Mr. Speaker, it gives me great pleasure to join today's debate. I am rising to speak in support of Bill C-17 and to address more particularly clause 18 which introduces an amendment to the Broadcasting Act. This amendment will allow the CBC a greater measure of financial flexibility.
I would like first to convey my appreciation to the Minister of Finance faced with the difficult task of balancing so many competing priorities. His support for the CBC has been most gratifying. I know the employees of the CBC, including very many talented Canadian artists along with millions of loyal CBC viewers, also join me in expressing their appreciation.
The importance of public broadcasting in Canada fully justifies such a commitment. Thanks to public broadcasting, Canadians remain in touch with one another locally and nationally scene and with the whole world. Public broadcasting also gives all communities across this vast country of ours a chance to define and articulate their own vision of the world. Public broadcasting plays a decisive role in reaffirming our national identity.
That is why annual budget funding for the Canadian Broadcasting Corporation totals about $1 billion. This is 62 per cent of all federal funding for cultural agencies reporting to the Department of Canadian Heritage.
However, the financial situation of the CBC has deteriorated in recent years. Since 1984, its budget has been cut by over $200 million, which has had the effect of increasing its dependence on advertising revenue. In 1984, this source of financing made up 21 per cent of the CBC's total budget. Today, it is 36 per cent of the CBC's total budget, an increase of 15 per cent, although this has not been enough to turn around a very serious deficit. Its
dependence on advertising revenue calls into question the role of the CBC as public broadcaster.
Furthermore, the 1993 budget inflicted cuts totalling $100 million, effective in 1996. The CBC has already told us that if its financial situation is not turned around, it will have to proceed with further cuts in operations.
However, the problems of the CBC are not only due to budget cutbacks, a structural deficit and the impact of the recession on advertising revenue. The Canadian broadcasting industry has changed considerably in recent years. New and specialized services obtained operating licences in the eighties.
Canadians now enjoy a wider range of programming and services than ever before. Although these changes are significant, they are only a preview of what we can expect in the broadcasting industry. In radio and television, technological progress will generate even greater diversity. It is expected that this diversity will lead to increased competition, fragmented audiences and major investments in technology, and will increase the cost of Canadian programming.
In television, the advent of direct satellite broadcasting and the ability of cable companies to increase the number of channels they offer mean that 200 or even 500 channels will be available before the end of the century. New American direct satellite broadcasting services will be extended to Canada in the next few months. Cable companies will add a number of new services, including a number of specialized services which the CRTC is expected to authorize this year.
This new competition will further fragment the audiences and advertising revenue of Canadian broadcasters, including the CBC.
Radio is also facing a number of changes. A few years from now, we will probably be seeing new radio services and digital technology adopted by existing services.
Our government has an historical tradition of supporting CBC, of supporting Canadian culture.
Our electoral platform was clearly outlined in the red book. In that document we stated that culture is the very essence of our national identity, the bedrock of national sovereignty and national pride.
At a time when globalization and information and communications revolution is erasing national borders Canada needs more than ever to commit itself to cultural development.
There is no single instrument more important to the development of our national cultural identity than the CBC. This belief was the basis for our electoral pledge to provide the corporation with stable, multi-year financing. It is a key element in our plan to strengthen the CBC's ability to adapt to the new communications universe.
On February 3 of this year the Prime Minister announced the appointment of Mr. Anthony Manera as president of the CBC. Mr. Manera has enjoyed a distinguished career both within and outside the CBC. His commitment to the ideals of public broadcasting and his understanding of the corporation are deep indeed. The government is confident that under the capable leadership of Mr. Manera and the direction of the board of directors the corporation will meet its many challenges.
The government recognizes the enormity of the task before the CBC. In asking itself how the CBC can continue to reflect our fundamental values that project an image of Canada in which all Canadians recognize themselves the government understands that it must provide some measures of assistance to the corporation.
As a first step the government has committed not to impose new reductions on the CBC over the next five years subject to annual parliamentary approval of appropriations.
In addition, the government agreed to reprofile the cuts announced by the last government in order to ease their integration by the CBC. This measure comes in cost of $100 million in foregone savings to the consolidated revenue fund. It is a sure sign of this government's commitment to the CBC that this decision was made in the context of severe financial constraints.
These measures, the appointment of a strong new president, our agreement not to impose new reductions on the CBC and the reprofiling of previous cuts will give the corporation both the leadership and the clear picture of its financial future for the next five years it needs to plan for the longer term with confidence.
