Scrutiny of Tax Expenditures: Screen Producers Ireland

Before we commence, I remind members and witnesses that we must conclude this part of our meeting by 3.15 p.m. because we have other work to do. I also remind them to turn off their mobile phones. I welcome the representatives from Screen Producers Ireland, Ms Elaine Geraghty, Ms Siobhán Ward and Mr. Stephen Rooke and thank for attending.

I draw the attention of our guests to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Ms Geraghty to make her opening statement.

Ms Elaine Geraghty

I thank committee for the opportunity to contribute to its work on tax expenditures. My name is Elaine Geraghty. I am CEO of Screen Producers Ireland, SPI, and I am accompanied by two member producers, Ms Siobhán Ward of Crossing the Line Films who produced such content as "The Game", "The Farthest" and "A Wild Irish Winter"; and Mr. Stephen Rooke of Tile Films, who produced "Aerial Ireland", "Sacred Sites" and "A Terrible Beauty".

Before commenting on section 481 and its importance to the Irish screen industry, I want to provide an overview of Screen Producers Ireland and our members work. SPI is the national representative organisation of over 100 independent film, television and animation production companies. The Irish independent production sector comprises a diverse range of companies of different sizes, spread across the country, producing content for television, cinema release and online distribution. These companies, most of which are in the SME bracket, produce high-quality content in English and Irish, which is culturally relevant and loved by Irish and global audiences. Irish independent productions have been lauded worldwide, including this year when SPI member, Element Pictures produced "The Favourite", a multi-nominated Oscar winning film. Other film and TV drama productions made by our members include, Fastnet Films, "Black 47", Samson Films, "Float above the Butterfly", Ripple World Pictures, "Never Grow Old", Abu Media, "Finky" and Metropolitan Films, "Vikings". Television productions made by our members include Indie Pics, "Ear to the Ground’, Coco Content, "First Dates Ireland", Crossing the Line Films, "The Game", Sea Fever, "Ireland’s Deep Atlantic" and Tile Films, "Sacred Sites".

In terms of what we do and the role of a producer, the Irish film and TV sector is a vibrant industry with a sophisticated infrastructure of production companies, studios, service companies and expertise, all of which provide valuable employment in the Irish economy. Irish producers within that infrastructure are entrepreneurs who contribute significantly to the enterprise economy and bridge the divide between commerce and culture. Producers are responsible for the creative, financial and statutory management of the individual projects in which they are involved. They are engaged in all elements of production from the earliest stages of commissioning of concept, rights acquisition, development, sourcing of finance, pre-production, production, post-production to delivery, marketing, distribution and compliance.

Financing production is challenging, and funding opportunities can be limited. Available funding for producing content includes a mixture of the TV licence fee, Broadcasting Authority of Ireland Sound & Vision funding, Creative Europe MEDIA funding, the Irish Language Broadcast Fund, section 481 tax relief and private financing. The importance of section 481 in this funding mix cannot be overestimated.

Ireland has a long history of supporting the Irish TV and film industry through fiscal incentives, the most important of which was originally introduced in 1987, namely section 481. While having experienced a number of iterations over the years, section 481 remains a crucial component to the sustainability and growth of the Irish independent production sector. It is absolutely necessary if Ireland's film and TV industry is to continue to develop and thrive because those countries with which Ireland competes have similar or comparable incentives, a point also made by the Irish Tax Institute when it appeared before this committee a couple of weeks ago. The Government commissioned Olsberg-SPI with the Nordicity company to conduct an economic analysis of the Irish audiovisual industry. The analysis defined the importance of section 481 as "underpin[ning] the Irish film and TV industry". The analysis stated, "It provides vital finance to enable Irish producers to make local projects with local content in Ireland, ensures Irish producers remain attractive international co-production partners, and makes Ireland a globally competitive location for co-productions and high-budget inward investment productions." The analysis recommended the extension of section 481 to 2024, as one of many recommendations to support the growth and sustainability of the Irish screen industry. The last available full-year total committed figures, for 2017, show a spend of €292 million in the Irish economy as a direct result of section 481-certified projects. This was spent on goods, services and labour across TV drama, documentary, film and animation. There were 85 certified projects in that year comprising 11 from animation, 17 from TV drama, 17 from film and 32 from documentary. Over the past four years there have been some significant big-budget TV drama projects. I am sure members are familiar with them. They include "Ripper Street", "Nightflyers", which was made in Troy Studios, "Vikings" and "Into the Badlands". However, it is also interesting to note that the majority of productions in Ireland are in the budget range of €1 million and under. Over the years 2016, 2017 and 2018, for example, the percentage of productions whose section 481-eligible expenditure budgets were €1 million or less are 79%, 85% and 83%, respectively. This reflects the fact that the majority of Irish production companies are in the SME bracket.

