Canadian Heritage Committee on April 29th, 2015

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good afternoon, everyone.

We are going to call to order meeting number 43 of the Standing Committee on Canadian Heritage.

Today we are continuing our study on the Canadian feature film industry. For the first hour we have with us from the Association québécoise de la production médiatique, Marie Collin, chief executive officer, and Brigitte Doucet, assistant general director; from the Quebec Cinema Foundation, François Lemieux, director of the Tournée du cinéma québécois; and by teleconference from Montreal, from the Société de développement des entreprises culturelles, Monique Simard, president and chief executive officer.

Each of the three groups will have up to eight minutes. We will start with Marie Collin and Brigitte Doucet from the Association Québécoise de la production médiatique.

You have the floor for up to eight minutes.

[Marie Collin, Chief Executive Officer, Association québécoise de la production médiatique]

Mr. Chair, members of the Standing Committee on Canadian Heritage, thank you for inviting the Association québécoise de la production médiatique, or AQPM, to take part in your review of the Canadian feature film industry.

My name is Marie Collin, and I am the president and CEO of the AQPM. Joining me today is Brigitte Doucet, Deputy General Director.

The AQPM is proud to appear today to discuss Canadian film, more specifically, Quebec's French-language film industry. Our productions are known the world over, receiving an enviable number of accolades and awards, from Incendies and Mommy to Gabrielle and Monsieur Lazhar, just to name a few. Films like these have positioned Quebec, and Canada, as formidable players in the industry.

Without government support and commitment, this level of exposure and success would not be possible. The Government of Canada has previously demonstrated its commitment to cinema through funding support, as well as through the Canadian feature film policy. The Standing Committee on Canadian Heritage reaffirmed that commitment in 2005 and now, 10 years later, is reviewing the Canadian feature film industry to determine how to achieve the objectives set out in 2005, in light of the changes the industry has undergone since then. Today, we will talk to you about the new challenges facing the film industry and the tools it needs to overcome them.

In 2000, the federal government refocused its support for the industry, announcing a new feature film policy. Under the policy, public investment in the industry should help build larger audiences for Canadian films and make them more accessible to Canadians. The challenge of meeting those objectives today is not what it was back then. No one thought at the time that the digital revolution would replace the silver screen experience. Today, however, it is clear that movie watching is happening less and less in movie theatres and more and more on other distribution platforms, mainly television.

According to a recent Telefilm Canada survey, 84% of films aren't viewed at the movie theatre, and a Department of Canadian Heritage study, released just this week, pegs that number at close to 97%. The Telefilm Canada study provides an overview of the changes in Canadians' film selection habits. The study also shows that Canadians are interested in watching Canadian films, as long as they are just as good as foreign ones.

I'm going to digress for a moment. It's important to make something absolutely clear: French-language films in Canada face just as much competition as their English-language counterparts. Francophone viewers, too, have access to the full range of foreign films, often choosing to watch the original or French dubbed versions, especially American ones, which are extremely popular. What that means, then, is that the challenge facing our industry in 2015 is not just to produce high-quality films that will appeal to audiences, but also to make them accessible to viewers on all distribution platforms.

If we are to make high-quality films on a par with our foreign competitors, the government must continue to fund film production and, ideally, enhance that funding. In 2000, the Canadian feature film policy pegged the average production budget of a Canadian film at $2.5 million. It sought to increase that budget to $5 million to improve the quality of Canadian feature films, in an effort to meet policy targets. And yet, in 2014, the average production budget of a Canadian fictional film funded through the Canada feature film fund was just $3.4 million.

Keep in mind that the tax credit is based on eligible labour expenses and that enhancing the tax credit would mean not just more funding for Canadian films, but also more jobs in Canada's film industry.

In our industry, tax credits are an integral part of production funding. Because of that, production companies have to borrow the money they will receive through tax credits from financial institutions before they can start production. They incur bridge financing costs until the Canada Revenue Agency pays out the tax credits. And those costs keep going up because of tax audit timeframes.

