Future of the film, television and Internet industry in Ontario: an interview with Adam Ostry, CEO of the Ontario Film Development Corp

TAKE ONE, Summer, 2000 by Wyndham Wise

A career public servant, Adam Ostry joined the federal public service in 1982 for, as he says, "one reason and one reason only I happen to believe in the utility of sound public policy." His most recent position was at the Privy Council Office in Ottawa where he worked in the intergovernmental affairs unit under minister Stephane Dion. His responsibilities related to what is now being termed the Clarity legislation. The one area of public policy that has interested him the most over the years, and for which he has a considerable degree of passion, is cultural policy. He has been CEO of the OFDC for the past 12 months.

What is the state of the industry in the province today?

We have an industry that, on the surface, is growing by leaps and bounds. Between 1998 and 1999, it grew by about 25 per cent. When you think the GDP is only growing at about three to three-and-a-half per cent a year a 25-per-cent growth rate is phenomenal. We're now hitting the billion-dollar mark. This is compared to a situation of five years ago where production activity was barely at $500 million.

How does this break down in terms of offshore and indigenous productions?

This growth rate is fuelled almost entirely by foreign production. In 1998, domestic production, in both film and television, dropped by 4.4 per cent, compared to an overall growth rate of about 26 per cent for the entire sector. Domestic feature film, as measured in terms of the value of the dollars spent in the province, was down by a whopping 37 per cent.

One could ask, from a public policy standpoint, so what? This industry is creating jobs by leaps and bounds. These are high paying, highly skilled, technology dependent, non-polluting jobs. If the sector is growing by 25 per cent a year, who cares what happens to certain parts of it?

Well, I would argue that this is extremely important. The part that is not growing as quickly is the industry's indigenous Canadian component. This sector is made up primarily of small-to-medium--size firms. These constitute the industrial base of the sector. If our dollar were to rise to 75 cents or even 72 cents vis-a-vis the American dollar, as the economists are predicting it will in the next couple of years, foreign activity will fall here. Indeed, we have data that would allow us to track the likely drop in foreign activity for every cent rise in the value of the Canadian dollar.

That said, it's not true to suggest that if the dollar were to go back to 90 cents, the industry would be wiped out. Indeed, this point was made eloquently in the recent studio feasibility study. Toronto, as a North American production centre, has a a series of comparative advantages that are unrelated to the exchange rate. But it is also true that we are currently competing, lazily, on price point alone. Where we're competing, indeed nearing the saturation point, is in the low-end TV series and MOWs.

The fact is that the industry is not maximizing its comparative advantages in areas other than the exchange rate. Ontario has crews that are second to none in terms of their skills and technological prowess. Toronto is clean, with a plethora of amenities and a first-rate transportation infrastructure. We have world-class training institutions, for example Sheridan, Ryerson, Centennial, Humber, and Algonquin in Ottawa. These institutions are training kids who are being cherry-picked by American firms. It would be useful, over the long term, if these graduates had the opportunity to work here in greater numbers than they do now.

What about this recent focus on so-called "runaway productions" and the legislation initiated in California to correct this?

Mark Twain said that there are only lies, damned lies and statistics. Believe you me, they are all out there.

Who is screaming in L.A.? It's the heads of the union locals. You don't hear a peep out of the big companies. You don't hear a peep out of the producers. Why? Because it's a highly mobile, global industry. Producers will go and shoot were it is in their best economic interests to do so.

The fact is that American product made in Canada constitutes about two or three per cent of the entire American entertainment industry. Moreover, what occurs in Canada is principal photograph)5 which constitutes only 25 to 40 per cent of any given production budget. The huge salaries paid to the American superstars are paid in U.S. dollars into U.S. bank accounts and stay in the United States. It's absurd for these people to single out Canada. They should be screaming at Sacramento or at Washington. Indeed, jurisdictions all over the United States are engaging in providing incentives to attract business. All you have to do is look at Texas, North and South Carolina, Washington State or Oregon. It's like having a virtual factory move into your town and paying your people good wages. So obviously, interjurisdictional competition is heating up to attract this industry. And since Ontario is a national economic actor, it would be folly for this jurisdiction not to compete to attract production since it has so many comparative advantages already.