When Liberal MP Pablo Rodriguez donned the chef’s hat at the Department of Canadian Heritage 14 months ago, his assignment appeared simple: Keep the cultural policy pots simmering gently. After the disastrous collapse of his predecessor’s Netflix soufflé, nothing was to froth up or boil over before the 2019 election.
But then this summer, Rodriguez signalled a new direction, tweeting that “web giants” would soon be forced to contribute to the Canadian system, a promise now repeated in the Liberals’ election platform. In four years, the Liberals have made scant progress on the politically tricky cultural file, but as they head into this month’s federal election, that may be changing.
Back in 2015, the new government began simply. During the election, the Liberals had promised easy fixes on culture. Funding to the CBC, so heavily chopped by Stephen Harper’s Conservatives, would be restored, as would money for the National Film Board and Telefilm. Meanwhile, the Canada Council, which the Conservatives had also favoured, would receive more increases. Once elected, the new Minister of Canadian Heritage Mélanie Joly enacted these promises in short order. But she also launched an ambitious – and long overdue – review of cultural policy, identifying herself as a trendy digital native and declaring “everything was on the table.”
The report that emerged 18 months later, however, only proved how difficult it is to drain the cultural-policy morass into which Canada – along with most European nations – is sinking. National policies designed to promote domestic culture, from Canadian-content regulations to business tax deductions for advertising in Canadian media, are circumvented by the borderless model of the FAANGs – Facebook, Amazon, Apple, Netflix and Google.
A recent report from the Auditor General estimates that in 2017 Canada lost $169-million on sales tax not charged on foreign digital goods and services. Netflix, to cite the most discussed example, pays no corporate taxes in Canada, collects no GST on Canadian subscriptions and does not, unlike Canadian cable and satellite distributors, contribute to the media fund that underwrites Canadian television.
Today, Disney looks set to enter the Canadian market on similar terms while Apple TV is also expanding its streaming services. Meanwhile, Google and Facebook account for about three-quarters of online advertising in Canada, stripping several billion dollars a year out of a declining ad market that once underwrote domestic media.
Joly’s report had no particular solutions and did not propose any significant regulatory intervention. Instead, preaching co-operation with Silicon Valley, it only offered small initiatives but was unveiled alongside a much-trumpeted Netflix investment deal – a promise the streaming giant would spend $500-million on production in Canada in the next five years.
Scratch the surface, however, and it looked like Joly got snookered: Industry estimates showed Netflix was already spending more than $100-million annually in Canada, a suspicion confirmed last month when Netflix announced it had exceeded the promised $500-million in just two years. Trouble is, most of that spending is on “foreign service production” – that is Hollywood projects shot by Canadian crews. Because the deal was set up as a foreign business investment, not a cultural regulation, it contained no definition of Canadian content. Many in Joly’s home province were further enraged because, despite promises to spend $25-million developing the Quebec industry, it became clear the Netflix deal contained no requirement the content be French-language in origin rather than dubbed from English.
So, Joly retreated to the portfolios of Tourism, Official Languages and La Francophonie with her tail between her legs and Rodriguez took over while the country awaited the results of the broadcast review so conveniently scheduled to appear after the election. The Liberals appeared to have kicked one very troubling can down the road until June, when Rodriguez began hinting at some form of tech taxation or regulation, stating, “If you benefit you contribute.” Critics immediately pounced, arguing he was prejudicing the results of the broadcast review to be delivered in 2020. Nonetheless, the Liberal platform now promises measures that will force media giants to offer meaningful levels of Canadian content in both official languages, and contribute toward the costs of its creation.
Meanwhile, the Liberal government has also recently taken action on an equally difficult and closely related file. This May, the government announced it would offer a $600-million package of tax credits to Canada’s struggling news media, responding to concerns that the collapse of local newspapers was reducing citizens’ access to Canadian news and damaging democracy. To be awarded by the government based on the recommendations from an industry panel made up of media businesses, professional associations and unions, the package has proved to be highly contentious. Commentators of all stripes wonder how the media remains independent if it takes government help, although Canada can easily look to the CBC and public broadcasting for an arm’s length model. The most severe critics have also complained that the industry panel is self-dealing. Still, the Liberals had two difficult cultural files to manage during their mandate: They mainly deferred the first; they did address the second.
The next question will be what becomes of the broadcast review’s recommendations in the new year. Will that report actually address the yawning gap between Canada’s regulations and digital realities with concrete suggestions for new legislation? And if it does, will the new government, whether Liberal or other, adopt them? Two big ifs, but the moment might finally have arrived when Canada cooks up some cultural policy for the 21st century.
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