Debates of May 30th, 1994

Canadian Film Development Corporation Act

[Louis Plamondon, Bloc, Richelieu, QC]

Mr. Speaker, first of all, I would like to say that the Bloc Quebecois fully supports this legislation, and this includes the official critic, the hon. member for Rimouski-Témiscouata and all members of the Bloc.

We know that this proposal is the result of three years of discussions conducted by the Department of Communications, the Treasury Board, the Department of Finance and Telefilm. The process, which started under the Conservative government three years ago, has finally led to the tabling of a bill, and I want to congratulate the government on acting so promptly in this respect. We seldom hear good news from the government nowadays, but when we do, I think we should stress the fact, and I am delighted to salute this initiative on behalf of all my Bloc colleagues.

It was high time the government interrupted a bleak series of cutbacks that have been a burden on the cultural sector in Canada and decided to introduce a measure long awaited by the film community.

Between 1992 and 1998, the government would have cut about $100.5 million from its grants to a film industry in full expansion.

The measure before the House today is a godsend for the film industry which suffers from a glaring lack of capital funding. Good projects that never set off the ground because of lack of cash are legion.

A study by the Department of Canadian Heritage has revealed that today, letters of agreement between producers and distributors worth a total of between $70 and $100 million have not been signed because of lack of money.

Furthermore, many very interesting projects never get beyond the production stage because they are not judged to be commercially viable. This bill will fulfil its purpose if it also reminds Telefilm Canada of its original mandate, which is to support all Canadian cultural products, not just the commercial ones.

Like SOGIC in Quebec, Telefilm Canada should give equal treatment to commercial films and documentaries, television and cinema, as well as female and male filmmakers and producers.

If it achieves its twofold purpose, Bill C-31 will ease the plight of Quebec and Canadian producers who are waiting for the government to deliver on another measure that is essential to the survival of this industry, and I am referring to a tax credit that would replace the existing tax relief for depreciation.

A tax credit would directly benefit Canadian film and video production, unlike the present tax shelter. It is estimated that only 7 per cent of the cost of this tax measure is reinvested in Canadian productions as such. The tax credit would not require any additional investment.

Introduced in Quebec in 1990, the measure has been a real success story and truly serves the interests of the Quebec film industry.

In concluding, I again wish to congratulate the government on this very appropriate initiative, and as an incentive to keep up the good work, I would like to quote what was said a few weeks ago by Pierre DesRoches, outgoing president of Telefilm Canada: "A country that does not have what it takes, either intellectually or financially, to make a feature film does not deserve the name".

Finally, I would like to reiterate the support of Bloc members for this bill and express the hope that the bill will pass all three stages today, so that producers who have been waiting for years

will perhaps not see their dreams come true but at least have some way to get the money they need to start production.

[Bob Ringma, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, my remarks on Bill C-31 will be premised on the assumption that most of us in this Parliament want to do what is best for our country as a whole and for the industries, such as the film and television industries which are a part of that entity.

What is the best role that Parliament can play? My thought is we should try to have the most thorough examination possible of any subject that forms the basis of a bill before the House.

I do wonder if Bill C-31's timetable is going to permit the examination the bill merits. It was tabled on Thursday, May 26. It was announced on Friday last that second reading would be today, Monday, May 30. I found out about it Friday afternoon. I do not think that is too much time to gather the facts on a subject one is not particularly familiar with.

One of the problems the public at large is having with the government and Parliament is the perception that decisions are made behind closed doors, that government with a majority in Parliament can do as it pleases. This House could dispel that impression by bringing things into the open. I am not suggesting there is anything concealed with Bill C-31, but surely more time for consideration would help the debate as well as the public perception of it.

What should be examined in detail is the whole concept of government assistance to industry versus free enterprise. There is a role for government to play, especially regarding start-up industries.

There is, for example, a real lack of venture capital in Canada. The government should not get into the business of providing venture capital, but it should encourage it through taxation rules on capital gains. If the government does get involved with the provision of loans or loan guarantees, it should do so for a strictly limited period of time. No industry that habitually depends on the government for support is going to prosper in the long term.

As we consider the extent to which the Government of Canada guarantees loans, we should be mindful of Canada's deficit and debt situation. With the federal debt at the $500 billion dollar mark the government must send out a signal of fiscal responsibility and a capability and willingness to get things under control. Its signal to date is inadequate. While Bill C-31 is a relatively minor matter, the loan guarantees it proposes exacerbate the government's position on the side of fiscal responsibility.

On the positive side of this bill we note that similar loan guarantee programs exist in several of our provinces. Quebec, Ontario, Saskatchewan, Alberta and British Columbia all have programs of guarantees. They have experienced a very low rate of default which is good news.

It is also noted that the Canadian Film and Television Production Association and l'Association des producteurs de film et de télévision du Québec both believe this program will be of great benefit to the industry. The government has stated it believes the program should only exist for a short period of time. That is on the positive side of it.