In the run-up to budget 2019, we engaged with the Department of Finance and Revenue on the possibility of extending section 481 beyond 2020. This engagement has led to better understanding between all stakeholders on the operation of the incentive and to ongoing engagement, which has been very helpful. In October of last year, the Minster for Finance, Deputy Donohoe, announced the extension of section 481 until December 2024, advising that the extension of the incentive was "to support the continued growth of the film industry in Ireland". The Minister also announced a new time-limited regional uplift of up to an additional 5%, which will taper out over four years. The uplift will support the development of new local pools of talent in areas outside the current main production hubs, which tend to be Dublin and Wicklow. This will help to increase the geographic spread of the screen sector in Ireland and support the overall cultural objective of having an established and sustainable screen industry. Significantly, the tax incentive moved to a self-assessment model, which came into effect in March of this year. We believe that this move will make the application process more efficient in the long term. In the meantime we look forward to the publication of a new set of guidelines by Revenue related to eligible expenditure. The announcement of the extension was welcome and very important as the lead-in time for film, TV and animation projects from initiation and development to financing and production can span several years. Certainty around the long-term availability of section 481 is crucial to providing confidence and security to the indigenous industry and to ensuring we can continue to attract direct inward investment from international studios and producers. Speaking about section 481 last May, the Minister for Culture, Heritage and the Gaeltacht, Deputy Madigan, said: "Section 481 is a key and central component to the Irish screen sector."

We support this statement by the Minister, which shows the Government's commitment to supporting a strong, vibrant Irish indigenous film industry.

Delivering quality employment is an obligation of section 481. The Irish producer company itself employs a core full-time staff who work in the areas of production, development, administration, sales and marketing. These core staff are involved at all stages of delivering a production, in a process that often takes, as I said, three to four years. Crew are then hired when a project moves to the production stage and for the duration of that project. Crew comprise a mix of PAYE and self-employed individuals. The independent production industry provides significant employment opportunities for crew. The Department of Culture, Heritage and the Gaeltacht commissioned the Olsberg report into economic activity in the audiovisual sector for 2016. The report stated that there are more than 7,070 full-time equivalents, FTEs, employed in the live action, film, TV and animation sectors. These sectors of the industry contribute €692 million in gross value added, GVA, and generate €184 million in export earnings.

Our crew are some of the best in the industry and act as a strong attractor for projects. This is in part because skills development has always been core to the production industry in Ireland but also because Ireland has been able to attract a diverse range of projects, enabled by section 481. The introduction of new skills development requirements as part of the section 481 application criteria means we can continue to build on this while it allows us to capture data and information on skills development. We can track career pathways in the industry as well as identifying and addressing skills gaps.

Section 481 has a positive impact on the creation of indigenously produced content. It attracts incoming production and has a positive impact on the creation of quality employment. It contributes to Ireland's reputation as a global hub for high-tech digital and creative content and has a direct impact on attracting tourism to our country. The result is that Ireland has become a very attractive location for incoming film and TV production but is able to support indigenous production at the same time. Expenditure in the Irish economy as a result of section 481 clearly illustrates the need for Ireland to maintain and continue to improve its fiscal incentive, as required.

I would be very happy to take any questions members may have, as would my colleagues, Ms Ward and Mr. Rooke.

I thank Ms Geraghty for her very comprehensive opening statement.

