Ross and Mr. O'Hearn, for appearing and testifying.

We'll suspend for five minutes to allow our next panel to appear.

[The Chair, Conservative, Michael Chong]

We're resuming our meeting.

Welcome to our committee.

We have representatives here from two departments of the Government of Canada.

We have, from the Department of Canadian Heritage, Mr. Blais, Assistant Deputy Minister, and Ms. Kennedy, Deputy Director General, and, from the Department of Industry, Mr. Beaudoin, Director General, and Ms. Miller, Director General.

Welcome to all of you.

We'll begin with an opening statement from the Department of Canadian Heritage.

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

Thank you very much, Mr. Chairman. It's a pleasure for me to be here with my colleagues.

We have a few slides to show you to support my remarks, just to simplify the presentation.

Obviously, Mr. Chairman, you'll understand that we certainly can't be here to speculate about future policy directions of the government, but we're more than happy to provide some factual information to the extent we can. If we can't provide it today, we'll follow up with the clerk of the committee. We'll try to be as helpful as we can within the limits of what we as public servants can or cannot do.

I bring your attention to the first slide, which is on page 2.

Whenever one does a policy framework, as you're looking at in terms of the impact of new technologies on creation here in Canada, the broad strokes of any tool kit would include legislation, institutions, and perhaps programs. On page 2 you can see the items in the current tool kit--the principal ones, not the sole ones--that we use to support creation of and access to Canadian content. You may notice that some of these date from a few years ago; however, they remain particularly resilient and adaptive, because when they were originally drafted by Parliament, they were done in such a way that they were pretty open-textured and were able to evolve over time. They have helped us to continue to support the strategic outcomes we're looking for, as I mentioned--the creation of and access to Canadian content--but now we're trying to do it on a multi-platform basis.

We will move to page 3. You've been at this and hearing evidence for a number of months, so none of this will come to you as a surprise.

Technology is indeed one of the most important drivers, though not the sole driver, affecting arts and culture these days. You've heard this from a number of folks. It's certainly affecting the way we create, share, and consume creative content. There's convergence in devices as well as suppliers. Traditional lines of business are completely blurring, and there is a significant disintermediation of traditional players.

Nevertheless, audiences out there, Canadians, want their content on the platforms that they want, when they want it. These new platforms don't necessarily compete with each other. It's amazing how people seem to have more time to consume more content at the same time, but the choices are multiplying and the choices are global. This actually is quite a great opportunity for Canadian creators, because the technology is providing our Canadian artists and creators with global audiences. Certainly content plays an important role, and it's actually driving the demand for devices and bandwidth. As well, you'll see in an ownership chart in the annex that it's actually affecting how people are organizing to deliver on it.

Within the department, we have been addressing the issue of the impact of new technologies on content creation at least since I have been in my position, that is since 2004.

At that time, we established a working group on new technologies, and we conducted basic research that put us in a good position to turn the corner.

On page 4, there is a summary of the major changes that we have managed to make in support of the programming.

For instance, in March 2009 Minister Moore was able to announce fundamental changes to the Canada Media Fund, which has $134 million per year of contributions. If you add the private sector contribution, it totals over $350 million per year. We announced changes to the Canada Interactive Fund, which replaced the former Partnerships Fund and the Gateway Fund. That's $55 million over five years. The Canada Book Fund was reformulated in September 2009. That's another $40 million. The Canada Music Fund was renewed in July 2009 and given $27 million. The Canada Periodical Fund, which was announced in February 2009, is another $75 million.

Into every one of these programs, when we reviewed them, we incorporated a digital component adapted to those particular realities. We also have the Virtual Museum of Canada as well as the online works of reference.

The framework also includes, of course, the important role of the national cultural institutions. I'll let you read what's on the page. Certainly the National Film Board, Library and Archives Canada, the CBC, and others--national museums, for instance--through their archives and new collections are very important innovators in providing Canadian content to Canadians. It's quite remarkable. CBC, for instance, is one of the most successful media sites out there.

Since then, with our colleagues from Industry Canada,

and from the Department of Human Resources, we have worked together on the digital economy. We conducted a consultation between May and July. Interest was very great.

