Mr. Speaker, it is a pleasure for me to take part in this report stage debate.
Bill C-103 is one element in the longstanding policy supported by various governments in Ottawa. Governments long ago recognized the importance of the Canadian magazine industry and the affirmation of the Canadian personality. Allow me to take this opportunity to describe the background of the various measures put forward by the Canadian government in an effort to support the development of this major sector of our cultural industries.
The Canadian government has been concerned about the status and survival of the Canadian magazine industry almost since the beginning of the 20th century. Government's original concern was simply to ensure that Canadians had access to periodicals from around the world. It was a question of communication, in other words, the possibility for Canadians to have reasonable access to periodicals wherever they live.
Another major concern of the government, editorial content, came later. Initially, the aim of federal policy was to give Canadians an opportunity to enjoy and appreciate the arts, so the Canada Council was founded in 1957.
The emphasis was on the quality and quantity of the cultural product in Canada. There was no specific attempt to find out whether Canadian interests were involved in the creation or production of this product. There was no concern for culture in the broader sense, only for the arts. Since 1957, the Canada Council has supported periodicals of an artistic or scientific nature with subsidies, modest though they may be.
A third concern arose sometime before the Canada Council was created and has become increasingly important in the past 30 years. I am referring to the issue of Canadian content and Canadian cultural identity in the broader sense.
While we were concerned with promoting Canadian ownership and content, we realized that we must not close the door to foreign
periodicals. We simply must prevent them from gaining too many advantages on the periodicals market in terms of economic advantages arising from intensive production, distribution, access to capital, or a well established reputation among Canadian readers. The key to this policy is advertising and postal distribution.
Thanks to legislative measures implemented progressively pursuant to the recommendations of the 1961 Royal Commission on Publications, commonly known as the O'Leary commission, and the 1970 Special Senate Committee on Mass Media, magazines printed in other countries were prevented from entering Canada when they contained advertising directed specifically at the Canadian market. Canadian advertisers were thus encouraged to place ads in Canadian magazines.
I would like to elaborate on the role played by the O'Leary commission in identifying measures to promote the development of the Canadian periodical industry. In 1961, only 25 per cent of the magazines distributed in Canada were Canadian. It became imperative for the Canadian government to do something about this situation. This led to the appointment of the Royal Commission of Inquiry on Publications.
Following a long series of hearings and extensive research, the commission was able to assemble all the elements it needed to establish the status of the Canadian periodical industry in the early sixties. It was clear that the industry was facing serious problems and that the government had to act. Members of the commission found that between the two sole sources of magazine revenue, circulation and advertising, there was a durable and mutually beneficial symbiosis which they defined as follows, and I quote:
"Behind all this is an important spiralling action, fundamental to periodical publishing; the larger a periodical's circulation, the more advertising it can attract; the greater its advertising revenue, the more it can afford to spend on editorial content; the more it can spend on editorial content, the better its chances of obtaining more circulation."
It became clear that advertising revenue was essential to the Canadian periodical industry. Consequently, the government decided to do what was necessary to channel Canadian advertising revenue to Canadian periodicals. The development of a policy for this purpose was instrumental in creating a strong financial basis for the industry.
Section 19 of the Income Tax Act was adopted in 1965 and became one of the main tools for implementing the federal government's policy on magazine publishing. According to this section, only purchases of advertising aimed at the Canadian market and inserted in Canadian periodicals were tax deductible. This section also provided that to be eligible for the tax deduction, the taxpayer had to advertise in a magazine with at least 75 per cent Canadian ownership and a ratio of original editorial content of at least 80 per cent.
Second, the members of the Royal Commission on Publications recommended that foreign periodicals containing advertising intended for the Canadian market should be denied entry. Customs tariff code 9958 was created in 1965 pursuant to this recommendation. Since these measures were implemented, Canadian magazines have multiplied and diversified.
In 1959, before the introduction of these two measures, Canadian magazines represented 23.3 per cent of the magazines distributed in Canada. The proportion rose to 29.9 per cent in 1971 and 39.4 per cent in 1981. In 1992 Canadian magazines represented 67.6 per cent of the magazines distributed in Canada.
These mechanisms must now be updated in response to the advent of new technology in recent years. The electronic transmission of proof pages produced in other countries for printing and distribution in Canada was not envisaged when these policy instruments were designed in 1965.
The need to modernize government structural measures became particularly clear in January 1993 when Time Warner officially announced its intention to publish Sports Illustrated in Canada. In an effort to avoid the application of tariff code 9958, Time Warner chose to print Sports Illustrated in Canada using editorial material transmitted electronically from the United States. This situation demonstrated the existence of a loophole in our structural measures and the urgent need to update the Canadian policy on magazine publishing.
On March 26, 1993, the government announced the creation of a task force responsible for reviewing the various issues affecting the Canadian magazine industry, including its trends and evolution, the Canadian advertising market, the impact of technological progress, the international aspects, the regulations, and the effectiveness of current policy implementation measures.
The government wanted to ensure that the measures taken to promote the development of this industry were up to date and effective. These measures included Customs Tariff Code 9958 and section 19 of the Income Tax Act mentioned earlier.
Barely two weeks after announcing the creation of the task force, the government said that this task force on the Canadian magazine industry would have two joint chairmen and would be composed of volunteer experts representing Canadian magazine publishers, advertisers, consumers and the legal community.
The joint chairmen of the task force on the Canadian magazine industry, Patrick O'Callaghan, journalist and former editor at Southam Press, and Roger Tassé, former deputy minister of justice, carried out their mandate with the help of a group of seven volunteer consultants representing all regions of the country. They came from the advertising industry, consumer associations and the Canadian magazine industry; some even had some experience in international trade.
This review of the measures in place to help the Canadian magazine industry was aimed at proposing other measures that would enable the government to meet its political objective of making Canadian information and ideas accessible to Canadians through truly Canadian magazines.
In March 1994 when the task force on the Canadian magazine industry submitted its final report, the government again acknowledged the valuable contribution the Canadian magazine industry makes to our economy, our culture and our heritage. On December 22, 1994 the government announced its response to the recommendations contained in the final report of the task force on the Canadian magazine industry. The government indicated then that it would address all of the task force's recommendations, including the recommendation for a new excise tax on all split run magazines containing advertising directed at Canadians.
The government then stated that an excise tax would be imposed on each copy of a split run edition at the rate of 80 per cent of the value of all the advertisements contained in the edition. Periodicals that would otherwise be subject to the tax are exempted from the tax based on the number of split run editions that were distributed in Canada before March 26, 1993, when the creation of the task force was announced.
Finally, this bill demonstrates the federal government's continued commitment to promote the growth of a Canadian magazine industry that is viable, original and dynamic.