I thank SPI for its presentation. Before I ask a number of questions, I wish to say I am very much in favour of the State providing support to film and all the other arts in the sector, and indeed I would welcome a very significant increase in the budgets for them. However, I am not, as I suspect the witnesses know, convinced that the way in which section 481 is structured achieves the ends we want in terms of the provision of quality employment and training, which is the legal requirement of section 481, or the development of companies of scale, which 24 years ago the Indecon report said should be the purpose of section 481. That report strongly criticised the project-by-project nature of the Irish film industry and said section 481 - or section 35, as it was then - was encouraging and perpetuating a project-by-project, short-term film industry which would not result in the development of companies of scale. Furthermore, the EU, in its guidelines on state aid to the audiovisual sector, pointed out that such aid should deliver the consolidation of the industry through the creation of soundly based production undertakings and the development of a permanent pool of human skills and experience.

I put it to Ms Geraghty that none of that is happening. For example, SPI and other supporters of section 481 came before the arts committee a year and a half ago and said there were 17,000 whole-time equivalents in the industry, which sounds good.

Today the figure of 7,000 has been used but there was a counter-point put at that committee from the workers in the industry, who said the figure was actually nearer 2,000 and that very few, if any, of those were secure jobs. On foot of that debate, the Minister asked for an investigation into the matter. A study concluded that in 2016 the Revenue Commissioners estimate the number of employees directly engaged in section 481 productions was 2,158. In other words, SPI and other supporters overstated the level of employment in the film industry deriving from section 481 by 800%. That is pretty significant from a value for money point of view for the public. Ms Geraghty might tell us how many of those are permanent or even secure jobs. One of the things the Indecon report stated way back in 1995 was that what we actually had was a series of micro-companies with a very small number of permanent employees. That continues to be the situation. Almost nobody has any security of employment. There is absolutely nothing to protect workers from wholesale displacement or even blacklisting, which has been alleged by workers in the industry. Riddle me this; given that section 481 says specifically that it is given on the proviso of the provision of quality employment and training, how can it be that when challenged by workers in the Labour Court and the Workplace Relations Commission, WRC, SPI's members claim that production companies that apply for and get the relief are not the employers? I do not see how a company can get a relief to provide quality employment and training and simultaneously claim that it does not employ the crew on those films, but hide behind a designated activity company, DAC, which is an accountancy tool, not a company. Although the companies that actually apply are standing companies that exist year after year, such as Element Pictures, Metropolitan Films and so on, they claim to have no responsibility whatsoever for the employees. They claim they are not their employees or trainees. As a result, nobody has any kind of security. In terms of training, can anybody even tell me how many trainees have qualified in the different categories of employment over the past ten years?

I am not stopping the Deputy but allowing for the fact there is only a small number of us here I have gone to five minutes on this. I am going to let the witnesses come back in with some answers to what has been posed so far and we will then have a further exchange. We have another Deputy who wants to come in as well. I will hand back to Ms Geraghty.

Ms Elaine Geraghty

Okay. There are lot of questions. It is fantastic that the Deputy welcomes support of section 481. That is very welcome.

I said State support for the film industry.

Ms Elaine Geraghty

I will take it as section 481 for the moment.

I would not necessarily do so.

Ms Elaine Geraghty

That is what we have at the moment and that is what we are dealing with and thankfully it runs until 2024. I will try to answer all of the Deputy's points and if I miss any, he should let me know. I will just take a step back and talk about the industry and how it is constructed. I touched on it in the overview that I gave in the first five minutes. I will ask Stephen and Siobhán to speak to this because they are company owners. The role of production companies and their job is to create opportunities for employment. I have set out what those producers do and the kind of people who work as part of their core staff. The responsibility of producers is to find projects, create projects, get them funded, get them produced, make them successful and give the opportunity to create the kind of employment the Deputy is talking about. That is the role. The Deputy talked about the EU directive around a permanent pool of talent; I would focus on the word "pool" as opposed to the word "permanent." Thankfully in this country we have a fantastic pool of very talented crew who work across all of those genres, TV, documentary, drama as the Deputy described, and film. They have been available and are available. They are incredibly talented. We have a permanent pool of workers. In terms of what that looks like and what their day-to-day looks like, our industry is no different from any other territory where a screen industry exists. It operates in exactly the same way.

