Evidence of meeting #21 for Health in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was healthy.
A recording is available from Parliament.
Conservative
The Chair Conservative Rob Merrifield
Yes. I'm certainly prepared to stay longer to add more questioning.
Vice-President, Policy and Research, Association of Canadian Advertisers
Yes, thank you.
I, too, appreciate the opportunity this afternoon. I'll try to be as brief as possible, although I sympathize with Catherine. Trying to address such a complex issue in ten minutes is really quite difficult, but we'll do our best here.
I'm very pleased to have this opportunity. The Association of Canadian Advertisers is the only association solely representing the interests of advertisers in this country. Our members, over 200 companies and divisions, represent a wide range of industry sectors, including manufacturing, retail, packaged goods, financial services, and communications. They are the top advertisers in Canada, with estimated collective annual sales of close to $350 billion. Our organization is concerned specifically with the advertising function in our economy and the many and different processes this can encompass.
Advertising is a significant economic force in the world. In virtually all developed countries, advertising is considered an important and necessary component of the communications infrastructure. It is estimated that the total world-wide disposable advertising expenditure approached $2 trillion U.S. last year. Advertising is also a significant economic force in Canada. Advertising expenditures in 2005 were projected at about $13 billion. Direct and indirect employment in this sector represents approximately 250,000, or about 2% of all jobs in Canada.
Importantly, approximately 79% of total advertising expenditures in Canada remain in the Canadian economy as value-added. Compared to most Canadian industries, this is a very high level of domestic content. Advertising also increases government revenues through the income tax derived from the jobs it creates and from the greater sales tax base that results from it. Clearly, advertising makes a significant economic contribution to our country. It is the fuel for Canada's economic engine.
The role of advertising is critical to a healthy and robust media system in Canada. Primarily, it is advertising that pays for the content, the news reports, the articles, and the programs that entertain, inform, and educate Canadians. Without advertising revenues, Canada's media system could not survive in its present configuration. But advertising is more than an economic stimulant, adding dollars and jobs to Canada's economy. Advertising, importantly, provides consumers with the information they need to make knowledgeable selections. It is a force that provides the connection between healthy competition among Canadian goods and services, ensuring the benefits of innovation, wider choice, lower prices, and better service.
The ACA is a very strong supporter of the excellent self-regulatory regime we have in Canada under the Canadian code of advertising standards and the broadcast code for advertising to children administered by Advertising Standards Canada. Our members believe that with the right to advertise freely in Canada comes the responsibility to do so truthfully and accurately. We are also strong supporters of the excellent work that concerned children's advertisers have undertaken over the last seventeen years. You have heard from both of these organizations already.
Obviously, advertising to children in Canada is not a free-for-all. Far from it. With its many built-in safeguards, self-regulation can and has worked very well for many years in Canada. Clearly, childhood obesity is an issue that requires attention. We all know the numbers by heart now. The important question is, what is to be done? It is a complex problem, to be sure, and will require a multi-sectoral response. Industry, governments, educators, parents, and, yes, even children themselves, all have our parts to play.
With our time parameters in mind, I would like to limit my comments to the following seven points. One, marketers realize that the status quo is not good enough. The effectiveness of Canada's advertising self-regulation system has been recognized as a model by numerous international organizations, but marketers realize the need to strengthen the codes in light of public health concerns is an ongoing matter at all times. This month the International Chamber of Commerce launched the framework for responsible food and beverage marketing communication. This raises the bar for food marketers operating in all markets world-wide, across all forms of marketing communications, including the Internet. Canadian marketers will be studying this new code closely to see where we go next on our codes.
Two, individual markets and companies are responding. Many food and drink companies have taken voluntary measures to change their marketing practices in line with the World Health Organization recommendations and as part of their commitments to the World Health Organization platform for action on diet, physical activity, and health. In addition to individual company initiatives, we have also witnessed commitments to change by whole sectors, and we are beginning to see how changes in products are being translated into changes in marketing.
