Focus on fixing the film industry
16 years after the first government announcement of a National Film Policy, a serious attempt at creating one is finally underway. Malcolm Scerri-Ferrante writes about how the financial incentives for foreign producers and the engagement of local crews may be effected by new policies.
The frequency of international filming in Malta increased tenfold over the last two decades, with a noticeable climb starting around ten years ago after a cash rebate was introduced. The local servicing industry has also seen substantial growth but the lack of a serious national film policy led to this industry not catching up with the huge influx.
Over the past decade several production service companies have been registered but the number of local crews have not increased fast enough. Equipment houses and specialised film related rental companies are also limited despite the growing popularity of the island as an international film destination.
The truth of the matter is that local film crews of a first-class nature exist only about one and a half deep. And anyway some department heads still cannot be sought locally.
Foreign producers bringing their productions to Malta do not wish to be the second or third one preparing or filming concurrently on the island, unless they are ready to fly in a large contingent of foreign crew. Moreover some positions need time to absorb local knowledge. And time is a luxury that seldom exists.
The lack of local crew or the 'clashing' of international productions - depending on how you may look at it - is indeed a serious problem that needs urgent attention. Orchestrating productions to reach the island's shores in a back-to-back fashion is of course an impossible feat.
When evaluating the qualified expenditure for an EU country’s rebate, EU policies discourage discrimination between citizens from different EU countries. However, Malta quite understandably prefers to rebate cash to producers utilising Maltese or local residents rather than EU crew members who do not reside in Malta and who are not forming and strengthening the local service industry, even if foreign crew members enable the economy to benefit from more accommodation, per diem and travel expenses. Meanwhile the island wants to keep the momentum of foreign film productions and all their direct and indirect benefits to the economy. These factors place Maltese lawmakers between a rock and a hard place.
A national film policy, the first of its kind in the country, hopes to tackle this issue and several others. In short, Malta's priority - and no small challenge at that - is to increase the local crew base and fast-track training opportunities whilst continuing to attract enough international work so that local crew members can finally sustain a full-time career.
So with this in mind government intends to revise the financial incentives in order to give producers a greater incentive, other than the obvious budget savings, when hiring more Maltese behind and in front of the camera. It is reported that this strategy is to be implemented through the Cultural Test that calculates the % of the rebate given to producers.
The idea warrants some credit and exploration as Malta can always find better ways to get more bang for its buck. The bang it rightly seeks is growing its industry and increasing employment. However, it needs to proceed with caution when walking down this tight rope. Trying to balance the generosity of its cash rebate with a very limited crew and talent base could lead to uncertainties abroad.
With minimal optimism, during early budgeting stages and important decision-making, when producers are still sitting in Los Angeles or London evaluating the financial pros and cons of each country, those planning their production several months ahead will be able to assume a minimum rebate of 20% with a further 5% being determined on the eventual quantity of local skills and local talent engaged. The situation should not be any less advantageous and the new rules might even be more generous. Meanwhile, until this national policy is finalised towards the end of this year, producers will continue to receive a rebate of between 20 and 25% depending on the standard “old” Cultural Test and with a further 2% if Malta's culture is portrayed adequately and positively on screen.
Malta's new film policy is also expected to "regulate" employment in the film industry. For decades crews have enjoyed the option to work as free-lancers or as employees. Producers likewise are free to choose according to existing legislation as applied for all other industries. However, Malta has some concerns about the film industry. Some of them are justified.
Firstly, Malta's publicly funded recruiting and employment authority - the Employment & Training Corporation - has never updated its computer software with titles of film crew positions. Furthermore, the nature of the film industry is not catered for within its existing regulations. This despite of the fact that the industry has been very active and visible for over a decade.
Secondly, local crews are not organised enough to form an association which can establish certain conditions or principles in regards to overtime, turnaround, rates etc. A few select crew members complain about the need of rules, but 'abuse' by productions is very isolated.
Thirdly, Malta wishes to see local film crews working on a payroll rather than by invoice, as freelancers do as self-employed, since the former involves withholding taxes and social security payments. Payroll is a surer way of ensuring all dues are received into the government's coffers and reduces the need of inspections.
The ETC indeed must finally recognise the film industry in its regulations and concessions. There is no doubt about the urgent need for this. But the matter about sick leave, employment bonuses etc which select crew members wish to implement as mandatory is a tricky issue. There are many developed film industries around the world which do not make it obligatory for producers to pay such fringe benefits. If government were to impose such restrictions on international producers it risks increasing crew costs by up to nearly 20%, unless crews are willing to lower their "employee" rates compared to their "self-employed" rates in order to allow for the fringe benefit payments forced onto producers.
Moreover, producers filming for only a few days do not want to be hit with the cumbersome rule of setting up a payroll system when everyone could easily be paid by invoice for a few days of work.
An alternative and simple solution is for "crew hiring guidelines" to be decided amongst all, perhaps through the Malta Film Commission until the crew base is willing to organise itself formally and professionally, even if film commissions are generally not regulating bodies. Such guidelines can establish turnaround penalties and minimum pay rates according to the scale of the production. They should also include such obligations as health & safety measures present on construction sites and on set.
Also, through the government-appointed audit that is conducted for every cash rebate to producers, crew invoices can be selected sporadically for inspection in order to solve any concerns about tax evasion.
For those productions filming for a considerable length of time and not only for a few weeks, a payroll system would indeed be an efficient way that ticks all the boxes for all interested parties. However, rather than remove existing options and make the film industry more restrictive than other industries, Malta can entice more locals to train and work in the industry and to choose the payroll system by offering a tax incentive such as a special final withholding tax rate which would start at 10% and later be increased to 15% once the industry manages to stand up on its feet. A similar plan was recently suggested in a consultation session held last month and it is hopefully being given serious consideration during this important and much needed policy-making process.
This tax incentive should be offered to all those working exclusively in film and who are willing to hold tight onto their seats during the rollercoaster ride offered by this very cyclical industry.
This newspaper reports an announcement for incentives and a national policy to be in place by 2001. The incentives were introduced in 2005. It is only in recent months that comprehensive and serious policy-making for the film industry reached a tangible draft format and where public consultations began.