Canadian Heritage Committee on Feb. 16th, 2011

[Jean-Pierre Blais, Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage]

It's disruptive technology. That's what happens when a player like Netflix and others enters the marketplace. I've been told the current Internet traffic in Canada related to Netflix may be as high as 5% already, and they just launched in September. Some broadcasters are concerned about what that means for them, because here's somebody coming in here.

It's always been the reality in the country, because of our geographical location, that we've had.... Technology is allowing it here--having Netflix doing an offering--but we've always had content pouring over the border. That's why even in the 1920s and 1930s we created the CBC as a public voice to counterbalance what was happening on the airwaves. Our geography means we're close--we've always been close--to the Americans, who are the great exporters of cultural content. Now technology allows it to come from all over the world, and our programs continue to be there regardless of what platforms, to make sure Canadian choice is available.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Do I have any time?

[The Chair, Conservative, Michael Chong]

You have one last question.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

I just want to go back again to an issue that was brought up in the last round of questions. The stable funding aspect of the $60 million a year does not keep pace with production costs or other things. You only have to assume that production costs have increased in the past little while. That's certainly the result.

There's even the salary question. When the government had an initiative to freeze salaries, as we spoke a bit here before, it certainly was stable funding...I mean, they have contracts in place, and CBC certainly has employees to pay, and they're under contract. They have to increase the amount they pay employees or for other services, yet the stable funding aspect does not address that. Eventually, that has to be diminished, so the $60 million is not worth.... That buck doesn't go as far as it used to.

[Daniel Jean, Deputy Minister, Department of Canadian Heritage]

Some of these challenges, the drive for efficiency and balancing the books, other crown corporations face as well. The government right now has asked all departments and agencies to absorb the salary increase of the last two years. This is something that other organizations have to face in the same way.

As the minister said earlier, this is a time where many other countries have reduced funding for public broadcasters or they have maintained--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

We've done the same.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Deputy Minister.

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much.

I just need to get some clarification before I ask my next question. I think it will be a pretty easy answer for you. Would any of you refer to yourselves as Conservative Party hacks?

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

You can just say “Conservative”.

[Dean Del Mastro, Conservative, Peterborough, ON]

You can just say yes or no.

No. Okay. Good. I just needed to clarify that, because we never know where they're going to go with it next.

I want to ask you a direct question, because some allegations have been made here at the committee, and I know some folks out there, the Friends of Canadian Broadcasting, are running a massive fundraising campaign by perpetuating a lie, by taking quotes out of context and perpetuating a bold-faced lie, and raising money I believe representing themselves as the CBC and not as a group that solicits funds for their own purposes.

I'm just curious. Has the minister ever come to you and asked you to put together a package to privatize the CBC, to sell the CBC? Has anybody ever come to you and suggested this might be something the government is considering doing?

[Daniel Jean]

Go ahead.

[Jean-Pierre Blais]

When I appeared last time on this issue, I think it came from another side. The Broadcasting Act right now has both a public and a private component. You are the parliamentarians. You know the act says that, and the CBC's creation is provided for in the act. It's the act, and Parliament would have a word to say.

[Dean Del Mastro, Conservative, Peterborough, ON]

So nobody has came forward and said it's time to rewrite the act?

[Jean-Pierre Blais]

I haven't heard anyone say that.

[Dean Del Mastro, Conservative, Peterborough, ON]

You haven't heard it. That's great. That means nobody has come forward—

[Jean-Pierre Blais]

On this issue.

[Dean Del Mastro, Conservative, Peterborough, ON]

—because you would have heard it.

There's a great group of conspiracy theorists, and most of what they do is politically motivated. We talk a lot at this committee about how to get the most for Canadian artists. How do we take the investments we're making and build value into what they're creating? How do we help them? How do we make it bigger, better, generate better outcomes for them? I thought that was a goal of this committee. You should be able to have discussions where you can look at possibilities and kick things around and discuss best practices and so forth.

One of the things I'm finding is that you can't play devil's advocate. You can't have a discussion with industry experts without being concerned that certain comments could be taken out of context.

CBC has two over-the-air affiliates that it recently signed an agreement with, one in Peterborough and one in Kingston. I heard November 23 kicked around a number of times. Of course, as of November 23, it was looking as if they were not going to re-extend the agreement and that local broadcasting in Peterborough wouldn't be a CBC affiliate anymore.

Have you reviewed the CBC's five-year plan? Do you think it's a good idea that they're looking at a regional focus, that they're looking at re-engaging directly with Canadians all across the country? Do you think that's part of their mandate? I was kind of excited by it. I thought it was a good idea.

[Daniel Jean]

Absolutely. It's in the act that they must be both a mirror for the region and then bring national content to the region. The plan has three pillars: one pillar for Canadian content, one pillar for multi-platforms, like digital, and one for the regions. This means having local programming, being able to reflect the regions to the national audience, and being able to see the regions reflected in the national coverage.

[Dean Del Mastro, Conservative, Peterborough, ON]

The CBC gets a lot of support from the Canada Media Fund. They indicated that they put about $400 million into Canadian content creation last year, for programming that aired on the CBC. How does the CBC access that fund, how much of the fund are they receiving, and have you heard any indications from them that they're happy with the way the fund is working?

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Del Mastro.

Deputy.

[Daniel Jean]

They have to compete in bringing productions forward. I'll let Jean-Pierre give you the numbers for the last few years.

[Jean-Pierre Blais]

Until the recent reform of what used to be the Canadian Television Fund, which is now the Canada Media Fund, the CBC had a set envelope of 37%. It was both a floor and a ceiling. They got just 37%. Under the new CMF, they get to compete with other players. They in fact get nearly $100 million of the CMF component. If you think about the total amount being about $350 million, that's a good share of that amount. With the new rules of the CMF, where there will be even more emphasis put on prime-time first-run programming, they will continue to do well.

[The Chair, Conservative, Michael Chong]

Thank you.

Mr. Angus.

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

Thank you.

I'll start off, I think, maybe not directly on CBC. I hope the chair will indulge me in this.

When I was elected in 2004, I came in and I was told by every group I met that the sky was falling, that this digital tsunami was going to destroy all our little cultural institutions, and we had to protect these silos we built up in the 1970s. Maybe I felt a bit of a dissident at the time. I didn't think we needed to step in and stop the digital revolution. I thought there were a lot of opportunities.

We're now starting to see how the new platforms are emerging and how Canadian content is getting out there. But it means adjusting cultural policy along the way. On the issue of Netflix, from our party's perspective, we do not want to intervene in any way in the choice of Canadians to view what they want, when they want, and how they want. This is one of the fundamental facts of the digital realm. However, they do pose certain problems that have not been encountered before. For example, they're offering a wide variety of content very cheaply and they're not paying into the system; other people are paying into the system.

I don't want to put you on the spot, but have there been policy discussions about the emergence of new platforms? I don't necessarily mean Netflix. It's a very different world than what we were even imagining three and four years ago. At a policy level, do you look at this and ask how we ensure choice and how we ensure that our system continues to operate?

[Daniel Jean]

We always monitor what's happening in terms of market trends. As Jean-Pierre has said, there's always been the reality of an industry that is emerging and new channels that are coming that bring new market forces. So we're always monitoring the situation and talking to people in the industry to see whether there are things that need to be considered. But this is a fairly early phenomenon.