moved:
That this House urge the government to follow up on its election promise to protect and strengthen Canada's publishing industry by renewing the Baie Comeau policy adopted in 1985 and by declaring that a public investigation will be held into the circumstances surrounding the takeover of Ginn Publishing by Paramount.
Mr. Speaker, there are many different reasons for submitting a question for debate. For instance, a decision was made and one feels it should be questioned because it was wrong, or it may be necessary to shed some light on the circumstances surrounding the decision-making process or on what was actually done. Or again, one would want to prevent a recurrence of something that just happened and which was unacceptable.
We have here a situation where all these reasons converge to require a public debate on a transaction that has just been authorized by the government. We are, of course, referring to the decision made by the government and the Minister of Canadian Heritage on February 18 to authorize the sale of Ginn Publishing Canada, a Canadian publishing company based in Toronto, to Paramount, the American communications and publishing giant.
The conclusion of this transaction is shrouded in mystery. I would say it is an enigma. Consider the following sequence of events: everything started in July 1985, when Cabinet met in Baie-Comeau and adopted, at the request of the Minister of Communications at the time, the so-called Baie Comeau policy which was aimed at further protecting the Canadian publishing industry.
The gist of the policy was, first of all, to authorize the creation of new Canadian publishing companies or the acquisition of Canadian publishing companies, provided, and I quote, "the proposed investment takes place within the framework of a joint enterprise controlled by Canadians".
Second, the policy provided that in the case of the direct acquisition of a company controlled by foreign interests but operating in Canada, the transaction could be authorized, provided that control over ownership was transferred to Canadians within two years, at a price reflecting market value. Third, the strongest component of the Baie Comeau policy, in my opinion, is the section pertaining to indirect transactions which ensures that in the case of foreign takeovers, Canadian publishing houses controlled by foreign interests are returned to Canadian owners. This means that 51 per cent of the shares of these Canadian subsidiaries must be transferred to a Canadian owner in the event the parent company operating abroad undergoes a change of ownership.
What are the objectives of this policy? Many members of the cultural community have congratulated themselves for supporting it. The following assessment was made by the hon. member for Mount-Royal, the Liberal Party critic at the time, who had been following this issue very closely. On June 7, 1993, she delivered in this House a speech in which she assessed the implications of this Baie Comeau policy. She asked what the results of this policy were? She stated the following and I quote: "Initially it was very exciting. It was very positive".
And she goes on to give examples. "The major retail chain, W.H. Smith, became Canadian controlled. An important book wholesaler, John Coutts Ltd., returned to Canadian ownership. The Doubleday Book Clubs were brought under Canadian control with a resulting fivefold increase in sales of Canadian authored books. For the first time"-still according to the Liberal critic at the time last year-"Canadian controlled publishers handled an increasing share of the distribution of imported books".
Let me continue to describe the sequence of events. In 1986, one of the first effects of the policy was-and here we are getting to the heart of the matter-to require Paramount to return Ginn Publishing and G.L.C. Publishers to Canadian control. And events continued to unfold.
In 1989, after the expiration of the two-year period required by regulation following Paramount's decision to put Ginn Publishing and G.L.C. Publishers up for sale, since no private buyer had expressed an interest in these companies, the federal government, acting through the Canada Investment Corporation, intervened to acquire 51 per cent of the shares of these two companies at a cost of $10 million. The government had no choice but to act to ensure that Paramount did not retain control over its shares following the expiration of the two-year waiting period.
A very important event occurred in January 1992, namely the amending of the Baie Comeau policy. This came about as a result of the enormous pressure exerted on the federal government and on the Conservatives, primarily by the Americans. The Conservative government caved in to these pressures and watered down its Baie Comeau policy which had achieved excellent results since 1985, even according to the Liberals in the House. So, the policy was amended. While the direct takeover of Canadian publishing houses by foreign interests was still prohibited, as far as indirect takeovers were concerned, however, foreign investors could now acquire ownership of a Canadian publishing house, provided that they made commitments likely to benefit the Canadian publishing industry. They were required to demonstrate that Canada was likely to derive a net benefit from this transaction. This change occurred in 1992.
