ECONOMIC IMPACT ASSESSMENT (page 2)

1.0 PRIMARY IMPACT

1.01 The primary economic impact of the fine arts concerns their direct and quantifiable contribution to the national economy.  This includes how much the arts contribute to Gross National Expenditure; how much Canadians spend on the arts; how many Canadians are consumers of the fine arts; how many Canadians are employed in the arts; and how much capital plant, equipment and inventory is invested in the arts.

1.02  Several dimensions of production in the fine arts will be described.  These include the economic size of the arts industry and the fine arts, the fine arts as research and development for the arts industry, concentration of production by company size, region and major urban area, the impact of inflation on production in the fine arts, and taxation of fine arts organizations.

Size of the Arts Industry

1.03  The arts industry includes advertising, broadcasting, motion pictures, the performing and visual arts and publishing including libraries and sound and video recording.  Compared to the 20 largest Canadian manufacturing industries during 1980 the arts industry was the 11th largest with revenue of $7 billion; the 4th largest with full-time employment of 146,000; and the 6th largest with salaries and wages of $2.3 billion.  Artistic revenue amounted to 2.4% of Gross National Product (Research & Evaluation, 1983a, 1-6).  The arts industry included 17,099 establishments with average revenues of $411, 311; and an average of 9 full-time employees including artists, technicians and administrators with average annual wages and salaries of $15,606.

1.05  The average size of reporting companies declined from $561,967 in 1971 to $211,929 in 1980, measured in constant 1971 dollars of gross expenditure.  There was a maturation of the performing arts in Canada during the 1970s (see Table 1).  A large number of small and medium companies emerged during the 1970s reducing the predominance of large companies with respect to expenditure, performances and spectators.

1.06  Over the ten-year period 1971 to 1980 performing companies accumulated deficits of $7,180,000 measured in constant 1971 dollars or $18,445,000 in current 1980 dollars.  The 111 small companies accounted for $125,000 of accumulated deficits or 1.7%; the 48 medium-sized companies accounted for $1,280,000 or 17.8%; and the 28 large companies accounted for $5,776,000 or 80.4% of accumulated deficits.

1.07 The Minister of Communications, through the Special Program of Cultural Initiatives, established a deficit retirement program for performing companies in 1980 (Communications Canada, 1980).  Final statistical results are not yet available.  The program is only the most recent of several deficit retirement programs introduced by the Canada Council and the provinces.  However, when one compares the relatively low income gap of 47% for large performing companies (Canada Council Performing Arts Data Base)) with their high proportion of accumulated deficits (80%) it is apparent that in the performing arts "nothing fails like success".

1.08  While there is no detailed information currently available concerning the other art forms, i.e. the literary, media and visual arts, administrative data from the Canada Council will serve to indicate growth in the number and the turn over of Canadian arts organizations during the 1970s.  The Canada Council supports only professional fine arts organizations which have been assessed as to their artistic excellence.  Accordingly the following understates the growth of the fine arts to the extent the data does not report fine arts organizations not supported by the Canada Council.

1.09  The Canada Council provided support to 1,550 fine arts organizations (Research & Evaluation, 1983b) between 1972-73 and 1981-82 (Canada Council Organizational Grant Inventory). In 1981-82 only 793 organizations or 51% still received Canada Council support.  Thus the "churn" factor for client arts organizations between 1972-73 and 1981-82 was 49% of all companies supported over the period. The total number of literary arts organizations supported during the period was 473 of which only 257 or 54% still received support in 1981-82. Some 112 media arts organizations in the film and video arts received support from the Canada Council during the period of which only 47 or 42% still received support in 1981-82.  Some 742 performing arts companies received support during the period of which 396 or 53% still received support in 1981-82.  Some 223 visual arts companies received support during the period of which 93 or 42% still received support in 1981-82.