Consistent with our recommendation to the government of Quebec, which is currently considering its feasibility, the AQPM is proposing that, 30 days after applying for a tax credit, the production company receive payment of 75% of the amount receivable, with the remainder being paid out upon completion of the tax audit. The program would become more efficient and production companies would have greater access to funding.

The AQPM would like to highlight the great job that Telefilm Canada does administering programs. With a pulse on the industry's needs, the organization has ensured that programs and the success index have adapted. Despite budget cuts in recent years, Telefilm Canada continues to invest more or less the same amount in the development and production of Canadian films, roughly $75 million a year since 2006.

[Brigitte Doucet, Assistant general director, Association québécoise de la production médiatique]

You skipped a page, but you can keep going.

[Marie Collin]

Since 2006, our costs have gone up and the production budgets of our foreign competitors have skyrocketed. With more funding at its disposal, Telefilm Canada would be better equipped to fund Canadian film production. We firmly believe that the roughly $10 million cut from Telefilm Canada's budget should be restored.

In order to promote Canadian films and make them accessible to audiences on all platforms, the government must adapt how it approaches the availability, accessibility, development and promotion of Canadian films to accommodate new industry realities. To that end, we recommend that the advisory group on feature film—which brings together stakeholders from across the industry—be mandated to review the new industry landscape in order to provide appropriate recommendations to Telefilm Canada. In the document we submitted to the clerk, you will find some suggested issues for the advisory group's consideration.

In conclusion, I'd like to leave you with some food for thought, a few considerations for the audiovisual industry that would have a significant impact on film and television production in Canada.

First of all, should foreign groups that make content available on websites with domain names ending in ".ca" be charged GST, companies such as Netflix and iTunes? Currently, foreign content has an advantage over Canadian content, when it comes to availability.

Second of all, should Internet service providers and wireless providers, who are largely responsible for transmitting film and television content, be charged some sort of royalty? This revenue could be used to help fund Canadian audiovisual production tailored to the new viewing habits of Canadians.

Thank you. We would now be happy to answer any questions you have.

[The Chair, Conservative, Gord Brown]

Thank you.

We will now move on to Fondation Québec Cinéma. François Lemieux, Director, Tournée du cinéma québécois, now has the floor for eight minutes.

[François Lemieux, Director, Tournée du cinéma québécois, Québec Cinema Foundation]

Thank you very much, Mr. Chair.

Thank you to the committee members, as well.

I'd like to start by telling you a bit about our organization. Fondation Québec Cinéma emerged from the Quebec film community's need to pool its resources in order to promote its works. We are dedicated to promoting Quebec film, artists, craftspeople and professionals, and to building our national film heritage.

Our major areas of focus have always been access to content, education and outreach. Each and every year, the foundation's activities reach more than one million people at home and abroad, through the Jutra awards, and the Rendez-vous du cinéma québécois and Tournée du cinéma québécois film festivals. In fact, I was invited to appear before the committee today to talk to you about the Tournée du cinéma québécois festival.

The festival goes to the heart of the foundation's mission, which is to promote Quebec's films, facilitating access to content and showcasing Quebec's film artists and craftspeople across the country. The foundation is thankful to its institutional partners—Telefilm Canada, SODEC, the Secrétariat aux affaires intergouvernementales canadiennes and the Canada Council for the Arts—for enabling it to continue its work as a cultural mediator, facilitating access to content and bringing works to Canadian audiences.

Furthermore, we are extremely proud of the fact that the Tournée festival helps satisfy the needs and expectations of Canada's francophone community, by making French-language works accessible. The festival is a major event in every community it stops in, bringing festival audiences new films and putting on special activities in schools, featuring film artists, craftspeople and professionals. They are really the ones who bring the festival to life. By supporting the tour and introducing their films, they enhance the highly valued synergy of the festival showcase.

