CHPC Committee Report
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CHAPTER 4: FEATURE FILM SUPPORT PROGRAMS AND INITIATIVES: INTERNATIONAL COMPARISONS
During the first phase of the Committee’s study, a number of witnesses talked about particular government policies and support programs in other countries that they viewed as innovative or successful. These witnesses suggested that a considered examination of support measures offered in other jurisdictions would offer important lessons that could be applied to the Canadian feature film industry. With this in mind, ten countries/jurisdictions were selected for appraisal.105 The key questions used for this review were:
| • | What forms of financial assistance (direct and indirect) do other countries provide in support of their domestic feature film industries for production, development, distribution, promotion and exhibition? |
| • | Is there any notable connection between levels of funding support and the success of domestic feature film markets? For those countries that are doing well, what are they doing differently? |
| • | In what ways do various forms of support resemble or differ from the types of support provided in Canada? |
| • | Who makes the creative decisions? At Telefilm Canada it is mostly senior officials who decide how to allocate funds; what are some of the methods used in other countries? |
| • | Are there any policies, strategies or methods used in other countries that could be applied or adapted to the Canadian context? |
In the final analysis, four countries — Australia, France, Germany and the United Kingdom — were judged to merit a more in-depth analysis. Three reasons prompted this decision: (1) the box-office performance of domestic films in these markets in recent years, (2) the population of these countries relative to Canada’s and (3) unique elements of the programs and support measures offered in these contexts.
This chapter opens with a brief review of what witnesses said about feature film support strategies found in other countries. Thereafter, a focused presentation on the programs and initiatives offered in Australia, France, Germany and the United Kingdom is provided. With this framework in place, the extent to which film support measures used in Canada differ from those offered in the countries under study is discussed. In closing, key lessons that can be extracted from these international comparisons are presented.
The topics most frequently identified by witnesses who mentioned film support measures used in other countries were: digital cinema, exhibition quotas and incentives, tax incentives, the decision-making process, training and professional development and slate funding.
A number of witnesses spoke of government interventions at the distribution and exhibition ends of the creative value chain. Widespread support was shown for initiatives to promote the adoption of digital projection technology in cinemas. In particular, witnesses praised the efforts of the British Government’s U.K. Film Council to provide support to cinema exhibitors for the purchase of digital film projection equipment in return for their showing a certain percentage of British films. Mr. Walter Forsyth of the Atlantic Filmmakers Cooperative noted that “it is very innovative. It’s costing them quite a bit of money to do it, but I think it’s a very smart thing and we should pay attention to the results of that move.”106 Similarly, the Association of Canadian Cinema Television and Radio Artists maintained that an initiative like the one in the U.K. should be emulated as “Digital content is less expensive to create — and suppliers and film makers could easily provide a wide variety of films to theaters across the country and around the world.”107 Mr. Jacques Bensimon of the National Film Board of Canada also spoke favourably of the U.K.’s Digital Screen Initiative and similar ones undertaken by others:
Around the world, countries have invested in equipping their cinemas with high quality digital projection to encourage the exhibition of indigenous production….If we want to have access to screens, if we want our indigenous production to be seen and appreciated by our fellow citizens, then we need to deploy e-cinema before it is too late.108
One witness mentioned an initiative in Norway where a committee selects a number of films thought to have considerable merit. Independent exhibitors in every part of the country were then given an incentive of box-office returns for showing these films.109 In addition, a number of witnesses raised the matter of screen quotas, attributing the incredible success of Korea’s domestic film industry to this measure. For example, Mr. Carl Bessai of the Citizen’s Coalition for the Protection of Canadian Films presented the case that the quota system has enabled Korean films to dramatically increase their domestic market share and has encouraged people (knowing that there will be a guaranteed amount of exposure) to invest in Korean films.110
Also related to exhibition, the National Film Board of Canada drew the Committee’s attention to France’s current practice of levying a tax on the sales of movie tickets and using the revenue to support French film production.111
As for tax incentives, Mr. Michael Donovan of the Halifax Film Company Ltd. suggested that the “Section 48” incentive offered in the U.K. and the “Division 10BA”112 incentive offered in Australia have been tremendously successful in encouraging the growth of the feature film industries in these countries.113
A number of organizations reflected on the regional character of feature film funding models in Germany, France, and the U.K., where some funds are disbursed by regional film agencies. The World Film Festival maintained that this is preferable to the situation in Canada where Telefilm is in a “monopoly” position in terms of allocating funding assistance. Another witness favoured these regional models because they make funding available all across the country rather than concentrating it in large centres.114
With regard to the question of who actually makes the funding decisions, Mr. Kevin Tierney of the Canadian Film and Television Production Association voiced support for the Irish film Board’s practice of involving external film industry experts in the process.115
As for training and professional development, Telefilm voiced concern that Canada is falling behind other countries such as the United Kingdom and Australia:
Currently, Telefilm Canada has an annual training budget of less than $3 million. … In 2003 the British government committed CD $114.7 million to training over the next five years. The Australian government contributes a healthy CD $78.5 million towards training in film, television and radio with industry and private investors contributing a further astounding CD $127 million.116
Finally, a number of witnesses voiced support for programs that offer “slate funding” for production companies. Ms. Trish Dolman of the Canadian Film and Television Production Association pointed to the Australian practice of providing development funds to production companies for a slate of multiple projects rather than a single project.117 The Ontario Media Development Corporation was supportive of similar measures undertaken in the U.K. where the:
… program allows eligible companies to use a portion of their slate funding as working capital, as well as applying the funding toward individual projects. Making this type of funding available for Canadian producers would enhance their long-term stability.118
C. FEATURE FILM SUPPORT IN AUSTRALIA, FRANCE, GERMANY AND THE UNITED KINGDOM119
This section identifies and reviews key programs and initiatives that Australia, France, Germany and the United Kingdom offer in support of feature film development, production, distribution and exhibition. Before proceeding it is useful, to set the context for this analysis by examining the market share of the domestic box-office enjoyed by filmmakers in Australia, France, Germany and the United Kingdom in relation to the performance of Canadian films in Canada’s two linguistic markets (as well as overall).
