A Business Focused Government

Back to article »

  • To assess the value of the industry you need also to be looking at the economic impact of the production sector. if we consider the 139 million of money coming into the province, levered by the tax credit incentive over one year, then that would be 1.39 billion in production over the ten years. Rather than a cost, the tax credit acts as an incentive attracting money from away and creating significant spending and economic activity in the province. When all the metrics are added, the tax credit may be merely revenue neutral costing the tax payer nothing, or perhaps it generates more than it costs when all factors are added in. One would expect that an in depth study of the economic impact of the film tax credit would have been done. Would this not be part of an informed approach? We should expect a knowledgeable impact study to access best kind of change to increase the leverage while still attracting production investment to the province before the changes are made. Leaving out all the aspects of economic activity and other benefits generated by film production is irresponsible; certainly not part of a disciplined thinking approach.

    Bill Fleming | April 20, 2015 | Reply

    • It strikes me as strange that an industry is allowed to sit back and defend their right to a subsidy based on the government did not do the proper economic study. To me it is the responsibility of the industry to put forward a yearly business plan to the government that puts forward a plan that shows how the taxpayers are going to get their money back, how there will be added financial benefits that contribute to the services consumed by the employees of the industry, what benchmarks and measurements are or will be in place to prove the taxpayers are being rewarded for placing their trust and their money in the industry.
      If the industry went to the bank and asked for a yearly loan of $26M, the industry would have to make a proposal that gave reasonable assurance to the financial institution would get their money back and would get a return. It would not be up to the bank to make their case or submit numbers for them.
      It appears the industry knows governments and taxpayers are an easy mark.
      Bill F. there are too many “maybe” and “perhaps” in your statement. That can also mean Maybe not and perhaps not. We can all make those kind of statements. I am disappointed to read that you think an industry that sits back feeling entitled to tax is a “disciplined thinking approach”. To me it is neither disciplined or thinking, but displays a reliance on taxpayers that borders on greed and incompetence.
      The industry needs to make a detailed proposal to the government and to taxpayers asking us, repeat asking us, for our financial support and describing how we get our money back. Maybe their case is so weak they know they cannot justify such a case. And that is my contribution to the list of maybes.

      Barry H | April 21, 2015 | Reply

  • Thanks Colin. The payroll number I used reflects the fact that the jobs grow from 150 to 500.

    The Canadian Media Production Association ( website down as I write) shows 1,140 direct jobs and 2,700 including indirect and induced jobs. The right number to compare with the bank is 500 since they will also have indirect and induced jobs.
    A more distinctive aspect of film is that it provides core funding for many professionals that also work in other arts professions. That is why I am comfortable with the extra $6 million per year.

    Bill | April 19, 2015 | Reply

  • We’d all like to know where the government is getting the numbers they are using to justify the Film Tax Credit cut. They are completely false and deliberately misleading. The government knows this and that’s why they are refusing to make the source known. The Liberal Government of Nova Scotia is spinning false data in the hopes of garnering more votes in the next election, and the fact that it will destroy an industry that employs 2500 people, and brought in $140 million dollars least year ( not $69 million as they claim) is a cost they are willing to pay to remain in power. They think people in Nova Scotia are stupid, and can be fooled through bad math. Incidentally, by their own admission the RBC deal will only produce 150 jobs this year, with the hope, but ” no guarantee” that this number will rise to 500 in ten years. So by their own math that would mean the salary for these cheque processing ( nee call centre) jobs will be $146, 666 this year ( 20 million divided by 10 years divided by 150 jobs ). More bad math, skewed to to favour more bad decisions.

