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Standing Committee on Canadian Heritage – Main Estimates 2012-13 Study – Funding to Crown Corporations

Impact of the 2012-13 Main Estimates on the CBC and other Crown Corporations

May 29th, 2012

Mr. Paul Calandra:

One of the other main elements of the economic action plan was a reduction in funding for the CBC. We heard from the CBC president some time ago about their 2015 plan. I wonder if you could comment on some of the rationale for the reduction and whether they still, in your estimation, will have the ability to implement their plan.

Hon. James Moore:

Yes. CBC is obviously a very important institution for the country in terms of culture, but economically as well.

As the minister in charge of official languages, I would say that only the Canadian Broadcasting Corporation provides information and news in every region of the country in both official languages, on every electronic platform—be it radio, television, websites or iPad applications.

The Canadian Broadcasting Corporation is very important for our country’s cultural future.

After the election, I sat down with the president and the board of the CBC. I asked a simple question about the 2015 plan that they’ve outlined, which I believe every member of this committee has had access to and had a good discussion about. I asked how much money they need to achieve it: how much money they need to achieve their mandate in the Broadcast Act and how much money they need to achieve the opportunities that are expressed and outlined in the 2015 plan.

Budget 2012 provides those funds. It’s still providing more than $1 billion every year to the CBC. They have the funds necessary to fulfill their obligations under the Broadcast Act, and the 2015 plan—I don’t mean to just gloss over it—is pretty impressive. This is stuff that this committee, and the Senate committees that have examined the role and mandate of the CBC in years past…. Certainly I think it is a strong, effective approach to public broadcasting.

The pillars of it, of course, are that it be 100% Canadian content, with no Wheel of Fortune, no American films; that Canadian films, television shows, news, shorts, children’s shows, and animation—all Canadian creations—be shown on the CBC; that they fully embrace the digital opportunities, because I think it’s critically important for the CBC to make those connections with young Canadians, so that the next generation of young Canadians think of the CBC as a go-to place for Canadian content. Their full embrace of digital technologies has, I think, been very well received and well regarded and is essentially the centrepiece of their 2015 plan.

I also think, as I said, that their national footprint, maintaining services in all regions of the country, with zero station closures—there’s not one station closure—and the maintenance of their national footprint in both of Canada’s official languages is core to their mandate. Those things are all built into their 2015 plan, and they have the funds to start to deliver on that plan.

Would CBC, like everybody, prefer to have their budget increase by 10%? Sure. Everybody who has come before this committee, I’m sure, has made that argument. But the reality is that we have an obligation. We made a commitment to Canadians and were elected on a platform commitment to balance the budget in the medium term and to do so responsibly. Responsibly means doing, I think, what we did, which is sit down with all of our crown corporations and all of our agencies and ask them those questions—not how much money they want but how much money they need to fulfill their mandate, what their goal is, what they are planning to achieve in the coming few years, and how they can best do it.

That’s what we did with the CBC. We didn’t work against them; we worked with them in this process, so that they have the funds available to deliver their 2015 plan.

It’s not going to be easy. They’re going to have some challenges, there’s no question, but they’re going to be able to do it. A great deal of credit certainly goes to Hubert Lacroix, the president and CEO, the board, the management, and the team that they have there, who have I think come together with a really ambitious plan for the coming five years that will serve the country very well.

Chair    I’ll cut to the CBC. One of the things they’ve talked about is based on what they do with the BBC in the U.K., and that is a funding model that is over a five- to ten-year period, something that’s longer term. Would you consider doing something like that?

 

Hon. James Moore:

The funding that we have for the CBC…. As you know, all these reductions are over three years. The CBC’s macro-budget for this year, including all ad revenue, is $1.6 billion, if memory serves me. The reduction for this year is 2.4%. It ramps up to a total 10% reduction between now and the three-year period. So they do have certainty over—

Mr. Scott Simms:

But you’re talking about including the $60 billion, right? You pulled that into the—

Hon. James Moore:

That’s included in the overall amount.

So, certainty over five years…. Look, they have certainty over three years, and this is…. Actually, I agree with you, and this is something the opposition has raised before, as has the CBC and as has the public: that certainty in funding is an important thing, which is part of the problem of the $60 million recurring programming fund. Every single year with the Liberal and Conservative governments there was always a doubt as to whether or not the $60 million would get renewed.

The truth is, and you can speak to members of the cabinet of the former Liberal government, that there was always a debate about the $60 million and whether or not…. There was a bit of a carrot and stick game with the CBC about how they were managing things, and that shouldn’t be part of it. We should take the politics out of it and we should just make sure that they have a base funding, lump in the $60 million, and have the 10% reduction phased in over three years. It’s a 2.4% reduction in year one and the 10% will be absorbed over three years.

Mr. Scott Simms:

But if you take that to its logical conclusion, then you would think that a five- to ten-year funding model that gives them some security as to what they could do…. I mean, you talked about getting into digital and the like and getting into the digital realm, which is changing all the time. This steady funding would certainly allow them to be far more flexible going forward.

Hon. James Moore:

That’s true. However, there’s a flip side to that. In government, you also have an obligation—are we going to say to every single crown corporation and every single agency in the government that they’ll get 5% and 10% funding? What’s the point of Parliament? What’s the point of your oversight of my decisions? If you’re just going to lock in funding and say “Well, there you go”, then what’s the point of having Parliament discussing these issues? Plans and priorities change.

Mr. Scott Simms:

We see that now for everything.

