Canadian Heritage Committee on Feb. 25th, 2015

[Peter Leitch]

That's how we built the industry in Canada. We built the industry by attracting some of the top talent from the U.S. initially, and now it's from around the world. These are the people who trained the people who are working in British Columbia.

As an example, Steve Beers is an American producer who I first started with when Cannell produced a show called 21 Jump Street. He was up producing that show, and we brought in a lot of the department heads from the United States and elsewhere, and now he's doing a show called Backstrom, an American-based production for which 100% of the crew is Canadian.

In terms of attracting the best people in the world, if you look at the visual effects community, which is growing dramatically here and becoming a big part of all feature films, we want to attract this world-class talent to be able to train the people we have here.

We like the borders to be as open as they can be. We certainly don't want some people taking Canadian jobs, but the benefits that these top-quality, world-class crew and cast members bring to the table are incredible in terms of building our infrastructure and building our talent base here.

[The Chair, Conservative, Gord Brown]

Thank you very much.

We're now going to move to Mr. Stewart for seven minutes.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Hello to our witnesses.

I'm Kennedy Stewart. I'm from Burnaby—Douglas, so I'm well aware of the value that this industry adds to our local economies with, I think, over 125 movie industry-related businesses in Burnaby. Thanks for being here today.

[Paul Bronfman]

We love Burnaby.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

I do too.

I was hoping to follow up a bit on what Mr. Weston said about moving people in and out of British Columbia. You spoke in general terms about why that's valuable, but I was hoping for more specific terms. This is a place where we can put specifics into a report, so I was wondering if you had a specific request regarding visas and people moving back and forth across the border.

[Shawn Williamson]

I can maybe field this, because I deal with the immigration concerns on a daily basis for the different films that we shoot.

There has been a change in the immigration policy with regard to bringing foreign workers into Canada. As Peter said, the number of crew that we import, generally from the United States, the U.K. or Europe, continues to decrease as the depth of the labour pools here increases and as Canadians are better and better trained.

It's much less common now to see tradespeople coming in, cinematographers and such. We will forever have an issue bringing U.S. actors in. We often do need American actors as part of packaging and selling the film. That's generally a studio requirement. When Sony came here to shoot The Interview with us, we had to bring a number of Americans up for them to package the film internationally.

The issue now has become a practical one in that turnaround time has moved from approximately 48 hours to upwards of two weeks. On a large feature film, that's fine, but when you're shooting television, and you're often not casting your show until days before you shoot, it has proven to be very challenging. This isn't a B.C. issue; this is certainly a national issue.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Do you have a suggested change we could make that would help?

[Peter Leitch]

We have been working closely with the Conservative government, and they have made some changes to facilitate people getting into the country.

There are a couple of issues that we're concerned about. One is the four-and-four rule. After four years, they have to leave for four years. It doesn't make too much sense for our industry, and that one is a real problem. We're really concerned about it and how that's going to be implemented.

The second concern for us is the transition plans. Especially when you look at visual effects and animation, we're hiring as many trained students as we can, but we're still trying to attract that world-class talent, and you're always going to have that going forward. We're not going to transition all those jobs into Canadian jobs. There will be more and more Canadians being employed and trained, and that's fantastic, but you're still going to want the best in the world, who will travel from show to show around the world, to be able to come into the province.

In terms of the transition rules, they should be consistent from one company to the other, because they all have the same issues. I think that's one of the things where we have the unions certainly looking at those issues closely. We could probably police ourselves, the industry, so on the transition plans I'd like to see self-policing for the film and television industry.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Okay. Maybe we could move to the tax credit side of things.

Again, are there any specific asks in terms of tax credits? I expect that more would be the direction you're going in, but would you have a particular percentage or application, either labour or capital, and do you have something specific that you can add there?

[Peter Leitch]

I'll comment on the tax credits. What we've asked for federally is not actually to increase the tax credits; we've just asked you to eliminate the grind.

First of all, it's inconsistent in the amount of federal tax credits we get from province to province, which doesn't make sense to me. Second, there are huge benefits to the federal government in terms of withholding tax, for instance, for American talent coming up here and the taxes that the federal government receives.

