Industry Committee on May 22nd, 2018

[Zach Churchill]

A change of understanding in fair dealing, we believe, would have a financial impact. In the way fair dealing is defined right now, if you have a short excerpt of materials—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I know what fair dealing is, but you're defending it because you want to save money. Is that fair to say?

[Zach Churchill]

We're defending it because we believe it's fair. The courts have gone through extensive deliberations and decisions to come up with this. It's quite complicated to develop what's fair from an academic learning standpoint, to ensure our students have access to the widest range of materials possible, and obviously ensuring that creators are properly compensated.

That's not an easy question to answer. The courts have helped us do that.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Lloyd. You have six minutes.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you for being here at committee today.

My first question will be in regard to previous testimony that was provided by your organization in 2011 when the committee was reviewing the Copyright Modernization Act. Your group appeared before committee and promised that the addition of education to fair dealing would have no negative impact on creative incomes, and that you would pay collective licences and would continue to do so after the amendment; that you were not trying to get material for free. Since 2012, you're claiming vast amounts of work for free. There have been hundreds of millions of pages printed. That's been documented. You have not been paying collective licences, and creative incomes have been in serious decline.

Do you still stand by the earlier testimony provided in 2011, that there would be no impact on creative incomes?

[Zach Churchill]

We benefit today from having Wanda Noel, who was actually present during that, who can speak better to the comments of the minister of the time. In terms of the hundreds of millions of dollars of copies that we've seen used— that number—I do think it's important to question where that number comes from. We have not seen evidence on our side showing that this is an accurate figure. In terms of what we do know, based on the Federal Court of Appeal assessment and the Copyright Board assessment, 98% of copying that happens in this country in the education system is within the parameters of fair dealing.

We don't know where that number comes from. I think it's important to have a better understanding of where that number comes from.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

I believe it's a PricewaterhouseCoopers number, and that's an internationally recognized auditing agency. Presumably, if that's the number that they're coming up with, there's some sort of evidence behind that. The evidence that you brought today, that there are savings of tens of millions of dollars, is also backed up by PricewaterhouseCoopers information, which indicates that since 2012 authors and publishers have lost $30 million because of fair dealing. This seems to corroborate the evidence that you provided that this does cost tens of millions of dollars for universities to provide collective licensing.

You have talked about the precedence in cases, but in regard to the recent York decision, which happened after the Supreme Court's ruling on fair use, do you still feel that you're on the right side of the law after that?

[Wanda Noel]

There are a lot of questions there.

Let's deal with Minister Jennex's comments in the Copyright Modernization Act. Minister Jennex's statement in 2011 or 2012 was correct. It's still correct. That's because adding education as a fair dealing purpose, which is what happened when the Copyright Modernization Act was passed, had nothing to do with the fair dealing guidelines. The fair dealing thresholds and guidelines are based on Supreme Court of Canada decisions that took place after the Copyright Modernization Act was passed. That's one thing. I saw a headline recently that said something like Minister Jennex lied to Parliament. Well, that's not correct, at all. It's just wrong.

On your reference to the PricewaterhouseCoopers' report, the origins of that was one report that was filed at the Copyright Board by Access Copyright, who is in the audience this afternoon, and another expert report that was done by Deloitte. When you're in a Copyright Board proceeding, you have duelling experts. That PricewaterhouseCoopers' report took one point of view. There was a corresponding study that said everything in that report is incorrect.

It's duelling economic experts. I would be more than happy, on behalf of Minister Churchill, to provide a copy of the other expert report that said PricewaterhouseCoopers is wrong.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Is that a Deloitte report that you're referencing?

[Wanda Noel]

I think it was Deloitte. It was several years ago now, but I can provide the report.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Maybe you could clarify it after.

Thank you.

[Wanda Noel]

The other thing, the York case—sorry, I'm not going to take up time here—is under appeal, and we have multiple cases interpreting fair dealing consistent with what Minister Churchill said. We have one case that has a different interpretation. We'll let the courts do their work, and they can figure it out.

It's based on evidence and a very complicated process that can't take place in a parliamentary committee.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

This is very interesting stuff that has been provided here.

How much would you say you spend on Canadian content? One thing that we've seen throughout our testimony is that universities indicated total spending is up. We've seen that coming from international publishers, international authors, in terms of the scientific and engineering fields.

Can you provide some specific information on how much Canadian content creators have benefited? Has there been increased spending on Canadian content creators since 2012?

[Zach Churchill]

The numbers we have available are provided to you in your package. I don't know that we can extrapolate Canadian content specifically from those numbers.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

[The Chair, Liberal, Dan Ruimy]

If you can forward the report that you were referencing to the clerk, that would be very helpful. Thank you.

We're going to go to Mr. Masse.

You have six minutes, sir.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Minister, for being here today.

Essentially the bottom line here—I want to make sure it's clear—is that just for your province, it's $10 million. Is that correct in terms of the cost if there was a change?

[Zach Churchill]

If the proposed tariff at $13.31 was imposed nationally, that would be over $50 million.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Nationally, okay. Does that include the territories as well?

[Zach Churchill]

That does include the territories. That doesn't include Quebec. That is one thing I forgot to mention. I'm here representing the education ministers outside of Quebec, but that does include the territories.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Okay, I wanted to make sure on that.

Now with the old system in place, has there been any work done in terms of what the cost differential would be for today? I mean, that's new money that you're being asked to pay if that is brought forth in terms of the fee.

Do you have any idea of what the cost would have been had Access Copyright not proposed that and it was the status quo, before even fair dealing was brought in? What would your costs be today if the old system were in place? Has that been looked at?

[Wanda Noel]

The rates of the tariffs are set by the Copyright Board, and they're almost constantly appealed.

Prior to the tariff system, the fee was around $2.50 for a full-time student equivalent. The Copyright Board set a tariff that was $5 and pennies. It ended up at $4.81 when the appeals were exhausted. There are four million students, so it's four million times $5. You can do the math.

That was the case that the ministers of education took to the Supreme Court of Canada, and the decision was that short excerpts could be copied by teachers without paying copyright royalties. Then, in 2013, based on that decision, the ministers of education stopped paying the tariff, and decided to rely on fair dealing and licences, databases and repositories, and other things to meet their copying needs.

That's the range.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Would it be fair to say there has been a cost savings, fewer expenditures, in that process because of that?

[Wanda Noel]

No, the money that's spent, as you'll see, is increasing. It's just not being spent on the same things. It's being spent on something different.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Yes, this is what we're running into.

In general, though, what we're hearing from not only the witnesses.... I know you have StatsCan stuff in front of us. When we have witnesses and people coming forward, it's not always representative of the full picture; there's no doubt. But it would seem to me we're running into a pattern of experiences, where there seem to be some winners and losers in the transition.

When government policy changes something, I think there's probably some expectation that there should be some amelioration or some public policy to help. Do you believe there have been any changes from your experience in the works you've been purchasing or your interaction with some of the content providers, maybe in your own province? Has there been any look as to whether there's been a shift since this has taken place?

Some authors say they've given up. They're not producing anymore. They have reduced their amounts. Has there been any examination to find out whether Nova Scotia has transitioned to new content providers, or has it just been the same?