Hon. James Moore:

Also, you appoint different boards, you appoint different chairs, and you appoint different presidents to crown corporations and agencies. They want to have different flexibility and different approaches to things. If, for example, people are going to be replaced at museums, if they want to have a new approach to things, if you lock in their budget for five or ten years and you say, “You’re going to be absolutely isolated from any kind of budget reduction, or even consideration of your mandate and approach to things”, I think that frankly neuters the obligation that we have on behalf of taxpayers to ensure that organizations are being as effective as possible in their approach to governing and spending taxpayers’ money. If you just lock everything in for ten years, then what’s the point of Parliament?

Mr. Scott Simms:

Well, it may not be ten years, but nonetheless you get the idea about how they’re dealing with them. Obviously the funding model’s out there, and it has proven to be successful.

Hon. James Moore:

There’s not one single crown corporation or agency or museum or anybody who wouldn’t say, “We would really love five to ten years of locked-in, guaranteed funding so we can have certainty for the next generation”. Everybody would want that, but I don’t think that’s prudent governing.

Mr. Scott Simms:

You don’t, for the simple reason that it takes control out of Parliament.

Scott Armstrong:

Minister, I want to thank you and your departmental staff for being here today.

To start, overall there’s a 12% increase in your department’s funding, and you expressed to us that many other countries are reducing their funding because of economic pressures in the recession, so that’s a very positive thing for your department.

The CBC has seen a budget reduction, but they have also said they have the needed funds to implement their 2015 plan. A big part of the 2015 plan, as I understand it, is to have more Canadian content and more Canadian-produced television shows. In fact, by 2015 I think that’s all they’re going to be showing. Am I accurate in saying that?

Hon. James Moore:

That’s correct, in both English and French.

Mr. Scott Armstrong:

That’s for both English and French.

When you look at the increase your department has received, much of it is due to an increase in the funding for the Canada Media Fund. That media fund, as I understand it, is to support artists in actually producing Canadian content and Canadian media. Would there not be a significant possibility that it could support the CBC, and provide them the content they need to meet the 2015 plan? Could you expand on the use of the Canada Media Fund?

Hon. James Moore:

Yes, there’s no question that it’s an important point. This can’t be lost. I’ll give an example. We talked about the importance of our national museums and galleries. People ask why the government isn’t increasing funding, for example, for the MAP program, the museum assistance program, or why we couldn’t be doing more for our national museums. Yet again, you have to draw back to 10,000 feet, and look at the entire suite of programs that we have to support Canadian culture.

For example, in the budget, the indemnification program is a simple concept. There are galleries and museums all across the country, from the big, from the Art Gallery of Ontario, to Glenbow Museum, to the smallest, the Port Moody Station Museum, a little museum in my riding—all shapes and sizes of museums. They apply to the Government of Canada for indemnification; that is, the Government of Canada agrees to be an insurance underwriter for the cost of transporting and hosting paintings, sculptures, any kind of exhibit that might be shown in a gallery or museum across the country.

Local museums can’t take this on. Local museums in this country are overwhelmingly volunteer organizations. It’s not as if somebody like my father, a retired dentist, is going to take on the financial liability of hosting something from Rembrandt. He’s not going to expose himself to that, to vandalism or what have you, nor is a volunteer organization. The Government of Canada steps in and backs them up, helps underwrite and fund them. We’ve doubled that.

Some people ask if the government couldn’t be doing more for galleries and museums. On the cash side, we say sure, there’s always an explanation for that, but if you draw back and look at the indemnification program, $3 billion is a massive relief for our galleries. The current envelope of $1.5 billion is usually taken up and consumed within the first three months of the year. We recognize that. Also, the big, professional organizations that have decent-sized budgets can go straight after those funds and crowd out the little guys. So we fixed that.

The reason I mention it is that there’s a similar parallel to the CBC. The CBC’s budget is being reduced by 10% over the coming three years, it’s true. However, on the other side, our government has created the Canada Media Fund. The Canada Media Fund receives $100 million per year from the Government of Canada. All told, the total partnership is $375 million. So $1 billion per year of A-based, Government of Canada money goes to the CBC, plus they get their ad revenue, which constitutes about a third of their operating budget. On top of that, we’re committing $100 million every year to the Canada Media Fund, a public-private partnership that we created, which in total kicks $375 million into Canada’s audio-visual sector.

All those shows are created and have to be Canadian in content and available in multiple platforms. The CBC leads the country in multiple platforms. It allows the CBC to access up to $375 million worth of productions of Canadian content to be shown on Canadian platforms all across the country. What we’ve done is take the Canada Television Fund and the Canada Media Fund, merge them together, and create a partnership.

The Canada Media Fund and the Canada Television Fund were created by the Liberals after the 1995 cuts to the CBC as sort of a stopgap from some of the blowback it received from those cuts. Those were both sunsetters and were lapsed every year. So production companies relying on those funds in order to create their Canadian television shows didn’t know if those funds would be available multiple years down the road.

What we did is merge those two funds, create the Canada Media Fund, and build a partnership with the private sector. We put in $100 million, and the private sector kicks in $275 million this year into this fund. Now we have all this money available. And better than that, the fund is not a sunsetter; it’s an A-based fund. In budget 2011, which we passed just after the last campaign, we A-based it, which is to say that it’s not a sunsetter any more, it’s now a permanent part of the Government of Canada’s funding infrastructure for Canadian television and shorts and movies, and content in both official languages. Part of it is reserved for productions in French, part of it is reserved for productions in aboriginal languages and in aboriginal communities, and part of it is reserved for all these things that are critical to Canada’s diversity across the country.

When people are critical of the reductions to the CBC, I understand, but you have to draw back and see the entire suite of things being done to support Canada’s audio-visual sector. In that regard, I think we’re doing very well.