If they'd just eliminate the grind, that would put more dollars on the screen and we'd have higher quality Canadian films that would be more marketable globally.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

I'm sorry, but could you explain to me what the grind is? I don't exactly know that term.

[Peter Leitch]

The grind is a reduction of the tax credit base by the provincial credits, prior to calculating the federal credit. In other words, if they just calculated the federal credit on the base itself without deducting the other incentives from the provinces, that would make a significant difference.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Okay.

I'm getting near the end of my time, so I'd like to move to the digital arts component.

You were talking about special effects and how that's emerging in British Columbia as a very important part of the industry. I'm wondering how separate those industries are now. I have EA games in my riding, and they say that personnel sometimes move back and forth between the gaming industry and the film industry. Is it artificial to divide these two industries? Are they one big industry? How would you characterize these two groupings?

[Peter Leitch]

I think we work very closely together. In terms of tax policy, I think you really have to study it and make sure there are benefits to both the industry and the government. I'm not advocating a wholesale change, and I think there's a risk of doing that, because we're dealing with almost different marketplaces in terms of where we market our projects.

The fact that we utilize talent in both industries and it's interchangeable is a fantastic thing. We want to build a bigger base that way, so that we have a large digital industry here and a film and television industry. It's hugely beneficial that both industries exist here, but I don't think I'd necessarily mix it unless it's really well studied.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Could you give me some idea of the personnel transfer between the two parts of this sector? How many folks would be interchangeable between film and video games, say? Do you have any idea?

[Peter Leitch]

Well, it's changing all around, but look at the quality of the games now, at how realistic they are, and the animation components and the real-life types of components. My nephew from Waterloo is now working at Microsoft here in Vancouver. He's certainly talented enough in terms of programming to be able to go over and create visual effects at MPC, for instance. With the quality of the talent we're attracting here, these people are in demand on both sides.

[A voice]

There's a direct crossover—

[The Chair, Conservative, Gord Brown]

Thank you. We have to move on.

Mr. Dion, you have seven minutes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you very much, Mr. Leitch, Mr. Williamson, and Mr. Bronfman.

I would like to continue with what Mr. Stewart started to do. I'd like to invite you to identify very clearly the recommendations you have for this committee in terms of changing some federal rules, federal programs or tax credits in a way that would help the film industry.

You started to explain different things, Mr. Leitch. Maybe I will invite Mr. Bronfman to react to what you said about the tax credit or the transition plan or the four-and-four rule. I will also invite Mr. Bronfman to identify his own recommendations in terms of changing some policies at the federal level to help the industry.

[Paul Bronfman]

Thank you, Mr. Dion. It's nice to meet you.

We recommend just what Peter was saying, that the standing committee advocate for the removal of the grind of provincial tax credits. The ensuing new money entering the system would encourage new development, production and the associated jobs throughout the entire industry value chain. That's certainly our first recommendation. I'm also aware of other witnesses who will come forward and propose that federal tax credits, or at least a segment of them, be advanced as a means by which producing may be relieved of some of the interim financing charges that, simply put, take money off the screen.

Finally, I think in sync again with Peter and Shawn, we propose that the $10.6 million that was taken away from Telefilm be returned. That was cut when the government was posting deficits, but mostly this year we'll have a surplus.

That's really what I would suggest: elimination of the grind and reinstatement of the budget that was cut at Telefilm.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you very much.

Mr. Leitch and Mr. Williamson, do you want to react to what Mr. Bronfman has proposed?

[Shawn Williamson]

I think we both agree with what he is proposing.

The grind does leave on the table money that we would like to put into films and allow us to create something a bit more competitive. With regard to Telefilm, certainly in the west we're always chasing Telefilm where we can. As a feature film producer, the more financing available, and ultimately the more competitive and the more watchful our films can be, the better equipped we'll be to compete with the United States, which is ultimately what we're doing.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

So is that the main recommendation: the grind?

[Peter Leitch]

The grind and Telefilm.

[Shawn Williamson]

That is correct.