Canadian Heritage Committee on Feb. 25th, 2015

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good afternoon, everyone.

We're going to call to order this meeting number 35 of the Standing Committee on Canadian Heritage.

We are currently undertaking a study of the Canadian feature film industry.

We have witnesses with us today by video conference. First of all, from North Vancouver, British Columbia, we have from North Shore Studios, Peter Leitch, who's the president, and he's the chair of the Motion Picture Production Industry Association of British Columbia; from Brightlight Pictures, we have Shawn Williamson, who's the president, and he's a member of the Motion Picture Production Industry Association of British Columbia; and from Toronto, via video conference as well, we have Paul Bronfman, the chairman and chief executive officer of William F. White International Incorporated.

We're going to have 10-minute presentations, and we're going to start with Mr. Leitch.

You have the floor.

[Peter Leitch, President, North Shore Studios; Chair of Motion Picture Production Industry Association of British Columbia]

Mr. Chairman, and committee members, thank you for the opportunity to appear today. We would like to thank the committee for launching the review of the Canadian feature film industry.

My name is Peter Leitch, and I'm president of North Shore Studios and Mammoth Studios, and the chair of the Motion Picture Production Industry Association of B.C. With me today from our industry association is Shawn Williamson, president of Brightlight Pictures.

Canadian feature films make a significant contribution to the growing creative economy in Canada. The industry facilitates well-paying jobs for the extensive creative talent that we have from coast to coast in Canada. The Canadian film industry not only contributes significantly to the Canadian tax base, but it is well documented in the value of the creative sector in building better and more liveable communities. This is an innovative industry that is constantly changing, and our engagement with it allows us to participate in the trillion-dollar global creative content sector.

The support of the federal government through its tax credit programs for both Canadian content and service work, the majority of which comes from L.A.-based studios, and through the Canadian feature film fund, which is administered through Telefilm Canada, continues to be critically important to building the feature film industry in Canada. Total production activity related to Canadian content in films alone was in excess of $375 million, and this sustained 8,100 full-time equivalent jobs. Foreign film production in the same year—in British Columbia, for instance, probably 80% of the work that we do is service-based foreign content work—accounted for $857 million and just over 18,000 full-time equivalent jobs.

We fully support the recommendations on changes to the current programs as presented by the Canadian Media Production Association.

Critical issues that we feel would improve the opportunity to build the Canadian feature film business in B.C. would be, first of all, the elimination of the grind against the provincial tax credits. Targeted provincial incentives, which may vary from province to province, should not impact different levels of tax credits across provinces, and this would not be the case if the provincial credits were not deducted prior to calculating the federal credits. The second thing would be restoration of the funding of Telefilm Canada from the 10% reduction to stimulate additional film production and create additional jobs.

Another point is that advances of tax credit funds for qualified productions would be a tremendous benefit to those producers who need to borrow against these funds to support their productions prior to receiving the credits. This would be of minimal cost to government, but would have significant benefits to Canadian producers.

I'd now like to introduce my colleague, Shawn Williamson, to carry on the discussion.

[Shawn Williamson, President, Brightlight Pictures; Member of Motion Picture Production Industry Association of British Columbia]

Thank you very much for the opportunity to speak today.

I'm a feature film producer and television producer who lives and breathes a number of things that Peter has just talked through. Our company is called Brightlight Pictures. We've been actively producing in the industry for approximately 15 years. We're based in Vancouver, and we've been fortunate to shoot movies all around the world. We've shot movies all across Canada, through the United States, and pretty much on every continent.

Recently, we produced a movie called The Interview for Sony, and a Canadian content picture called The 9th Life Of Louis Drax, which we financed as a Canada-U.K. treaty co-production. That picture we packaged off relationships that we picked up off the various service movies that we produced over the years. We were fortunate to cast Jamie Dornan, the star of Fifty Shades of Grey, in it. So hopefully, this is a Canadian content movie that will gain a fair bit of critical success and hopefully financial success when we complete it in the next few months.

I produced a movie many years ago called 50/50. That was a service movie which Lionsgate and Summit shot in Vancouver. It was a small comedy about cancer, and starred Seth Rogen, and it was produced by Seth Rogen. The relationships we built on that movie and various different service movies over the years often lead to relationships that we can then translate into ownership and packaging opportunities in Hollywood. Much of the Vancouver industry, as Peter suggested, is based and driven from Los Angeles, so we are a company that mixes service productions, like 50/50, with content movies we've done, like White Noise, Gunless, a Telefilm-financed movie, or The 9th Life Of Louis Drax. Our company works in a very wide range of productions, from service projects through wholly-owned television and film, and through treaty co-productions where we own a percentage anywhere from 20% to 80% of the production.

