Canadian cinema from boom to bust: the tax-shelter years

TAKE ONE, Dec-March, 1998 by Wyndhan Wise

"I think they squandered a grand opportunity and it's largely the fault of producers who were shameless and greedy, people of dismal taste, who were more interested in making deals than films and who made a lot of money for themselves. And so Canadian films do not enjoy a larger reputation anywhere and it's a pity...a lot of damage has been done." --Mordecai Richler, Cinema Canada, May 1985

More feature films were made in a hectic 30-month period from the fall of 1978 to the spring of 1981 than at any other time in our short cinematic history. This essay, originally written as part of a master's degree program at York University, attempts to provide some insight into what happened when Canadian feature-film policy was made up by greedy producers, clueless politicians, bottom-line consultants and inventive lawyers and accountants. It's not a pretty tale.

The year 1978 was a watershed for the Canadian film industry. Several factors fell into place that year, which created an unprecedented growth followed very quickly by an equally unprecedented decline. Tax-shelter financing for feature-length films had existed prior to 1978. A 60 per cent tax write-off for investment in Canadian films was available as early as 1954. As the pre-1978 tax legislation did not distinguish between films with a significant degree of Canadian content and those without, there was no incentive to invest in Canadian productions as opposed to films made elsewhere. The idea of actually making features in Canada was simply not considered viable. There was little history and no feature-film industry to speak of in 1954. Certainly there was the talent and artistic energy to create the films, but without a financial base or production infrastructure in place, this talent was forced to work abroad. Directors such as Norman Jewison, Arthur Hiller and Daryl Duke, nurtured by the CBC in its television infancy, left for Hollywood. Sidney J. Furie went to work in England and Ted Kotcheff (who became known as the first Commonwealth director) made films in the United Kingdom and Australia. They became the lost generation of Canadian filmmakers.

In the early 1960s, a new generation grew up through the NFB to replace them. These young filmmakers were determined to remain in Canada and create films necessary to build a national cinema.

Claude Jutra (A tout prendre, 1964) from Quebec and Don Owen (Nobody Waved Good-bye, 1964) from Ontario gained international recognition for their original work, while Allan King (Warrendale, 1967) pioneered the techniques of direct cinema. In response to this growing movement, the federal government of the day initiated certain policy changes. In 1964, the cabinet approved, in principle, the establishment of a loan fund to foster and promote the development of a feature-film industry. The cabinet, in accepting the recommendations made by an interdepartmental committee under the direction of Guy Robage, the film commissioner, charged the committee with the responsibility of preparing specific proposals. These proposals were made a year later by O.J. Firestone, a professor of economics at the University of Ottawa, in his Report of Film Distribution: Practices, Problems and Prospects. Firestone recommended an accelerated capital cost allowance (CCA) for producers, joint international film agreements, the establishment of a film development corporation and a film industry advisory committee. Most of his recommendations were eventually adopted in one form or another, but never as a comprehensive package.

The first step was outlined in the speech from the throne in 1965 and proposed that a Crown corporation be established with the responsibly of administering a $10-million revolving fund. Legislation to establish such a corporation was introduced in June of 1966 and the Canadian Film Development Corp. (CFDC) was brought into being in February 1968, thus marking a significant change in government policy and providing much needed support for an underdeveloped private sector. Coproduction treaties were signed with Italy in 1970, the United Kingdom in 1975, and the one with France (which had originally been signed in 1963) was renegotiated in 1974. The CFDC was charged with the responsibility of administering the coproductions and determining which films would be certifiably Canadian and therefore qualified for the benefits of the CCA.

The fledgling corporation had some early successes under the directorship of Michael Spencer. Don Shebib's Goin' Down The Road, 1970, Bill Fruet's Wedding In White, 1972, Peter Pearson's Paperback Hero, 1973, and Ted Kotcheff's The Apprenticeship of Duddy Kravitz, 1974, among others, drew critical acclaim, if only modest returns at the box office. There was a growing sense of real excitement about the future possibilities of the industry; however, it soon became apparent that the CFDC, with its small, rotating budget, was proving inadequate to the challenge of stimulating growth in production. There was a call from an ad hoc industry lobby group, the Council of Canadian Filmmakers (CCFM) and others, for an enforceable quota system placed on the major exhibition chains. The CCFM's "Winnipeg Manifesto," issued in October 1973, called for "the development of practical methods for the distribution of Canadian films to the Canadian public including an immediate quota system with a minimum objective of approximately 20 per cent screen time being given to Canadian films." In a related brief presented to the CRTC by the CCFM during the 1974 licence-renewal hearings for the CBC, Peter Pearson, then the chairman of the CCFM, made the point that, "of the 101 completed feature films the CFDC has invested in over the past five years, only two have been screened by the English network." Despite the best efforts of the CFDC, between the dominance of the American distributors in the Canadian marketplace and the indifference of the CBC, very few Canadian feature films were being seen by Canadians.