Is the Harper government’s Bill C-10 the beginning of a crusade against the domestic film industry?

One of the country’s liveliest soap operas has enjoyed an extended run in the Canadian Senate. For the past several months, film producers, politicians, and religious activists have been showing up before the banking, trade, and commerce committee in a long-running saga over Bill C-10. Buried within this 568-page tax bill is a clause that allows the heritage minister or her designate to withhold tax credits from productions that are deemed to be “contrary to public policy”.

Nobody is exactly sure what that means. Some in Canadian film, including actor-director Sarah Polley and director David Cronenberg, have claimed that the bill smacks of censorship and threatens the future of the country’s film industry; on the other side are those like Conservative MP Jim Abbott, parliamentary secretary to the minister of Canadian heritage, who has compared the Senate hearings to a “gong show”.

At the centre of the uproar is a small Canadian film called Young People Fucking, (for more details about the film, see this lead feature) which will open in Vancouver on Friday (June 13). The $1.4-million movie has a lot more to do with relationships than with carnal pleasure, but its title has raised the ire of religious conservatives, including Charles McVety, president of the Canada Family Action Coalition. For Steven Hoban, the producer of Young People Fucking, this is a serious affair that could have an impact on all Canadian filmmakers and the crews that work on their productions.

Hoban told the Georgia Straight in a phone interview that his film has $80,000 in federal tax credits, which is a relatively small percentage of the budget. There is an additional $120,000 provincial tax credit, Hoban added. In addition, Telefilm Canada owns a 30-percent equity stake. He noted that if the federal government were to deny his federal tax credit, it wouldn’t be catastrophic for him financially. He could probably take out a second mortgage on his house to cover the debt.

“But the real problem would be the next movie I go to finance or any other Canadian producer goes to finance,” Hoban said. “The bank is going to say, ”˜We’re not going to bank your tax credit. We can’t count on banking it because Young People Fucking didn’t get the tax credit at the end of the day, and we don’t deal in risks. We only deal in certainties, because we’re a bank.’”

Hoban said that to obtain financing, it’s necessary to demonstrate that there is interest in the film in the market. Young People Fucking was a small picture with a first-time director and without any big-name stars, which made this a challenging task. However, Hoban said, the script was very good and very funny. “The title, even way back then, is what got the movie noticed,” he said. “What got it financed was the quality of the writing. There was nothing else that got it financed.”

He said labour costs on Young People Fucking were approximately $1 million. The federal taxes likely exceeded the federal tax credit doled out to the producer. Hoban’s next film, Splice, is a $26-million science-fiction feature starring Polley and Adrien Brody. Approximately 80 percent of the budget for Splice came from investors in France, he said, and there will be approximately $1.3 million in federal tax credits.

If there were no federal tax credits for this film, Hoban suggested, there would be no incentive to shoot the film in Canada. He said that’s because there are better tax-incentive programs elsewhere, including in New York and Australia. And that’s why he, like Polley, thinks Bill C-10 has the potential to drive filmmakers out of the country.

“I will have to leave Canada, and a lot of my colleagues will do the same, especially the above-the-line people—the directors, the writers, the producers, the actors—most of them will leave,” Hoban claimed. “The crew people who just aren’t as mobile, they’ll be unemployed. You know, we’ll erode what has taken years to build.”

Along with the Canada Revenue Agency, the Canadian Audio-Visual Certification Office co-administers the Canadian film and video tax-credit program. Earlier this year, a film-financing specialist with accounting giant Ernst & Young, Neal Clarance, told the Straight that if Bill C-10 passes in its current form, it will be “virtually impossible” for him to write opinion letters on behalf of producers in the absence of clear guidelines defining what is contrary to public policy. Without these letters, he noted, banks won’t provide financing. Clarance, who lives in Vancouver, is scheduled to testify before the Senate committee today (June 12) in Ottawa.

Film financiers have delivered similar tales to the committee. The Royal Bank of Canada provided the following statement, which was passed along by Sarah Ker-Hornell of FilmOntario: “Canadian content certification is an absolute necessity for the collection of the tax credits and certain payments from broadcasters, the Canadian Television Fund, and Telefilm [Canada]. Should the assumption of eligibility currently underlying all bank loans to this industry be compromised or diminished by Bill C-10, this will indeed limit the ability of the bank to continue funding Canadian content production.”

