There was an interesting exchange between Premier Brad Wall and Leader of the Opposition Cam Broten during Question Period on March 16, two days before the tabling of the provincial budget. Broten had been hammering the government on its spending on “Lean” training in the medicare system. Wall deflected a follow up question and took an entirely different tack with his response.
According to Hansard Wall said, “Mr. Speaker, you know, we’re discussing where there might be opportunities for savings in the upcoming budget, and the Leader of the Opposition just referenced it in his question, Mr. Speaker. He was asked actually at his scrum about that question. The question was, what’s waste? There aren’t going to be a lot of increases anywhere in this budget, so what are you cutting?
“Here was his answer, and this is a quote: ‘Well it was this government that eliminated the film employment tax credit. It would be great to have the industry here to make up for any temporary dip that might be there with oil.’ He said, any dip that might be there with oil — $700 million short in terms of revenue shortfall because of the oil price. Mr. Speaker, families in this province now out of a job because of the layoffs in this sector.
“Mr. Speaker, his answer to the question today, well how would you make up that shortfall? He’d reinstate the film employment tax credit which, by the way, it’s a grant. We have a grant today. It’s not at the level it was, but we still have a grant. Mr. Speaker, no wonder the NDP don’t want their Leader of the Opposition talking about his alternatives or, worse, talking about the economy or his plan for the budget because what we get then, when he does, is nonsense.”
Now, politicking aside, there is a point here. How much film activity would we need in Saskatchewan to compensate for a loss in oil revenues?
Let’s look at the budgets for some major films recently produced, or in the works. These numbers are from Wikipedia, but they should be in the ballpark. Funds are presumably in US dollars. We have Star Wars: The Force Awakens: $200 million; Transformers: Age of Extinction: $210 million; Avatar; $237 million. Given the exchange rate differences from when these were produced at today, these three movies’ budgets come within the ballpark of C$700 to C$800 million, the shortfall Wall referenced.
Now let’s be clear – that’s not revenue to the local government, i.e. province. That’s the total production budget, spread all over the planet for various shooting locations, digital post production, etc. After tax credits and what not, the local jurisdiction would receive but a small sliver of that.
These productions were also done over several years.
So how much movie activity would have to take place here for the province to see a boost in overall revenue to the tune of $700 million? Given that a huge attraction for movie productions are the generous tax breaks jurisdictions fall all over each other to provide, how much tax is actually made? Is it primarily on the income taxes of those working on the project? Would we need a film industry larger than British Columbia’s? Or bigger? Much bigger?
The oilpatch, on the other hand, is for the most part consistent. Except for the occasional hiccup year, which this is, we can bank on about $1.5 billion, or more, a year, year over year, in provincial revenues when prices are stable. That’s about as much money as we spend on our provincial Ministry of Education for K-12 schools (not counting local municipal education taxes.)
Could we ever bag even one of these massive Hollywood productions? Could we repeat it year in and year out? Doubtful. But that nodding donkey will keep pumping oil (and revenue) night and day.