1.10 In 1981-82 the Canada Council, in addition to support to individual artists and special artistic events, provided $39 million current dollars in support to 793 fine arts organizations (Research & Evaluation, 1983b).  In the performing arts Canada Council support represented an average of 18% of total company expenditure (Research & Evaluation, 1983a, 36-54).  Assuming the ratio holds in other art forms it is estimated that the fine arts generated at least $217 million current dollars in economic activity.  Allowing for companies not supported by the Canada Council it is likely that the Canadian fine arts generated at least $250 million in direct economic activity in 1981-82.

Fine Arts as R&D

1.11 Within the arts industry the fine arts play a role analogous to research and development or "R&D" in other sectors of the economy.  In fact "(n)onprofit arts are the testing ground for profit-making industries such as recording publishing, film making, broadcasting, advertising and design" (Sellner, 1982, 17).  The analogy can be drawn that the fine artist is like the "pure researcher" in the sciences whose primary motivation is "knowledge for knowledge's sake". Scientific researchers pursue professional excellence just like the fine artist.  It is generally accepted that both government and the private sector must support such research even though it is not, in and of itself, profitable.  Rather pure research serendipitously leads to industrial invention, innovation and diffusion, even though the pure researcher, like the fine artist, may not intend such a result.

1.12  Unlike other research and development activities, however, the fine arts do not yet benefit (Touche Ross & Co. 1984) from the same set of tax expenditures and incentive grants.  As nonprofit organizations they do, however, receive certain tax privileges and grants.  As in other sectors many R&D fine arts projects must be supported, and high risks accepted, if commercially viable and exportable artistic goods and services are eventually to emerge.  The relevance of the R&D analogy is illustrated by the international success of British television programming.

The reason why so many BBC and ITV drama series have sold well abroad is because British television directors have so much expertise, derived from the theatre, on which they can draw. Indeed the health of our future export trade in television films largely depends on the buoyancy of our theatre (Liberal Party, 1982, 29).

1.13  Three dimensions of concentration in the performing arts can be measured using available quantitative evidence.  These are concentration by company size, by region and by major urban area.

By Company Size

1.14  Performing arts activities became significantly less concentrated during the 1970s (Canada Council Performing Arts Data Base).  Small companies, as a per cent of all companies, increased from 18% in 1971 to 59% in 1980.  Their share of total expenditure increased from 2% to 12% while their share of performances and attendance increased from 2% to 45% and from 1 % to 23%, respectively.  Medium-sized companies, as a per cent of all companies, decreased from 35% in 1971 to 26% in 1980.  Similarly their share of performances decreased from 39% to 29%. However, medium-sized companies increased their share of total expenditure and attendance from 14% to 23% and from 20% to 24%, respectively.  Large companies decreased their share as a per cent of the total number of reporting companies, expenditure, performances and attendance.

By Region

1.15  The regional distribution of the performing arts changed in favour of British Columbia and especially Ontario during the 1970s (Canada Council Performing Arts Data base).  Both regions experienced relative increases in the number of companies, their share of total expenditures, performances and spectators.  The Atlantic region remained relatively constant with respect to relative number of companies and expenditures, but experienced a small decrease in its share of performances and spectators. Quebec's share of reporting companies decreased marginally from 30% to 29% but its share of expenditure decreased from 26% in 1971 to 20% in 1980.  Quebec's share of performances and spectators decreased from 32% to 25% and from 26% to 24%, respectively.  The Prairie-region experienced a significant decline in relative number of companies, performances and spectators, but experienced a small increase in its relative share of total expenditure.  This suggests that the average size of company increased in the Prairies relative to other regions of the country.

By Major Urban Area

1.16 During the 1970s there was a significant decentralization of performing arts activities outside the 6 major census metropolitan areas (CMAs) (Canada Council Performing Arts Data Base).  The relative number of companies in the 6 major CMAs fell from 70% in 1971 to 59% in 1980; expenditures from 74% to 65%; performances from 74% to 60%; and spectators from 73% to 64%.  Two CMAs, Quebec City and Toronto, however, experienced relative growth with respect to their share of companies, performances and spectators.

