Montreal: Canadian feature films will continue to be dwarfed by foreign competition without a fundamental rethinking of creative policy and the implementation of financial incentives that would ensure Canadian ownership of bigger budget productions, says veteran producer/distributor Rene Malo.

Malo, who is the 1994 recipient of the Academy of Canadian Cinema and Television’s Air Canada Award for career achievement in film, says government should transfer the cost of the existing Capital Cost Allowance tax shelter, estimated at $70 million a year, to a new tax-credit incentive program representing 15% to 20% of a feature film’s budget. And unlike the tax shelter, he says a new tax credit program should only benefit Canadian-owned production and distribution companies.

Malo, also chairman of the Canadian Association of Film Distributors and Exporters, adds: ‘When you make a Canadian film, about 70% of the money is used for salaries, which means 30% of the total budget goes back to government in the form of income tax. It’s a very good investment.

‘As long as the investment by Telefilm Canada and the cost of a tax credit is less than the sum collected through taxation, government actually earns revenue through production activity,’ he says.

The tax credit is vital ‘because Canadian movies cannot be financed solely with revenues from Canada,’ says Malo. He says the credit should not be used for p&a partnerships, and should be triggered through a signed agreement with a distributor.

‘If you don’t have a Canadian distributor who triggers the credit, it means the Canadian movie could be released by an American company and the profit would go outside of Canada when it should stay in Canada. The second reason is that it’s a good way to (eliminate) the danger of a `front’ producer who is simply hired and paid by an American company for the purpose of accessing Canadian benefits.’

Malo says effective national distribution legislation would also be cost-free for government.

‘There would be that much more money in the Canadian system (because) the profits made by the Americans leave the country.’

According to Malo, cutbacks at Telefilm ‘are simply a very bad investment decision for Canada.’

However, he believes the federal funding agency has to start backing more commercially viable, profit-oriented features.

‘We have to make films that are more important. Telefilm has to get involved in films with bigger budgets with commercial appeal. That doesn’t mean that we have to be involved with stupid movies. There are a lot of good films like Forrest Gump that are quality films and make loads of money, or The Piano, which is also not a stupid movie.’

To be more competitive, Malo says the Canadian film industry has no choice but to do fewer films with bigger budgets – 15 or 20 pictures a year with budgets in the $10 million to $20 million range as opposed to the current 30 to 40 pictures a year with budgets falling in the $1 million to $3 million range.

He says the cost of producing quality television drama in Canada is only slightly lower than in the u.s., while the spread is in the order of 10 to one, or 20 to one, when it comes to features.

‘We will have to come to the same solution in feature films,’ says Malo. ‘In television, we control distributionÉwe will have to control more distribution (of features), and we will have to put more money in the production of our feature films.

‘One thing is for sure, we have to open our minds and our movies to foreign stars,’ he says.

‘I think it’s a big mistake to say everything has to be Canadian, including the stars. There are practically no Canadian stars. The reason there are no Canadian stars is because Canadian movies are not seen enough around the world. And they are not seenÉbecause there are no stars. It is a kind of chicken and egg situation.

‘I think it is better for a Canadian actor with a second role to sit alongside a Robert De Niro than to have the first role in a picture nobody will see,’ he says.

‘Look at a picture like The Piano. It was produced by the French, shot in AustraliaÉwith a New Zealand director (and two of the leads from the u.s.)

‘We have good people in Canada, but we do not have an abundance of big stars. So I think Telefilm should permit foreign stars in our films. The movies will not be less Canadian. What is important is that the picture is owned by Canadians using as much Canadian creative talent as is possible. We have to stop being afraid of foreign elements in our movies.’

He says feature funding ‘has been taking bigger hits ($6 million in the last round at Telefilm) than television, which has access to all kinds of new development and production funds, including the cable fund, whereas for feature films, outside the small provincial funds, there is nothing else.’

Highlights of Malo’s 30-year career in the Canadian entertainment industry include his first foray into feature film distribution in 1973 with the establishment of Les Films Rene Malo, now known as Malofilm Distribution. As a producer, Malo has some 20 productions to his credit, including Francis Mankiewicz’s Les Portes tournantes, Micheline Lanctot’s Sonatine and l’Homme a tout faire, and the Denys Arcand smash hit, The Decline of the American Empire, which earned approximately $25 million to $30 million worldwide.

Chairman and ceo of Montreal-based Malofilm Communications, a publicly traded company listed on the Montreal and Toronto Stock Exchanges, Malo told Playback the company will become more active in feature production in the months ahead, with at least three films slated for 1995.