Malta needs that film rebate. But it needs to be more transparent

There seems to be quite a lot of interest, all of a sudden, in the ‘cash rebate’ that Malta so generously offers to foreign film studios, for their use of our island as a filming location.

But there also seems to be a little confusion as to what this cash rebate even is, to begin with... and especially, how it is SUPPOSED to work, in practice. [Please note the heavy emphasis there, folks. It will become important later on.]

This week, I lost count of the number of reports about the ‘shocking’ revelation that Malta had paid out almost €140 million, through that scheme – €47 million of which, to only one production: Ridley Scott’s ‘Gladiator 2’.

I won’t summarise them all: but here is brief overview of all the objections/misconceptions, as they arise from those articles.

a) The scheme is ‘funded by the tax-payer’;

b) It is generally assumed that those €140 million must have come at the expense of budgetary allocations for other departments: including health, education, social services, and so on;

c) The cash-rebate only benefits massive foreign productions such as ‘Gladiator 2’, ‘Napoleon’, ‘Jurassic World Dominion’, etc. (Indeed, nobody ever mentions the much more modest sums, that foreign producers – mostly in TV - have been receiving in cash rebates ever since the scheme was introduced, way back in 2000).

d) The scheme itself is sometimes described in terms of a ‘national investment’: suggesting that it is expected to generate some kind of financial ‘return’... and, most bizarrely of all;

e) Some people seem to genuinely think that part of the €47 million that went to ‘Gladiator 2’, somehow ended up lining the pockets of only one actor: the one who starred in the original movie, over 20 years ago. (One comment even suggested that: ‘Malta paid €47 million, so that [Tourism Minister] Clayton Bartolo could have dinner with Russell Crowe!!’)

OK, tell you what. Let’s reverse through those objections one-by-one, shall we? Starting with:

Russell Crowe. Erm... sorry, guys, but: it has evidently escaped some people’s attention, out there, that the New Zealand-born actor by that name is NOT (I repeat: NOT) actually part of the cast of ‘Gladiator 2’.

Nor is it even possible that he could have been: given that the character he played in the original was – in case you’ve all forgotten – ‘killed off’, at the end of the movie. (And besides: Russell Crowe himself has also – no offence, or anything – ‘aged’ just a little bit, over the last 23 years. So he CANNOT be cast in the sequel, today: no, not even as ‘the ghost of Maximus Decimus Meridius’, if that’s what some of you were hoping...)

Even less, then, can he possibly claim any part of a ‘cash-rebate’, that went to a film which – as he himself put it, in a recent outburst – ‘[he’s] not even in!!’ So, please: can we stop all this nonsense, once and for all?

As for the rest: they can all be very easily rebutted, just by looking at what’s written on the tin. The Producers’ Creative Partnership website, for instance, describes Malta’s cash rebate as:

“[...] a cash grant given to eligible productions on the qualifying expenditure INCURRED IN MALTA [my emphasis]. A minimum of 30% the eligible expenditure can be obtained as a cash rebate by a qualifying production company ONCE FILMING IS COMPLETE [ditto]. For films which portray Malta as Malta and/or have special Maltese cultural content, the rebate can be as high as 35%. If the Malta Film Studios (aka water tanks) forms part of the expenditure then the rebate can reach 40%.”

For a more detailed description of how it is SUPPOSED to work: this is from the website of law-firm Chetcuti & Chetcuti:

“Once filming is complete and the Malta Film Commission receives the official audit report, the cash rebate is provided to the production within five months from the date of receipt of the production expenditure”. Eligible expenditure includes, inter alia: “accommodation, transportation equipment and hire, location fees, catering services, per diems, leasing of offices, computer equipment, props, property, animals, equipment, vehicles, and boats [and many, many more].”

Now: from these and other details, we can deduce that:

a) The scheme is only ‘publicly funded’, insofar as the money paid out is (inevitably) undersigned by the Maltese tax-payer. But the sum itself is a percentage of money that – SUPPOSEDLY - has already been spent, here in Malta.