The issue has also attracted the attention of Vancouver mayor Sam Sullivan. In a June 2 letter to the Senate committee, Sullivan pointed out that more than 25,000 British Columbians are employed in the film industry. “I would like to confirm my opposition to the amendment regarding fiscal incentives applicable to Canadian films included in Bill C-10 and recommend that the federal government amend Bill C-10 following consultations with the film industry in order to eliminate any measure that would negatively impact on the financing of film productions,” Sullivan wrote. On June 5, the mayors of Toronto and Montreal delivered similar messages to the committee in person, and the mayor of Halifax sent a letter, according to Senator Mobina Jaffer, the only B.C. member on the Senate committee.

“One of my biggest concerns, not just hearing the mayors but hearing people generally, is the fact that financing will become difficult,” Jaffer told the Straight in a phone interview. “The banks have already said this. If they’re not sure about the tax credits, they will be very reluctant to finance the films.”

Josée Verner, the minister of Canadian heritage, told the committee in early April that the tax-credit program has contributed to more than 12,000 productions with a value of almost $22 billion since it was created in 1995. Verner pointed out that the “contrary to public policy” test is not a new concept. It has always been part of the regulations, and she said it was announced in draft legislation in 2002 and 2003 by then–Liberal finance minister John Manley.

“The policy rationale for the ”˜contrary to public policy’ provision is simple,” Verner said, according to a transcript of the proceedings. “It ensures that the government has the ability, in exceptional circumstances, to exclude certain material from public support. There is material that is potentially illegal under the Criminal Code, such as indecent material, hate propaganda, and child pornography. Currently, no provision in the Income Tax Act or regulations exclude such material. Bill C-10 addresses this loophole, in particular.”

Earlier this year, McVety admitted to CBC host George Stroumboulopoulos that he hadn’t watched Young People Fucking in its entirety. “I’ve seen clips,” McVety said. “I’ve seen enough of it.” He claimed in the same CBC interview that Bill C-10 would not have an impact on 99 percent of all films, only those “grossly offensive films”.

In his appearance before the Senate committee last April, McVety noted that since 1995, “pornography” has not been eligible to receive tax credits. “Of course, we have presented the fact that some objectionable films have been paid for by our taxpayer dollars, like Young People F—ing,” McVety said, according to a transcript of the proceedings. “We cannot even say the word here because we have standards, but we expect the Canadian taxpayer to pay for something that we cannot even say the title of.” McVety, who didn’t return a call from the Straight by deadline, also complained about another film being funded called The Masturbators.

Diane Watts, a researcher with the antifeminist REAL Women of Canada, also testified before the Senate committee. She described the material at the Vancouver Queer Film Festival as “apparently offensive to even those who have a same-sex attraction, since they stay away from the festival in droves”.

In a recent phone interview with the Straight, Watts insisted that her group isn’t calling for censorship. However, she said REAL Women opposes federal funding or federal tax credits for film and television productions that are “offensive to a large segment of the population”. She included productions that have aroused the ire of veterans’ groups, such as The Valour and the Horror.

“We don’t think much of what is produced—and that would include Telefilm and that would include television and CBC—is very uplifting culturally,” Watts said. “It’s not very uplifting to the values which Canadians hold dearly, which are related to family. We mentioned that it is very rare that we see a properly functioning family in the various media. The dysfunction seems to be focused on, rather than using our creative abilities to create something that is appealing, that’s meaningful, that perhaps is maybe even profound, and that respects the basic unit of society.”

When asked how she defined a “properly functioning family” and whether that could include a same-sex couple, Watts replied, “We define it as the traditional family.”

Watts noted regulations state that government grants are provided “to develop Canadians’ sense of belonging”, but she argued that Canadian films do not appeal to the general public, as evidenced by the lack of attendance in theatres. Only four percent of the total movie audience attended Canadian films in 2006, she said, compared with eight percent who attended foreign films and 88 percent who attended Hollywood productions.

Burnaby-Douglas NDP MP Bill Siksay is one of the few MPs who have watched the film at the centre of the uproar. In a phone interview with the Straight, Siksay said he saw Young People Fucking at a screening that was attended by only one senator and two MPs. “I think it’s a good film,” Siksay said. “I enjoyed myself.”

