Sixteen years after the government first spoke of a national film policy, an attempt at drafting one that is solid and clear is under way. Malcolm Scerri-Ferrante writes about how financial incentives for foreign producers and the engagement of local crews can be affected by new policies.

The frequency of international filming in Malta has increased tenfold over the last two decades, with a noticeable climb starting about 10 years ago after a cash rebate was introduced. The local servicing industry has also seen substantial growth, but the lack of a serious national film policy has led to its lagging behind the huge influx.

Over the past decade, several production service companies have been registered, but the number of local crews have not increased fast enough. Equipment houses and specialised film-related rental companies are also limited despite the growing popularity of the island as an international film destination.

The truth of the matter is that local, first-class film crews exist only about one and a half deep. And anyway, some department heads still cannot be sought locally.

Foreign producers bringing their productions to Malta do not wish to be the second or third preparing or filming concurrently on the island unless they are ready to fly in a large contingent of foreign crew. Moreover, some positions need time to absorb local knowledge. And time is a luxury that seldom exists.

The lack of local crew or the ‘clashing’ of international productions – depending on how you look at it – is indeed a serious problem that needs urgent attention. Orchestrating productions to reach the island’s shores back-to-back is, of course, an impossible feat.

In evaluating the qualified expenditure for an EU country’s rebate, EU policies discourage discrimination between citizens of different EU States. However, Malta quite understandably prefers to rebate cash to producers using Maltese or local residents rather than EU crew who do not reside in Malta and do not form and strengthen the local service industry, even if foreign crew members enable the economy to benefit from more accommodation, per diems and travel expenses.

Meanwhile, the island wants to keep the momentum of foreign film productions and all their direct and indirect benefits for the economy.

These factors place Maltese lawmakers between a rock and a hard place. A national film policy, the first of its kind in the country, hopes to tackle this issue and several others. In short, Malta’s priority – and no small challenge at that – is to increase the local crew base and fast-track training opportunities while continuing to attract enough international work that local crew members can finally sustain a full-time career.

With this in mind, the government intends to revise the financial package to give producers a bigger incentive, other than the obvious budget savings, when hiring Maltese behind and in front of the camera. It is reported that this strategy is to be implemented through the cultural test that calculates the percentage rebate given to producers.

The idea warrants some credit and exploration, as Malta can always find better ways to get more bang for its buck. The bang it rightly seeks is growing its industry and increasing employment. However, it needs to proceed with caution when walking this tightrope. Trying to balance the generosity of its cash rebate with a very limited crew and talent base could lead to uncertainties abroad.

The government intends to revise the financial package to give producers a bigger incentive

With minimal optimism, during early budgeting stages and important decision making, when producers are still sitting in Los Angeles or London evaluating the financial pros and cons of each country, those planning their production several months ahead will be able to assume a minimum rebate of 20 per cent with a further five per cent determined on the eventual quantity of local skill and talent engaged. The situation should not be any less advantageous, and the new rules might even be more generous.

Meanwhile, until this national policy is finalised towards the end of this year, producers will continue to receive a rebate of between 20 and 25 per cent, depending on the standard, ‘old’ cultural test and with a further two per cent if Malta’s culture is portrayed adequately and positively on screen.

Malta’s new film policy is also expected to ‘regulate’ employment in the film industry. For decades, crews have enjoyed the option to work as freelancers or employees. Producers, likewise, can choose according to existing legislation as it is applied to all other industries. However, Malta has some concerns about the film industry. Some of them are justified.

Firstly, Malta’s publicly funded recruiting and employment authority, Jobsplus, has never updated its computer software with the titles of film crew positions. Furthermore, the nature of the film industry is not catered for within its existing regulations. This despite the fact that the industry has been very active and visible for over a decade.

Secondly, local crews are not organised enough to form an association that can establish certain conditions or principles with regard to overtime, turnaround, rates, etc. A few select crew members complain about the need for rules, though ‘abuse’ by productions is very isolated.

Thirdly, Malta’s civil servants wish to see local film crews working on a payroll rather than by invoice, as freelancers do as self-employed, since the former involves withholding taxes and social security payments. Payroll is a surer way of ensuring all dues are received into the government’s coffers and reduces the need for inspections.

Jobplus must finally recognise the film industry in its regulations and concessions. There is no doubt about the urgent need for this. But the matter of sick leave, employment bonuses, etc, which select crew members wish to implement as mandatory, is a tricky one. There are many developed film industries around the world that do not make it obligatory for producers to pay such fringe benefits.

If the government were to impose such restrictions on international producers, it would risk increasing crew costs by up to nearly 20 per cent, unless crews were willing to lower their employee compared to their self-employed’rates to allow for the fringe benefit payments forced onto producers.

Moreover, producers filming for only a few days do not want to be hit with the cumbersome rule of setting up a payroll system when everyone can easily be paid by invoice for a few days of work.

An alternative and simple solution is for crew-hiring guidelines to be decided among all, perhaps through the Malta Film Commission until the crew base is willing to organise itself formally and professionally, even if film commissions are generally not regulating bodies.

Such guidelines can establish turnaround penalties and minimum pay rates according to the scale of the production. They should also include such obligations as health and safety measures on construction sites and on set.

Also, through the government-appointed audit that is conducted for every cash rebate to producers, crew invoices can be selected sporadically for inspection to solve any concerns about tax evasion.

For those productions filming for considerable time, a payroll system would indeed be an efficient way that ticks all the boxes for all interested parties.

However, rather than removing existing options and making the film industry more restrictive than other industries, Malta can entice more locals to train and work in the industry and to choose the payroll system by offering a tax incentive, such as a special final withholding tax rate that would start at 10 per cent and later increase to 15 per cent, once the industry manages to stand on its feet.

A similar plan was suggested in a consultation session held in January, and it is hopefully being given serious consideration during this important and much-needed policy-making process.

This tax incentive should be offered to all those working exclusively in film-making who are willing to hold tight onto their seats during the rollercoaster ride offered by this very cyclical industry.

Malcolm Scerri Ferrante is a film and television line producer who has been actively involved in the local and foreign film industry for 29 years.