What Should Be Done? Recommendations

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9. What Should Be Done? Recommendations

The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.-John Stuart Mill, On Liberty, 1859.

Almost no socially redeeming value

In light of the critique in the previous section, surely it is time for the federal government to either abolish or to make major changes in Canadian content regulations. In the interests of simplicity, and to signal to fellow citizens and policy makers the serious weaknesses in those regulations, one is tempted to recommend that the whole scheme be scrapped immediately. Instead, I propose a more measured approach.

It is necessary to focus on the most objectionable aspects of the CanCon regime. Essentially, the CanCon regime is composed of two parts: (1) a number of direct and indirect subsidies to those Canadians who make TV programs and musical recordings, and (2) a number of regulatory edicts which are aimed at altering the set of TV programs and musical recordings broadcast in Canada, and at increasing the consumption of such "approved" cultural products. The second part of the CanCon regime is the more objectionable because the various regulations infringe on the constitutional right of freedom of expression. The outrageousness of these provisions are apparent when we consider how closely analogous ones would be applied to booksellers (who are the equivalent of BDUs for books). Recall the fictitious book store owner example in Box 1 in section 8. Distribution quotas and the like go far beyond the nanny state. They are the exemplar of the intrusive state. Recall that ordinary folks are free to decide

whom to marry (of either gender),

how many children to have,

what type of education and/or training to acquire (beyond age 16),

what type of occupation to pursue, and

which individuals to elect to Parliament, and whether to leave Canada and become a citizen of another nation.

But the federal cabinet, aided by the CRTC, does not believe that the same people should be free to consume as much foreign TV or musical recordings on radio as they want. It is hard to satirize something so absurd. Why focus on these particular cultural products? What about the possible effects on national identity and cultural sovereignty of citizens consuming a potentially unlimited quantity of foreign films, books, newspapers, magazines, plays, musicals, videos, and that cornucopia of digitized content pulled into one's computer from the Internet? One doesn't know whether to laugh or cry. Why do we put up with it? A great tolerance for intrusions by the state into freedom of expression is not a virtue. It is, rather, foolishness. It provides a rationale for further restrictions on freedom of expression in the name of somebody's inchoate ideas of national identity or some other concept. In his Liberty of Thought and Discussion, John Stuart Mill stated that

The power [to censor] is illegitimate. The best government has no more title to it than the worst. It is as noxious, or more noxious, when exerted in accordance with public opinion, than when in opposition to it.

Note: it is not true that the common property nature of the electromagnetic spectrum-which justifies government regulation of access to it-justifies CanCon regulations. First, controlling access to the spectrum by means of licensing relates only to over-the-air broadcasters. The vast majority of households in Canada receive their TV signals over wires!¹⁰⁹ Second, licensing spectrum users can be limited to auctioning-off the right to use a certain piece of bandwidth subject to a relatively few technical rules to ensure that negative externalities among broadcasters are properly constrained. CanCon has nothing to do with such provisions. Third, CanCon regulations consist of direct and indirect subsidies and a set of rules to increase the distribution of Canadian TV programs (and musical recordings) relative to foreign ones. The implicit objective of the latter is to induce Canadians to "ingest" more Canadian content and thereby acquire the federal government's undefined concept of national identity and cultural sovereignty.

While the legal authority to regulate broadcasting makes the CRTC's job with respect to CanCon much easier, all of the direct and most of the indirect subsidies could be provided in the absence of such authority. The quotas and other constraints on the distribution of foreign programs (and musical recordings) which infringe on the right to freedom of expression do require a licensing regime for broadcasters and related entities. But such licensing can be done (and is now done) independently of the need to licence access to the spectrum. For example, programming undertakings can operate without access to the spectrum and they are presently licensed by the CRTC.

Recommendations

My recommendations are divided into three categories: those that relate to the CRTC's infringement on freedom of expression (recommendation 1); those which relate to making much more visible the direct and indirect subsidies designed to increase the supply of Canadian content (numbers 2 to 8), and those aimed at improving the process for selecting CRTC commissioners (recommendation 9). The key idea behind recommendations 2 to 8 is that more and better information is needed by MPs and citizens to permit them to appreciate the costs and benefits of subsidizing CanCon. Then they can properly hold the party in power accountable.

I recommend that the federal government

1. Abolish forthwith all the regulations which in any way restrict the availability of foreign TV programs or musical selections on radio. If the federal government refuses to take this step, it should make a reference to the Supreme Court of Canada on the constitutionality of Canadian content regulations: do they violate the Charter with respect to freedom of expression? (This will shift the burden of bringing such an action to Canadians as a whole rather than a single broadcaster or small group of citizens.)

2. Move as quickly as possible to put CanCon on a channel- or program-specific, user-pay basis so that those who most enjoy CanCon can pay for their own pleasure and it will not be a burden on those who prefer foreign programs (see Watson, 1996).

3. Convert all indirect subsidies into cash subsidies. Require Parliament to vote on all subsidies for CanCon each year.

4. Make all of the taxes and subsidies involved in Canadian content requirements overt and subject to an annual report to Parliament. The legislature needs to know the full consequences of the CRTC's actions with respect to CanCon.

5. Require that all bills sent to consumers by cable TV and other distributors of television programs indicate the amount and percentage of the total that is attributable to CanCon subsidies. It is not a good idea to hide taxes (one of the arguments for having the GST replace the federal manufacturers tax). The people ought to know the cost of public policies.

6. Require all subsidized television programs to run a "trailer" at the top or bottom of the screen indicating the estimated amount of the subsidy for a few minutes each time it is broadcast. This will help citizens to see what their tax money is buying.