1.17  The most dramatic increase occurred in Toronto.  The city's share of performances almost doubled from 11% in 1971 to 19% in 1980.  Vancouver also increased its relative share of companies and expenditure, and maintained its share of performances while its share of spectators declined marginally.  Edmonton increased its relative share of expenditures, but decreased its share of companies, performances and spectators.  Montreal and Winnipeg decreased their relative share of companies, expenditure, performances and spectators.

Inflation
1.18   Six years before the Arab Oil Embargo set off the most explosive inflationary spiral in post-war history, it was revealed that the fine arts experienced a pattern of rising costs that outstrips the rate of inflation in the rest of the economy (Baumol, Bowen, 1966).  The sensitivity of the fine arts to inflation results from the difference between productivity increases available in the fine arts versus those available in other sectors of the economy.  It is the differential in the rates of narrowly defined productivity which fuels the pattern of rising costs in the arts.

The theatre is having to meet the brunt of inflation head on.  Its very nature offers little scope for increased efficiency or productivity, and its ability to absorb inflation by these means is therefore strictly limited...  Indeed the only thing which has kept the theatre going is the fact that labour has been prepared to work in appalling conditions for low wages...  Of course the theatre, even though it has been subsidized in that workers have been accepting low pay, is not totally insensitive to wage levels outside, and this leads to difficulties. If industry increases productivity by 10 per cent it can increase wages about the same without having to put up prices; but sooner or later the theatre will. have to meet sympathetic rises in wages, and these will increase costs (Grist, 1976).

1.19  There are also indications that the commercial media arts have succumbed to the resulting "cost-squeeze".

Even the mass media seem to be suffering from that cost disease which constituted one element of our analysis of the problems of live performance.  The available estimates indicate that in television in the United States, some 10 per cent of the total budget is devoted to transmission (the portion of the activity which seems to benefit most easily from technological progress). On the other hand, more than 60 per cent goes into programming, i.e. into performances, which is just as little amenable to increases in productivity as is live theatre. This may help to account for the very rapid rate of increase per hour of broadcasting, and for the various corners that broadcasting in the U.S. seems increasingly to have been cutting. (Baumol, Oates, 1976, 116).

1.20  Inflationary pressures need not, however, depress the level of arts activity.  If inflation is accompanied by a decline in the real wages of artists then the level of arts activity may actually increase.  The thrust of the argument is that with declining real wages for performers and creative artists, producers can afford to experiment more and require fewer performances to break even.  Conversely, in times of prosperity and high real wages producers may not be able to afford to take such risks.

economic prosperity does not automatically bring with it all the things that are usually taken to contribute to the "quality of life", and if it is accompanied by rising real incomes for all economic classes, it may be a positive detriment to such activities... It follows that one cannot simply assume that growth in GNP will bring forth with it a prosperous and innovative drama (Baumol, Oates, 1972).

1.21 The differential impact of inflation on the arts has recently been confirmed by a study of the performing arts in the United Kingdom (Peacock, et al, 1982). The study demonstrated that there was no statistically significant difference between cost increases in the performing arts and other sectors of the economy.  This resulted, however, from the depression of artistic salaries and wages during a period of rapid general price increases.  This finding reinforces the claim that the largest subsidy received by the fine arts takes the form of depressed wages and salaries received by individual artists.

1.22 Another implication of the differential impact of inflation on the arts is what has been called "techno-aesthetic progress" (Leroy, 1980).  In essence Leroy argues that in response to economic cycles the aesthetics of the arts mutates.  Thus during periods of economic depression or recession the arts tend to increase the scale of production as the real wages of artists decline.  During periods of economic boom, particularly when associated with high levels of real wages, the arts respond with the aesthetic of smaller productions such as "one-man shows".

Taxation

1.25 Exemption from income tax is not a direct benefit because most fine arts organizations operate at a loss even with donations and contributions from private and public sector donors.  However, the tax exempt status of fine arts organizations permits them to issue receipts carrying their charitable registration number in return for donations from individuals and corporations.  These receipts permit donors to deduct their donations from taxable income.  This privilege encourages private philanthropic support to the fine arts and is a significant benefit.