Also on the positive side, there is evidence of real growth in the industry in western Canada. Activity in indigenous Alberta productions has increased by 360 per cent in the last few years. British Columbia has enjoyed similar growth. This increase has come without any federally guaranteed loans. It shows that relationships between the producers and Canadian financial institutions is healthy and is improving. Perhaps this indeed demonstrates there is no longer a need for guaranteed loans.

This House should look closely at what is happening in the industry in western Canada, that the provinces alone are able to furnish the guarantees necessary and that this is having a very positive effect on the industry. It is growing and succeeding. Why then do we have to keep coming in with federal government intervention?

The other concern I would voice, but on the positive side concerns co-operation interprovincially and internationally. There are joint production efforts going on between the provinces and between our country and others. This also is a sign of success. That is where we should allow the industry to capitalize on its success and go in that direction.

If this program goes ahead another concern is the equitable distribution of loan guarantees. This is to be to all of the provinces. I would like to know from the government what process will be used to ensure an equitable distribution if the bill takes effect. If the effect of Bill C-31 is to regionalize the industry, to concentrate more development in Ontario and Quebec as opposed to the development which is going on in the west of Canada then again it is not going to have the effect it should be having. If it is going to regionalize, please let us make sure this regionalization is not concentrated in one area but is spread throughout.

The spokesman for the bill in committee mentioned a promise to get rid of Telefilm as a crown corporation. I would like know from the government what the time schedule is on that and when it thinks it should happen. Also, why was the statement made that Telefilm could eventually be done away with when the

government is doing more now to jack it up with Bill C-31? I do not quite understand that.

In conclusion, I encourage the government to introduce bills such as Bill C-31 with a little more leeway in the timing to allow for more comprehensive preparation for debate. We do agree the government has a role to play in encouraging industry, particularly fledgling industries in Canada. However, it seems to us the role should concentrate on providing appropriate tax incentives rather than loans or loan guarantees.

If in its wisdom and with its majority the government decides to proceed with this bill, we caution it to put a time limit in the bill, a sunset clause as it were, and to ensure that the international financial community fully understands why this temporary assistance to this Canadian industry is needed.

[Albina Guarnieri, Liberal, Mississauga East, ON]

Mr. Speaker, I rise on a point of order. Are there questions and comments?

[The Deputy Speaker]

No.

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, as a matter of fact I thought this would be a question and comment period myself, but now that I have the floor I will address some of the comments made by my hon. friend from the Reform Party.

In this House I may be the only member of the Alliance of Canadian Cinema, Television and Radio Artists. I have knocked around the industry performing professionally since 1966. I can recall where film was at that time, where it went and what the inhibitions were to its proper and orderly development in this country.

Film development and the development of a base for film production in Canada is much more than loan guarantees, although they are part of it. It is much more than tax incentives which have not always worked in the past.

The requirement has been for a consistent employment of both technical and performing talent which would allow the medium to continue to grow in this country. It is not enough to establish an industry on a one-time basis. What happens is you can bring in a lot of mediocre capability and end up with a mediocre product and then have nowhere to go from that point onward.

To this point the development of film drama in Canada with the assistance of successive governments has been consistent. It has been consistent enough so that the talent base has been maintained and cultivated in this country, not just the talent base for performers but the talent base for technical people, the technical base for all of the ancillary needs of a film industry.

It has grown to where it is starting to be recognized as being one of the best places to produce films and television programs in the world. That was not so in 1966 when producers and directors who in the main were from other countries looked upon Canada as a place to go to to get cold.

I recall a company in Toronto called Film House which established one of the most sophisticated and advanced systems for film dubbing. It ended up failing because it could not attract the volume of work needed to keep afloat.

It has been a constant battle, a constant effort, to prove that Canadian capability ranks as world class in order to attract the kind of-my friend refers to joint efforts with other countries-joint effort as a result of assistance to the Canadian film industry that allows the rest of the world to look on it as being second to none. As hon. members will know, we are now in a position where we are able and do produce television series and so on which we export to the rest of the world.

Film production as we know is a very individualized effort. My friend talked about making sure that these loan guarantees were spread across Canada. I have to tell him that film production is site specific. It is not relegated to the major centres of this country. Feature film is shot in every province of Canada but it is done on a film specific basis. I believe that loan guarantees in this case are probably superior to tax write offs.

I can remember when there were very attractive tax write-offs in the film business. A lot of film was produced that never saw a screen. It never got farther than the can but it fulfilled the requirements for the tax write-off.

I would suggest when we are considering assisting this kind of venture that we should be taking those elements into account. We have reached a certain stage in development. I use the phrase talent base. Talent base is a much more broad term than actors as I think we will all accept. We have reached a level where Americans like to come to Canada because grips, technical people, cameramen and women are able to compete on a world class second to none. Facilities now have developed to a point at which we have some of the largest sound studios in the world. We have the best technical people. We have a class that we can offer. What happens is that these productions in effect de facto become an export for Canada.

Support for the performing arts in the past has often taken second place to things that some people considered to be more important. I have to say that if we look at support for the performing arts, whether it is in theatre or film and so on, it has an economic spinoff that may be as high if not higher than any other venture.

