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  • Ted Woodhead

This week at the CRTC

Updated: Jun 7

Let's begin with a quote from Albert Einstein, "Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution." So with that in mind I sat and read the Canadian Radio-television and Telecommunications Commission's (CRTC) decision on Tuesday morning titled heroically, The Path Forward - Supporting Canadian and Indigenous content through base contributions.

All of that to say the CRTC decided after much ado to impose a tax on online providers of audio-visual and audio content and to take those tax remittances and divert them to their favourite funds that will mete out the money to the Cancon creative communities. Of course none of this was a surprise given that the CRTC has been doing precisely this for the better part of 50 years and companies like Amazon, Netflix and Spotify etc. proved to be too enticing a taxation target to be left alone innovating and things like that. You see the kleptocratic class that is our Government, simply cannot countenance success being its own reward. The fact that Canadians have voted with their wallets and feet and have opted to subscribe or otherwise cast their eyes and ears on streaming services cannot simply be evidence of consumer choice and preference. It must be met full on with yet another tax to subsidize the ever so elusive objective of producing and distributing quality Canadian content.

Don't get me wrong, I have no issue with the Government supporting the Canadian arts, but rather, I do not believe this is the way to do it. This little 50 year experiment has simply not, based on my opinion on any value for money calculation, produced the desired result, whatever that might be. What it really is, is an industrial policy masquerading as a cultural one. The path forward is apparently doing what we have been doing, forever it seems, with dubious results and hoping for better. It cannot credibly be argued that this decision responds in any meaningful way to the institutional knowledge of the CRTC, and worse, shows so little imagination as to be criminal.

I actually sympathize with the CRTC here, because it had little choice but to do it. They have been literally told to do so by the Government through a succession of Heritage Ministers, most recently Minister Pascale St-Onge and the army of "culturecrats" at Heritage Canada whose best days are enjoyed funneling money to the supplicant cultural panhandlers outside their door. The CRTC literally had no choice, and that is a great shame.

The decision does nothing, yet at least, for the traditional radio and television companies who have been trapped in a punitive taxation scheme for a long, long time. There is no relief whatsoever, even hinted at. I doubt very much the online distributors are happy, and nor will their millions of customers be either, who will undoubtedly see their subscription fees inch up so that the online companies can recoup their costs. Various elements of the decision are arbitrary such as why 5% of revenue was chosen, and odder still why the audio streamers were taxed at the same 5% tax rate as the audio-visual streamers. Surely, the CRTC must know the fundamental economics of the two are very different. It may well be that the 5% tax will exceed the margins available in those businesses to pay it and remain profitable

The subsidy receiving crowd all appear very pleased with this of course. Champagne must have been popping in the finest Bistros in Montreal and Toronto. They've been invited to go to the bar for a second round on someone else's tab. It was ever thus. Hopefully this gushing gas hose of cash will lead to an explosion of high quality Canadian content that will be consumed by all, not just Canadians, but also globally where throngs of viewers await this content juggernaut. That's the fictional story they tell of course, but I predict the reality will be far different.

Losers in this are the streamers and Canadian consumers who will be left footing the bill. The Government has declared an affordability emergency and this is its response. Sorry, the logic simply doesn't hold. The traditional broadcasters are also losers, still saddled with obligations, financial and otherwise, that are stifling their businesses. Little bits of relief have come but there has been no major overhaul of a complex scheme of taxes and other constraints that hobble them from competing effectively.

Having made a shambolic mess of all of it, who else might weigh into this with a thought or two? Well, let me tell you who. The United States, you know our closest trading partner to the South, sees this all quite differently. The United States Trade Representative (USTR) has taken issue with Canada's Digital Agenda, of which The Path Forward is one piece. She regards the Online Streaming Act, and by implication Tuesday's decision, as a trade barrier along with grievances about Canada's Broadcasting policy and regulation. Since we are currently preparing for negotiations with the United States on the United States/Mexico/Canada free trade agreement, picking this fight with the United States seems unwise. Is this particular course of action, that has drawn the ire of United States, a hill to die on when we no doubt should be focusing our attention on more critical areas like resources and manufacturing? It really doesn't seem so.

I'll give the last word to Bryan Adams. He compellingly argued that Canadian music is global now, and beseeched the Government to change the rules with the times. He refers of course to the points system that the "culturecrats" use to determine a song's certified "Canadianess". This particular issue and a bunch of others weren't decided on Tuesday, but by all indications the CRTC doesn't seem to have the imagination to embrace the entire world, or for that matter the new world. Stimulating progress and giving birth to evolution doesn't seem to be a capability set that Heritage Canada or the CRTC have the ability or self awareness to grasp.


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