As noted elsewhere in this report, a key measure of success — an incomplete but undeniably important one — is the extent to which domestic films capture a share of their domestic box-offices. Table 1 shows total feature film program spending (i.e., direct spending) by domestic box-office and population for the most recent years available.120
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Figure 4.1 |
Total Feature Film Program Spending in Selected Countries by Box-Office and Population (Canadian Dollars)121 |
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|
Total Spending |
% Share of Domestic Box-office (5 year average) |
% Share of Domestic Box-office (2004) |
Population |
|
|
Germany |
199.6 |
16.4 |
23.8 |
82.4 |
|
|
France |
167.7 |
34.3 |
34.8 |
60.6 |
|
|
United Kingdom |
134.3 |
14.5 |
12.0 |
60.4 |
|
|
Australia |
54.7 |
5.1 |
1.3 |
20.1 |
|
|
Canada122 |
107.8 |
2.7 |
4.5 |
32.8 |
|
|
English Market123 |
55.8 |
0.9 |
1.6 |
21.8124 |
|
|
French Market |
35.6 |
19.2 |
26.9 |
7.2 |
|
|
Sources: European Audiovisual Observatory, UK Film Council, German Federal Film Board, Centre National de la Cinématographie, Australian Film Commission, Department of Canadian Heritage, CIA World Factbook, 2005, Statistics Canada. |
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A clear connection between the level of government support for feature films and the share of domestic box-office captured is far from apparent. Germany, for example, spends about $30 million more per year on feature film programming than the U.K., yet its films have achieved, on average, a similar share of the domestic box-office. France, meanwhile, spends more than the U.K. and less than Germany, yet its five year average share of the domestic box-office is more than double these two countries.
Most interesting is the result for Canada’s French-language market, where an annual investment of about $36 million in direct support has helped generate an average box-office share of more than 19% over the past four years and more than 26% in 2004. Most troublesome is the result for Canada’s English-language market, where an annual investment of about $55.8 million in direct support has helped generate an average box-office share of less than one percent over the past four years and just 1.6% in 2004.
The poor box-office performance of domestic films in Canada’s English-language feature film market, particularly in light of the remarkable strength of Canada’s French-language market, raises an important question. Similar levels of support in other jurisdictions — including Canada’s French-language market — have, over time, helped raise domestic market share for indigenous films. Why then, has such a substantial investment in Canada’s English-language market made so little difference?
The Committee will return later to this question later on. This section now turns to its review of approaches used to support indigenous feature film development, production, promotion and exhibition in Australia, France, Germany and the United Kingdom.
Funding Support Agencies and General Structural Aspects
The U.K., France, Germany and Australia all have national agencies responsible for the support and direction of their feature film industries. These agencies are the U.K. Film Council, the Centre national de la cinématographie, the German Federal Film Board, the Australian Film Commission and Australian Film Finance Corporation. Though all of these countries also have sub-national agencies that administer some programs at a regional level, there is variance in the degree of decentralization of these funding models.
France, for example, has about 36 regional film agencies, most of which have a budget of less than $1 million.125 The Centre national de la cinématographie, however, is the nation’s main supplier of funds to feature filmmakers, with an annual budget of more than $694 million, of which nearly $170 million was in support of feature film production in 2004.126
For fiscal year 2005-2006, the U.K. Film Council has designated more than $134 million for feature film production and has an envelope worth about $15.1 million for nine regional screen agencies across England for a limited range of regional programs. There is also a national agency for each part of the U.K. outside of England: Sgrin Cymru Wales, Scottish Screen, and the Northern Ireland Film and Television Commission, each receiving a separate (albeit small) budgetary allocation and share of lottery funds to support films that have a particular cultural relevance to their areas.
