Canadian Heritage Committee on May 18th, 2022

[The Chair, Liberal, Hedy Fry]

I call the meeting to order. Good afternoon, everyone.

I acknowledge that this meeting is being held on the unceded traditional territory of the Algonquin Anishinabe peoples.

I welcome you to the 22nd meeting of House of Commons Standing Committee on Canadian Heritage.

Pursuant to the order of reference of Tuesday, March 1, 2022, the committee is meeting to study the main estimates for the fiscal year ending March 31, 2023.

Today's meeting is taking place in a hybrid format pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely, using the Zoom application. Per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask.

I would like to make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those participating by video conference—

[Kevin Waugh, Saskatoon—Grasswood, CPC]

I have a point of order.

[The Chair, Liberal, Hedy Fry]

Yes, Kevin.

[Kevin Waugh]

I'm sorry, Madam Chair.

It's only been five minutes and 14 seconds since the recorded vote in the House of Commons. We wish to inform the chair that we're still missing one member on our side, who has up to 10 minutes after the vote to get here.

[The Chair, Liberal, Hedy Fry]

I'm sorry, Mr. Waugh. We were going according to the clerk, who said that everyone was here, but we will wait until your member comes in.

[Kevin Waugh]

Thank you.

[The Chair, Liberal, Hedy Fry]

As I was saying, I acknowledge that this meeting is being held on the unceded traditional territory of the Algonquin Anishinabe peoples.

I welcome you to the 22nd meeting of House of Commons Standing Committee on Canadian Heritage.

To pick up where I left off, for those participating by video conference, click on the microphone icon at the bottom of your screen to activate your microphone, and please mute it when you are not speaking.

For interpretation for those on Zoom, you have the choice at the bottom of your screen of the floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

I would remind you that all comments should be directed through the chair.

For members in the room, if you wish to speak, please raise your hand. For those on Zoom, please use the “raise hand” icon.

I now would like to welcome our witnesses.

For the first hour of this meeting, our witnesses, from the Canadian Radio-television and Telecommunications Commission, are Ian Scott, chairperson and chief executive officer; Scott Hutton, chief of consumer research and communications; Claude Doucet, secretary general; and Valerie Huot, director general of finance and administration services.

You have five minutes to present, and then there will be questions and answers from the members of Parliament.

Whomever you have chosen to present has the floor for five minutes.

[Martin Champoux, Bloc, Drummond, QC]

I have a point of order, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Yes.

[Martin Champoux, Bloc, Drummond, QC]

Madam Chair, before we start the meeting, I would like us to address one issue so that we know where we stand and how much time we have. I'm told that committees can use the two hours allocated for meetings, as long as they don't end after 8 p.m.

That's the information we've received.

Am I right, Madam Clerk?

Madam Chair, should we not make a decision to determine if we—

[The Chair, Liberal, Hedy Fry]

We have this room until eight.

[Martin Champoux, Bloc, Drummond, QC]

Okay.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you, Martin.

We should begin. Whoever will be speaking for the CRTC, you have five minutes.

Please begin.

[Ian Scott, Chairperson and Chief Executive Officer, Canadian Radio-television and Telecommunications Commission]

Thank you, Madam Chair and committee members, for inviting us to appear before you.

You have already introduced my colleagues. I would like to say that we do, indeed, welcome the chance to appear here as part of your study of the main estimates for 2022-23 as they relate to the CRTC and to Bill C-11.

Before we address the specific element of the main estimates, I thought it might be helpful to provide a little context for my remarks. In particular, I want to offer a quick overview of how the CRTC is funded and how the monies assigned to implement our new responsibilities under Bill C-11 would be used.

The commission has access to two sources of funding: appropriation and revenues. On top of that, there is some statutory funding that is allocated to the commission to cover certain employee benefit plans.

The first category, appropriation, is earmarked for expenses related to Canada's anti-spam legislation and the voter contact registry activities. In addition, the CRTC was granted temporary appropriation funding for expenses related to Bill C-11's implementation, on a preliminary basis. Appropriations, however, represent only about 13% of the CRTC's overall funding.

The bulk of that funding, 87%, comes from fees paid directly by the companies it regulates. I am sure they feel a great joy in paying for their regulation. The commission collects fees under the authority of the Telecommunications Act, the telecommunications fees regulations and the unsolicited telecommunications fees regulations, as well as under the Broadcasting Act, as set out under the broadcasting regulations. The Treasury Board authorizes the CRTC to use revenues from these fees to offset operating expenses incurred in the same fiscal year.

I should note and clarify that broadcasting part I licence fees, telecommunications fees and unsolicited telecom fees are used to cover expenses related to our regulatory activities. However, part II broadcasting licence fees accrue to the government's consolidated revenue fund. They do not come to the commission. They do not fund our regulatory costs for broadcasting-related activities or support the commission's activities in any other way.

The committee, I am sure, will have an opportunity to conduct a study of Bill C-11 in the near future. We very much look forward to appearing before you again to speak at a greater length about the legislation. For now, I'd simply like to say that we, as a commission, certainly welcome the tabling of the bill, given the pressing need to modernize the Broadcasting Act and the CRTC's powers, and to clarify the commission's jurisdiction regarding online broadcasters.

