Finance Committee on May 7th, 2020

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

In that respect, we're lucky—

[The Chair, Liberal, Wayne Easter]

Thank you.

I'll go to Mr. Julian. Following Mr. Julian in the second round will be Mr. Poilievre and then Mr. Fragiskatos.

Peter.

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

Thank you very much, Mr. Chair.

Thanks to all our witnesses. You've offered very compelling testimony about the importance of supporting arts and culture as well as non-profit organizations. We certainly hope that your families are all safe and healthy.

My questions, to start, will be for Mr. Ambrosie, from the CFL.

I am a big supporter of the CFL. I support the BC Lions. I have supported other CFL teams, too, when I have lived in other parts of the country, and I have had legislation, as you probably know, to support the CFL.

I'm a bit perplexed by your testimony today. Why are you not here today with representatives from the players' association? These are the world-class athletes, as you've said, who actually are the heart and soul of the CFL.

What would they be saying if they were before the committee? How much of the financial support that you're requesting would be going directly to the players of the CFL?

[Randy Ambrosie]

I'm here representing the CFL today and not representing the players, yet I would tell you that I wake up every day thinking about those players and their families, as I do the league employees, coaches, football operations people and our fans.

Look, we're meeting with the players again tomorrow afternoon. It's Thursday today, and we're meeting with them again tomorrow afternoon to talk about our approach to government, to see how we can work better together to approach government and have a conversation about how we protect this great league of ours. We expect to do that and to try to harmonize our thoughts.

As for how much will go to players, we have to work that out. That's why we want a conversation with government. We want to talk about how we can work together. We know, for example, that our players and our alumni could be a potential solution in the healing of Canada, but we need to talk to the players about that; we need to talk to government about that, and then together work out a strategy.

Our approach was that we simply wanted government to know that we need help. The details of how it all comes together are yet to be decided. That has to be done with our players, and it has to be done with the government as partners.

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

Thank you for your answer, but the reality is, as we know, it's the CFL players who are at the heart of CFL football.

Mr. Chair, I think there's a compelling argument to have the CFL Players' Association before our committee. I think it's important that we hear from them as quickly as possible.

Mr. Ambrosie, as has been pointed out, Maple Leaf Sports & Entertainment has $4 billion in assets. The Edwards family has over $1 billion in assets. The Greenberg family has $1.5 billion in assets. These are all part of the ownership group around the CFL.

Many Canadians are suffering a lot and are really struggling to put food on the table. They are struggling with minimum wage front-line jobs and keeping a roof over their head. I'm sure they would be asking the question: Why are these owners, who are extraordinarily wealthy in Canadian terms, not stepping up to provide supports for the CFL at this critical time?

[Randy Ambrosie]

Well, in fact, all of those groups and people that you've mentioned have been stepping up.

Our league lost somewhere in the neighbourhood of $20 million last year, and those losses were funded by those individuals and those groups you're describing. In fact, I call them sports philanthropists. Maple Leaf Sports & Entertainment did not buy the Argos because they believed they would have a great financial windfall. They bought the Argos because they love Canada, they love the CFL, and they wanted to help rebuild the team.

Their losses were substantial, so the question, really, for us is: How many losses can these owners take when they've been losing approximately in total $20 million a year? There is now, of course, a dramatically accelerated level of losses that will come with a truncated season or a lost season altogether. I don't think it would be fair to question the motives of our owners, because I think they are remarkable Canadians who have given tremendously to our league and our sport.

Again, we're not looking for a handout. We don't want to stand in front of Canadians with real needs. We're looking for a partnership with government where we can sustain this league through the crisis. We want to pay the government back and taxpayers back.

We think our ask is different from what it may be reflected, but really what we want to do is sit down and have a conversation with all of you and figure a way through to the other side.

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

Thank you.

Mr. Reeb, you talked about the web giants and the uneven playing field. We've certainly seen this right across the country, where Canadian businesses are competing with web giants that aren't paying income taxes, as you mentioned, and aren't making contributions to Canada.

How important is it for the Canadian government, coming through this pandemic and after this pandemic, to establish a level playing field so that Canadian businesses aren't competing with web giants that don't pay taxes, don't have payroll deductions and aren't contributing to Canada?

[Troy Reeb]

Well, it's incredibly important, and the urgency of dealing with that file has only been heightened by the COVID-19 crisis, which is not only affecting Canadian broadcasters, but is affecting Canadian producers as well.

As you know, the independent production sector, the film and television production sector in Canada, is worth $12.8 billion a year. I have seen some estimates that tens of thousands of jobs are at risk in that production sector if things cannot be rectified. Some of that production certainly does come from Hollywood studios that do contract production in Canada, but they are producing American content in Canada. That's important economically, but it's not important culturally.

To rectify and level that playing field culturally will take an urgent overhaul of the Broadcasting Act, which the government had committed to. We would like to see it put back on the table as soon as possible, if not this year.

