Wednesday, January 16, 2013

BC Liberals Reap What They Sow, The Movie Business Crying Game

I would find it almost funny if it wasn`t so tragic, I`m  talking about the movie industry and the latest corporate strategy being deployed..

Corporations and lobbyists pitting countries, states and provinces against each other, a deliberate distortion, a race to the bottom..

Pat Bell 2 weeks ago on Sean Leslie`s radio show stated(I`m paraphrasing here)..

I wish each province would have the same tax rate rather than trying to lowball one another, let every province fend for themselves with equal taxation...

Pat Bell was responding to criticism from the film industry over not matching Ontario`s tax credits, the film industry is crying up a storm, they want more dole, productions are leaving BC and heading to Quebec and Ontario and to be completely truthful the movie industry is also heading to a even cheaper filming jurisdictions, those being in Eastern Europe..

A race to the bottom, I have a friend, he`s not overly skilled, he is a competent fabricator, when he works for the film industry he makes over a $1000 dollars per day, or more, certainly he can sharpen his pencil, that`s what European labour has done to attract the movie industry..

I mentioned how this latest movie industry Tempest in a Tea Pot was funny, I`ll tell you why, it was British Columbia that first started under-cutting Hollywood over a decade ago, a cheaper Canadian dollar and lucrative tax credits, Hollywood cried foul, yet BC carried on undaunted, we soon found ourselves with a new nickname, "Hollywood North"..

Here are some excerpts from a well written article from 2005..

Canada rolls credits on a slump
By Richard Verrier, Times Staff Writer

VANCOUVER, Canada - There's probably no better barometer of Hollywood's presence here than Lynne McNamara.

Her thrice-weekly column, "The Backlot," chronicles filming and celebrity sightings around town in the Vancouver Sun. There's Halle Berry and Nicollette Sheridan dining at Gotham Steakhouse. Lucy Liu with friends at Savory Coast. Robin Williams sampling tapas at Bin 941. Burt Reynolds singing "Pennies From Heaven" at Rossini's, accompanied by Michael Moriarty on piano.

Just a year ago, soundstages here were half empty. Production in a city whose vibrant movie business earned the nickname "Hollywood North" had plunged to its lowest level in six years. A sagging U.S. dollar had erased many of the cost advantages enticing studios. Seizing the opening, other countries and states used incentives to poach work.

So British Columbia and other Canadian provinces answered with a fresh round of sweeteners layered on top of an already generous package. Now, studio lots are jammed until well into next year.

"As soon as the new credits were announced," McNamara said, "things just started to go crazy. It's nuts."

In the borderless world of movie making, the scramble over Hollywood's production dollars is a financial arms race of government subsidies. Eager to get the best deals, Hollywood skillfully pushes the ante up by playing off one another the myriad countries and states hungry for the dollars and glitz a film production generates.

"It used to be Canada and America," said Randall Emmett, a producer of "The Wicker Man" with Nicolas Cage and "88 Minutes" with Al Pacino in the Vancouver area. "Now, everybody is competing for the film business."

Added Ron Haney, executive director of the Directors Guild of Canada, Ontario: "Everybody can compete with tax credits now…. It's absolutely frightening."

For Los Angeles, global outsourcing could turn the city into something of a general contractor for feature films. Projects are often conceived and financed at studios in Southern California. But increasingly the actual moviemaking is delegated to such countries as Canada, Romania and Australia or states such as Illinois and New Mexico that actively court film work...........

To the east, Toronto was using financial sweeteners to lure productions to build its own vibrant film business, with the city serving as a stand-in for New York in such movies as "Three Men and a Baby" and "Moonstruck." Nearly all of Hollywood's made-for-TV projects, which survive on thin profits, set up shop in Canada.

By 2003, production in Vancouver alone totaled more than $1.2 billion in Canadian dollars, or $950 million in U.S. currency then. Hollywood labor groups complained that $3 billion in production fled the U.S. annually, mostly to Canada, although Canadian officials called the number exaggerated.

For Les Erskine and about 35,000 other workers in the Vancouver area, it meant a good living. The 55-year-old gaffer, or chief lighting technician, found regular film jobs, including working on major movies such as 1988's "The Accused" starring Jodie Foster and the 2003 Will Ferrell comedy "Elf."

But as the U.S. dollar weakened, hampered by budget deficits and trade imbalances, Canada suddenly wasn't so cheap anymore. By last year one U.S. dollar was buying about $1.20 in Canada. Production spending on non-Canadian films plunged 50% in British Columbia.

To make a living, Erskine had to teach sailing.

"It was dismal," he said. "There was hardly anything."

With Canada's filming industry infrastructure at risk, thousands of local film and TV workers mobilized across the country.