The role of the producer is to create the opportunity, to be enterprising and create employment opportunities and to add value to the economy. That is the role of the production company per se. Often they are managing the opportunity of two, three or four projects at any one time, which is very challenging in its own right, but that is when employment is created. To suggest it could be any other way is really not accurate. It cannot be any other way. The purpose of the pool is that we have available talent and crew when we need it, and we have that. The Deputy will remember how after the culture committee hearings in the Oireachtas back in January and February, as a direct result of what was being said at those meetings, the film guilds of this country organised to tell the Deputy and those who may have a different view of the industry how their industry works for them and how they wish to work. Yes, it is project-by-project but the point about what we do as professional producers is that we create as many projects as possible and, ideally, have so many that we can operate and offer work 365 days a year. That is the model and it is not going to change.

Let me take a step back to address this idea about not being supported in terms of security and the other words the Deputy used around the sense that perhaps people who are engaged and employed in the industry do not have protections. We as employers are under the same scrutiny and subject to the same employment legislation as absolutely every other employer in the land. That is the first thing. The second thing-----

We are going to keep this as tightly as possible, if we can, to the tax question and the tax incentive question. I appreciate that Deputy Boyd Barrett did go into other areas but I am conscious of the time. This is a budget committee and we are not revisiting the whole area of what the sectoral committee did earlier in the year.

Ms Elaine Geraghty

Fair enough but all of those obligations are tied to section 481.

On a point of order, the point is that in the finance legislation, the tax relief is explicitly tied to the issue of quality employment and training, so it is relevant.

Absolutely. I am just trying to keep to time for all our sakes because I want to let Deputy Pearse Doherty in as well.

Ms Elaine Geraghty

I am happy not to refer to previous committee meetings but it is really relevant because there are a number of obligations tied to section 481 being received. With the move to a self-assessment model, the producers themselves are individually required to declare that there is compliance with lots of things, including skills development. One has to put forward a plan in order to get certified in the first instance to be allowed to be considered for section 481 at all. I refer also to areas such as legislation and quality employment. In that context, "quality employment" means adherence to all employment legislation. Producers are required, individually and personally, to give a written declaration that they will be obliged to deliver all of those. In the context of section 481 as a relief in its own right, regardless of any other discussions in any other committees, that is what is required of a producer. The Deputy wanted to speak about companies of scale. I will defer to my colleagues who actually own a company.

Mr. Stephen Rooke

If we are going to look at the concept of companies of scale, we have to understand the television and film business. There are three major sections within our industry, namely the animation industry, the factual industry and the drama industry. Companies in those three areas are always on a different scale. The factual industry is where Tile Films comes from. We are a company based in Dún Laoghaire that employs ten people full-time and can employ up to 250 people when we are doing a production. We are of the same scale as the average factual company based in London, New York or L.A. When we are looking at section 481 in terms of companies of scale, we have to look at the individual areas. We have companies of scale here as would be the norm across our industry across the world. An animation company may have 200 or 300 people employed because of the type of work they make. A factual company will never have more than ten to 15 people employed full-time. We are generating projects so we have people in development and finance and people going out selling those concepts to broadcasters around the world.

Drama companies are a different animal because there is more development work taking place on scripts and so on in a drama company. By its nature, a drama company will probably grow to a bigger scale. We have companies of a scale here, such as Metropolitan Films and Element Pictures, that are as big as drama companies in Los Angeles. It is wrong to say that we are not building companies to scale here. I think every producer who works in this business is keen to build as big a company as possible. In reality, companies do not get beyond a certain size when they are not involved in production because when a production company is not making something, it is developing something.

Ms Siobhán Ward

With regard to companies of a certain scale, that is not to say that there is not growth within the type of companies that we work in. Crossing the Line Films started in 1995 to make one film about the Irish Everest expedition. Now we generally try to have two or three productions at different stages at different times. It does not go from project to project, with one project being finished, nobody knowing where they stand and then the next one starting. Projects are constantly getting off the ground while another one is being worked on. Section 481 has been a key part of that growth. We had a project, "The Secret Life of the Shannon", which received section 481 funding and was entirely Irish-financed. That added a layer of production value. The programme went on to win awards. The BBC and PBS wanted to license it for their channels so that when we went to them about our next big natural history project, entirely about Ireland and made entirely with Irish crew, they wanted to be in at the start as full commissioning funders with a much larger budget. Consequently, foreign funding came into the country and allowed us to make a much larger-scale project, with double the budget and double the eligible spend. That allowed us to grow our company, increase our number of permanent staff and employ a greater number of people on that production.