The next step in our campaign to help the CBC has been our agreement to grant the corporation's longstanding request for a borrowing authority. This measure will permit the CBC to become more efficient in its operations and allow it to enter into other ventures acceptable to the government that provide a return on investment.
The proposed legislative amendment to the Broadcasting Act would authorize the CBC to borrow from the consolidated revenue fund and from Canadian banking institutions through lines of credit, commercial loans and issuing bonds or commercial paper.
These borrowed funds would be used only to generate operating savings or for venture investments. The operating savings would accrue from investments in small and medium capital equipment and projects which have a payback of four years or less.
At the present time the corporation is unable to take advantage of such opportunities due to its shortage of capital re-
sources and the immediate need of addressing physical obsolescence in plants and equipment across the country.
Although the CBC can currently request an advance from the government this can be obtained only in exceptional circumstances.
The present situation is inadequate for two reasons. Requests must be evaluated in competition with other government priorities and the outcome of a request is directly dependent on the availability of operational reserves.
An obvious example of how this initiative could generate operational savings would be the purchase of capital equipment to replace leased equipment.
The operational savings would first serve to repay the capital investment over a period of three to four years and then further be applied against the corporation's operational shortfall. The authority to borrow would also facilitate the corporation's undertaking of large scale initiatives that further the achievement of the CBC's mandate and yield significant returns for a relatively small investment.
A good example of an initiative of this magnitude is the recent arrangement reached by the CBC to establish its owned and operated stated in New Brunswick. If the CBC had taken out a loan of $9.5 million for the purchase of the station, the advertising revenues from this new station would have allowed the CBC to repay the loan over a shorter timeframe than the life of the current agreement. The ability to borrow would have improved the CBC's financial position over the term of the agreement by over $3 million.
At this juncture I would like to assure the House that under no circumstances would the CBC be permitted to use these borrowed funds to address an operational shortfall and thereby operate on deficit financing. The CBC would be responsible for raising all the borrowed funds and ensuring that all procedures are followed in full compliance with the guidelines for market borrowings by crown corporations issued by the Department of Finance. The cash flows from the projects in question would remain with the CBC with their first priority being to service the debt.
The CBC's borrowing ceiling would be $25 million. A memorandum of understanding between the CBC and the Department of Finance would set out the terms and conditions governing the borrowing authority. Foremost among these conditions is that the CBC would require the approval of the Minister of Finance for each case in which borrowed funds were required.
In my opinion granting this long standing request for the borrowing authority is an important initiative in fostering the business like flexibility that is required for a $1 billion corporation with commercial objectives like the CBC.
No other corporation operating such a large enterprise would wish to operate without at least some such ability to borrow for viable investment opportunities.
The government and the CBC have taken a joint approach to resolving the corporation's problems. In addition to these measures, the minister has resolved to consult with his Cabinet colleagues, with other broadcasting industry stakeholders and with the corporation itself with a view to finding other ways of generating revenues in the public broadcasting field which would reduce the CBC's dependence on advertising revenues.
For its part, the CBC is expected to eliminate structural deficits and to absorb inflation costs as well as operating costs.
Mindful of the unique and highly enviable reputation enjoyed by the CBC's radio broadcasting services as well as the vital role that regional services play in helping the corporation serve the regions and introduce them to audiences nationwide, we have asked that current radio services and a regional presence be maintained.
The challenge is formidable. The move to grant the CBC limited borrowing authority will be one important component of the new strategy which the corporation will need to embrace if it is to meet the challenge.
Clearly, what we want is a renewed CBC.
Canada needs an effective public broadcaster as a front-line weapon in the battle to defend our cultural sovereignty against the influences of globalization.
To wage this battle effectively, the CBC must do the following: it must be the perfect reflection of regional perspectives across the network; it must help English-speaking Canadians and French-speaking Canadians gain a better understanding of the other group's culture by exposing them to programs produced by the other group; it must contribute to the common understanding of the multicultural or multiracial makeup of our population; it must adopt the strictest standards of journalistic responsibility; finally, it must co-operate with the rest of the broadcasting industry in an effort to come up with new markets for Canadian programs and sound recordings.
If we really want the CBC to be the typically Canadian voice that will shape our national identity in a multichannel environment, we must give it the necessary tools with which to confidently plan its future.
I call upon my hon. colleagues in the House to support the passage of Bill C-17 which, among other very commendable things, will amend the Broadcasting Act so as to grant the CBC limited borrowing authority. Recourse to this mechanism under the stringently controlled circumstances described above will
give the CBC considerable commercial flexibility. In turn, this flexibility will result in operating savings in the long run.