 In Ontario, industry workers marched on the provincial Legislature, helping prompt an increase in its tax credit on labor expenses to 18% from 11%. Toronto went further, guaranteeing that producers would be charged just 78 cents for every Canadian dollar spent on city services.

Quebec and British Columbia quickly followed. In Vancouver, producers now receive 18 cents for each $1 of local labor costs instead of the 11 cents they previously reaped. The federal government upped its tax credit on local labor spending to 16 cents on the dollar, from 11 cents.

"Everybody has figured out what a great business this is," said British Columbia Film Commissioner Susan Croome. "We're not going to be less expensive than Romania, but what we need to make sure of is that when someone sits down and does the cost-benefit analysis, they realize we're the best value for the money."


That was in 2005, since then the movie tax credits have grown, from 11% to 18% in 2005 to now over 33% labour tax credit in BC and  25% credit in Ontario on everything, on all expenses..and guess what..?

The well orchestrated movie industry is crying the blues again, asking for more dole, more gifts, the corporate race to the bottom continues..with Harper pushing his toxic pipelines, if Canada ever does become a energy exporting super-power, and our dollar rises to $1.10 or $1.20 against the US greenback we`ll be back here again, listening to howls and moans from the fickle film(flim) flam industry..

Yesterday and today movie people called into cknw and lashed out in segments on movie tax credits, lashed out at Bill Teileman, Bill Vanderzalm and the NDP, they blamed those 3 parties solely for the impending loss of the HST, yet we know it was the people who spoke up against a very unfriendly consumer tax, it was all voters and shoppers, it was Liberals, Greens, NDPers and Conservatives on masse who rejected the HST, it was a monumental success for millions of REAL British Columbians..Millions of regular folk who don`t make a $1000 dollars a day for banging nails..

And then even more movie folk called into CKNW radio today and declared they were now going to personally vote for the NDP because Christy and the Liberals won`t give in to their demands..Funny stuff those cry baby movie folk, they bash the NDP and Vanderzalm for listening to the vast majority of BC`s populous and then threaten the Liberals with a NDP vote for not caving into their demands....They`re probably part of the 45% of the electorate that doesn`t even bother to vote.

And guess what, it`s not just the movie industry, all corporations are now doing it, pitting country against country, state against state, everyone promising lower labour rates, cheaper corporate tax rates, in fact I wrote about this not too long ago..

Remember the Caterpillar betrayal, a very profitable company left Ontario for a cheap labour state, even our national air carrier Air Canada sold us out and moved all maintenance to a third world country, El Salvador, where airplane mechanics, welders and electricians work for $4000 per year, 1/20 th of a Canadian equivalent worker..

By David Segal, executive director of the online organizing group Demand Progress and former member of the Rhode Island House of Representatives

The New York Times published an expose this week on Texas’s regime of business incentives, but for anybody who pays passing attention to so-called municipal and state economic development schemes, there wasn’t much news: Our states and localities are cannibalizing one another as they concoct targeted tax breaks which they use to lure corporations from their neighbors. Meanwhile, a bevy of middlemen wet their beaks by helping corporations pit sucker states off of one another and brokering deals to sell the tax credits that comprise much of the ensuing largess. Here’s the rub:

Granting corporate incentives has become standard operating procedure for state and local governments across the country. The Times investigation found that the governments collectively give incentives worth at least $80 billion a year.

That’s an especially big deal for cash-strapped states, banned from deficit spending, no printing presses on hand. The $80 billion figure represents a full ten times the budget of my state of Rhode Island, and more than 15 times the amount spent from locally-generated funds.

So here we are in 2013, Ontario out tax-credited us again, and Quebec, and if we match them they will respond in kind, so will Eastern Europe where labour can be sliced so low..

I was amazed with the remarks on radio from those who claimed to be in the movie industry, they talked about how easily the industry can move to new jurisdictions, to the greener pastures of Bulgaria and Toronto..Greener?..Really?

Was more money the only reason the movie industry came to British Columbia?..Did exquisite super natural scenery or a friendly skilled workforce not matter, a safe place to do business, pleasant mild weather all year round, these weren`t factors?


That`s funny too, evil snakes, seems for years that I have been surrounded by evil snakes, like our Government, both Federal and Provincial...

The movie was called Vipers..We extras were paid $8 dollars per hour, minimum wage, they did supply us lunch though..Lucrative business?..For some..My friend who makes $150 per hour to bang nails on sets..Really, that`s what these tax credits are used for, to jack up wages for the few?

But the thing is, people can take vacations, cheap holidays to Mexico or Las(WAGES)Vegas...Or people can travel to exclusive islands, or Rome, Paris, those vacations aren`t cheap, they cost a small fortune, its called choice.