In high-end creative documentaries, as Ms Geraghty was saying, it is not a six-month shoot after which people are gone. The project is in development and one could be filming over two years for a natural history programme. We could have someone sitting in a hide waiting for a badger to do whatever it needs to do. There is a significant amount of post-production involved in crafting strong narratives to ensure these are films that travel across the world and do not just stay in Ireland. In addition to the different companies of scale in the different sectors, which Mr. Rooke mentioned, there is growth within the companies.

I am conscious of time and wish to let Deputy Pearse Doherty contribute. I will come back to Deputy Boyd Barrett.

Ms Elaine Geraghty

Would it be possible to correct one set of numbers as I think it is important to do so? A figure on the numbers working in the audiovisual sector was cited at a previous session. Deputy Boyd Barrett would prefer me not to refer to it. The figure was not from us but from the Olsberg report on the numbers employed in the whole audiovisual industry. Instead of taking out the element that refers to film, television and animation, which is the 7,070 figure that I stated, it was incorrectly but not intentionally given as 17,000. The overall figure is actually 16,930. The Deputy asked if separate work was done. That work is actually the cost-benefit analysis from the Department of Finance, which was before the committee and gave another number-----

Ms Elaine Geraghty

Exactly. That is like comparing apples with oranges in one sense because the data set is completely different. The Department of Finance's cost-benefit analysis did not look at post-production, which is a significant part of production. It came out with a set of numbers over a different period. The economists are much smarter than I am but we are looking at two different pieces of information. That Olsberg number was a broad audiovisual number. If one drills down into our sector, the 7,070 figure is accurate.

I welcome the witnesses. Could they start by outlining the financial benefits of section 481 to a company that is involved in production? What is it allowed to offset in the production costs and does that include post-production costs?

Mr. Stephen Rooke

There is a cultural benefit and a business benefit from section 481. Section 481 is based on Irish eligible expenditure, which can be up to 80% of the total budget if the total production budget is a pure Irish budget.

If one is doing a co-production with filming and work overseas, all that overseas work is non-eligible spending because it is outside the country. It is 32% of the eligible expenditure in Ireland which includes goods and services and employment in the State.

So for a production solely based in Ireland, approximately a quarter of the entire budget can be written off.

Mr. Stephen Rooke

Yes.

That is 32% of 80%.

Ms Elaine Geraghty

Of certain expenditure but not all of it.

Mr. Stephen Rooke

I can give one of our own productions as an example. We have just finished producing a series called "Aerial Britain" for the Smithsonian Channel in Washington, DC. Some 60% of our company's turnover in Dún Laoghaire is export work. Money comes in to finance programmes that we make for the international marketplace, especially the Smithsonian Channel. That project had all Irish crew, all Irish post-production, all Irish writers and all Irish composers. The whole production was based out of Dún Laoghaire but obviously the filming all took place in the UK. When the Irish crew steps into the UK or when the director goes to the UK, all of that becomes non-eligible expenditure, but all of the expenditure that happens out of the base is eligible.

Of course. That was going to lead me to my second question. For the portion of the production that may take place in Britain, is there a similar type of incentive or tax where some of the production that is taking place there can be written off? I am trying to get a sense of where competitors are.

Mr. Stephen Rooke

That is possible if one does an official co-production with another company in Britain but because this project was financed by a broadcaster out of Washington, D.C., that funding and the section 481 tax credit made up the full financial package.

If Mr. Rooke did a co-production, would the incentive in Britain be similar, less or more generous?

Mr. Stephen Rooke

It is a more complicated one because there is a minimum spend per hour to qualify for it.

That would rule out a large number of productions.

Mr. Stephen Rooke

It is much higher. Many English producers would say to us that the section 481 rate is why quite a number of English productions come to Ireland.

Ms Elaine Geraghty

There are 97 incentives globally that can be accessed. They are all nuanced.

