Bill C-32 (40th Parliament, 3rd Session) Committee on Feb. 3rd, 2011

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

I'm finding this discussion incredibly interesting today. There's a lot of ducking and weaving on the part of the Liberal Party because of some things they have said or done in the past regarding the iPod tax.

I find it quite interesting to hear particularly the strong language from Mr. Garneau last meeting and Mr. McTeague this meeting regarding their position. The facts are the facts, and you only have to look at the facts to see that first of all the Copyright Board did propose the iPod tax, which would be in the range, as you mentioned, of $75 for anything more than 30 gigabytes—and of course, that covers most recording devices that are commonly used now, so it's very significant. You can probably get a 30-gigabyte device for $150, so a $75 tax on top of that is pretty significant.

Regarding the specific issue and the language that Mr. McTeague and Mr. Garneau used today, let's just again take a look at the facts. In March 2010, the Standing Committee on Canadian Heritage reported a motion to the House. It's important to hear the wording used in this motion. It read:

That the Committee recommends that the government amend Part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well.

That's pretty clear. It's a pretty clear motion, reported to the House.

On April 13, the House voted on this motion. This is the official record of the House of Commons. This is the final vote on this issue in the House of Commons, in April 2010. I have a list here of the yeas, and I see Mr. Angus—that's not a surprise—Mr. Cardin, not a surprise, and Mr. Garneau--he voted yes to that motion. Ms. Lavallée, of course, is not a surprise.

Mr. McTeague, in the official record of the House, you voted yes to that. You voted yes in the House to recommend that the government amend part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well.

Mr. Schellenberger, if I go down the list here, voted no. Every Conservative member voted no.

Taking a look at the facts—that's the official record of the House—we actually had a vote on the issue. It's pretty hard, in fact....

I have a quotation from that day in the House in which Mr. Rodriguez is saying:

...we are in complete disagreement with the Conservatives when it comes to taxes. We consider it a levy.

He's not opposing the issue itself. He's maybe opposing the wording around it, but is clearly in favour of the iPod tax.

The record is there. You can't argue otherwise. You voted on it not that long ago. We're talking about $75 on a $150 device.

I want to get back to the actual issue at hand, if I could, with Mr. Oakey.

I'm from Alberta, where we don't have a sales tax. I personally avoid buying things here because I don't want to pay 8% more. Seventy-five dollars on a device that might cost $150 is a 50% tax on top of the device. Is it reasonable, for example, that when a Canadian knows they're going to go to the U.S. at some point in the near future, they might not buy something that's going to cost them $225, knowing they can get it for $150 in the United States when they're there?

[Terrance Oakey]

This is a concern that our members have obviously expressed. That's why I'm here expressing it to you. But it also has to be looked at in the holistic environment right now, where the dollar is at parity. There are already other requirements that Canadian retailers have to adhere to that their U.S. counterparts don't. So it's a competitiveness issue.

I think, and my members have seen it, that just the dollar going from $0.95 to parity is leading customers to buy online. That's not even an 8% difference.

Obviously, if there's a tax on iPods anywhere near what the Copyright Board or SOCAN or Re:Sound is asking for, it will lead to Canadians buying their products outside of our borders to avoid the unnecessary fee.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Do you think it's reasonable that comparing two prices, one at $225 and one at $150 for the same product, even if someone's not planning or able to go down to the U.S.... Is it reasonable that more people would buy a product at $150 than would buy it at $225?

[Terrance Oakey]

It's reasonable to assume that, but there's another point. You don't have to go to the U.S. You don't have to travel across the border, buy your iPod, and bring it back. You can ship iPods into Canada duty free and just pay the GST. If there was that difference in price, it may make sense to even buy one if you were going on your winter vacation, but you can also buy one online.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Mr. Hémond, do you want to jump in on this conversation? Do you have any thoughts on that?