1.26  While exempt from income tax, fine arts organizations do not necessarily receive relief from other forms of taxation.  The incidence of social security payments varies between fine arts organizations according to the employment status of artists, technicians and administrators engaged.  Fine arts organizations must pay the employer's share of unemployment insurance and pension plan contributions for all their "employees".  When, however, artists, technicians or administrators are engaged as "self-employed" professionals then no social security payments are required of fine arts organizations.

1.27  Federal, provincial and municipal sales and amusement taxes are generally, but not in all cases, paid by fine arts organizations or their customers with the notable exception of Ontario which exempts tickets to "Canadian" arts events from retail sales tax.  With respect to local property taxes, fine arts organizations which own facilities are subject to property taxes in some municipalities but not in others.  Similarly exemption from customs duties is generally available only to fine arts organizations which can obtain "educational" status with Revenue Canada.  Other fine arts organizations must pay customs duties on imported materials and equipment normally subject to duty except when a special waiver can be obtained from Revenue Canada, on a case-by-case basis.  Variation is so great that a major research effort would be required to estimate the net cost of tax expenditures to various levels of government.

1.33  Another indication of growing demand for the arts is participation rates in alternative leisure time activities (Research & Evaluation, 1983a, 57).   Between 1977 and 1985 the adult population is projected to grow at an average annual rate of 1.6%.

1.34  Participation in arts-related activities is projected to grow significantly faster than other leisure activities.  Attendance at museums and art galleries will grow at an average annual rate of 2.6%; use of libraries at 2.4%; and attendance at live theatre at an average annual rate of 2.1%.  Attendance at sports events will increase at an average annual rate of 1.3%, and television viewing at 1.4%.

1.35 Between 1985 and 1990 the population is projected to grow by 1.1% a year. Attendance at museums and art galleries is projected to grow at an average annual rate of 2.0%; use of libraries at 1.6%; and attendance at live theatre at an average annual rate of 1.5%.  Attendance at sports events is projected to grow at an average annual rate of 0.7%, and television viewing at 0.9%.
1.36  Between 1990 and 2000 the adult population is projected to grow at an average annual rate of 1.0%. Attendance at museums and art galleries is projected to grow at an average annual rate of 1.9%; use of libraries at 1.6%; and live theatre at 1.7% per year.  Attendance at sports events is projected to increase at an average annual rate of 0.9%, and television viewing at 0.8%.

Merit Audience

1.37  In addition to the ticket-buying public, individual donors, the corporate sector and governments act as a merit audience for the fine arts. The merit audience is as old as the fine arts themselves.  The aristocratic or ecclesiastic patron of previous centuries contributed to the arts in order that the whole population might benefit.  Today through grants and donations, public and private sector patrons donate to the fine arts in order to insure that a larger supply of artistic goods and services is available than the market is able to provide.  This tradition of "multiple funding sources", i.e., box office revenue combined with public and private donations is a major guarantee of the independence of the fine arts.

Corporate & Private Donors

1.38  The corporate sector is, to a great extent, the successor to the Di Medici as patrons of the fine arts.  According to the -Institute for Public Donations and Research, corporate cultural donations increased from $3.2 million in 1972 to $12 million in 1981, or 16% of total corporate donations to all charitable activities (Research & Evaluation, 1983a, 18).  In constant 1971 dollars, however, corporate support to the arts increased from $3.2 million in 1972, peaked at $3.3 million in 1974, and fluctuated up and down ending in 1981 at $4.1 million.  The level of real corporate donations in 1981 is misleading, however, in that it includes a one-time only grant of $2.5 million to a science centre in northern Ontario.  If this donation is excluded then real donations to culture remained static at $3.2 million constant 1971 dollars in 1980 and 1981, or $100,000 less than in the peak year of 1974.

1.39  The unstable nature of corporate donations reflects, among other factors, the "money illusion" of corporate donors, an illusion which also plagues support from the public sector.  Real support, measured in constant dollars, declines or remains stable while the nominal value of the donation, measured in current dollars, increases rapidly (Baumol, Baumol, 1980).  In the private sector money illusion is mitigated, to some extent, by increasing corporate awareness of the advertising value of sponsorship of arts events and organizations.  Sponsorship reflects the correspondence of the corporate target market and the arts audience.  Sponsorships are made from public relations, not from donations budgets.  No figures are currently available concerning corporate sponsorship of cultural activities.