Funding support in Germany and Australia is significantly more decentralized, likely due to these countries both being federal rather than unitary political systems. Germany, for example, has 16 regional film agencies, 5 of which have combined annual budgets of $132.4 million, while the German Federal Film Board’s budget is $111.1 million. Australia (slightly less decentralized in nature) has six regional agencies at the state level with combined budgets of $39.1 million in 2002-2003, while the two national agencies, the Australian Film Commission and the Australian Film Finance Corporation have annual budgets of about $17.2 million and $34.1 million for feature film respectively.
This brings up a unique feature of the organization of the Australian funding system. There is a specific agency that focuses on film development (the Australian Film Commission) and another that focuses on film production (the Australian Film Finance Corporation).
The activities of the U.K. Film Council and the related Scottish, Welsh and Northern Irish national agencies are funded in part by direct government contributions. The majority of their funding, however, comes from the proceeds of its national lottery.
|
Funding Sources in Support of Film Production |
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|
Germany |
Tax on cinema tickets, DVDs and videos |
|
France |
Tax on cinema tickets and broadcaster revenues |
|
United Kingdom |
National lottery |
|
Australia |
Government appropriations |
In France the Centre national de la cinématographie receives most of its funding from a tax imposed on cinema tickets and a tax on broadcaster’s advertising revenues (with some funding from the government budget). Similarly, Germany’s Federal Film Board is funded almost completely through a tax levied on cinema tickets, a tax levied on the sale of videos and DVDs, and direct voluntary contributions from broadcasters (some of which also goes to the regional agencies). In Australia, however, funding for federal and state film agencies comes from government appropriations.
Most feature film funding programs in France and Germany are delivered via two streams: an automatic stream and a selective stream. Automatic stream programs typically award funds to applicants with track-records of significant box-office achievement. The level of automatic funding is determined by box-office admissions or receipts achieved by a film during a reference period. Selective funding is generally aimed at those with less significant box-office track-records and is awarded via what tend to be highly competitive project-by-project assessments.
|
Funding Streams in Support of Film Production |
|
|
Germany |
Automatic and Selective |
|
France |
Automatic and Selective |
|
United Kingdom |
Not used |
|
Australia |
Not used |
In Germany, funds awarded through the selective stream are expected to serve a cultural purpose. In France, films that receive selective funding are often expected to serve a cultural as well as an economic purpose. Moreover, although the vast majority of France’s funding programs use the selective principal, the overall value of its automatic funding programs is greater.
In Australia, production funding from the Australian Film Finance Corporation is awarded through a market attachment stream and a project evaluation stream. The market attachment stream requires projects to demonstrate a high level of commitment from market participants. This market attachment must include an Australian distributor and an international sales agent. The project evaluation stream provides funds for films judged to have significant creative potential and potential to secure distribution. It should be pointed out that this type of streaming is quite different from those operating in France and Germany because funding is not provided automatically.
The practice of delivering funding through different streams has been abandoned in the U.K.
Who Makes the Funding Decisions?
Decisions for funding from the U.K. Film Council vary from program to program. For development and production funding decisions are typically made by the head of each program along with members of the Film Council’s Business Affairs and Production Finance Departments. For other programming areas, decisions are made by Film Council staff, in consultation with outside bodies or individuals at their discretion.
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Who Makes the Funding Decisions? |
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|
Germany |
Committees made up of a cross-section of participants |
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France |
Director General of Centre national de la cinématographie |
|
United Kingdom |
Program head; Film council staff |
|
Australia |
Internal assessors |
Decision-making authority in Germany’s Federal Film Board has a unique character. Decisions regarding the selective components of feature production are made by a committee of 11 regular members and 11 substitute members. The Committee is composed of a member of the German Parliament, a senior public servant, and representatives from sectoral film organizations: Organization of German Cinemas, Federation of Feature Film Producers, German Federation of Television and Film Directors, Federation of German Screenplay Authors, Association of Film Distributors, Federation of Audiovisual Media, Association of Public Broadcasters, and Association of Private Broadcasters. Decisions regarding other selective, non-production aspects of funding are made by six subcommittees made up, in part, by members drawn from the larger committee. For the German regional agencies decisions are generally made by internal agency committees or boards.
Funding decisions for the selective programs of France’s Centre national de la cinématographie are generally made by the agency’s Director General on the advice of a committee composed of industry experts. Each program or program type has its own committee.
In Australia, decisions are usually made by internal assessors. The Australian Film Finance Corporation’s Board of Directors makes funding decisions based on the recommendations of an Investment Manager who has already considered the application. In the Australian Film Commission, an initial assessment is made by a project team which is typically composed of AFC staff, but on occasion there may be an outside assessor attached. Their recommendation is then reviewed by the AFC Project Committee.