[Anthony Hémond]

Yes. The European Union, for example, imposes levies. The purchase of devices outside Canada represents quite a small market share. Why? It shouldn't be forgotten that, if you buy a device in the United States and it breaks down, the company may well tell you that, since you bought the device in the United States, it doesn't provide service in Canada. So Canadians consumers have an interest in buying their products in Canada.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Mr. Oakey, what are your thoughts on that? That's the other side of the argument.

[Terrance Oakey]

In terms of the warranty, there are issues, but it depends on where the price point is. A $75 additional fee and $150 is quite substantial. I would argue that if someone feels confident with the product, which most people do about digital music recorders, they likely would take the risk of their warranty.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

If I could move on with the final bit of my questioning, we hear a lot of discussion about what people don't like. I've said this meeting after meeting when I'm talking to folks. As we're discussing what potentially to change as we go through this, what areas of the bill are the most important to maintain?

[Terrance Oakey]

The number one issue for our members is that the blank media levy on iPods not be extended. Our members have told me to focus on that. I know it's not directly addressed in the bill, but there are rumours that there may be amendments coming.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Okay.

Mr. Hémond, in terms of the things you like in the bill, what are the most important parts of this legislation that you want to make sure we protect as we go through the discussion?

[Anthony Hémond]

The new exceptions have some interesting aspects, including user rights. However, there is one point in particular that I would like to see amended, and that is technical protection measures. As currently defined, they are extremely problematic for users. That doesn't suggest—

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

If I could break in for a second, we're going to hear that repeatedly. We've heard it already. What I'm interested in hearing from you today is the things you want to make sure we protect in the bill, the things you like the most about the bill.

[The Chair, Conservative, Gord Brown]

Mr. Lake, that's going to have to be it for your round. With the consent of the committee, we could go for a two-minute round for each of the parties.

[Some hon. members]

Agreed.

[The Chair, Conservative, Gord Brown]

We have consent.

Mr. Garneau, for two minutes.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you very much.

I'm glad, Mr. Oakey, that you said in response to Mr. McTeague that you recognize the Liberal Party had no intention of putting any kind of levy on iPods and that you'll be ignoring the five-minute rant from my Conservative colleague on that, which is completely disconnected from any sense of reality.

You talked about the fact that when people have bought something for private use they should be able to use it, do some format shifting, perhaps copy it, back it up, and that kind of thing. Do you have a specific, practical way we could do this, in terms of the proposed legislation? This certainly is something that many groups have said is the right thing to do, and I agree with it.

[Terrance Oakey]

I think there is.

We do believe they may be on the side of owners for consumers.

Howard I think is going to comment more specifically, because we do propose it in our submission.

[Howard Knopf]

We have not specifically addressed that in detail, but we'd be happy to provide something later. What we have specifically addressed is some very simple language to, pardon the expression, liberalize the TPM regime that would probably allow exactly what you're suggesting to happen. This would allow the consumers to break a digital lock or whatever to make a copy for the car, the bathroom, the cottage, or whatever, which doesn't cause economic harm because the consumer has already paid for it at least once already.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you very much. I'd appreciate getting that. I don't think we have your submission here in front of us yet, but thank you.

[The Chair, Conservative, Gord Brown]

Monsieur Cardin, vous avez deux minutes.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman. I'd like to ask Mr. Hémond—

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Pardon me, Mr. Cardin. Would it be possible to do this first?

On a point of order--sorry--would it be possible that before the session begins, if there are any submissions to give, that we actually have them on our table here? I didn't know we did not have it. I don't want to make a big deal of it, but it's important. We have witnesses here, and we didn't have some of these submissions.

Thank you, Chair.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

I'd like to ask Mr. Hémond a question about music streaming. Who do you think should pay royalties if that technology is used?

[Anthony Hémond]

For music streaming, I previously mentioned that there were agreements between those who want to stream music, the societies and creators. In fact, you can't record streamed music with some of these services. The consumer, or user, only listens to the music. The proposed models operate on the basis of either subscriptions or advertising. Users retain no copies on their devices under some of these models. The royalties are paid to creators by the person offering the service.