Quickly, I'd like to give you a few statistics on the 2014-15 festival. Already this year, we've seen a 34% increase in the festival participation rate. More than 20 guests and artists from Quebec's film community are touring with the festival. We've reached more than 7,000 Canadians, both francophones and francophiles, members of the general public and students alike. One indicator, in particular, is significant because it speaks to the committee's efforts to promote exceptional Canadian content. We noted that 48% of young participants had never seen a Quebec film before. We are also pleased to note that, thanks to festival stops in these communities, theatrical films are enjoying a second wind, as are more specialty films that either weren't released or distributed or were subject to limited Canadian release.

We would like to make a few recommendations. Greater funding would, of course, be welcome, as always. But we also believe that working with partners to integrate measures into certain settings would make it possible for projects like the Tournée festival, as well as other promotion and outreach projects focused on Canadian film, to reach the public. Such an initiative would better position us to access the audiences we seek at specific times throughout the year.

The purpose of the Tournée festival is certainly not to make money but, rather, to build Canadians' knowledge and recognition of our cinematographic production and the vast landscape it represents.

In conclusion, I'd like to point out that audience fragmentation is a very real issue for us. In our view, there is no such thing as a bad place to promote film, be it in commercial movie theatres, libraries or art cinemas. Our goal is to stay in step with the audiences we serve, audiences with different views and beliefs.

[The Chair, Conservative, Gord Brown]

Thank you very much.

Now we're going to go to Montreal by phone.

Ms. Simard, can you hear us okay?

[Monique Simard, President and Chief Executive Officer, Société de développement des entreprises culturelles]

Yes, I can hear you just fine.

[The Chair, Conservative, Gord Brown]

Thank you.

When we get to the questions, everyone, please remember that Ms. Monique Simard is with us.

Ms. Simard, you're from the Société de développement des entreprises culturelles, and you are the president and chief executive officer. You have the floor for up to eight minutes.

[Monique Simard]

Thank you kindly, Mr. Brown. I'd also like to thank the committee members for inviting us to appear today. I'll try to keep my remarks brief. Just a note for the interpreters: I won't be presenting my brief in full, so as not to go over my eight minutes.

Joining me are Marie Brazeau, SODEC's Director of Hospitality and Film Operations; and Fannie Sénéchal, Director of Communications.

I'd like to give you an overview of Quebec's film sector and a few of the key challenges it faces.

But first, I should point out that SODEC, or the Société de développement des entreprises culturelles, has been around for 20 years now. It's a crown corporation governed by various Quebec laws. Over 100 employees, a board of directors and several advisory committees guide SODEC's work in a number of areas.

We are active in the film sector, but we are also involved in books, music, television, and arts and crafts. Our job is to promote all of those cultural exports and to enhance their international visibility. That makes SODEC the single government agency dedicated to supporting Quebec's cultural businesses, both in Canada and around the world.

And we do that through assistance programs, providing some $39 million in funding support to Quebec's film industry. We operate a merchant bank, and provide bridge financing for tax credits and other tax measures. Through these activities, SODEC is responsible for a significant number of productions every year. Just to give you an idea, in 2013-14, we reviewed 1,144 funding applications, approving 405 and financing 28 fictional feature films in Quebec.

Looking at the figures for the Canadian film industry, you will see that a very high proportion of Canadian content comes from Quebec. And, of course, the bulk of those productions also receive support from Telefilm Canada, the Canada media fund and other federal programs.

The witnesses who appeared before me talked about the popularity of Quebec cinema on the world stage. I won't start listing film titles, but as everyone knows, for the past four or five years, Quebec films have received acclaim at the Cannes and Berlin film festivals as well as nominations for best foreign language film at the Oscars. This year, Denis Villeneuve has been selected for the official competition at Cannes. Even though the film wasn't produced in Quebec or Canada, he is still a French-Canadian filmmaker from Quebec who made his first films here. We have been supporting him since he began his career.

