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.