Canadian Heritage Committee on June 10th, 2010

[The Chair, Conservative, Gary Schellenberger]

Welcome, everyone, to meeting number 20 of the Standing Committee on Canadian Heritage. Pursuant to Standing Order 108(2), this is a study on the funding of festivals by Industry Canada.

Here today are witnesses from the Department of Industry: Richard Dicerni, deputy minister, Marie-Josée Thivierge, and Marcie Girouard.

Would you go ahead, Mr. Dicerni?

[Richard Dicerni, Deputy Minister, Department of Industry]

Thank you.

Good morning. I'll say a few words, take about four minutes, and then be open to questions.

Marie-Josée Thivierge is the Assistant Deputy Minister in charge of this program, and Marcie Girouard is the Executive Director of the Program.

The marquee tourism events program was announced on January 27, 2009, as part of Budget 2009. The budget allocated $100 million over two years to this program.

In early February 2009, Industry Canada was given the responsibility to design and deliver this new program. The program was developed with two characteristics in mind: one, it had to be timely, and two, it was temporary.

Given the number of events that were scheduled to take place in the spring and early summer of 2009, it was necessary to quickly secure the appropriate authorities from cabinet and Treasury Board to establish an administrative team and develop the program's terms and conditions, including the eligibility criteria. These efforts led to the program being launched on April 6, 2009. The full details of the program's criteria are available on the department's website.

Program results. In the first year, 165 applications were received; 60 events in 26 cities were funded, for a total approved funding of $47.5 million, including $1.2 million in funding for two-year projects. In the second year, 131 applications were received; 47 events in 35 cities were funded, for a total approved funding of $39.2 million.

On May 7 of this year, when the Minister of Industry announced the 2010 recipients, he also announced an investment of $8 million for the Canadian Tourism Commission. This additional funding has been allocated to the Canadian Tourism Commission to capitalize on the great success of the Olympic and Paralympic Winter Games in key international markets.

The Canadian Tourism Commission is well-positioned to use this investment to attract international tourists and generate increased tourist revenue throughout the country in years to come.

A small amount of funding remained in each year, and that was earmarked for program administration costs.

Thirdly, in terms of the process to review the applications, program officials carried out a number of due diligence activities. These included ensuring that the applications were complete, that eligibility requirements were met, and that the requested funding was within the funding limits based on financial information submitted by the applicants. For example, applicants were required to demonstrate how they met all eligibility criteria. They had to submit audited financial statements from the previous iteration of the event. They had to submit a letter from the chairperson attesting that the board of directors supported the proposed project and would ensure that the project adhered to the program requirements.

We also looked at funding requests, ensuring that maximum program funding was restricted to 20% of the event's previous year's cash operating budget, up to a maximum of $3 million per year for tier one applicants, which were the larger festivals, and up to a maximum of $1 million per fiscal year for tier two, the smaller festivals and events.

The program funding was to be devoted to additional costs, incremental activities, associated either with new activities or with improved or expanded activities.

In our review process, we also used the skills and expertise of other government departments and agencies, such as the Department of Canadian Heritage and regional development agencies, as well as of representatives from the private sector who are familiar with the tourism industry and the festival and events industry.

After officials ensured that all applicants met the eligibility criteria of the program, projects were submitted to the minister, who made the final funding decisions.

Mr. Chair, this represents a very brief overview of the marquee tourism events program, which was announced in January 2009. We look forward to answering any questions you and other committee members may have. We have kept opening remarks deliberately short because our experience in front of various parliamentary committees is that members much prefer to ask their questions to elicit the information they have rather than listening to officials share all of the knowledge that we have.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

The first question is for Mr. Rodriguez, please.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you, Mr. Chair.

Thank you for being here this morning. Thank you also for limiting your comments. That means we can go into more detail in our questions.

So we can understand better, I am going to talk about some concrete examples of events. We will depart from the theoretical framework of the program and talk about specific cases.

In the case of the FrancoFolies de Montréal, were you satisfied with the results in the first year?

[Richard Dicerni]

The evaluation is underway. We have asked all recipients to provide us with an economic impact analysis. I don't know whether the analysis has been completed for that event in particular.

Do you know?

[Marie-Josée Thivierge, Assistant Deputy Minister, Small Business and Marketplace Services, Department of Industry Canada]

It is underway.

[Richard Dicerni]

It is underway.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Right.

The people at FrancoFolies are satisfied that they achieved the objectives that were set. I talk to them regularly, and they tell us they have a good relationship with you. They were expecting that funding would be renewed. Why did they not receive funding this year?

