Here’s the bad news. With the Canadian dollar inching its way closer to parity with the American dollar, there’s a sense among industry stakeholders that 2005 could end up worse than 2004 in terms of total production volumes.

Already, B.C. predicts that volumes this year will drop below $800 million from a record $1.4 billion in 2003. Much of the decline is due to the soaring exchange rate, which is keeping Hollywood productions away.

At the beginning of 2003 the dollar was still at 64 cents US. It has been tracking up ever since, averaging 10 cents per year. While some economists predict the dollar will settle at 85 cents, others say the loonie will reach parity with the U.S. dollar before falling back to earth in two to three years.

Either scenario could be catastrophic for many of the 50,000 Canadians who rely on steady work from Canadian and foreign producers. All told, according to CFTPA data, 133,400 full-time jobs are created directly and indirectly by the industry.

At stake is a $1.9-billion slice of the Canadian production pie, a full 40% of total production in this country.

But here’s the good news. Where it’s been difficult for lobby groups to convince governments that changes are needed in tax credits when data has consistently told a growth story, now they will be armed with bad news backed up by numbers. Significant drops will surely compel the B.C. and Ontario governments, which continue to offer the lowest tax credits in the nation, to boost these to competitive levels. And surely, the CRTC, spurred on by the minister of Canadian heritage, will revamp its failed television policy in an attempt to stimulate broader genres of production.

But here’s the bad news. These declining numbers won’t be fully documented for two years. Right now the industry relies heavily on the CFTPA’s annual Profile publication, which is the most comprehensive collection of industry-related data out there. But Profile 2004 is actually a collection of figures from the last nine months of 2002 and the first three months of 2003.

That means the best data for 2004/05 won’t be in wide circulation until early 2006. Then it will still take months, even years, before new rules and regulations actually come into play since these sorts of things need to be studied, meetings and consultations have to be called and budgets tabled. We’re probably looking at 2007 or 2008 before anything significant happens.

But here’s the good news. By then, the U.S. dollar will in all likelihood have gained strength, as is its historic tendency, leaving the Canadian dollar to wallow once again below 70 cents. Meantime, a new CRTC television policy and improved tax credits will have come into effect, stimulating domestic production; the international market will have fully recovered as broadcasters continue to buy Canadian kids and factual programming; and American producers will return to Canada, which will again have a great exchange rate and will still be a more convenient destination than Bulgaria despite similar tax incentives.