If anybody wants to challenge that I would invite them to downtown Toronto any night of the week to see all of the theatres that are operating at the present time and the spinoff effects that has on the economy of metropolitan Toronto for the people who work in the service industries, et cetera.

When you and I go out and pay $65 for a ticket, which we think is exorbitant, to see "Miss Saigon", we probably buy dinner as well and take guests with us. All of that infuses economic activity into that area.

Assistance to the performing arts, regardless of what it may be, is an economically sound venture providing it is done in a responsible and proper manner. I heartily endorse it.

The other thing we must consider is that we are in competition with other countries in the world. Australia was one of the early lower populated countries to begin to export film and television programs. Over the years it has been very successful. Canada is now perhaps behind in the volume of export that goes on. It is because these countries support their industry. We can do no less in this House than to provide that kind of support. I of course endorse this bill wholeheartedly for the reasons I have put forward.

I would hope that every member in this House understands that this kind of support is a positive thing. It is an investment. It is something we do and we expect excellent sustaining returns.

[The Deputy Speaker]

I see the member from Nanaimo getting up. Unfortunately it is not questions and comments, so he will need unanimous consent to speak again. Is there unanimous consent?

[An hon. member]

No.

[John Duncan, Reform, North Island—Powell River, BC]

May I clarify why there are no questions and comments.

[The Deputy Speaker]

The hon. member is raising a point. The rules stipulate that when a bill is being introduced, the first three speakers on behalf of the three parties have 45 minutes, but there are no questions and comments after their speeches. Thereafter, for example the member who just spoke, there is a 10 minute questions and comments period. Perhaps the member wishes to ask questions or make comments.

[Bob Ringma, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, thank you and I thank you for the intercession of my colleague to get it straightened out.

The last hon. member who spoke painted an almost glowing picture of the industry today and that is good. I am very happy that is so and it is burgeoning. In view of that, and this is an honest question, does the member foresee the day coming when such loan guarantees will no longer be required? Is that coming? Is the industry successful enough that in the foreseeable future it will be able to stand on its own?

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, the intent of the legislation is to lead toward that point. That is one of the reasons I suppose why we would deal in terms of loan guarantees rather than tax incentives.

We are at the point of near maturity in this industry in terms of our ability to compete on a world-wide basis and so on. There are still areas where this kind of assistance is desirable and often becomes necessary.

It is not always. I know the hon. member has pointed out that there are productions taking place in western Canada. I was involved in one last year which was an ABC movie of the week shot in Toronto which had no government funding whatsoever.

It is certainly getting there. We have certain things we can offer to our friends in other countries, most particularly in the United States because of the volume of material that it produces.

I think there is still a need to encourage and enhance the world-wide recognition of what Canada does and what Canada can do. We started it with some assistance. It was an investment. It has been paying off. I firmly believe that we will see the time, perhaps in our tenure here, where we may grow right through it and out the other side.

[John Duncan, Reform, North Island—Powell River, BC]

Mr. Speaker, my question for the member for Halton-Peel relates to the fact that parts of the industry appear to be operating quite successfully without loan guarantees and other parts seem to require it.

Does that not imply somewhat of a defeatist attitude on the part of the industry in terms of why this bill is required in this format? We first heard about it last week and we are rushing it through this week. Is there some reason that the member is aware of why we are going through this rapid exercise here?

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, there are some productions where it is much easier to raise money. For instance, if Canada is shooting an American production that financing will be in place but it will be shot as an American production.

I refer back to "JFK: Reckless Youth", ABC movie of the week. That financing came here already in place. However in Canada there are many times when one is venturing into new areas where that financing is not as readily available and where the banks are not forthcoming 100 per cent. Members know how ventureless banks are when one gets right down to it.

The member would also recognize how expensive film production really is. It is a very expensive item. I hope there is a recognition that we are not dealing with new money in this issue. We are not trying to create new finances or increase the deficit and so on. We are simply attempting to direct money in a manner that is going to be most effective, if you like, the biggest bang for the buck.

[John Duncan, Reform, North Island—Powell River, BC]

Mr. Speaker, as I have already expressed I have some concerns about the timing on this bill and why it is being presented in the way it is.

I am pleased to speak today on Bill C-31, an act to amend the Canada Film Development Corporation Act. Telefilm Canada is the better known name for the Canada Film Development Corporation.

A major stated purpose of this bill is to help the already well established producers develop a better relationship with Canadian financial institutions. My interpretation of this statement in simpler language is very different and I can summarize it in three statements.

First, this bill is all about access to capital. Second, the bill leaves the selection of winners and losers in the hands of the Telefilm Canada bureaucracy. Third, this bill assumes that the relationship between producers and banks is unhealthy. I would like to discuss each of these in turn.

This bill is all about access to capital. The problem is that the banks will not give anyone any money even though one has an order. This is certainly not unique to the film industry in Canada.