We can ask ourselves what all of these provisions mean and why the fuss over the publishing sector? The answer is that we wanted to step in to protect the publishing industry, a cultural industry that is clearly very much at risk in Canada. In 1991-92, Canadian publishers controlled only 50 per cent of a $1.2 billion market. During this same period, 80 per cent of Canadian authors had their works published by Canadian book publishers.
The imbalance between the two is clear. Canadian publishers are far more likely than foreign controlled publishing houses to publish the works of Canadian authors.
Therefore, since the publishing industry is important to Canada and to Quebec and indeed to all Canadians and since it plays a meaningful role in the protection of our cultural identity, it must be protected. And that was what the Baie Comeau policy purported to do.
Of course, when the policy was watered down, howls of protest arose from cultural circles. Everyone in cultural circles-I would say it was a rare case of unanimity in Canada and Quebec-protested, including the Liberal Party now in office.
On February 14, 1992, we heard in this House the hon. member for Mount Royal, who is now a member of the Liberal Cabinet, complain about what happened and ask very tough questions to the then Minister of Communications, and I quote: "Is the government going to permit the foreign takeover of Canadian publishing subsidiaries like Harper-Collins, Collier-Macmillan and Grolier which are presently before Investment Canada? Is it going to sell off $150 million of our book publishing industry to foreigners?" That amount was worth a lot more back then.
So here we are today with a new government whose members harshly criticized the watering-down by the Conservatives of the very welcome measures they had taken in July 1985.
We would have thought that this government would tighten the screws in line with the old Liberal tradition to defend Canada's cultural identity. We thought that a Liberal government more sensitive to the important realities and symbols of cultural identity would come to the rescue of this threatened industry. The red book even contained a very explicit commitment in this regard, that the government does not like to quote very often but that I will quote today: "A Liberal government will help Canadian books, films, and sound recordings to increase their share of the domestic market through the establishment of policies and legislation with respect to marketing, distribution, and exhibition". They talk about culture in very lyrical terms that must have won them many votes in the last election.
And I quote: "Culture is the very essence of national identity, the bedrock of national sovereignty and national pride. At a time when globalization and the information and communications revolution are erasing national borders, Canada needs more than ever to commit itself to cultural development".
Nobody could have put it better. But as for honouring its commitment to protect cultural industries, the first time this government was put to the test, it failed miserably and disappointed a lot of people.
I am talking, of course, about Ginn Publishing that Paramount had to return to Canadian interests in 1989 under the Baie Comeau policy. We do not know exactly what happened, we may find out in this debate, but Paramount eventually managed to get Ginn back with the agreement, I would say the complicity or the complacency at least, of the heritage minister. How could a great victory for Canadian cultural identity be erased with a stroke of a pen by the minister who must defend Canada's heritage, a member of a government that promised to do the opposite? How is it possible?
Because the current legislation and even the 1992 guidelines contained the policies considered by the Liberal Party to be diluted, feeble, insufficient. Even the Liberal Party had, through its heritage minister, violated the Tories' already very diluted rules. In other words, they were more lax than the Conservatives themselves by allowing Paramount to regain Ginn Publishing. Under the rules in the 1992 policies, it should have been demonstrated that Ginn was in financial trouble, which is not the case. It should also have been demonstrated that Canadian buyers had the opportunity to make an offer. Nothing of the sort happened, no matter what the people opposite are saying. All Canadian publishers feel they have been pushed aside. All Canadian publishers are unanimous in their complaints. We would have found people to buy this publishing house but everything was done on the sly to allow the American company to reclaim Ginn quickly.
I would like to table a letter proving that at least one Canadian buyer expressed interest on May 7, 1993. This letter was addressed to the then owner of Ginn by Canada Development Investment Corporation.
I would like to file this letter before the House because it is evidence that there was at least one Canadian interested.