Budget 2022 proposed to provide the Canadian Radio-television and Telecommunications Commission, the CRTC, with $8.5 million over two years. This amount is necessary to establish a new regime to ensure that Canadian news outlets are fairly compensated by digital platforms.

Madam Chair, Bill C‑18 proposes a mechanism to ensure that Canadian news outlets receive fair compensation from the digital platforms that share and distribute their work.

The legislation would require platforms that generate revenues from the publication of news content on their sites to negotiate with news businesses and reach fair commercial deals.

Bill C‑18 proposes to entrust the CRTC with five main functions in overseeing this activity.

First, the CRTC is asked to play an administrative role, registering news businesses that meet the legislation's eligibility criteria and assessing whether digital platforms meet the act's exemption criteria.

Second, it is asked to oversee negotiation and mediation and maintain a public list of external arbitrators agreed upon by both the platforms and publishers.

Third, it is asked to deal with complaints of undue preference or unjust discrimination filed by news businesses against platforms.

Fourth, it is asked to contract an independent auditor to publish an annual report on the total value of commercial agreements and other key information.

Fifth, it is asked to establish regulations to collect fees, similar to those paid by broadcasters and telecommunications service providers.

The commission requires additional funds to prepare for these new responsibilities, so that we are ready to implement the legislation in an expedient manner should Bill C‑11 and Bill C‑18 receive royal assent.

Further, should either bill receive royal assent, we will move quickly to launch public consultations to gather views and evidence from Canadians and stakeholders. CRTC staff will need to develop consultation documents and tools, analyze the public record and develop a regulatory framework.

[The Chair, Liberal, Hedy Fry]

You have one minute left.

[Ian Scott]

Thank you, Madam Chair.

That work will be in addition to the proceedings currently planned for 2022-23. With the benefit of the allocation identified in the main estimates and budget 2022, the CRTC will be well positioned to achieve Bill C-11 ’s goal of developing a new regulatory framework for online broadcasters, as well as Bill C-18's goal for a fair and sustainable Canadian digital news marketplace.

I trust that very broad overview is useful to members, and my colleagues and I would be pleased to answer your questions.

[The Chair, Liberal, Hedy Fry]

Thank you very much for your presentation.

I will begin now the questions and answers. The first round of questions is for six minutes, but that includes the answer. We will begin with the Conservative Party, and I do not know who will be asking the first round of questions.

[John Nater, Conservative, Perth—Wellington, ON]

That would be me, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Okay, Mr. Nater, begin for six minutes.

[John Nater, Conservative, Perth—Wellington, ON]

Thank you, Madam Chair, and thank you, Mr. Scott, for joining us this afternoon, as well as your counterparts from the CRTC.

I'll open on something you mentioned in your opening comments about part II licence fees. I just want to make sure I understand this correctly. Effectively, part II licence fees are a tax on broadcasters that goes directly to the government. The CRTC doesn't keep any of the part II licence fees, and 100% goes to the government's consolidated revenues. Is that correct?

[Ian Scott]

Yes, other than, perhaps, the use of the word “tax”. Obviously, it is meant to pay for the use of spectrum, fundamentally, and has been there for a long time. But you're absolutely right: We collect it on behalf of the government, but it's a flow-through, and goes to consolidated revenues.

[John Nater, Conservative, Perth—Wellington, ON]

So, effectively, if we were to eliminate part II licence fees altogether, that would be a benefit to broadcasters and would have no effect on the CRTC's daily operations or financial liability.

[Ian Scott]

I assume that companies would always prefer to pay less to government, and it would have no effect on our operations.

[John Nater, Conservative, Perth—Wellington, ON]

I think someone promised that in the last election. I can't remember who.

Moving on, the CRTC's 2022-23 departmental plan gave some foresight into the work that it would be undertaking in preparation for Bill C-11. Again, you've noted some of that, such as preparing for public consultations. Where some of our concerns lie is that CBC licence renewal is at 17 months, for example. It's been over 500 days now since the three-digit suicide-prevention line was unanimously adopted in parliament.

I'm concerned about where the CRTC is in terms of its staffing, its capability, its competency, to implement Bill C-11 first, and then Bill C-18. I'm curious as to what timeline you see from the time that Bill C‑11 is passed and receives royal assent to when it is fully implemented. What's the best case scenario from the CRTC to have that fully implemented?

[Ian Scott]

That's a complicated question. It's a fair one, and I can certainly speak to the time it takes for certain types of proceedings. I understand that the point of your question is looking forward. One, it will obviously depend on exactly what is the content of the legislation ultimately passed by Parliament and what might be the nature of any policy direction that the government puts to the CRTC. Those would be factors.

What I can say is, I have had more than 100 staff working in a series of working groups for well over a year to prepare. To their credit, they've been doing this at the same time as their other work, and we have done a great deal of preparatory work. To say when it'll be fully implemented is very difficult. I think the first stages of setting up the broad parameters of the regulatory regime—who will contribute; who is caught, how much, and major definitions—should be done reasonably within a year. There are many other more technical aspects such as transition—we have licences and some are for five years and some are for seven years. They will all need to be changed. There's a set of regulations that need to be passed that are beyond the control of the CRTC.

If I had to put a number on it, I think it could be fully implemented in two years.