Economic pain inflicted by the anemic Canadian dollar is spreading fast.
From the cost of food and other imports to professional sports teams and entertainment productions that pay their stars in American dollars but generate revenue in Canadian, the 2016 outlook is bleak and getting bleaker. However, in some sectors business prospects with a low loonie are bright and getting brighter.
Manufacturers and other exporters, for example, are having their competitive edges artificially sharpened via the vagaries of foreign exchange that are giving them a competitive advantage they haven’t had since the turn of the century when the Canadian dollar was flirting with sub-US$0.65 exchange rates.
But few sectors are enjoying the down dollar more than the local film and television production industry.
As reported in last week’s Business in Vancouver, it’s on pace to match or exceed the previous year’s $2 billion in production spending.
The low Canadian dollar is fundamental to that industry buoyancy, as is B.C.’s deepening pool of production talent. But there’s another reason Canada is attractive for U.S. productions: taxpayer-funded film and tax credits. They range far and wide across the land, but suffice it to say that they add up to substantial benefits for foreign filmmakers. As the Canadian Taxpayers Federation has pointed out, the B.C. government alone has doled out $1.5 billion in film subsidies over the past five years. That might have been needed earlier in the development of the province’s film and TV production sector, which has always had the advantage of proximity to Hollywood, but now that its expertise can compete globally and with a Canadian dollar providing the local industry with a significant discount compared with U.S. competition, the current tax credit structure needs to be retooled. Pegging it to the Canadian dollar’s exchange rate would be a good start.
B.C. taxpayers, already faced with higher bills for basics when the dollar is low, should not be helping finance the U.S. entertainment industry.
