Newsflash: 'America is under attack. Not
from Osama bin Laden, but from our peaceful neighbours to the
LOS ANGELES - The Canadian film industry dodged a bullet three
weeks ago, though few seemed to notice.
The California Legislature, hacking through hundreds of
last-minute bills to finish a budget that was already a record two
months late and a boggling US$24-billion short, quietly killed a
ballyhooed proposal that would have handed Hollywood $650-million in
taxpayer bribes to resist the midnight urge of "runaway
The measure, had it passed, would have given U.S. producers of
movies with budgets under US$10-million a 15% tax credit on the
first US$25,000 of each employee's salary, as long as half the film
was made in California. The Canadian menace, at last, was going to
be faced down.
"Hollywood is under siege and we have to come to their rescue,"
Gray Davis, the Governor of California, bragged to a film-union
audience back in January, when he noisily unveiled the "Davis Plan"
for movie production subsidies. "We will enact this bill," he
assured The Hollywood Reporter as recently as July 12. "I will sign
it.... Our bill will become law."
That it did not shouldn't come as any kind of surprise. Whenever
U.S. politicians mix it up with the state's US$30-billion
motion-picture industry -- especially during an election campaign,
such as the high-profile contest Davis faces this fall -- the ratio
of rhetorical hot air to tangible legislation borders on the
But the politics of runaway production have not yet run their
course. Hollywood has too much political influence; it's a large
source of campaign finance in California, and real worries persist
among rank-and-file workers about blockbusters and
movies-of-the-week being shot in Toronto, Sydney and Prague. There
are two film-industry tax-credit bills sitting in Washington, D.C.,
committees, and some local unions are trying to petition the World
Trade Organization to crack down on the various incentives Canada
and its provinces have been dangling on top of its favourable
For most non-Americans, the idea of Hollywood suffering from
globalization may rightly sound insane. Many countries, Canada
especially, are worried their domestic film industry and culture
will soon be swallowed whole by the crude California juggernaut.
Jack Kyser, chief economist of the non-profit Los Angeles
Economic Development Corporation, spells out the L.A. perspective:
"Everybody tends to view it through the eyes of Entertainment
Tonight or Access Hollywood, and so they think everybody makes
$20-million a year. The reality is this is an industry where you
have a lot of people who are not employed full-time; their work is
very, very sporadic, and so this issue of runaway production just
sort of hits their hot buttons."
Southern California, especially the commercial strips on either
side of the Hollywood Hills, is overrun with freelancers who work on
movies, television shows and commercials. They toil long hours in
concentrated bursts, then are idle for weeks at a time. Once they
gather the thousands of dollars necessary to join their relevant
union, they make a handsome amount of money; until then, they chase
after a shrinking pool of poorly paid non-union jobs, and make up
the difference waiting tables or tending bar. It is a peculiar
system, but it has worked fairly well for nearly a century.
However, that system has become expensive to maintain. Between
union rates, production expenses and star salaries, the cost of
making a big-budget film in California has doubled every four years
or so since the mid-1980s. Meanwhile, new location markets have
opened in places such as Central Europe and Mexico, while the other
English-speaking countries were busy falling over each other to
offer tax incentives for shooting on their turf. All along, the U.S.
dollar has continued to reach historical highs, driving up the price
for staying at home.
The combined effect of these developments is under serious
dispute. Estimates among the blame-Canada crowd run as astronomical
as 25,000 lost jobs and US$10-billion a year, while partisan
skeptics such as Elizabeth McDonald, president and CEO of the
Canadian Film and Television Production Association, believe that,
as she told The New York Times, "It is not even clear that 'runaway
production' actually exists."
The most noticeable loss locally has been that of television
productions, especially "movies of the week." As the rather robotic
Gov. Davis told The Hollywood Reporter in July, "From 1993-99,
movies-of-the-week declined by 33%, while foreign production
increased by 55%. In 1999 and 2000 alone, Canada increased its share
of films in the $5-million-$50-million range from 15-35%."
The movie-of-the-week defection spurred Hollywood's unions into
action, dominating their internal politics for the past few years.
With few exceptions, Hollywood's famous lobbying muscle has
responded to the Canadian and Australian tax incentives not by
calling for punitive tariffs, but by pushing for some matching
After the Sept. 11 massacre, rather than ease up on the campaign,
Hollywood just wrapped up its new protectionism in the flag and held
news conferences on Capitol Hill.