Second, the bill leaves the selection of winners and losers in the hands of the Telefilm Canada bureaucracy. This bill makes Telefilm Canada a guarantor for the loan for part of the presale agreement to a maximum of 85 per cent with an annual allotment of $25 million. Each application would be to a maximum of $1 million.

This will place the producers in the situation of having to sell their project twice, once to broadcasting or other companies and then to Telefilm bureaucrats. Broadcasters will soon find out which producers can sway bureaucrats and which cannot. This will tend to distort the whole marketplace. It is one more example of the Canadian disease whereby the government interferes in the free market. In this case it has the effect of backing the strongest players in the market by giving loans to the healthiest and most established companies that apply.

A director for Telefilm at the briefing on the bill stated that the money would help the 50 or so strongest Canadian producers and that it was not meant for new or fledgling producers. Over time this will have a tendency to preclude those with new and fresh ideas who are new to the marketplace and those from the non-established film centres. This will be counterproductive to Canadian culture.

Another major concern I have based on the briefing is that there are no specific criteria in place to evaluate the applications or proposals to Telefilm Canada. That is left open even after the bill.

Third, the bill assumes that the relationship between producers and banks is unhealthy. While this may be true in some instances there are instances where it is apparently not true, as in B.C. and Alberta examples where indigenous productions have increased dramatically in the last few years without federally guaranteed loans.

The bill is a response to a portion of one industry having some difficulty accessing capital. It is important to look at the bigger picture since this difficulty is a longstanding Canadian problem which the parliamentary standing committee on industry has been studying in this session with regard to access to capital for small and medium sized businesses.

Why is there so little Canadian investment? Can we achieve our goals with regard to Telefilm Canada through tax credits or through motivating the banks? Both these methods are preferable to the intent of the bill which will have bureaucrats backing the winners. There is nothing in the bill to preclude a grant from Telefilm Canada, a grant giving organization, and a guarantee against production. The government may be accepting more than 85 per cent, or even 100 per cent, of the risk.

It is very unlikely this type of legislation would be contemplated in Germany, one of our major trading partners. Both Canada and Germany have a strong national banking system, but I am told by German business people that if they have a legitimate order in Germany they will almost certainly get the money to produce the order. They have a very good system to ensure that capital flows to legitimate business propositions. It is a major strength of their country.

In one of my previous careers I was a Canadian manufacturer with some export sales. Selling with foreign purchase orders was preferable to domestic sales because the federal government guaranteed the major portion of payment upon delivery. A very positive aspect of the federal program was that the eligibility rules were clear and certain and applied whether one was a new entrant such as us or a long established enterprise.

Bridge financing can be a reasonable proposition if it follows the principles of equal access to all and encourages good ideas. We should be in a position where if we have a good idea we can go for it. It makes no sense to have a capped and artificial program limit of $25 million. If we want to get into this area as a country we have a lot of homework to do and the bill does not cut it.

In summary, the strongest and largest film producing areas are in Toronto and Montreal. There is concern within the industry about equitable distribution of funds for loan guarantees. The bill will tend to entrench regionalization for an industry that is thriving across Canada without federally guaranteed loans.

Canadian access to capital is a problem for many industries. It is my recommendation that we look very closely at the German example for constructive ideas we may want to adopt.

Canadians want a strong national identity. This is best achieved through a strong cultural community that is allowed to develop and grow with minimal government constraint. The bill entrenches bureaucrats as arbiters of culture in my view and is counterproductive to progressive Canadian culture. There are many examples where Canadian banks have provided loans for cultural program development. Let us build on this success and attack the problem, not the symptom.

I am opposed to the bill because it is ill designed and is counterproductive to the long term benefit of Canadian culture.

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, my hon. friend is somehow opposed to the people he calls the bureaucrats in Telefilm Canada refereeing who will get the support and who will not.

One question I should ask him is who should referee it? Certainly not a group of politicians from committee. Does he have any suggestions of who would be better referees than we have at the present time?

Another question jumped out at me during his speech. He was talking about banking systems responding if a company had an order. That is very commendable in itself, but what is an order for a film? What is an order for something that has yet to be created? It is not an order for a bottle of milk.

With it goes risk. It is a creative risk. It is all those things banks do not like to deal in. That is why it is still necessary to help allay some of the risk at least. Each film that is made, each television series that is ventured, each pilot show that is done, is done with some creative risk. Either it will be a success or it will bomb. Some of them bomb. They are not all successful.

[John Duncan, Reform, North Island—Powell River, BC]

Mr. Speaker, as a small manufacturer in the furniture business with about a 20 per cent success rate, the banks were very used to the manufacturing success in my business. That is the best example I can give.

Every business has a degree of risk, particularly manufacturing. I empathize with the member's comments in terms of the banking system and how the access to capital for small businesses is not forthcoming in the way we would like to see. However to single out this one industry with a bill wherein the rules of engagement afterward are not specified is not doing our homework.

As to who should do the refereeing, I gave an earlier example of federal bureaucrats administering the export development program. They are not insiders. That is my concern with having Telefilm Canada be the arbiters. They have all the baggage of the established cultural industry in Canada and will be potentially blind to new regional development or new blood that wants to come into the industry.