    Colin Paul | April 19, 2015 | Reply

    • Thanks Colin. The payroll number I used reflects the fact that the jobs grow from 150 to 500. The Canadian Media Production Association ( website down as I write) shows 1,140 direct jobs and 2,700 including indirect and induced jobs. The right number to compare with the bank is 500 since they will also have indirect and induced jobs. A more distinctive aspect of film is that it provides core funding for many professionals that also work in other arts professions. That is why I am comfortable with the extra $6 million per year. Bill | April 19, 2015 |

      Bill | April 19, 2015 | Reply

    • The fact of the matter is I do not trust anyone’s numbers. What I do know and what I find frustration is the film industry has been subsidised for years and has been collecting hundreds of millions from taxpayers. When pressured by the government to improve their contribution to NS or to change their ways to reduce their dependence on handouts the industry displays classic addiction withdrawal symptoms. NS must learn to do things differently and the film industry must get rid of its selfish give me more attitude and contribute to the solution. If it cannot be part of the solution it is part of the problem.
      The film industry tends to have above average creative people. Hopefully they will use their creative juices to become less dependent on tax payer money. The numbers from the past do not matter as much as what the industry is going to do to improve the numbers as we go forward. If it takes aggressive action from the government to bring that about, I am all for it. Call be stupid if you want, but the status quo is unacceptable.

      Barry H | April 19, 2015 | Reply

      • The question you should ask is what is the best return on investment. The measure should take into account all the benefits that such investments bring to the province.
        The CPMA states that the film production in Canada was worth 5.8 billion which included 1.8 billion in foreign production. Film production is a project to project business, more like construction than a tire plant or call centre. Production will go to where it is most cost effective. In an era where broadcast licenses are going down, production will go to one of the 37 states, incuding California, or provinces that offer some sort of incentive in order to finance the projects. If a province wants to attract some of the billions spent in production, it will do so through offering some kind of incentive.
        The Nova Scotia economy is at best stalled and at worse in decline. It is critical that the government create a climate to somehow generate more economic activity. The film production community argues that the fully range of the money that is brought into the Nova Scotia economy and the activity it generates more than offsets the investment by the province. The full range of economic activity needs to be properly measured. This needs to include all the many businesses that receive a portion of their income from film production. These range from vehicle rentals, building suppliers, furniture and fabric stores, hotels and landscapers. Currently, hotel nights paid by film production are seen as credit to the tourism industry. There is also money going to office rental, location fees. All part due to the spending of the production money coming into the province. What is harder to quantify is the impact on things like tourism. The CURSE OF OAK ISLAND was the most popular show on the American History Channel this year, the most watched non fiction show on Tuesday nights. Hope Swimner’s wildlife rehabilitation centre is featured in HOPE FOR WILDLIFE. This show is seen around the world and she credits it for the over ten thousand people who visit each year and the million dollars that was raised for a new building. As reported in the Chronicle Herald:
        Many guests mention the Hope for Wildlife TV show. One woman tells Swinimer her family watches the show “religiously.” Filming for the fifth season began this past summer. Swinimer admits the show is “a little hammed up,” but it brings money into the rehab centre and children from all over the country write letters asking about the animals. A volunteer tells me of meeting people in South Africa who first heard of Nova Scotia on the show, which airs in more than 20 countries.
        Also hard to quantify is the stimulation of a vibrant creative economy and the businesses that have spun off from this activity. If Nova Scotia is to dig itself out of debit, it needs this kind of activity. Activity that generates revenue across many businesses and in different parts of the province. I doubt that a future of call centres and box stores serving retirees will turn the economy around.

        Bill Fleming | April 21, 2015 | Reply

  • 22 millions to the Royal Bank after they had a record breaking first quarter gain?? Haven’t we seen too many of these “call centers” close shop as soon as the incentive is removed? I’d rather have it invested in the film industry that keeps growing here. The spin offs far out way any tax credit. Open your eyes sheeple! This government lies through it’s teeth and too many sheeple are drinking the kool-aid.

    Sonny Nauss | April 19, 2015 | Reply

    • The right reason for payroll rebates is not that a business is needy but that it can fulfill commitments–so the better financed ones are to be preferred. Agree with your skepticism on call centers but the big problems have been with contract centres like Convergys. By way of contrast, Admiral Insurance has been quite a success so far.