We have cheap restaurants like Denny`s, and we have more upscale places like Nick`s , and even more upscale joints where meals are way out of my league, you know the places, places where the likes of  Billy Good and Pamela Martin go, or Christy Clark and her oyster bar fetish..

The point I am making is this, there are choices, go film in Africa and wages are peanuts, or free, go to China and find even cheaper labour..

These BC Liberals crying the blues over having to match lucrative tax credits from other provinces and countries is hilarious, I`ll tell you why, just think about their BC Jobs plan ads...

They brag about the lowest corporate tax rates in Canada, and they are, our corporate controlled BC Liberal Government has been lowering the corporate tax bar over and over again and each time the Limbo bar is lowered for corporations sneaky taxes and user fees are dumped onto an already indebted British Columbian, the highest tax burden in Canada, MSP, ICBC, highest SIN taxes, liquor and smokes, highest priced fuel in Canada, highest property taxes, property transfer taxes..

Each and every time corporations had their taxes lowered more hidden taxation and user fees were dumped on Joe Lunch-bucket..

And now that the BC Liberals have lowered corporate taxes so low we are now running permanent structural deficits, there is no more room for lowering taxes, big oil, resource royalties at a 2 decade cumulative low, that`s right, we got more resource revenues a decade ago then we get now, even with record coal shipments and Fracking gone wild and raw log filled tankers heading for China our royalty revenue is but half of what is was a decade ago...And yes, these resource exporters have never been wealthier..

Now that`s funny, deficit after BC deficit, our BC debt now topping $67 billion(not counting P3s or energy buying agreements or deferral accounts)..

From $28 billion dollar debt in 2001 to almost $70 billion and the film industry is crying for more dole, more gifts, crying for BC to increase its structural deficit..

How often do we have to go through this, blackmail from an industry, manufacturing in North America including Ontario decimated by cheap Chinese labour, conglomerates don`t bat an eye as they shutter domestic plants and set up shop in the land of the exploited, what happened to being a good corporate citizen, those days are a thing of the past, despite record tar oil extraction reduced royalty rates have Alberta running its 5th straight multi-$billion dollar deficit, no contributions in the last decade to Alberta`s heritage fund, now that longterm safety net is shrinking, been drawn upon, how low can we limbo before we finally fall flat on our backs... Alberta being portrayed as Canada`s economic future, yearly $billion dollar deficits and growing..Alberta was debt free and ran steady surpluses when oil extraction was a 1/3 of today`s volume..

Proposed LNG exporters are negotiating as we speak for subsidized hydro electric power, and guess who`s rates are and will climb for the sake of said corporation`s bottom line.

I have no beef with our movie industry, however this time it`s up to you, promote your skills, our high tech facilities, our diverse one of a kind wild scenery minutes away from a bustling world class and voted world`s most liveable city many times...Location location location...What`s that worth..Chivas Regal or gut rot rye..from swanky west side to our downtown east side ghetto, we got it all, snow covered Whistler mountain by day and Kits beach by night....Toronto right?

Well, you reap what you sow BC Liberals and now that you are fiscally backed up against a cliff edge, no more money to give, a structural deficit, you no longer want to play a race to the bottom game and plead for other provinces to stop..

And as for the crying game being deployed by the movie and television wimps..

When does Joe Public get subsidized?

Suck it up, sharpen your pencils, reduce your wages.....And or..

Go East young men/women, go east...-

The Straight Goods

Cheers Eyes Wide Open


Hugh said...

Grant, I read somewhere that natural gas used to generate electricity for LNG plants in BC would be sold for even lower royalty rates than gas that gets exported.

Do you know about this?

Grant G said...

Actually Hugh, I doubt any royalties will be paid on gas used to power LNG plants.

We haven`t got a plant yet, and.
The negotiating going on is for free electricity, that would be free hydro electricity.
That`s the carrot for whoever gets there first..

Anonymous said...

great post,a kick in the nuts,well done

Anonymous said...

Background employees are treated poorly and are paid minimum wage. They also pay their agency 15% and only work casually. There is no income tax benefit there. Many of the key grips and other staff are often substance abusers. As a former backgrounder working on 2nd rate films such as Watchman and Hot Rod, I won't miss the industry at all. Whatever happened to decent paying wages in this province anyway?

Anonymous said...

HEY the Lieberals is trying to save the industry themselves, I mean look at all the lies that are playing on TV right now, thats a big boost to the industry isn't it? OOPS I forgot its mostly the lieberal network {aka Global} thats getting the most benefit from the millions of taxpayers dollars that the government is borrowing to spend on partisan advertizing!