Lights, Camera, Reaction

It's a plot familiar from classic Westerns. A small, peaceful community is terrorised by a skilled gunslinger. Unable to defend themselves, the townsfolk decide there's only one thing to do - hire their own gunman to take the adversary on at his own game.

The Irish film industry has been shaken in recent months by rumours that a report carried out by the Indecon economic consultant, Alan Gray, for the Department of Arts, Heritage, Gaeltacht and the Islands is highly critical of Section 481 tax incentives, suggesting that they should be phased out or possibly replaced by some other mechanism. Nerves within the industry were further sharpened by the announcement in last week's Finance Bill that Section 481 had been extended for just 12 months, "pending full consideration of special studies on film relief to be published by the Minister for Arts, Heritage, Gaeltacht and the Islands". The studies include the much-delayed report by an industry "think tank" assembled by Minister de Valera, but the fear is that the damage has already been done by Gray's report.

Now the producers' organisation Film Makers Ireland has hired its own economist, David McWilliams, to produce an independent report on the industry. Published this week, The Bigger Picture is essentially a polemic in favour of maintaining and enhancing tax relief for film production. McWilliams was responsible for coining the dreaded "Celtic Tiger" phrase, and his report, while replete with the diagrams, charts and figures of his trade, is delivered in a surprisingly informal, almost chatty prose style, studded with punchy soundbites. It's a clear attempt by Irish producers to counter-attack what seems a rising swell of opinion, in the Department of Finance in particular, against tax incentives for film production.

"The industry has been penalised because the case for Section 481 hasn't been articulated in a logical fashion up until now," McWilliams told me before the launch of his report on Wednesday. "It's hard to quantify an industry that doesn't produce computer chips in Kildare, but this is not a parasitical industry. I'm an economist, and I didn't know much about film-making when I came to this, but I looked at the global situation, how Section 481 operates and how the industry itself works, financially and economically."

In McWilliams's analysis, the Irish economy will continue to shed manufacturing jobs over the next decade. "The `clock in, clock out' world of the factory floor will become increasingly irrelevant in the `click in, click out' world of the 21st century," according to the report. "The key to economic wealth will be high value-added, knowledge-based service industries. For a highly literate, high-income English-speaking country, few sectors make more economic sense than film and TV production."

As its title indicates, The Bigger Picture steers clear - for the most part - of the nitty-gritty detail of film production. The cultural aspects of the subject fall outside its remit, but there are references to some of the currently fashionable buzzwords in the film industry. Thus, the importance of intellectual property rights is emphasised. "A true high value added industry can only be built if the income stemming from the intellectual property rights flows back to the producers . . . Without this reciprocal flow of profit, the film industry becomes an extractive industry." It's a point which has been recognised recently by the Film Board, with its allocation of increased resources to acquisition and script development. But the differences which exist between Irish producers - in particular between those who profitably service the "extractive" industry of overseas productions shooting on location here, and those developing projects themselves - are glossed over. It would be interesting to see FMI producing some analysis of the respective benefits of Section 481 investments in Saving Private Ryan and I Went Down, for example. One suspects, though, that the disparate interests within the organisation would find it difficult to articulate a common position on the issue.

The Bigger Picture also mentions "vertical integration", the jargon for the system perfected by Hollywood whereby a company involves itself in the totality of the film business, from creative origination through production to distribution, marketing and merchandising. It's a model which has been espoused by many industry advocates in Europe, and particularly in the UK, where lottery-funded franchises like Pathe represent a concerted attempt to restructure and rationalise film production. "The Irish industry should aim to emulate this type of vertically integrated company structure, in order to extract as much value as possible from this dynamic, high profit business," writes McWilliams. Easier said than done - the British and European experiences suggest that there would be almost insuperable problems of scale involved in attempting such a course of action.

Where The Bigger Picture is at its best is in forcefully arguing the common sense case for supporting film-making. Taking the chemical industry as a point of comparison, McWilliams argues that the State's support for multinational chemical corporations, through low corporate tax rates and grants, generates considerably less benefit pro rata to the economy than does Section 481. He also points out that, even before the current uncertainty, Section 481 "has been subject to gradual erosion over the years to the extent that the slightest change means it will cease to be an attractive vehicle for investors." The report indicates that relief on investments will have to be increased to 100 per cent from the current 80 per cent, because "as taxes fall, so does the attractiveness of Section 481 unless the relief is increased."

Crucially, McWilliams points to the increased competition internationally for film production, particularly from the UK, and asks why Ireland should choose to hobble its own promising industry at the point when it is "between infancy and adolescence". For Sile de Valera, who travels to Los Angeles next week to promote the dynamic Irish film industry, The Bigger Picture should make interesting in-flight reading.