[Richard Dicerni]

A number of applications were made, and ultimately, a certain number of new projects were selected, as well as a certain number of projects that had been sponsored the first year.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Did your rules change in the interim? The Minister said afterward that it would be limited to two projects per large city, that there would be regionalization. Did those rules change?

[Richard Dicerni]

The rules for the eligibility of projects and the eligibility of activities have stayed the same from one year to the next. That explains in part why some projects, like the Montreal International Jazz Festival, were selected.

As the Minister said, for this second year of the program, to increase the regionalization of the program, we adopted the guideline of having a maximum of about two activities per city.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

The FrancoFolies people didn't know that. It wasn't in the rules. When they submitted their application, they had no knowledge of that. That's what they told me.

[Richard Dicerni]

What we review are the activities, the eligibility of what is proposed. For the number of projects, there were discussions about that, and ultimately the Minister decided to aim for greater regionalization.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

I understand. However, and you will certainly agree with me, when a project is submitted, when resources and time are spent, when people invest in it and try to do it with full knowledge, that is, with knowledge of the rules. The FrancoFolies people tell me, and they are not the only ones who say this, that they were not aware of this business of two major projects per city.

It's as if the rules had been changed or improvised at the last minute, without informing the people making the applications. It came as a surprise to everybody. Is that in fact the case?

[Richard Dicerni]

I think that when the decision was made public, it may have come as a surprise to some groups.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Since the rules in general haven't changed, apart from the rule about two projects per city, the FrancoFolies festival would have qualified this year. But since you or the Minister have decided to have only two projects per major city, some events did not receive funding and did not know the rules that led to them being refused or disqualified.

[Richard Dicerni]

It isn't necessarily a question of disqualification. There were a lot more projects submitted than the budget could satisfy.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

I understand, but if they met the criteria the first year, if everything went well, they provided good reports, they submitted essentially the same thing, they are credible, the event attracts tens of thousands of people from around the world, those are good partners for you.

But in the case of the FrancoFolies festival, it was rejected and they got a refusal just before the clock struck midnight. You know as well as I do that an event like that takes lengthy preparation. You have to reserve the halls, the technicians, there are performers who come from around the world, there is promotion to be done, and so on. In this case, why did the FrancoFolies organization learn a month in advance?

[Richard Dicerni]

On our forms, we were very careful to point out that until a decision is made, we encouraged sponsors of these projects to be prudent. I understand that it put them in a somewhat difficult situation, but as I say, our forms were quite clear on that. Until there is a decision, until an announcement is made, there is no government commitment.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

But you know it is impossible to react at the last minute, a month before the event is held. I understand the element of prudence, but there is a limit to prudence. A month in advance, you have to have reserved the halls and the performers by then. So the organizers had to do that, and what they did was responsible. But it caused them a lot of problems then.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Madame Lavallée, please.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Thank you.

Good morning, everyone.

What is reprehensible here is that there were criteria applied after the fact. Nobody knew about the two new criteria that have been mentioned. I have read the entire program guide, myself. It is extremely interesting. You learn a lot of things. All the criteria are there. There is even one that says, and in fact, it isn't a criterion, it's a definition, that a marquee tourism event must have a long tradition. So all the criteria are there, except for two new ones that suddenly, after the fact, excluded the FrancoFolies de Montréal, the fact that there can't be more than two projects per city and the fact that there has to be regionalization. Those criteria do not appear anywhere in the guide.

It is unfair to invent new criteria after everyone has made their applications. If those criteria had been known, probably the three big festivals in Montréal, with Just for Laughs and the Montreal International Jazz Festival, would have got together, would have agreed, or would have competed.

You say the Minister invented these criteria. That is what you said. In fact, that corresponds to page 4 of the guide, which says that funding applications have to be approved by the Minister of Industry. I understand, and you can tell me whether I understand correctly, that there were new applications and the Minister decided what activities he wanted to fund or not, using entirely subjective, ideological and political criteria, against the FrancoFolies, against the francophone community, against the Toronto gay community, against things with which he doesn't particularly agree. It makes no sense.

You had $12 million left over. Now you are telling us that you have sent $8 million to the Canadian Tourism Commission. Where does it say, in the January 2009 press release, that you would be sending $8 million to the Canadian Tourism Commission? It has no shortage of money. There is money there. What is the tourism commission going to do with that money? These decisions seem to be reprehensible. It is as if, for example, I invented a new criterion to say I will not allow you to respond.

[Richard Dicerni]

Well...

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

But I'm going to allow you to respond since I haven't invented any new criteria.

[Richard Dicerni]

You have said quite a few things. First, I don't think I used the word "invent" when I talked about the two-year period.