I support section 481. I think there are significant opportunities in the film industry and would like to see more activity in it, especially in the regions. Concerns have been discussed here which I have also raised relating to quality of employment and so on. Can we drill into some of that? Ms Geraghty mentioned that there were 85 certified projects in 2017 which availed of section 481 tax relief. Of those, how many, for that year, equated to the figures that we are talking about relating to employment of 7,070 full-time equivalents?

Ms Elaine Geraghty

Is the Deputy's question about the number of employees?

Yes, for those 85 projects.

Ms Elaine Geraghty

I have not broken that down. The numbers we are working off are from Revenue, as it issued them, and it would not necessarily provide numbers of people attached to a project. The figure of 7,070 came from the Olsberg audio-visual report and refers to 2016.

That is the entire industry as opposed to the industry that is benefiting from section 481?

Ms Elaine Geraghty

The 7,070 is for television, animation, film and television drama, not all of which would benefit from section 481, but the vast majority probably would. One of the promises with the Olsberg report was that there would be a methodology to continue to analyse data in the industry and get these kind of statistics, such as the Deputy is speaking about right now. That was not brought forward as part of the report, which was eventually published last year. The last data we have which are done in any great detail are for 2016. We are without it though it would be helpful to have it in some form or another, because one is just working on top line numbers from Revenue rather than a deeper dive into what the industry is like and how it is structured. The information is there. It is a matter of gathering it.

I agree that all the full-time equivalent figures should be collected. If we were to say all those full-time equivalents were companies availing of section 481, then, as a rule of thumb, on average each certified project availing of section 481 was employing approximately 80 full-time equivalents. Does that make sense?

Ms Elaine Geraghty

If that were done as a blunt instrument across everything. However, it is a matter of hours and genre. Mr. Rooke spoke about the kind of production with which he is involved. That is not comparable with a project such as "Vikings"-----

Ms Elaine Geraghty

-----on which could be employed 500 or 600 people. I do not mean to avoid the question, but what we really need to do is exactly what the Deputy has just talked about, that is, to talk about genre of production, when employment commences, what the numbers are, what the hours look like, how long people are on the project and so on. As an industry, we are calling for this.

Should a production that employs, say, 40 full-time equivalents be availing of the same type of tax incentive linked to quality employment as a production that employs 400 full-time equivalents?

Ms Elaine Geraghty

My colleagues have made the point about that. I refer to the depth of content and what is produced. We have another member based in Kerry, for example, that produced "Ireland's Deep Atlantic", without a huge number of staff, etc. That programme is now on the junior certificate curriculum. How, then, does one measure value? It must have a cultural impact as well. One must be able to say it leaves a footprint, has longevity and allows companies to leverage what they do such that when they go to public service broadcasting in the United States or whatever, they can build their companies and build scale. It is a blunt instrument to say "X number of hours equals Y amount of income". A number of measures must be considered when looking at value.

Some of the earlier questions do not necessarily reflect my views, but I am interested in Ms Geraghty's views and the industry's views on this question in particular. Does she believe there is a concern about employment rights within the industry? Does she think there is room for improvement?

Ms Elaine Geraghty

That issue has clearly been raised, particularly by Deputy Boyd Barrett. As recently as May, the Minister, Deputy Madigan, spoke about having a film forum to examine any concerns that might be raised by Deputy Boyd Barrett and suggested that the place to hear all those concerns would be the Labour Court or the WRC. Screen Producers Ireland, along with ICTU, has therefore taken the initiative and approached the WRC to conduct an audit of our industry, which it has agreed to do, and it has invited public submissions on that. We have done it for a few-----

Who is doing the audit?

Ms Elaine Geraghty

The WRC.

Deputy Boyd Barrett has raised his issue, but I have not heard a debate on section 481 in recent times in which there was not support for investment by the taxpayer in the arts, including the visual arts and the film industry. However, I also have not heard a debate that did not raise the concerns about employment. There is an issue in that while this is extended until 2024 - and I am sure the industry hopes it will be extended again beyond that-----

The Deputy has only one minute left.

Okay. Unless these issues are addressed, Screen Producers Ireland will be-----

Ms Elaine Geraghty

The trade union movement and the industry have now provided an opportunity to have those issues heard. The Deputy's question to me is whether I think there are issues. I do not believe so because with section 481, which is pertinent to this conversation, as employers we have legal requirements. There are personally signed declarations about commitment and compliance with all these things. Certainly, our industry is slightly different; it is not a bricks-and-mortar concern and we do not produce widgets. That does not mean we are a special case, however. We must still provide proper employment and adhere to all the relevant legislation. We have afforded the opportunity to have these issues discussed with ICTU. I suggest that everyone contribute to that process.

