Information & Ethics Committee on Oct. 18th, 2011

[The Vice-Chair, Conservative, Patricia Davidson]

Good morning, ladies and gentlemen. I will call this meeting to order. Pursuant to Standing Order 108(2), we are studying the access to information dispute and the resulting court actions concerning CBC.

Our first witness from the CRTC is Konrad von Finckenstein, the chairman.

Mr. von Finckenstein, please go ahead.

[Konrad W. von Finckenstein, Chairman, Canadian Radio-television and Telecommunications Commission]

Thank you, Madam Chair.

I'd like to introduce my colleagues from the CRTC. Christianne Laizner is General Counsel, Telecommunications, and Graham Sheppard is the Senior Annual Returns Auditor.

I understand that you have asked me to appear so that I can discuss the CRTC's administration of access to information requests. I will provide an overview of our approach and then refer to the Local Programming Improvement Fund—a program you seem particularly interested in—as an example of how we apply the legislation.

There are four central principles that have governed the CRTC during my mandate: transparency, predictability, fairness, and timeliness. You will note that I put transparency first. The CRTC is a public organization and members of the public should have the clearest possible picture of how we operate and how they can interact with us. As a government institution, we have been subject to the Access to Information Act since it came into effect. We take access to information requests seriously. We ensure they are processed in a timely manner. Administering the act involves certain costs, but we view these as necessary to ensuring that the commission is as transparent as possible.

As I understand it, you're interested in how we handle information furnished by third parties, particularly information related to broadcasters. Our golden rule is quite simple: when in doubt, disclose.

In order to do our work as a regulator, we often require parties to submit financial, commercial, technical or other information as evidence for our proceedings.

The submitting party may declare such information or parts thereof confidential, as in its view public disclosure would harm its competitive interests. Unless the party itself discloses this information, we keep it confidential.

If we receive an access to information request for such material, after consultation with the submitting party, we will release the non-confidential part, but we will not provide that part of the information for which confidentiality has been established.

If the requester takes the matter to the Federal Court, we will provide the requested documents to the court under seal, but we take no position. After listening to the requester's argument and the counter arguments from the party claiming confidentiality, the court will determine what information, if any, can be released. We then implement the court's decision.

This is the way we operate, and we have never seen any reason to operate in any other way. Compliance with access to information requirements is not an issue with us now, nor has it ever been.

Now let me say a few words about the local programming improvement fund.

The Local Programming Improvement Fund is a good example of our insistence on transparency as a fundamental principle. A little background may be useful.

The fund is our response to a serious problem affecting consumers outside the big cities. Conventional TV stations in small markets have been in precarious financial shape—especially since the worldwide financial crisis struck in 2008.

These stations have found it increasingly difficult to bear the costs of creating their own local programming.

Canadians value their local programming. It reflects their communities and their interests and concerns. Local news is especially important to them, but this content is unfortunately not self-financing in small markets. Therefore, in order to maintain and improve the quality of local programming, we created the LPIF, the local programming improvement fund, in 2008 and began operating it in 2009.

The money comes from a percentage of the gross broadcasting revenue of the cable and satellite distributors, which has been set at 1.5%. Small market stations across the country broadcasting in English and French are eligible for LPIF support.

How do we ensure transparency and accountability in the use of LPIF support? We established the following specific reporting requirements. First, stations must provide an annual LPIF operating report to the commission. The report is designed to show how LPIF moneys have been used to improve the local programming provided to the markets. The improvement must be both quantitative and qualitative.

Here are some of the indicators that must be documented to show that the funds have been put to good use: evidence of audience success and viewer satisfaction; increases in local advertising; increases in original local news stories; the number of local news stories that are picked up nationally; expansion of the news bureaus; and increases in the quantity of the local programming broadcast.

Second, stations must also submit an annual statement of direct local programming expenses. The total disbursed in the broadcast year 2009-2010 was just over $100 million.

Third, we have created an oversight panel, made up of three commissioners, that will investigate any allegation of non-compliance with the fund's terms and conditions. Given that the annual operating report and the statement of direct local programming expenses are filed in confidence, we cannot publish them on our website. However, we publish the following information to provide maximum transparency to the public.

So we put the following things on the website: audited financial statements of the LPIF showing the total amount disbursed during the broadcast year that ended August 31, 2010; a list of eligible stations for 2009-10; the distribution of LPIF moneys by region; and aggregate annual returns that identify the amounts contributed to and received from the LPIF by major distributors and broadcasters respectively. You can find all this information on our website, and it is also included in annex A of my remarks before you.

You may be interested to learn that we have received an access for information request regarding how much each individual market station received in LPIF money. We consulted the broadcasters. The CBC and Rogers had no objections. The others claimed confidentiality. We therefore released the data regarding CBC and Rogers, which I have attached as annex B.

If the requester goes to the Federal Court to obtain similar information from the other stations, lets say, CTV or Global, we will adopt the procedure I explained before. We will take no position. We will deliver the documents under seal to the court and let the opposing party try to convince the court of its position. We will abide by the court ruling.

I hope this has given you an idea of how we treat access to information. We will be pleased to answer any questions that you have.

Thank you.

[The Vice-Chair, Conservative, Patricia Davidson]

Thank you very much.

We will go to our first round of questioning for seven minutes.

Mr. Angus, please.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Madam Chair.

Mr. von Finckenstein, I welcome you to our committee. I'm feeling a little let down, because over the years you and I have had many great discussions and battles. I said in the media and I'll say it again to your face that I disagreed with you on many of your decisions, but I have always respected the fact that you're an independent thinker, and I look forward to a good, healthy round of discussion today.

So welcome to our committee.

