No more close-ups, just economic arguments

It is hardly surprising that the public reaction to a staged, five-minute Facebook rant by film commissioner Johann Grech, rankled with the intended defence of Malta’s incentives scheme for the film industry.

The notorious €47 million cash-back to Ridley Scott’s Gladiator II production in Malta startled many, only because they are unaware of the generous 40% rebate to such Hollywood movies.

Built on the premise of a multiplier effect for spending millions in Malta, the cash rebates started almost 20 years ago, and grew only recently to 40%, a rather over-generous ceiling, since Grech took over.

It is accepted economic wisdom that small economies on the EU’s periphery, like Malta, attract foreign direct investment to the island through such generous incentives: take its favourable tax regime, or industrial land offered on the cheap, rebates on investment and employee training schemes. All these incentives come at a ‘cost’ to taxpayers, but come on the understanding that the busnesses they attract create jobs and contribute to economic growth.

To be clear, a distinction must be drawn between the Malta Film Commission and the homegrown film industry, where creative muscle remains severely underfunded. Film servicing is therefore another extension of Malta’s FDI policy, and the cash rebates are there to turn seasonal employment on films, a year-round labour market, providing both film ancillary services and creatives with a constant stream of work opportunities and good income. This in turn can encourage more people to join the industry on a more permanent basis.

Achieving this is not an easy feat. The island is easily overlooked for other cheaper destinations in stable north African countries or Eastern Europe. But Malta’s pool of skills, stability and modern economy, make it an important location for film productions in the Mediterranean – the cash rebate strengthens this competitive edge, when as Gladiator producer Aidan Elliott, said it is “the most generous in the world”.

It is simply irrational to think that, irrespective of the job creation this rebate encourages that it should be scrapped. Simplifying the debate to say that the cash-back millions might have been spent in much more pressing domestic areas betrays the economic rationale. The film industry is an export, just like tourism.

What Malta needs is a rational discussion on how the generous scheme can be tweaked to ensure it remains sustainable in the long term, while still benefitting the industry. One argument to limit the rebate on expenditure done in Malta is easier said than done: given the limited availability of crew and equipment in Malta, especially if more than one production is underway, producers would have to make up for the shortfall by importing their own crew and equipment. This could mean higher costs and an added hurdle when choosing whether to film in Malta.

This is why, rather than getting lost in a pathetic filmed rant that was nothing more than a political stunt targeting his critics, Film Commissioner Johann Grech should be in a position to justify the rebate mechanism from an economic perspective, and its economic spin-off from spending by foreign crew on accommodation, entertainment, restaurants and travel services, just to mention a few.

This is necessary to understand whether it makes more sense to limit the rebate to expenditure directly linked to Malta, or else offer a mixed package that caps the rebate on foreign-based expenditure.

This mixed system should still make it worthwhile for foreign film productions to choose Malta but at the same time limits the amount of Maltese taxpayer money flowing directly abroad.

Maltese film producers have been arguing in favour of a cap on foreign expenses as a means to ensure the cash rebate scheme’s long-term survival. It will help the scheme be sustainable at a time when the national budget is increasingly coming under pressure.

At the same time, they are also calling for more investment into the training of indigenous film crews – in various production and technical departments and not just creative or construction – to create a ‘strong’ local industry whereby foreign productions can find all, or most, of the talent they seek domestically.

What Malta needs is an honest discussion between stakeholders in the industry to chart out a sustainable future for the film and TV industry. But any such discussion should steer clear from the narcissism of the Film Commissioner and the elitism of the industry’s old guard.