Canadian Heritage Committee on Dec. 4th, 2006

[Jean-François Bernier]

As to that particular evaluation, in our tool kit we have two tax credit programs, one for certified production and one for the other type of production, foreign productions being shown in Canada. The need to be competitive on a worldwide scale is mostly related to attracting foreign-location shooting. Our evaluation will not be targeted at that program. It's going to be targeted at the tax credit program for certified production only.

I cannot tell you exactly. First, we need to have this evaluation come in, and we need to look at options. There's no question in my mind that after ten or eleven years of existence, a program has to be evaluated. So this is its intended purpose. It's a little difficult for me to tell you, because once we receive the evaluation—and we'll look at the recommendation, of course—and we do a management response, that might lead to a decision that the tax credit program is obsolete, or the money is all going to the banks, or it's not meeting its intended purposes. So there's an area of possibility here, and there is also the Department of Finance involved in this. It's not just for our minister.

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

So it will not likely be within the next year and a half.

[Jean-François Bernier]

I wouldn't say “not likely”, but that's probably the horizon you're looking at.

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

Okay. Just quickly to follow up on that, why not look at the competition for the foreign tax credit?

We had an amazing amount of business come into Canada up until about 2000, and then due to a number of factors we saw an incredible decline. But industrially, we had massive punching power, and it was helping build a domestic industry, because we had the U.S. productions and foreign productions helping to pay for and create an environment where we could.... So why not look at that?

[Jean-Pierre C. Gauthier]

To look at the competitiveness argument, you have to also go back, and when you do, you see that for a long time, Canada, with the tax incentive we had in support of foreign productions coming here to shoot their films, was pretty much alone. What we've seen in the late 1990s and early 2000s was a lot of countries basically copying what we're doing here, so it created some alternatives for the various projects that were looking for locations in which to shoot. I don't think we're necessarily not competitive anymore. I think we still have a very strong sector that has a lot of activity. It fluctuates from year to year for all kinds of reasons, ranging from the exchange rate to labour negotiations in the States, and so on and so forth.

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

But you're not studying it.

[Jean-Pierre C. Gauthier]

In 2005 we did study what happened during the summer of 2004 and why we had somewhat of a big downfall. We looked at all the factors that contributed, trying to find out if there was a way to actually make a change or proceed with improvement at that time.

At that time several provinces basically stood up to the plate and increased their respective provincial rates. The federal government had done so the year before that, when we moved it up from 11% to 16%.

I think what you've seen is attention being paid. I don't know if it's the design of the tax incentive itself that requires attention as opposed to just looking around to see what the initial dynamic at play is internationally. At some point it is a joint responsibility with the Department of Finance, because as a tax incentive it belongs as part of the fiscal policy framework as much as with the cultural policy framework. And we have to take into account various competing policy objectives here--the fiscal ones, the cultural ones--to try to reconcile everything.

We still have a tax incentive that is very much praised by industry, which I would submit is still very effective.

There are other ways to increase our competitiveness, including collaboration among various provinces, and we see that, for example, in major film festivals. In Cannes you have events where all the provinces gather to sponsor a session, whether it be a breakfast or a time during the day where they invite all prospective producers to come and browse around the various programs by the various provinces and so on.

So there is a lot of room I think where you can try to work on increasing the competitiveness of that sector of our individual industry.

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

I would like to hammer the point home again, because to me there would be--

[The Chair, Conservative, Gary Schellenberger]

Mr. Angus, keep it short, please.

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

I'll keep it short, yes.

To me, there is a big difference between holding a breakfast and ensuring that we don't have massive fluctuations like we had through the first half of the decade. There could be a lot of reasons for that, but how do you chart why those reasons are occurring so that you know we're not left out of the loop if New England is suddenly a lot more competitive than we are and there's a two-year or a three-year delay before we actually realize that? How do you track that, and how do you make decisions on whether or not we're still in the game?