1.40  Corporate support also suffers from the "St. Matthew Syndrome", i.e., to those that have shall be given (Vichert, 1981).  Private donors tend to be cautious and conservative.  They do not support controversial productions or new innovative art forms.  Private donor caution is reflected by private support to theatre, a highly visible, articulate and controversial art-form.  Thus in 1980 private donations were only 10% of total expenditure by theatre companies compared to 13% for all performing arts companies.  In fact small theatre companies received only 9% of total expenditure from private sources (Research & Evaluation, 1983a, 36-54).

1.41  In 1980 the Canada Council was the primary supporter of dance and theatre, art forms which tend to be controversial because of esoteric experimentation, scatological language, political themes or frontal nudity.  The private sector, however, was the primary supporter of music and opera, art forms which tend not to be controversial.

Modes of Public Support

1.42  In the present century the role of the public sector in support to the fine arts has varied and evolved.  In the United States the role of the federal government before the advent of the National Endowment for the Arts in 1965 was that of a "facilitator" which created tax exemptions for private donations.  Since the advent of the NEA the federal government of the United States still provides the majority of its support to the arts through the tax system.  In Great Britain and Commonwealth countries the role of the state has been that of "patron" which supports the fine arts through more or less "arms-length" agencies like the Art Councils of Great Britain, Australia and New Zealand, as well as the Canada Council.  Both the facilitator and the patron model are associated with the tradition of "multiple funding sources" in support to the fine arts in order to ensure artistic integrity and independence from political interference.

1.43  In western Europe the state has played the role of "architect" of the arts.  The state constructs most of the arts facilities and staffs them with artists, technicians and administrators who often are public servants.  Choice of what art to produce, however, tends to remain in the hands of the artists - not the state.  The recent doubling of support for the arts in France and Italy reflect the enhanced importance associated with the arts as a "growth sector" and their role in attaining the national goals of western European countries.  In eastern Europe and the Soviet Union the state tends to play the role of "engineer".  The state consciously uses the arts to attain its own goals, i.e., to create the "new socialist man".

1.44  The difference between these modes of public support is highlighted by the use of music in the manned-space programs of the USA and the USSR.

The Russians consider some things as scientific in nature that we have never looked at.  They talk about music and entertainment and programs as something which a scientist can determine.  We just ask the astronauts what they want to listen to, and play their favorite music (Patton, 1983).

Tri-Level Cultural Expenditure

1.45  In Canada public support to the amateur arts, the fine arts and the commercial arts is provided by all three levels (tri-level) of government, i.e., federal, provincial and local governments.  Support for all three are standardized and reported through the Canadian System of Government Financial Management Statistics  (CSGFMS Statistics Canada, 1972).  The CSGFMS is used to calculate equalization payments under the Fiscal Arrangements Act.  However, the CSGFMS classifies expenditure on broadcasting, e.g., the CBC and provincial broadcasting authorities, as communications, not culture.  In addition CSGFMS reported provincial support to the arts excludes some support provided through government operated lotteries.

1.46  Tri-level support to culture, net of inter-governmental transfers, grew from $139 million in 196970 to $798 million in 1979-80 measured in constant 1971 dollars.  As a per cent of consolidated tri-level gross general expenditure, culture increased from 0.596 in 1969-70 to 0.7% in 1979-80.  Measured in constant 1971 dollars, tri-level cultural expenditure per Canadian nearly doubled from $7.46 to $14.80 in 1979-80, or $33.64 in current 1980 dollars (Research & Evaluation, 1983a, 7-11).

1.47  Federal support to culture, gross of inter-governmental transfers, increased from 23.3% of tri-level cultural expenditure in 1969-70 to 30.8% in 1979-80, or from $1.74 per Canadian to $4.56 in 1979-80, in constant 1971 dollars.  The provincial share increased from 29:2% to 36.2% or from $2.18 per Canadian in 1969-70 to $5.36 in 1979-80.  The local share declined from 49.1 % in 1969-70 to 36.5% in 1979-80 but increased from $3.66 per Canadian to $5.41 measured in constant 1971 dollars.