It was apparent in the briefing on the bill that this program would go to the strong and the established. It was not to go to fledglings or new entrants into the business. Who has the biggest concern with access to capital? I would say the opposite to the apparent intent of the results of the bill.

My suggestion on who should referee the whole process would be someone not within that group but someone perhaps associated with the regular bureaucracy that is used to this type of standard setting and this type of allotment.

[Ovid Jackson, Liberal, Bruce—Grey, ON]

Mr. Speaker, I thank both the hon. member for North Island-Powell River and the member for Halton-Peel. This has actually been a very good discussion.

In my previous job as mayor of the city of Owen Sound we tried to get a centre for the performing arts. It was very difficult. On the one hand we had to have a balanced business approach and on the other hand we were looking at visionaries, idealists and artists, and artists are not necessarily business people.

Let us try to imagine a world without artists. Somebody had to dream or imagine many of the things we do in life whether it is the CN Tower or the Corvette car we drive. Sometimes dreamers or imaginers do not know anything about money and sometimes they do make mistakes. The government is trying to find a medium through Bill C-31 to encourage the arts in Canada.

We are rather unique in Canada in our proximity to the United States and with the competitiveness from there. All of us are aware of what happens in Universal City. We know the Japanese are taking large chunks of it. It is a very clean industry. It is a great industry. It is a growing industry. It is an industry that Canadians could be proud of, with the quite recent ACTRA awards. As the hon. member for Halton-Peel has said, we have good film makers and a lot of producers coming to Canada. We have an environment in major cities, as mentioned before, for this kind of climate.

Notwithstanding it is not going to be perfect, knowing the groups at work here. The hon. member from the Reform Party talked about the business part of it and the hon. member for Halton-Peel talked about the artistic part of it. Somehow we have to merge those two parts. People have to take risks. Sometimes they bomb. Sometimes it takes years for things to happen, but we need these people and we need to encourage them. I am certainly glad we on this side are trying to promote that kind of climate.

I know there have been boondoggles in the past. There will probably always be, but hopefully we can cut out the loopholes and have a climate to create work for our people, expression for our people and growth for our country as the great country we know it to be.

[John Duncan, Reform, North Island—Powell River, BC]

Mr. Speaker, I do not know exactly what the question was, but I do appreciate the fact that we both have the same bottom line on this bill which is we want to see Canadian culture improved as a result of the cultural industry in Canada. I certainly would not want anyone to think that was not the direction I was also heading in. I thank the member for his comments in that regard.

[The Deputy Speaker]

The time for questions and comments has expired.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, it is a pleasure to speak to Bill C-31, an act to amend the Canadian Film Development Corporation. I am rising to voice my opposition to this bill. It will encourage state intervention in what should be a naturally evolving and privately funded industry. I will begin by speaking broadly.

Culture cannot be bought. It is something which exists because people practice it. They live it. They are it. It cannot be artificially created or preserved by the state. All cultures thrive, evolve and change naturally as the wishes and practices of the people change.

Although a young country, Canada has a culture and it is one to be proud of. We need to define what that culture is. Reform has taken a swipe at identifying some components of Canadian culture.

We believe that Canada's identity and vision for the future should be rooted in and inspired by a fresh appreciation of our land and the supreme importance to our well-being of exploring, developing, renewing and conserving our natural resources and physical environment as a part of culture.

We believe the people of Canada are this country's most valuable resource. The nurture and development of human knowledge, skills and relationships are the keys to full participation in the knowledge based service economy of the 21st century.

We believe the creation of wealth and productive jobs for Canadians are best achieved through the operation of a responsible broadly based free enterprise economy in which private property, freedom of contract and the operations of free markets are encouraged and respected.

Furthermore, we believe in the value of enterprise and initiative. Governments have a responsibility to foster and protect an environment in which initiative and enterprise can be exercised by individuals and groups.

Looking at Bill C-31, it reminds me of an old tax incentive program. I believe it was introduced by the Liberals, but maybe it was the past Conservative government; sometimes it is hard to distinguish between them. It was a research and development tax credit scheme. All of us believe in research and development and we want to promote that, but this scheme attracted a number of con artists. It was a fiasco. The design of the program caused the loss of millions and millions of tax dollars because it was not properly handled. It was interfering in what should have been more of a private sector enterprise.

We believe every individual, group, province and region in Canada is entitled to fundamental justice. Fundamental justice entitles the people of each region to benefit equally without discrimination from participation in Confederation and from the programs and expenditures of the Government of Canada. There is some doubt as to whether Bill C-31 in fact would be broadly based across the country and allow equal access by all Canadians.

To repeat what I said, Canada although a young country has a culture, one we should be proud of. It includes peacefulness, fairness, compassion, excellence, tolerance, initiative of spirit, an appreciation of the arts, in spite of government red tape, high taxes and inefficiency.