[Jean-Pierre C. Gauthier]

Tracking does take place by basically collecting related statistics on the industry, so that is pretty much an end. But you're right, there is a gap between when things happen and when we collect data, and that happens across the whole country. It's us, it's the provinces. There is always a lag time by the time you are actually in a position to confirm what took place as opposed to speaking of projects that may or may not materialize.

So some tracking is taking place, and it's not three or four years out of date, but I would say there is probably a six-month gap. We have the final statistics probably around January for whatever happened the summer before. That is already a tool we have to see how we're doing.

Again, the factors that are brought to bear in terms of influencing the level of activities are many, and I don't think it is just a matter of playing around with the tax credit itself that will be a solution to fluctuations.

In a highly competitive environment, where we're competing with many jurisdictions, starting with individual states in the United States, and with countries, whether it be in eastern Europe or whether it be in Australia or other countries, it is going to be a bit of a push and pull game, where we're trying to improve over last year and trying to maintain our position. So I suspect we'll see some fluctuations from year to year. I think it's part of the environment, very much so.

[Jean-François Bernier]

I would like to conclude on a positive note. Two or three weeks ago, la Société générale de financement du Québec announced that they would be investing in a slate of 12 feature films to be shot in Canada. So there is always the other side of the coin as well where activity is being announced and is happening.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

As you know, last week Mr. Wayne Clarkson appeared before us from Telefilm Canada.

As you know, Telefilm has been the subject of some criticism over the last year or so. Some of the criticism is directed at the fact that the films that are being funded aren't being watched, the subject material of some of these films is something that to most Canadians appears to be unattractive, and to most Canadians it's obvious the subject material isn't something they'd be interested in watching.

There was also criticism from the producers themselves as to how funding is delivered, something they referred to as envelope funding, which Mr. Clarkson confirmed is still presently used to fund films.

I'd like to get your assessment of this envelope funding that is used to provide incentives to filmmakers to make sure they make films that appeal to a broader audience.

[Jean-Pierre C. Gauthier]

Yes, definitely. As a starting point, and I think Mr. Clarkson mentioned it as well when this topic was discussed, I don't think there are any good indicators of how successful a film will be until it's actually presented in theatres. As a matter of fact, that's true even before it's actually finished and you can see it out of the can and on the screen and say, is that going to work or not?

Even in the United States, the vast majority of productions don't do very well. It's a matter of a small number in the United States, if we take that model, which is very successful by some measures, that become blockbusters and basically save the day for all of them.

Canada is no different, and we can say the same thing about many of the other countries around the world. So I'd like to caution us; there's nobody who can predict if a film, especially on paper, is actually going to be successful or not.

Some people say it's a prototype industry. Every time you build something, it's the first time you build it, so is it going to work or not? It's always difficult to tell. Some people have a better track record, and that's what the envelopes are trying to encourage. Those who have found good recipes in the past and have known success are considered and deemed to be more able to find it again. That's why we build the envelope around people's track records in actually making films that work.

It is also true that we are making some films that might not be to the taste of the majority of people, but I would also suggest that a lot of the films that are made are actually quite good. I agree that there are still not many, but having seen quite a few myself, they're actually not bad at all.

One thing that everybody agrees on is the need to promote them better. Promotion is key. Certain people start to talk about the star system at that point, in order to see that promotion is part of what you put forward to market your film.

[Ed Fast, Conservative, Abbotsford, BC]

Quebec has a star system, which Canada does not in the same way, probably due to the fact that we're competing with a much larger star system from the country to the south of us. Is that correct?

[Jean-Pierre C. Gauthier]

Yes, there's a retention issue in English Canada, where many of the most talented of our people decide to move their careers south of the border. But still there are quite a few very solid creators who decide to stay in this country.

There is going to be a lot of work to do to build up that promotion train you need to back up your releases. The industry agrees and sees that as well. It won't happen overnight. We'll need to be patient and work hard at it. There will be good years and not so good years in doing so. Therefore, promotion is definitely one of the key things.

