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Setting the record straight on the "Netflix tax debate"


By Maureen Parker, WGC Executive Director

On August 7, the Globe and Mail published an opinion piece by the University of Ottawa’s Michael Geist, entitled “Election 2019: Return of the Netflix tax debate." The Writers Guild of Canada has long differed with professor Geist on the subject of cultural policy, but in this case he not only reaches conclusions with which we strongly disagree, but he also gets a number of his facts wrong in the process.

First, Geist implies that the government convened the Broadcasting and Telecommunications Legislative Review panel because a $500-million commitment from Netflix for production in Canada “failed to stem calls from the cultural sector for more aggressive policies.”

That is simply not what happened.

On September 28, 2017, then-Minister of Canadian Heritage, Mélanie Joly announced the $500-million Netflix commitment and, in the same speech, launched the “Creative Canada” policy framework, which included the review of the Broadcasting Act and Telecommunications Act. “Our laws and regulations need to work in an online environment,” she said. “We will announce more details of the review of [the Acts] later this fall.”

Minister Joly also recognized that the CRTC should have a role in this process. “That’s also why, today, we are invoking our power to request the CRTC to report back to the government on how they see the system evolving,” she said. The CRTC ultimately did so, in a report entitled “Harnessing Change: The Future of Programming Distribution in Canada”. Immediately after the release of that report, the Broadcasting and Telecommunications Legislative Review panel was announced.

All of this clearly demonstrates the Liberal government had always planned to review and modernize the relevant legislation to support Canadian programming. It was not some kind of knee-jerk reaction to an “aggressive” cultural sector, as Geist implies. And a review of the legislation is eminently sensible  a five-year commitment from one company is not a long-term cultural policy for Canada.

Second, professor Geist says that because the panel report is not due until January, 2020, recent statements by current Heritage Minister Pablo Rodriguez constitute “circumventing the broadcast review panel and effectively ignoring the results of a public consultation before the results are even in.”

That is an absurd claim.

Remember “Creative Canada”? That came from months of public consultation. “In all, over 30,000 Canadians, including a wide range of creators and cultural entrepreneurs, took part in the discussion in a variety of ways, from in-person events to online discussions.” Is the government supposed to now ignore all that? What about the CRTC report, “Harnessing Change”? That also followed from a major public consultation. Are we to pretend nothing was learned at that stage either?

Geist himself notes recent reports indicate that Minister Rodriguez’s department has convened working groups charged with identifying regulatory reforms for the Internet. There have likely been any number of internal government studies, reviews and discussions, as well. These issues have been debated for at least a decade. Why are we now supposed to pretend the matter constitutes a tabula rasa, about which nobody knows anything until the Broadcasting and Telecommunications Legislative Review panel speaks?

It seems entirely reasonable that after more than three years of various consultations and studies, the government can start to reach conclusions about broadcasting policy in the digital age, and that is entirely consistent with seeking the advice of an expert panel on the details as it concurrently settles on where it wants to go in broad strokes.

Third, Geist states: “The shift toward mandated Canadian content comes despite industry data confirming record-setting financing in Canadian film and television production,” and “Spending on Canadian content production hit an all-time high last year at $3.3-billion, rising by 16.1 per cent.”

This is incorrect.

The $3.3 billion figure refers to production volume in from April 1, 2016 to March 31, 2017. This is 2019. We are currently in the 2019-2020 reporting year for the relevant data. Suffice it to say that 2016 was not “last year." Moreover, more recent data from 2017-2018 shows that those numbers have already declined, and have moved closer to the average of the past several years, particularly when adjusted for inflation and this at a time in which production is booming globally, due in part to a debt-fueled spending by global digital giants like Netflix and those seeking to compete with them.

Meanwhile, investment by Canadian broadcasters is going down. What will happen when Netflix can no longer borrow billions on the anticipation of expanding market share? What will happen after their five-year commitment not even to truly Canadian content, but to “original productions in Canada”, which includes Hollywood location shoots — ends?

What is the longer-term vision for Canadian content? Whatever it is, it must be based on the most current data and a broader view, not erroneous statements.

“Technology entrepreneurs cannot disdain tax laws and regulatory structures as mere archaic concepts incompatible with the digital economy.” Stephen Harper said that last year, in an opinion piece for The Globe and Mail on the perils of populism. Ironically, Professor Geist begins his latest piece by noting then-Prime Minister Harper’s opposition to a “Netflix tax." If indications are that Mr. Harper’s thinking may have evolved over the past four years, perhaps Mr. Geist should consider updating his as well.


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