Canadian Heritage Committee on March 8th, 2021

[The Chair, Liberal, Scott Simms]

I call this meeting to order. This is meeting number 18 of the House of Commons Standing Committee on Canadian Heritage.

Pursuant to the order of reference of Tuesday, February 16, 2021, the committee will commence consideration of Bill C-10, an act to amend the Broadcasting Act and to make related and consequential amendments to other acts.

As a reminder, today's meeting is in a hybrid format—virtual and in person—pursuant to the order of January 25, 2021, from the House. The webcast will always show the person speaking rather than the entirety of the committee and will be available on the House of Commons website.

As a final note, screenshots or taking photos of your screen are not permitted. Since we are dealing exclusively with the department today, I don't suppose we'll have that problem. They probably know the rules better than we do.

We have, in our first hour, officials from the Department of Canadian Heritage.

We're going to be taking a brief intermission, for technical reasons, to hook up with Minister Guilbeault, who will join us in the second hour.

Right now, we have Jean-Stéphen Piché, senior assistant deputy minister of cultural affairs. We have Thomas Owen Ripley, director general of broadcasting, copyright and creative marketplace branch. We have Kathy Tsui, manager of industrial and social policy, in the broadcasting, copyright and creative marketplace branch.

We're starting out with a 15-minute statement.

Mr. Piché, you have the floor for 15 minutes.

I'll let you decide if you want to hand it to someone else.

Monsieur Piché, the floor is yours.

[Jean-Stéphen Piché, Senior Assistant Deputy Minister, Cultural Affairs, Department of Canadian Heritage]

Thank you, Mr. Chair and committee members. It's a pleasure to be in committee once again.

I want to take this opportunity to wish you all a happy International Women's Day.

We're talking to you from the national capital region's ancestral territory of the Algonquin Anishinabe peoples.

As you said, Mr. Chair, I am accompanied by Thomas Owen Ripley and Kathy Tsui. They are both experts in the area of broadcasting and have made major contributions to the development of bills and digital projects.

Mr. Chair and members of the Committee, thank you for inviting us here today to help you with your study of Bill C-10. I would like to take this opportunity to thank the committee for the work it has been doing on the bill and for having undertaken to commence its work so expeditiously.

Bill C-10 makes important amendments to the Broadcasting Act that will benefit artists, broadcasters, and Canadians.

It is expected to result in more opportunities for Canadian producers, directors, writers, actors, and musicians to create high quality music and audiovisual content and to reach Canadian audiences.

It will establish a fair and flexible regulatory framework where comparable broadcasting services are subject to similar regulatory requirements.

It will make Canadian music and stories more available through a variety of services, and it will create a more diverse and inclusive broadcasting system that is reflective of Canadian society.

This bill renews the Broadcasting Act for the digital age. The changes that it makes are well overdue. It is one of four initiatives currently under way at Canadian Heritage that will modernize our federal communications legislative framework for the online world.

We're also developing a proposal to address online harms such as hate speech, violent and extremist content, terrorist propaganda, child sexual exploitation and non-consensual distribution of sexually explicit images.

We're working with Innovation, Science and Economic Development Canada to amend the Copyright Act.

Then there is the matter of ensuring that Canadian news services are fairly compensated for the use of their material by online services. This work, too, is currently ongoing at Canadian Heritage.

Together, these initiatives will establish rules that will make the online world a more equitable, inclusive and safe place while also ensuring that it remains a fertile ground for innovation and freedom of expression.

Bill C-10, which is focused on broadcasting, is the first piece of this puzzle.

I will now turn things over to Owen Ripley, who will outline the need for Bill C-10 and its primary objectives.

Owen.

[Thomas Owen Ripley, Director General, Broadcasting, Copyright and Creative Marketplace, Department of Canadian Heritage]

Thank you, Mr. Piché.

Thank you for the opportunity today to address the committee and discuss Bill C-10 and how it modernizes the Broadcasting Act.

Before diving into the details of the proposed legislation, I would like to briefly tell you about the Broadcasting Act and the current regulatory framework. It is important to understand the current system, because it is the foundation on which Bill C-10 is built.

The bill aims to modernize our legislation for the digital age; but it also aims to preserve and strengthen key elements of our system that have served us well for many decades. These include our independent communications regulator, our Canadian broadcasters, support for Canadian music and storytelling, and the objective of ensuring that diverse voices, including those of Indigenous peoples, are heard across Canada.

