B.C. Finance Minister Mike de Jong says the province can no longer afford to keep the tax credits that draw film and TV-productions such as the box-office smash Deadpool at their current levels.
"We're not prepared to see payouts grow at the rate they have. We have a balanced budget, but we have other priority areas that we feel we need to address on behalf of British Columbians," Mr. de Jong said in an interview on Wednesday. He was elaborating on concerns about the credits recently addressed in the B.C. budget speech, which said a solution would be announced in coming weeks after talks with the industry.
Mr. de Jong's comments are prompting some in B.C.'s production sector as well as the NDP Opposition to urge caution, suggesting hints of tinkering might make Hollywood producers uneasy about bringing job-creating projects to B.C.
"You have to move very sensitively," said Spencer Chandra Herbert, the NDP arts critic, noting Mr. de Jong has said he wants to move quickly. "I say: 'Be careful. You're messing with a good thing right now, which is tens of thousands of jobs.'"
Mr. de Jong said something has to be done to hold the line on credits, which cost $493-million in 2015-16 due to the falling value of the Canadian dollar. That is up from an annual average cost of about $255-million.
Foremost among the tax credits is a 35-per-cent refund on B.C. labour costs for productions that meet Canadian-content standards. Productions that do not meet the content standards get 33 per cent. There are also tax credits for work done outside the Vancouver area, digital animation, visual effects or post-production work. According to the most recent B.C. budget and fiscal plan, foreign production spending – largely linked to Hollywood – was about $1.6-billion in 2014-15, and about 20,000 people are employed in the sector.
The relatively low Canadian dollar is among the factors that make Canada appealing to U.S. producers. About 80 per cent of the film and TV productions shot in B.C. are developed for Hollywood.
The minister is talking to the industry and has not decided what to do. Asked about options, he mentioned other jurisdictions that have capped tax-credits and the "fairly straightforward" option of adjusting the rates.
Deadpool was shot in Vancouver last year. Other B.C.-made feature films include Star Trek Beyond, War of The Planet of the Apes and Steven Spielberg's The BFG. Recent and ongoing TV productions include the return of The X-Files as well as Fear the Walking Dead and seven Warner Bros. shows, including Arrow and The Flash, that the city of Vancouver says have employed 2,400 local cast and crew.
Mr. de Jong said he is mindful of the "great success" of the production sector, but that it is incumbent on the government to apply tax credits to other sectors as well. "It's more for me a question of equity and fairness. The support is, I'm sure, very welcome within the film and television production sector, but our job is to ensure there is a measure of fairness as it relates to other areas of the economy."
Asked if it was wise to be hinting at change when things are going so well for the sector, Mr. de Jong said the province wants to be "fair and open" about its intentions.
Peter Mitchell, president of Vancouver Film Studios, which hosted Star Trek Beyond, said he hopes any government action is flexible enough to be adjusted if the Canadian dollar rises to parity with U.S. currency – a possibility that could be a detriment to B.C.'s appeal to U.S. producers.
Mr. Mitchell said Hollywood producers – who like Vancouver because it is only a short flight away and in the same time zone – are well aware of Mr. de Jong's concerns, and that a conclusion of the debate that creates some certainty would be helpful. "There are lots of people in Hollywood who are pulling for us and want us to be competitive because they want to come here because it is so easy."
"It's this ironic thing that our customers are on our side and really want us to succeed because it makes their lives easier."
Peter Leitch, chairman of the Motion Picture Production Association of B.C. and president of North Shore Studios and Mammoth Studios, was sanguine about the whole issue, saying the good news is that government is talking to the industry before proceeding. "The bad news would have been if the government put in the budget that, 'We're going to cut the tax credits by this much' and they hadn't talked to us."