Quebec Austerity Measures Signal End Of Film And Game Subsidies

The Quebec government announced this week that it would cut subsidies across the board by 20%. This includes film and games subsidies:

On the spending side, an across-the-board cut of 20 per cent will be applied to the popular tax credits that government agencies often use to attract investment in industries such as video games, information technology, aerospace and pharmaceuticals.

That’s just the start of a complete review of how business tax credits and subsidies are doled out.

The longer term view by the government is to effectively eliminate industry specific subsidies:

Québec has many targeted tax assistance measures for businesses, particularly large corporations. These measures are costly and can create unfairness. The government wants to gradually change these incentives so that they are general rather than specific in scope. These measures of general scope will be simpler to apply, thus maximizing their benefits and limiting the administrative burden on businesses,

Here is what Quebec currently offered for VFX. On all expenses it paid for 25% of costs. For VFX labor it adds 20% on top of the 25% and when you add the 16% federal labor subsidy you could match the 60% subsidy British Columbia offers on labor. Since BC doesn’t offer to pay 25% on non-labor expenses like Quebec does, you can see why many VFX facilities are recently flocking there instead of BC. For the games industry QC offers to pay 37.5% of salaries.

As you can see, this is a completely unsustainable white collar welfare program. The latest budget slashes 20% across the board (so instead of 25%, it’s 20% etc) making it 20% more expensive to do production work there and that’s just the beginning. Those who argued that provinces in Canada could just continue to freely spend money to subsidize their jobs are dead wrong.

While Quebec is deep in debt those in British Columbia should be warned. BC’s debt-to-GDP ratio (17%) is less that half of Quebec but still more than twice of California (7%). The BC government recently proposed $56 million in education cuts which is leading to big strikes.

A few questions remain to be answered:

Are Quebec’s intentions enough to trigger facilities to migrate to another location?

Sony quickly left New Mexico when the newly elected Governor announced intentions to limit the film subsidy program there. If studios are sensitive to costs how will they react to Quebec making it effectively 20% more expensive to do work there?

Did Quebec trigger Imageworks decision to move all operations to BC?

It was always known that Imageworks was trying to move work to BC but why the big announcement now? Could it have been because executives anticipated that Quebec’s intentions would trigger other companies to start flocking to BC?

Are cuts to subsidies in Canada part of a truce sought by BC?

After last year’s elections in BC which involved a big fight to increase subsidies because of larger offers in Quebec and Ontario, BC’s Finance Minister sought to offer a truce with other provinces:

B.C.’s Finance Minister is challenging his counterparts in Ontario and Quebec to stop allowing Hollywood studios to pit the three provinces against each other for “unaffordable” film tax credits.

“As a country, and individual provinces within the country, we are better off to stop competing to see who can send the biggest cheque to Hollywood,” Mike de Jong said Monday.

Two years ago Saskatchewan announced it would end it’s film subsidy programs for similar reasons.

Soldier On.

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41 Responses to Quebec Austerity Measures Signal End Of Film And Game Subsidies

  1. Jon Fitz says:

    “As a country, and individual provinces within the country, we are better off to stop competing to see who can send the biggest cheque to Hollywood,” – Wish the states would think the same thing

    • VFX Soldier says:

      Well actually they are. Florida has run out of film subsidy money and will not renew. Michigan looks like it will end their program. North Carolina’s senate is looking to replace it with a smaller grant program.

      It is important to point out though that there is not one state subsidy program that is paying 60% of workers salaries. That’s insane.

    • vfxmafia says:

      Jon,

      You are also assuming US States….subsidize VFX. In fact most of the US states who dole out money are actually to film producitons….the one state exception is NY….who despite the large influx of money and new studios…fucked up a couple movies….as heard through the grape vine…(a couple 911 calls definitely went out)

      • Jon Fitz says:

        I should have clarified. I wasn’t necessarily referring specifically to VFX. I see this as a problem for all filmmakers. I’ve been chatting with people in NC that are furious they’ll have to move, when the incentives sunset, and that’s completely understandable. They wouldn’t have this problem if the incentives never existed in the first place…they may not have had as many movies made there, but they wouldn’t be facing this dilemma. I think moving people around the map so that Disney, or Warner Brothers can make a buck is deplorable….What the hell happened in NY?!

  2. mtl_vfx says:

    Having worked in both Vancouver and Montreal I personally hope if subsidies do stick around in Canada, that Vancouver does remain the stronger hub as staff are at least treated better.

    Very few are getting OT in Montreal. Plus the wages being offered for the same role at the same companies are lower because of the apparent ‘lower cost of living’, which is actually a fallacy.

    Personally I found everything to be pretty much on par aside from house prices. The price for rent, food, transport etc. vary a little for certain things, but in the end everything evens out.