The Broadcasting Act is a key piece of legislation for the sector. It defines broadcasting, outlines policy objectives that serve as guiding principles for developing specific regulations, and sets out the mandate and powers of the Canadian Radio-television and Telecommunications Commission, the CRTC. The CRTC’s independence from government is important.

The CRTC makes rules and regulations that govern the media sector. The sector is obviously central in supporting freedom of expression and fostering cultural expression. In a democracy like Canada, it’s important that there be a healthy distance between the government of the day and the media sector. Countries such as Australia, the United Kingdom and France all rely on an independent regulator to oversee the media sector.

The CRTC also has the expertise and experience to make technical regulatory decisions, while balancing many policy considerations. This independence and expertise have served Canadians well.

Ultimately, Bill C-10 preserves an oversight role for the CRTC and for the government. The CRTC has the mandate to oversee the system on a day-to-day basis, while the government's mandate is to ensure that the CRTC operates as it should.

One way that the CRTC has supported Canadian culture is by ensuring that broadcasters support the creation and presentation of Canadian content. Currently, as a condition of licence, TV programming services are required to spend a percentage of their revenues on Canadian content each year. Cable and satellite companies are required to contribute a percentage of their revenues to production funds and local programming to support the development and production of Canadian content. Commercial radio broadcasters and satellite radio carriers contribute a portion of their annual revenues to support Canadian content development initiatives. These contributions totalled $3.34 billion in 2019.

However, digital disruption and competition from online broadcasters threatens this support. Increasing competition is leading to diminishing revenues, with traditional broadcasting revenues declining by 1.4% from 2018 to 2019. Ultimately, this will lead to less funding for Canadian music and programming.

Compared to 2019, recently released aggregate returns data from the CRTC show a 7% decline in broadcasting revenues for large ownership groups in 2020. Aggregate returns include the largest broadcasters and vertically integrated companies but exclude the smaller companies, and as they represent the majority of industry revenues, they are expected to reflect overall industry trends for 2020.

Streaming services obviously aren't new to Canada and have operated in parallel to the traditional broadcasting system for many years now. Their operation in Canada has been facilitated by a regulatory instrument, the digital media exemption order, which exempts online broadcasters from having to seek a licence to operate in Canada, as well as the obligations placed on traditional broadcasters, such as supporting Canadian content.

The DMEO has essentially allowed foreign online broadcasters to operate in Canada outside of the traditional closed system. The DMEO was originally issued in 1999 to promote the growth of the nascent online broadcasting sector. Since then, the sector has greatly increased in size and commercial viability.

For example, in 2011, only 10% of Canadians subscribed to Netflix. By 2020, this had increased to 67% of Canadians. Online broadcasters are now thriving and no longer need to be shielded from regulation. They are well positioned to make an important and meaningful contribution to supporting Canadian music and storytelling. Bill C-10 aims to bring them into the regulatory framework, so that all broadcasters operate on a level playing field.

There's no denying that the digital age has brought many benefits. More services provide more choice for Canadians and more opportunities for creators and producers. Bill C-10 isn't about denying these benefits, but rather about carving out a space for Canadian voices.

To facilitate the inclusion of online broadcasting in the regulatory framework, Bill C-10 adds a new category of broadcasting undertaking to the Act: online broadcasters. This change will ensure that the CRTC can require services such as Crave, Netflix, Amazon Prime, QUB Musique and Spotify to contribute to Canadian stories and music.

Canadian Heritage estimates that, by 2023, the inclusion of online broadcasters could lead to contributions of $830 million annually to Canadian content. This is not a target, and ultimately the final figure will depend on how the CRTC decides to implement the new regulatory framework. Nevertheless, this estimate illustrates the significant and tangible results that Bill C-10 seeks to achieve for Canadian creators.

Some of the discussion regarding Bill C-10 has focused on the Bill’s treatment of social media platforms. These platforms will be subject to regulation, but only in so far as they display content commissioned by the platform itself, or its affiliates.

However, the users of social media platforms and content posted by these users will not be regulated. Social media is an important form of expression for many Canadians, and, as Mr. Piché noted, a separate proposal is being developed to address the impacts of harmful content posted to social media.