In Britain, the U.K. Film Council’s Development Fund (intended to enhance the overall quality of screenplays) offers seed funding, partnerships funding and pre-production funding for single projects, as well as funding for a slate of projects. Scottish Screen makes lottery funds available for script and project development, while Sgrin Cymru Wales awards lottery funds for script development. Sgrin Cymru also has a program that gives screenwriters a chance to meet with industry professionals in order to obtain feedback on their scripts. In addition, the Northern Ireland Film and Television Commission (NIFTC) provides funds from its Lottery Fund for project development. The U.K. Film Council along with Scottish Screen, Sgrin Cymru Wales and the NIFTC spent $11.7 million on features development activities in 2003-2004.
France has one main program offering selective funding for all stages of development (scriptwriting and development, optioning, acquisition of rights, and research). There is also a separate program for scriptwriting that provides a selective subsidy for the writing of new scripts, and the further development of existing ones. In 2004, France spent $3.9 million on development programming for feature film.
Germany’s Federal Film Board offers a scriptwriting program that provides funds for the development of screenplays. Indicative of the decentralization of the German system, the larger regional agencies offer more comprehensive development programs covering essentially the same activities as the development funds mentioned in the other countries. Spending on features development programming in Germany — both federal and regional — was $9.4 million in 2002.
Australia has by far the most comprehensive set of development support programs. In 2002-2003, Australian federal and state agencies spent $6 million on development. All of the developmental aspects of feature film support at the national level are undertaken by the Australian Film Commission. Programs offered include:
| • | a New Screenwriters Program aimed at providing promising writers support to develop a screenplay; |
| • | funding for the development of a first draft of a new script, a subsequent draft script of a new script and a subsequent draft of an already existing script; |
| • | matched investment funding to encourage the participation of third parties in the development process; |
| • | the SPARK Script Development Program through which screenwriters are provided with an intensive workshop with industry professionals to polish their scripts for production; |
| • | writer fellowships to assist screenwriters who have received significant Australian or international awards to develop a new screenplay; |
| • | the General Development Investment Program which supports experienced practitioners who intend to develop and finance a slate of projects (i.e., two or more) by providing ongoing infrastructure and development funding; |
| • | the IndiVision Program for low-budget features through which creative teams are provided with an intensive professional workshop to aid in script development, as well as funding to develop a draft script; |
| • | a program that provides funds for documentary filmmakers to develop pitching materials to attract potential investors and another that offers funds for a detailed script as well as the development of pitching materials; and |
| • | two programs that make funds available to support the development costs for both drama and documentary films made by Aboriginal filmmakers. |
The U.K. Film Council administers two programs in support of feature film production. The New Cinema Fund makes funding available for the production of feature films and low-budget feature films that are particularly innovative and “cutting-edge.” This Fund, which is especially committed to supporting films from ethnic minorities and from the regions, also has a low-budget features component. The Premiere Fund invests in popular, commercially viable features that have global potential. This fund makes resources available for each stage of the creative process, from development and production through to marketing and distribution. Funding is generally made through equity investment. The U.K. Film Council and its three regional agencies spend approximately $34.4 million on feature film production activities annually.
Germany’s Federal Film Board administers a major production funding program through an automatic stream and a selective stream. In the automatic stream a company is entitled to a production grant if it has previously produced a German film that has achieved a certain threshold of box-office success. In the selective stream a production company is entitled to an interest-free loan for production for a film that promises to enhance the quality and profitability of German cinema. The amount of funding available through the selective stream is considerably less than the amount available through the automatic stream. Many of the regional German film agencies also offer significant programs for funding production. These regional funds do not have an automatic stream. Annual features spending of the Federal Film Board and three largest regional agencies totals approximately $109.7 million annually.
Similarly, France offers both automatic and selective funding for production. Established producers are awarded automatic funding for production based on their previous box-office performance. Selective funding for production is available through the Advance on Receipts Program, and is generally awarded to less experienced filmmakers to make films that would not be viable without public support. France also has a program designed to share the risk with producers who use experimental production technologies (e.g., digital special effects, image modelling) in their films. Funds for this program are awarded on the basis of the costs incurred for the use of such technologies. In addition, separate programs exist to provide selective funds to support the production of foreign-language films and French-Canadian co-productions. In 2004, France’s Centre national de la cinématographie spent approximately $112.4 on features production.
The Australian Film Commission does not administer programs for the production of feature films per se. It does, however, offer a program to support the production of innovative low-budget features through its IndiVision Low-Budget Feature Production Program. The AFC also administers a program that provides support for the production of documentary films as well as a small program for the production of films made by Aboriginal Australians.
The Australian Film Finance Corporation is the Australian government’s principal agency for funding feature film production. Funds for production can be accessed through a market attachment stream and a project evaluation stream. Australian national and regional agencies spent $34 million on features production in 2002-2003.