Any attempt to artificially interfere with the natural progress of Canadian culture is destined to become just one more failed attempt at social engineering. It is certainly not the role of government to dictate what the culture of the population will be nor is it appropriate for the government to interfere on the edges as is the case with C-31.

Much apart from the fundamental issue of state intervention within society, the bill itself has some significant problems. The loan guarantees this bill would provide will diminish the opportunities that would allow new, innovative and evolving cultural enterprises to break into the market.

Under this bill loans would likely be guaranteed to the healthiest existing companies. This will have the dual effects of entrenching the existing players in the market, thereby establishing an elitism within the industry which will hinder change and growth within the industry, and creating an industry that finds itself increasingly out of sync with mainstream Canadians.

Not only would this bill have a detrimental effect on the cultural industry in Canada but there is nothing to suggest that loan guarantees are required. For example, the motion picture industry in Alberta has had a 360 per cent increase in productions over the past few years without federally funded guaranteed loans. The results in B.C. are similar.

These examples prove there is no requirement for guaranteed loans at all. This bill is unlikely to have an impact on regions with fledgling industries like Saskatchewan. It is not that I support this type of funding for regional development purposes, but not even the regional development argument can provide a

pretence of defence for Bill C-31. One might question whether this bill is another of the government's special interest payouts.

Furthermore there has been a trend in Canada for more jointly funded projects involving Canadian and international organizations. Canadian culture can thrive in the private market and has demonstrated it can do so. One such example is the filming of the Clint Eastwood movie "Unforgiven". It was filmed in Fort MacLeod, Alberta. The venture involved many Canadian production companies, one of which won an Academy award for set design.

Many Canadian television programs have gone into syndication as a result of partnerships with international agencies. There is a list of Canadian companies which have prospered without federal loan guarantees through this kind of international co-operation. They include: Alliance Communication Group; Paragon Entertainment Corporation; Accent Entertainment; Astral Communications; Cinar Group Ltd.; Nelvana Ltd.; Atlantis Media Group; Power Pictures Corporation; Post-Production Buzz Inc. These are but a few.

These companies are testament to the fact that Canadians can compete and thrive in the entertainment industry without government interference. It is these kinds of ventures that are going to drive the industry and also be most in sync with mainstream Canadian culture.

Art and culture for its own sake as an industry has its place in generating economic growth, but it is not the kind of thing we should be looking at to lead an economic recovery and end unemployment woes for Canadians. This government is constantly telling us, the media, the public, and anyone else who will listen that its priority is jobs. This bill will have no effect on unemployment. It may make job creation more difficult if the government has to shell out money to cover defaulted loans.

Some people may be looking to make political mileage by smearing our position on Bill C-31 and will say that there is a Reform bias against culture. That is clearly not the case. We want to remove all government barriers to the promotion and growth of Canadian culture. We do oppose government handouts to business, even the business of culture.

We take the same line with cultural organizations as we do with all businesses and special interest groups; that is, you cannot expect to get grants, loan guarantees and tax holidays from the government indefinitely. All special interest groups should raise money from the people they claim to represent or they should have a project that is viable enough that the bankers will lend them the money.

There are many examples of where we would reduce funding for these groups in the spending plan we published during the last election campaign. Our zero in three package outlined very clearly that business and special interest groups of all kinds would have to expect less from government in the way of grants, loans and loan guarantees.

There are some significant omissions in this bill, especially where issues of loan criteria and repayment details are concerned. Many people in the industry have very grave concerns that nepotism is rampant within some of these organizations. Many projects are funded on the basis of who knows who and family relationships rather than on artistic merit and economic potential.

The bill omits all explanation of repayment terms. If the government is backing 85 per cent of the loan and the loan defaults after partial repayment, is the government portion considered to be paid off first? Is the government liable for any of the interest on the loans when it backs over 50 per cent of the value? If not, what is the incentive for the banks to ever accept any less than 15 per cent of the risk?

It appears this bill was thrown together in a hurry, probably at the request of special interests, without completely thinking through the implications of such loan guarantees. I guess the details will be supplied later, but it does make us question the wisdom of supporting such a bill.

Voting for this bill and many others like it would be like co-signing on a loan when one's account is $520 billion in the red. I would not like to be considered as an accomplice to that crime against our future generations.

Another concern is that this program will encourage the government to underwrite those projects that would not ordinarily have been considered as an acceptable risk. That means the default rate is likely to be significantly higher than the current one which, by the way, is very low. If this happened, it would seriously hurt the reputation of the industry which has been steadily improving over recent years. As it stands, only those projects considered viable receive funding. That seems to be a reasonable place to set the standard for funding.

I said it once and I will say it again: You cannot buy culture. All you will get for trying to do so is a whole lot of debt. If the original idea behind this bill was to build a cultural future for the next generation, it will succeed in a small way. It will help to build a culture of high taxes and crippling debt. It will contribute to a society that strips away most of a family income to pay interest on a debt the previous generation ran up. It will create a culture that exists with no government services, no safety nets or social programs because most government revenue will be going to debt financing. This will be a country with massive

unemployment since no investment capital will be forthcoming to a nation in such a financial mess.