We tend to leverage wherever we can our relationships with Hollywood to facilitate creating something that is a watchable piece, but also something that we can sell internationally. We've been mildly successful doing that thus far, so it works, and it has been working for us. We utilize Canadian elements within the industry, like the Toronto International Film Festival, which is probably the most important film festival in North America, to sell our films, to package our films, and showcase our films. We've had the opening gala, we've had the closing gala, we've had numerous films in different positions throughout the festival, so ongoing, supportive ancillary elements within the industry like TIFF are huge for us.

With CAVCO, the Canadian audio-visual certification office, and the point system that currently exists, there's something we've been discussing at least within the various different groups in the west. We're looking at potentially reopening the point system and how things work here, and potentially loosening that up to allow us to bring elements that bring financing. As much as we have a very strong and vibrant Canadian industry, it is around the world driven by the United States. I have produced German-French films that have come to Vancouver to “shoot an American movie”, so around the world, people come to Vancouver, Toronto, Montreal, and Winnipeg to shoot movies that appear Hollywood-driven. The reality of the industry is that stars, actors, scripts, directors, all ultimately drive the financing of our industry and how able we are then to monetize that in the future.

I have made a number of Canadian films over the years that are seen by our audiences, but get very limited viewership outside Canada. That is one thing we would want to look at. Peter has alluded to some of the other elements, such as the ability to not have to finance our tax credits in advance. Those are things that would help, that are small-business points that do save money and allow us to decrease what we pay the banks.

I think that's what I have to say at this point.

[The Chair, Conservative, Gord Brown]

All right, thank you very much for that presentation.

We'll now move to Toronto to hear from Mr. Bronfman. You have the floor for up to 10 minutes.

[Paul Bronfman, Chairman and Chief Executive Officer, William F. White International Inc.]

Thank you.

Well, since Shawn is a customer, please allow me to thank Shawn for his business over many years.

Mr. Chairman, vice-chairs, and committee members, thank you very much for this opportunity to appear before your committee.

My name is Paul Bronfman, I am chairman and CEO of the Comweb Group as well as William F. White International Inc. The industry calls us Whites for short. I'm also the chairman of the board of Pinewood Toronto Studios. In my spare time I'm a proud member of the board of Film Ontario. I'm a member of the board of directors of the Canadian Media Production Association as well as the Ontario Media Development Corporation. In case I get bored, I'm also a board member of the Academy of Canadian Cinema and Television. This week was a very exciting week for our academy because it's Canadian screen week where we do highlight many of the feature films that we're talking about in this conversation.

I am joined today by my colleague who is much more handsome and good-looking than I am, Mr. David Hardy. He's off screen. He helps me turn pages because I have hands that are compromised because I do have MS. He's our vice-president of industry and government relations here at Whites and Comweb.

I'd also like to say how delighted I am to be appearing with my old friend, Peter Leitch, who was a colleague of mine at North Shore Studios, along with the late Stephen J. Cannell in Vancouver some 27 years ago. Peter and I have remained close friends. He's been to my kids' bar and bat mitzvahs and he's a great friend and great industry leader in Vancouver.

On behalf of my colleagues at Whites and across the entire sector, I would like to thank the Standing Committee on Canadian Heritage for taking this close-up view of Canadian feature film industry, a segment of our sector as culturally significant as it is enigmatic. It has always been under pressure.

At the same time I would be remiss if I didn't express my serious concerns of the very last-minute nature of the process, in being given three business days to prepare a presentation on such an important topic as the Canadian feature film industry. It really would have been nice to have a little more time. It was tough for us to get it all together, but we did it.

For the past 52 years, Whites, which started April 1, 1963, has provided the most technologically sophisticated professional production equipment to clients all across the country. Just like the production sector as a whole, our business is split between domestic producers and service producers, i.e., American producers primarily. Whites provides services to every production, from major American studio pictures with Academy Award-winning directors at the helm to microbudgeted Telefilm projects from first-time emerging filmmakers, domestic producers, directors, and everything in between.

