Why is it so hard to get investment to produce a feature here yet so easy to produce a documentary? What are the historical events that might have shaped this?
Is it a lack of population density? Education? Or perhaps there is something more sinister worming its way through the film community; poisoning any attempt to produce or distribute a mainstream feature.
I contend that the National Film Board of Canada's noble use of propaganda in the mid-20th Century to turn public opinion against the Nazi's served as a convenient narrative in the government's long term goal of creating a bureaucratic framework for codifying a political apparatus in order to control new media markets.
This laid the groundwork for today's difficult production environment. Through political overreach the distribution of film in Canada was heavily regulated in favour of American interests dooming new media markets to the whims of whichever ideology controls our executive branch and neither will ever give that power up willingly.
As Peter Morris writes
In 1938, the Government of Canada invited John Grierson, a documentary film-maker, to study the state of the government's film production. The results of Grierson's report were included in the National Film Act of 1939, which led to the establishment of the National Film Commission, which was subsequently renamed the National Film Board. In part, it was founded to create propaganda in support of the Second World War. 
John Grierson was instrumental in forming deals between the Canadian Government and the American dominated commercial film distribution industry to get his government propaganda films played in private theatres across North America. This was the key stone in laying the basic structure of an economic framework that hurts us to this very day. Distribution is the respiratory system of the film business and economic interference from government will always choke a market out in the end.
Gary Evans observed that
In later years Grierson was fond of claiming that the film industry in North America was one hundred percent Jewish; hence from his point of view, the Second World War was a Jewish War. This fact doubtless had some connection with the willingness of commercial theatres to allow the distribution of government film propaganda. 
Taking advantage of a weak private market, Grierson moved in with the NFB and took total control.  If the government wanted to encourage the U.S. to join the war then films were made, if war bonds needed to be sold, films were made.  This would further support his own interest in documentary film making and all it required was sacrificing Canadian economic freedom. He literally decided for all Canadians what kind of film would be allowed a green light as directed by Ottawa. 
During peace time, the documentary form acted as a convenient part of a deliberate collusion of government based social engineering and geopolitical interests but features were overtly deterred until the late 60's  at which point the damage was already done and Canada was type cast firmly in the documentary genre.  This marked a more passive aggressive form of manipulation than the hard hitting propaganda of the war time films but more suitable for a long term narrative such as defining national identity.
Losing our ability to determine our own destiny and thus encourage Canadian businesses to form an independent film industry  was an inevitable consequence of John Grierson's successful demonstration of the extraordinary length to which a government can directly influence content creation by controlling distribution. Specific ideas have specific consequences.
This "heavy handed" approach played into the McCarthy era  fueled suspicion of government's general involvement in the arts while simultaneously undermining the artistic and business classes' sense of independence, further inflaming the historical distrust of both for authority and establishment. The pioneering spirit of the types of risk takers and filmmakers that establish complex collaborative industries need to be free of such state control to thrive.  Content control needs to firmly belong to the people through its private interests. The producers, investors, AND customers are the ones who should enjoy the fruits of so much labour otherwise a fair market cannot form and the true identity of the people won't reveal itself. This is what I think happened in Canada and what remains are the zombie limbs of a failed idea still clawing their way across the national budget.
There are few areas as illustrative of government interference and the negative consequence that can have as the arts.  Film is especially dangerous because of its broad appeal and the unique connection that forms with people's personal narratives; the dependence and overt cognitive influence it can establish.  Propaganda is to film, what violence is to physical force. It's an ethical violation of the trust every filmmaker relies upon from the audience and there are consequences, both profound and long lived when either a person or worse a trusted institution employs it.
H.S. Gunnie Reagan argues that
Violence is an action against a victim; force is an action to quell the violent act. Passivity breeds violence; force regulates violence. 
The concept is so nuanced that it is begging for a good person to use it as cover for bad actions. It practically spells out a rationalization to commit violence while convincing ones self it is really force. In the case of Grierson we have the double temptation of helping his homeland fight a great evil in the Nazis and the appearance of legitimacy granted to him by the government of Canada.  To make matters worse a large segment of society has concluded, incorrectly in my opinion, that the very act of having state sanction makes any action legitimate. This is how water boarding happened in Guantanamo  and because this happened at the beginning of Canada's commercial film experience we suffer the maximum possible damage from the effects of compound interest. 
