Budget changes make Ireland less attractive to film makers

THE changes in the tax relief or investment in Irish made films introduced in the last Budget have dramatically reduced Ireland's attractiveness as a location for making big budget films. The situation is likely to deteriorate further as, labour and other costs creep up, warns Mr Kieran Corrigan of Merlin Films.

Criticising Section 35 may seem like biting the hand that feeds you particularly as the situation regarding low budget films is more or less unchanged, acknowledges Mr Corrigan.

However, the changes have led his company to decide to shoot a £70 million screen adaption of CS Lewis's The Lion, the Witch and the Wardrobe at Pinewood studios in London rather than at Ardmore in Bray.

The changes in the legislation, along with the rising cost of crews, has meant that the perception of Ireland as a low cost location for filming has faded, particularly among the all important US producers, he maintains. The producers of the oscar winning Sense and Sensibility went on record as saying that they had looked at Ireland and decided that it was too expensive a location.

"There is a perception and all that there needs to be is a perception."

There is now a shortage of suitable projects for people to invest in, says Mr Corrigan. Two funds that raised money under Section 35 last year to invest in Irish films have failed to do so.

"The problem in Ireland is a shortage of good projects rather than funds. People want to invest in projects that are pre sold; that involves big productions with big budgets."

Kieran Corrigan is anxious to acknowledge the efforts made by SIPTU, the union that represent the bulk of the unionised workers in the film industry, to face up to the problem. The labour cost differential between Ireland and Britain is mostly due to the difference between PRSI and tax rates rather than wages, according to Mr Corrigan.

To some extent the industry is the victim of its own success, with wages having been pushed up by the number of big budget movies made here in recent years.

However, the disparity is set to increase following the earmarking of £100 million from the British lottery to develop the film industry there and a commitment from the Labour Party in Britain to introduce Section 35 type tax incentives, if it wins the next British general election.

The decision to cap the amount of Section 35 finance that can be invested in any one film at £7.5 million was intended to try and direct money into smaller budget films, which have a larger Irish content, and away from the big blockbusters such as Braveheart.

It followed criticism that the majority of the jobs for Irish people related by Section 35 backed have been at the lower end of skill scales. Large foreign productions have generally brought their own senior technical staff with them.

The criticism is valid, Mr Corrigan accepts. However, he points to the establishment of Concorde Anois, the £10 million studio being built by independent film maker Roger Corman at Tully in Co Galway. This studio will employ 50 people who will be trained in all aspects of film production. The films that this studio plans to make are all heavily dependent on Section 35 finance

Another major criticism levelled against Section 35 is that the investors who avail of the relief are not taking on any substantial risk in return. This is because many of the films that are made here have already been pre sold to distributors or television stations.

This conflicts with the concept behind tax incentives such as Section 35 and Business Expansion Schemes, which is that the tax is essentially an incentive to invest in a venture which has a higher than normal risk of failure.

Mr Corrigan makes the point that pre sold is different to pre paid, as the end product must meet the standards and criteria set out in the presale agreement.

The changes introduced in Section 35 in the last Budget are unlikely to be reversed, accepts Mr Corrigan. However, he believes the Government should look very seriously at having a mechanism under which the cap on the amount of Section 35 money that can be raised for any one film can be put aside in certain circumstances.

Otherwise you could end up with a situation where a film with an Irish director, that is set in Ireland and has an Irish cast, ends up being made in England, he warns.