"America is under attack. Not from Osama bin Laden, but from our
peaceful neighbours to the north," said Joel Joseph, chairman of an
outfit called Made in the USA Foundation, in a statement delivered
to the U.S. Commerce Department in early December, 2001. "There is
no such thing as Canadian culture," added Brent Swift, a production
The foolishness was not limited to union grunts. Harvey
Weinstein, the famous co-chairman of Miramax Films, has been, in the
words of The New York Post, "working with Mayor Bloomberg and
Governor Pataki to stem 'runaway production,' ideally with tax
breaks and incentives for studios willing to shoot here." Weinstein,
for all his post-9/11 New York boosterism, is notorious for pressing
reluctant directors to shoot their films in Canada.
The Chicago Tribune reported last May that Stolen Summer, Pete
Jones' new movie, "was shot entirely here despite Miramax's attempts
to have the movie shot in Canada." Kevin Smith, director of a new
film called Jersey Girl, told the Philadelphia Inquirer last month
that "Miramax was pushing 'Toronto, Toronto, Toronto, where you can
get 50¢ on the U.S. dollar.' " How did he choose the City of
Brotherly Love? "The [Philadelphia] film office, which sweetened the
deal with incentives."
If it isn't clear by now, everyone in Hollywood -- from the suits
to the hard hats, from the righty L.A. Chamber of Commerce to the
lefty L.A. Weekly -- is quite fond of "incentives." Who doesn't like
a tax break, after all? Film offices in other states -- Arizona,
Georgia, New Mexico, Oklahoma and more -- have leaped at the chance
to introduce incentives, in a desperate effort to keep what little
slice of the Hollywood pie they have enjoyed. Why shouldn't
California, the cradle of the industry, follow suit?
Because "that's lunacy," argued the Sacramento Bee newspaper late
last month, "particularly in a state facing a $24-billion deficit.
At a moment when the Legislature is looking at raising taxes on all
Californians and cutting aid for the most vulnerable poor and
elderly, the idea of giving hundreds of millions in subsidies to
Hollywood producers and giant media companies is obscene."
You will not hear many California politicians echo that
sentiment. A federal bill nearly identical to the failed California
measure is being co-sponsored by a liberal Democrat, Howard Berman,
and a conservative Republican, David Dreier, who both represent Los
Angeles County, which just this month has shut down nine health
clinics for lack of funds.
Meanwhile, scandal has erupted around another government reaction
to runaway production: A film-shoot permit agency set up by Los
Angeles city and county to promote production in L.A. was raided and
placed under investigation this month after the local district
attorney found evidence indicating political corruption and possible
So Hollywood must be reeling, right? Wrong. The Los Angeles
Business Journal last month reported on a "surge in feature
filmmaking in the L.A. area," in which "no less than 15
feature-length movies either have started or are preparing to begin
principal shooting in the region, the most at one time all
Among the local studios and production companies, Jack Kyser
says, "You're seeing a lot of aggressive outreach now.... It's like
they'd almost been resting on their laurels ... and now they have to
get lean, mean and hungry."
For all the uncertainties of globalization, L.A. still has two
advantages no city has been able to compete with since around 1915:
An enormous cluster of talent, and perfect weather. "This is a very
unique culture," Kyser says. "Southern California understands and
lives with it, but if you tried to transplant it someplace else, it
would not take."
The key production in Hollywood's re-revitalization has been
Arnold Schwarzenegger's US$170-million Terminator 3, which was
yanked from Canada back to Los Angeles early this year, according to
The Calgary Sun, because the Austrian-born actor feared a "runaway
production would hurt his chances at becoming governor of
Such reasoning seemed terribly silly until Wednesday of this
week, when the L.A. Weekly newspaper revealed Schwarze-negger
representatives have been quietly conducting telephone polls to
gauge the viability of Arnold as a write-in candidate this
The gubernatorial campaign -- between the money-grubbing Democrat
Gray Davis and the inexperienced Republican Bill Simon -- has been
as desultory as any in recent memory, with voters clamouring for a
half-way decent third choice. Who knows? Maybe runaway production
will have an impact on this election after all.