Three, consumers drive markets. There is an unprecedented shift under way as product portfolios of major food and drink companies are moving away from products high in fat, sugar, and salt and towards products with higher micronutrient content. Companies are jostling for competitive advantage in response to the rapidly increasing consumer demand for healthy products. Research data from the U.S. and the U.K. demonstrate that the size, scope, and pace of change is currently greater than ever.
Four, reformulation and marketing go hand in hand. Product development and reformulation of food and beverage marketing are inextricably linked. On the one hand, changes in the nature of products are a prerequisite of changes in marketing practices. On the other hand, marketing is essential to communicate product changes. This, in turn, changes the nature and balance of foods promoted. Marketing is necessary for communicating change, building awareness, and encouraging consumer acceptance. Marketing restrictions would be counterproductive, potentially blocking new entrants to the market and freezing existing market shares.
Five, marketing restrictions will not fix health problems. There is absolutely no correlation between the number of ads viewed, ads banned, and obesity. In a number of jurisdictions, such as Sweden, Norway, and Quebec, where child ad bans or restrictions have been in place for some time--almost twenty years in Sweden and over twenty years in Quebec--and where children are exposed to significantly less marketing communications, the incidence of childhood overweight or obesity is equal to or higher than in adjoining jurisdictions with no marketing restrictions in place. The bans are a simplistic, ineffectual response.
Six, children must be given the skills necessary to interact with media. Ongoing efforts of concerned children's advertisers help to equip children with the faculties necessary to be able to interact with the reality of a media-filled world. Paid for by the advertising industry, developed by independent media literacy experts, and endorsed by educators, TV&ME and other programs have already been copied all over Europe and launched with great success in the U.K., Belgium, the Netherlands, Denmark, Sweden, and Finland. This is Canada leading the way and showing the world how to do this right. We cannot afford to think we can just build a fence around the ocean. We must instead teach our children to swim.
Seven, there are no quick-fix solutions to obesity. Obesity is a multifactor issue requiring complex solutions. Industry understands the challenge and it's responding. Fundamental change is taking place in the food industry, but investment, time, and consumer acceptance are required to bring about change, since consumer acceptance is the prerequisite of any effective change strategy. We are beginning to see tangible benefits.
In summary, a holistic response is required for this multifactoral problem. We all have a part to play, and our industry has been active in this area for many years. We are committed to taking and promoting a responsible approach to food and beverage advertising to children. Advertising bans are simplistic and miss the mark. Regulations should be able to achieve the stated public policy objectives without imposing unnecessary or disproportionate regulatory burdens. Companies are responding, and it is important that media literacy campaigns continue to better equip children with the skills needed to interact with a modern commercial world. More than anything, there is a need for some proportionality in this debate.
I thank you again for the opportunity to be heard, and my apologies for being unavoidably late today. Thank you.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much, and thank you to all the panellists.
We'll now open it up for questions.
Ms. Davidson, the floor is yours. You have five minutes.
Conservative
Patricia Davidson Conservative Sarnia—Lambton, ON
Thank you, Mr. Chairman, and thank you very much to each of our presenters. It has certainly been an interesting afternoon.
One question that comes first and foremost to my mind is, what is covered by the advertising? We've heard from the different areas about the regulations, and that we do have the systems in place to regulate what is in the ads and we have the systems in place to enforce those advertising standards. We've also heard that there are concerns about online advertising. We've heard concerns about cable TV. In this day and age, I would gather that the majority of people either watch cable TV or satellite TV, so what is covered under the regulations that are in place today? Is cable TV covered? Is online advertising covered? Is satellite TV covered? If it isn't, what would be the percentage of viewing time that is covered by regulation?
Director, English Pay, Specialty and Social Policy, Canadian Radio-television and Telecommunications Commission
From the regulation of the CRTC, we do regulate all broadcasting licensees in Canada. That's all television and radio broadcasters to whom we grant a licence who are operating in Canada. That includes--
Conservative
Director, English Pay, Specialty and Social Policy, Canadian Radio-television and Telecommunications Commission
Yes, those that originate in Canada, and that's the key there. We do not have jurisdiction over the content of stations that are originating in the U.S. or in other countries. However, regarding the Canadian broadcasters, it's important to understand that all the content they broadcast they are responsible for. Whether it's foreign programming or Canadian programming, the Canadian broadcaster is responsible for it, and the majority of stations that are carried by cable or by DTH satellite distribution are Canadian services. But you're right that the foreign services that are carried are not within our jurisdiction as far as the content goes.
