MONTREAL — Will Quebec’s tax credit on special effects help or, ultimately, hurt the province’s burgeoning industry?

Last week’s announcement that foreign productions with computer-aided effects and animation can now deduct 20% of their labor costs — up from 5%, and including freelancers — drew nods of approval as Quebec looks to keep pace on tax breaks with Ontario and B.C.

It will be ‘a big plus,’ said Sylvain Gagné of the Quebec Film and Television Council.

But François Schneider, director of technology at Montreal’s New Breed VFX (Halo 3) says his industry ‘is already too subsidized’ and warns that propping up the production side is risky because, at some point, the tax credits could be scaled back and the work could dry up.

‘It’s a race between jurisdictions as to who offers the best tax breaks. It’s a game that’s not healthy in the long run,’ he says. ‘I dream of a day when clients come here not because of tax credits but because we are the best.’

Where subsidies are crucial, says Schneider, is in research and development. ‘It helps us create new methods and processes which make us more competitive.’ Most effects R&D money comes from the federal government.

Further, the effects sector is precarious. Both in Quebec and around the globe, shops and their workers are on the bottom rung of the revenue ladder. To cut costs, big studios outsource work to small companies around the globe who often lowball their bids to get contracts. Artists, who aren’t unionized in Quebec, work long hours for a few months a year and sometimes have trouble getting paid — as in the case of Meteor Studios and Journey to the Center of the Earth, and at damnfx, which let its workers go in the middle of post on the sequel to John Woo’s John Woo’s Red Cliff.

The unlucky lot of many effects artists has been making headlines south of the border recently. Political blogger and one-time artist Lee Stranahan wrote an open letter to director James Cameron in the Huffington Post asking him to speak out for the talent that helped make Avatar. ‘The writers, composers and actors all will receive well-deserved residual payments for decades to come,’ he wrote. ‘But the visual effects artists don’t receive royalties and residuals. And as one visual effects artist told me, ‘even in the credits, we’re listed after craft services.”