Canadian Heritage Committee on Dec. 4th, 2006

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

So the recommendations on training or whatever else would come in time to be included in the budget.

[Jean-François Bernier]

Yes, in theory.

[The Chair, Conservative, Gary Schellenberger]

Mr. Malo.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Thank you, Mr. Chairman.

Good afternoon. I'd like to come back to something my colleague from Saint-Lambert raised when he spoke a little earlier this afternoon. He told you that a coalition of people in film from Quebec came this summer to meet with the minister about the financial crisis that is rocking the film community and asked her for another $20 million. The answer from the minister was, as you know, no.

Do you know why Canadian Heritage decided that day to say no to Quebec filmmakers?

[Jean-François Bernier]

I'd like to make two points. First, the report of the Standing Committee on Canadian Heritage mentioned that the system was adequately funded and that it was more an issue of funding allocation. In its response, the government agreed with that committee finding and that the sources of funding for the feature film industry would have to be diversified.

Our policy on the Council of Heritage Organizations in Ottawa, or CHOO, and the tax credit program may provide for diversified funding other than through an injection of new money into Telefilm Canada.

Second, the federal government isn't the only source of funding. The Government of Quebec has in fact invested another $10 million, but just for this year. They also mandated Mr. Macerola to report to Ms. Beauchamp, the Quebec Minister of Culture and Communications, on a series of innovative measures with no cost consequences for the Quebec treasury.

It's a matter of diversifying funding sources. I'm not saying we'll have an answer overnight. Jean-Pierre spoke earlier about increasing production budgets. We are studying various options, and you had the government's response on September 29.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

You said the committee had tabled a report. I'd like to remind you that the Bloc Québécois presented a dissenting report.

You did well to point out that the Government of Quebec decided this summer to listen to people from the film industry by granting them another $10 million in special assistance, which the Government of Canada refused to do.

Given that refusal, that lack of interest from the federal government, the Government of Quebec, which doesn't have the huge budget surpluses of the Government of Canada, ends up always having to make agonizing choices over funding allocation.

Isn't it about time the federal government forked over to Quebec the funding it had earmarked for Quebec and gave Quebec full control over its film industry?

[Jean-François Bernier]

I do understand your question, Mr. Chairman, but I'd prefer not to answer it.

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

I have a point of order.

[The Chair, Conservative, Gary Schellenberger]

On a point of order.

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

I would hope we make sure that our questions are appropriate. Monsieur Malo is asking for a political decision, which we cannot possibly ask of departmental officials.

[The Chair, Conservative, Gary Schellenberger]

Okay. I will say that I was doing some business and I missed the question.

Yes. We don't ask political questions of our witnesses here today.

Thank you, Mr. Bélanger.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Indeed—

[Jean-François Bernier]

I did understand your question; it was perfectly clear.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Thank you. Indeed, perhaps the government will decide to answer it at some point.

As you know, Quebec film and Canadian film have to develop all across the country. Does the new Canadian Feature Film Policy contain anything to encourage regional film production not just in Quebec, of course, but also throughout all regions of Canada?

[Jean-Pierre C. Gauthier]

The Feature Film Policy, as implemented in the year 2000, federally, has mainly to do with finding an audience, that is to say that to some extent, projects are chosen based on their merit, their ability to attract an audience. I don't think there are any other criteria, such as regional representativeness. In fact, the best project is the winner. They are all regional projects; the main selection criterion is the ability to draw an audience.

Some features of the Feature Film Policy could lend themselves to that. I know that our Telefilm colleagues—I believe Mr. Pradier explained this when he appeared last week—are making an effort to come up with initiatives aimed at, perhaps, with first works or in the selection process, recognizing a place for regional productions produced in a region, in one province or another, by a minority language group or someone else.

So an effort is definitely being made, but let's not forget that the main goal of the Canadian Feature Film Policy is to draw an audience. So the films best suited to reaching that goal have to be selected.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

You know that in Quebec, there is a tax credit for film productions produced outside the major centres. Are you in favour of a similar tax credit from the federal government?

[Jean-Pierre C. Gauthier]

That's one of the items of interest to us in our evaluation of the federal tax credit program. In fact, the provincial tax credit has a number of advantages, including a regional bonus. So there's an added 2% when a production is produced regionally. The federal tax credit, as it stands, has just one rate, which applies without any bonus. So the evaluations have to take that into account.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chairman.

Thank you very much for coming in today and sharing with us the information about film being produced here in Canada. We appreciate it.

I would just like to follow up a little bit with regard to the Canadian film and video production tax credit. I'm wondering if you could explain to me the criteria that's required in order to receive that tax credit--just the Coles Notes version of the stipulations on what qualifies for that tax credit.

[Jean-Pierre C. Gauthier]

The key parameter to satisfy to be eligible for the Canadian production tax credit is to be certified as a Canadian production. To do that you have to apply to a unit in the department called CAVCO. That certifies whether or not it's Canadian. It's based on the key creative positions. We've listed the eight key creative positions and we gave them a score each. Two of them actually have two points, out of a total score of ten. So for a production to be certified, we ask for a score of six out of ten, with some qualifiers, some constraints. We also require a production to spend 75% of its production budget on Canadians and 75% of its post-production budget in Canada. Those are some of the key tests we use to certify something as Canadian content.

The producer and distributor need to be Canadian as well, Canadian-owned and -controlled companies.

When that's satisfied, they can include a claim for the tax credit in their income tax return.

[Chris Warkentin, Conservative, Peace River, AB]

Okay. So the Department of Heritage wouldn't be involved in any other tax credit for any production that wouldn't qualify under those stipulations. Is that correct?

[Jean-Pierre C. Gauthier]

We do administer the other tax credit, but in an arrangement with CRA to assess their claim in terms of the service production tax credit. But again, the same kind of scheme appears. When the file is vetted at our offices, it goes to--

[Chris Warkentin, Conservative, Peace River, AB]

What are the stipulations for that particular tax credit?

[Jean-François Bernier]

Essentially, to be a feature film it has to be over ninety minutes, and there's also a threshold in terms of the minimum budget for feature films. If it's a TV production, there's a minimum threshold for the budget.

[Chris Warkentin, Conservative, Peace River, AB]

So anybody could come into Canada and then produce, as long as they're within that stipulation.

I just want to carry on with what Mr. Angus was talking about before, because I think the intent of what he was getting at is that if we could just increase the amount that's produced domestically, that would lead to good things happening here in Canada. I'm actually a believer that if we had a bigger industry here in Canada, we'd have more Canadian content, inevitably, being produced. I'm hopeful that we can look down the road at how we can increase production domestically.

You talked about 2004 being a critical year. You looked into the situation, maybe some of the factors that led to the decline of domestic production in that year. I'm wondering if you could just talk about some of the factors you identified.

You mentioned that maybe tax credits weren't the only reason. What are some of the other factors you identified?