1.48  As a per cent of federal gross general expenditure, cultural expenditure increased from 0.2% in 1969-70 to 0.4% in 1979-80.  As a per cent of provincial gross general expenditure, cultural expenditure increased from 0.3% in 1969-70 to 0.5% in 1979-80.  Local cultural expenditure increased as a per cent of local gross general expenditure from 0.9% in 1969-70 to 1.2% in 1979-80.

Federal Support

1.49  A more detailed view of federal support to the arts including support to the CBC can be derived from the annual budgetary estimates of the federal government.  The annual estimates are known as the "Blue Book".  Federal cultural expenditure increased 3.6% from $396 million in 1972-73 to $410 million in 1982-83, measured in constant 1971 dollars (Research & Evaluation, 1983a, 12-16).  Over the period federal cultural expenditure grew at an average annual rate of only 0.2%.  Federal cultural support per Canadian declined from 17.31 in 1972-73 to 16.42 in 1982-83, in constant 1971 dollars.

1.50  Federal support to the fine arts, relative to other revenue sources, also declined over the period.  In the performing arts federal support, mainly through the Canada Council, declined from 24% of total expenditure by performing companies in 1970 to 18% in 1980 (Research & Evaluation, 1983a, 36-54).  In the case of medium-sized companies federal support declined from 20% in 1971 to 18% in 1980. For large-sized performing companies federal support declined from 24% to 18%.  In the case of small-sized performing companies federal support increased as a per cent of total expenditure from 19% in 1971 to 22% in 1980.

Provincial Support

1.51  Provincial support to culture increased from $45.6 million in 1969-70 to $127.0 million in 1979-80, measured in constant 1971 dollars (Research & Evaluation, 1983a, 7-11).  As a percentage of tri-level cultural expenditure, provincial cultural expenditure increased from 29.2% in 1969-70 to 36.2% in 197980.  The Province of Quebec spent the most on culture, $42.9 million in 1979-80, followed by Ontario at $36.4 million, Alberta at $18.9 million, British Columbia at $7.0 million, Saskatchewan at $6.5 million, Nova Scotia at $4.8 million and New Brunswick at $4.0 million measured in constant 1971 dollars.  Manitoba, Newfoundland and Prince Edward Island spent less than $4 million on culture, measured in constant 1971 dollars.

1.52  As a per cent of provincial gross general expenditure Prince Edward Island spent 0.7% on culture in 1979-80. Saskatchewan, Alberta, Quebec, New Brunswick and Nova Scotia spent 0.6% of provincial expenditure on culture.  Ontario and Newfoundland spent 0.5% on cultural activities while Manitoba spent 0.3%.

1.53  In terms of cultural expenditure per capita Alberta spent the most, $9.18, followed by Prince Edward Island at $8.20, Saskatchewan at $6.83 and Quebec at $6.76 per capita in 1979-80, measured in constant 1971 dollars.  New Brunswick spent $5.77 per capita while Nova Scotia and Newfoundland spent $5.70 and $5.33 per capita, respectively. The Province of Ontario spent $4.28 per capita on culture while British Columbia and Manitoba spent $2.70 and $2.33, respectively.

Local Support

1.54  Local government cultural expenditure increased from $76.7 million in 196970 to $128.2 million in 1979-80, measured in constant 1971 dollars (Research be Evaluation, 1983a, 7-11).  The local share of tri-level cultural expenditure declined from 49.1% in 1969-70 to 36.5% in 1979-80.  Cultural expenditure at the local level excludes programs and facilities designed to serve both recreation and cultural purposes. Even assuming a constant proportion of such shared programs and facilities throughout the period, however, local support to culture declined dramatically relative to federal and provincial expenditure.

