Producers abandoning Saskatchewan as tax credit ends

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When the Saskatchewan government announced the elimination of the Saskatchewan Film Employment Tax Credit in its spring budget, there were cries that the move would devastate the industry. The extension to apply for the tax credit runs out this week, and there is growing evidence that the industry that helped to produce Canadian TV giants such as Corner Gas and Little Mosque on the Prairie may indeed be fading to black.

"That's the new way of saying hello for anybody who works in the media industry in Saskatchewan. It's 'so where are you moving?' " says Jeff Stecyk, general manager, chief operating officer and senior partner of the Emmy-winning company Partners in Motion, which is leaving Regina, likely for the Vancouver area (Toronto and Winnipeg are also being considered). "And if they're not planning on moving, they're getting out of the industry entirely. ... We're just not in the game without the tax credit."

The tax credit went into effect in 1998 and was essential boosting an industry that has both attracted U.S. production work (Just Friends, Terry Gilliam's Tideland) and created indigenous productions (The Englishman's Boy), peaking with $67-million in production in 2004 (down to $28.5-million in 2010-11). The $11.9-million, 82,000-square-foot purpose-built Canada-Saskatchewan Soundstage has also been a key factor in attracting projects (the Christian Slater film Stranded is currently shooting there).

It's difficult to determine how many people are directly employed – estimates range from 300 to 1,100 – but the industry has developed to the point where production staff and crew members have a good reputation, says David Cormican, head of development and executive producer with Minds Eye Entertainment. "Everyone's expectations are low. They come in thinking you're sort of a country bumpkin and when they get there, they realize, 'Holy crap these guys know what they're doing.' "

People who work in the industry say the elimination of the tax credit puts all this in jeopardy. The Saskatchewan Motion Picture Industry Association, which has been lobbying hard since the spring-budget shocker, has conducted a voluntary survey of industry members and found that 45 per cent of respondents plan to leave the province entirely (a further 10 per cent plan to leave but maintain a small presence in Saskatchewan).

"And some really major players," says SMPIA board member Annelise Larson, who administered the survey. "People who have been in the province, building an industry, for 20 to 25 years."

Director/writer Rob King, chair of the Directors Guild of Canada in Saskatchewan, circulated an open letter last weekend titled, "Well it was a good run," indicating that he has essentially given up the fight and will be leaving himself.

"One half of me thought something would happen, because it just seemed so insane, and the other half of me started making plans for separation, but it didn't really hit me until the last week or so as this deadline draws near," King says. "It's like when there's a death and you go through those stages. I'm kind of past denial now, and I'm halfway through anger."

He plans to move to Toronto by late fall. It's unclear what will happen to the DGC's Saskatchewan district council, but he says it's possible it will fold.

Producer Rhonda Baker with RGB Productions, currently working on Stranded, will leave for Winnipeg in August. Minds Eye, which is producing the film, says it will consider leaving next year.

"Our lease is up June 30, 2013," Minds Eye chief executive officer Kevin DeWalt says. "If there's no change in the government's position ... clearly there's no reason for us to stay in Saskatchewan."

Stecyk, of Partners in Motion, predicts that the industry will dwindle to perhaps one or two producers, but the real problem will be getting work made, because the labour pool will disappear.

Local 295 of the International Alliance of Theatrical Stage Employees, which represents film technicians and stage crew (among others) in Saskatchewan, has laid off its business agent, in part because of this issue. "Without the tax credit, I think it would be safe to say that we're anticipating that we will not be getting as much film work," says Debra Sawarin, whose last day is Friday.

The industry says that for every dollar spent on tax credits, six dollars is returned to the economy, and that each direct job in the film and TV industry creates almost two additional jobs in related industries such as hospitality and equipment rentals.

Anand Ramayya, whose company, Karma Film, has just completed its best year, with $5-million in original production, says there is a reason so many jurisdictions offer tax credits. "It works for everywhere else in Canada and it works for the majority of the states and we believe that's a good argument for it."

But Susan Hetu, Special Adviser to the Deputy Minister for Tourism, Parks, Culture and Sport, says the government is looking for a new model. "There's been lots of debate about the economics around film and it was a tough decision for this government to make. There's not a lot of point at this point looking in the rear-view mirror. We want to look into the future and look at how we can build a strong creative industry which includes film." (Minister Kevin Doherty was unavailable when The Globe and Mail tried to reach him on Tuesday.)

Hetu said she could not comment on how many people in the industry are leaving the province. But along with the SMPIA survey, it appears anecdotally that exit plans may be escalating.

Reached on a shoot in Mumbai a month ago, Ramayya said he was still optimistic something could be worked out. On Tuesday in Saskatoon, he said he was making plans to move. "I don't know how a person like me who solely produces original Canadian film and television can stay," the Gemini Award-winning producer said. "I just don't know how to do that."

Larson is concerned that another cultural shoe may be about to drop. On Thursday at an invitation-only event, the government is to present three reports on the cultural sector: two program evaluations and a study on the requirements to support the commercial objectives of Saskatchewan's creative industries. It will then launch a consultation process with the arts and culture sector.

Given the film industry's experience, Larson worries that the consultation could lead to cuts. "I really believe that the arts and cultural industries are under attack," she says. "And I worry that everyone is too scared to stand up and protest and that the crime of being silent is going to make everyone complicit in the death of the cultural sector in this province."

PLOT SYNOPSIS: HOW THE TAX CREDIT DIED

The elimination of the Saskatchewan Film Employment Tax Credit was announced in the March 21 provincial budget. The government said that cutting the program – which provided tax credits of 45 per cent on eligible labour costs (plus 5 per cent bonuses for productions shot outside Regina and Saskatoon, and productions with budgets over $3-million that employed locals in key positions) – would save up to $3-million this year and $8-million each year once the program was wound down.

The industry fought back immediately and won an extension on the program, which was supposed to end 10 days after the announcement, but was extended to June 30. No new applications will be accepted after that date.

In May, industry representatives presented to the government a roughly sketched-out proposal for an alternative program. They were surprised when the following day, Bill Hutchinson, then the minister of tourism, parks, culture and sport, came back with a version of the plan as a proposed replacement – but with a key change from the industry's recommendation: the 25-per-cent tax credit would be non-refundable.

This means that a widely used financing model, where producers secure financing based on a refundable tax credit they will receive, would no longer apply. In the new model, the credit would be applied toward future tax liability in Saskatchewan, but production companies often are set up for single projects, so they would have no future profits (and therefore no future tax liability). This is standard practice in the industry.

There was some hope in the industry when a new minister, Kevin Doherty, was appointed later that month, but the province has made it clear that there will be no movement on this issue.

"Government has no interest in introducing a refundable tax credit at this time," said Susan Hetu, Special Adviser to the Deputy Minister.

"It was a difficult decision made by government in March. There's lots of competing priorities. This is the only province that has a balanced budget in the whole country and government is looking to make sustainable investments in other kinds of infrastructure like highways and health care, programming for persons with disabilities."