As Albert Einstein's famous truism suggests,
Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. 
Poisoned in its first infant steps by an overbearing father fixated on defining his child, the Canadian film industry is a twisted parody of something that could have been beautiful, and personal, and yes still Canadian. I am always amazed at government's ability to create just enough of something to form defensive cover against criticism. This is called, as Rodney P. Carlisle argues, "plausible deniability" , in which they basically always get to retreat to the position of "not doing enough" while maintaining that they are "not directly in the way". But they are in the way. These insincere institutions draw the oxygen from the room and everything else suffocates. 
Imagine a world where government had tried to make cars rather than highways.  How long until government vehicles are granted privileged access and Ford vehicles penalized? Ford would have abandoned the market immediately as would Dodge and any other reasonable company.  One cannot out compete the treasury which is why it is so important that governments have extremely limited influence over daily market activity lest we experience the financial collapse of our entire system as many past empires have. It's not the loss of consumers that takes down a country, it's the loss of producers and producers don't come from government programs, they come from the spirit within and fair market access to encourage participation. 
The Hollywood system is an excellent example of this. Especially compared to the system we "enjoy" here in Canada.  Hollywood may be a specific place in California, but what we mean by Hollywood is the studio system of creating and distributing films. These studios are private, powerful, and rarely take subsidy from the government so creative control is almost entirely dominated by the executives and shareholders that now administer these great monoliths ripped from the minds of dead legends. It may be that they are the source of the influence working on our own system, but it's not their responsibility to govern our market access and there is nothing wrong with wanting to earn market share. The error lies in our government failing to protect our markets because they have too much direct influence over them. 
The primary criticism of the studio approach is that it produces more wealth than art, but no one disagrees that it employs many more skilled people than our state based system and has helped developed some of the greatest works of all time not just good film or adequate training. Quinton Tarantino famously said "I'm not a Hollywood basher because enough good movies come out of the Hollywood system every year to justify its existence, without any apologies."  The important point to note is that Hollywood, though it occasionally wanders into commercial self indulgence (for example as with sequels and franchises), does produce every kind of film in a commercially viable way because it attracts investment from all kinds and that money stays in the U.S. because Americans own American movie companies. As they should.
Under our system it's still very difficult for a project not firmly designed to fit the current government mandate to get started here.  It's not illegal, of course, but to do it requires an army of bureaucrats producing a mountain of paperwork and runaway expense.  The cost of investing money from outside Canada is so high in-spite of free trade agreements that it's more advantageous for American companies to open up a Canadian subsidiary rather than to invest in a company owned and operated by Canadians, a sad consequence of a capital gains tax set far too high,  such that if your profit is $1000, you are taxed on $500 at your marginal tax rate. That is, if you were in the top tax bracket, you would be taxed at approximately 29% federally and then account for your provincial obligation as well.
Additionally, the cost of permits to use the most basic equipment or shoot on public lands are exceptionally sensitive to inflation  and unpredictable delay. It takes government approval which can be withheld on virtually any pretense, AND money to fly a camera drone for commercial purposes even in the safety of an empty field. Yet kids fly their drones with similar camera technology all they want without consequence because they aren't a commercial threat. How convenient that commercial drones happen to weigh just a little too much for an exemption by Transport Canada. 
So dangerous is the power of the purse, if not adequately restrained, that the U.S. constitution required the following words to remind every representative.
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time. 
It's not surprising at all why it's difficult to make a competitive Canadian feature at a viable price point. Every feature project has been reduced to lottery ticket under cost/benefit analysis where only a runaway success has any chance of paying for itself after expenses, losses, and taxes. That's not a good investment on paper and without the support of institutional investment companies that buy big based on spread sheet data there can be no competitive film industry in Canada. 
Consistent with this approach and to further cement this power over Canadians, the government provides regional institutions such as Saskfilm  just enough funding to hire well meaning people to unwittingly support the illusion of an industry we could call our own, appearing to support the arts, however timidly, when in fact it was always about guaranteeing government influence in the decision making process of Canadian film creation and distribution.
