Tuesday, March 27, 2012

Sustainability... what was said back in 2007?

You may remember back towards the end of 2007 Indecon produced another of their reports for the Department of Finance on the workings of Section 481.

The main recommendations were adopted - particularly the raising of the ceiling per project to €50m and lifting the level of the tax write-off from 80%. This actually went further than Indecon proposed in pushing it right up to 100% in the 2008 Finance Act. The duration of the scheme has also been extended out to 2015.

I was prompted to revisit the proposals because of the move on the Downton Abbey tax credit for TV in the UK. Here is the list of recommendations from November 2007.

I don't believe that recommendation 5 was acted upon, unless the Creative Capital report somehow ran away with the brief and turned it into something else. This might account for Film Board spend of €201,818 on 'consultancy' (excluding recruitment and readers' costs) in 2009, and €143,906 in 2010.

Below is the expanded version of the fifth recommendation (p 66). One dosen't have to read between the lines to see that there are a few cautionary words here for 'the industry'. The collective response must have been, "Not listening... not listening... not listening... but thanks for the changes to section 481!"

The film sector in Ireland is primarily dependent on competing on the basis of tax incentives which can easily be replicated in other counties. This vulnerability was highlighted by Indecon as far back as 1998. Any sector which is dependent on a competitive advantage which can be removed by a simple change in tax legislation in other countries is not sustainable.
The sector and the IFB need to design more sustainable tax and other incentive mechanisms that have a lower cost but greater benefit, and should also focus on developing skills/talents, infrastructure and a competitive cost base, in order to provide long-term sustainability for the sector. The plan should also consider the capital structure of Irish film and TV companies.

And now the UK have taken the ball away... again.


Anonymous said...

I think the reliance on tax breaks is an extension of our general (and infantile) dependence on "Foreign Direct Investment".

Perhaps foreign productions should only really shoot here if the story or location warrants it.

The idea that Ireland can "compete" with Canada or the UK for major productions - on any other basis than that - is fanciful and is really another example of hubris.

One "smart" move may be to scrap tax-break-led production altogether, focus instead on technical quality, scenery, and locations and accept that foreign productions are a welcome occasional bonus.

As an aside, I also think much of the reason for the huge subsidies to film and TV here is to make Ireland "look good" in an attempt to cover up the corruption! Per your other fascinating post :-)

irish film portal said...

The logic behind public policy in this area is hopelessly confused between cultural and economic motivations. It is further compromised by the interests of producers who are granted far too much credibility by the powers that be.

However, we shouldn't fall into the trap of blaming producers - you might as well blame fishermen for catching fish. The problem is with the lack of proper regulation and transparency over where the money actually goes - a pivotal issue in the Indecon Report 2007.

I believe the turn of events since this report in 2007 (the later Creative Captial Report and the Film Board's 'expanded remit') comes from the official realisation that the 'independent' film and TV sector does not really pay its way. (Animation may be an exception to this.)

Rather than use this realisation as a reason for concentrating, at least, on valuable cultural outcomes there has been a drive to bury the failings in the broad church that is the 'Audiovisual Sector'.

This avoids having to deal with the uncomfortable truth that S481 is a highly inefficient policy instrument to put cash into film production, mostly because not all the cost does go into film production.

Far better to provide the money directly as a loan/grant incentive based on levels of tightly monitored local spend and geared to the creation of Irish IP rights. However, that wouldn't suit everyone and they might even have to compete for funding (and fees) from a circumscribed pot of money.