2011 government document critical of film subsidies
Ontario's film and television industry would be “decimated” if tax credits allowing up to 45 per cent of labour and a quarter of other production costs to be reimbursed from government coffers were cut, said David Lickley.
The Sudbury-based IMAX film producer made the remarks in the wake of a Ministry of Finance presentation critical of the subsidies. The 2011 report was recently obtained by The Canadian Press through a freedom of information request.
It said the credits don't appear to make the film and television sector sustainable and are leaving productions reliant on provincial assistance.
The government doesn't appear to have paid attention to these criticisms, as it has continued to give out hundreds of millions of dollars a year to these sectors.
Ontario Premier Kathleen Wynne — who won last week's election with a majority government — made business grants a big part of her platform.
The document states the subsidies may be a “zero-sum game or simply a race to the bottom” as Ontario and other jurisdictions outdo themselves to offer juicier tax credits.
But the alternative would be letting these productions go elsewhere, as would inevitably happen if the tax subsidies were ended, said Lickley.
“They'd probably go to Quebec first, and then they'd go to Vancouver,” he said. “They can go to South Carolina and get just as generous (subsidies). We're not the only jurisdiction that offers them.”
Lickley, who has been on the receiving end of these tax subsidies, said they support the salaries of people who work in these productions, who in turn pay income tax.
Film productions also support local businesses, including hotels and restaurants, he said.
“If you did all the math, I'm not sure in the end where it all fits, whether you get back as much as you put out, but my guess is it's not that far off,” Lickley said.
Then there's the idea that the government is subsidizing something of intrinsic value — for example, the educational IMAX films Lickley produces in partnership with Science North.
“I think there's something valuable to society,” he said, adding that most sectors receive some sort of government subsidy anyway.
David Anselmo, CEO of Northern Ontario Film Studios and Hideaway Pictures, said he thinks the report is “off base.”
“The Ontario tax credits are vital for the film and television industry to allow this province to remain competitive with the rest of the world,” he said, in an email.
“The tax credit is an economic driver that attracts new foreign investment into the province.”
With the tax credits, the province was able to attract $2.4 billion in film and television productions to Ontario in 2013, while creating 50,000 full-time jobs in the industry, Anselmo said.
“This is 49 per cent of all production in Canada,” he said. “Lastly, with strong tax credits from states such as Louisiana and Georgia, the Ontario tax credits allow us to stay competitive with these other markets.”
The Ministry of Finance presentation also said it would be a good idea to move from tax subsidies, which are handed out after projects have wrapped up, to direct funding.
“Stakeholders need financing up front — not an option in the tax system,” the report said.
But Lickley said he thinks the system is good the way it is. He said the rules surrounding these tax credits are very strict.
“We've been through that,” he said. “You really have to account for every penny you spend in the way you say you'll spend it, or you don't get the tax credit back. So it keeps productions very honest.”
Film and television productions in Northern Ontario do have access to direct grants through the Northern Ontario Heritage Fund Corporation, a pool of money that Lickley has also accessed for his films.
In 2013, the NOHFC invested more than $9 million in 13 film and television projects in Northern Ontario.
If the NOHFC grants were to dry up, Northern Ontario's burgeoning film industry would be damaged, he said.
“I think a lot of the productions would go elsewhere, and the jobs would go with it,” Lickley said.
“The people that are building up their expertise here would have to go somewhere else to work, and then you lose that whole brain trust that you're trying to develop.”