7. Require that all elements of the CanCon regulatory regime be approved by Parliament every five years by means of a sunset clause similar to that which applies to the Bank Act and some other regulatory statutes such as Lobbyist's Registration Act. To assist MPs in evaluating the effects of the regulatory regime, the government should commission an independent report on the effects of the policy; this report would be published several months before the policy was up for renewal.

8. Require the CRTC to provide a national 800 number 24 hours a day to permit citizens to register their views on its policies with the agency. The number should be shown on the screen when "Canadian programs" are broadcast. Further, the CRTC should include in its Annual Report a summary of the views it received from citizens.

9. Require that all appointees to the CRTC be subject to the approval of a joint House-Senate committee after public hearings.¹¹⁰

In summary, here is a list of the more important consequences of eliminating restrictions on the broadcast of foreign TV programs and musical recordings on radio and reducing the subsidies for CanCon:

The restraints on freedom of expression regarding broadcasting will be eliminated. Market forces will determine the demand for CanCon, and although production costs will continue to be subsidized, but at a lower level.

People will be free to consume as much CanCon as they wish and/or as much foreign programming or recordings on radio as they wish.

The end of restrictions on foreign programs would create strong incentives for TV program producers to tap the market for those willing to pay for good-quality Canadian content on a pay-per-channel or pay-per-program basis.

There would also be incentives to exert greater effort to export TV programs (and musical recordings) made in Canada-particularly to countries worried about US domination via Hollywood. Consider the experience of CITY-TV and others in this regard.

Eliminating the restrictions on foreign TV programs and musical selections broadcast on radio would appear to be consistent with changes in Canadians' values as documented by Neil Nevitte (1996) and Michael Adams (1997).¹¹¹

Since no evidence has been provided of any link between increases in CanCon requirements over time and a stronger sense of national identity among Canadians, it seems very unlikely that the removal of the requirements will have any adverse impact on national identity.

Restrictions on foreign programs are now almost irrelevant to CBC-TV. It is already providing almost 100 percent CanCon during prime time. CBC is committed to more CanCon during the daytime (see Saunders, 1998c).

CBC-Radio and its French-language radio network already provide a very high percentage of CanCon (see table 5). This is unlikely to change.

It appears that at least 60 percent of CanCon on TV would not be affected since it is not driven by regulations but by audience preference for news (local and national), public affairs programs, Canadian sports teams, and certain other Canadian programs, such as Royal Canadian Air Farce (see tables 3 and 5).

Eliminating the restrictions on foreign programs and musical selections would end the real threat of possible trade retaliation by the US-threats that are becoming more serious over time. (Consider the final WTO decision on split-run magazines in mid-1997.)

Citizens and their elected representatives will be able to see the estimated annual costs of subsidies aimed at supporting Canadian content. As noted in section 7, there is a reasonable case for subsidizing some Canadian drama for TV.

Elimination of the restrictions on the broadcast of foreign-made TV programs could result in more foreign drama (cheaper to import) on TV and other foreign programs that Canadians appear to prefer. This will also increase broadcasters' revenues.

No doubt these recommendations will be harshly condemned by cultural nationalists and the pecuniary beneficiaries of Canadian content regulations. One can only hope that a genuine debate will ensue and the Canadian public will become better informed about the real nature of the policy and the justifications for it.

The opponents of Canadian content regulations must appreciate that not only do interests create public policies, but public policies create interests. There are now so many people and businesses supping so deeply from the trough created by the federal government through Canadian content regulations that it will be extremely difficult to eliminate the policies. People will fight with great vigour against the possible loss of their accustomed position, whether in terms of their economic or perceived status.

Who should be held to account?

In this study, the focus has been on the actions of the CRTC, the agency responsible for regulating broadcasting and telecommunications in Canada. As noted in the introduction, the CRTC has had delegated to it by Parliament a very great deal of authority over broadcasting. But in Canada, the legislative agenda of Parliament is very largely controlled by the Cabinet. So the Cabinet is the real fount of power with regard to broadcasting policy. While the CRTC decides scores of cases each year, and it creates many pages of subordinate legislation (i.e., regulations),¹¹² one key fact should be noted: the Cabinet has a host of tools it can use to signal its views to the CRTC. These include the following:

1) decisions on political appeals to the Cabinet following a CRTC decision;¹¹³

2) the power under section 7 of the Broadcasting Act to issue policy directions to the CRTC. For example, it was used in 1995 with respect to the licensing of DTH satellite broadcasters;¹¹⁴

3) the power, under section 26 of the Act, to issue directions to the CRTC on several matters, for instance, the maximum number of channels or frequencies to be licensed in a geographical area, reservation of channels or frequencies for the CBC, and classes of applicants to whom licenses may not be issued. Such directions must be published in the Gazette and laid before each House of Parliament within the first 15 sitting days after making the order containing the direction;

4) the Minister of Canadian Heritage can give speeches indicating the government's views, but without compromising the independence of the Commission. Recall that the Minister is responsible for the CRTC; and

5)the (ultimate) power to control appointments to the CRTC and the renewal of such appointments. The Cabinet could begin to change the CRTC's behaviour by appointing commissioners who are likely to have a different interpretation of the policy objectives of the Broadcasting Act.

The key point is this: the CRTC cannot implement CanCon regulations or any other aspect of broadcasting policy in a way that is unacceptable to the Cabinet for very long. Therefore, citizens unhappy with the economic burden and restrictions on freedom of expression created by Canadian content regulations should focus on the Cabinet and, in particular, the minister responsible for the CRTC, the Minister of Canadian Heritage.¹¹⁵

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Last Modified: Wednesday, October 20, 1999.