[The Chair, Liberal, Wayne Easter]

Thank you.

We will go to Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you very much.

Mr. Reeb, the government keeps telling us how much we need Canadian content. Corus is actually a gigantic Canadian content factory. You produce not only news but also documentaries and historical productions. You have one of the most, if not the most, impressive animation studios in all of Canada. You are literally cranking out an endless supply of Canadiana through your enterprise at Corus. Yet far from helping Corus, this government, and governments historically, are imposing massive regulatory and other governmental costs on your operation, costs that your inevitable international competitors do not face, in the form of heavy regulation, restrictions on the types of investments you can take, and the requirement that you give some of your air time to content that your viewers and listeners don't want to hear or see.

Some on the left would simply say the solution to that is to impose all of these massive, cumbersome regulations, rules and taxes on your global competitors, but of course, there are some things that we cannot do beyond our borders, and it is impossible to stop the leakage of entertainment and other content across our borders because Canadians have the freedom—thank God— to watch and hear whatever they want. In other words, it's not possible to pick up this monstrous regulatory apparatus that we impose on Corus and impose it on the whole world.

Can you describe the enormous costs and disadvantages that Corus faces as a result of the governmental apparatus that you must navigate just to provide Canadians with the content that they want to receive?

[Troy Reeb]

Thank you for the question, Mr. Poilievre. You're quite correct in that there are two ways you can address the imbalance that we have with the foreign Internet companies. One is to take the same kinds of historical, and we would say rather onerous, regulations that we face as a company and try to transpose those to international companies. We've seen other jurisdictions attempt that with great difficulty. The other is to try to reduce the regulatory burden that companies like ours face and give us more flexibility to be able to program to the tastes of our audience and produce programming to the tastes of customers both foreign and domestic.

There's been plenty of controversy—just look at the news space—over the government's extension of tax credits to the newspaper industry. I should make clear that broadcasters do not benefit from those tax credits, and we're not here with our hand out for those kinds of things.

What we would say is that there's another way to reach those kinds of goals and allow us to continue to produce content and that's to reduce the regulatory burden on our business overall.

[Pierre Poilievre, Conservative, Carleton, ON]

I would point out that there are 37 million content regulators in Canada. They're called citizens. They regulate what they decide to watch, read and hear, and we ought to maximize their freedom to choose whatever it is they want to see. In many cases they choose Corus and your abundance of content outlets.

Can you describe how the cost of government regulation is actually reducing your ability to produce and transmit Canadian content?

[Troy Reeb]

We're very proud to be creators of Canadian content, but by and large, Canadian content creation is not a money-making business. If it were, you wouldn't need regulations forcing us to spend money with certain kinds of producers on certain kinds of content. You wouldn't need to hand the CBC $1.2 billion a year in order to create Canadian content.

Choices have to be made about what kind of content you can make with the resources you have, and we are obviously prepared to accept certain regulatory obligations and privileges. We think it's a privilege to be able to provide local news, and we touched on the need for us to do that. That is absolutely core to our licences and both local and national news. However, there are a whole handful of other regulations, whether it's the mandated spending of 30% of last year's revenues on Canadian content this year, or the mandates on what kind of genres we have to spend it on—we have to spend it on certain categories of programming as opposed to those that we feel have the best opportunities with audiences and with overseas buyers. There are mandates as to what times and what kinds of stations we have to air it on. So there are a lot of complications that are far from free-market realities when it comes to how we run our business.

Our only point would be that there are two ways to improve competitiveness for the long term. Either try to regulate the foreign guys and have your domestic companies ask for more handouts or try to bring down the regulatory burden so there's a more level playing field that way.

[Pierre Poilievre, Conservative, Carleton, ON]

I like the latter.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll turn to Mr. Fragiskatos and then to Mr. Morantz.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Mr. Chair.

I didn't realize my friend Pierre is such a champion of media and Canadian content, but we learn a lot of things these days.

Witnesses, thank you very much for your presentations. Because of time constraints here, I'm going to direct my questions to Ms. Baldwin and to Mr. Ambrosie.

Ms. Baldwin, Michelle, we've known each other for some time. Thank you very much for your commitment and dedication to London and to the sector at large. I know you're supporting not-for-profits, social enterprises and charities right across the country.

Something stood out to me in your testimony, and I want you to confirm. You said that 50% of the industry, meaning not-for-profits, social enterprises and charities, do not use a payroll system. Is that correct?

[Michelle Baldwin]

That's correct. We have 170,000 non-profits and charities across this country and 50% of them only have volunteers so they wouldn't have a payroll system, and even those that have a payroll system, such as the Museum of Ontario Archeology for example, don't have a payroll number because we've encouraged shared services and partnerships where they might lean on somebody else for a payroll number. So there are barriers to some of the programs that have been offered and to people having access.

Those are important things to consider as these programs are rolled out, to make sure that our sector is able to access them the same as any other sector.

