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Heritage Minister Mélanie Joly poses along the Ottawa River in April, in Gatineau. Ms. Joly has spent the past year consulting Canadians on an impending shake up of the country’s content regulations. (Dave Chan/The Globe and Mail)
Heritage Minister Mélanie Joly poses along the Ottawa River in April, in Gatineau. Ms. Joly has spent the past year consulting Canadians on an impending shake up of the country’s content regulations. (Dave Chan/The Globe and Mail)

New system for funding Canadian content would rely on tax credits Add to ...

Canada desperately needs an update to its cultural policies but, like many Liberal initiatives, the review announced last spring by Minister of Canadian Heritage Mélanie Joly feels pretty mushy. To date, the consultations about nurturing Canadian-content creation seem mainly to have produced pieties about the digital age but few concrete suggestions.

Enter Richard Stursberg, former CBC executive and Telefilm chief executive officer. Commissioned by Rogers Communications Inc. to consider the issues, Stursberg has come up with his own bold plan to remake the funding system for Canadian content. Presenting his report “Cultural Policy for the Digital Age” at the University of Ottawa’s Centre for Law, Technology and Society Wednesday, Stursberg unveiled three pillars of agnosticism.

Sounds like an ancient Greek philosophy – or perhaps a style of architecture – but what it refers to is a system that funds Canadian creation regardless of its platform, its producer or its content. His plan would fold Telefilm Canada (which invests in film) and the Canadian Media Fund (which supports TV and some digital) into a single new agency that would rely solely on tax credits to encourage the production of any Canadian content. If a Canadian online service wanted to produce a series, it wouldn’t need a broadcasting partner to trigger funding; if a newspaper wanted tax credits for the Canadian articles it published, it would be eligible. Foreign services could participate, too – if they were paying taxes in Canada. (Hello, Netflix!) The plan sounds great on paper and includes some welcome ideas, but it is also a provocative scheme that raises questions about how it will operate and whether it will succeed – not to mention whether there’s any consensus on the philosophy behind it.

For example, since journalism is important to civil society and local TV news and newspapers are increasingly unprofitable businesses, Stursberg argues they are as worthy of public support as Canadian film or TV. But the notion of government funding, no matter how independently administered and automatically triggered, makes most print journalists queasy.

Meanwhile, the audio-visual producers who benefit under current rules will want to know if the proposal, which would rely entirely on tax credits refunded after they have paid their labour costs, is really going to seed their productions in the same way that upfront grants and loans do.

Also, the system is to be driven exclusively by the demand of the producers and the judgments they make about what the market will buy. So, if the only criteria for qualifying for the tax credits is first-come, first-served (until the government decides to cap the amount it will spend), what mix of content will the money actually produce? At a panel convened by the University of Ottawa to respond to the report, I had to ask whether this might not be a recipe for a lot of Canadian reality TV.

Another thorny topic is that of the levies, which broadcasting distributors, such as Rogers and Bell Canada, currently pay into the Canadian Media Fund .

Stursberg suggests that Netflix should not merely be collecting HST from Canadian subscribers – it currently benefits from a loophole that many other countries have plugged – but should also contribute to the programing supports for Canadian content. If Netflix is a distributor in Canada, shouldn’t it pay the levy, equivalent to 5 per cent of cable or satellite revenues, that Rogers and Bell pay? Or maybe it’s a broadcaster, similar to CTV or Global: then shouldn’t it face the same spending requirement on Canadian content, equal to 30 per cent of revenues?

Stursberg rightly dismisses “Netflix tax” as a misnomer for the HST requirement because that doesn’t single out Netflix for some special tax but rather requires it to pay what everyone else does. Similarly, the levy would just bring Netflix in line with Canadian participants who are now being forced to compete against untaxed foreign rivals.

Will Netflix, which has refused to disclose the size of its Canadian business to the Canadian Radio-television and Telecommunications Commission, really play ball? If bringing Netflix into the system proves politically unpalatable, I suspect the real question Stursberg is leading us toward is whether government should consider letting Rogers and Bell stop paying the levies – especially since, under his system, those funds would now be lumped into general federal revenue rather than sitting comfortably in the CMF where the distributors get some say in their disbursement.

So, talk of bringing Netflix in will likely lead to talk of letting Rogers and Bell out. And nobody thinks there’s any political appetite for the obvious alternative, changing the law to permit a cultural levy on Internet service providers, which would then target the other side of Rogers’ and Bell’s business.

Meanwhile, as Joly’s consultations wend their way across the land, Netflix has been playing the good corporate citizen, commissioning lots of Canadian series, including a new co-production with the CBC of an old familiar story. Is it really just a coincidence that Netflix is now underwriting Anne of Green Gables?

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