By hiding provincial controls behind the promotion of provincial narrative there could never be enough people in any given area of political coverage to form a critical opposition that could do anything material about it. The closest example would be Quebec's relatively vibrant media industry,  but its language forms a natural barrier that reduces its potential to threaten the mainstream power players and its uniquely coherent cultural identity attracts more aggressive local investment.  This successful Francophone microcosm supports my contention that a film industry is better off with less government interference. A strong and locally supportive provincial government pumps money into the industry broadly avoiding the perils of project control. By doing this Quebec gained almost unfettered market dominance producing their own specialty industries in several forms of media which the rest of Canada was denied and now envies.
It is quite possible, though beyond the scope of this essay, that we are the victims of this pattern in many more areas of our lives than we realize. That regional differences can be used to leverage one group against another just enough to maintain status quo.
Let's not forget what Martin Luther King Jr. famously said
True peace is not merely the absence of tension: it is the presence of justice. 
Perhaps the famously trumped up conflict between French and English Canada is part of this group of tactics and nothing more than socially convenient narrative for the political elite.
Specific government actions have specific consequences on the people. Tax credits have shown themselves to be very effective at generating film production without allowing the government into to the editor's seat. However, coming so close to success without government controls has hitherto been just too much for our politicians to accept. So powerful is this compulsion for creative control in media that it overrides even the rare bipartisan support tax credits usually enjoy,  as shown in Saskatchewan recently when the Wall government canceled a relatively small tax credit of 7 million, destroying 16 years of work and losing 700 million dollars worth of private sector media industry. 
Yet notice the Wall government has no problem putting tax dollars into an organization like Creative Saskatchewan  where they can control the content on a per project basis and hide behind arguments of "managing the people's money wisely" through a grant model. Once again we see this abuse of the "power of the purse".
Canadian film production is forever scarred by the NFB and the top down approach the government of Canada took in defining Canadians as the governing class would prefer us be. It became a framework used in every province for controlling the voice of Canadians. There is a sinister word game employed by propagandists and this is no exception. This is an almost absurd malapropism.  Phrases like "government funding" or "using government money" have no meaning. There is no such thing in a democracy as "government money". It is the people's money. This abuse of language is only one sign of a larger tendency toward abuse of power.
The role it played during the formative years of Canadian Cinema are obvious when one considers the current climate and the cynical attempts of government to continue to trick Canadians into thinking they have any say in their own country's development. This betrayal runs deep. In effect Canadians have been sold the lie of 1st world nationhood. In fact we are actually being subtly guided through economic modeling toward something more akin to a 3rd world labour force. In many ways we have become like a highly educated techno-underclass designed to serve American economic interests because they require all the science and engineering of a major 1st world country but don't want to pay fairly for it. In Canada the median income for a film editor is $47,000 while in America it's $55,000.00.  This again reinforces the effect of blocking any effort to develop an industry of our own as we lose our better talent to the south and what remains works cheap for projects from the south.
It's like a bate and switch. The government lays the groundwork for an argument about supporting film by subsidizing certain film projects and generating jobs; the ones that "fit the mandate", anyway. They spend more tax dollars promoting their efforts to protect Canadian content  but what they won't do, in-spite of the dominant role media plays in all our lives, is increase budgets in university programs for building student run theatres with open access for producers wanting to distribute and make ticket sales. More than half the cost of film production can be paid for in pre-sales . Consider that there are almost no Canadian controlled theatres let alone chains, again the best examples are in Quebec and they are relatively few. The top 10 theatre companies in North America are all American and control over 25000 screens, around 4000 in Canada. Canada controls about 450 and none of them are in the U.S.  We have few TV networks with any real audience size(CBC is again a government imitation), and Blackberry is our last Canadian software platform. Without a significant amount of Canadian theatres and emerging digital technology being owned by Canadians there is little to protect Canadian industrialists from manipulation by powerful American content creators through their leverage over the current platforms.
There are real things government could do to support Canadians through the cinema industry. Things like tax credits or reduced regulation lead naturally to economic growth by encouraging wealth generation using local resources. Film is not above the laws of economics nor is it denied the benefits if left to prosper on its own. Government should be supporting our industries through fair market conditions, confidence in Canadian producers, and reducing tax burdens. But the government seems more willing to sell out its own people to please powerful political allies.