[Konrad W. von Finckenstein]

Thank you.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I don't know if you'll ever invite me out for a coffee in retirement, but I hope you will think of me once in a while and enjoy your retirement.

[Konrad W. von Finckenstein]

Who knows, I may appear before you advocating another interest some time in the future.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Exactly. I look forward to that.

Mr. von Finckenstein, we are looking at the access to information request to the CBC, because my Conservative colleagues have rightly pointed out that taxpayers' money is invested and taxpayers should get benefits. So there's a question about the CBC.

Taxpayers pay millions to the private broadcasters, as you well know, through the Canada Media Fund and the local programming improvement fund. There are hundreds of millions in benefits from section 19.1 of the Income Tax Act. It has created a protected market free from competition. Of course, there are hundreds of millions further in films and documentaries that are often shown on television. So the issue of transparency for taxpayers is vitally important.

Would you agree that some information requested from a private broadcaster or a public broadcaster should not be given out because the information could be expected to prejudice the competitive position of a third party?

[Konrad W. von Finckenstein]

Are you talking about private broadcasters?

[Charlie Angus, NDP, Timmins—James Bay, ON]

Yes.

[Konrad W. von Finckenstein]

The act makes it quite clear that where you have information belonging to third parties and they've claimed confidentiality, you have to respect that. For instance, as I explained, private broadcasters file all sorts of information with us, and they claim that the release of it would be harmful to them. On the other hand, we need it in order to see whether our policy works with them and has the desired effect, etc. So we respect their wishes and don't disclose things where they care. It's usually the case, as you know, that we partially but not totally redact a document. They will say that we can leave certain numbers, but that others should be blacked out.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm looking at a letter you sent regarding a request that was sent to you on March 19, asking for information on private television financials for the period 2001 to 2005. None of this information was released to the public, because it would possibly prejudice the competitive position of a third party. I'm surprised, given the millions that Canadians pay in, that we would be told that financial data from eight years ago was of a competitive nature and might affect a third party.

Why was that information not released?

[Konrad W. von Finckenstein]

It was the decision of the third party, who owns that information.

[Charlie Angus, NDP, Timmins—James Bay, ON]

The third party being the private broadcaster who refused to release it?

[Konrad W. von Finckenstein]

Right.

If you as a requester disagree with my decision not to divulge, it's your right to go to the Federal Court and say we should divulge. At that point, I would say to the court, “Here is the information. It's under seal. I have no interest in this fight, but the private company says it's commercially sensitive to them and cannot be released. You decide.” And if the court says to release it, I will release it. If the court says they are entitled to keep it private, we will keep it private.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I think it's important that you specify that. You know that in the past I have referred to the CRTC as the black hole of accountability and transparency for all issues. We ask simple questions and we never get an answer. I'm glad you clarified it. It's not the CRTC that's the black hole of accountability; it's the private broadcasters who are refusing to give up the most basic information.

I'd like to ask you about a letter you sent on June 20, 2011, regarding the question about the LPIF fund, which Canadian taxpayers have paid into. We should be able to find out if local television stations are using it and how many are using it. You wrote, in response, that those records were not being handed out pursuant to section 25 of the act. And if I heard you correctly, you said that the CBC and Rogers did not have a problem with giving up information on the LPIF, but the other private broadcasters refused.

I'm not accusing you of not being transparent, but it seems a fairly straightforward question. If Canadians are paying millions of dollars to keep the bottom line of a private broadcaster alive...? We have had questions on this. My good friend Mr. Del Mastro and I have raised questions in the past. We're not helping the bottom line of a company that doesn't want to invest in local programming. If the taxpayers pay the full freight, the taxpayers should know.

Are you saying that the private broadcasters would force the public to go to Federal Court to find out information about how taxpayer dollars are being spent?

[Konrad W. von Finckenstein]

Let's take it one by one. First of all, we're not talking about taxpayers; we're talking about subscribers. The money from the LPIF comes from cable and satellite subscribers. It's a percentage of the gross revenue made by cable companies and television companies.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That is set by the taxpayers of Canada.

[Konrad W. von Finckenstein]

Well, if you want to....

Obviously, there are taxpayers--

[Charlie Angus, NDP, Timmins—James Bay, ON]

We've established a public frame to support private broadcasting, and I think that's excellent. But it's a fairly straightforward question that Canadians would want to know about. If I were in Barrie, and the local television station was hanging by the skin of its teeth, I'd want to know if the station was actually putting the money there. And I'm being told that the private broadcasters are saying it's none of your business. That's unaccountable.

How would you suggest we get that information? Do you say we have to take it to court?

[Konrad W. von Finckenstein]

I've just explained to you that we administer this fund. We make sure it is used for the purposes set out for it. I went through the criteria we used and I explained to you the reports they have to file each year, what they have to contain, etc.

Now the company takes a position. If I were to make that position public, you could do some reverse engineering and actually figure out exactly how profitable that company, that local station, was or was not. You, as elected representatives, are entitled to know that. What they don't want is their competitors to know and then to use it to their competitive advantage.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's an excellent point, but—

[Konrad W. von Finckenstein]

I do not take any position on whether this is justified or not; I just take the information. Knowing that they furnished it to me in confidence, I respect that confidence. Effectively, the challenge is with the private broadcasters. I have no issue here; I just put it in court and let the court decide.

[Charlie Angus, NDP, Timmins—James Bay, ON]

So if CBC is being asked questions by Quebecor, you'd say they might take a reasonable position and that it's their competitor and they shouldn't have to divulge that?

[The Vice-Chair, Conservative, Patricia Davidson]

Mr. Angus, your time is up. Thank you very much.

We'll now turn to Mr. Del Mastro.