    • VFXodus says:

      In Montreal there are only two companies that do provide OT: MPC and Framestore (ironically both are British, non-French speaking companies). It’s 1.5x after EIGHT hours, so it’s a bit better than BC. However, the vast majority of vfx/animation houses here do NOT pay OT, and in fact even bully artists to work for free. They don’t even hide, they just say “You have to come in Saturday.” Rent is definitely cheaper but it evens out with the astronomically high income taxes (significantly more than BC).

      • mtlvfx says:

        Framestore does not pay OT, at least not to everyone they don’t. I’m a TD and I get standard 1x pay on Saturday (banked as vacation time), and no pay at all after 8 hours during the week.

      • matteobject says:

        That’s interesting, the guys I know at Framestore (all ex UK) like working there specifically because they ARE paid hourly OT.

    • vfxmafia says:

      @ MTL….

      Ughh…depends on what studio you are at…..OT is a factor here like any VFX studio…

      Ask MPC who worked 3 months of OT to finish godzilla….alot of bodies were left on the floor….along with alot of unpaid OT>..

      VFX is VFX and its contingent on company not country…

      GO LA KINGS!!!

    • Peter Greenaway says:

      OT or not OT, really does not matter. Once the cake is reduced by 20%, make sure that the situation will change. And not for the better .

    • Andreas jablonka says:

      Interesting I always heard Montreal rent is lower no? What a normal 1 bedroom apartment rent per month?

  3. joan says:

    MPC and FS will be British, but here in Montreal is full of french speakers and they only look to hire local people.

    • VFXodus says:

      Not true. Maybe it’s different depending on department. About 40% of my department are not Canadian.

      • joan says:

        So. Kind of true. I know a biggest department. 70% are canadian. And 50% are from Montreal. Plus 12 local students coming for a intership this summer. And all the foreiners hires are on hold.

      • vfxmafia says:

        I see like 10% Canadian….there are more people in Los Angeles then this entire country

      • joan says:

        Real canadians doesn’t live here my friend. Only foreigners tax payers do

      • vfxmafia says:

        @ joan…

        Your not joking. I live/work in Vancouver…and there aint any Canadians!

        %50 of the town is wealthy Asian….I mean WEALTHY hong kong stock money wealthy. I see kids up here driving Lamborghinis ….and Audi R8s

        Then there is Persians, Russians, and tons of Americans. 1 in 10 is a real Canadian in Vancouver…they are actually a minority in the modest 700,000 person city. Strange but true…….

        Its amazing how little populated this country is………all freaking trees and glaciers.

  4. mtl_vfx says:

    From those I’ve spoken to it’s only a minority at MPC and Framestore are getting OT (the first few through the door who were shrewd enough to negotiate it would seem). But the majority are not.

    Seems like after a few months they found the loopholes to bypass the law. I know for a fact that MPC is now not giving OT to any new hires.

    • Rob says:

      Really? That must be VERY recent then. Because I was still offered 1.5 pay after 8 hours by MPC Montreal only a few weeks ago. But the base salary was ridiculously low. Reminded me of an insulting offer I got from Framestore a while back.
      I suppose it was to be expected but I figured I’d still give them a chance.

      • Andreas jablonka says:

        Would you mind sharing how low? I heard of 25$/hr offers for senior artists in Vancouver. Curious about montreal

      • polyphemus says:

        Define senior… I know guys with 10-14+ years US vfx experience pulling in double to triple that in Van.. the higher end of the scale on short contracts.

        $25/hr seems.. well journeyman at best. Pretty sad if they are throwing that at senior folks.

      • Jackadullboy says:

        Yeah, no ‘senior’ is on $CAD25. At the moment, 50 is a good rate, and friends of mine who are also experienced vets are getting offered figures like 38.

      • minoton says:

        FYI, folks, check your conversion rates. $50 CAD presently equals $45.85 US. If you’re planning on sending cash back to family stateside, and you budget your living expenses for $50 US, adjust your asking rate upward accordingly. Not to mention, banks will charge a fee for the conversion, too.

  5. Dave Rand says:

    Several artists have contacted me that both MPC and Framestore offer OT to selected individuals who are then asked to keep it to themselves.

    This just another reason we need vfx union.

    However, the subsidy race also dampens the possibility and desire to organize. In LA, well, it’s all gone, nothing TO organize….ironically almost all the jobs left are union jobs.

    In the subsidies locations artists sense their boat is leaky due to the fragility of our industry. A result due to the use of subsidies creating false competition, separating the artists globally by keeping us forever arguing about their validly… and our bidding business model.

    In a job environment like this no one wants to rock the boat. In this environment the constant Fear of job loss can make those concerned very irrational.