That is fair enough.

Ms Elaine Geraghty

Furthermore, while we conclude national collective agreements under the ICTU group of unions, we will examine those agreements and ensure we have best practice. If we do not, it will make recommendations. It also allows the Labour Court and the WRC to become familiar with the industry, warts and all, so we-----

I want to ask two final questions. It will be interesting to see the outworking of that but the Chair is very rigid with his clog beag-----

He is, unfortunately.

-----even though there are only two of us here. I know we have another piece of work.

We will be thrown out of this room at a quarter past. We have reports to do after this.

Could Ms Geraghty talk to me about the regional uplift that was introduced last year in the legislation? Does she believe it is working? Maybe some of the witnesses can talk about its importance or effectiveness for that sector. The provision is tapered and I would like the witnesses' views about that. Going back to my earlier point about support for the industry and trying to nourish it, we are very proud when we see the achievements, the talent and the productions on-screen. Ms Geraghty has come here arguing the case for section 481 which is in place for the next number of years. What else could be done for the industry? It need not be a tax measure. Are there any opportunities in the context of all that is happening that Ireland needs to grab with both hands, to attract more investment and support the talent that we have here by additional productions and so on?

Ms Elaine Geraghty

On the regional uplift, it was only written into legislation in July of this year. It has taken a while but is extremely welcome. Most production takes place around Dublin and Wicklow so opening it out beyond those areas is incredibly important. There are two reasons, really. It is costly to bring crew with skills out of Dublin. It is incredibly important for places like Troy Studios in Limerick, for example. In parallel with that, it also allows skills to develop within those regions so that in future when productions happen, we have local crew. The uplift is 5% and there are lots of obligations with it. The focus is on looking into the local talent pool and building a permanent talent pool outside the usual areas where production takes place. It is really important, especially for incoming and studio-based productions. It is only for four years and it is tapered so we need to see how successful it will be. It is only the very beginning. Maybe in a year's time the Deputy can ask me again. I will let him know how it goes. I do not know if Ms Ward wants to contribute on that.

Ms Siobhán Ward

It is quite early to tell. For producers, it does make the idea of bringing a production to a region much more attractive. When we are looking at the figures we might consider if we could do this in Kerry, Galway or Mayo rather than the places we would have used. We are always looking at the bottom line, asking if we could do it and what the extra costs would be. I think it will cause a lot more people to consider it.

Donegal is up there as well.

Ms Elaine Geraghty

Actually we are working with Donegal at the moment; they reached out and said they had been forgotten about, "there ain't no train" there and so on. Specifically in the last week we have been speaking to Donegal about all of this. There are myriad things that could be done. Our industry falls between a lot of stools in terms of Government Departments. The audiovisual steering group examines all the recommendations of the Olsberg report with everybody in the room and that is really helpful. I would really like our screen industry to be considered as an industry in its own right and to be championed. There is so much value and so many good stories. There are small, medium and big companies that are doing great things and we tend to fall between all of these stools. It needs to be considered in the round.

When we think of screen industries in particular, what do we think of? We think of drama, film, documentary, animation and everything in between. We have a fantastic story for Ireland in these really difficult times. We are going to be up against it, especially after today and what Brexit means, so we need to batten down the hatches. The UK is burgeoning with the amount of production that is coming through. Its studios are bursting. We need to make sure that we have more studio space, that it gets through planning permission. We need to continue to grow our crew. Skills development is going to be fantastic. I would look to be sitting at decision makers' tables as often as possible when we talk about Ireland Inc. and Ireland's screen industries. I welcome Désirée Finnegan, the incoming chief executive of Screen Ireland. It is going to be great to meet Désirée and learn what the plans are ahead. They are our ambassadors when they leave these shores and they need to be supported and able to sell "brand Ireland" for incoming productions. I would finally say that if anybody has any concerns about any element of our industry, we are always open for business and for questions.