Distribution and Promotion Programs
The U.K. Film Council supports distribution mainly through its Prints and Advertising Program. This program provides financial support to distributors for extra prints and advertising materials to widen the distribution and marketing opportunities for films that would otherwise have limited release and exposure in the United Kingdom. The Council also has a program to help support the promotion of U.K. films at international festivals by providing funding for marketing items, subtitled prints, and travel costs. The Northern Ireland Film and Television Commission has two very similar programs to support distribution and promotion as well as attendance at festivals. The U.K. spends approximately $5.3 million on distribution and promotion activities.
The German Federal Film Board’s distribution funding activities are administered through a program with automatic and selective streams. In the automatic stream, a subsidy is provided for distributors who have distributed a German film that has reached a certain threshold of box-office success. Funding for distribution through the selective stream is offered in the form of an interest-free loan or sometimes a grant. The Federal Film Board also offers a separate program that provides grants for the production of additional prints. Additionally, Germany’s regional film agencies provide some support for the distribution and promotion of films within their regions. Germany’s national agency commits about $31.9 million annually to distribution and promotion funding activities.127
Support for distribution in France resembles the German approach. Automatic support is granted to established distributors and is contingent on the box-office track-record of their films. Selective distribution support in the form of repayable advances is available for independent distribution companies. The Centre national de la cinématographie also provides a special program to support the costs of distribution for film works from countries whose cinema is not well known in France. In all, France committed about $21 million to distribution in 2004. Interestingly, the Centre national de la cinématographie does not seem to offer any significant programs through which promotional funds can be accessed.
The Australian Film Commission offers a marketing loans program intended for completed film projects that have been unable to secure funding from another source. The Australian Film Finance Corporation makes funds available to distributors for the making of extra prints and advertising materials in the form of a non-recourse loan. In addition, some of the Australian regional film agencies provide limited funds for promotion and marketing schemes. These agencies commit approximately $2.4 million annually to distribution and promotion.
As several witnesses pointed out, the U.K. Film Council offers a program called the Digital Screen Initiative to provide funding for cinemas to adopt digital projection equipment in return for devoting a set percentage of screen time to U.K. specialized films.128 The objective of this initiative is to create an infrastructure for the exhibition of such films and to enhance the viewing opportunities of the public. The initiative currently comprises 240 screens in 200 cinemas across the United Kingdom. The U.K. Film Council also offers some limited funds to enhance the activities of film societies and clubs to bring new viewing opportunities to rural audiences, as well as a larger Audience Development Scheme that provides funds to organizations to run cinema-based programs to enhance public knowledge and appreciation of film. Spending on exhibition programs in the U.K. totalled $34.3 million in 2003-2004.
Germany’s Federal Film Board, as well as several of the regional German agencies offer automatic and selective support for cinematic exhibitors to make institutional improvements to their cinemas, screen specialized German and European films, and provide various educational programs to the public. Spending on exhibition programs by the Federal Film board as well as the regional German agencies was $20.3 million in 2003-2004.
The Centre national de la cinématographie offers a selective support program for exhibitors to construct and improve cinemas in underserved areas of the country. France also has a separate national agency called the Agence pour le développement régional du cinéma. This agency, whose purpose is to promote nationwide access to cinema and to encourage cinematic diversity, provides architectural and environmental advice to exhibitors wishing to renovate their cinemas. It also offers exhibitors in small and medium sized towns a subsidy to acquire additional prints, as well as a subsidy for all cinemas to show classic French films.
The Australian Film Commission’s Industry and Cultural Development Fund makes resources available to organizations to deliver a range of events which increase Australians’ access to, and appreciation of, film. These include special screenings of films, conferences, film festivals, and film publications. Some of the Australian regional film agencies (New South Wales and Western Australia) have very similar offerings. The AFC’s program also includes the National Touring Exhibition Fund, which provides support for exhibitors to run screening programs that will tour Australia. In 2002-2003, national and regional agencies in Australia spent $5 million on exhibition support programs.
Training and Professional Development Programs
The main program for professional development in the United Kingdom is the Film Council’s Training Fund, which provides grants to individuals and organizations seeking to receive or provide film-specific vocational training. The Northern Ireland Film and Television Commission offers a similar program that provides bursaries to individuals to attend recognized training courses, as does Scottish Screen. Another noteworthy program provided by the NIFTC is the Film and Television Creative Entrepreneur Program, which offers workshops to help improve the business skills of small film and television production companies. The U.K. Film Council’s Training Fund is expecting to disburse $13.9 million in 2005-2006.
Germany’s Federal Film Board also has a program that provides grants to film professionals to attend training courses.129 Surprisingly, France does not offer any training programs or funds to attend such programs through its film agencies.130
The majority of training and professional development activities in Australia are carried out through the Australian Film Television and Radio School, which offers a broad range of training and development courses — as opposed to funding programs. The Australian Film Commission provides an internship/mentoring program for film practitioners as well as a fellowship program. Most regional Australian agencies also have programs that provide funds for film practitioners to attend workshops, conferences, courses and related events. In all, Australia spent $24.9 million on training and professional development in 2002-2003, most of which was allocated to the Australian Film, Television and Radio School.