Whites has operations in Halifax, Toronto, Winnipeg, Calgary, and Vancouver. We also have a partnership in Budapest, Hungary.

Until 2012 we had an operation in Regina. Regina was a thriving film community. There are some excellent people there, but the current provincial government, in its infinite wisdom, sought to kill the industry, so unfortunately we had to close our office there. We're hoping that Mr. Wall and company will understand that and will come back and reinstate some of the credits. Without tax credits, Saskatchewan is not a destination of choice, unfortunately.

We as a company are deeply woven into the fabric of each community in which we operate. For our purposes today, we would define the service production as foreign, really primarily American productions with intellectual property residing outside of Canada. Domestic production is CAVCO-sanctioned production generally, with intellectual property remaining in this country under Canadian control.

Now I'd like to turn to the question posed by the committee. Effectiveness of government funding programs was the question, as I understood it.

To preface, the federal government support to the Canadian feature film industry is and has always been crucial. Our geocultural positioning is like nothing else on this planet anywhere. We're 5,000 miles wide by 100 miles deep. In fact, everybody lives near the United States. If America sneezes, we catch a cold. That's why I'm fighting a really bad cold, because I was in the United States. We happen to share the same language. We share, in a broad sense, a very similar culture to the Americans.

The removal or absence of government investment in the risk averse Canadian environment in which we live and work would spell immediate disaster for the Canadian feature film industry. Where prime and equity funds stateside are injecting very large, huge sums of money of state development and production financing for both studio and independent productions alike, we in this country scramble constantly to find development money, let alone production financing. As a result, the bridge financing industry, which the folks in Vancouver mentioned, is thriving and making a nice profit, and at the same time removing capital from the system, which is really not dissimilar to what happened with the tax shelters started in 1978, 1979, and 1980. I'm old enough to remember those because I was working in the industry at the time. Most of the money did not stick with the industry, although it did train a lot of people, including me.

As you all know, the Government of Canada provides two streams of support: refundable tax credits and support rendered through Telefilm Canada programs, like the Canadian feature film fund.

As one early adopter of federal tax credits nearly 20 years ago, we have witnessed a virtual explosion of credits around the globe as jurisdictions realize the jobs potential and general economic activity afforded by a robust film industry, but we in Canada were the pioneers. The rest of the world caught on and, in many cases, improved upon what we had started. Canada has provided the global model, truly, for a successful government investment in the film industry. The Department of Canadian Heritage should be commended, truly, for maintaining these tools. Without doubt, they are an essential part of the tool kit that makes Canada such a competitive market for feature film production.

Telefilm Canada recently weathered the storm of budget cuts rather well and seems to have emerged quite strongly. It is engaged in exploring new types of entry-level production while at the same time retaining an envelope system measured by audience success. Given the stickhandling required to oversee English and French language production, Telefilm Canada has done quite a commendable job in maintaining an equitable balance and approach. It's not easy. That said, given the resources, it really could do more on the promotional side, and I will revisit this notion in our recommendations.

The other question, I think, was regarding promotion.

The committee has asked us for comment on ways in which to promote the value of the industry, the quality production services offered in Canada, and the exceptional content that is created by us Canadians. I will speak to the second part of this question first, as the marketing of our services at Whites and the Comweb group is an essential tenet of our business plan.

I've spent a significant amount of time in Los Angeles with my colleagues promoting Whites and Canada to major studio clients, and I can tell you with absolutely no hesitation that when we're down in Los Angeles talking to producers, we are preaching to the converted. They love our country. They love making movies here and they love making television here.

The world's largest entertainment market looks at filming in our larger markets, such as Vancouver, Toronto, and Calgary, no differently from filming in Los Angeles or New York. If you walk on a film set in New York or L.A., or you walk on a film set in Vancouver, Toronto or Calgary, it all feels very similar, because many of us were trained by the American production people.

[The Chair, Conservative, Gord Brown]

Mr. Bronfman, you are a fair bit over your 10 minutes.

[Paul Bronfman]

Oh, no. Do you want me to wrap it up?

[The Chair, Conservative, Gord Brown]

I'll tell you what; I'll give you another 30 seconds, because I know you have some recommendations you want to give us.

I'll give you that time, and then maybe you can work more of it into the questions.

[Paul Bronfman]

Thank you, Mr. Chairman. I'm also talking a bit slower because I'm fighting post-nasal drip here.

