BRITISH COLUMBIA

NDP's 'corporate welfare' for film industry won't save jobs: economist

05/14/2013 08:40 EDT | Updated 07/14/2013 05:12 EDT
VANCOUVER - Promises to bring the film and TV industry back to British Columbia figured prominently in the opening and closing credits of New Democrat Leader Adrian Dix's election campaign.

But economists call it "corporate welfare," and say B.C. should get out of what has become a "race to the bottom" with tax incentives.

"We know that we have the best crews in North America," he said in one of his final rallies, where he was surrounded by close to a thousand supporters at Vancouver Film Studios.

"All they require is a level playing field and we will compete, and we will win, and we will bring jobs to British Columbia."

The Liberal government under Christy Clark didn't match the glittering tax incentives offered by provinces such as Ontario and Quebec in the past two years — dangling carrots that film industry workers claim have lured business away from B.C.

Dix has pledged to increase film labour tax credits by up to seven per cent for foreign and domestic productions, a move he said would put the province's incentives at 40 per cent and allow competition with other jurisdictions.

An expert economist from Simon Fraser University, however, says Dix's election promise seems to be motivated by politics rather than a desire to create lasting jobs.

"It really is a game," said SFU economist Rhys Kesselmen in a telephone interview. "And it's most definitely a race to the bottom."

He added the NDP's economic policy has so far been inconsistent.

While the party claims to have the industry’s interests at heart, Dix has come out in favour of the provincial sales tax and raising the corporate income tax rate — both policies Kesselmen said are a significant burden for the film and TV business.

The economist also cautioned that singling out one particular industry for "corporate welfare" won't do much for B.C.’s economy in the long run.

"Why should we be spending that much of public funds for one industry, and in effect we've got to tax all the other industries and all households to support (it)," Kesselmen asked.

The rebates, he said, will cost taxpayers between $100,000 and $120,000 per film job.

“We do have evidence from studies in the U.S. and my own back-of-envelope figures support it ... that these are very expensive subsidies, or tax credits,” he said.

Kesselmen is skeptical of NDP numbers that indicate Dix’s incentive would cost taxpayers about $45 million annually but generate $93 million.

The Liberal government under Gordon Campbell raised film labour tax credits to put the province on a competitive level, yet it’s becoming increasingly difficult to play the one-up-manship game, Kesselmen said.

He added the industry has done a good job of playing one jurisdiction off the other for tax breaks.

"They are masters of playing off Ontario versus B.C., California versus Texas versus New York," Kesselmen said, with governments essentially being taken hostage until they meet industry demands.

“It’s kind of like the industry that cries wolf,” he said. “And apparently they’ve sold it to one political party in B.C.”

Kesselmen said he wasn’t an advocate of eliminating the full 33 per cent tax credit but couldn’t see any economic benefit to increasing it.

It’s a fallacy to assume film industry workers are going to start a mass exodus from B.C. if business isn’t booming as it once was, Kesselmen added.

The stakes are high for Save BC Film spokesman Wayne Bennett, 44, who has worked in the business for 23 years as a production manager on films and TV shows such as The X-Files, Alcatraz and Case 39.

He said it’s not as easy to re-train or find work to suit their specialized skill set as economists make it out to be.

“I tried to get out of the industry last year,” Bennett said, adding recruiters advised him that he’d have to go back to school and re-train — something he couldn’t afford to do mid-life, with a wife and kids relying on him as breadwinner.

He said the province is already starting to lose cast and crew because of jobs going elsewhere.

“If you’re not in the game on a financial level, all the other things that we have to offer — in time zones, in location, in infrastructure, in people ... really take secondary placement,” Bennett said.

“They’re going to go where they can get the best deal.”

He said this election is a chance to show the province how important the industry is to the well-being of B.C.’s economy.

“We just wanted our government to realize the ... value of what it actually brings to the province, in terms of 15,000 direct people who work on film and television sets every day,” Bennett said.

Between 1,400 and 1,600 other retail, hotel, car rental and other businesses also benefit from spin off of what Bennett calls “new money,” he added.

Bennett said the industry has already invested more than a billion dollars to establish physical infrastructure — sound stages, rental houses and equipment.

“Once we start losing that it’s incredibly difficult to get back,” Bennett said.

B.C. lost 3,500 direct and spin off film and television production jobs between 2011 and 2012, reported the Canadian Media Production Association in February. At the same time, Ontario gained 7,900.

Vancouver-based actor Jerry Wasserman has had a job in the industry since he came to the province from New York more than 40 years ago.

He’s one of the lucky ones with a long “Vancouver resume” spanning decades, that includes films with Johnny Depp, Kirstie Alley and Will Smith and a teaching career in theatre at the University of B.C.

“The opportunities have been so rich,” Wasserman said.

He argued that investing in film and television is similar to investing in events such as the Olympics or the Times of India Film Awards — while they cost significant amounts of money, they also arguably promote the “B.C. brand” and bring in profits in the long run.

“You hope it’s going to generate some kind of return in terms of tourism, in terms of investment,“ he said.

Wasserman has seen the positive impacts that come with a thriving film industry.

“It’s clean, it’s glamorous, it’s brought a real cache to Vancouver,” he said. “I’ve been a Vancouverite since 1972 and so I’ve seen what a difference it’s made in the reputation of the city.”

Currently, Ontario and Quebec offer 25 per cent tax credits on every dollar spent on TV and film production, in contrast to B.C.’s 33 per cent incentives that apply only to labour.