Tax relief for qualifying British films is currently channelled through a sales and leaseback mechanism. A producer or production company can reduce its borrowing by selling the film rights to a U.K. purchaser, which can claim tax relief on the purchase price while leasing the rights back to the seller. Tax relief allows a 100% write-off for British production and acquisition expenditure on films that cost less than £15 million. Films with budgets of over £15 million may write off expenditures over three years. This system of relief is currently under review and the government plans to replace it some time in 2006 with incentives worth 20% of production costs for lower budget films and 15% for higher budget ones. In addition, the government plans to introduce a more rigorous set of cultural standards for productions to be considered British and, by extension, eligible for the above tax relief measures.
In Germany, German film investors can obtain a tax deduction at their marginal tax rate for up to 100% of their investment in the scheme. There is, however, no requirement for the film to be made in Germany. As a result, this system of tax relief has come under heated criticism, and it seems likely that it will be replaced.
France offers perhaps the least generous tax incentive of the countries studied: up to 20% of qualifying technical expenses related to the production of a film, provided that the expenses are for services performed in France. The tax credit is capped at €1 million. This incentive was recently introduced by the French government to stem the tide of French films being produced outside of the country.
In Australia, the federal government offers a cash rebate of 12.5% of a production’s qualifying Australian expenditure — defined as, “production expenditure reasonably attributable to goods, services and property provided/used in Australia.”131 In addition, there is a federal capital cost allowance available for Australian films whereby Australian resident investors can deduct 100% of the capital cost of the film against their active income. Whereas the 12.5% rebate is aimed at encouraging large budget films to shoot in Australia, the capital cost allowance is intended to encourage investment in Australian productions. Several of the Australian state governments offer tax exemptions and rebates of between 6% and 10% on labour expenses incurred in their jurisdictions.
Chapter 5 and several appendices to this report provide an overview of direct and indirect support measures offered by the Government of Canada in support of Canada’s feature film industry. This section looks at how Canada’s programs and initiatives compare to those offered in Australia, France, Germany and the United Kingdom.
Funding Support Agencies and General Structural Aspects
The Canadian support system is configured quite differently from those described above. Unlike each of the countries examined here, the vast majority of funding for feature film in Canada is available from one national organization, Telefilm Canada. Funding applications for English-language projects are received by local Telefilm offices in Toronto, Vancouver, and Halifax. Funding requests for French-language projects from across Canada are handled by Telefilm’s Montreal office. Some provinces also have provincially administered film offices, but these generally exist to provide non-financial support services (e.g., information) to filmmakers.
With respect to funding sources, there is a significant difference between Canada and the other countries examined here. Whereas much of the funding in Germany and France comes from levies of direct entertainment taxes, and in the case of the U.K., from lottery proceeds, Telefilm Canada’s feature film funding (worth $100 million) comes from the federal government via the Department of Canadian Heritage. In addition, about 60% of the Canadian Television Fund’s $15 million feature film stream comes from contributions made by the Canadian cable and satellite companies,132 with the remaining portion being provided by the Department of Canadian Heritage.
The streaming system in France and Germany follows on principles similar to the Canadian system where several of the programs in Telefilm’s Canada Feature Film Fund are delivered through an “automatic” performance component, which reserves funds for already successful filmmakers based on their box-office track-record, and a selective component where those applicants who do not meet the performance threshold are evaluated in a highly competitive project-by-project selection process.
Who Makes the Funding Decisions?
With respect to decision-making, Telefilm Canada employs an interesting mix of elements from each of the countries under study. Like Germany and France, a certain percentage of resources are allocated to a “performance envelope” stream for high performing recipients according to box-office receipts. In these instances, funding decisions for certain productions are, to some extent, determined by the marketplace.
Unlike France and Germany, however, where industry representation is standard practice, all selective funding decisions are made by agency officials (i.e., Telefilm personnel). Since 75% of all CFFF Development, Production and Marketing Program resources are allocated to the selective funding stream, this means that the majority of funding decisions are made by Telefilm personnel.
Telefilm’s Canada Feature Film Fund Development Program supports essentially the same core development activities as those offered in the countries described here and is at least as comprehensive as those offered in Germany and France. The difference between Canada and Australia (which offers a vast array of programs) may not be as significant as it appears. Many of the development funding activities that Australia divides into separately administered programs (e.g., different script drafts and low-budget feature development) are offered by the CFFF Development Program. Also, both countries spend roughly the same amount on development programming ($6.2 million in Canada for 2003-2004 and $5.4 million in Australia — nationally and regionally — for 2002-2003).