This culture of debt and poverty is not the kind of Canada I want to create for the next generation of Canadians. That is why I must oppose this bill and all bills like it. The accumulation of many bills which spend tax dollars unwisely is the reason we have accumulated such a huge debt to this point in our history.

It is time for government to carry out its most pressing responsibility and let the private sector do the same in its area of expertise, namely the marketplace. This bill encourages rather than discourages state participation in the marketplace. It is likely to increase rather than decrease government spending. It is likely to discourage rather than encourage new, innovative and emerging firms from entering the industry. It perpetuates the idea that a nation's culture can be designed by a select few and artificially preserved by the state.

As a final concern, this bill was only tabled in the House on May 26. Without adequate time, it has been brought forward for debate on second reading. Over one weekend our caucus has had a limited amount of time to study this bill, to discern its implications. As we look into it initially, we have some grave concerns about the wiseness of supporting such a bill. We will be reviewing this bill in detail in our caucus.

We are trying to slow down debate on this bill to give it some some second thought so that this House can make wise decisions in the way we are putting the taxpayers' dollars on the line in loan guarantees. After all, it is the taxpayers we represent and in the final account they are paying the bills we run up.

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, my hon. friend seems to have a philosophical thing about state intervention. It was a major theme at the outset of his speech. I hope he will express the same views to his agricultural constituents, the farmers in this constituency. I hope he will express the same ideas on the formation of the auto pact. I hope he will express the same thing to his business constituents on the small business development corporation, or with the oil patch on the tax investments and the uncollected tax. There is the aircraft industry too. I could go on and on.

Canada has had a history of a mixed economy. There are many good reasons for it. One of the main reasons has been the size of the elephant we sleep with to the south of us. It has been considered necessary from time to time not with any ideology in mind but from a practical point of view to deal with issues as they have arisen.

State intervention is not new. I am surprised the hon. member is treating this as if it were some kind of new conjuring. It is not new. I am a little older than the hon. member. Maybe the hon. member does not remember the difficulty Canadian musicians had in being heard and the almost impossibility of getting Canadian productions over radio until the CRTC came into the picture. And that was state intervention too, I should say.

Look at what happened. Look at the result. The result of that investment is that all across Canada, whether it is in French Canada or English Canada, there is a thriving music industry today. It largely came about because those people, those performers and creators, for the first time were able to have their music heard in a large forum.

My hon. friend says that the business of granting loan guarantees will create an elitism. I respectfully suggest to him that this kind of intervention will prevent elitism, If investment money is only going to go to the strongest, the survival of the fittest, that to me is elitism. It seems to me that one of the functions of these loan guarantees is to prevent that.

Finally, I would suggest to the member that in spite of the fact that he has tried to create this illusion, this is not new money we are talking about here. This is a redirection of money. We are not adding to or increasing the deficit.

I suggest that he take those things into account.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, it is with real pleasure that I respond to the hon. member's concerns and also his questions.

First of all, he is absolutely correct. I do come from an agricultural riding that depends on agriculture, small business and the production of oil. I might tell the hon. member that in our agriculture policy we clearly discuss with producers how we might save taxpayers' dollars, how we might become more efficient in the defence of the industry of agriculture without spending more money but in fact spending less, and how we would not justify spending for agriculture in areas unless they be beyond the control of producers. I would suspect that Bill C-31 does not affect film producers or the film industry in areas beyond their control.

I heard from small business that they want an end to grants and tax concessions, loan guarantees. It is not fair. If I do not happen to be the beneficiary of the program then I am paying my taxes for someone who is the beneficiary of the program. I may go out of business trying to pay the taxes to keep my competitor in business. It is a very unfair appropriation of tax dollars, whether it be in the form of grants or in the form of loan guarantees or whatever. It is a distortion in the marketplace when what helps Peter is paid for by Paul and many times they are in the same industry.

I know I have the support of small business in my concerns with this bill. The oil industry, by the way, has similar concerns. I have spoken in this House about the foolishness of spending millions, billions perhaps, of taxpayers' dollars on megaprojects such as Hibernia when we are not sure that they are fundamentally sound projects.

The marketplace has a very good nose for sniffing out where investments should be made and where they should not be made and government has a notoriously bad reputation for being able to sniff out what is a good business venture and what is a poor business venture.

I want to respond briefly to the hon. member's concerns over our giant neighbour to the south and the effect that that has on our culture. He mentioned specifically the music recording industry and the fact that radio stations in Canada have to play a certain percentage of Canadian content in their air time. Perhaps it might be even good to review whether that has had a positive effect on the recording industry in Canada.

I spoke some time ago with the general manager of a radio station who felt that this ruling had limited the growth of the recording industry in Canada. He said there were very few recording artists in Canada who had ever made it until they made it big in the U.S. Because of some of the restrictions in our recording industry they tended to leave the country and become Americans rather than maintain their allegiance to and close association with Canada.