[Peter Fragiskatos, Liberal, London North Centre, ON]

In your presentation you said Canada needs social enterprises, not-for-profits and charities now more than ever.

Last week we heard from Bruce MacDonald and Imagine Canada. Imagine Canada, as you know, has put out a public statement on this, describing the sector as a need-to-have, not a nice-to-have, but a need-to-have, especially now and going into the economic and social recovery to follow.

We take that on one hand. On the other hand, and I think this is, if not unique to the not-for-profit, charity and social enterprise sector, it certainly stands out to me as peculiar, as interesting, because while in other sectors we see a decrease in demand and revenue, for the sector you represent, we see a decrease in revenue but a dramatic increase in demand.

Could you speak about the challenges that poses for the sector at large?

[Michelle Baldwin]

Absolutely. We did a membership survey within two weeks of this happening, and just in the London area we saw millions of dollars were lost in just two weeks.

There has been a very quick reduction in donations, in events and fundraising and it is impacting us in a big way. There's a real urgency to what we're asking for at this moment because we are stepping up in big ways, whether it's with women's shelters or food banks, and of course some of things you've supported out of the gate. As you've heard from some of my other colleagues here, there is arts and culture, sports and heritage as well. It's a broad sector, and we want all of us left standing as we come through this.

We have been seeing an increased demand for much of what we're doing, and we need to be paying attention to those who are seeing the decrease as well. They might not be having the big numbers they would normally have, but we're going to want them here afterwards because they are essential to a vibrant and healthy economy and community.

We contribute 8.1% to the gross domestic product. That is a huge economic driver in our country, $151 billion. Therefore, we request that this be looked at urgently because people are having to make these decisions about their organizations now.

Thank you.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

Mr. Ambrosie, thank you for your testimony. Like my colleagues who have spoken, I too am a CFL fan, converted from an Argos fan to a Hamilton Ticats fan by my father-in-law, but that's a long story. I grew up admiring Rocket Ismail and Pinball Clemons. However, I'm an MP and represent constituents, and ultimately we're accountable to the citizen, to the taxpayer. Why hasn't the CFL asked for assistance from banks? I think that's an obvious question that hasn't been asked yet: why the federal government and not banks?

[Randy Ambrosie]

Well, I think the answer lies in the fact that as a league last year we lost approximately $20 million.

First of all, some of our teams are community teams and, by virtue of their structure, can't take on traditional commercial credit—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Mr. Ambrosie, I don't mean to cut you off, but I'm under time constraints. I have to ask you, if banks won't support the CFL, why should the federal government support the CFL?

[Randy Ambrosie]

Well, it's not a question of whether banks would support us. The issue is that you're now taking a $20-million loss and you're almost certainly making that loss bigger in future years.

Our challenge is that we have a situation where we are going to see our losses grow as a result of not being able to play games. If you add traditional consumer debt to our financial statements, all you are going to do is bloat our losses, not make our losses reduced.

[The Chair, Liberal, Wayne Easter]

Okay. We are going to have to end it there.

We're turning to Mr. Morantz, followed by Ms. Koutrakis.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you very much, Mr. Chair.

In my hometown of Winnipeg, there are currently two major projects going on in the arts community. One is the Inuit art gallery, and the other is the Diversity Gardens project at beautiful Assiniboine Park in my riding. Both of these projects are multi-million dollar projects that have government grants. I was on Winnipeg City Council, in fact, when we were asked to contribute. One of the major things we were looking for as elected officials was buy-in from private donations, from the private sector, and they stepped up. Millions of dollars were raised for the Diversity Gardens at Assiniboine Park, and millions for the Inuit art gallery.

We hear a lot about asking government to contribute, and government is certainly part of the answer in a crisis of this magnitude, but they can't do everything. There are a number of policy areas that I'm wondering about—I think I'm going to direct my question to Ms. Baldwin, at least initially—that I think government could do and that wouldn't involve direct subsidy.

For example, we have heard the policy option of increasing the charitable tax credit to drive more donations. Our party has floated the idea. In fact, it would be the subject of my private member's bill, if we ever get back to Ottawa. It would be the old Don Johnson policy, Mr. Chair, about allowing private capital, private shares in corporations, to be donated to charities.

Third, I mention this because foundations are a key part of this as well, and I mention it last because they would also benefit from an increase in the tax credit and the donation of private shares. Right now, under the Income Tax Act, which is my critic area portfolio in opposition, foundations are regulated, in that they have to disburse at least 3.5% of their assets every year. Foundations currently hold over $80 billion in assets, and government certainly has it within its power under that act to increase the amount that foundations contribute. If they were to increase it to, say, 4.5%, that would be another $800 million.

These are private sector, non-government policy solutions, so I'm wondering if maybe we could have a discussion about that as well.

With that, Ms. Baldwin, it was a long introduction, but I'll let you have at it.