You've no doubt seen the document issued jointly by the three departments.

From our perspective, I think it's chapter 4 that deals with digital content. I recommend you read it if you haven't had a chance to do that so far, because it provides a road map for dealing with content in the digital world. We were quite surprised that almost half of all submissions dealt with content, so it's very much a driver of where we're going, and the page outlines that.

Looking forward over the coming months, again related to the digital story, there is the Copyright Modernization Act and the digital economy strategy. We are in the process of developing a forward strategy with the ministers.

As well, we are currently looking at the foreign investment policy in the book and publishing distribution business in Canada. The Red Wilson panel, you will recall, has recommended that we periodically review our investment policies; we're in the process of doing that, starting with the book policy. This policy was originally adopted in 1985 and revised in 1992, so it's certainly one that needs to be looked at.

That pretty much summarizes where we've been and where we're going. I'd be more than happy to answer some questions.

Now my colleague, Alain, will say a few words.

[The Chair, Conservative, Michael Chong]

Thank you.

Now we'll hear from Industry Canada.

[Alain Beaudoin, Director General, Information and Communications Technologies branch, Department of Industry]

Thank you very much.

I would like to thank the Standing Committee on Canadian Heritage for the opportunity to be here today.

I will first speak about some of the key findings from the consultations we had on the digital economy.

I want to clarify at the outset that I'm not in a position to comment on next steps with regard to the strategy, as this is the purview of ministers. However, I can tell you, as Jean-Pierre mentioned, that we're working closely with our colleagues at Canadian Heritage, HRSDC, and other departments as well.

On May 10, Minister Clement launched consultations on behalf of the Government of Canada.

Through an interactive consultation website, Canadians were given an opportunity to discuss ideas and provide recommendations. We received more than 270 submissions and numerous ideas, all of which have been available to the public on our website: digitaleconomy.gc.ca.

If you haven't accessed it, all submissions received are accessible to the public.

Meetings were also held with key stakeholders on various topics.

Overall, participants generally agreed with the key challenges outlined in the consultation paper, and the notion that everyone has a role to play on the digital economy.

I will now speak to some of the areas that fall under the purview of Industry Canada with regard to the results of the consultations.

On capacity to innovate using ICTs, participants noted that Canada suffers from underinvestment in ICTs and slow adoption rates. Additionally, stakeholders considered SMEs disadvantaged, because they often lack the time and resources to select and implement the right ICT solutions.

The private sector acknowledged that they have a role to play in better using ICTs, but also recommended some government leadership to incent change, such as awareness initiatives.

Several stakeholders called for speedy passage of bills related to spam, privacy, and copyright in order to strengthen Canada's regulatory and legislative frameworks that protect and foster the online marketplace, and also to increase the take-up and use of digital technologies.

Next-generation network infrastructure was seen as a critical part of modern infrastructure for all sectors of the economy. Stakeholders wished for new, innovative services and higher-speed broadband at the lowest possible price. Generally they felt that the competitive market is working reasonably well in urban areas; however, in smaller rural and remote communities, stakeholders indicated that market forces on their own would not lead to deployment of higher-speed broadband and felt that government intervention would be necessary.

On promoting growth of Canada's ICT sector, stakeholders pointed to the relatively small size of our firms, lack of commercialization, and insufficient exports as factors constraining the growth of the sector. They noted the effectiveness and usefulness of programs such as NRC's IRAP to support the ICT sector and the digital media sectors as well.

While the scientific research and experimental development tax credit, known as SR and ED, is seen as very essential, many called for changes.

Some stakeholders argued that governments should review their procurement practices in order to foster innovation. They also emphasized the importance of highly qualified people for the ICT sector, as well as the need for greater collaboration between public and private sectors.

This leads me to talk to you about government support for digital skills. For its part, the industry portfolio supports digital skills talent through various programs, such as the Canada Research Chairs, the Canada Graduate Scholarships, the Vanier Scholarships and the Canada Excellence Research Chairs.

Allow me now to discuss the separation of telecommunications and broadcasting. As you know, broadcasting is a sub-set of telecommunications and it is treated differently from other forms of telecommunications because of the role it plays in developing, protecting and promoting Canadian culture. The Broadcasting Act therefore is primarily cultural in nature.

