Long the Rodney Dangerfield of Canadian feature film financing, the idea of a return of the tax shelter is suddenly starting to get some respect. Or at least the notion that more private sector participation is needed to maintain the health of the national movie business.

Speaking at the CFTPA’s Primetime in Ottawa, producer Robert Lantos got the ball rolling in January when he trumpeted Canada’s successes under the old 100% Capital Cost Allowance. Since then, filmmakers have begun to openly ponder whether shifting the sector’s reliance on private investment in favor of government subsidization beginning in 1983 was necessarily the best move, just as Canadian cinema was coming into its own as a commercially successful medium.

For nearly two decades thereafter, Canada pursued an artistic mandate in regard to feature filmmaking, only to renew the emphasis on commercial success in recent years when the federal government told Telefilm Canada to boost the box office take of domestic films to 5%.

While hard stats are not readily available, it is not a stretch to imagine that Canadian films were doing better than 5% in the late 1970s and early 1980s before the feds pulled the CCA. Box office successes included:

* 1978: In Praise of Older Women, The Silent Partner and Watership Down;

* 1979: Meatballs and Murder by Decree;

* 1980: Atlantic City, The Changeling and Middle Age Crazy;

* 1981: Scanners, Heavy Metal, and My Bloody Valentine;

* 1982: Porky’s, The Grey Fox and Paradise.

Now, many have argued that the schlock quotient from that era was setting Canada down a path toward becoming something of an international joke in terms of artistic merit. And for all those successes there were dozens of failures, not to mention many abuses of the system.

Certainly, in the intervening years, with the emergence of filmmakers such as Atom Egoyan and Denys Arcand, Canada has established its artistic credentials internationally. But we still produce many more failures than successes.

What is certain is that the production industry is in a period of transition.

While private investment was being pulled in the mid-80s, foreign location shooting, government funding and tax credits stepped in to replace lost dollars.

In particular, foreign location shooting has had a significant impact outpacing all other production, with an average annual growth rate of 8% for the last decade. In fact, the rise of location shooting in Canada came quickly on the heels of CCA productions, many of which were really just U.S. backed shoots disguised as Canadian productions to take advantage of the tax shelter.

But foreign location shooting appears to have peaked in 2003, due in part to a rising Canadian dollar and competition from other locations in Europe, Australia and U.S. states such as Louisiana.

It is for this reason that the CFTPA has begun to explore ways to stimulate private investment, including a PricewaterhouseCoopers’ study of federal legislation pertaining to flow-through shares in the mining industry.

While the return of a 100% tax shelter is unlikely, re-establishing significant participation of Canada’s middle class as investors in feature-film projects must be a critical piece of the puzzle if Canadian production is to maintain the momentum built over the last 30 years.

PETER VAMOS, EDITOR