This is why government won't build sound stages the way they built highways. They certainly don't ask everyone where they are going every time they travel. What happened to Greek culture when the people could no longer speak freely in Lyceum?  This is why they won't remove regulatory burdens that scare away investors and discourage Canadians from staying here and building media companies of our own. The system is set up to pay less by taxing profit more. This is a recipe for mediocrity, not a growing 21st century economy with ambitions for greatness. Is this the real Canadian identity as our governors see us?
The question of Canadian identity and the role it played in this farce has an ideological angle. History has shown there are always people trying to define others as they would like them to be  and this attempt to create Canadian culture like it were something as trivial as sausage is a doubly ironic narrative to drive the early NFB given the timing and point of its creation during the war against fascism, which we all agree is history's most horrific example of one demographic trying to shape an entire people in its image through any means necessary. Nietzsche said it best. "When you look into an abyss, the abyss also looks into you."  Even today we see this malevolent force in organizations like ISIS and its grotesque attempt to create an Islamic caliphate.
Only through self-identity can a culture be revealed as all cultures are a continuation of everyone who has come before, naturally and over many, many years. This is something propagandists ignore, blinded by their own self righteous fixations. They trick and scare the audience. This may win the battle today, but in the long run creates distrust, paranoia, and resentment which will only increase as such institutional access inevitably leads to abuse of a power it should never have had in the first place. Frankly the idea of the Canadian government defining Canadian culture through such tactics is undemocratic and offensive. Any group with too much power will eventually make the argument "it's ok when we do it, we're the good guys", but sooner or later a bad guy always gets the key to the kingdom and avoiding this problem is what a constitutional  democracy is designed to solve. We have a charter of rights and freedoms  specifically to avoid tyranny of the majority. 
Canadians are smart, informed; we can point to several examples of successful Canadians who top the charts and entertain the world over such as Martin Short, William Shatner, Justin Bieber, Alanis Morrisette, Jim Carey, etc. They are not just stars, but super stars. Yet not here. Our home and families just don't get to benefit as they should because the prosperity generated doesn't make its way into our communities, that is into our municipal budgets. It's not magic holding us back. There is simply the long shadow of an old parochial system designed by overprotective parents trying to keep their "children" safe in a world full of Nazi's. But we are not children any more. They gave into their fear and made a mistake with the best intentions but we know what paves the road to hell. The propaganda wasn't necessary. The Nazi's revealed themselves for what they were and produced Ansco  coloured film so we could look right into their cold blue eyes. As we saw with recent experiments in torture by U.S. soldiers, expediency is often the hallmark of good people committing evil acts.
In the last 10 years the media world has exploded as audiences everywhere have become more interconnected and interdependent. These old mentalities about media production in Canada need to change and refocus toward digital distribution models that grant access not just to Canadian directors and technicians, but also to investors and business owners. We need to own more theatre's, websites, radio stations, TV stations, and software platforms. As a multi-media effort we can form a real collaborative industry in Canada that serves the interests of all Canadians while supplying the incentives for teaching and working all the different foundational skills needed to compete on the world stage.
Canada is its own brand and that brand has nothing to do with the government in power or the red and white labels on all the mail outs. It has nothing to do with "doctored-mentaries" promoting a consistent image. It comes from within the homes and hearts of the people and we can't ignore this, its too complex. It remains one of the greatest lessons to emerge from WW2 and is why the Americans finally abandoned isolationism to engage politically on the world stage which has almost certainly helped us avoid WW3. Acknowledging that culture matters and that it comes from the local level is how we kept Quebec in the family when she wanted to run away,  and even then just barely.
In conclusion I've shown how Canadian Cinema is diminished when considering the potential of her home grown talent, describing how early attempts to define Canadian Identity through manipulation scarred our country. I explored historical as well as modern reasons for the suspicions many feel toward government involvement with content control through creation and distribution as it applies to film production. I've described John Grierson's specific role in this circus of many acts and drawn connections to modern consequences while illustrating how the machine he built set a precedent of abuse for those who came after. And finally I've made my argument for how the government could change all this by rewriting regulations as it applies to film and commercial involvement in general. Through tax credit programs, tax reforms and a general commitment to avoid perpetuating the original sin of using the power of the purse inappropriately we can overcome political interference in the Canadian film industry and build a better country that reflects Canada as she is, not what some wish she were.
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