Adjournment Debate. - Film Industry Development.

I am glad to have this opportunity to look at the future of the Irish film industry, which faces something of a crossroads. The Minister for Finance indicated in the last budget that the tax incentives that the film industry has enjoyed will be looked at, which is timely. In any good tax incentive scheme, review is always an important and vital part of it. The reason I am particularly interested in the review which will be conducted is that it gives us the opportunity to applaud and appreciate the pioneering work of section 481 which has allowed the Irish film industry to develop at an unprecedented rate. When I say "pioneering", I do not use that word lightly. Ireland is well known as having this pioneering legislation. Legislation has also been introduced to provide tax incentives to artists. As somebody who worked in the arts industry in England, I know they always turn to Ireland as an example of how things should be progressed.

The decision to introduce this incentive was a courageous and an important economic one because, as a result, the Irish film industry has developed into a thriving one. Ten years ago, six feature films were made in this country while last year, 21 feature films were made. If incentives such as this are to continue, God knows how many films will be made. It will probably reach three figures.

A report published recently indicates that this industry, given the care and attention it has already received until now with incentives such as section 481, will grow at an extraordinary rate. It has been indicated that the industry is growing at an annual rate of 18%.

I wish to make a case for the retention of section 481, or something similar to it, for the film industry. It has been suggested that the economic cost of this incentive is roughly €25 million in taxes forgone. However, not quite that amount of money has been forgone. Much of the money forgone has come back to the State because a lot of it was used to pay wages, PRSI, VAT and so on. It has been calculated that the actual cost has only been €10 million. The economic return on the other hand is somewhere in the region of 3:1. Some 4,300 people are employed directly and it is estimated that another 3,000 are employed indirectly in tourism related to the film industry. That is quite extraordinary. I visit Connemara regularly and I meet people who constantly refer to where "The Quiet Man" was filmed. The places where films have been shot remain part of a community.

The Minister has indicated that he is in favour of incentives, particularly property related ones which were needed in the 1980s in order to incentivise development. The standard incentives available to other businesses are not really available to the film industry, in particular the attractive corporation tax rates and IDA grants. In effect, section 481 is the equivalent of those incentives and that is why I will press the case for a retention of that scheme, or an acknowledgement of what it has brought to this country and how it has developed an important industry.

If we are to look forward and if the number of feature films made annually is to reach three figures, we need certainty, and I appreciate the Minister would be interested in something such as this. Certainty comes from proposing long-term objectives. Perhaps we might think of putting a ten or five-year scheme in place which would be subject to review. We have developed an attractive labour force and have trained individuals. We should applaud the incentives which others have copied. I hope the extent and importance of this industry will be acknowledged.

I thank the Deputy for raising this matter. I am replying on behalf of my colleague, the Minister for Arts, Sport and Tourism, Deputy O'Donoghue, who, unfortunately, cannot be here.

The Irish film business has come a long way in recent years. Success has been achieved in both the indigenous sphere, which has seen fine Irish works produced, and by way of attracting international productions to this country.

In Ireland, we believe that there cannot be a question of whether it is better to promote Irish films than to attract international productions, but that we must do both. Irish films reflect our culture, outlook and our lives but international productions bring economic benefits, they allow our practitioners to work with, and learn from, the best in the world and they showcase Ireland to large numbers of people around the world.

The status and calibre of the Irish film continues to be recognised in a variety of prestigious international festivals and markets. In this context, we can refer to "Bloody Sunday" and the "Magdalene Sisters," both of which have achieved critical acclaim as well as commercial success. We are still attracting major international productions, such as "King Arthur," which is currently a work in progress.

Concern has been expressed about the future of our section 481 tax relief scheme for investment in film production and, in recent days, we have had significant coverage of this issue if the media. The relief is scheduled to discontinue from the end of 2004 and we are looking forward to where we go from that point.

Section 481 of the Taxes Consolidation Act 1997, as amended, is a statutory tax-based incentive for investment in film production in Ireland. Irish taxpayers receive tax relief on 80% of the amount of their investment. Investment is by way of shares in a company set up specifically to receive these funds for the production of the film. It should be noted that "film" for the purpose of section 481 includes feature films, short films, television drama, creative documentary and animation. Productions must be made for theatrical release or television broadcast, including cable network transmission.

Recently in Cannes, the Minister for Arts, Sport and Tourism, Deputy O'Donoghue, restated that film production is, and will remain, important to Ireland, that we value the benefits international production in Ireland brings with it and that we will be looking carefully over the coming months at the entire context. This will involve a complete review of the existing incentive structures, of where they position us strategically and competitively and where we need to position ourselves after 2004 to ensure that we remain attractive as a filming location. In all of this, we will be working closely with the Irish Film Board.

Screen Producers Ireland has just released its study on the importance of this incentive, which is a useful analysis of the position. The Department of Arts, Sport and Tourism, in collaboration with the Irish Film Board, has commissioned a separate study by PriceWaterhouse Coopers of what discontinuation of the section 481 incentive would mean to the sector and outside the sector. This study is expected to take around eight weeks to complete and on receipt of its conclusions, decisions will be taken on how best to proceed.

The Irish Film Board is a central plank of our approach to developing a viable Irish film sector and will remain so into the future. The primary function of the board is to provide development and production finance for Irish film projects. Development loans are given to provide resources to allow a project to be brought from the drawing board to the stage of being a properly researched and developed project ready to be taken to the production stage. Production loans contribute towards the cost of producing a finished film or documentary project. By providing these loans, the board is providing the opportunities needed by emerging Irish talent and, through schemes such as Short Cuts, has launched the careers of a number of young Irish film makers.

The board also supports more established companies in producing cultural Irish films which have significant commercial prospects. It also provides, under its capital provision, funds for film training carried out by the National Training Committee for Film and Television established under FÁS legislation, known as Screen Training Ireland. The board also provides, under its capital provision, funds for film training, carried out by the national training committee for film and television established under FÁS legislation, known as Screen Training Ireland. It is inevitable that any body like the Irish Film Board will come in for quite a bit of criticism. This probably just comes with the territory.

However, the board is by and large doing a good job. Of course people in the sector get annoyed when they feel that the board does not share their vision of what constitutes a worthwhile project, or that the—

The Minister's five minutes have concluded.

Can I just finish the sentence?

At this time of the night, in fairness to the staff, I would prefer if Members did not go beyond the five minutes. The Minister can finish the sentence.

I will finish the sentence. It must be remembered that the board is ploughing a very difficult furrow and has to balance a number of agendas which require different approaches. For example, what it takes to attract a major international production to Ireland is quite different from what is needed to give a neophyte film maker his first entry to the sector, and the board must do its best to cater for people at both ends of the spectrum and those in between.