Thank you, Mr. Chair and members of the committee.
I believe the clerk of the committee has circulated copies of the presentation in both official languages.
There are four areas that we would like to briefly review today. The first is the different approaches adopted by the Cultural Property Export and Import Act and Bill C-473 with respect to the retention of important heritage in Canada.
In keeping with federal jurisdiction over matters of international trade, the cultural property act controls export. That is the term that is used in that act. Export permits are required for all insignia that are defined in the Canadian cultural property export control list, which is a regulation under the cultural property act. Permits are required any time insignia leave Canada for any period of time, for any reason, and irrespective of who the owner or exporter is or who the recipient of the export will be.
In cases of permanent export, if insignia are deemed to be of outstanding significance and national importance, export may be delayed. It's essentially a time out in the export process. That delay is intended to provide an opportunity for designated Canadian museums and public authorities to acquire the insignia.
A grant program exists to assist institutions in the purchase of items threatened with export, and special tax incentives also encourage donations of outstanding insignia to public institutions.
Bill C-473, as we read it, would prohibit the transfer of insignia of cultural importance to non-residents unless the insignia are first offered for sale to the Canadian Museum of Civilization, the Canadian War Museum, or the Department of Canadian Heritage, but those provisions would not apply in cases of transfer to a near relative or an heir.
For consideration by the committee, we would note that the difference in language between the Cultural Property Export and Import Act, which uses the term “export”, and the language in the bill, which uses the term “transfer to a non-resident”, may result in questions about what sorts of transactions are covered by the bill, and we would note that there is also a risk that the phrase “transfer to a non-resident” in the bill does carry with it the risk that questions could be raised related to provincial jurisdiction over the regulation of trade and commerce involving property within a province.
The second issue that we would like to put before the committee is the approach to the definition of what insignia are covered. Under the Cultural Property Export and Import Act, military insignia that are controlled for export must be more than 50 years old and must have a fair market value in Canada of more than $3,000. The value threshold is used in essence as the means, the proxy, for defining those insignia that are most likely to be of outstanding significance and of national importance, which are the criteria set forth in the act.
Bill C-473 covers insignia awarded by Her Majesty in right of Canada, which we understand therefore to be insignia awarded after 1967. Prior to 1967, Canadian insignia were awarded by Her Majesty the Queen in right of the United Kingdom, and legally there is a distinction. The bill would also require the insignia to be of cultural significance, with the concept to be defined in regulation.
For the committee's consideration, we note that the earliest of the insignia covered by the bill, those granted in 1967, will be 50 years old in 2017. At that point, depending on their value, they could be covered both by the Cultural Property Export and Import Act and by the provisions in Bill C-473. As a result, we believe there is some risk that Canadians could be confused about their legal obligations, which are somewhat different under the existing legislation and under the proposed legislation.
The third issue we would like to raise relates to the determination of “fair market value”. This is an exercise in obscure dictionary definitions and Revenue Canada definitions. Mr. Chair, I ask the committee to bear with me as I work through that.
The term “fair market value” is used in both the cultural property act and Bill C-473, but in very different contexts. It's used in the cultural property act in reference to the role of the Canadian Cultural Property Export Review Board in determining the importance and value of objects that are donated or sold to Canadian institutions and public authorities. It's used very specifically to determine the value for the tax certificate, the tax incentive.
A different term is used in the cultural property act for the board's role in relation to situations where an object is subject to export delay and there may be disagreement between the owner of the object and a potential Canadian purchaser as to what would constitute a fair offer. The term in that context used in the cultural property act is “fair cash offer” rather than “fair market value”. The amount of a fair cash offer might be the same as fair market value, but it doesn't have to be. Fair market value is a larger concept that takes into account the purchasing power of foreign buyers—in essence, whatever anyone anywhere is prepared to pay for an object. The term “fair cash offer” is used to refer to what a fair offer would be within the Canadian context. So fair market value is anywhere in the world; fair cash offer is in the context of the Canadian market.
In clause 6, Bill C-473 sets out a role for the Canadian Cultural Property Export Review Board in assessing the value of an insignia that would be offered up for sale to the institutions that are listed in the bill.
The bill uses the term “fair market value” for the function that is described in the cultural property act as determining a fair cash offer. There is a risk of confusion concerning which meaning is intended and therefore what considerations of the Cultural Property Export Review Board would have to take into consideration in determining value.
Finally we'd like to draw the committee's attention to the issue of maximum fines for violations. The cultural property act and Bill C-473 take different approaches to the maximum fines for violations of their provisions. The act specifies a specific dollar amount for a maximum penalty. For illegal export, the maximum fine is $5,000 on summary conviction and $25,000 on indictment. Bill C-473 provides for a penalty for summary conviction in any amount up to five times the fair market value of the insignia in question, rather than specifying a dollar amount.
We would draw to the committee's attention that this provision in the bill could possibly result in a situation where the penalty for the illegal transfer of a modern medal could be greater than the penalty set out in the cultural property act for the illegal export of a historic model, such as the Victoria Cross. We would also note that the norm in federal legislation is a specific amount to provide clarity to Canadians as to what the penalties could be.
Mr. Chair, that concludes my presentation on behalf of the Department of Canadian Heritage. At the appropriate time we'd be pleased to answer any questions the committee may have.