      Bill

      Bill | April 19, 2015 | Reply

    • You are fighting a loosing battle if want to compare the economics of the RB agreement to the economics of the endless subsidies paid out to the film industry. The business model used by the film industry is commonly referrred to as a leech approach– they take out more then they put in.
      Someone in the industry is in fact making money– unfortunately for Nova Scotians $26 m of that profit, every year, is our tax money. Government money should be used to help business/ industry get started, then after a short period they are out. The film industry has had many, many years to develop and stand on their own feet. They have chosen not too. The question is how many hundreds of millions of dollars of our debt has been accumulated to finance payments to the film industry.
      If the film industry is not satisfied with the size of the future money trough they cosy up to then……………

      Barry H | April 19, 2015 | Reply

  • It would be a great step forward for Government if it were Focused on Business; for there is very little ‘real’ employment in the East today that isn’t connected to what you’ve referred to as “transactions” – which obviously don’t work, if your measure is economic prosperity.

    The “equally uneconomic” ‘competition’ for more of the same by other governments just prolongs the economic regressiveness.
    And; don’t expect the Government’s recent rearrangements to change much – unless they engage the business component of ‘Ivany’ to stear the bureaucrats on what ‘climate’ changes need reform out in workforce land.

    Business is just not something that Government is meant to understand. Business provides for good government, not the reverse, … something individual citizens need to come to e’valu’ate before voting; for their priorities seem to have been ‘subsidized’ away from True North Strong and Free over the last hundred years.

    gordon a.... | April 19, 2015 | Reply

  • If you think the film industry got hit , then you missed how bad the tourism industry got hit . Maybe because there are NO subsidies in tourism to cut so it didn’t get noticed BUT they cut the WHOLE tourism department .They supposedly amalgamated with this NS Business but staff has been reduced and you can’t find an organization chart or staff list anywhere . Tax wise, revenue wise , tourism pays big bucks to government for little investment . No one tells you where those dollars go but the industry is quoted to be worth $2 billion and employs 30,000 and the private sector makes all the investments where 99% of the taxes are generated . They cut a visitor centers at visitor entry points from two ferries .They cut camp grounds . They are still allowing thousands to avoid taxes by not chasing the Air B&B’ and underground rentals and loosing millions in taxes but taking away the staff who would be the ones to manage the tax accounts . This is amazing and they never contacted one of their existing clients who have licensed properties and CONTRACTS with NS Tourism. And this is the way they do business ?? Sad day for the private sector in tourism. It’ll take 2-3 years to sink in , but wait .

    peter s | April 19, 2015 | Reply

    • Peter the tourism industry gets lots of subsidies in the form of government paid advertising and data services not to mention $40 million and counting for the Yarmouth ferry

      Bill

      Bill | April 19, 2015 | Reply

  • some of the intentions of this government appear to be very well thought out and favorable BUT we are very soon to learn how it ranks on “Resolve”…

    bob mackenzie | April 17, 2015 | Reply

  • Last season, according to Film and Creative Industries Nova Scotia (the former provincial crown corporation shut down immediately following the budget), the province invested $26 million in the film industry by way of labour tax credits and equity investments. That, the film industry agrees with. However, your brief analysis fails to capture the scope of the damage being inflicted by this government without consultation, and without evidence of much analysis, understanding or thought.

    Under the previous program, the provincial financing allowed producers to leverage external funding from broadcasters, distributors, and other agencies, including international funding in the case of co-productions. This meant that last year the film industry’s direct spending in Nova Scotia was more than $120 million. True, the individual companies formed to run the projects themselves net little profit, and therefore pay no tax. However the $120+ million paid to the 2500+ people who work on Nova Scotia films pay taxes personally, through small businesses or through the profits claimed by parent production companies.

    The way the program was structured (which is consistent throughout North America) allowed producers to use the calculated tax credit to obtain bridge financing, which was then repaid after the project was completed, audited, and tax credits received. The new Nova Scotia program is unworkable because it’s structure does not allow the provincial investment to be reliably calculated in advance. This means, for the most part, it is not ‘bankable’; producers no longer have the means to finance their productions.

    Nova Scotia is now the least competitive film jurisdiction in North America, if you don’t count NB and SK, who killed their film industries over the last couple of years using similar tactics. Those two provinces are now attempting to roll back those changes, and to try to rebuild their once promising industries, with uncertain results.

