Mr. Speaker, the government of Canada is pleased today to propose to the members of this House amendments to the present Canadian Film Development Corporation Act, in order to create a loan guarantee program that will give companies in the Canadian film and video industry easier access to sources of private funding.
This program, which is the outcome of a very detailed analysis of the needs of the Canadian film and video industry, will allow better management of public funds without involving the federal government in any additional expenditure. It will be managed by one of our major national cultural institutions, Telefilm Canada, and will guarantee loans totalling $25 million annually.
The program, in fact, will be an invaluable financial incentive contributing to the growth of the Canadian film and video industry. Its objective is clear and its scope considerable: to encourage our financial institutions to become better acquainted with this industry and devote more of their resources to funding Canadian production and distribution companies. For it must be said that the financial institutions have always been reluctant to participate in funding companies of this type, because they were unfamiliar with the cultural sector and considered intellectual property as inadequate security from a financial perspective.
In recent years, the financial position of the film and video industry has been affected by the continuing decline in resources available from both public and private sectors. Telefilm Canada's annual resources will shrink by some $195 million, or 22 per cent, over the period from 1992-1993 to 1997-1998.
On the one hand, the banks are not co-operating as much as they might and, on the other hand, government funding has consistently fallen. If this trend continues-and there is little chance of a turnaround in the foreseeable future-production will decline and this will inhibit the government's efforts to ensure that Canadian cultural products of quality are available on our own market.
The time for action is now. Change is necessary if Canada's cultural industries are to establish themselves in the new cultural landscape that is now taking shape. They have always had to deal with the proximity of the "American giant" whose vital mass culture assures worldwide success.
Ours is one of the most open cultural markets on earth. While this is certainly enriching for all Canadians, such openness also represents a threat to our own creative artists. We cannot allow our national culture to be marginalized in our own domestic market, or fail to provide it with every opportunity to prosper in foreign markets.
The loan guarantee program is an innovative solution to this problem. As well as demonstrating this government's commitment to protecting our cultural sovereignty, it aims to diversify the funding sources of a fast growing industry and foster good business relations with new financial partners.
The situation is especially pressing in that a study conducted in 1992 reveals that the growth of the Canadian film and video industry is limited by chronic lack of access to sources of interim financing. It is difficult, even impossible, for Canadian film and video companies to obtain from the banks the funding they need for their activities when their only guarantee is a letter of intent from a broadcaster or distributor.
The contract signed on the basis of these guarantees are worth an estimated $70 million to $100 million a year. This shows how important they really are. Once it is in place, the loan guarantee program will rectify what has been a problem to the industry and could generate up to $143 million in activities related to film and video production and create several thousand jobs.
The Canadian film and video industry which barely existed 20 years ago has experienced phenomenal growth and is now a major employer and a producer of high quality entertainment programs.
The figures speak for themselves in this regard. The total revenue of this industry, despite fluctuations from year to year, rose from $122 million in 1980 to more than $835 million in 1992, with the number of direct and indirect jobs totalling more than 50,000 in 1992.
According to Statistics Canada, the revenue from exports of film and broadcast products jumped by $210 million from 1980 to 1989 to reach $230 million. There is no doubt that this is a vital and viable sector of Canada's economy. The loan guarantee program could not come at a better time to stimulate the growth
of a dynamic Canadian industry and to establish a relationship of trust between cultural enterprises and financial institutions.
It is possible to hope for better co-operation between the cultural and financial sectors and over the long term reduce dependency of the cultural sector on public funding. This is the objective of this legislation.
The risk is small. Any potential losses will be covered by a reserve fund established with Telefilm's current parliamentary appropriations and the user fees levied from recipients. Telefilm Canada will subject applications for loan guarantees to close scrutiny using strict criteria to ensure that only promising projects submitted by solvent companies receive such assistance.
This is the first step in that direction. It is not unthinkable that the Government of Canada, if it considered it appropriate, would contemplate extending this program to the publishing and sound recording industries which also suffer from chronic under funding and the same lack of understanding on the part of financial institutions.
The minister has asked the officials in his department to study this possibility. In a way it would be a question of applying the same tried and tested solution to a similar problem. The challenges of the 1990s must be met with the solutions of the 1990s. The importance of the cultural sector, both in terms of strengthening our national identity and the economy, calls for judicial changes to the structures already in place, especially at a time when borders are fading and it has become imperative to preserve everything that makes us unique as a country.
The loan guarantee program partakes of such a vision and attests to the government's commitment, set out in the red book, to promote Canada's cultural development. It is an innovative, effective and economic tool that will contribute to the prosperity of one of our most flourishing cultural industries, enhance the production of quality Canadian cultural products and enable banks to better understand the needs of Canadian cultural enterprises.