Quebec's film and television industry generates more than 16,000 full-time jobs, according to a recent study.

When Telefilm Canada officials appeared before the committee just over a month ago, they underscored the importance of co-production, and we share that view. In addition to the financial networks possible between Quebec and Canadian institutions, co-production is a critically important way for us to increase the production budgets of films made here, films that will bring us international exposure. Clearly, we promote co-productions by participating in all international markets, supporting our producers and arranging missions. Last year, we had seven Quebec-Canadian majority co-productions and ten minority co-productions, increasing the number of films we can make.

SODEC places tremendous importance on its initiative to bring together francophone co-production stakeholders. We have made working in francophone markets a priority for our film companies. Every year, 250 professionals gather for three days to discuss feature film projects. In the winter, we organize scriptwriting workshops in Quebec. The resulting production volume has been 40% of reviewed projects over 12 years, which is huge.

Now it is time to discuss the real issues. The previous witnesses talked about them.

We are seeing a literal shift in film and TV audiences. The results of our joint studies with the Canada media fund and Telefilm Canada make that perfectly clear. And when we look at trends in other countries, be it the U.S. or in Europe, we see the same thing. What that underscores is the need to strengthen certain tools in order for Canadian cinema to survive and be accessible and to provide for new funding sources. We still have a long way to go when it comes to distribution, which we talked about a little bit. Perhaps I could touch on that during the question period.

I'd like to use the little bit of time I have left to talk to you about funding sources.

Films are usually financed through parliamentary funding allocated to SODEC, on one hand, or Telefilm Canada, on the other. Both sides have tax credit systems, and feature films are often based on TV shows. For the most part, they receive support from Radio-Canada.

All of these funding envelopes are dwindling. Distributors, who play a role in the financing scheme, are scaling back their contributions as well. And because other funding sources are drying up, SODEC and Telefilm Canada are under more and more pressure. Here, feature film production budgets hover between $4 million and $4.5 million, which is modest.

That brings me back to what was said previously. We have to find new sources of funding for the culture and film industry and, incidentally, for Canada's and Quebec's cultural heritage. In fact, the report put out by the task force mandated to examine issues in the film sector and chaired by my predecessor, Mr. Macerola, talks about that. According to the report, it is crucial that the CRTC require foreign companies to contribute to the funding of authentic cultural productions in order to keep the nation's cultural production from diminishing.

The review panel established by Mr. Couillard's government to examine Quebec's tax system recently released the Godbout report, which was also very clear on the subject. The report urged the government to review its fiscal spending in order to find funding sources for the cultural sector. The panel recommended that the government consider taxing residential Internet service in order to revitalize the cultural sector and put new resources at its disposal. These are extremely important issues.

The Canada media fund, formerly known as the Canada television and cable production fund, has been in existence for 20 years, put in place to fund national TV production and foster the development of production companies in Quebec and Canada. The fund was jointly financed by cable companies, satellite owners and the federal government, with the contribution ratio varying over the years. The fund was an incredible tool to support and develop production companies across the country, in every province, while giving them the resources to produce high-quality films and television series. Without the fund, I don't think we'd have those high-quality productions today.

Technology has changed and so have the issues. The methods people use to access cultural products are much different than they used to be. For those reasons, we recommend bringing the fund in line with current realities through support mechanisms based on the same philosophy as those established in 1993-94.

I am very proud of Quebec film, and equally proud of SODEC's support for short feature films. As virtually the only organization providing real assistance for short feature filmmaking, SODEC has helped many of our great filmmakers get their start.

SODEC also administers a program targeting young people, to cultivate the next generation of filmmakers. In most cases, people like Denis Villeneuve and Philippe Falardeau, whose names are now well-known and who are at the top of their field, have humble beginnings here, in Quebec, starting out with short films that have taken them far. We want to be there for them when they start their careers, but also later on, when they have made it to the top.