1.55  As a percentage of local gross general expenditure local governments of New Brunswick spent the most at 2.3% followed by Ontario at 1.9%, British Columbia at 1.5%, Newfoundland at 1.3%, and Saskatchewan at 1.2% in 1979-80.  Manitoba local governments spent 1% of their gross expenditure on culture in 1979-80 while all other local governments spent less than 1% of their gross expenditure on culture.

1.56  In terms of cultural expenditure per capita, local governments of Ontario spent $8.95 on culture followed by British Columbia at $6.49 and Saskatchewan at $5.99 in 1979-80, measured in constant 1971 dollars.  Local governments in Alberta spent $4.76 per capita while local governments in Manitoba spent $4.08.  In Nova Scotia and New Brunswick, local governments spent $2.97 and $2.89 per capita on culture, respectively.  Local governments in Newfoundland spent $1.42 per capita in 1979-80, measured in constant 1971 dollars.

Lotteries

1.57  During the 1970s, lotteries were rediscovered as a major source of arts funding. In the 18th century the British Museum obtained its first collections through lotteries.  During the 19th century only arts lotteries were exempted from the general prohibition of lotteries in Britain.  In Canada lotteries were legalized by an amendment to the Criminal Code in 1969.  In 1970-71 Canadian lottery ticket sales were $116 million or 0.1% of Gross National Expenditure (GNE) or $5.45 for every man, woman and child. In 1979-80 ticket sales were $1.5 billion in current dollars or 0.5% of GNE or $62 per capita.  Official Canadian aid to developing countries, by contrast, was 0.4% of GNE in 1979-80. Total government, corporate and university R&D expenditures were 0.9% of GNE (Chartrand, Ruston, 1982).

1.58  Gross operating revenue from Canadian government lotteries in 1970-71 was $30 million.  In 1979-80 gross operating revenue was $443 million in current dollars.  As a percentage of consolidated tri-level revenue (federal, provincial and local), lottery revenue increased from 0.1 % in 1970-71 to 0.4916 in 1979-80.  Provincial lottery revenue increased from $30 million in 1970-71 to $382 million in 1979-80, or from 0.1 % of consolidated provincial-local revenue to 0.5%.

1.59  Gross receipts from privately operated lotteries increased from $17.9 million in 1970-71 to $482.9 million current dollars in 1979-80.  Net receipts increased from $18 million in 1970-71 to $143 million 1979-80.  Most privately operated lotteries are conducted by non-profit organizations.  There are about 43,000 non profit organizations in Canada.  In 1979, some 391 corporations donated $58.1 million to all religious and charitable causes.  In 1978-79 federal grants and tax expenditures in support to the non-profit sector was $546.5 million current dollars.  Thus by the end of the decade, privately operated lotteries were almost two and a half times as important as a funding source for non-profit voluntary organizations as corporate donations and represented more than one quarter of total federal support to the non-profit sector.

1.60  It is estimated that in 1981-82 direct provincial lottery support to the arts was $40 million current dollars. This excluded lottery revenues placed in general consolidated revenue used to increase total provincial resources and thereby permit increased provincial support to the arts through regular programs. Total provincial cultural expenditure in 1979-80 was $288.6 million of which direct lottery support was estimated to have been at least 15%.  In addition the federal government, through its Special Cultural Initiatives spent $13.3 million in lottery funds to support the arts in 1981-82.  Privately operated lottery support to the arts in 1981-82 is conservatively estimated at $20 million. Total direct lottery support to the arts in 1981-82, therefore, is estimated to be $73 million current dollars.

1.61  The pattern of public support to the arts in the 1950s and 1960s was dominated by "arms-length" arts councils created by the federal and provincial governments, but with the provinces playing a relatively small role.  Both the provinces and their arms-length agencies tended to take direction from the Canada Council (Pasquill, 1973).  By the mid-1970s, however, the arts support pattern had changed to one of provincial ministries of culture funded by lottery revenues playing the leading role in innovative arts support programs such as Ontario's Half Back scheme.  The role of arms-length agencies declined, both in relative dollar terms and in terms of initiating innovative support programs (Chartrand, Ruston, 1981).