Taking a backseat to only the weather and high gas prices, the ill health of Ontario’s production business has been a topic of endless discussion for – well, how far back to we want to go? SARS? The CTF crisis? Earth: Final Conflict?

Point being, most producers agree that the province is underperforming on both the domestic and foreign markets. The bigger question is why, and what can be done about it?

Playback readers divided the blame more or less evenly among various points in a recent online survey. Roughly 26% say that business has been pushed down by the lack of Ontario Media Development Corporation equity and development funding, while almost as many blame competition from other provinces (23%), inadequate studios (21%) and the province’s meager tax credits (20%). Some 10% of respondents point the finger at Ottawa and federal policies that appear to favor production in other territories.

The tax-credit program – 20% off labor costs for Canadian shoots, 11% for service – has been a major issue and the subject of much lobbying for years, much of the pressure coming from lobby groups such as Film Ontario, which co-runs an office in Hollywood with the OMDC and the City of Toronto.

Film Ontario co-chair Patrick Whitley, president of Toronto’s Dufferin Gate Productions and Temple Street Productions, gets weekly reports about what the major studios like, or do not like, about filming in Ontario. A lack of large, purpose-built studios and the poor tax credit are at the top of the list, although the former will be less of a problem when Toronto’s Portlands and Great Lakes studios open in 2005.

‘The provincial government disappointed a lot of people with the last budget [by not raising the tax credits], but the reality is they’ll be in office for four years so we’ll continue to lobby them very aggressively,’ says Whitley.

He is optimistic that the recent appointments of John Godfrey and Liza Frulla to the federal cabinet as the ministers of infrastructure and communities, and heritage, respectively, is good news for the production lobby, and has a good feeling about Toronto Mayor David Miller, who has pledged to improve filming conditions in the city (see story, p. 1). Godfrey represents the Toronto riding of Don Valley West, and is known as a forward thinker on urban issues.

‘I think everybody’s encouraged by Godfrey,’ says Whitley. ‘The cities will get more clout and will have a real voice in policy.’

On equity investment, Alexandra Raffe, co-chair of the CFTPA’s Ontario Producers Panel, agrees that such funding was good while it lasted, up until 1994, but says the industry has grown too much since then for that kind of backing to be feasible. ‘It would take a heck of a lot of equity to fill the gap,’ she says – on par with the $60 million per year SODEC pays to Quebec producers. Ontario gave out some $18 million in ’94.

But in the meantime, shoots and their spends are drifting into other, cheaper territories, including the Prairies, the Maritimes, Australia and the Czech Republic. New Brunswick has a 40% credit, Manitoba’s is 35%.

A recent study completed for the OMDC indicates that Ontario producers took $710 million in production out of the province between 2000 and 2002, representing 57% of all homegrown production in Ontario.

Go east

Steven DeNure of Toronto-based Decode Entertainment, for one, has moved some of his shows out east and struck copro deals with the U.K. Decode’s animated series Girlstuff/Boystuff and Bromwell High are made with Halifax-based Collideascope Digital Pictures.

‘Producers like us have to go where there’s financing, so we’ve moved some projects we could have done in Ontario out of Ontario,’ he says. The company still makes some shows at home, however, including its Freaks of Nature and Radio Free Roscoe.

‘Because there is a downturn here we know we can get good crews and talent,’ he says. ‘We don’t have to compete with expensive and well-financed service productions.’

Ontario is also facing stiffer competition from the U.S. Louisiana’s very favourable incentives have recently lured a handful of projects away from Canada – the Martin Scorsese and Dean Koontz series Frankenstein, for example – while Pennsylvania enacted a 20% ‘all expenses’ tax credit on July 21, and Rhode Island is also expected to pass a tax credit or other incentive shortly.

Ira Levy, exec producer at Toronto’s Breakthrough Films and Television, says there’s no way to work around the problem with credits. ‘It’s so basic in any financial plan, because it’s labor-based,’ he says. ‘Production is not like a factory, it doesn’t have to be grounded here. It can move from province to province. That’s the way production works, it follows the money, then the talent follows. It’s a very frustrating situation.’

Across town at Protocol Entertainment, Steve Levitan disagrees. Levitan (Train 48) is an outspoken critic of the provincial and federal funding systems and dismisses the idea of a slump or complaints about taxes or shooting conditions as ‘whining and complaining.’

‘Nobody’s focused on how we find an audience,’ he says. ‘We get more handouts from the government and yet we’re constantly complaining that the handouts aren’t good enough, not rich enough, the rules aren’t easy enough… We’ve ended up with an industry that’s dysfunctional.

‘I don’t care what province is paying what,’ he says. ‘If I want to produce outside Toronto there are way cheaper [international] places to shoot, where I can get way more production flexibility, better talent, better working conditions than I could in whatever the flavor-of-the-month province is.’ He cites Australia as an example, where he shot the series The Saddle Club.

You don’t meet a lot of producers who feel that way, just as you don’t meet a lot who miss the old ‘tax shelter’ days of Canuck production (1974-1982). But David Devine of Toronto’s Devine Entertainment believes that, because changes in the U.K. tax laws have depressed business here, Canada or Ontario should again set up shelters.

‘With the [Department for Culture, Media and Sport] tax shelters in the U.K. on hold in the winter/spring quarter, it causes a complete eradication of Canada/U.K. coproductions,’ he says, on the phone from L.A. ‘That’s major for anyone dealing with the U.K. To do 60/40 you pretty much need a 25% tax shelter and 15% sale-and-leaseback to get your 40% out of the U.K. to match with Telefilm and the other gap and equity financing here in Canada and Ontario.

‘Surely we’ve learned enough about the misuse of funds that we could bring back Canadian or Ontario tax shelters. It creates some wealth for people running the shelters – through fees, sure, that’s the way life goes in business – but it will stimulate employment.’

Peter Lukas, owner of Showline studios in Toronto, remembers the tax-shelter days, and the highs and lows that have come since. He also downplays talk of a slump, although he concedes the market is ‘soft’ right now, and says that whatever’s happening in Ontario has little to do with government policy, or studios, or shelters.

‘The film and TV business is volatile. I’ve been in this business 30 years. I’ve seen ups and downs. It has not been a steady rise,’ he says. What’s happening in Ontario is a reflection of bigger, worldwide market changes, he says. ‘The globe is shrinking.’