And this answers two objections, at once. No, the money does not come ‘at the expense of other budgetary allocations’; and no, the cash-rebate is not a ‘financial investment’, in the strictest sense of the word.

On the contrary: it is an expense that the Maltese government – all governments since 2000, to be precise – deems ‘worthwhile’, in view of the much larger sums of money that would have been (assuming the system functions as it is SUPPOSED to) invested in the local economy.

As such, its success cannot be measured in terms of ‘how much Malta pays out, in contrast to how much it receives’... even if, by that yardstick, Malta seems to have done rather well out of the transaction. (Always assuming that the above regulations were adhered to: we paid out €47 million, in return for over €70 million of ‘foreign direct investment’. I call that a bargain, myself...)

Conversely, however: the success of this scheme can only be truly measured in terms of how it lives up to its original purpose; i.e., to help the local film-servicing sector (which, last I looked, accounted for over 85% of the entire industry). And at this level... things almost immediately become a little ‘murkier’.

Having dispensed with all the frivolous/factually incorrect objections... let’s look at a few of the valid criticisms (which, unsurprisingly, tend to come from Maltese film-makers, and film-servicers.)

1) There are many, serious question-marks surrounding the official figures released by the Malta Film Commission: starting with the sum paid out to ‘Gladiator 2’.

A strict application of the cash-rebate system, as described above, implies that the money can only be paid, ‘once filming has been completed’. Yet it is an open secret that filming on ‘Gladiator 2’ – far from being completed – has barely even STARTED, yet... because the entire production has been stalled, for the foreseeable future, by the ongoing Hollywood actor’s strike.

This raises the possibility that those €47 million is limited only to filming that was already completed, five months ago (suggesting, in turn, that Malta may end up paying tens of millions more, by the time the whole movie wraps up... if it ever even does that, at all.)

But it is debatable how much ‘filming’ had actually happened, before last March; and even then, we are left to ponder the second line of criticism. Namely...

2) The sheer generosity of our cash-rebate may be ‘unsustainable’, in the long run.

This is where the ‘capping’ argument comes in. Personally, I don’t see any exaggeration, in the amount of money allegedly spent on ‘Gladiator 2’ so far. It is, after all, a historical epic... and those are notoriously expensive films to make, even by current Hollywood standards.

But given that the actual production is on stand-by (and has been, since the beginning of summer)... what, exactly, are they spending all that money on?

According to Clayton Bartolo, the answer is: ‘the renting of film studios’.

"They are paying a lot of money to rent them. There are tax payments in Malta made both by extras and foreign actors, the renting of vehicles, accommodation, and they stay in the best hotels in the country, there are the catering establishments they eat at, other entertainment establishments that crews and actors go to [...]. Aside from that, then you have extras who are paid. An extra on a film is paid around €100 per day. There are some who are paid more, others less..."

Now: all of that is indeed covered, by the eligibility criteria. But there are a few caveats, remember? Including that ALL the money had to be spent here, in Malta; and that the rebates are given out in exchange for detailed receipts.

In the case of ‘Gladiator 2’, however: it is highly questionable, whether the ‘€111 million’ figure represents money that has been spent ‘here, in Malta’... or whether it also includes the wages of that movie’s actors – including the rather highly-paid Denzel Washington – who are currently being paid ‘not to even act, at all.’

Meanwhile, it is unlikely that there are even any ‘extras’ actually left, on the studio’s pay-roll... given that, for obvious reasons, no crowd-scenes are currently being shot.

In any case, however: for the rebates to have already been paid out, those receipts must indeed exist. So Clayton Bartolo could give us a much clearer answer: by simply publishing the full, submitted audit report (which is SUPPOSED to already be in his possession, anyway).

Without that information, it is quite frankly impossible to gauge whether this €47 million expenditure was ‘worthwhile’, or not... or even whether the rebate itself is ‘sustainable’, for that matter. One thing, however, remains certain.

Malta’s cash rebate IS, in fact, a necessary investment: if we really want our film industry to remain competitive, in such a cut-throat market. But, in order to function properly... it also has to be a LOT more ‘transparent’, than it currently is.

Just saying, that’s all...