Members can come out to visit one of the sets, watch a documentary being made or sit in a hut as a nature programme is being filmed. There is an open invitation for them to visit Ashford Studios, Ardmore Studios or wherever to see things up close for themselves.

That concludes Deputy Pearse Doherty's questions. I will go back, as promised, to Deputy Boyd Barrett for a couple of quick questions to finish. We have this room until 3.15 p.m. Realistically, we will probably need to use tomorrow's session to look at the pre-budget report.

Are we not going to come to the pre-budget report today? I have to leave by 3 p.m.

If we do, we will only have a few minutes for it. We will not get a full run-through at this time. We will try to get something started. I apologise. I call Deputy Boyd Barrett.

To clarify, I am in favour of more public investment in the arts and the film industry but not necessarily, and for the reasons I have indicated, section 481. Our guests say that the particular nature of the industry means companies of scale are actually much smaller. I put it to them that this is not the case with animation. An animation company can have a much bigger workforce that enjoys some security of employment. I do not accept that that cannot be done with live action film and television. Given the amount of public money going in and the fact that it is largely going to nine companies, and if, as our guests describe it, there are ten to 15 people in each company, how many people have permanent jobs when the figures are added up? Is it 100, 200 or 300? That is a significant problem. Whether our guests say it is 2,000 or 7,000, it means that all the rest have absolutely no security of income or employment from project to project. I put it to the them that this is the current situation and that there is nothing to stop wholesale displacement of people who may have worked in the industry for years or blacklisting, which has been alleged not just by some of those outside the ICTU fold but even the Irish Equity representative here in January 2018. He stated that there was a significant problem with bullying and harassment and that workers had no protection. Who is the employer of these people? The production company is not, or at least it tells the Workplace Relations Commission that it is not.

I am sorry. The Deputy has made the point already.

I have not. The Protection of Employees (Fixed-Term Work) Act cannot and does not apply if the employer is a designated activity company, DAC, which can only exist for the purposes of one project. As a result, is it not correct to state that almost nobody in the group in question who have contracts of indefinite duration or any kind of expectation of or right to employment from one project to the next? Our guests stated that it should be comparable with other employment. Do most of those workers get sick leave, holiday entitlements and maternity entitlements? How many trainees have qualified?

I have to interrupt the Deputy there. I am sorry but I have to ask Ms Geraghty to be very brief in response to a comprehensive question.

Ms Elaine Geraghty

Deputy Boyd Barrett should look at the animation industry and maybe get to know it a little better. The structure is completely different from live action. It is not possible to compare the two. It might be helpful if the Deputy met Animation Ireland to discuss how that industry works because it is very different from live action and drama.

As producers who apply for section 481 relief, we are required to set up designated activity companies, DACs, which are responsible for engaging the crew. I have been in the Workplace Relations Commission, WRC, many times, happily successfully, on occasions where the point in question has been around which is the employer and which is the DAC. It is very clear how the structure is set out with regard to section 481 and where obligations are required. There are contracts and holiday pay is paid. All of those things occur. I really do not know how I can say it any clearer. There is no obfuscation here. There is a very clear structure to which we are required to adhere.

The Deputy spoke about permanent employees. Consider the case of a production company that makes one project that requires construction and does not make another for four years. Is it being suggested that that company takes on a permanent staff of construction workers because that is the right thing to do, even if the company never makes a project that requires construction? That can never work and is not how it works. That allows people who work in construction, or whatever element of crewing they are in, to be hired for the projects that are suitable for their grades and talents. One cannot have-----

What if that company does make other projects that require construction?

Ms Elaine Geraghty

One cannot have a production company based in Dublin, Waterford or Kerry that makes an array of projects and must have a full-time, permanent staff that are irrelevant to the core of the organisation. These roles are not around marketing or funding. Our job is to create opportunities and it is quite hard to get that done, so I am really glad we do it so well. It is not about that.

I am going to bring this session to a conclusion. I thank Screen Producers Ireland for coming in. I thank Ms Geraghty, Ms Ward and Mr. Rooke for their contributions today. I also thank the Deputies for their interactions.

The select committee went into private session at 2.55 p.m. and adjourned at 3.10 p.m. until 4 p.m. on Tuesday, 15 October 2019.