Is the Harper government’s Bill C-10 the beginning of a crusade against the domestic film industry?

One of the country’s liveliest soap operas has enjoyed an extended run in the Canadian Senate. For the past several months, film producers, politicians, and religious activists have been showing up before the banking, trade, and commerce committee in a long-running saga over Bill C-10. Buried within this 568-page tax bill is a clause that allows the heritage minister or her designate to withhold tax credits from productions that are deemed to be “contrary to public policy”.

Nobody is exactly sure what that means. Some in Canadian film, including actor-director Sarah Polley and director David Cronenberg, have claimed that the bill smacks of censorship and threatens the future of the country’s film industry; on the other side are those like Conservative MP Jim Abbott, parliamentary secretary to the minister of Canadian heritage, who has compared the Senate hearings to a “gong show”.

At the centre of the uproar is a small Canadian film called Young People Fucking, (for more details about the film, see this lead feature) which will open in Vancouver on Friday (June 13). The $1.4-million movie has a lot more to do with relationships than with carnal pleasure, but its title has raised the ire of religious conservatives, including Charles McVety, president of the Canada Family Action Coalition. For Steven Hoban, the producer of Young People Fucking, this is a serious affair that could have an impact on all Canadian filmmakers and the crews that work on their productions.

Hoban told the Georgia Straight in a phone interview that his film has $80,000 in federal tax credits, which is a relatively small percentage of the budget. There is an additional $120,000 provincial tax credit, Hoban added. In addition, Telefilm Canada owns a 30-percent equity stake. He noted that if the federal government were to deny his federal tax credit, it wouldn’t be catastrophic for him financially. He could probably take out a second mortgage on his house to cover the debt.

“But the real problem would be the next movie I go to finance or any other Canadian producer goes to finance,” Hoban said. “The bank is going to say, ‘We’re not going to bank your tax credit. We can’t count on banking it because Young People Fucking didn’t get the tax credit at the end of the day, and we don’t deal in risks. We only deal in certainties, because we’re a bank.’”

Hoban said that to obtain financing, it’s necessary to demonstrate that there is interest in the film in the market. Young People Fucking was a small picture with a first-time director and without any big-name stars, which made this a challenging task. However, Hoban said, the script was very good and very funny. “The title, even way back then, is what got the movie noticed,” he said. “What got it financed was the quality of the writing. There was nothing else that got it financed.”

He said labour costs on Young People Fucking were approximately $1 million. The federal taxes likely exceeded the federal tax credit doled out to the producer. Hoban’s next film, Splice, is a $26-million science-fiction feature starring Polley and Adrien Brody. Approximately 80 percent of the budget for Splice came from investors in France, he said, and there will be approximately $1.3 million in federal tax credits.

If there were no federal tax credits for this film, Hoban suggested, there would be no incentive to shoot the film in Canada. He said that’s because there are better tax-incentive programs elsewhere, including in New York and Australia. And that’s why he, like Polley, thinks Bill C-10 has the potential to drive filmmakers out of the country.

“I will have to leave Canada, and a lot of my colleagues will do the same, especially the above-the-line people—the directors, the writers, the producers, the actors—most of them will leave,” Hoban claimed. “The crew people who just aren’t as mobile, they’ll be unemployed. You know, we’ll erode what has taken years to build.”

Along with the Canada Revenue Agency, the Canadian Audio-Visual Certification Office co-administers the Canadian film and video tax-credit program. Earlier this year, a film-financing specialist with accounting giant Ernst & Young, Neal Clarance, told the Straight that if Bill C-10 passes in its current form, it will be “virtually impossible” for him to write opinion letters on behalf of producers in the absence of clear guidelines defining what is contrary to public policy. Without these letters, he noted, banks won’t provide financing. Clarance, who lives in Vancouver, is scheduled to testify before the Senate committee today (June 12) in Ottawa.