Canadian Heritage Committee on March 23rd, 2015

[Marc Séguin]

One of the things we hear often from our members is that they have to provide audited financial statements on the same project several times.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

To whom?

[Paul Pope]

I'll answer that.

You would do your own internal audit, then you'd go to an outside chartered accountant, and then you would have Telefilm review the audit if they're a partner. You'd have CAVCO review the audit. You'd have the provinces review the audit.

Telefilm, to their credit, has the most clear rules on the audit, and the audit manual, which a lot of places have adopted, but not all. Those things create costs in terms of revising the audit, multiple phases, but also it just is slow. Interest rates are monthly, and it's surprising how fast nothing can happen.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

It would be great if you could send us a road map of all the red tape that we could eliminate.

The last one is your recommendation about an export strategy.

Once again, you talked about an international promotion strategy.

Do you have an idea on how we may design this strategy?

[Michael Hennessy]

Yes, the fundamental you really want to focus on is the idea of sales and inward investment. Sales, that's the promotion of Canadian producers or distributors to the international markets, including money perhaps through existing funds to promote the activities when we're over there, so we're promoting brand Canada in that form of content.

The second one, which I think is more complicated and needs a little thought, is how we can bring more money into the country to do more work here. We do very well, by the way, obviously. We bring in over a billion dollars a year from Hollywood with very little outflow, but that would be the second part, and I think probably writing it up would be more efficient.

[The Chair, Conservative, Gord Brown]

Mr. Weston, for seven minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for joining us today.

I see that there are really two themes here—one has to do with protecting or developing Canadian arts and culture, and the other one is related to our industry's economic efficiency. In the riding I represent, West Vancouver—Sunshine Coast—Sea to Sky Country, a lot of people are focusing on the cultural side, including fine arts, singers, sculptors, artists and those involved in film production. We actually have a festival at Whistler. I want to use this opportunity to congratulate Shauna Hardy, who organized the festival.

What can be done to attract investors, as is being done at Whistler? A lot of people from China come to the festival to invest in the industry and in films. What do you think about that approach? What can we do to attract foreign investment to our industry, which is already so well-known?

[Michael Hennessy]

I think that in the first case you ultimately need a program in trade that underwrites a portion of delegations that would come to the country looking to do productions in the country. That's why you need some kind of working group, because you need to define the parameters enough, so you're not spilling money as opposed to attracting it.

Sorry, I'm just trying to remember the second part.

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

What needs to be done to attract investments? Are other countries investing in that area?

[Michael Hennessy]

It's kind of a controversial issue and I haven't landed in a place, but the CRTC started this to some degree talking about trial programs. Part of it, I think, is that if we're going to compete in a more global environment, we must be aware that almost every country, including now the United States, is looking to do co-productions. Jennifer here is just working on a co-production herself with the U.K. that is majority Canadian. We have to think about our foreign investment rules a little more closely in the industry.

We're now in a world where the Internet, on-demand, and everything are going to be what drives both TV and film. There's no intention anywhere to regulate that particular sector, and if that's the future of broadcasting, we've said implicitly that we don't have the issues about foreign entry, foreign competition, that we used to have in the past.

How do we then look at how we define Canadian content? Maybe for certain things, as the CRTC did, there's a threshold. Is it better to attract investment into those things where we're going to have global partners and we're going up against shows or movies of a scale we couldn't otherwise produce? It's the idea that maybe 50% of something that is 75% bigger than what we make is not such a bad thing.

I think we have to kick a couple of elephants in the room. If we have said—and I'm saying if—it's okay not to worry about regulating Netflixes, Googles, or whoever—I'm not saying that's good or bad—then we're less worried than we used to be about what the rules should be. Maybe we need to be more open and maybe we can at a certain threshold say that we're not going to worry as much about how we define Canadian beyond a certain point.

[Paul Pope]

I would add that the co-production treaties we already have could be strengthened.

We have international co-production treaties that already lay out a lot of the groundwork and a lot of the ways to work. It's a fast way to increase foreign investment through co-productions between my company and a company in Bulgaria, or wherever we happen to have the treaty.

[Marc Séguin]

If I may add to that, you may know that Canada's international treaty framework was updated, I believe it was last summer. The first country with which we signed under this new framework was India, but the fact remains that the other 49 treaties that we have were negotiated under the old framework. I do know that the Department of Canadian Heritage is working hard to try to update those treaties.