It is not true in all cases. We certainly have many recording artists in Canada whom we are very proud of. There is some doubt as to whether or not this Canadian content rule has been a blessing or a curse to the Canadian recording industry. In some ways it has suppressed the industry rather than assisted it. I guess time will tell. We certainly do not have tons of testimonials to be proud of. Even today most Canadian recording artists do not make it big in Canada until they have made it big in the U.S.

We have to be looking at our own confidence and the fact that we do not consider someone to be of any value because government dollars go to support them. We expect and measure value based on the saleability of what is being produced for us. That is the true measure of quality and the true measure of culture in Canada.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, I am going to take just a little different approach to this than my hon. colleagues who preceded me on both sides of the House.

I think that we have to look at this in reality as what it is and not be ashamed of it. It is an infrastructure program for the film industry. We should not be ashamed of that. If you look at every film industry in the world, save the United States or India perhaps, there is a good deal of government intervention in the film industry of one kind or another.

We are trying with this particular bill to make the intervention that we have in our film industry work a little bit better.

The film industry in Canada, as other members have mentioned, because we are so close to the United States with its ever pervasive influence in our culture, is particularly important because our sense of identity as Canadians, as we all know, is very much wrapped up in the reflection of what we see of ourselves when we are watching television. Much of our sense of Canadianism or what it is to be a Canadian we take from what we see on TV every day.

In the expanding universe of television of 500 channels of the future, when you see people up north living a nomadic or semi-nomadic existence in the barren lands of Canada watching Detroit television, you think: "My God, what kind of vision are we reflecting of ourselves as Canadians". Television and film production to Canadians reflects the kind of people that we are or would want to be. That is of particular importance.

We have to break this bill into two separate issues. One is television and the production of film for television. The second is the production of feature films. All of the infrastructure money in the world or loan guarantees in the world is not going to make one iota of difference in the feature film industry if you cannot get your feature films on to the screen and all of the screens in Canada are controlled by Odeon and Paramount out of Hollywood.

We have to look at this in two very distinct and very real approaches, one being feature films and the other being television. Canadians have had a good deal of success in producing television indigenously here in Canada.

I draw hon. members' attention to this interesting fact. We have the CBC in English Canada and Radio-Canada in Quebec. In Quebec the CBC has far more viewership per capita than the CBC in English Canada despite the fact that we spend more money on television in English Canada with the CBC. I submit that the reason for that is the French CBC has far more indigenous programs, far more programming that originates in Quebec.

In English Canada if you look at CBC's primary productions on any evening, what is it? It is a repeat. I know I am getting into the CBC thing again, but prime time viewing on CBC is all rehashes of American programming.

If we really want to do something about feature films and particularly made for TV production in Canada, our national carrier in English Canada should be carrying a lot more Canadian originated TV production.

That leads us to the question of public money, financing and how you get it to how do you get money into the hands of entrepreneurs that want to do a movie for TV or feature film. I am 100 per cent behind our caucus position. We do not have the right to take money from future citizens of Canada, children yet

unborn, to give to people today so that we can live better today than we should.

As an hon. member mentioned earlier, when we start weaning our economy from government dependence, we have to wean our economy slowly. We have to wean the whole economy, not just one sector, away from dependence on government grants and handouts.

This industry is no different than any other industry. It has to work on its own independent of government financing. How does it go about doing that? One way would be to relax the rules whereby people could get public equity participation in a movie.

Imagine how difficult it would be with an intellectual property if you go to a bank and say: "I'd like to finance this movie". When you show the script, you are asked: "Where's the bricks and mortar?". You say there are no bricks and mortar.

The information highway, computer programs and software are not bricks and mortar either. Somehow we have to allow our entrepreneurs to get money from people who are putting hordes and hordes of money into RRSPs to invest in ideas in this country.

The only way we are going to be able to do that is to relax the rules in our corporations act so that people are able to invest in a movie production. Yes, it would be extremely high risk but the rewards would be there.

I do not think we can say this is all one way or all another. I agree 100 per cent with my colleague who said earlier that we should not be using government money to finance any private venture. The minute you start using public money in a private venture it is no longer a private venture. It is a public venture.

On the other hand it is particularly important that we in Canada support our cultural industries particularly our made for television movies because TV is so much a pervasive part of our day to day lives. We see ourselves reflected back from TV with a sense of value as to what it is to be a Canadian.

If everything we see on television is imported from some other part of the world it is going to be even more difficult to get a sense of Canadianism, to be together as a nation.

I would like to see us import more of the films done in Quebec and dubbed into English and vice versa. Perhaps that would be a way to start getting some communication going back and forth.

This is in some ways a difficult bill for our caucus to wrap itself around because of the involvement of public and private money but I think on balance it is worthy of support. Again, it is not new money. It is a realignment of present moneys. Telefilm must be more sensitive to the regions and more accessible to producers outside Montreal and Quebec, Toronto and Ontario, but I understand that it is working in that direction.

We need access to big screen television for our feature films. We have got to break the monopoly of Paramount and Odeon to get our feature films on to our own screens.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.