Mr. Speaker, today we are debating, at third reading, Bill C-103, an act to amend the Excise Tax Act and the Income Tax Act. On behalf of the Bloc Quebecois, I rise today to reiterate our support of this bill, which is basically aimed at putting an end to the distribution of split run editions in Canada and at strengthening the provision granting tax deductions to Canadian companies advertising in Canadian newspapers and magazines.
For the benefit of our listeners, I should add that a split run edition is an edition in which more than 20 per cent of the editorial content is of foreign origin.
It is important to note that this bill was made necessary by the government's lack of action to take the required steps to ban split run editions in Canada.
In 1993, Time Warner advised the Canadian government that it intended to distribute a split run edition of Sports Illustrated in Canada. As I said in my September 25 speech, instead of acting, the government chose to appoint a task force to study the issue. Sports Illustrated went ahead with its plan unhindered and with the full knowledge of the government.
Time Warner simply decided to electronically send the editorial content of its American magazine to Canada. It then sold advertisement to Canadian companies, and printed and distributed its magazine in Canada. Therefore, dumping advertising was possible for Sports Illustrated because its domestic market already covered its production costs. It could sell ads much cheaper and undermine the magazine industry in Quebec and Canada.
However, and I want to be clear on this point, that measure is not aimed only at Sports Illustrated . In fact, it became necessary because Sports Illustrated was the first magazine to circumvent the intent of the Canadian law. I know, and it was said repeatedly at the finance committee, that other businesses are only waiting for a slight bending on the part of the Canadian legislators to do exactly what Sports Illustrated did, that is transfer some editorial content to Canada and practice advertisement dumping.
I would also like to remind you that this bill was requested by representatives of the magazine industry in Quebec and Canada mainly for two reasons: first, because the industry could not have grown without the proper protection measures and second, because there is no financial security in that sector of the cultural industry.
For example, at the finance committee, Mr. Jean Paré, editor of L'actualité and representative of the Association québécoise des éditeurs de magazines, when speaking about the impact of the measures implemented by Canada to protect the Canadian magazine industry, told the committee that most of these magazines would not exist without the measures that successive federal governments have implemented over the last 30 years to level the playing field for Canadian businesses in the international market and ensure fair competition.
"The proof of our argument is that, before this legislation was adopted, our industry was nonexistent. The magazine I represent will be just 20 years old in a few months. When it was started up, only three of the 57 periodicals I represent today were in existence. The combined annual circulation of those in existence at that time was a mere six million copies. Today, our 57 members have a total of 80 million annual circulation; with the nonmembers added in, the figure is 138 million. The legislation adopted 25 years ago triggered investment in these businesses. The magazine industry in English Canada has followed almost the same path."
In his presentation to the Finance Committee, Mr. Paré indicated that, at first sight, one might think that these figures indicate that the magazine sector is a healthy one, but this is not the case. In fact, his statement to the Committee confirmed the conclusions of the task force on the Canadian periodical industry. Mr. Paré said:
"One might think that this is a robust and flourishing sector of the communications industry. Not in the least. Nine out of ten of these magazines are not cost-effective and are in existence solely because the publisher has a few profitable titles. This minority of profitable magazines, moreover, has to settle for profits that, on the average, barely exceed 10 per cent, far from what is considered a minimum in the US. Between 60 per cent and 70 per cent of these magazines' revenues come from advertising and a 10 per cent cut in advertising would probably wipe out the entire Canadian magazine industry". Sports Illustrated also testified before the Finance Committee. During its presentation, the company stated that Bill C-103 was unfair because it specifically targeted Sports Illustrated .
In fact, it is true that the bill calls for imposition of an 80 per cent excise tax on the advertising revenues of split run magazines, and that this measure must be applied to Sports Illustrated . The bill states that this measure does not apply to those split run periodicals which were already published and distributed in Canada as at March 26, 1993, and Sports Illustrated began its Canadian distribution on April 1, 1993.
Unlike what Time Warner, the publishers of Sports Illustrated , would have us believe, this measure is not solely aimed at its magazine. In his presentation to the finance committee, Mr. Paré described as follows the competition Quebec magazines might face if Bill C-103 were not passed by this House, and I quote:
"The publishing giants are not all American. They do not publish in English alone. The competition comes from German, French and British companies as well. These gigantic concerns, which may own hundreds of different magazines, the smallest with a circulation that sometimes exceeds that of the biggest Canadian magazines, are increasingly publishing in all languages in compact editions with adapted content, in order to skim off advertising revenue in as many markets as possible. These international publishers are now discovering Canada".
So Bill C-103 is not exclusively aimed at Sports Illustrated , as Time Warner would have us believe, but also at all the other magazine publishers who are waiting to see what will happen to this attempt by an American magazine to enter the Canadian market.
In its presentation to the finance committee, Sports Illustrated insisted that it participated in Canadian life, first by printing stories on Canadian teams and athletes like the Toronto Blue Jays and Elvis Stojko, and second, by creating jobs in Canada. In this respect the magazine's representatives stated, and I quote:
"-the company saw this as an opportunity to create jobs for Canadians in printing and distribution, and assignment opportunities for Canadian journalists and sports photographers".
According to our information, however, Canadian content in Sports Illustrated is minimal. Furthermore, it seems that the stories in Sports Illustrated that feature Canadian athletes would have been included in any event in the U.S. version of the magazine. Elvis Stojko may be a Canadian, but he also won the gold for figure skating, which makes him an international star, so it is not surprising he would be featured in Sports Illustrated . In fact, it would be surprising if Sports Illustrated did not have a story on Elvis Stojko.
As for job creation, I am told that the contribution of Sports Illustrated in this area is rather meagre. With both versions of Sports Illustrated being produced entirely in the New York, Canada's editorial contribution was to all intents and purposes nil. As to the job of printing, one printer estimates it takes a maximum of nine hours press time to print an issue of Sports Illustrated . We really have to ask ourselves just how much Sports Illustrated contributes to Canadian culture and employment.
On the other hand, Sports Illustrated clearly creams off the advertising market by selling its advertising space at cut prices. In its brief to the Standing Committee on Finance, the magazine announced its intention to change from a monthly format to a weekly one, an announcement that will hardly be reassuring for the Canadian industry, if the government does not act diligently.
This legislative measure is important for the magazine industry. I would, however, like to take this opportunity today to remind the government that it must also implement the other measures put forward by the task force on the magazine industry.
They are: first, freeze the funds set aside for the postal subsidy program at their 1995 level and second, remove the GST from all reading materials. The Liberal Party of Canada made clear and formal commitments in this regard. It passed a resolution to the effect that a Liberal government would reaffirm the historical principle of not taxing the publishing industry and would remove the goods and services tax, the GST, from all reading materials. We are still waiting for these promises to take effect.
Third, the Government of Canada should be obliged and the provincial governments encouraged to place advertising messages to the people of Canada in Canadian magazines only. Fourth, the Investment Canada Act should be amended to ensure that the Department of Canadian Heritage vets all measures approved by Investment Canada concerning periodicals and magazines.