Liberals test Netflix tax, airport privatization and 'moonshots' ahead of budget

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The federal government has tested the public's appetite for a Netflix tax, a new smartphone app for streaming Canadian content and spending on "moonshot" projects like placing a network of balloons on the edge of space to boost Internet access.

The policy suggestions are contained in a wide-ranging, 114-page report prepared for the Privy Council Office in November based on small focus-group sessions with Canadians in nine cities.

The survey questions featured a heavy focus on innovation, which is expected to be a central theme of Finance Minister Bill Morneau's 2017 budget.

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The research provides insight into the policy options under consideration in Ottawa and how federal officials are testing various ways that those ideas could be sold to the public.

The feedback would inform government decisions over what to include – or avoid – as the Liberals prepare their policy agenda for 2017.

The main themes of the questions were innovation, climate-change policy and the cultural sector in Canada.

While innovation is a broad term, the questions outline potential federal measures, including support for the tech sector, research and development and encouraging geographical clusters of expertise.

"When asked, there was strong support for the government offering subsidies to support innovation, rather than providing tax cuts or investments, particularly for smaller organizations," states the final report summarizing the research. "In terms of sectors, participants favoured assistance for the health-care sector, given Canada's aging population, along with education, agriculture, forestry, and renewables and clean technology."

Focus-group participants were also told, according to prepared scripts, that "one way that government could encourage innovation is by creating what we'll call 'moonshot challenges.' A moonshot is an ambitious, exploratory and ground-breaking project undertaken without any expectation of near-term profitability or benefits."

Three examples were provided, including driverless cars, unmanned aircraft that deliver packages and a concept called Project Loon, led by Google, that is described as "a network of balloons travelling on the edge of space, designed to help people connect to the Internet in remote areas or during a crisis situation."

The final report said there was "some appeal" for this kind of investment, as long as the project might have a significant impact on society.

"Participants were not keen to see the government invest in such projects if they are to profit a private enterprise," the report stated.

The federal government has separately contracted outside expertise to examine options for fully privatizing Canada's air and sea ports. However the focus-group work found "lukewarm appeal" for the idea.

"Many were not keen on having to pay user fees," the report said. "Another common concern was the possibility that infrastructure would move to foreign ownership."

On the issue of how to support Canadian content when fewer Canadians are purchasing cable TV subscriptions, the government tested four options to raise new money for Canadian content: making telecom companies divert some smartphone and Internet revenue; requiring "foreign companies like Netflix and iTunes" to devote a portion of revenues; giving consumers the option of making a voluntary $2 contribution on their telecom or Netflix bill; or making telecom companies add an app to every smartphone sold in Canada that would provide access to Canadian music, TV and film for between $5 and $15 a month or a flat charge of $3 on the sale of all smartphones.

The report said support was greatest for making telecom and foreign companies contribute, but participants did not want the added cost to be passed on to subscribers.

Daniel Lauzon, a spokesman for the Finance Minister, said the government conducts a wide-range of consultations throughout the year and that the discussions are much broader than what might be in the budget.

"It's all about generating ideas, testing assumptions and getting to the bottom of how middle-class families and individuals can be best served by their government," he said Monday in an e-mail.

The focus-group work was conducted by Corporate Research Associates Inc. of Halifax, at a cost of $112,510.

The focus groups were conducted between June 21 and Sept. 1, 2016, and the final report is dated Nov. 4, 2016. The report was recently posted online in accordance with federal disclosure rules.