Thank you very much.

[The Chair, Conservative, Gord Brown]

Thank you.

Now we'll go to the questions.

Mr. Yurdiga, you have seven minutes.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

I'd like to thank the witnesses for participating in this important study of film, because it's truly what makes Canada unique.

The first question I have is for Ms. Collin. Quebec cinema has traditionally been stronger than films in other parts of the country. What's the state of the Quebec cinema now compared to 10 years ago?

[Marie Collin]

In our brief, we talk about the fact that the methods people use to consume cinematographic products have changed, both in Quebec and in the rest of the country. People go to the movie theatre much less than they used to; movie viewing is much more concentrated on conventional TV, pay TV, specialty TV and video on demand platforms. DVDs represent another, although less popular, viewing platform. The model is changing gradually. There are also all the other services for which we, unfortunately, have no data. For instance, we don't have any information on the use of non-CRTC-regulated services, even though we know they represent a growing trend among consumers.

According to the Heritage Canada study that came out this week, TV-based movie viewing has decreased slightly, both on conventional and pay TV platforms. My feeling is that, if we meet in another five years, or perhaps even sooner, we will likely see an even greater shift towards Internet-based and on-demand viewing.

One thing is certain: Quebeckers still have an appetite for Quebec films; they merely consume them differently. It is crucial, in my view, to bring funding mechanisms in line with the current viewing landscape and to accommodate consumers' new viewing habits. As I see it, with this new context come new opportunities to deliver our cinematographic products to consumers.

Furthermore, as both we and Ms. Simard pointed out, Quebec is home to a wealth of cinematographic expertise. And despite language and cultural differences, the province's filmmakers are being recruited elsewhere, including Hollywood. Just think of Denis Villeneuve. They have succeeded in making films that have gained international popularity. In other words, not only have our funding and support programs made it possible to satisfy consumers' needs, but they have also enriched our market with tremendous expertise. Our industry has built a high-calibre workforce.

In that respect, and in terms of viewing habits, I would say that Quebec's market and Canada's English-language market are not all that different. We have a very successful star system, which is a tremendous asset. But, as I said, it doesn't protect us from our U.S. competitors. Audiences don't care about a film's budget; all that matters to them is its quality. From a consumer's standpoint, all movies are equal. That means that, beyond the distinctly Canadian and Quebec identities of their productions, our filmmakers have to set themselves apart from their international competitors, making consumers want to opt for homegrown films over foreign ones.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Thank you.

To go along in the same sort of area and talk about revenue streams, the digital platform offers new revenue streams to Canadian producers. How well do you think Canadians are taking advantage of this?

[Marie Collin]

If I understand your question correctly, you're asking whether the availability of products on digital platforms makes them more accessible to Canadians.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Yes. Before now, most films were seen on the big screen. Now people are using their laptops, their home computers, or their TVs. We're seeing a big transition over time. The opportunities are there. How do we capitalize on that to ensure there's a successful film industry that has transitioned from one sector to another?

[Marie Collin]

I think we are taking advantage. But I also think we can work with task forces to re-examine movie theatre viewing—the role of conventional distribution in movie theatres versus distribution via other platforms—funding sources and so forth.

Right now, we're partnering with Telefilm Canada on a few pilot projects. We've proposed new funding schemes tailored to current viewing habits. As we indicated, Telefilm Canada should probably head up a task force to examine that, the idea being to bring together all the players in the film industry to define the new reality and, as you said, capitalize on Canadians' access to content and available funding.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

Thank you.

My next question is for Mr. Lemieux.

Have I pronounced your name correctly? Am I close?

[François Lemieux]

Yes, that's correct.

[David Yurdiga, Conservative, Fort McMurray—Athabasca, AB]

In the context of this study, a number of film producers have mentioned that there's extensive paperwork involved in applying for grants or tax credits. Is this a big issue? Would you like to see a single-desk sort of application?

