Mélanie Joly's Netflix deal will take another knock this week as an Ottawa think tank adds its voice to the chorus calling for the GST on foreign streaming services. Ever the populists, the Minister of Canadian Heritage and Prime Minister Justin Trudeau have expressly ruled out imposing the goods and services tax on your Netflix bill, but the C.D. Howe Institute says it is only fair and sensible, because Canadian services have to pay the tax.
In a report about Canadian television that will be issued on Tuesday, the authors argue it is probably not realistic to impose a Canadian-content quota on Netflix's catalogue. But, after Ms. Joly announced in September that Netflix would deliver $500-million in Canadian programing without any definition of what qualified, they do think Netflix's contributions need to be monitored by the Canadian Radio-television and Telecommunications Commission.
Ms. Joly may take some comfort, however, in other sections of the report, titled Strengthening Canadian Television Content: Creation, Discovery and Export in a Digital World. Authors Lawson Hunter, Kenneth Engelhart and Peter Miller argue that Canadian television needs to make its money by selling top-quality shows to export markets, a direction the minister has also pushed.
The authors have practical suggestions on achieving this: They point out that because Canadian broadcasters are required to out-source a lot of production to small independents, they do not have enough "skin in the game." The authors figure a change in the rules (which were originally designed to diversify production) would actually produce better Canadian content as the broadcasters retained more ability to profit on foreign sales of the shows they had backed. Like Ms. Joly, the authors favour an all-eggs-in-one-basket approach that lets broadcasters concentrate their spending on a few high-quality programs.
Well, everybody wants quality – show me the screenwriter or TV producer who set out to make a bad show – but political demands that Canadian TV produce more hits always have an element of wish fulfilment. In the highly successful U.S. system, huge quantity has produced great quality (along with a lot of garbage). The people who seem to beat that simple equation are those clever Scandinavians, who operate in geographically concentrated and culturally homogeneous markets. Maybe we can learn something from their strategic spending – other than the truth that it is damned inconvenient being a small country 9,000 kilometres wide.
The C.D. Howe authors argue the system is not going to collapse tomorrow, but that regulation needs to be smarter or Canadian content will wither. They agree that money Ottawa earns from auctioning wireless spectrum should be used to subsidize Canadian programming. (I have been advocating for that no-brainer since 2014.)
And their most original idea would extract governments rather neatly from this conundrum: A levy on cable and satellite revenues currently pays for much Canadian content, but there is great political opposition to a parallel levy on ISP revenue. Their idea is that, as Canadians shift their viewing online, the levy should be gradually shifted, percentage point by percentage point, from the cable side to the ISP side. Your bill would not go up.
Kate Taylor