Feb 162013
government subsidies for film industry hurt the sector

Albert Einstein is said to have defined insanity as doing the same thing over and over again while expecting different results.

When it comes to funding the film industry it’s hard not to think that governments, and those who want a strong local film making communities, have all gone insane.

As discussed previously, the global producer incentive industry is a scam perpetuated by the major movie studios on gormless governments desperate for the glitz and glamour of having a Hollywood star or two come to town.

In Australia, governments are scratching around to raise change to attract a high profile Hollywood production once again – unsurprisingly to subsidise another remake of a fifty year old hit.

This is dressed up in the guise of helping build or maintain the local skill base or infrastructure. The water tank that’s expected to be used should the Aussies win the bid was built by the Queensland government in 2007 to attract aquatic themed movies, as the minister at the time said;

“As a result of having the water tank facility, the Government’s Pacific Film and Television Commission and Warner Roadshow Studios are currently in negotiations with a number of major studios requiring water tank facilities for their next major films.

“These projects under negotiation have an estimated value of $US370 million.”

Little of that money made it down under and the Gold Coast water tank stands largely unused as the Queensland and Federal governments failed to interest subsidy hungry movie producers.

When governments win those subsidised productions the local industry has brief sugar rush as providers struggle to find caterers, crew and extras required to film Superman XVIII or the fourth remake of Herbie The Love Bug. After a few months, the big producer folds their tent and moves on to the next city that spent millions attracting the studios’ favours.

Those involved in the big Hollywood production sadly go back to their day jobs and dreams of building careers in a vibrant local industry which has no chance of developing under the boom and bust cycle of major production attraction.

And so the cycle goes. At least today’s Sydney accountants can tell their kids how they once stood next to Keanu Reeves as an extra on The Matrix.

While Hollywood is the best organised at milking gullible governments, it isn’t just the film industry that pulls this scam off on taxpayers. If anything, the automobile manufacturers are probably the biggest beneficiary of government largess and produce more unloved bombs than the movie industry.

What’s particularly notable when governments announce huge licks of money for multinational corporations is just how small support is for the local industry in comparison.

A good example of this are the New South Wales film industry subsidies. The state’s Emerging Filmmakers Fund dispensed a grand $90,000 to local producers in 2012. This compares to the $6.6 million dollars spent by the state on attracting foreign productions.

Even that $6.6 million number has to be treated with caution as major productions can be subsidised from the state’s Investment Attraction Scheme – a $77 million slush fund put aside for attracting ‘footloose’ multinational business operations.

Generally payments from the IAS are ‘Commercial in Confidence’, or ‘Crooks in Collusion’ as some more cynical might put it, so it’s almost impossible for taxpayers to know how much has been lavished on attracting foreign businesses.

What is clear though is the government subsidies for foreign operators, not just in the film industry, dwarf the support given to local businesses.

During my short period working for the NSW Department of Trade and Investment more than one businessman asked me “why is your minister giving a slab of money to my overseas competitors rather than encouraging local businesses?”

It’s difficult to find a diplomatic answer that doesn’t imply that political and public service leaders are blinding the glamour and prestige of being associated with rich multinational corporations.

The real support local industries need is steady work producing products that play to their advantages, the sugar rushes of major movie productions or subsidised manufacturing only distort the market and may even damage the smaller local production companies as the wrong skillsets and infrastructure is built.

Done strategically as part of a broader, long term plan targeted subsidies to global industry leaders can work, but unfortunately few of the movie industry incentives or investment attraction schemes have that sort of thinking underlying them.

As budgets tighten with the deleveraging global economy, it’s going to be interesting to see how long governments can continue this sort of corporate welfare.

Film clapper image courtesy of Chrisgr through SXC.hu


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