Siksay, the NDP critic for Canadian heritage, said that he finds it “troubling” that anyone would suggest that this film is undeserving of support from the Canadian film and video tax-credit program or from Telefilm Canada. “I think lots of people will have a good laugh when they see it,” he said.

He noted that the proposed wording in Bill C-10—that tax credits not go to films contrary to public policy—mirrors language in many provincial film tax-credit programs, including B.C.’s. Siksay said that the only thing that has changed is the election of Conservatives, who brought it forward in legislation, and that members of the Conservative party make “outrageous statements” regarding their personal tastes in film. “I still think it’s an inappropriate guideline,” Siksay said. “I think it’s way too broad.”

Last January, Conservative MP Ed Fast, who represents Abbotsford, complained to the heritage committee about federal funding for a film that “focused more on recreational sexual activity than loving relationships”. In Fast’s opinion, this was “not redeeming”. Fast didn’t return a call from the Straight to elaborate on his concerns.

Kootenay-Columbia Conservative MP Jim Abbott, on the other hand, did return a call. He told the Straight that the language in Bill C-10 was acceptable to the film industry in the past. “First of all, people in the film industry were given this precise wording back in 2003 by the Liberals as part of a proposal for a change in the taxation,” Abbott told the Straight in a phone interview from Ottawa. “And they didn’t see the problem when it was given to them by the Liberals.”

Abbott told the Straight that the Senate committee hearings are starting to resemble a gong show. “It could be some political opportunism on the part of some people with a partisan axe to grind,” Abbott claimed.

He noted that the minister has promised to work cooperatively with the industry to develop guidelines about what is contrary to the public interest. Carleton University journalism professor and former reporter Christopher Waddell, speaking on behalf of PEN Canada, suggested to the Senate committee that the words “contrary to public policy” could have chilling implications.

“Among those subjects that could be deemed contrary to public policy would be a documentary about the Maher Arar case that might reveal new information that the government has kept secret; a docudrama that is critical of Canadian Forces activities in Afghanistan; a film that advocates a carbon tax to deal with climate change; or a film or television series that suggests there is a secret plan to export water from Canada,” Waddell said. “Such legislation might affect the production of dramas, works of pure fiction, a film that imagines or depicts the breakup of the country, or even films that feature drug addiction and needle-exchange programs. It is not illegal to debate or to depict any of these issues, but they could be or might be viewed as contrary to public policy and, presumably, could be denied tax credits.”

Vancouver director Mark Leiren-Young (an occasional Straight contributor) testified before the Senate committee about his concerns. Leiren-Young told the Straight in a phone interview from Barcelona, where his film The Green Chain was being screened, that Bill C-10 is “a nasty piece of legislation” and “a really discreet form of censorship that acts like it’s not censorship”.

“The bill is being used to debate pretty much all government funding on the arts,” Leiren-Young claimed.

Jaffer said that the Senate committee will likely propose amendments and send the bill back to the House. She added that she doubts the Senate will finish dealing with the bill before MPs and senators go on their summer break. Abbott said he didn’t know if an election will be triggered if Bill C-10 is blocked by the Senate.

Last April, Verner promised the committee that after Bill C-10 receives royal assent, the government will not apply the “contrary to public policy” provision over the following 12 months. During that time, she promised to invite the Canadian film and television production industry to propose guidelines and administrative procedures.

That prompted a warning from McVety of a voter backlash. “If they want to capitulate to David Cronenberg so that he can make a few hundred more million dollars, then they don’t deserve to be in government and they won’t be in government for very long,” McVety told the Hill Times on April 14. “If the government loses common sense and says that ”˜We’re going to continue funding Young People ”˜F-ing’ [Fucking] and other such movies,’ then they will pay a price for that. That’s not good government and the grassroots will rebel.”

McVety has sometimes been compared to Jerry Falwell, the U.S. pastor who created the Moral Majority. Leiren-Young, who pays attention to the religious right, suggested that Bill C-10 is being used by right-wing activists to start the same kind of culture wars that erupted in the U.S. several years ago.

“I’m not sure how Young People Fucking contravenes public policy,” Leiren-Young commented. “It’s a film that has opened in festivals around the world. Contrary to what you might think from the title, there is very little sex in it. None of it is particularly graphic, yet somehow that is the movie that ended up at the centre of the debate.”