Director, English Pay, Specialty and Social Policy, Canadian Radio-television and Telecommunications Commission
The commission does not currently regulate online. It looked at online, at the Internet, in 1999 to determine whether the commission had a role in regulating it, and the commission determined at that time to exempt broadcasting activities on the Internet.
The reason for that is really twofold. One is that our primary reason for regulating in the broadcasting arena is to ensure that there's a predominance of Canadian programming in the system, and the evidence showed that there was no lack of Canadian content on the Internet at that time. Two, the broadcasting activities on the Internet did not have a significant impact on the traditional broadcasting activities, so the commission exempted it at that time.
That said, all alphanumeric text on the Internet would not be included under the broadcasting activities, regardless.
President and Chief Executive Officer, Advertising Standards Canada
However, in terms of a course, Canada's Food and Drugs Act and regulations apply to all advertising in Canada, whether it's Internet or not. Internet would also be encompassed there. In cases where the advertising was Canadian, again it's the same offshore issue, where, if somebody were accessing perhaps a service from Sweden, it would not apply, but Canada's Food and Drugs Act would apply to food advertising messages that appeared on the Internet.
As well, for Advertising Standards Canada, also encompassed in the definition of the Canadian code of advertising standards is Canadian Internet advertising, and we would accept complaints about Internet advertising. We have an interpretation guideline on that as well, which gives them additional guidance in this area.
Conservative
Conservative
Patricia Davidson Conservative Sarnia—Lambton, ON
I'll be brief.
In talking about the children's clearance committee functions, in general, how often are ads found not to be in compliance?
President and Chief Executive Officer, Advertising Standards Canada
A lot, but the way it works is that in most cases, because creating commercials is a costly endeavour, advertisers will come, at the staff level, and seek a consultation. Then they will create the commercial after the consultation has been deemed to be consistent with the children's code. The finished commercial then goes to the committee. If the committee identifies any breach, if it's fixable, there are recommendations on how to fix it, and then it would have to get resubmitted and approved if the fix worked, or if it couldn't be fixed, it would just be rejected.
Conservative
The Chair Conservative Rob Merrifield
For the committee, as a point of clarification on the last question, are you saying, then, that any American advertising that would go against the Canadian Food and Drugs Act would not be allowed in Canada?
President and Chief Executive Officer, Advertising Standards Canada
No. I'm saying--
President and Chief Executive Officer, Advertising Standards Canada
No. It applies to Canadian advertising. But Canadian advertising that appears on the Internet would certainly be encompassed by both the Canadian code and of course the Food and Drugs Act.
Conservative
Liberal
Tina Keeper Liberal Churchill, MB
I'd like to follow up on this. So for clarification as well, then, the CRTC has no impact in terms of advertising from the U.S. stations, or anybody here in Canada. We don't? So their advertising can violate all of our standards. Is that right?
Director, English Pay, Specialty and Social Policy, Canadian Radio-television and Telecommunications Commission
That's true. It's true if it's originating from a U.S. station or a station from another country. That's right.
Liberal
Tina Keeper Liberal Churchill, MB
Okay.
I also want to ask this, because I'm a little confused. There is a broadcast code for advertising to children. In the presentation by Advertising Standards Canada it was mentioned that there were no complaints about food and nutrition issues in advertising. A couple of presenters have also mentioned that in Sweden and Quebec there's been no impact from advertising upon the obesity in children.
So I don't know really what the argument is about having codes. Why have codes? Do you know what I mean? If you're saying there's no effect of what children are watching impacting upon their behaviours relative to this issue, then how do you support having them?
President, Concerned Children's Advertisers
I don't think we're saying it has no impact. What we're saying is that when we look at the data in the two markets where there has been a prohibition on advertising to children, it hasn't protected them from this issue.
As to why we have codes and standards, it's because we all respect the inherent vulnerability of the child audience, and we need—