To account for the inclusion of online broadcasters, we need a renewed approach to regulation. Bill C-10 shifts away from relying on the rigid system of licensing to a more flexible conditions of service model. This model will allow the CRTC to seek financial contributions from all players and to impose other conditions, such as discoverability requirements, programming standards and information reporting requirements.

The CRTC will hold public processes seeking input from stakeholders and Canadians in order to inform its regulatory choices. Once it has gathered this information, the CRTC will be able to tailor conditions of service to specific broadcasters. We want to avoid an overly rigid approach that results in an undue regulatory burden on broadcasting services and increased costs for Canadians.

Lastly, the broadcasting policy objectives are being updated to ensure that the broadcasting system serves the needs and interests of all Canadians in their diversity. This means ensuring that Canadian voices, including indigenous creators, official language minority communities, racialized and ethnocultural communities, LGBTQ2+ communities and persons with disabilities, are present in the media we consume. That's why Bill C-10 includes stronger support for diverse Canadian content and its creators.

However, Bill C-10 does not include quotas or targets for supporting certain varieties of content such as French-language content. Quotas and targets risk becoming de facto maximums. The CRTC is better placed as the independent and expert regulator to make decisions on how to best support all types of content and to have it evolve over time.

After Bill C-10 receives royal assent, the minister intends to propose to the Governor in Council to issue a policy direction to the CRTC on how the new regulatory tools granted in the bill should be used. Seven priorities are sketched out in the technical briefing presentation.

We know that the committee has requested a draft copy of the policy direction to better understand concretely how these priorities would be communicated to the CRTC and we are working to fulfill this request.

While an important step, we know that Bill C-10 doesn't address all of the issues in the broadcasting sector, such as the future role of CBC/Radio-Canada and the governance structure of the CRTC.

Bill C-10 is intended as a first step on the most pressing policy issues. It makes critical changes that will ensure that Canada's broadcasting system is fair and that it will sustain Canadian music and storytelling into the future. We also have an opportunity to make the system more accessible as well as more inclusive by supporting creators and producers who historically have been marginalized. This bill provides a much-needed update to Canada's Broadcasting Act.

We would now welcome your questions on the bill.

[The Chair, Liberal, Scott Simms]

Thank you, Mr. Ripley. We appreciate that.

We now go to questions.

We're going to go to the Conservative Party, Mr. Shields, for six minutes.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Mr. Chair. I appreciate the witnesses.

It's good to see some of you again.

Mr. Piché, I heard different words used—about freedom of expression and legislation to control some kind of speech—but then mention of how the CRTC interprets the regulations, and then not over-regulated and then policy direction to the CRTC. I'm just listening but it sounds as though there is some differentiation right in those statements and they don't quite match.

Do you want to respond to that, Mr. Piché?

[Jean-Stéphen Piché]

Mr. Chair, positioning the CRTC in that space is extremely important. Creating the right distance between the broadcasters and government is very important. That's why you have an organization, a regulator, like the CRTC, which is at arm's length. That's why we need to find that delicate balance between the ability of government to instruct the CRTC about certain policy changes it wants to have and a very well-determined way to be able to operate that and to leave the CRTC leeway so that it can find the best way to adapt these instructions to the context of broadcasting as it evolves.

That's a delicate balance. That's why the work on the directive is going to be so important, because it does calibrate the ability of government to interject. In fact, we had many issues with the old section 7 in the legislation. It provided those means. It's been used, I think, once or maybe twice in the last 30 years. It's very seldom used, but sometimes when things happen in the ecosystem, government needs to intervene. This way, it has a way to do so while maintaining the distance from the CRTC.

[Martin Shields, Conservative, Bow River, AB]

I understand that, but when I hear someone talk about how the CRTC “interprets” the regulations, that gets me, because we've had witnesses who were very concerned with the powers you're creating. We both well know that the regulations and the interpretation of the regulations are where the power is. We've had witnesses who were very concerned about the powers you are now enlarging for the CRTC here. No matter what policy you're writing or directions you may give them, when you talk about how the CRTC interprets those regulations, you just empower them so that fine balance you're talking about moves over into their world, and that is not controlled by legislation.

