Another Climbdown

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  • Although, I do not always agree with your articles, I do believe that you are spot on with your opinion piece in the May 9, herald piece.

    I have known many people over the years in the “industry” and they are laughing all the way to the bank with taxpayers monies.

    I have written to Diana Whalen on two occasions, but the voices in the film and animation industry are clearly much louder than mine.

    I sincerely hope Ms Whalen reads and heeds your article

    Barbara | May 12, 2015 | Reply

  • The fact taxpayers spend something like $30M to get $25M every year is troubling and we should continue to press our “leaders” to solve these problems.
    However in the total scheme of things it is small potatoes.
    We are talking about a budget of something like $9 Billion. If one reviews the government’s budget assumptions for employment levels, wage growth, and expenses; combined with the government’s ability to manage and execute, Nova Scotians should be very concerned that this budget is not only high risk but beyond the governments ability to attain. By March of next year I suspect this $5m net loss will be lost in substantally larger deficits.
    It is time to focus on the much larger picture. If the premier wants to move forward it is time to move the Minister of Finance, but the problem is with who??? There is a significant difference between repairing refrigerators and managing a $9B budget.

    Barry H | May 11, 2015 | Reply

  • One would want a clear picture of where all the indirect and induced effects were being allocated, and how the loss of GDP activity balances against revenues, loss of income or population, whatever.

    But in any case, until there are large reductions in multiple provinces of existing programs, then either it is determined that some sort of competitive program is seen as beneficial, or the government should frankly say that Nova Scotia is withdrawing from the broader film and animation industry, acknowledge that this implies the loss of the sort of better-known productions and jobs currently here, say “goodbye but we can’t afford you’, and perhaps put in a small fund to retain a minimal industry for captive, local or low-budget stuff, a la Saskatchewan. Hopefully with a transition period!

    Study, decide, disclose and cleanly execute whatever decision is made, but the current government (cabinet and high-end civil service) action has been an embarrassment no matter what position one has..

    David | May 10, 2015 | Reply

  • Once again Bill you are right on. This province will never move forward (as can be seen by the lack of attention to the Ivany report ) if the gov’t continually gets weak knees every time a voter threatens to take their ballot elsewhere. Hopefully, they ran the numbers , as you did, and came to the same conclusion. Let DHX go, it seems to me we will all be further ahead. Or at least have the funds to put to better use.
    Thx again for the great articles.

    Don | May 10, 2015 | Reply

  • Since BC and Ontario have equivalent animation credits (Quebec also has one, and Manitoba’s general film credit was at a similar rate to the old Nova Scotia program), it seems fair to assume for the sake of the argument that significant animation production wouldn’t locate to Nova Scotia without some sort of competitive credit. Assume the two scenarios are “with big Animation Company X” and without it.

    Hypothetically, Animation Company X is saying – “We will bring $7.5 million from outside the province. We will spend it here, with 75% going to salaries, the rest to various normal local business overheads like rent. Of that, provincial and local tax revenue will probably be around $1.5 million. The catch, we want you to give back $3 million to us.”

    The 75% labour comes from a number of sources indicating that labour is 70-80% of 3D animation shows. The $1.5 million in direct/indirect taxes to provincial and local government is supported by the Manitoba impact study which suggested around 20% of total spend came back in taxes. That’s for general film industry spending; a permanent animation establishment would have somewhat different spend patterns, but presumably the higher labour content and infrastructure overheads would skew slightly to higher taxes, if anything. There would be corporate taxes on whatever profit margins individual animation studios had on production, etc.

    So the government may give company X $3 million, but in the alternate world where it didn’t exist, $1.5 million of govt tax revenues would also not exist, so the net cost is the remaining $1.5 million. That may still be a costly way to buy $7.5 million of economic input, but that’s where all the intangible calculations have to come into play to make the decision.

    For DHX as a particular case they have Halifax as their place of business, so some unknown portion of their overall tax payments (not just the local animation studio) is flowing through the provincial tax system. And animation studios in general may be able to drive some amount of non-tax credit business, although the reality is that unless all the big provinces drop support of animation, some sort of credit is going to be necessary to attract an ongoing workflow.

    Anyway, whatever the actual numbers, the point is that some attempt needs to be made to work out the net cost, not just the headline number. Investing in a CGI may be more bang for the buck than a DHX, but without an unlimited supply of CGIs to invest in, there may still be a case for supporting film, animation, etc.

    David Oberst | May 9, 2015 | Reply

    • David thank you for your comment. There is a fundamental flaw that shows up in discussion on this, the shipbuilding deal with Irving, and the Yarmouth Ferry, and is too much used by NSBI when announcing payroll rebates.
      When we pay taxes we are paying for our share of the cost of government services. If we have an average income and if the government is balancing its books that will be about equal to our share of the cost of health care, education, roads and infrastructure, etc.
      So it is not a suitable test of acceptability to have incentives offset by provincial tax receipts. That means that other taxpayers have to shoulder the burden of those employees’ public services.

      On a lesser matter, DHX’s total income tax last year was about $3 million most of which would have gone to the federal government and much of the rest to other provinces. DHX is more than three quarters of the animation business in Nova Scotia.

      Bill | May 9, 2015 | Reply

  • I suppose that we can only hope that the old adage “practice makes perfect” applies and that this group of under performers achives perfection before we run out of money
    Completely concur with comment of bob mackenzie

    Bill F | May 9, 2015 | Reply

  • All of these observations are really ‘on the money’ (accurate and in line with the facts) but this should not come as a surprise to anyone. Even a cursory review of the background of those Politicians who seem to author/endorse these numerous initial decisions, makes it quite obvious that they are ‘outta their. league…Governing should not really be a venue where Trial and Error is the first. choice in decision making…’

    bob mackenzie | May 8, 2015 | Reply