The sooner we update those treaties to fall under the framework the better, because the new framework makes it easier to package films. Of course, it takes two to dance. When you try to negotiate a bilateral treaty, the other country has to be willing to do it too. The sooner we update those treaties, the better.

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

I was pleased you obviously know of the Whistler Film Festival, and it's making an impact.

[Marc Séguin]

Absolutely.

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

We just talked about foreign investment in our industry. Mr. Hennessy, your website links to a study that says, in terms of finding foreign markets, it's more and more important for producers to invest in that. Moving from investment into production, and now finding foreign markets for the product, do you want to comment on that? How well are Canadian media producers equipped to find the appropriate markets for that?

[Michael Hennessy]

Up until about 10 days ago, pretty good.

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

What happened?

[Michael Hennessy]

Ten days ago the CRTC decided to remove all the safeguards they had to fix the imbalance in terms of bargaining power with the big integrated broadcasters like Rogers, Bell, and Shaw. They did this, remarkably, at the same time they increased protections on the broadcast distribution cable side for independent companies like Telus and Cogeco, while they increased protections for independent broadcasters, and while they increased protections for small independent Internet providers.

Those protections, which are called terms of trade, were copied from the U.K., where they put the protections against market power right into their legislation, in section 285 of the Communications Act 2003. That is what led the U.K. into this golden age of television with Downton Abbey, The Fall, Luther, Inspector Lewis, and all those kind of shows.

The key thing that came out of that was the producers' copyright was recognized and their ability to use the rights in the copyright to pursue international markets began to be exploited. All of that was taken away on the assumption that somehow Telus doesn't have enough bargaining power, but we do, even though we're a fraction of the size. I think the end result of that is the broadcasters are going to end up with the international rights without a lot of interest in selling them.

[The Chair, Conservative, Gord Brown]

Thank you very much.

We're going to move to Ms. Nash, for five minutes.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you to all the witnesses for being here.

I'm a Toronto MP from Parkdale—High Park. We have a lot of filmmakers, including independent producers, actors, and musicians, in our area. I'm also the official opposition industry critic, so I'm thrilled that our film industry is so successful. I think that we punch above our weight and we do amazing work, so thank you for all you do.

We're always looking to not just stay in place, and we really appreciate your recommendations to address a rapidly changing world market. I appreciate and support your recommendations around the CBC. It's unfortunate that our national broadcaster is not promoting Canadian film more strongly, because I know that is the case in Quebec.

We are sitting next to the biggest cultural exporter in the world, and now with changing technology, films from around the world are at everybody's fingertips. I confess I do love to watch films from other countries. I think it's an amazing opportunity.

What can our federal government do? You talked about greater access to grants, more efficiencies, getting rid of red tape, etc., but what more can we do as a country? What can our government do to encourage more Canadian content, to do what we do even better, to boost more film production here in Canada? What would you say? It's obviously the opposite of what they've done with the telecom companies and the trade agreements. What else can we do here that fosters the kind of creativity that has made Canadian film such a success? You talked about training young people. What else can we do that would help inject more support into this important sector?

[Paul Pope]

I would say make sure that we have access points for young people who come into the business and that we have mechanisms and measures in place to make sure there is film and television and Internet activity in all parts of Canada, in all languages. We need to have a vibrant full spectrum sector.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I know there's an organization called Reel Canada that promotes Canadian films in the school system. Do we need to do something like that on a bigger scale for the whole country, not just for young people but throughout the country?

[Michael Hennessy]

Yes, absolutely. I think it's always easy...we get involved particularly, as I say, as a trade association in thinking about ourselves and our own interests, but I think all of us here collectively would like to see a world where there's a future in creative jobs, creating intellectual property for our younger generation. Intellectual property, and the control and sale of that, not just for economic reasons but because it is still the way we communicate and reflect our ideas and opinions, is critical. I think there is a huge absence of programs, with all respect to the government, because we do a lot of internships that we couldn't do without the support of the government, but we need more of that. These are going to be high-valued jobs in an information economy and we're making choices today on how we structure industry, whether we're going to be importing the jobs or exporting our children.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Just on that, if you're trying to attract production to come to Canada, if you're trying to get into a co-production, what are the advantages that you would tell another country's producers? What are the advantages to producing in Canada, or maybe specifically in Toronto, my hometown?

[Michael Hennessy]

Well, Jennifer is from Toronto as well as Montreal, but she's actually involved in doing that. She could probably tell you what the pitch was that she did with the U.K. recently.