Canadian Heritage Committee on May 18th, 2022

[Ian Scott]

It's a great question.

It is a challenge because of the uncertainty and the limited flexibility we have, having only a licensing power. We've certainly kept track of it. We do data analysis. We're aware of the role. The big impacts, however, have been on the regulated entities, the Canadian broadcasters whose business models have been fundamentally changed because they're losing subscribers or losing advertising revenues and so on.

The focus, I would say, has been on assisting them in fulfilling the objectives of the Broadcasting Act.

A note was made earlier about how long it's taking to do the CBC's licence renewal. Part of the challenge with that is exactly that—operating in two spheres. We can issue a condition of licence with respect to the traditional sector but no condition of licence with respect to media distributed via the Internet.

Those are big challenges, and that is why we need the flexibility that is offered by the proposed legislation.

[Lisa Hepfner]

Just so we're all clear around the table—and I know it's a basic question—why do we need a CRTC in Canada going into the future?

[Ian Scott]

I assume we're referring here to broadcasting. On the telecom side, it is predominantly for economic regulation. On the broadcasting side, it's predominantly public good regulation. You will not achieve the objectives of the act absent a regulatory framework that encourages it, whether it's through incentives, which I hope should be the case more in the future, or whether it is through prescription. Without it, you will not achieve the results. We will not have original French-language content, and we will not have indigenous content or racialized content because economically it doesn't make sense in a North American market.

[Lisa Hepfner]

I believe I understood from your opening statement that you feel, from your experience, that bills C-11 and C-18 are necessary in Canada. Can you go into that a little bit more?

[Ian Scott]

As I said with regard to Bill C-11, the necessity is that we need modern tools. The entire broadcasting ecosystem, if you will, has changed. The traditional model, if you wish, is a walled garden. You can come into the garden and here are the rules for you to participate. That's no longer the case because there are a whole bunch of platforms. They are wonderful and are offering Canadians a plethora of content, which they're consuming with vigour, but we've now created these asymmetries. We don't have the tools to address that in the changing marketplace.

On remuneration, it is a question that news is the most costly element of broadcasters' productions. It is a challenge, as you all know, for the print press. Their advertising revenues have largely gone to those platforms. The government clearly is seeking a way of ensuring that they receive remuneration for it. Our role will be to establish the regulatory framework to allow that to happen, hopefully, through commercial negotiations.

[Lisa Hepfner]

If you have any opinion, I'm wondering if you can share about why it's important to have local news and broadcasters in Canada.

[Ian Scott]

No one would know that more than those in this room.

If you don't have reliable sources of news that are trusted by Canadians, that have the ability or wherewithal to cover local, regional and national issues, as well as provide international coverage and ethnic programming from a perspective of Canada, not simply a foreign perspective.... These are all critical elements to a functioning democratic society.

I can't say that there's anything more important in what we do than the support of news.

[Lisa Hepfner]

Thank you.

Is there another minute or so left?

[The Chair, Liberal, Hedy Fry]

No you don't have another minute. It's a five-minute round, Ms. Hepfner. I'm sorry.

I'm going to have to go to Mr. Champoux for two and a half minutes.

Thank you.

[Martin Champoux, Bloc, Drummond, QC]

Thank you very much, Madam Chair.

This is a very interesting debate we're having today. The questions and comments are particularly relevant.

Mr. Scott, two important bills are currently under study: one is already before the committee, and we hope that the other, Bill C‑18, will be before it by the end of the current session.

Before we get into the details of that bill, I wonder if both bills will be passed by the end of the session and if they will find their way before the CRTC. They are both important bills for their respective industries.

How soon do you think we can expect the CRTC to complete its work on these two bills?

[Ian Scott]

On Bill C‑11, I mentioned earlier that it would take about two years to implement.

With Bill C‑18, it's harder to say.

There's the development of regulations as a statutory instrument and the timing of that is not in our control because it has to go through justice. I can't easily estimate how long it will take to do the regulations that we need to do to establish the framework. Bill C-18 is very new and we're just getting our heads around it.

[Martin Champoux, Bloc, Drummond, QC]

If I understand correctly, Bill C‑11 must be implemented urgently, since the industry has been waiting and struggling for a very long time.

[Ian Scott]

That's right.

[Martin Champoux, Bloc, Drummond, QC]

On Bill C‑18, I have to say that I'm concerned about the eligibility of businesses and the effectiveness.

If I understand correctly, one of the purposes of the bill is to protect local news. As we know, local news has been hit hard by the pandemic and by the fact that the big platforms are taking over the advertising revenues.

The size of the company is a criterion for negotiating with the web giants. Smaller media are also struggling. I am thinking in particular of regional coverage, especially in the more remote regions of Quebec and the rest of Canada.

How can we think that Bill C‑18 will support regional coverage if the smaller media are not eligible because of their size and their impact?

[Ian Scott]

I'm not sure why they would not be admissible. Part of the role of the CRTC will be to identify who would be or should be the recipients.

Where they may have more of a challenge is reaching a commercial agreement. It's a hypothetical situation, but one assumes that the larger news organizations—and this is evidenced in Australia for example—will be the first to reach a commercial agreement. Smaller players may have more difficulty, but that's where the regime allows for arbitration. The commission will be able to assist in that.

[Martin Champoux, Bloc, Drummond, QC]

Have you seen—

[The Chair, Liberal, Hedy Fry]

Monsieur Champoux, I think we have ended your time period.

I will now go to the NDP.

Peter Julian, you have two and a half minutes, please.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Madam Chair.

I'm going to continue in the same vein as Mr. Champoux.

When we talk about Bill C‑18, the finances and the public consultations you're planning, what does the Australian example tell us?

I'd especially like to hear your thoughts and concerns about the local media. In my community of New Westminster—Burnaby, we've lost half of our newspapers. This problem is happening all over the country. What do you plan to do to ensure that the local media have the ability to negotiate?

My last question is, when do you think this process will be completed?

[Ian Scott]

Maybe I'll start, and Scott might want to add to it.

The essence of the legislation is to provide remuneration—unless I'm misunderstanding the essence of the question—that they need. With that remuneration, they will be able to invest further in local journalists and—

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I was thinking more about the financial impact on the CRTC.

[Ian Scott]

I'm sorry. I misunderstood.

The monies identified in the budget I believe will be sufficient. There are elements of the legislation for which it remains to be seen exactly what the final form will be. On things like the cost of an external audit, I'm not sure that we know yet the exact cost, since it's only been a matter of weeks since we saw the legislation. The idea is that the approximately $8.5 million will allow us to put the regime in place. Thereafter, it will be paid for by the participants through cost recovery.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Okay.

What about the other three questions, that is, public consultations, lessons learned from Australia and ensuring the ability of local media to negotiate within a reasonable timeframe?

[Ian Scott]

Just quickly on the first one, and then I'll turn to my colleague, we always do it through public consultation—

[The Chair, Liberal, Hedy Fry]

I'm sorry. We have 12 seconds left, Mr. Scott. Please answer in that time.

[Ian Scott]

Pardon me, Madam Chair.

We will use public, transparent processes. That is how we regulate. Parties will be able to assist us in developing that record on which we'll rely to set up the regime and raise those very concerns.