    A final thought. Yes, the big producers have some ability to move quickly, to relocate in order to maintain their businesses, to honour broadcast and distribution agreements, and to keep their people employed. However, it is the small businesses and individual crew members who will suffer the most. They have lost their jobs here, and they cannot pick up their families and move to follow the work. Before they can qualify as local labour in other areas (and be considered an eligible expense for their tax credits), most jurisdictions require them to be in residence for a year. So these 2500 or so talented, hardworking, technical and creative (mostly) young people are out of work very soon, and are scared for their families and for their future.

    This government, no matter how tough or focussed they may be, should not be in the business of making chaotic changes of this magnitude to an entire industry, with no notice, and especially when it means breaking a campaign promise to stabilize the program until 2020. At the very least, we should be able to expect a clear analysis of the full financial and economic impact on the province and its people. Until this government can make a credible argument that cutting the $26 million investment will improve the provincial economy, and not create greater harm by destroying this $150 million industry, they should not do it.

    Not continuing with the existing program, or something close to it, is making a mockery of the Liberal claim to be doing things right, with disciplined thinking, or consideration for intelligent economic development.

    Change for change sake might mean the Liberals can claim to be doing things differently. But this change in particular cannot be called bold.

    Erika Beatty | April 17, 2015 | Reply

    • Your response to Bill’s article states numbers I have not heard quoted during this debate. I suggest your assertion ” the $120+ million paid to the 2500+ people who work on Nova Scotia films” is a dramatic overstatement based on emotion. As a taxpayer I have considerable difficulty supporting a cause that wants my money and defends their claims through such overstatements.
      If each of those 2500 people paid $6000 in provincial tax then the provincial coffers would be better off by $15m. And I suggest that is a generous assumption. So why should taxpayers subsidize this industry with a payment of $26m.
      NS taxpayers have a history of subsidising “Sydney Steel” business models. A model that relies on yearly subsidies is not a viable industry. The government is correct in aggressively addressing this tax on the people of NS.
      What would be helpful, would be for the industry to bring forward a business plan that weans them off the tax heroin they currently believe they are entitled to. Welcome to the real world.

      Barry H | April 18, 2015 | Reply

      • The amount spent by the film industry within Nova Scotia in 2014 was $139 million, as confirmed by Audits by both the department of finance, by the crown corporation Film & Creative Industries NS and in a letter sent to the Premier by the Canadian Media Producers Association. The CMPA also confirmed there are 3470 full time film industry jobs in Nova Scotia, a huge difference from the 1140 jobs assumed by the finance department. It’s not clear where these numbers came from.

        Barry – Before you discount the film industry as “entitled” or “emotional” please take the time to verify the underlying data. Speak to the leadership at Screen Nova Scotia. Read their financial reports. And ask your MLA to explain the department of finance’s position. The Deputy Minister of Finance confirmed last week that the most recent study on the economic impact of the film labour tax credit program was in 2004. It showed the program was a net benefit to the province. And the the industry has grown significantly since then.

        Please follow through with your initial rough calculations, but this time using real numbers and not assumptions. Real people’s lives and livelihoods are at stake.

        Erika Beatty | April 19, 2015 | Reply

        • Erika 1140 is the CMPA number for full-time equivalent direct jobs . Their number of 2,700 cited by Marc Almon, includes indirect and induced jobs. I am not sure what “net benefit”. If that means that the amount of taxes directly produced exceeds the incentive that is hardly a win . Who is going to pay for health, education etc for those folks.
          The reason I use payroll is it avoids complications in part time vs. full time and temporary vs. permanent.

          Bill B

          Bill | April 19, 2015 | Reply

          • I checked back with SNS, and they confirmed the CMPA corrected their employment number to 2700. Yes, whatever modeling the finance department used to understand the value of the industry needs to include induced activity. I’m pretty convinced by the videos from small business owners in communities like Chester that the economic impact of the film industry is real.

            Erika Beatty | April 20, 2015