  6. Peter Greenaway says:

    At CBC radio, yesterday, a guy from Warner Bros. Montreal, explained why it’s not good to cut the pie by 20%. Then, the announcer asked people to sent messages (pro or against). The vast majority of messages received were against tax incentives. So people do not want this ripoff to continue. Only the mayor, M. Coderre was pro, but I think he has some direct benefits from the deal.
    Mafia rules everywhere in Montreal since forever.

    Quebec is at the bottom of the financial abyss, and vfx or games are the last thing that taxpayers should contribute and care about.

  7. MTL-Anim says:

    Don’t know how well Google translate does of a job to translate french, but this article gives some more details as well as the local perspective.

    http://affaires.lapresse.ca/economie/technologie/201406/06/01-4773351-reduction-des-credits-dimpot-le-multimedia-evalue-les-degats.php

  8. Ever Watt II says:

    Montreal provides a socio-cultural link to Euro-studios such as BUF and Mikros Image. So while the tax credits are the major reason for a studio branch office opening in Montreal, it is not the only reason. Montreal also has proximity to the Toronto labour pool, with significantly higher quality of life factors and cheaper accommodations. So although the ‘Rigging’ of a studio locations may shift around..I think Canada is going to be a part of the pipeline for years to come for not just economic benefits, but also cultural and creativity that comes with the metropolitan influences.

    • vfxmafia says:

      Culture and creativity….are not apart of the film business or vfx
      dont you know? (Its all bottom line)

      • Ever Watt II says:

        Why do people go see movies? All business is people business – knowing that will change how you play the game.

  9. mad martigan says:

    Framestore pays OT mainly to juniors and mids that had enough balls to ask for it. Seniors and higher salaries only get weekend pay because of the shady “OT approval” policies and definitely not 1.5.
    MPC salaries are simply way beyond ridiculous, OT doesn’t even make a difference: you’ll just starve.
    They are scared to death of being clear and honest with OT pay as the subsidized (underbid) fixed-budget model can easily screw them up at any time, since underbid=underplanned and things get systematically out of hand. Their fear is so clear, you can almost touch it.

    I did both Vancouver and Montreal and fully endorse who says that lower rates in Montreal are absolutely not justified. Quebec taxes are insane and you’ll have a cheaper rent only if you get a student-like destroyed flat in a crappy building. Vancouver is a much younger and less diversified city, if you live there, you’re likely in a modern highrise condo with nice amenities. To have the same in Montreal, you’ll end up paying the same.

    Montreal companies have a majority of local people not because that’s what they want: Quebec “skilled workers” visas are tougher and much slower to get, salaries (as said before) are generically bad, and last but not least, from November to April living in Montreal is a nightmare.

    • fixed bid says:

      MPC does not submit fixed bids. But how often do the get change orders is another story.

      I wish people would stop with the fixed bid nonsense. Most facilities have the legal right for change orders in the contracts they sign. The issue is with each facility fighting each other they often don’t file as many change orders as we would like.

      • mad martigan says:

        Fair enough. The problem is, as you said, everything about “changes” is very shaky, normally addressed making sure not to upset the client.
        This industry is mature enough, workflows and production strategies are standardized enough to have a union and lay down very specific categories and sub-categories of visual effects, assets, sims, creature performances, plate treatments, etc. with modular attributes like shot-lenght, level-of-detail etc to be combined, so that we have some solid (and shared) pay-as-you-go rates.
        This would set the threshold between acceptable and unacceptable per-shot requirements, ultimately clearer briefs for the artists, it would foster those directors with a better understanding of vfx and standardize prices, making bidding (and hiring) a little bit more about who does things better.

  10. MTLVFXer says:

    Mad Martigan is right on what he says.

    When I was in Van MPC the way OT worked was after 12hrs.. Which is BS. I heard things were changing as things got competitive or the unions started happening there. Can you imagine the UK? They got no overtime.. Ever apparently. MPC is notorious for low wages too. Seniors making less than 6 figures.. Ridiculous. But people still work there..
    I expected nothing different with their entry to MTL. Business as usual. And when the subsidies reduce (and they will) business will go elsewhere.

    Anyway this VFX song and dance will continue to go on until we organize ourselves and unionize. Until then bodies will continue to drop. As will the value of what we do.
    If you really want to make a difference… Slap a co-worker that’s making less than they should and accepting conditions with no proper OT. Each and every artist is attributing to the mess and deserves a slap. :)

  11. Peter Greenaway says:

    MPC, Framestore, Dneg, Cinesite and so on….
    All are crappy factories with no rules except one: let’s make the biggest amount of money in the shortest amount of time!!!!
    Cause they know – it won’t last.
    Well, if you want to support thieves, charlatans, crooks, then go ahead and work for them.

  12. […] few weeks ago I pondered if cuts in Quebec subsidies would trigger a migration for games and VFX studios in Montreal. IGN reports that Ubisoft’s CEO is seriously analyzing […]

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