Canadian Heritage Committee on Dec. 4th, 2018

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Thank you.

Mr. Williams, you talked about the cash register moment, and I'm assuming the cash register moment was brought on because of the creative industries and the changes in that.

Can you describe what other things led us to that cash register moment and the impact that had almost immediately?

[Matt Williams]

Sure.

What I meant by that was a mechanism whereby certain uses of material could be paid for, I guess, and we could collect for that.

If I understand your question, were you asking what the events were that might have changed that?

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Yes.

[Matt Williams]

I think the reduction in income for us was as a result of the educators choosing to stop paying.

To Mr. Katz's point earlier, nobody was telling us that they were going to stop using our material. We had very detailed reports from Access Copyright about the use in the classroom of certain stories or poems or parts of works that we control. The difference was that the payments just stopped after the educators penned their fair dealing guidelines. That was the moment that this began, that the descent in income began.

Have I answered your question?

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

I think so.

If we were to get back to then, was the remuneration for publishers and for artists somewhat equitable prior to that?

[Matt Williams]

I think so.

We don't hold copyright in works; we contract with authors who hold the copyright. It's our job to step out and make money with it. There are authors for whom we act, and we're always conscious of that. The question of income is, for us, so that we have to keep running our business and also so that we keep the cheques going for authors.

I think, to your question of whether it was equitable, yes. I think we were paid for use.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

The principles or values we're trying to reflect are what I'm struggling with. What constitutes equitability with that, in terms of the various sectors that play a part in this, from the artists to the publishers? I'm trying to find out where that is, whether it did exist and whether there was some sense of satisfaction. Prior to your cash register moment and the change that happened with that, what did that look like?

I don't know if any of you has an answer to that. I'll let any of you respond.

[Matt Williams]

I might say quickly that income from educational markets for our company was a small piece of the pie. We're present in a number of different markets. It was a pillar of income for us, to run our business, so the removal of that income is not going to take down our company—we're not that exposed to it—but it was an important element of what we did. That money was part of our....

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

It impacted artists as well, and providers.

[Matt Williams]

Most certainly. It weakens—

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

We're talking about remuneration models for artists and creative industries. That's what our study is about.

How do we get back to the principles that reflected...? I'm assuming you're saying that they were a somewhat workable part of this. In other jurisdictions, which we can learn from, where does that sit?

Mr. Katz, I'm interested in your disagreement around collective licensing. I'd like to hear that carried out a little bit. If you could respond to the first one first, then we could talk about collective licensing disagreement.

[Prof. Ariel Katz]

There seems to have been a wide perception that since 2012, educational institutions have stopped paying for content. This is entirely untrue. Educational institutions are paying. They have not reduced the amount of money that they spend on purchasing licensed content. They have, rather, increased it.

What they stopped paying for, by and large, were the licenses through Access Copyright. They are a fraction of what they spent before. Most of them no longer pay for those. Overall, they are paying more than they paid before. What they do more than they did before is negotiate directly with publishers and other market intermediaries.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

If they're paying more, how is that being distributed? Is that being distributed fairly, consistent with what the distribution prior to that was?

[Prof. Ariel Katz]

There are many problems in that industry, such as competition and probably a lot of other issues, but what determines the amount of compensation....

When the University of Toronto signs a licensing agreement with Oxford University Press or Elsevier, they pay a lot of money for those licences. U of T pays over $30 million a year, if I remember correctly.

There are different prices and different publishers, depending on their market power and other factors.

Over time, most publishers, especially with the move to digital, realize that they can make more money by transacting directly with users than they can through collectives. They can do it more efficiently and they can price it better for them. We are happy to do that. We get content and we get the rights to use it.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Monia, do you have anything to add to that, or any comment on distribution?

[Monia Mazigh]

I can see that the examples given by Mr. Katz are more related to universities, more for a university student and textbooks.

My experience is as an author who writes books. Some of the books I write are being taught at some universities. It's not all from other countries, or American. It's just to be able to, first of all, have our work recognized in Canada. Our copyrights should be recognized and go to our publisher and then come to us.

I think we are being thought of as victims here. We are not; we are creators. Many of my colleagues are very well aware of what they are publishing and the work of promotion they are putting in there.