That said, there are some interesting programs in the U.K. and Australia for which no equivalent exists in Canada. Sgrin Cymru Wales and the Australian Film Commission both offer screenwriters intensive workshops where they can benefit from the advice of industry professionals. No such program for fiction features is available through Telefilm. In addition, Australia has a matching funds program that is intended to lever private investment for development; no such program exists in Canada. Finally, both the U.K. and Australia have programs that offer development funding for a slate of projects rather than for a single project. The development program offered by Telefilm gives no such option.
The production support programs used in the above countries closely resemble what is used in Canada. Each has a stream of production programming designed to provide funds to more experienced, proven producers for films that will have outstanding commercial potential. In the U.K., for example, this is accomplished through the Premiere Program, which takes a calculated chance on less proven candidates for films judged to have some significant creative and market potential. France, meanwhile, is a bit of an exception in this respect, as its Advance on Receipts Program tends to supports films with little potential for commercial success.
Canada’s CFFF Production Financing for Producers works according to similar principles as those described above, with a performance component that reserves funds for those producers with a demonstrated record of box-office success, and a selective component that provides funds for those with creative and commercial potential, but less of an established record. Canada’s spending on features production totalled about $68 million in 2003-2004, with an additional $43.6 million spent on documentary production by the National Film Board.
Distribution and Promotion Programs
With respect to distribution and promotion, Canada’s distribution and promotion support system seems to be more comprehensive than that of France and Germany, and quite similar to the U.K. and Australia. The Telefilm CFFF Marketing Loans for Distributors Program spent $13.3 million in 2003-2004; one can add another $10.6 million if one includes the distribution and marketing activities of the National Film Board. This is an impressive amount, especially when one considers that Canada (in terms of population) is about half the size of the U.K. and France, and not quite one-third the size of Germany.
A near complete absence of programs aimed at supporting film exhibition is perhaps the area where Canada differs most significantly from the countries studied here. The Canada Council for the Arts does provide a number of programs that disburse funds to media arts organizations and festivals to present independent Canadian media artworks to the public. This support is modest, however, with a total budget of about $1 million for film related projects, of which just a subset are feature films.
Training and Professional Development Programs
A key difference between the training and professional development programs offered by Telefilm and those offered by the other countries studied here is that Telefilm does not provide funds directly to individuals to partake in such activities. Rather, Telefilm provides grants to organizations and recognized film training schools to provide training programs and courses to individuals.
For documentaries, the National Film Board provides a number of training and professional development programs directly to filmmakers; in other words, the NFB trains the individuals itself rather than providing funds for them to seek training elsewhere. Telefilm’s annual budget for training and professional development is $3 million. This is significantly less than the U.K. Film Council’s budget of $13.9 million, and much less than Australia’s $24.9 million.133
The Canadian government’s Production Tax Credit refunds 25% of qualified labour expenditures for a CAVCO-certified Canadian film, while the Production Services Tax Credit refunds 16% of qualified labour expenditures for services provided in Canada by Canadian residents or taxable Canadian corporations. In addition, the Canadian provinces provide a range of tax credits for labour expenses which tend to be more generous than the equivalent ones offered by the Australian states.134
Comparing and contrasting tax incentives offered by different countries with an aim to determining best practices is a difficult undertaking. The incentive that will work best for a producer, production company or investor typically depends on each individual’s specific financing situation. For instance, whether the 100% capital cost allowance offered in Australia is better than a refund on 25% of labour expenses, as in Canada, will depend entirely on a production’s particular cost structure. That said, it is worth noting that all of the countries studied (and others) have in recent times introduced (or considered introducing) incentives that emulate Canada’s system of tax credits.
