Evidence of meeting #17 for Canadian Heritage in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was company.
A recording is available from Parliament.
12:40 p.m.
Bloc
12:40 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
I did not go into that in my presentation, because it is extremely complex. Tests similar to those applied to telecommunications, broadcasting, aviation and transport, in general, are used to determine the indicators of control in fact and in law. In the case of large corporations, we do an analysis. We check first and foremost whether the company is Canadian.
12:40 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
Do you check whether it does business in Canada, or whether it has a principal office in Canada?
12:40 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
Yes, there is a legal test that is quite specific.
12:40 p.m.
Bloc
12:40 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
I can tell you that when a company is not subject to the act, it does not have to file an application. So when someone files an application, they know they are subject to the act.
12:40 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
Very well. That partly answers my question.
The Icahn representative who spoke earlier went to a lot of trouble to explain that the company's strong suit was, to a certain extent, that it had better management than the current ones, which gave it somewhat of an advantage in ensuring the financial survival of those companies. Their survival would of course have cultural benefits. If the company left, went bankrupt or did not do well, the cultural sector would suffer tremendously, obviously.
How do you determine whether a takeover is really consistent with Canada's cultural policies?
12:40 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
I cannot comment on the transaction per se.
12:40 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
As I said, cultural policy is one of the criteria. For example, an investor may wish to invest in a company that is in financial trouble. That is one aspect of the situation we could examine. We gather a lot of information on investors. It could be a matter of survival, for instance.
As for cultural policies, specifically, I am also the assistant deputy minister of Cultural Affairs—I have two hats, one head—and with the help of my team, I am perfectly capable of ensuring that investment is in line with public policies. Sometimes, I consult with my team, Missy's colleagues, who are on my cultural program and policy management team. There is also a consultation process with the provinces and territories, as well as with the Competition Bureau and other stakeholders we may need to consult, depending on the issue. In addition, there are agents of the Crown, especially within the federal government, who are experts and whom we may look to for advice. I can assure you we are well aware of what goes on.
12:45 p.m.
Bloc
Roger Pomerleau Bloc Drummond, QC
On the international front, we have seen that with the growing number of international agreements between countries, an effort is being made to give corporate capital as much flexibility as possible. There may be support for that. But that flexibility is often granted under international decisions that may conflict with what countries are doing.
If a Canadian company is denied control over cultural content, further to one of your decisions, can it turn to international bodies to intervene in Canada?
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
First of all, before it goes that far, the investor can seek a remedy that already exists internally in cases where the minister decides not to allow a transaction. A final avenue of redress is available to the investor for a period of 30 days.
As for our agreements, especially those with the WTO and such, I do not want to state my position publicly. However, as you know, Canada's policy has always been to provide for a cultural exemption. That is how everything has been set up.
In terms of the cultural sector, when we negotiated the agreement on cultural diversity, we attended an event in Paris with our partner groups, and Marie Laberge gave a talk. She said that in culture, there are two sides to the coin: the business side and the creative side. Sometimes it is a matter of commodities, but in the cultural sector, goods and culture are something else altogether. So you have to consider the issue from both sides.
12:45 p.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you for coming. It's always a pleasure to have you at our committee.
I'd like to get a definition. Within the film industry, what is the basic test to determine whether a company is Canadian?
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
There is no test that's specific to film, television, or audio-visual production companies. It's the same test that applies throughout the Investment Canada Act.
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
Right.
12:45 p.m.
NDP
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
No, but it's both ownership and control one has to look at, and it's a variable dimension, based on circumstances. You've seen other cases we deal with. We sometimes give status opinions on whether a company is or is not Canadian. They're complicated reviews. We're basing our opinion on speculation about what the business arrangements might be over time, using documentary evidence as much as possible.
12:45 p.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Clearly, that's the kind of review that would be privileged information. The public doesn't need to know that; competitors don't need to know that.
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
It would be privileged if it's not otherwise available in the public domain.
12:45 p.m.
NDP
Charlie Angus NDP Timmins—James Bay, ON
It seems to me the crux of Mr. Schaitkin's presentation this morning was on the issue of whether Lions Gate is truly Canadian or not. He said that the address is just a “mail drop” rather than a Canadian office; that they've been delisted from the Toronto Stock Exchange; that less than 4% of Lions Gate shareholders are currently Canadian; that they don't own or lease any film studios; that they don't appear to have any facilities or offices in Canada at all. Lions Gate is not managed by Canadians. Then on page four they suggest that if Lions Gate were found not to be Canadian, they would have to repay all the tax credits and subsidies to the Canadian government. Is this something your department has looked into?
12:45 p.m.
Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage
To answer that question I'd have to cross a line that I don't think is appropriate for me to do. But be assured that when we do reviews we look widely at the impacts. Remember, some of these areas are directly within my own responsibility. The Canadian Audio-Visual Certification Office is in my sector, as are programs that finance magazines and weekly publications. So we look at all that in the context.