I think the issue is finding an equitable model. I'm not saying the copyright is the best, but so far it's something that brings us some dues, and this is already being removed in this new sort of economy.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

I guess we're trying to find out what that equitability looks like and the principles that drive it, and therefore the policies or legislation that will allow it to occur.

[Monia Mazigh]

I think the user should be paying.

[The Chair, Liberal, Julie Dabrusin]

That will be the note that we will end on for this panel, because we will have to suspend briefly to switch to our next panel.

I'd like to thank all of the people who have come to give testimony today. It was really helpful. It was an interesting conversation.

We will be suspending for a few minutes.

[The Chair, Liberal, Julie Dabrusin]

We will resume.

I'm very pleased that Pablo Rodriguez, Minister of Canadian Heritage and Multiculturalism, is with us today. He is accompanied by two departmental representatives: Jean-Stéphen Piché, Assistant Deputy Minister, and Andrew Francis, Chief Financial Officer.

Pursuant to Standing Order 108(2), on supplementary estimates (A), 2018-19, we have vote 1a under Canadian Radio-television and Telecommunications Commission, votes 1a and 5a under Department of Canadian Heritage, vote 1a under National Film Board and vote 1a under Telefilm Canada, as referred to the committee on Wednesday, October 24, 2018.

You may begin, Minister.

[Pablo Rodriguez, Minister of Canadian Heritage and Multiculturalism]

Madam Chair, distinguished committee members, thank you for inviting me to speak to you.

With me today are Assistant Deputy Minister of Cultural Affairs Jean-Stephen Piché

and Andrew Francis, Chief Financial Officer.

It's a true privilege to be Minister of Canadian Heritage and Multiculturalism. Since I was appointed, I have met with many engaged Canadians, creative entrepreneurs, artists, and dedicated leaders. Their passion and energy inspire me in everything I do.

I'd like to highlight some of our progress over the past several months.

My mandate as Minister is clear: to strengthen and promote our cultural and creative industries, celebrate Canada's diversity and foster greater inclusion.

My department is working hard to fulfil our vision for a Creative Canada. We are investing in creators, including those from Indigenous and official language minority communities, and strengthening public broadcasting, that is to say, CBC/Radio-Canada.

In addition, as you know, we launched the review of the Broadcasting Act and the Telecommunications Act this past June. It is absolutely necessary that we modernize our broadcasting and telecommunications laws so that the system works for everyone: artists, businesses, consumers and broadcasters.

Together with my colleague, the Minister of Innovation, Science and Economic Development, we are also reviewing the Copyright Act. An enormous amount of work is being done on this. At the same time, this committee is studying remuneration models for artists and creative industries.

The goals for all this are threefold: to support Canadian cultural content; to compensate our artists in a fair and timely manner; and to ensure greater access for Canadians to creative content.

And that brings me to the 2018-19 Supplementary Estimates (A), and the expenditures for Canadian Heritage and five Portfolio agencies.

First, let me speak to you about the department's expenditures.

As you know, the Department of Canadian Heritage is asking for additional resources of $32.4 million. This includes $25.5 million in grants and contributions and $6.9 million in operations. This will result in total authorities of $1.4 billion for the department. These funds will allow us to continue our work in a number of areas, including strengthening official languages, supporting Canadian content and local journalism, promoting multiculturalism, and stabilizing pay administration.

We also continue to make great progress on our Creative Canada vision, a vision anchored in our diversity and focused on the talent of our creators. It is a vision that recognizes the significant contribution of the creative sector to our economic growth and our prosperity. We're investing in our creators and their stories. We're investing in our cultural spaces and creative hubs to foster the next generation of artists and creators. We're promoting discovery and distribution of Canadian content at home and abroad. We work to provide space in the digital world for stories that reflect Canada's diverse voices and cultures.

As part of this, we launched the creative export strategy earlier this year.

As you have no doubt seen, we are allocating $125 million over five years to help our creators reach wider audiences and gain access to new business opportunities. Of this, $17.2 million is contained in these Supplementary Estimates (A).

We have also announced measures to support local journalism—$50 million in Budget 2018 to help our newspapers make the transition to digital, and to ensure under-served communities have access to local news. Many communities no longer have access to local news.

As you will also recall, the Fall Economic Statement announced on November 21 included several new measures to support journalism, such as encouraging non-profit business models and providing tax credits to strengthen Canadian media.