Here are our recommendations. Transparency and accountability are fundamental purposes when accessing public moneys. Taxpayers want to know how their money is being spent. We are cognizant of a potential public perception of double-dipping when a producer accesses refundable federal tax credits as well as funding from Telefilm Canada. Accordingly, we feel that deducting assistance at this level is fiscally responsible.

But the federal government should not be in the business of impeding—

[The Chair, Conservative, Gord Brown]

Mr. Bronfman, I have to cut you off there. You can work some of what you're telling us right now into the questions.

[Paul Bronfman]

Very good. Sorry to drone on there, Mr. Chairman.

[The Chair, Conservative, Gord Brown]

We'll now move to the seven-minute round of questions.

Mr. Weston, you have seven minutes.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you to Paul, Shawn, and Peter for being with us. I know if I twisted his arm, Peter Leitch might tell us about cherry blossoms and crocuses being around where he and I are from. We won't tell you what we have here.

Peter, perhaps you could start us off by reiterating what you said about the revenues produced by your industry and the number of jobs. They are stunning statistics, and I'd appreciate it if you could repeat them, please.

[Peter Leitch]

Sure. Total production activity related to Canadian content films alone in Canada was $376 million in 2013-14. This volume sustained 8,100 full-time equivalent jobs. Foreign film production in the same year, which is the majority of the work we do in B.C., although our Canadian content is certainly growing here, accounted for $857 million and just over 18,000 full-time equivalent jobs.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

So $857 million is all productions, whereas $376 million is Canadian productions. Is that right?

[Peter Leitch]

That's correct.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's a very large number.

What about indirect revenues and jobs? In my own case, as someone who lives in Vancouver, my kids were extras in a movie film there. One TV production was filmed at a home owned by my parents, and we had a tenant from the film industry for several years. I know many people who are indirect beneficiaries.

Do you want to comment on that part of the film sector?

[Peter Leitch]

In British Columbia the spend on film and television in the community was over $1 billion, and it's been that way for a number of years now. When I was vice-president and controller with Cannell Films, I'd have a stack of cheques. We paid over 5,000 different vendors.

I look at it as being very similar to tourism, especially on the amount of U.S.-based money coming up here to do the service work. But when we're talking about Canadian feature films and Canadian television, that applies to that also. We're certainly supporting hundreds and thousands of vendors in a community. It's a huge stimulator in the community, not only from a financial standpoint but also from a cultural standpoint.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Is there some work with the tourism industry? Do you collaborate in order to enhance both your sectors?

[Peter Leitch]

I think that's a fantastic comment in terms of where we could do better, working closely with Tourism British Columbia. It's certainly one of the initiatives we have for our industry association this year.

They do that very well in some of the American states. We need to blow our horn a little bit more in terms of the benefits we create that relate to tourism.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

We've talked about this before; when you're out trying to land a film, what countries are your competitors?

[Peter Leitch]

Certainly, the United States is a huge competitor, some of the states there. There's no doubt about that.

In terms of Canada though, one of the things we look at, in British Columbia specifically, is that we want to get the business up here. The advantage of getting the U.S. business up here is that it allows us to build the infrastructure to nurture some of the talent. We're right beside Capilano University here, and we have those students coming in. We encourage them to produce their own films and to make sure they can market the films. In fact, the training in the educational facilities is now more geared to commercial films, from which we can actually make our money back so we can sustain the industry for the long term.

We really benefit from both service work and Canadian production in terms of building the industry, building the crew base, and attracting world-class talent here.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Paul said that U.S. producers love making films here.

What are the factors that really help attract a producer here, Peter?

[Peter Leitch]

There are a number of factors.

Here in British Columbia, of course, the crocuses are coming up. It is 14 degrees and balmy. We can shoot year-round in B.C.

I think it's the quality of talent we have right across Canada. That's why when Paul was referring to Saskatchewan...it's kind of tragic there, because there are so many talented people there. These talented jobs lead to innovation, the creation of new companies, and the creation of subsectors of the industry. If you look at the suppliers now in British Columbia, we have some of the top visual effects companies in the world training local people to do the work. We're really looking forward to just growing our indigenous sector so that we own more of the IP. The way we're doing that is attracting more work here.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

We want to get to the foreign tax credits in a minute, but what about getting people into the country? This is something that you and the Minister of Employment and Social Development and other members of our government have worked on. How about the importance of being able to move people in and out?