At the other end of the spectrum, one could also suggest that we need to put even more effort into developing the films, making sure the script is punchy and has the right story lines, and then rework them over and over again.

Hearing Mr. Tierney speaking about his film, Bon Cop, Bad Cop, he said that it takes about six different writings of the script before he gets something that he feels he can start to work on shooting. That requires a lot of support, because you don't earn any money while you develop something as a producer.

We have to be quite effective at supporting this phase, giving them the time to properly develop and develop one better. So you see, developing better films and then promoting them better are probably the two areas where we need to work most in the English market in Canada.

[Ed Fast, Conservative, Abbotsford, BC]

Let's talk about the marketing. You've identified this as a weakness. How do you propose we better market these films? There has to be a strategy in place. Is that strategy going to come from you? Is it going to be coming from Telefilm? Is it going to be coming from the CTF or the Canadian Independent Film and Video Fund? Where's the direction going to come from?

[Jean-Pierre C. Gauthier]

Honestly, I don't think it's necessarily the role of government to start marketing films. I'm not even sure it would be a proper role for Telefilm, as a crown corporation, to start marketing films either. Films are property that belong to private sector companies. I think it's up to them to find their markets. What we need to do is make sure we provide the proper incentives and supports as they try to do that, and try to see if we can then provide some incentives for doing it better.

With respect to Telefilm, for example, when we design access to the distribution policy, one of the requirements, just to give you an example, is that to be eligible to be considered for funding, a film needs to have a commitment by a distributor to distribute the film. Now, that needs to be reinforced; that may need to be done in different ways to be more effective, but these are little things we can do to incentivize better marketing and better releases as much as we can.

Obviously, Telefilm does not only look at having distributors committed to distributing the film, but also what type of marketing plan they're proposing. The whole industry has to learn how to market the films better, how to release them better. Looking at examples around the world, starting with the success we have in the French market in the province of Quebec, for one, but also elsewhere--how can we better accomplish that? That's part of the work taking place around Telefilm Canada that struck those working groups, which gather together all of the industry around the same table, from the creators--that is, the actors, the writers, and so on and so forth--to the actual movie theatre owners. I participate in these meetings. That's the kind of question we're trying to answer during these meetings, how to market better. Quite frankly, successes we've seen this summer in the English market, such as Bon Cop, Bad Cop and Trailer Park Boys.... Are they actually going to help?

If you go back to what we've seen in Quebec, a lot happened around Les Boys that became an awakening point, where an interest started to take hold in the marketplace on the French side.

Have we reached that point yet with these two films? I don't know. I can't tell you yet. We'll see in a few years' time, I suppose, when we see the trends, but we need to keep working at it. Eventually, many of the films that are made--and many of them are quite good. I think there's a lot of potential. It's just trying to break into the marketplace.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Mr. Bélanger.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chair.

We will continue with the list of files, see how the work is being conducted and then, deal with the respective timeframes.

There is the co-production file, which is being done internally, the evaluation of tax credits for consultants, the legislative modernization of Telefilm and the NFB, the work that is being done internally on the certification of Canadian content, work that is being done internally with the CRTC, Telefilm and the Canadian Television Fund and the feature film file, which the minister is overseeing with the help of department officials.

Are there other issues being addressed?

[Jean-François Bernier]

As indicated in the presentation, we are also working on performance indicators. You will find that on page 6. We are currently trying to find appropriate market indicators and targets that are not box offices related.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Is this work being done by experts from the department, Telefilm and Library and Archives Canada?

[Jean-François Bernier]

No, that is only for the preservation component. We have a policy to preserve Canadian feature films. How can we evaluate that policy? How do we know if we are preserving Canadian feature films? Our objective was established, but we did not have any performance targets to measure it.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

When you talk about preserving films, I imagine that you are trying to ensure that they do not deteriorate.