December 2nd, 2004

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Canada
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Canadian Film Industry Getting Pasted By Rising Dollar

You’ve probably heard about this, but earlier this week there was a protest by 1000 Ontario film industry workers outside of the Ontario legislature. They were appealing to the province for larger tax credits for foreign productions. The meteoric rise of the Canadian dollar is driving American productions elsewhere:

“Film and television is our life’s work,” Goy, a 12-year veteran of CBC-TV’s popular Royal Canadian Air Farce, told an enthusiastic crowd. Beside her on the stage was a car with its front end smashed against a wall decorated to symbolize the 11 per cent foreign-production tax break Ontario currently provides the industry–a pittance, critics say, compared with the up to 40 per cent available in places like Nova Scotia, Manitoba and Saskatchewan.

Sam from Daily Dose of Imagery has some nice photos of the protest. The organizers also have a website called Keep Ontario’s Cameras Rolling.

I don’t know enough about tax credits as a strategy for drawing international business. That approach was a critically important step that brought Ireland increased prosperity through the nineties. However, surely there’s a point where tax credits become defacto subsidies? Maybe not. Macroeconomics isn’t my bag. It’s not even my clutch purse.

Comments: 7 Responses so far

'nee
December 2nd, 2004
4:26 pm

Somehow I get the feeling that your entire post was manouvered just so you could get around to that “clutch purse” line. Good line, by the way :)

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morph
December 2nd, 2004
4:54 pm

It isn’t so much that the dollar is rising as it is that the US dollar is spiraling into irrelevance.

http://finance.yahoo.com/m5?s=EUR&t=CAD&a=1&c=2 (EURO vs. CAD)

http://finance.yahoo.com/currency/convert?from=USD&to=CAD&amt=1&t=2y (USD vs. CAD)

In the last 2 years the USD has shed over 25% of its value while the CAD has gained about 2% on the Euro during the same time period.

Of course versus the USD we are losing big time but the loss of overall business is mainly because of a poor US economy and the dollar value reflecting that than an actual loss as a result of the dollar dropping.

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Michele
December 2nd, 2004
5:06 pm

Off topic: Great blog! I came by from the list of nominees for Best Canadian Blog.

The wonderful thing about beig nominated in the same catagory as you is that I get to flatter myself with the wonderful company I keep.

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Dean
December 2nd, 2004
5:50 pm

Subsidies are pretty much doomed to failure with anything as portable as the film industry. Targetted incentives, such as Ireland used, that bring in long-term high-investment bricks-n-mortar industries are very different.

I don’t see how we can hang onto the film business. I think it entirely possible that we will see the US dollar at par within another year, and it isn’t beyond the realm of possibility that we will see it below ours.

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Lisa
December 2nd, 2004
6:15 pm

Good point, morph.
Is there a reason that the Canadian dollar is described as “rising”…rather than the U-S dollar falling?
Economics ain’t my clutch either.
If there isn’t a good money reason, then I say it’s because we’re trying to be polite (i.e. An international monetary version of: It’s not you, it’s me.
“Oh, dear…it’s not that your dollar is bad! It’s just that our filthy loonie won’t stop rising!”)

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'nee
December 2nd, 2004
8:12 pm

Lisa: We say that the dollar is rising against the US dollar. Because back in the old days the US dollar was on the gold standard, it was measured against a hard objective. Now, the US dollar is floating, but all currency is still measured against it, rather than the other way around, basically out of tradition. That, and the US economy has traditionally been the largest force. Just like you wouldn’t say that the land came closer to the boat, you’d say the boat came closer to the land :) So, the US economy isn’t doing well, therefor other countries in relation to the US are doing better: since they’re the yardstick, our dollar rises rather than their dollar falls.

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Declan
December 6th, 2004
12:16 pm

If the government is feeling innovative (I know, not likely) they could give the film industry some ‘currency-adjustment’ tax credits.

i.e. The amount they get would be proportional to the level of the Can$ vs the U.S$ and would decline over time (since if our dollar stays high vs the US$ for a long time, sooner or later they need to adapt or pack up).

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