We also fought hard to maintain the cultural exemption clause in the new U.S.—Mexico— Canada Agreement. One that is technology neutral, and covers all segments of our cultural industries. This was a significant and positive outcome for Canada and our creators.

I'm also proud of my department's progress in fulfilling our commitments to reconciliation. In budget 2017, we provided $89.9 million over three years to support indigenous languages and cultures, and increased support for the aboriginal languages initiatives. Soon we will work to introduce the indigenous languages act to preserve, protect, and revitalize first nations, Inuit, and Métis languages. This legislation is very important to mention. It's co-developed with our partners and reflects extensive engagement with knowledge-keepers, language experts and speakers.

My department is also taking concrete steps to encourage Canadians to embrace diversity and inclusion. In particular, we're focusing on addressing systemic racism against black Canadians, as well as against indigenous people. As part of this, budget 2018 included $23 million to increase the funding for the department's multiculturalism program, as well as to support cross-country engagement sessions on a new national anti-racism approach.

We are working very actively on this. I have travelled to many regions across the country, and we will continue to do so.

I will now address the additional funding to be provided to the Canadian Heritage Portfolio agencies by way of the 2018-19 Supplementary Estimates (A).

The Canadian Radio-television and Telecommunications Commission will receive $99,196 to support efforts to address issues with the pay system. The National Film Board will receive the same amount for this purpose.

Telefilm Canada will receive $1 million in funding as part of Canada's Creative Export Strategy.

The Canada Council for the Arts will receive a transfer of $127,000 from the Department of Canadian Heritage. These funds will support French-language theatre projects, and ensure Canada's participation in meetings of the Commission Internationale du théâtre francophone.

The National Arts Centre will receive a transfer of $150,000 from the Department of Canadian Heritage for the 2019 edition of the biennial Zones Théâtrales event. This is an important platform to promote professional theatre in Canada's Francophone communities.

Together, these organizations are vital to helping enrich the cultural, linguistic, civic and economic life of Canadians.

I want to also highlight our efforts to ensure transparency and diversity in Governor-in-Council appointments. Since October 2016, 126 individuals have been appointed to positions within the Canadian Heritage Portfolio. They represent a wide diversity of Canadians from across the country, and of diverse backgrounds, languages, genders and cultures.

That brings my remarks to an end. I look forward to working with all of you to advance our priorities.

I thank you for your attention. I am now ready to answer your questions.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

Now we will begin the question and answer period.

Mr. Breton, you have the floor for seven minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you very much, Madam Chair.

Minister, thank you for being with us today. We can sense the vitality and passion driving you in your new role as minister.

Thanks as well to the departmental representatives who are here to support you today.

Minister, earlier you mentioned, in a very positive way, the cultural exemption that has been retained in the new US—Canada—Mexico Agreement. You obviously discussed it very briefly since you had a lot of items to present to us.

What does that actually mean for the Canadian cultural community? Can you give us any examples of direct impacts this exemption will have on Canadians and the entire cultural sector?

[Pablo Rodriguez]

Thank you for your question. It's actually an extremely important question.

If we want to continue introducing bills to protect and promote our cultural industry, we basically have to have the mechanisms we need to do so. We therefore needed a cultural exemption clause in the agreement renegotiated with the United States and Mexico.

I'll tell you a secret, but don't repeat it to anyone: it's not always easy to negotiate with the Americans. I would say the negotiations were quite tough right to the end. They would have cut that clause if they could. However, the Prime Minister was extremely clear on that point. You no doubt had an opportunity to hear him or see him on the subject. It was a red line that couldn't be crossed from start to finish, and it was precisely his determination that enabled us to get this carve-out, which is an interpretive clause under which culture is exempted from the treatment accorded other products in the agreement signed with the United States and Mexico.

This means we can develop our industry and pass laws and regulations that safeguard and promote our culture without anyone being able to prohibit it under the agreement. This special clause applies to and takes precedence over the entire agreement.

[Pierre Breton, Liberal, Shefford, QC]

Thank you.

In your presentation, you also mentioned the creative export strategy, which you announced last June. That got my attention. That funding represents $125 million over five years, which is a very significant amount. Can you give us more details on the strategy, which I consider quite important?