The Telecommunications Act, by contrast, is primarily economic in nature, with emphasis on ensuring that Canadians have access to high-quality, affordable services.

Let me turn to government support for R and D in the digital media sector.

Since 2006, the government has committed an additional $8.5 billion in innovation. These investments have been administered by a wide range of federal programs and agencies, as well as granting councils. ICT was identified as one of four priorities as part of the S and T strategy that was launched in 2007, with programs and initiatives that support digital media R and D and innovation, amongst others.

While we cannot provide you with an exhaustive breakdown of federal funding for digital media, some examples include the networks of centres of excellence program, which finds the Graphics, Animation and New Media Canada Network, known as GRAND, in British Columbia, and the centres of excellence for commercialization and research program, which funds the Canadian Digital Media Network in Waterloo, known as CDMN for some.

With that, I'll be pleased to answer your questions.

My colleague, Ms. Miller, will also be able to answer questions on telecommunications and infrastructure.

[The Chair, Conservative, Michael Chong]

Thank you.

I want to ask committee members a question.

Since there will be a vote at 5:45 p.m., do you want to adjourn the meeting at 5:15 p.m. or 5:30 p.m.?

Do you want to adjourn the meeting at 5:15 p.m. or at 5:30 p.m.?

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

At 5:15 p.m.

[The Chair, Conservative, Michael Chong]

At 5:15 p.m.? Thank you very much, Mr. Angus, for that direction.

We will have 30 minutes of questions and commentary from members of the committee, beginning with Mr. Rodriguez.

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

Thank you. Good afternoon, everyone. We don't have a lot of time. I will ask a few brief questions.

Mr. Blais, at what point was your department consulted on development of Bill C-32?

[Jean-Pierre Blais]

As you know, under their enabling legislation, the Department of Canadian Heritage and the Department of Industry are both responsible for copyright. Consequently, we work together. Personally, I have taken part in the process since Bill C-60 was introduced. The department has always been involved in that file.

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

So Canadian Heritage had significant input into the final version of—

[Jean-Pierre Blais]

That's the responsibility of both departments.

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

And you at Canadian Heritage?

[Jean-Pierre Blais]

We have been taking part all along.

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

Mr. Beaudoin, in your presentation, you mentioned the separation of telecommunications and broadcasting. Technically, you're correct. In actual fact, everything is virtually integrated. Everything is increasingly integrated. Bell, which in principle is a telephone company, is evolving, buying CTV and is now engaged in broadcasting and production through what CTV does. The best example is Quebecor, which is involved in cable distribution, owns a television network, TVA, is engaged in production and also owns a series of print media concerns.

How can we really think all that can be treated differently when it's all integrated?

[Alain Beaudoin]

I'm not an expert on the matter. So allow me to turn to my colleague for a few moments.

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

All right.

[Pamela Miller, Director General, Telecommunications Policy Branch, Department of Industry]

I think the point Alain was making in the remarks is that the different activities conducted by the companies are regulated differently. So even if they are engaging in communications activities that on one side have the broadcasting activities and on one side the telecom activities within the same company, they are subject to different acts. Therefore, just as many companies are subject to many, many different pieces of legislation, the same applies in this case, where they're subject to two different pieces of legislation.

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

Once again, you're technically right. In your view, would that mean that the door might be open to the purchasing of our telecommunications businesses by foreign interests and that, since this is governed by both acts, there would be no impact on the broadcasting components, even though the businesses are integrated?

[Pamela Miller]

There is a very fulsome set of regulations under the Broadcasting Act that have to be adhered to if you are both engaged in broadcasting distribution undertaking activities and broadcasting activities, on which I would defer to Jean-Pierre. Those are extremely clear about the obligations one must fulfill in order to engage in broadcasting to Canadians. Those would fully remain in place under any scenario.

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

I'm asking you the question, Mr. Blais. Can we permit the sale of telecommunications businesses to foreign interests without there being an impact in the broadcasting sector, even though those businesses, the major players, are all integrated?

[Jean-Pierre Blais]

As you know, the Industry minister has begun consultations on this issue, and Canadians were able to take part in them. This exact question was an issue.