A report by Auditor General Sheila Fraser says Telefilm Canada, the Canadian Television Fund and other agencies under the Department of Canadian Heritage suffer from inefficiencies and a lack of clearly defined goals.

‘Canadian Heritage and other organizations spend over $800 million a year on programs that support cultural industries,’ writes Fraser in the 28-page report, released Nov. 22. ‘The department should have a better idea of what it’s trying to achieve.’

The report notes several problems, some of which are already being addressed at the various organizations, including:

* Overly complex governance of CTF and lax application of its conflict-of-interest guidelines.

* Insufficient enforcement of Cancon regulations at Heritage and Telefilm.

* Lax control of tax credits at the Canada Revenue Agency.

* A lack of ‘overall vision’ and ‘established targets’ among Heritage agencies.

Though critical, the report is softer than Fraser’s recent missives against the RCMP or Ottawa’s sponsorship scandal, and offers few specifics. It comes within days of another study, from Heritage itself, that takes aim at the failure of CTF-backed shows to attract audiences (see story, p. 2).

CTF chairman Douglas Barrett says Fraser’s report was correct for the period she reported on – calling it a ‘snapshot’ of last summer and this spring – but says many of its criticisms are already being addressed. The fund is preparing to meld its operations with Telefilm early in the coming year, and Heritage is stepping up enforcement of its conflict-of-interest guidelines.

‘We agree with what the auditor general has to say. But what is being described in the report is all about the old environment. The entire audit predates the changes underway that we are committed to making,’ says Barrett.

Barrett also sees a silver lining in the criticism, noting, ‘The auditors had reviewed our conflict-of-interest guidelines and didn’t find them deficient, didn’t say they needed to be replaced, but rather that they needed to be rigorously enforced. We agree with that.’

Telefilm executive director Wayne Clarkson said in a statement that the agency is moving ahead on the auditors’ recommendations, especially improved quality control and risk management.

‘I am pleased to say that in all cases the Department of Canadian Heritage and Telefilm have already taken steps to implement the necessary solutions,’ says Clarkson.

Fraser also says lack of clarity has plagued the Canadian Audio-Visual Certification Office, the agency that monitors Cancon requirements, and the Canada Revenue Agency. In 2004/05, the federal government spent more than $650 million in contributions and tax credits to support the production of feature films and TV, yet auditors found CAVCO had no formal control process to ensure that only eligible productions received support.

‘The key risks CAVCO and the CRA face is that they might issue tax credits to non-Canadian productions or to productions with significant foreign investment that are not under the effective control of Canadians,’ warns the report.

In the AG’s opinion, the confusion starts at the top and works its way down. Heritage oversees seven branches responsible for developing cultural initiatives, from sports and theater to books, film and television. For years, the department has labored with a plethora of initiatives, and since 2000 has tried to bring some order to its policies through its Cultural Affairs Sectors, which has worked to create clear plans and the means to deliver programs.

The results are mixed at best, says the report. Heritage’s current plan includes four priorities, ‘but has 45 activities or projects or ‘strategies,’ designed to attain them.’

Fraser notes that, unlike other Crown corporations, Telefilm reports to the minister and not directly to Parliament. As a result, some board members ‘expressed concerns about the extent of oversight that Telefilm is subjected to, which leaves the board with little leeway to interpret its mandate and determine the best way to accomplish it.’

It is hoped that the new CTF/Telefilm regime will clear up the confusion. In June, Heritage Minister Liza Frulla announced the coming together of the two bodies into one administrative structure. CTF will manage funds allotted by Parliament for both bodies, while Telefilm will handle applications and act as direct contact with the clients.

Barrett says the new CTF/Telefilm structure will be in place by February or March 2006, the start of the new fiscal year.

www.oag-bvg.gc.ca