[François Lemieux]

I am not an expert in this area, but as a broadcaster I think that adapting certain rules to facilitate things could be an incentive. I'm thinking of the projects we defend throughout Canada and about everything producers and distributors submit to us. There will never be enough money to act on all of the products that are available. The budgets vary, but the artistic quality is always interesting. This may be where Telefilm Canada's study groups could take the relay.

I mentioned integration in my presentation. On our side the distribution-related integration refers to schools, community associations, the distributor and so on. All of the forces lined up and paddling the same canoe would allow dissemination on a broader scale, and allow us to reach as many people as possible wherever they may be.

As a producer, as I said, I am not a tax credit expert, but I am inclined to think that some things could be reviewed and modified in order to allow better use of all of the resources.

[The Chair, Conservative, Gord Brown]

Thank you very much.

Monsieur Nantel, vous disposez de sept minutes.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Mr. Chair.

I thank the witnesses for being here with us today.

Your testimony is very precious. It allows us to understand the issues today's film industry—our cinema—is up against in 2015. Indeed, the previous study goes back to 2005. Another study on that sector was way past due.

I often say that when we were elected, in the last elections in 2011, almost no one had an iPad. Today, almost everyone has one. Viewing habits have of course changed. Most of us, when we do not go back to our ridings, and if we are not working, probably watch a film on Netflix. So we are sinners too.

First of all, I want to thank Mr. Lemieux. Honestly, in my opinion, your organization is at the heart of francophone music. Your mission is to distribute and to raise awareness about the product, to make it known. That is terrific. It brings us back to this notion of cultural events bringing a lot of people together, which is gradually becoming an anachronism. We heard this in fact from the managers of performance venues two days ago.

I thank the AQPM people, because you have repeatedly met these challenges and technological changes, especially as concerns the accessibility of culture. Among other things, you contributed to the report produced by Canadian Heritage, which you mentioned earlier.

There's something specific I would like to hear your opinion on. At the very end of the report on pages 101 and 102, viewership is discussed, and the sources television viewers now have access to, to view content. They talk about on-demand television, specialty tv channels and cable. Can we have some information on broadcasters such as Netflix? There are no statistics to do the market analyses that are so important for movies. Our cinema has to be supported by the state if we want it to keep its place and role.

[Marie Collin]

Canadian Heritage tried very hard to find parameters to measure viewership across all of the platforms. It is a complex task because the information providers are very diverse. However, several of them fall under the CRTC's purview, which helps the department have access to data before preparing its annual report.

The method developed by Canadian Heritage seems to be the closest to reality. However, in the study entitled Seen on Screens: Viewing Canadian Feature Films on Multiple Platforms 2007 to 2013, released this week by that department, there is a footnote which, unfortunately, we are going to see increasingly often, because we are going to have more and more trouble having access to that information. The problem is that the VOD, video on demand data only comes from businesses that have a CRTC licence. There are many businesses, and new ones are being created every day both in Canada and abroad that provide services that consumers adopt. We have no information on those businesses.

Last fall during its hearings, the CRTC tried as best it could to obtain information on Netflix, for example, but it was unable to do so. In the course of the “Let's Talk TV” review last March 14, hybrid VOD services were exempted from the policy. It is reasonable to think consequently that we will not have access to that information, and that is worrisome for you as decision makers, and for stakeholders like ourselves, who must direct policy and understand how consumers are going to act in this very fluid, constantly evolving environment.

Things used to evolve quite slowly before this. Now there is an extremely rapid evolution in consumption because of the rapid development of technology. Unfortunately, it will be increasingly difficult to know where Canadians are getting their films and videos.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Ms. Collin.

I was referring to the importance of information sharing with your producers. I will always remember one occasion, when I met Ms. Simard.

Ms. Simard, are you still on line with us?