This chapter has compared feature film support programs and initiatives offered by the national governments of Australia, France, Germany and the United Kingdom with those offered at the federal level in Canada. The key findings of this analysis are as follows:
| • | Canada’s approach to film funding is highly centralized, with one agency (Telefilm) responsible for the largest sum of money and for most of the funding decisions; |
| • | Canada spends very little on scriptwriting, training and professional development; and |
| • | Canada does not have a coherent strategy to encourage and ensure the exhibition of its indigenous films. |
As for lessons that can be drawn from this comparative exercise, the following are some of the more notable strategies used by the countries that have been studied here:
| • | In the United Kingdom a national lottery is used to raise money for the feature film industry. |
| • | In Germany and France an entertainment tax is applied to the sale of movie tickets. |
| • | Germany and France have formal mechanisms to ensure input from a cross-section of industry professionals for all of its funding decisions. |
| • | In Germany the committee that makes funding decisions includes a member of the German Parliament, a senior public servant and representatives from sectoral film organizations. |
| • | Rather than funding on a purely project-by-project basis, the United Kingdom and Australia offer funding for a “slate” of two or more projects. |
| • | France has a fund that encourages experimental production technologies, such as digital effects. |
| • | Australia and Wales offer intensive workshops for screenwriters. |
| • | Australia offers matched funding for project development. |
| • | In the United Kingdom, the Digital Screen Initiative provides funding to cinemas to adopt digital projection equipment in exchange for setting aside a percentage of screen time for U.K. films. |
| • | The United Kingdom funds regional film societies and clubs. |
| • | In France, exhibitors are offered a subsidy for screening classic French films. |
| 105 | Australia, Belgium, the European Union, France, Germany, Taiwan, Republic of Korea, Republic of Ireland, New Zealand and the United Kingdom. An appendix to this report provides an overview of film agencies and feature film funding programs in these 10 contexts. |
| 106 | Mr. Walter Forsyth, Executive director, Atlantic Filmmakers Cooperative, 6 June 2005. |
| 107 | Brief submitted by the Association of Canadian Cinema Television and Radio Artists, August 2005, p. 16. |
| 108 | Mr. Jacques Bensimon, Government Film Commissioner and Chairperson, National Film Board of Canada, 21 April 2005. |
| 109 | Mr. Don McKellar, Alliance of Canadian Cinema, Television and Radio Actors, 6 April 2005. |
| 110 | Mr. Carl Bessai, Chairperson, Citizen’s Coalition for the Protection of Canadian Films, 10 June 2005. |
| 111 | Brief submitted by Mr. Jacques Bensimon, Government Film Commissioner and Chairperson, National Film Board of Canada, June 2005, p. 9. |
| 112 | An appendix to this report provides more information on these tax incentives. |
| 113 | Mr. Michael Donovan, Chairperson, Halifax Film Company Ltd., 6 June 2005. |
| 114 | Brief submitted by the World Film Festival, 15 February 2005, p. 2. |
| 115 | Mr. Kevin Tierney, Producer, Park EX Pictures, Canadian Film and Television Production Association, 20 April 2005. |
| 116 | Brief Submitted by Telefilm Canada, 31 May 2005. It should be noted that about $24.9 million of the $78.5 million figure cited for Australia is for film training and development. |
| 117 | Ms. Trish Dolman, Producer, Canadian Film and Television Production Association, 9 June 2005. |
| 118 | Brief submitted by the Ontario Media Development Corporation, September 2005, p. 5. |
| 119 | Those in the United Kingdom, France and Germany who seek funding may also be entitled to benefit from the programs offered by the European Union. An appendix to this report provides information on European Union programs. |
| 120 | An appendix to this report provides longitudinal data for all 10 contexts. |
| 121 | Figures quoted are from the latest years available for each country: U.K. (annual); Germany (2004); France (2004); Australia (annual); Canada (2003-2004). Includes all feature film related activities, but excludes documentaries. For Australia, the Australian Film Television and Radio School has been excluded as funds spent for film training could not be separated from television and radio. Includes both national and regional agencies for the U.K., Germany, France, and Australia. |
| 122 | Because Canadian figures prior to 2001 predate the introduction of the new film policy, Canadian feature films’ share of domestic box-office has been averaged over 4 years, from 2001 to 2004. |
| 123 | In 2003-2004 Telefilm’s Canada Feature Film Fund commitments for French-language productions accounted for approximately 39% of total commitments. Note that the English Canada, French Canada breakdown includes CFFF resources only. |
| 124 | Population by frequency of language spoken at home, 2001. |
| 125 | All monies referred to here are converted from domestic currencies to Canadian dollars. Monies referred to in the appendices are generally quoted in domestic currencies. Also, the reader should view the budgetary quotes with some caution; as with Canadian agencies, it is often very difficult to determine just how much of a budget is allocated to feature film and how much is allocated to other forms of film. Where it has been possible to make such a determination, it will be specified. |
| 126 | France’s 36 regional agencies had combined budgets of approximately $25 million in 2002. Since it cannot be determined how much of this amount was spent specifically on feature film, these figures have been excluded from the total spending figure. |
| 127 | The amount of spending by the German regional agencies on distribution and promotion cannot be determined. |
| 128 | Specialized films are broadly defined by the U.K. Film Council as those films that “do not sit easily within a mainstream and highly commercial genre.” These are the films that typically are limited in their release. |
| 129 | Spending data on Germany’s training and professional development programs is not available. |
| 130 | It is likely that such training is provided through separate government funded film schools. |
| 131 | Australian Film Commission, http://www.afc.gov.au/filminginaustralia/taxfins/federal/fiapage_56.aspx. |
| 132 | These contributions are a CRTC condition of licence. Broadcasting distribution undertakings in Canada are required to contribute up to 5% their revenues to the CTF. |
| 133 | It is important to be cautious when comparing Australian spending on training with Canadian spending, as most of the figure quoted here refers to the Australian Film Television and Radio School, whose activities are only partly related to feature film. In addition, Canada also has government-supported institutes and fine arts colleges that provide film training, so it is reasonable to assume that the actual amount Canada spends on training and professional development is greater than $3 million. Even so, it is clear that both the U.K. and Australia outspend Canada on film training by a notable margin. |
| 134 | An appendix to this report provides more information on Canada’s provincial tax credits. |