[Jean-Stéphen Piché]

The important thing is the applicability and how it can be applied. The direction is not an option. The direction needs to be implemented but the “how” component, how it is being applied, is subject to the expertise of the CRTC, which knows the environment, understands how it's evolving and understands the application itself. That is what we're talking about. It's not about not doing what is in the direction. The direction is very clear. It's explicitly directed towards the application by the CRTC but—

[Martin Shields, Conservative, Bow River, AB]

I got that, but the statement that was made was how they “interpret”. That's a different legal term, and we have to be very careful here. Words are important. When you say that it's how the CRTC interprets, that's a different game than what you just said.

[Jean-Stéphen Piché]

If I used that word, what I mean to say is how it applies. We leave some discretion on the application of that direction.

[Martin Shields, Conservative, Bow River, AB]

Words are important, so when we're having hearings like this and you say those kinds of words, and we have witnesses who are very concerned that those things are going to be in the CRTC's hands, that is a very...it's an enlargement of powers for the CRTC.

I'm going to change to one other question for you. It has been reported many times that the federal government is spending 80% of their advertising dollars on foreign social media. Why so much on foreign for Canadian taxpayers...? Why not Canadian?

[Jean-Stéphen Piché]

The expenses for advertising are not managed by the Department of Canadian Heritage. This is done by other—

[Martin Shields, Conservative, Bow River, AB]

I got that. I'm asking your opinion. You want to protect Canadian media. You want to protect Canadian social media. That's what you three people are doing here—

[Jean-Stéphen Piché]

Yes.

[Martin Shields, Conservative, Bow River, AB]

—yet you have no opinion. It's just fine with you. It's nothing to do with you, but yet it's a source of revenue for our Canadian content and, without it, we're losing.

[Jean-Stéphen Piché]

What I can tell you—

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Mr. Chair, if I may, I have a point of order.

[The Chair, Liberal, Scott Simms]

Can we just stop the clock for a second?

Ms. Dabrusin, go ahead.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Members of our public service don't give policy direction and opinions.

[The Chair, Liberal, Scott Simms]

Thank you, Ms. Dabrusin. I appreciate your input, but I'm sure they're quite qualified to defend themselves.

Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

When we're talking about the protection of a lot of things to do with Canadian content, our media is a huge part of what we're talking about here, and we are supporting foreign media with our taxpayers' money.

Thank you. I'm out of time.

[The Chair, Liberal, Scott Simms]

Now we go to Ms. Ien.

[Marci Ien, Liberal, Toronto Centre, ON]

Mr. Chair, thank you.

This question is for Mr. Piché, Mr. Ripley or Ms. Tsui. I just want to know how this bill is going to level the playing field, but with a perspective, a lens, on community or local broadcasters.

We heard from several witnesses who were concerned that community broadcasters were left out. They talked a lot about media deserts, about news deserts in rural areas, areas where the large broadcasters aren't. I'm wondering how this bill will level the playing field with regard to those things, given a community lens.

[Jean-Stéphen Piché]

I will start.

This bill will act on two objectives. Of course, levelling the playing field is very important in terms of bringing the web giants, the large online audiovisual enterprises, into the broadcasting system. That's a large component of it, but also within the objectives of the act is a modernization of the language around inclusiveness in terms of ensuring that the communities are well represented. Don't forget that the act has not been modernized in 30 years, so we need to adapt the language to reflect a better distribution, a better understanding of Canada. That, in and of itself, will also be reflected in the objective of the legislation to provide better access.

To outline a bit more on the objectives, I will ask Owen to elaborate on those specific points.

[Thomas Owen Ripley]

As you may know, community broadcasting is already recognized as one of the pillars of the broadcasting system. You have public broadcasting, private broadcasting and community broadcasting, so it's a very important element of the system and one that the government certainly recognizes.

I highlight, for example, that we are working with community broadcasters, in the context of the local journalism initiative, to provide support for journalists working in underserved and remote areas.

We have certainly heard from community broadcasters that they feel Bill C-10 should go further in the sense of recognizing the contributions that they make to the system.

It's a complex question, partly because the support for community broadcasters is also tied up in terms of how cable and satellite companies support the system. Cable and satellite companies—cable in particular—often work very closely with community broadcasters to provide service to their communities.

It is certainly a question that is on our radar and one that we're looking at. We certainly recognize the important contributions that Canadian broadcasters make.